Expansions: Credit Union


Corrections or additions?

These articles by Caroline Calogero and Barbara Fox were prepared for the July 3, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Life in the Fast Lane

A long term marriage dissolves. The relationship between

the partners has grown distant. They don’t need each other anymore.

The split up is not unusual, but their decision to continue to live

under the same roof and their subsequent signatures on a two-year

lease is.

The scenario sounds like a love affair gone bad, but it is actually

a corporate history gone modern. Former FMC employees Jonathan

Chun and Anatoly (Tony) Nemzer formed Alliance Technologies

from the remains of FMC’s in-house analytical chemistry lab.

Located in FMC’s facility on Route 1 North, Alliance Tech provides

analytical chemists and their corresponding expertise and equipment

for hire. As niche marketers focused on inorganic chemistry, they

support manufacturers of active oxidants such as hydrogen peroxide;

persulfates used in the semiconductor industry; lithium needed for

batteries and pharmaceutical intermediates; agricultural chemicals;

and cleaning products.

Chun describes the four labs the company owns as his big toolbox.

Rather more than a collection of beakers and Bunsen burners, the labs

have the capability to detect contaminants — which can prevent

a batch of chemicals from performing as expected — down to 10

parts per billion.

The company can do real time testing during the manufacturing process

for product analysis or to achieve optimization. Sophisticated computer

data evaluation is offered to provide a statistical depiction of chemical


There are machines for chromatography that separate mixtures of liquids

or gases to name and quantify their components, and for spectroscopy,

including an infrared microscope similar to those used in forensic

labs. The scope allows the identification of particles in microscopic

amounts. Chun jokes another corporate name for Alliance Technologies

could have been Purity R Us.

Chun, the author of a chapter on detergent analysis in a technical

manual, shows off a defractometer that measures the crystalline structure

of powders. He explains that it is useful in evaluating phosphates,

a common ingredient in household cleaners. Phosphates have two different

crystal structures. One dissolves more slowly in water, not the favored

choice when you are filling a bucket, mop in hand, waiting for the

bubbles to appear.

The labs provide some interesting visual contrasts. A spectrometer

ray gun straight out of a sci-fi movie rests opposite marble mortars

and pestles similar to those used by medieval alchemists. The same

periodic table of the elements that adorns every high school chemistry

lab hangs off a counter.

FMC’s now defunct analytical group was founded 35 years ago. Nemzer

took over the group in 1997, supervising its 20 workers. Chun worked

within it. But its future began to darken when FMC merged its phosphorus

division with that of another company and launched a joint venture,

Astaris, based in St. Louis.

Nemzer estimates that 60 percent of the analytical group’s work had

been coming from the phosphorus division. But there was no assurance

of continued business from Astaris.

Chun points out that FMC divisions were not required to obtain their

analytical services in house and that FMC discarded the idea of allowing

the lab to sell its services to the outside world. "While we could

not get external clients, they could get external contracts for services

. . . there were more constraints," says Chun describing the no

win situation.

The challenge for the lab is to make its services attractive enough

so that the FMC divisions would choose them over independent competitors.

Cuts in personnel reduced the number of potential billable hours.

Fixed expenses remained high and included depreciation charges for

costly equipment. To recoup those costs, internal clients paid inflated


"Neither entity, FMC Chemical divisions or Astaris, on their own

with their workload could justify sustaining or supporting this group,"

says Nemzer. The group was destined for further shrinkage, but any

more cuts would have curtailed its analytical capabilities.

In 2001 there was a decision to close the labs and lay off a number

of its workers. But rather than lament their fate and circulate their

resumes, Nemzer and Chun saw the demise of the lab as a potential

business opportunity.

"As soon as they closed the analytical group, all of the chemical

divisions, including Astaris, will be forced to go and identify contract

services out there to do what we’re doing — so why don’t we be

that contractor?" says Nemzer. "We approached FMC asking if

they would consider this option: for us to privatize the group. FMC

came back and said OK."

By that summer the idea was well developed. "We registered the

name and the LLC in August," says Nemzer.

The men felt confident the company would fly. They had a well defined

product that was cost effective, and they had a reliable, highly experienced


"An overall trend in corporate America today is to outsource.

If you look at the outsource market, it is growing at an estimated

10 percent a year," says Nemzer. Nemzer left FMC in September,

2001, to get the new firm organized.

The partners further predicted that by taking themselves out of a

large corporate environment they could economize significantly on

overhead costs. "We were able to reduce our hourly rate to a level

where we are very competitive to the outside contract labs," says


The initial push for starting the business came from Nemzer. "It’s

one of those things. If you wouldn’t have tried it, you would have

died wondering."

Chun, with less of an entrepreneurial bent, made the leap only

because success seemed a certainty. "I didn’t think this could

fail," he says, "at least not immediately, because we had

done a lot of homework."

"It’s better than finding another corporate job and waiting for

the next layoff," says Nemzer.

Their predictions have been accurate. FMC, Astaris, and Church & Dwight

are current customers. So are BetzDearborn, a water treatment firm,

and a company that makes sausage casings out of collagen. Alliance

developed improved tests to enable this Japanese-owned manufacturer

to check quality.

Chun, 35, is a graduate of the University of Hawaii who left his home

state for graduate school at Princeton University. He holds a Ph.D.

from Princeton and lives in town with his wife and two children. Chun’s

current focus is the technical side of the business, producing the

analytical services. Chun also designed the company’s website (www.alliancetechgroup.com)

and sales brochure.

Nemzer, who is concentrating on the business side of the new company,

describes his partner as "an excellent human being, plus there’s

his technical skill. I felt very comfortable."

Nemzer, 43, is a Russian immigrant whose undergraduate studies occurred

at Moscow Institute of Fine Chemical Technology. He has an master’s

degree from St. Joseph’s College in Philadelphia. Nemzer has three

children and the family lives in Newtown, Pennsylvania.

Chun and Nemzer sought help in launching Alliance Technologies from

the Mercer/Middlesex branch of the Small Business Development Center,

a program partially funded by the Small Business Administration. It

provides management assistance to beginning business owners. They

were paired up with SBDC counselor Kenneth Horowitz, a CPA who teaches

accounting and auditing at Mercer County Community College.

Horowitz has lots of praise for Chun and Nemzer and calls them the

poster children of the SBDC. "Their attitudes are very positive.

They are in love with their business. They have a passion for it,

one of the keys to success."

He initially offered advice on revenue planning, and later helped

the new entrepreneurs with non-financial issues. "They knew how

the business ran as a captive of FMC, but there was a large unknown

as it expanded outward," Horowitz says. SBDC support can continue

beyond a business’ opening day. The subject of Horowitz’s most recent

visit to Alliance Tech was to review first quarter results.

In order to secure a bank loan, the partners produced detailed budgets,

and monthly cash flow projections for the first year. Each guaranteed

the loan by putting a lien on his house. No venture capital money

was solicited. Neither wanted to dilute his control of firm’s direction.

They had to come up with enough cash to maintain the 5:1 debt equity

ration dictated by the SBA. They got enough cash to cover the first

two months’ expenditures, plus some for initial expenses.

The bank loan was secured on December 28, FMC’s lab closed on December

31, and Alliance’s payroll began on January 1. Nemzer and Chun were

determined to offer this continuity of service. Failure would have

brought steep penalties: a loss of business from FMC and Astaris,

and a potential loss of their three full-time employees who sought

ongoing employment.

"If there were even one or two months’ interruptions, during those

months both customers would be forced to find another supplier. So

that was our deadline," says Nemzer.

A worst-case cash flow scenario did materialize later. "We tried

to be very, very conservative in our projections. We said `let’s go

really berserk and say we will not start collecting until mid-March.’

And it was almost mid-March and we were just collecting," recalls

Nemzer of a close call.

Having gone through downsizings themselves, the partners wanted to

create a profitable business, but also "a microenvironment where

people can feel a lot more secure," says Nemzer. Quarterly profit

targets will not trump long term goals, they insist.

Chun says this desire is partially a reaction to watching how the

lab and other corporate areas were managed as "cost centers and

at the end of every month we were expected to have a zero balance,"

forcing rates to rise and fall in short cycles upsetting their customers.

They are projecting first year revenues at $700,000 to $800,000 with

hopes of 10-20 percent growth over the next year.

According to Nemzer, Alliance’s short term goal is to nail down business

practices, including managing cash flow and accounting procedures.

Growing the business without sacrificing quality, and re-evaluating

their current location, is next on the agenda.

Chun and Nemzer both hope for more growth over the long term although

Nemzer believes human resources will be the first bottleneck in plans

for growth. "We don’t want to grow too fast. One of the goals

of the business is not that we’re trying to turn around and give you

a number back. We’re trying to say `What are the problems that you

have? What are your headaches?’ and then we’re going to try and help

you solve them," says Chun.

"Normally the way you really provide value to customers is you

integrate yourself with your customer, and rather than waiting for

the customer to tell you what needs to be done, you learn enough about

their business and then go to a toolbox and say, `What do we have

here to use and solve the problem,’" says Nemzer. The firm’s name

was chosen with thoughts of creating these type of partnerships.

Chun, more of a techie in his focus, puts it a different way, "We’re

chemists and we understand that chemistry and we’ll help you solve

that problem. We have a lot of tools to do that."

— Caroline Calogero

Alliance Technologies LLC, Route 1 & Plainsboro

Road, c/o FMC, Box 8, Princeton 08543. Jonathan K.M. Chun PhD, principal,

director of technology. 609-951-3145; fax, 609-514-0740. Www.alliancetechgroup.com

Top Of Page
Expansions: Credit Union

In May the Healthcare Employees Federal Credit Union

(HEFCU) located at University Square merged with the Christ Hospital

Federal Credit Union located in Jersey City. HEFCU acquired 600 members

and over $2 million in assets, bringing its total to over 25,000 members

from about 175 institutions and assets to over $55 million.

"We have been getting to know them over the past four years,"

says John Dawidowski, who retains his job as CEO of HEFCU. "In

1999 they asked me to be on their board and last fall the board chairman

said that they thought it was time to seek a merger partner."

HEFCU — one of the fastest growing credit unions — has also

opened its doors to workers at non-healthcare related companies in

the Princeton vicinity, or within 30 miles of its headquarters. Among

its members are a college, various trade associations, and some manufacturers.

"We are considering the possibility of a name change so we are

not industry specific," says Dawidowski, who has been CEO of the

credit union since 1985, when it was a two-person organization.

He grew up in Ewing and graduated from Trenton State College, Class

of 1977. After working for the county government he started at New

Jersey Hospital Association in 1979 and has been there ever since.

"In 1983 I brought my concept about offering a statewide credit

union to senior management, and we got it off the ground," he


Credit union members can use any of the 15 hospital-based ATMs, and

through a national alliance of credit unions they have free access

to more than 12,000 ATMs nationwide. Also available are Internet banking

and electronic bill payment.

Five other hospital credit unions are left in New Jersey — potential

targets for mergers. "Nationwide the landscape has really changed

since we started. Consolidation has brought the number of credit unions

from 14,000 to 8,000, and the demands on financial institutions continue

to grow. Margins are shrinking," he says. "It makes sense

to consolidate."

Healthcare Employees Federal Credit Union, 101

Campus Drive, University Square, Box 1, Princeton 08543-0001. John

Dawidowski, CEO. 609-951-0700; fax, 609-275-4194. Home page: www.hefcu.com

Top Of Page

Zutty Associates, a manufacturer and distributor of

souvenirs, moved its warehouse in April from 2,000 feet in Robbinsville

to 3,000 feet at Windsor Industrial Park. In this four-person family

business, Louise Zutty is the president, Larry Zutty the vice president,

and one of their two sons, 38-year-old Steve, is the sales manager.

Looking for a $7 puffy vinyl cushion shaped like a New York taxicab

or a $5 magnet showing last year’s New York skyline? Buy it at the

Empire State Building, one of the many Manhattan retailers that carry

the Zutty line, or go to www.zutty.com Need a memento for a wedding

giveaway? The Zuttys will design and make it.

Except for two items, the Zuttys make all their products in the United

States. The actual mug be imported, but the decoration is done here.

"When we went into business, that was our approach — to sell

American and use American," says Larry Zutty. "After so many

years we know where to go and how to do it."

The exceptions are a gold-plated brass Christmas tree ornament that

is imported from mainline China ($6 to $10 retail) and a float action

pen from Denmark ($2.50 to $4.50). In one of the biggest orders the

Zuttys ever had, they put logos of a Fortune 100 firm on 325,000 of

those pens.

But the bulk of their sales consist of specially designed mugs, glassware,

and keychains as souvenirs for special functions (such as the Musikfest

in Bethlehem), amusement and theme parks, museums, and airports. Also

in the Zutty lineup are spoons, magnets, pens, pencils, bags, hats,

ponchos, flashlights, backscratchers, personal fans. Newly popular

now are polar fleece blankets. Seldom does he do umbrellas because

summer is high season for souvenirs and, as he notes, "it doesn’t

rain in the summer."

A company win, for him, "is when somebody we work with comes back

to us because we did it right. It is a relationship operation,"

says Zutty. He and his wife founded their firm in 1984, but they have

been in the souvenir and specialty business for 35 years. "We

don’t do any wining and dining, but we deliver what we say, and we

are selling now to a second generation of clients."

Asked about pricing, he hedges. "Cheap is a conceptual thing that

depends on your position in life," says Zutty. "Somebody’s

cheap is $1, somebody’s else’s is 20 cents. But you generally get

what you pay for."

Numerous Zutty souvenir items show the Twin Towers, and they have

added one memorial item. "The majority of the people are in favor

of it," says Zutty.

Zutty Associates, 92 North Main Street, Windsor

Industrial Park, Building 15G, Suite 15G, Robbinsville 08691. Louise

Zutty, president. 609-490-0203; fax, 609-490-0250. Www.zutty.com

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