A Compression Of Old And New
In 1977, Ralph Moss faced the greatest challenge of his working life -- managing his 97-year-old family business after the death of his brother and partner, Louis. In Lou's last few years, John Nageldinger & Son Inc., of Westbury, N.Y., had been facing insolvency. But Ralph knew little about the company's financial troubles. For almost 40 years he had worked in the company's manufacturing end, overseeing the machinists who produced and assembled compressed-gas regulators and portable oxygen equipment. Marketing and finance had been Lou's job.
Ralph struggled for months to solve Nageldinger's problems. Unable to manage alone, he telephoned his son, Harvey, 39, then living in California, and persuaded him to apply the marketing skills Harvey had honed in his own company, Idea West Creations Inc., to the troubled family business.
This would be Harvey's second life with Nageldinger. He had worked for his Uncle Lou 15 years earlier but had been frustrated by Lou's resistance to innovation. He left after only one year. Harvey was sure he could work as his father's partner. He and his wife, Debby, packed up their van in the winter of 1978 and headed east.
"I was ready to come back to New York," remembers Harvey. "I had been divorced. I had just remarried. Debby and I wanted to start a family. I wanted to go back and start a new life."
Harvey had been in California since 1969 when he joined Pfizer Pharmaceuticals Inc.'s ethical-phurmaceuticals division. He left Pfizer in 1972, and, with a local craftsman, formed Idea West Creations, a manufacturer of gift items. Harvey had just sold his share of the business to pursue a career in management consulting when his father called for help.
When Harvey arrived at the Nageldinger plant on Long Island, the future looked dim. "Debby and I really made the trip cross-country not knowing what was going to happen," he explains. When he crossed the threshold of the Nageldinger plant -- a tiny one-story concrete-and-brick building stashed in the far corner of a dead-end street -- he was surprised to find a business that hadn't turned a profit in 3 years and a manufacturing operation that hadn't changed in almost 40.
"The company was operating with machinery and operators that had been there for 35 or 40 years," Harvey says with amazement. "And they were still using a product catalog that I had helped design when I was in college in 1960."
It was clear to Harvey and Ralph that they had to make do with outmoded equipment until the company was back on its feet. But in just 12 months, Nageldinger was out of the red, and 1982 sales were expected to reach almost $4 million, up 1,500% from $238,000 in 1977.
The sharp turnaround over the past five years, which made the company #93 on the INC. 500 listin 1982, took much more than Harvey's business savvy. Both father and son brought strong ideas about the operation to their partnership. Ralph hnd been with the company since he was 14 years old. He had run the old drills for so many years that they were almost extensions of him. Some of the machinists were like family.
But Harvey wanted to move out the old machines, farm out the manufacturing, and turn Nageldinger into an assembly operation. He wanted to begin the company's first advertising campaign in trade magazines, expand the sales operation from the New York tri-state area into a national dealership network, and abandon industrial applications of regulators and compressors for a more lucrative market.
It took patience and painful compromise to mesh the two regimes. "At first I held Harvey back from spending money," says Ralph. "Money was very tight. But I finally thought to myself, 'The kid must be right, we have to progress. We're not going anywhere with my way of thinking.' He used to harp on me to modernize everything. I couldn't take that. The old ways were still with me."
"With my father," says Harvey, "it was one step at a time. Certain decisions that I made he was monitoring, and fortunately a lot of them were the right ones. His confidence in me grew to the point where, now, whatever I do is okay with him."
Ralph and Harvey's first task in the summer of 1978 was to reach $20,000 in sales per month. "That was our breakeven point," says Harvey. "We had to struggle. Sometimes we had to extend the month for a day or two to make it."
The Nageldinger staff was small. Harvey worked in the front office with the bookkeeper, Frances Mathesius, 63, who had been there since she was 19. Ralph still worked in the back as foreman for the four remaining machinists and the men in shipping, including Alan Goldstein, 36, and Tom Riccinto, 25, his two sons-in-law.
In Harvey's first three months, he talked to dealers to determine where the growth was for regulators and compressed gas. It was in the home-care respiratory equipment industry. Congressional concern in the 1970s over rising Medicare hospital costs was leading to increased eligibility for home-care benefits. Doctors advocated such home-care equipment to hasten their patients' return to normal living. Harvey planned to get in on the ground floor of this new market.
Harvey began to push medical applications of regulators and oxygen systems that Nageldinger was making, and he sought vendors to supply the parts for nasal cannulae, oxygen concentrators, and resuscitation units to be assembled and labeled with the company name.
"I told my father, 'We've got to go to medical supplies, to turn this company around,' " says Harvey. "We had been the sundry house of the compressed-gas industry for the New York area. My new push was to become known to dealers as the total source for respiratory equipment."
The move took reorganization. Harvey felt his only choice was to persuade his father to farm out the manufacturing and turn Nageldinger into an assembly plant. "I said to myself, 'There ain't no way those old guys and those old machines can produce what I can sell."
The decision to shut down manufacturing and let the machinists go was difficult for Ralph, even though some of them were past retirement age. The machinists' unions provided some compensation, but Lou Moss had never established pension programs for his employees. "It was like letting go of a child," says Ralph. "It was heartbreaking, but I realized it had to be."
In 1978, Harvey set out to persuade his vendors to, as he puts it, "roll the dice with me." By 1979, he had a new line ready for his sales representatives and dealers. He says, "I would schlepp into their offices with my new samples, and they would say, 'Is this the Nageldinger that used to bring things in plywood boxes?' I had streamlined everything for the medical market. There was more chrome on the equipment. It was a pleasant shock for them."
It didn't take much persuading to retain the support of the Nageldinger suppliers and sales representatives. Many had been with the company since the first Mosses had taken over the company. Their trust in the family was hard to shake.
Says Mark Chudnow of Chudnow Manufacturing Co. in Oceanside, N.Y., "My father worked with old Morris Moss [Harvey's grandfather] back in 1921. Lou and I would pal around when we were kids. Ralph is like a brother to me. They're family."
Bill Fraser, of Harwil Corp., in Norwalk, Conn., has been an independent sales representative for Nageldinger for 15 years. Fraser was exhilarated by Harvey's marketing plans. Harvey always had innovative ideas, says Fraser, but "now he's in a position to implement them. Our repeat business has grown since Harvey came in, and we've increased our market share."
Sales doubled in 1979 from the previous year, to $740,000, which convinced Harvey's vendors, sales representatives, and, most importantly, his father, that Harvey was right: Medical was the way to go.
By 1980, Nageldinger had halted all manufacturing, doubled the number of vendors to six, and increased its independent sales force from 1 local representative to 24 nationwide. With manufacturing phased out, Harvey realized that his father no longer fit in.
"It became apparent that, given the direction I was taking the business, we were going to outgrow my father," says Harvey. "It was important to me to make sure that when my father was ready to retire we could afford to retire him in a way that he never dreamed possible for us. That really was a driving force for me emotionally in taking the company to where it is today. Even above making money. I don't know if my father understands that.
"But without his groundwork, the reputation of Nageldinger, the years that we have been in the metropolitan New York area, which still is our foundation, without that to build upon, it would have been impossible for me or anybody else to bring Nageldinger to where it is today. For that reason, it was apparent to me that we had to take care of my father."
Ralph was prepared for the transition. He had given his blessing to each new step since Harvey's arrival. He was confident of the company's direction and pleased with his son's accomplishments. His health had been failing for several years. He was ready to retire. "I always knew that Harvey was going to take over, and I was going to step out," says Ralph, adding, "After 43 years, enough is enough."
Since 1980, Harvey has hired a national sales manager, Dan Etzold, 35, to expand and train the independent sales foree. A national network of dealerships has been established, now totaling 1,800. Sales rose 100% in each of Harvey's first four years.
Ralph retired in January at age 61 but left enough relatives behind to preserve Nageldinger as a family business. His daughter Sonia Riccinto, 25, was hired in 1980 to run the new computer operation. His son-in-law Tom was promoted to purchasing manager last December. His other son-in-law, Alan, now oversees regulator assembly.
And then there is Harvey, who, despite his relentless march into the future, guards tradition by adding the motto "a century of progress" to every new product catalog that rolls off the presses.