I ELLIS ISLAND
I was 12 when my father met me at Ellis Island. I made the trip alone, in steerage. My mother died right after I was born, in 1907, and my father left Italy a few months later, so I didn't really know him at all. The only way I had of recognizing him was a photo I carried with me from Sicily. He met me at the boat carrying a pair of knickers -- I'll never forget this -- and insisted right away that I put them on. I was wearing these tight pants with three buttons down the front, and I said to him, forget it, I'm not going around looking like some Arab. In school, you see, we'd read that Arabs wore knickers, all the way down to their ankles. He told me everyone would laugh at me in those tight pants. Well, I said, I'm sorry, but I'm not wearing any knickers. Put them on, he said. So I put them on -- but over my other pants, you know. Then we went home.
In the four decades from 1880 to 1920, more than 26 million immigrants made the voyage from the Old World to the New. They came from small towns and farms, factories and urban ghettos; they came from Ireland and from Poland, from Russia, Rumania, and a dozen other sovereign states. They came from Italy -- more than 2 million of them in the years spanning 1901 to 1910 alone. Mostly poor and ill-educated, they came to an America long on possibilities and short on guarantees.
One of these immigrants was Joseph Pellegrino, age 12, a native of Mastretta, Sicily. Pellegrino's father, a stonecutter by trade, had himself emigrated to the United States in 1908, finding work on the Rockefeller estate near the banks of the Hudson River. When he could afford it, he sent for his only child, meeting him at Ellis Island and taking him home to a third-floor walk-up in lower Manhattan.
Young Joseph spoke no English and left school for good in the eighth grade. With few skills to fall back on, he soon found his calling as a hustler and street vendor, selling everything from shopping bags and shoeshine stands to Coney Island frozen custard. By the time he reached his early twenties, his father was dead, a victim of lung disease. Joseph scraped together $12,000 in savings from a variety of enterprises and sank it into a grocery-store partnership with two fellow immigrants from Mastretta.
The business thus established was a paradigm of how commerce evolved in the ethnic pockets of urban America circa the 1920s: neighbor to neighbor, bloodline to bloodline, immigrant to immigrant. But Joseph Pellegrino's destiny far transcended that of the prototypical small-time immigrant entrepreneur. Today, at age 79, "JP" is the incumbent -- and as yet unretired -- board chairman of the Prince Co., an enterprise established by fellow Sicilians and built by Pellegrino, with the help of family and colleagues, into the largest independently owned manufacturing company of its kind in the United States.
Independence, an idea much on the nation's mind this July, has meaning for companies as well as countries. From the neighborhood grocery to today's $200-million-a-year business, Pellegrino and Prince have faced virtually every opportunity -- and obstacle -- a man and a company can confront. In simple terms, theirs is a classic American success story; yet little of their story translates into easy simplicities.Filled with catastrophic setback and vicious ethnic rivalry, it dramatizes the effects of old loyalties, new opportunities, and intergenerational conflict on a business and a family coming of age in twentieth-century America.
It was just a coincidence, but the uncle who raised me [in Sicily] happened to be in the macaroni business, that's how I knew something about it. I worked for him. At that time they made macaroni with these big wooden blocks. You'd take a stick and put the flour and water in there, mix it by hand, then you'd use the stick to knead the dough back and forth, back and forth. Then you'd cut it, roll it, cover it with wet cloth, push it through a screw press, then you'd take it out in the sun to dry. Drying is always the tricky part. You got to dry it and sweat it, dry it and sweat it, over and over again. See, if you dry the macaroni too quick, the moisture locks inside and you get case hardening, and when macaroni gets case-hardened it breaks all to hell when you go to cook it. So you got to sweat and dry, sweat and dry. The exact same principle applies today.
When Joe Pellegrino met her in 1928, Lena Realmuto was already working for her own father, Pietro, co-founder and president of Roman Macaroni Co. Started in 1894, Realmuto's company had grown to $300,000 in annual sales by the 1920s and was dominating the Manhattan pasta market. Lena, the oldest of five girls (all seven brothers had died prematurely), was a graduate of Columbia University who had put her college degree to work keeping the books and tracking the accounts for her father and uncle. Love blossomed between Lena and Joe: they married on September 21, 1932. So did the bond of respect and affection between Pietro and his son-in-law. Invited into the family business, Joe put up $12,500 for an equity position and commissioned salesman's beat. In six months, he was selling 50% of the plant's production. Within a year, he was running both the family and the company.
"[Pietro] took a heart attack a year after we married," he recalls, fighting back tears more than 50 years later. "He called the family into his bedroom and made one of the girls -- Mary I think it was -- bring him a box of kitchen matches. He sits up in bed and takes seven matches and breaks them each one at a time. 'See that?' he says. 'They break easy.' Then he takes seven more matches and says, 'See what happens now I hold them together? They don't break.' Then he turns to me and makes me promise him I'll take care of the family as long as I live. We shake on it.
"He dies at seven the next morning. I call everyone together again and tell them, From this day forward there will never be another discussion of money in our house. My money, your money, it doesn't matter. Everything we've got, you girls get 10% each, I get 50%. Whatever you spend, I'll go out and earn. There was no argument. As a matter of fact, that's how my son Joseph wound up with four aunts living in his house."
In 1940, Joe bought Lena's uncle out of Roman and assumed sole responsibility for charting the company's course. The $125,000 it cost him left Roman strapped for cash, however, and in his need to cut the operating budget he made a terrible mistake. One of the line items he trimmed was insurance; a few months later, at a cocktail party in Yonkers, the Pellegrinos heard radio broadcaster Walter Winchell report a four-alarm fire at a macaroni plant in Long Island City. Staring at one another in horror, they leapt into their car and sped south toward the Triborough Bridge. As they pulled up onto the span, they could see the Roman plant ablaze and crumbling. Joe parked the car in the middle of the bridge and stared solemnly at the scene of the holocaust. Lena, he said finally, tears streaming down his cheeks, I'll never build another plant in New York. Then he got back into the car, drove to the fire, and convinced the fire chief to let him into the burning building so he could rescue the company records.
If Joe had harbored dreams of rebuilding at the same site, his dreams would soon have evaporated anyway. The plant fire burned for three days; before the ashes cooled, two creditors served him with summonses -- one less than the three that would have forced him into bankruptcy court. And while his friends in the industry phoned in their sympathies, grief didn't stop them from hiring away his salesmen or cutting off his supply lines. Underinsured, contemptuous of lawyers, and $120,000 in the hole, Joe persuaded his creditors to settle accounts for 40? on the dollar. Only one business, Rossotti Lithograph, his box supplier, refused to go along, saying they would be content to wait around for full payment. He appreciated the faith. But Rossotti was a name that would come back to haunt Joe Pellegrino when the scene of the drama moved to Lowell.
By 1940, Lowell, Mass., had become a city abandoned to, and by, its own history. Once the center of the American Industrial Revolution, her textile mills symbolized both the shift from agriculture to manufacturing and the exploitative excesses of unfettered capitalism. When textiles went south after World War I, the industrial infrastructure of the city collapsed under the combined weight of excess capacity and inadequate demand. By the late 1930s, 40% of the city was on relief, and a Democratic mayor was campaigning on promises to cut taxes and slash city spending.
Not everyone saw Lowell as a wasteland, however: in 1939, a vacant bleachery on the south side of town became the new headquarters for a growing macaroni company with roots in Boston's North End. Founded in 1912 by a trio of immigrant Sicilians -- Gaetano LaMarca, Michele Cantella, and Guiseppe Seminara -- the Prince Co. began as one of three small pasta manufacturers in the Italian enclave on the edge of Boston's waterfront. Twenty-seven years later, having outgrown both its Prince Street birth-place and a larger plant on nearby Commercial Street, the company needed even more room to expand. Lowell had a ready supply of surplus labor, and when the city offered a 300,000-square-foot facility for $10,000, the decision to pack up and move 23 miles north was easy.
More complicated from the standpoint of corporate growth, however, was the issue of management. For the three old friends from Villa Rosa were beginning to tax the limits of their expertise.
My father and his partners weren't really businessmen. The way it started, Mr. La Marca and Mr. Seminara used to have this bakery, see, and my father worked for them. At some point they decided to try the macaroni business, so they asked my father about it, because he'd had some experience [making macaroni] over in Italy. I think they agreed to put up $1,000 each -- only my father was $200 short, so he threw in a horse and cart of his, which is how he became the chief salesman. La Marca had the most education; he ran the company. Seminara was in charge of production. They must have been doing pretty well, because they borrowed $250,000 when they opened the [Commercial Street] plant, and you didn't get that kind of money from Yankee bankers in Boston on a handshake and a whim. On the other hand, I'm not sure they always got along with each other, either.
Two years after moving to Lowell, Prince was carrying a $300,000 debt load and losing $5,000 a month. Orders had fallen off sharply, relocation costs had somehow escalated from $50,000 to $200,000, and the company's principal lender, Union National Bank of Lowell, was making noises about calling in its notes. Aware through industry contacts that Prince was hurting, Pellegrino nevertheless hoped it could solve some of his problems, notably the difficulty of finding reliable supply sources in the New York market. When he turned up in Lowell looking for help, however, he found his supposed saviors in worse shape than he was.
For starters, a tour of the plant convinced him that the product wasn't selling because it wasn't being dried properly (sweat and dry, sweat and dry). What he saw of the front office persuaded him that a firmer hand on the management wheel would do wonders for the balance sheet. Sizing up the situation, he proposed a new partnership. He would make the business profitable in a month, he promised; if successful, he would get one-quarter of Prince's stock for $50,000 -- the last of the insurance money -- plus a voting-trust agreement giving him effective control over all production and sales decisions. Then he went back to New York.
His financial advisers told him he was crazy. Joe, they said, a company losing five grand a month in a swell town like Lowell hardly looks like the vehicle for building the next great American industrial fortune. But Joe dismissed their caution, for reasons that to this day remain hazy even to him. Possibly his other options were not all that palatable. Possibly his advisers were not all immigrant Sicilians. Whatever the possibilities, the reality was that the (now) four macaroni makers shook hands and became partners. Joe had an apartment built on the back of the plant -- his home, as it happened, for the next three and a half years. His wife got a note saying, "Dear Lena, Here is my new address. Visiting hours are once a month; come Friday, leave Sunday. Love, Joe." In one month, the new general manager posted a $900 profit.
The first thing I did was change the product. Immediately. We switched the [drying] racks back to 66 sticks from 44. That helped. Also, I cleaned up the place, because people don't feel good unless the place looks good and, besides, I was living there. What else? Oh, I said we had to use only number one semolina -- no bag of this, bag of that -- because I wanted to make the best product in the world, not the cheapest. There really wasn't much magic to it. I knew we couldn't sit around and wait for problems to fix themselves, because guys like La Rosa were coming in from New York and taking our whole market away. When I got to Lowell, La Rosa was selling 30,000 cases a week in New England. Prince was selling maybe 500 cases. The reason I knew about La Rosa, I traded macaroni with the tollbooth collectors in exchange for the information.
The company's turnaround came none too soon. La Rosa's presence in Prince's backyard was symptomatic of a changing industry that was fast losing whatever respect it had once had for turf rights or politesse. The business had matured in the era stretching from the Crash of 1929 to the end of World War II: first more Americans (including Americans of other-than-Italian origin) discovered pasta's versatility; then the armed forces discovered its portability. Moreover, the growing market stimulated the innate competitiveness of the immigrant entrepreneurs, many of whom held sharp opinions on such matters as, say, the relative worth of Sicilians versus Genoans. Most of these manufacturers knew each other personally, and most of them took threats to their market share the same way. "It was the Hatfields against the McCoys," remembers the offspring of one feuding family. "These guys all had big egos, and they all absolutely hated one another. They didn't come in trying to 'create a market presence.' They came in trying to destroy yours."
The instinct to wipe one another out took its toll. In 1904, the National Macaroni Association's membership totaled 475; by 1948, the number was down to 250, with a few well-known names -- La Rosa, Ronzoni, Mueller, Prince -- demonstrating enough market muscle to qualify as truly regional companies. Even on an expanded scale, however, the feelings stayed personal. One day early in his tenure at Prince, standing in Martignett's, a North End groceria he would later glorify with his "Wednesday is Prince Spaghetti Day" television commercial, Joe Pellegrino met Angelo La Rosa, his most visible nemesis. Pellegrino was in Martignetti's to beg for orders, La Rosa to collect a fat check. While the two men were politely deferential, sarcasm flowed thicker than bolognese sauce. Finally, La Rosa said, Don't worry, Mr. Pellegrino. You're a nice young fellow, we leave you the crumbs. Joe walked outside and, looking up at the sky, said, Lord, help me exterminate this man from this spot. Six or seven years later, at a dinner in his honor, Pellegrino sent a bottle of champagne over to La Rosa from his seat at the head table. What's this for? asked La Rosa. You destroyed me in Boston.
That's right, and you inspired me, said Joe Pellegrino. Enjoy the champagne.
III PRINCE SPAGHETTI DAY
I didn't see much of my father growing up; he was always on the road. But I can understand that. I really believe his true love -- much as he adored my mother, me, my aunts, whoever -- was [this company]. It didn't matter if the business was wildly profitable or successful -- it was fun to him, and he approached it with the energy of 10 men. If I had to list his other strengths, I'd say they were an absolute confidence in everything he did, plus the ability to surround himself with loyal people who'd do whatever he told them to. If you asked me his greatest weaknesses, I'd say . . . the same damned three.
(Joseph Pellegrino II)
The family settled into a rambling brick house in the Shawsheen district of Andover, Mass., 15 miles from the factory. There were Joe and Lena, Lena's mother, the four unwed Realmuto sisters (all worked for Prince), and, born in 1939, an only child, young Joseph. Dominated by women, the household observed Old World tradition in deferring to its main provider and patriarch, but the son was born an American and soon showed more interest in the rituals and values of the New World. He ran with an assortment of neighborhood rat packs and dutifully attended parochial school. At 13, he applied successfully to Phillips Academy, the renowned preparatory school up the hill in Andover. Phillips was such a radical departure from the immigrant Catholic norm that a school nun took the boy aside and warned him that by going there he would risk living in eternal sin. He went anyway. "I didn't even know what a 'preppy' was, much less how one behaved," he noted many years later, "but I already had a sense of wanting to play in a wider world."
In Lowell, the father quickly widened his power base, buying out La Marca and Seminara and recruiting a management team molded by the stamp of his forceful personality. And although he lacked much appetite for the financial side of the business, Joe dealt straightforwardly with his bankers, especially Union National president Homer Bourgeois, whom he perceptively placed on his board of directors. Under Pellegrino's command, Prince truly took off, seeing sales grow from $5 million to $10 million between 1940 and 1950.
Most private companies take on the personalities of their CEOs; Prince certainly became a reflection of Joe Pellegrino. Both were aggressive, uncompromising, amusing, and constantly in the public eye. Joe himself could not sit still. He ran over to Italy to shop for premium offers: he and Lena carted back wine pitchers, spaghetti forks, cheese graters, and, on one memorable trip, 100,000 medals blessed by Pope John XXIII. He invented a new product: square spaghetti, of which he sold 6 million pounds. He threw the largest spaghetti supper in history: 26,500 people twirling pasta with luminaries like Ted Williams, Rocky Marciano, and a young TV personality named Johnny Carson. In the mid-1950s, he committed a sizable chunk of Prince's advertising budget to local television in Boston, not because, as he says, "even though I didn't own a set, I heard everybody talking Monday about the Sunday-night movie, so I knew that was the way to go." He hobnobbed with New England politicians, met Harry Truman at a White House reception, and generally made his presence felt.
"If he were a woman," Lena, his wife of 54 years, insists, "he'd be the biggest prostitute in the world, because he never says no to anyone."
It wasn't all fun and games, though. In the mid-50s, the spaghetti industry's version of a speakeasy shootout erupted between Prince and Ronzoni, another symptom of the market warfare heating up in the macaroni business. This time the catalyst was Rossotti, the box-maker who had once supplied the Roman Macaroni Co. in New York. For young Joseph, an only son just coming to awareness of what the family business was all about, the lesson proved instructive -- albeit far different from the one his father intended.
Rossotti and I got into an argument over some [printing] plates he didn't want to give us. I told him I never do business with him again. When I got to Prince, he was their sole supplier. Rossotti tells his salesman to stay away, leave Pellegrino alone, he'll ruin the business in six months anyway.
Now, my own ad guy happens to know Rossotti's salesman [Holbrook], so after I design my own package, I call Holbrook in and tell him to figure on an order of 6 million boxes. What does Rossotti do? He fires Holbrook and goes to Ronzoni, says Joe Pellegrino copied your design but we won't print the order because it'd be unfair competition. So Ronzoni sues me for $500,000. But's it's all really a setup, see? I know, because I buy a container company of my own and hire Holbrook as my salesman. Guess what Holbrook has? A complete set of interoffice memos between Rossotti and Ronzoni, laying out the whole scenario of how they plan to set me up. I get the papers, stick Holbrook in a hotel room, and tell my son I'm taking him out of school for a day, because he'll see something he'll never forget.
We go to court. The judge listens to [opening arguments] and calls us into his chambers. You're two reliable, upstanding businessmen, he says, let's settle it here, we shouldn't have to go back out there. I say, Your Honor, I'm here to negotiate, not litigate. But Ronzoni won't back down. He gets very cocky, very aggressive. Says I gotta do this, I gotta do that. I say, listen Mr. Ronzoni, you haven't won anything here, I don't gotta do a thing. The problem is, he's from Genoa and I'm from Sicily, and the north always has this animosity for the south. I don't know what it is -- they think we're a bad element or something, uneducated. It's crazy.
Anyway, they insist on going to trial, and Rossotti takes the stand and starts lying like a rug. They have no idea we've got the documents. Or Holbrook in a hotel room. We finally bring in Holbrook to testify, and it's all over the minute he opens his mouth. As soon as he finished, I put my family on a boat for Italy, because I knew we couldn't lose. Three days out to sea, we get confirmation of the judge's verdict.Why did I want my son along? So he could see how a man risks everything when he gets too greedy.
Cleghorn Container Co., the carton manufacturer that Pellegrino purchased, was one of several small -- and struggling -- concerns that Pellegrino would bring under the Prince corporate umbrella during the '50s and '60s. In 1956, Joe hired Armond Giarrusso, a former Internal Revenue Service man whose parents had come over from Italy and gone to work in the Lowell textile mills. Together the two men began traveling the country, looking for acquisition targets that might expand Prince's distribution channels or vertically integrate its supply lines. Relying on their own industry intelligence, they worked alone: no investment bankers, no high-priced analysts drafting colored charts.
"The first month I was here," says Giarrusso, "I was on the road 22 days. We went to St. Louis first, where we tried to buy the old Viviano Macaroni Co. After that came Roselli Foods of New Jersey, the first successful deal we made. All these negotiations were owner-to-owner and face-to-face. If JP didn't get his point across the first time, he kept presevering, but he left all the accounting and tax aspects to me. We never even took an attorney with us."
The string of acquisitions made by Prince during this era -- Meisenzahl Macaroni in Rochester, N.Y.; Cardinale Macaroni in Brooklyn, N.Y.; Roma Macaroni in Chicago; Michigan Macaroni, a Detroit franchisor; and others -- represented the company's first crude attempts to push its name beyond New England and establish it in the national marketplace. The results of this strategy were mixed at best. Meisenzahl's market share, for instance, dwindled significantly once Prince converted the product to its own label, a testament to the tenacity of regional brand loyalty. Then, too, many of the deals were paid for partly with Prince stock, which created a growing constituency of shareholders among the acquired companies' owners. Furthermore, because these companies had their own arcane management and accounting procedures, they strained the managerial capacity of the home office almost to the breaking point.
Prince was a family business that had suddenly adopted all kinds of new family, and it was not always clear who was minding the kids. A 1959 Boston newspaper headline noted: "Prince Macaroni Co. Still a One-Man Project," but a one-man project with 22 stepchildren and annual revenues of $22 million was a project in some ways imperiled, especially in a $450-million industry that was now down to 125 players and shrinking. Brilliant as he was, Joe knew product and people better than he knew numbers and projections. And for Prince, it was management, not matchsticks, that now demanded his commitment.
The son knew that better than anyone.
My father went through Ellis Island, I went through the U.S. Marines. Nothing I've experienced -- not Andover, not Harvard -- did quite as much to change my perspective [on human behavior]. When I came into the company, it was ragtime down here. There were no systems. There was no management sophistication. There was no "acquisition strategy." There were acquisitions, period -- and these were mostly failing companies that were short on management and long on debt. The worse thing was, nobody ever said no to my father. Board meetings were a bunch of guys sitting around a saloon, waiting to see who'd draw his six-shooter first. I mean, it was real chaos. Here I was coming out of an organization that taught sixth-grade dropouts how to land a mortar round 500 yards away without blowing up their own platoon, and into another one where everyone was underpaid, demoralized, and looking to one guy to issue every order. Having to take a pay cut on top of that was an absolute joke.
Prepped at Andover and polished at Harvard (he even picked up some business experience managing the fiscal affairs of the Harvard Lampoon), young Joe parlayed an ROTC commission into a captain's rank with the Second Marine Division. Married to college sweetheart Anne Benedetti, however, and with a child of his own to think about, he mustered out and joined the company. His father hugged him and said it was the happiest day of his life. Then he put his kid right where he thought he belonged: at the bottom.
"I owe my son a good home and a good education," the father liked to say. "I never said I owe him a living." The son took a look at the chaos around him and thought, what the hell, only from the bottom can this mess be sorted out anyway. It was the beginning of an unusual working relationship.
The son worked in the Lowell plant (and took accounting and management courses by night) while the father relentlessly pushed Prince forward. Joe did deals from Montreal to Michigan, expanding his pasta empire and the company into such diverse areas as cookies and chemical pumps. From the early '50s on, the company never failed to pay a dividend to its shareholders, some of whom were on hand for 1955's year-end bonanza, a 50-1 stock split.
Still, Prince's real performance was not easily measured. As late as the mid-'60s, the only internal reports were being generated by Sal Cantella, the treasurer (and son of company co-founder Michele Cantella), and they seldom circulated beyond Joe Pellegrino's desk, certainly not beyond the inner circle of family members who constituted a kind of druidic sect within the management hierarchy. For the son, who graduated to the title of plant manager within 18 months, such secrecy seemed outmoded at best and dangerous at worst. Without the raw data, he wondered, how could responsibility be fixed for bad decisions or incentives provided for good ones? Who cared about "doing better" when nobody could point out where you'd gone wrong in the first place? Tending to his own garden first, he established a system of in-plant controls to measure variables like cost per pound and number of pounds produced per manhour; companywide, however, such measurements were simply nonexistent.
"These were nice people who were very loyal to my father," says the son, speaking of the management generation that preceded him, "but they were also people who were highly suspicious of sharing any information with 'outsiders.' That might've worked when the 'outsiders' could be shuttled off into the plant or the sales office, but when they took over the financial side and started opening up the books, it really caused some antagonism here."
Prince had other problems to tackle as well. Many of its acquisitions were small, family-run concerns with antiquated plants, serious debt problems, and slim management pickings; as the son later put it, "The combination of lousy assets, very small brands, and nonexistent management brought no synergy to the party at all." The old guard in Lowell wasn't eager to move away and run these acquisitions, and Joe was reluctant to displace old friends. Drafted on one rescue mission, his son headed for Michigan and promptly took over a dilapidated, money-losing macaroni plant sitting squarely in the middle of Detroit's riot zone; he eventually folded the business into a far more viable acquisition, Vivison Macaroni, thereby creating Prince Macaroni of Michigan Inc., to this day the company's major link in the Midwest.
Returning to Lowell, the son began to challenge some of the old man's assumptions. Like his father a generation before him, he decided to put Prince's money where his own mouth was, to give himself a goal. I can make the company its first $1-million profit ever, said the firm's newly designated executive vice-president, but if I do, I want a free hand to spread that cash around as I see fit. Figuring he had little to lose, the father agreed. Largely on the strength of Joe II's efforts to start packing private-label products, Prince's sales rose from $22 million to $27 million in 1969, with pretax profits soaring to a little more than $1 million; a year later, the same numbers climbed to $29 million and $1.3 million, respectively. Joe II dipped into this earnings pool to reward key executives. For the first time ever, incentive bonuses higher than $1,000 (as high, indeed, as $10,000) were ladled out, a harbinger of things to come.
For this was a time of transition for Prince, a step away from a business with roots in the Old World toward a business firmly anchored in the New. The father had once insisted on exposing his son to the lesson of the Ronzoni trial, and now that lesson seemed both palpable and inescapable. But the lesson wasn't the risks of greed, young Joe said later. It was that a businessman could never afford to take things personally.
Listen, I tell him, you're gonna have trouble with your father. I'm a self-made man, I'm accustomed to telling people to do this, do that. Now you come in here, I'm going through a change of life, people won't know who to listen to. I can learn, I tell him, I'll retrain myself, but you gotta understand this change I'm going through too, OK? Now give me a report card so I know how I'm doing. He gives me one, it's 95. Great, I said, I'm very happy with 95. Just don't go looking for the other 5%, because you'll never get it from me.
My line to my father is the same one I expect my employees to give me: you hired me to do a job, you may not like the way I go about doing it, but if I tell you what the results should be and I achieve them, then you can keep your mouth shut. If I don't, shame on me. And I damn well better succeed more than I fail. Of course, with the father-son thing, it's not quite that simple. Sometimes we've had to agree just to stay out of each other's way. I'd say most of my time [during the management transition] was spent being a buffer between the chairman of the board and the people in this company who were trying to do their jobs. And I'm not sure that's over, either.
As families, companies, and industries change over time, so do the places they inhabit. For much of the century, Lowell served as a commanding symbol of American industrial failure, a monument to the transitory nature of corporate commitment and civic prosperity. The shadows cast over the city by the brittle brick shells of the textile mills were deep and long, softened only a bit by the growth of the region's embryonic electronics industry. But as the wheel of political leadership turned over from one generation to another, so did Lowell's resolve to reverse the course of its own decline. In 1970, this resolve crystallized in a congressional act designating Lowell the nation's first Urban Cultural National Park. Pooling federal dollars and private initiative, the legislative effort led to an ambitious rebuilding program that reclaimed whole chunks of Lowell's rich heritage and put new faces -- both commercial and historical -- on many old mill sites.
Like Lowell, Prince drew upon its history for the wherewithal to move forward. No longer strictly a macaroni company, it continued its course of diversification through acquisition; but pasta remained its principal focus. In one celebrated ad campaign of the late '60s, for instance -- the Clio Award-winning "Wednesday is Prince Spaghetti Day" campaign -- the company cleverly traded on its ethnic Boston roots through the image of Antony, a winsome North End waif who hurries home each Wednesday to the family dinner table. Not only did the message help make Prince a household word, it further illuminated the fractious nature of the industry itself: JP had originally proposed the "Wednesday" slogan for the macaroni manufacturers' trade association. His suspicious -- and contentious -- colleagues rejected it out of hand.
The leadership wheel at Prince turned too. In 1973, JP told his son that he was forwarding his nomination as the company's next president to the board of directors.
The son could not claim to be shocked by the news -- "I always knew I'd wind up running the company if I wasn't a complete idiot," he later commented -- nor was he intimidated by the responsibility that went with it. Yet he had a keen appreciation of the differences between himself and his father, and deep down he brooded about the control issue. Could Prince adapt to a more "professional" style of management, he wondered, and would the old man allow it in the first place? His father was so many things that he was not: volatile, mercurial, instinctive, impulsive, the type of man who cemented lifetime contracts with a handshake and was not above shaking his fist at the sky and begging the gods to "exterminate" his competitors; in short -- and literally -- an immigrant Italian.
Not so the son. He was, he said, "an American, period," both by birthright and by proclivity. A pessimist by nature ("I wake up in the morning, and everything else that happens is gravy"), he fretted over charts and numbers and felt strongly that company growth could be sustained only through sharp decentralization of authority. As a chief executive, he believed in the notion of strong, independent managers running strong, independent company divisions, and in cultivating a group of nonfamily advisers who weren't afraid to second-guess his judgment. As a family man with three growing children of his own, moreover, he made life outside the office a high priority. When he wasn't managing the company, he fished, skied, golfed, antiqued, and went to his sons' hockey games. These were never his father's priorities; for him, the son felt, management was the vocation and crisis management the avocation.
Reconciling these adversarial styles was a monumental challenge for two men who had never been particularly close. At times they clashed emotionally over management strategy, at others they maintained whatever respectful distance they could in a company with thin walls and small corridors. One of the most difficult times came in 1980, when serious merger talks began with the William Underwood Co. Although it was never consummated, the proposed deal struck Joe as an excellent opportunity to put a price tag on the old family business; for JP, it was a troublesome expression of his son's independent bent and a lesson in the mortality of his own dream.
Then, too, there was the matter of those report cards.
The Aunt Millie's [Sauces Inc.] acquisition, in 1984, was a big deal for us, by far the most money we'd spent to pick up another company. Still, we'd analyzed the deal from every possible angle, and we knew we could fold their manufacturing operation into ours without a hitch. My father was dead set against it. He said we'd be spending millions of dollars on a leveraged buyout that could jeopardize the entire company and that he simply wouldn't allow it. Fine, I said, but I'm taking this to the board; we'll decide it there.
We had a real knock-down-drag-out fight about it. When the board approved the deal -- on a split vote -- he got really upset. I'm gonna write you a letter, he said, telling how you ruined this company. Four days later -- four days! -- I got a call from the same people who engineered the deal saying they had another offer and would guarantee us a $4-million profit if they could take Aunt Millie's back. Thanks just the same, I said, but let me tell you something, you just made my day. Then I walked into the chairman's office. Remember the letter you were going to write me about running the business? I said. Well, make sure when you get around to writing it that you mention a brand-new option: keeping Aunt Millie's, or putting four million bucks in the bank.
He never wrote the letter, and despite what he may think, I never considered "giving him a grade," either. I mean, what the hell do you give him on something like this? Zero for being a pain in the ass, or 100 for letting you do it in the first place?
While father and son groped for a way to accommodate each other, their company faced a competitive future as far removed from the era of immigrant warfare as modern Lowell was from turn-of-the-century Mastretta. The basic product image had changed radically: mundane old macaroni was now superchic pasta. So had the stakes of the game. In 1966, Hershey Foods Corp. bought San Giorgio Macaroni Inc., a brand strong in the mid-Atlantic states; San Giorgio became the first of several companies Hershey ultimately would consolidate into a major pasta division. In 1976, C.F. Mueller Co., another independent player, slipped into the portfolio of Foremost-McKesson Inc. (now McKesson Corp.), which later turned the egg-noodle maker over (for about $124 million) to CPC International Inc. In 1977, Pillsbury Co. joined the party with a takeover of Kansas City, Kans.-based American Beauty Macaroni Co., then bowed out by selling American Beauty to Hershey's in 1984. In 1982, The Coca-Cola Co. purchased Memphis-based Ronco Corp. and its Creamettes label, planning, as so many others had and would, to take a pasta line national; failing in that, it sold Ronco to Borden Inc. in 1984. Perhaps most telling of all, Ronzoni Corp., the old Pellegrino nemesis, fell to General Foods Corp. in 1984, after a buyout offer from Prince that was, says Joe, "substantially -- and I mean substantially -- more than what they got." (Joe's sources told him the Ronzoni family spurned Prince for fear they'd never be welcome in Lowell, a concern he labeled" old wounds and complete b.s.")
By the mid-1980s, Prince was thus one of the last two major independents in a market dominated by large, multilayered conglomerates. Four of them alone claimed half the $10-million domestic retail market (Prince, number five on the list, had a 1985 market share of 7.5%), and all were food-oriented companies deep in managerial talent and capital resources for the long haul. To industry analysts, moreover, the "long haul" increasingly meant any and all attempts to roll out a national pasta brand, a strategy sound by traditional marketing standards yet deeply suspect on the basis of consumer -- and corporate -- history. Millions would be spent trying, and still the effort proved futile. One industry insider called it "the same old battle on a whole new level," a relic of the marketplace's past and a blueprint for its future.
VI THIRD GENERATION
The business never really interested me. Actually, if you want to know the truth, it bored me so much that I would get up and walk away from the dinner table whenever anyone started talking about it. I wasn't real close to my [paternal] grandparents growing up, either, so I never knew much about Prince's history.Besides, everyone just seemed to assume that my brother J. J. would be the one who'd go into the company and wind up running it, and that totally turned me off. So it really blew my father away when I got out of college and walked into his office and asked for a job. You're kidding, he says. Well, I guess I wasn't, 'cause here I am.
(Carla A. Pellegrino)
You know, I really admire what my father has done with this company. I give my grandfather a lot of credit for what he did, too, because he never had an education to speak of, and he ran Prince during a time when there weren't any large markets to capture. From what I know, he was a very dominant, street-smart type of guy -- I guess you could even call him ruthless -- who had to learn whatever managerial skills he had through real-life avenues. J just think Dad's done a fantastic job building on what his father gave him. He's more educated than my grandfather, more analytical, more able to deal with different levels of people -- just a more complete manager, I'd say. He and I started talking about my coming to work for him when I was a sophomore at Harvard. It's something we both look forward to; we have a real good relationship. And I feel like I'd be a fool not to take advantage of the opportunity to run my own company. My brother and sister? Hey, if they both want to work for Prince, I welcome their participation -- and the competition.
(J. J. Pellegrino)
In his Lowell office last spring, Joseph Pellegrino II was explaining that the race to be first with a "national" product -- a goal ostensibly shared by his largest competitors -- is of minor importance to him.
"To tell you the truth," he said evenly, "I don't even care if Prince is in the pasta business in another 10 years. I mean, I'd like us to be, because I think we do that as well as anybody. And I'm sure we'll stay involved with food products. But our goal is to be a $1-billion company by the end of this century, and we'll plan our moves accordingly."
Having recently built an ultramodern, $11-million semolina mill (in partnership with an Italian firm), Prince seems unlikely to stop making macaroni anytime soon. To Joe, however, the younger managers now under him are as vital to the company welfare as any manufacturing facility. One of them, Paul Jardis, president of New Jersey-based Prince Foods canning division, was the first executive hired by Prince without prior consultation with JP. A refugee from Procter & Gamble Co., Jardis joined the company in 1974 and has overseen a rise in divisional sales from $5 million to $50 million. Another, Jack F. McLaughlin, left Container Corp. of America for Prince's packaging division in 1979, when sales were $12.5 million. Now president of the $24-million-a-year division, McLaughlin must walk the tricky line of satisfying Prince as a box supplier while satisfying the home office as an independent profit center. A third, executive vice-president for marketing and sales Marco Bonne, worked for both Mueller and General Foods before joining Prince in 1984. Chairman of the National Pastas Association's operations' side from 1981 to 1983, Bonne brought an insider's knowledge of production to an area in which Prince should -- and must -- excel at taking advantage of its size.
Compared with their counterparts of earlier eras, they are an odd lot. None is Italian. All worked for big companies. All put a premium on long-term strategy, divisional autonomy, decentralization of authority, and the profit motive.
"Personally," says Bonne, "I prefer the control factor big companies have, but around here there's no time to savor your victories. We can move awfully fast. If you're a control freak at Prince, you're dead."
"We're clearly going from being a manufacturing-driven company to a consumer-driven one," adds Jardis. "Joe understands this, and he's pretty much got the next generation of management on board now."
Pretty much. In June, the oldest male in the next generation of Pellegrinos, J.J., graduated from Harvard with a degree in economics and a firm five-year plan. He has told his father that he'll spend two years with a Wall Street investment house ("I'd like to specialize in food-industry mergers and acquisitions," he says), plus three more pursuing an M.B.A.; then, equipped with experience in marketing, finance, and management, he intends to come into the company and work toward a leadership position. Why all the steps in between?
"It's a natural evolution," he points out. "My grandfather didn't need a college education to do what he did. My father, on the other hand, almost had to have a B.A., but not an M.B.A. I need both, because the company requires more and better analytical skills."
Meanwhile, J.J.'s older sister, Carla, has already confounded the family by taking a job in Prince's personnel division. Bored with college academics ("It was like you talked about all these ideas without making anything happen," she says), she has found happiness in Prince's personnel department and can't wait to get on the board.
"J.J. and I are completely different people," she notes. "I don't like numbers, but I can relate real well to everyone from the truck drivers to the managers. My brother's just the opposite: sort of shy with people, real smart on the nuts and bolts. The funny thing is, my younger brother, Stephen, is probably the one who'll wind up running Prince, because he's an absolute genius at doing both."
Three children, Americans all, descendants of a dream that began in Mastretta and fed on the strength of its own independence. Whatever role they play in it, it is, says one Prince manager, a company with a future even more interesting than its past.
And a past more interesting than most.
Joseph Pellegrino sits in his Hallandale, Fla., home and sips a cup of plain hot water. At 79, his eyes are clear, his tongue sharp, his back as straight as a kitchen match. Lena occupies a wheelchair nearby, listening alertly to details to her husband's upcoming itinerary -- to Lowell for a directors' meeting, Costa Rica to check up on some private investments (Prince also has a large plant there), then Taiwan for talks on penetrating the Japanese market. Were Lena not ailing, he adds, they'd return to Italy one more time, but only as tourists. They are Americans now. This is where they live.
"I'd rather be dead here than alive anyplace else," he declares, gesturing furiously. "In America, you have opportunity. That's why the rest of the world wants to come here."
He reaches over and squeezes Lena's hand. There are, their smiles say, promises worth keeping.