A brutal neighborhood and a sluggish industry haven't kept Ed Alago down.
Ed Alago drives his white Cadillac through the refuse-lined streets of Brooklyn's Williamsburg section, a loveless stretch of graffiti-covered concrete that was once his home and is now the location of his company. Maneuvering around potholes and shards of glass, Alago describes a typical business day.
"Not too long ago, this punk broke into my Caddy.I keep it parked right at the entrance of my business, where I can keep an eye on it, and he tried to strip it in broad daylight," says Alago, his raspy voice rising in anger. "Angel, one of my guys, and me chased him down the street. I pulled my gun on him, and we threw him into the car. At first he wasn't very cooperative, but Angel gave him a few raps on the head with a pipe, and that settled him down. I knew if I just handed him over to the police, some bleeding-heart judge would let him go and he'd be back.
"So I decided to give him a little lesson. First I took the clip out of my gun. Then I shoved him into my office chair, put the gun to his head, and started to squeeze the trigger -- slowly. I screamed at him: 'See this gun? I'm gonna blow your goddamn brains all over this office!' Then . . . click." Alago chuckles. "He never bothered me again."
This is not Silicon Valley.
"We have lots of junkies and robberies around here, and many homicides as well," says Nelson Arroyo, a detective who has been with the New York City Police Department for 15 years. Arroyo, whose beat once covered the neighborhood where Alago's company is located, knows of the incident with the empty gun. Alago-style justice, he says, is not uncommon in this part of the world. "If you show fear or weakness, you get victimized. A lot of businesspeople have moved out, but Eddie is from the neighborhood. He knows the score, and he's a survivor. He lets people know that they can't mess with him and get away with it. No one is going to make him move his company."
Alago, 42 and Puerto Rican-born, founded Alago Sales and Manufacturing Corp. in 1978 out of a seedy Brooklyn storefront. He and his partners, both family friends, had little knowledge of business, no bank loans, and no help from the Small Business Administration. They did have $10,000 in cash. They also had a machine invented and patented by Alago that could cut "panels" -- pieces of mattress fabric -- faster, easier, and cheaper than anything else on the market.
Today, the company is selling its panelcutting machines nationwide and in Saudi Arabia, Singapore, Venezuela, and Puerto Rico. Sales reached $370,000 in 1983, and they are expected to at least double this year. In the United States, where the ethic of upward mobility remains strong, such a rags-to-incipient-riches tale by itself is nothing new. But while many entrepreneurs begin their training in business school, Ed Alago began his where he ultimately chose to stay: on the mean streets of New York.
"I didn't have any background in business or engineering when I started this company," says Alago, "but I knew that the big fish eat the little fish." As a teenager, he belonged to a Brooklyn street gang, and he bears the scars on his wrists and eyebrows from rumbles and knife fights of hot summers past. A short, swarthy man with a full mustache and hard brown eyes, he seems tightly wound, as if about to lash out at any moment."He's the kind of boss you want to keep happy," says Jose "Papo" Torres, 22, a welder employed by Alago. "He can get pretty mad."
Alago was honorably discharged from the Marines in 1962. He thought of reenlisting to fight in Vietnam, but his wife persuaded him to stay home with her and their three daughters. After a series of dead-end jobs in mills and factories, he landed a position in 1965 as head cutter at C.M.C. Sleeper Products Inc., a local mattress manufacturer.G.M.C. managers noticed Alago's knack with machines and his willingness to work hard, and moved him up to supervisor of the company's cutting and sewing operations. During his tenure as supervisor, engineering ideas that had been percolating in his mind for years began to surface and take shape.
"Cutting machines are bulky," he explains. "It occurred to me that a simpler, faster machine could be built. For instance, instead of having separate rollers that feed the material and separate knives that cut it, why not make a single unit that can perform both functions at the same time? I made some sketches of my ideas, and started working in the basement of my tenement, taking apart sewing and laundry machines, using automobile parts, whatever I could get my hands on."
Working nights and weekends, Alago put together a mock-up at home, and later he built a prototype that G.M.C. allowed him to demonstrate on company space. He invited bedding executives to view the machine in operation, and word quickly spread in the industry of a remarkably efficient new machine created by an unknown engineering whiz. Orders for the machines, which cost about $14,000 each, started to come in. "My aunt's brother-in-law got excited," recalls Alago," and he said we should form a corporation to manufacture and sell my machine. He was a shoe salesman, and I knew nothing about running a company. But I figured, hey, it's worth a try. He put up ten grand. I put up my patent."
The pair brought another friend into the company as well. But as sales picked up, Alago felt the urge to take total control over the invention he still calls "my baby." He bought out both partners in 1979, and in 1982 moved to 3,000 square feet of shop space in Williamsburg, where he has dug in his heels and stayed. "Williamsburg is a rough section, no question about that," says Mike Littmann, director of marketing for the Brooklyn Chamber of Commerce. "But the rent and the taxes are low, and that's a major incentive for a small business to stay."
The difficulties presented by his location aren't the only obstacles Alago has had to overcome. Largely dependent on the fortunes of the housing industry, the $1.5-billion wholesale bedding industry is expected to benefit from the economic recovery and grow this year by about 14%. But the industry's long-term growth is sluggish, and the market both for mattresses and the machines that make them is easily saturated. The panel-cutting business, a tiny corner of the industry, is made up of fewer than a dozen companies, most of them small.
"Bedding is a very mature and competitive industry," says Nancy Butler, editor of Bedding magazine. "It has never been considered a growth industry. It's rare for an entrepreneur to look at the industry and say, 'Hey, wow, I'm getting into this business!' It's a constant market-share fight, with everyone struggling for a piece of the same size pie."
Alago has carved out his piece primarily through imaginative engineering. "This ain't high tech, but the man's a genius anyway," declares G.M.C. vice-president Bruce Gelbard, a fast-talking New Yorker whose family has been in the mattress business for generations. "Eddie's [panel-cutting] machine is cheaper, has less breakdowns, and takes up, jeez, maybe eight times less space than other cutting machines." Gelbard raps his knuckles on the surface of his desk. "Eddie has done okay for himself, knock on Formica. We were proud to nurture him along."
