Transitioning

Automatic Industries

The co-op and condo world has been fertile ground for many family businesses, including some that are now transitioning to the fourth generation. Here are the stories of four such businesses – how they grew, how they adapted to the city’s changing real-estate landscape, and the ways they passed the baton from one generation to the next. It turns out that no two family businesses – even the happy and successful ones – are exactly alike.

Bob Savino, son of Queens, worked as a heavy-equipment operator during the borough’s post-World War II building boom. Pushing all that dirt to make way for new apartment buildings put Savino in touch with a lot of developers and landlords, and those relationships spawned an idea: instead of having tenants take their dirty clothes to the nearest laundromat, why not bring the laundromat into the building?

And so, in 1971, Automatic Industries was born. Working from home with his wife, Angela, keeping the books, Savino built the business on the foundation of those relationships with landlords, installing and servicing coin-operated washers and dryers in thousands of apartment buildings across the city. By the time she was a teenager, Denise, the youngest of the three Savino children, was answering the phones and helping collect coins on weekends. While her brother Robert became a doctor and her sister Ellen a lawyer, Denise decided to join the family business full-time after earning a degree in marketing in 1990.

“We were having a growth spurt back then,” Denise recalls, thanks to the burgeoning co-op movement. “So I had to hit the ground running. My dad was running the service side, so I spearheaded bringing in new business. My dad was accustomed to dealing with one individual, the landlord, but it was a different culture with co-ops. A lot of co-op boards were starting to take control from sponsors and had more interest in their vendors. Boards appreciate the service you give, that you have a strong back office. And I like dealing with the end-user.” “Landlords didn’t care about the equipment, quality, service,” adds Bob, now 78 and semi-retired. “The boards are much more personally involved.”

Denise – now Denise Savino-Erichsen, mother of two, and president of the company with its 29 full-time employees – says another major change has been keeping up with evolving technology. It’s not just that plastic smart cards have phased out all those coins, but the use of credit and debit cards has become commonplace, as have systems for notifying residents by text or email when machines are available.

“New Yorkers are busy people,” Denise says. “We’re trying to be as cash-less and as progressive as possible.” And since laundry contracts usually call for a split of profits between the building and the vendor, Automatic also furnishes boards with credit-card statements so there’s no question about the accuracy of accounting.

One thing that hasn’t changed is that the business, like any service business, is built on personal relationships – and it’s still about family. Denise’s older sister Ellen, a real-estate attorney, helps negotiate customized contracts for clients, who include co-op and condo boards as well as landlords, colleges, public housing developments, hotels, even campgrounds and marinas. “We’re competing against national companies,” Denise says, “but boards appreciate that when they call us, someone picks up the phone. They appreciate that they know the mechanic, that it’s a familiar and knowledgeable face. If there’s a problem, boards appreciate that the owner will come out to the building.”

Will Automatic Industries soon become a three-generation family business? Anything’s possible. Denise’s son, Cooper, is studying finance at Fordham University, and her daughter, Ashley, still in high school, has staged co-op open houses and attended more than a few board meetings with her mother. “But it’s not something you can force,” Denise says. “It has to be something they want to do – a passion.”

One thing is certain: the demand for the service Automatic Industries provides is not likely to dry up anytime soon. As Bob Savino, son of Queens, puts it: “Until they come out with disposable clothes, people are going to have to wash their laundry. I’d say our future looks good.”

Buchbinder & Warren

When Lori Buchbinder joined Buchbinder & Warren, it was because she didn’t want to have any regrets about the road not taken. She had been practicing law for 24 years when her father, Norman Buchbinder, died in 2007, nearly half a century after he had co-founded the real estate brokerage and management company that carries his name.

“He was working in the family millinery business and had just invested in a Harlem brownstone when he met Gene Warren at a party,” Lori recalls. “Gene was also in apparel and had dabbled in real estate, and they hit it off so well they agreed to start a firm together – literally with a handshake.” They also had an ironic connection: these two avowed capitalists were named after two avowed socialists, Eugene Debs and Norman Thomas.

Over the years, Buchbinder & Warren thrived, and after her father’s death Lori finally succumbed to the pull to become part of her father’s legacy. “It was his passion,” she says. “If I didn’t join then, I knew I’d never have another chance to see if I felt the same.”

Norman Buchbinder had been a pioneer. During the ’60s and ’70s, when New York City was on the verge of bankruptcy, it “took a great leap of faith to invest in real estate, which is what Norman did,” recalls Rosemary Paparo, the firm’s director of management, who came on board in 1977. “He was part of the early wave of co-op conversions, which really took off in the early ’80s. Norm ran the company intuitively and could always laser in on problems and find solutions. That said, he was a benevolent despot. When he wanted something done, it was done his way.”

That was just fine with his younger daughter, Susan, who joined the company after graduating from Adelphi University in 1982. “Yes, Dad could be forceful, impatient, and blunt, but he had a tremendous work ethic,” Susan says. Their desks were just inches apart, and Susan learned a lot working by his side, including the importance of responding to clients ASAP. “We had to do that through letters back then. Can you imagine?” says Susan, adding that she did have one ongoing beef with her father. “I was always telling him to go home to my mom. He spent too much time at the office.”

In part, that was because the business was changing. “Things weren’t nearly as rigid and codified as they are now,” says Paparo. “We were very transparent with record-keeping, but as we acquired more properties, we had to deal with more rules and regulations. Norm not only realized we needed computers but even had the firm write a real-estate program because none were available. He was pretty cutting-edge.”

Even so, when Lori took the helm (Susan was on leave at the time), she did make infrastructure changes to bring the company into the 21st century, including updating IT programs to better track and archive information. “She’s streamlined and reorganized the company, which has made us much more efficient,” says Paparo.

Not that Lori didn’t have a learning curve of her own. “Going from a corporate legal department to a service-oriented business was a huge change,” she says. “I wasn’t used to dealing with such a wide spectrum of people, from employees to supers to complaining tenants. There were times when I just wanted to put a pillow over my head. It took a while to figure out how I could best contribute. I couldn’t fill my father’s shoes, but I could better liaise on compliance issues and court matters, and give employees greater leadership roles.”

The sisters, who are co-principals – Susan currently works with the firm’s holding company, handling the family’s investments – continue to draw inspiration from their father. “We just went to a work breakfast where someone started talking about him,” says Lori. “He lives on through the company, and his vision keeps us motivated. What we’re doing is just an evolution of what he started.”

Fred Smith Plumbing & Heating

Maybe it’s in the genes. Phil Kraus’s grandfather and father were master plumbers, and he followed them into the trade and the family business that was founded in 1908. But by the late 1970s, Phil, a graduate of Ithaca College, was growing restless. “I decided I had to find my own way,” he says.

And so in 1980, he became the twelfth employee of Fred Smith Plumbing & Heating, another family-owned New York business that had been founded before the First World War. Soon after coming on board, Phil bought the company from the founder’s son. “Fred Smith Jr. and I had the same philosophy,” Phil says. “It was real simple: if you take care of the business, it’ll take care of you.”

While vacationing in the Caribbean soon afterwards, he met a woman from Oklahoma named Sandy Plowman, who was working a fast-track finance job in Manhattan. They were married in 1982. They’re still together – and they’re still running the company, which now has 130 employees, including their sons and heirs apparent, Preston and Spencer. Yes, it’s definitely in the genes.

Preston, 32, and Spencer, 30, traveled different routes. Both started working for the company in the summers when they were boys, answering phones, carrying tools, cutting pipes, cleaning fittings. While Preston studied finance at Southern Methodist University and then went to work in investment banking and private equity for big firms, Spencer studied fine arts and literature at Carnegie Mellon University in Pittsburgh, then started climbing the ladder of the family business.

“The plumbers in the company had no doubt I was going to come back and take over for Dad,” says Spencer, who, after a seven-year apprenticeship, will take the exam this fall to become a master plumber. “We developed a plan of what I needed to be successful: a lot of experience, getting your hands dirty. Dad did me a great service by making me work. He also said I needed an MBA.”

So after full days of turning wrenches, Spencer attended New York University at night, earning his Master of Business Administration degree in 2015. Then the final piece of the puzzle fell into place. Spencer talked his brother into joining the fold in the summer of 2016.

“Spencer put the hard sell on me,” Preston recalls. “The big hook was the ability to work with my family and make a direct impact on a small organization. I see my actions reflected on a day-to-day basis. At a bigger organization, you’re more of a number.”
All four Krauses agree that it’s tougher to do business in New York City than it used to be, thanks to increasingly complex regulations, which put stress on the back office. “Another thing that’s different,” says Spencer, “is that consumers have different expectations because of all the information they have at their fingertips. Because they have more information, they think they don’t need a troubleshooter. In reality, you do need a troubleshooter. Also, people want to know what’s wrong and why. You used to just do the job and leave.”

Another big change is that the company has gone from a 9-to-5 operation to 24/7 full-service, growing tenfold and expanding into high-pressure steam work, fire suppression, HVAC piping, and water purification systems.
Sandy, as chief financial officer, helped bring the company into the computer age, streamlining its purchasing, billing, accounts receivable, payroll, benefits, and inventory management. “Technology now has to be integral if you want to stay competitive,” she says. “You need to be able to measure your performance with great granularity.” Since earning a law degree, she also handles legal and marketing duties. Preston, with his financial background, will take over many of her duties, while Spencer, the future master plumber, will try to fill his father’s shoes.

No one in the family can say precisely how the coming transition will unfold. “There’s going to be an organic process when it evolves so that the customers don’t even know the difference,” says Sandy. Adds Phil: “The business is already in transition. The boys are picking up responsibilities, and nobody sees it. It’s a living thing. It’s not going to all of a sudden be, ‘OK, here’s the keys.’”
“When the transition does happen,” Preston says, “we want to make sure our Dad’s core values are passed on – respect for everyone he does business with, for his employees, the community, his family. It’s how he operates in the world.”

Definitely the genes.

Orsid Realty

As chairman emeritus of Orsid Realty, Maks Etingin cuts a trim, dapper figure. It’s been 48 years since he first joined the real estate management company founded by his father in 1955; now, at 90, Etingin still heads into the office three days a week, focusing on the equity side of the business and enjoying the company of his colleagues. But he’s particularly close to the guy in the office next to his: the president, Neil Davidowitz, who also happens to be Etingin’s son-in-law.

Davidowitz never expected he’d be working at Etingin’s side. He was a prosecutor in the Manhattan district attorney’s office when he married Etingin’s daughter, Doreen, in 1982. “A couple of years later, Maks and I started a running conversation about my joining the firm,” Davidowitz recalls. “It was clear what he wanted. His father, Albert, had started the company and acquired the properties. Maks had been converting rental buildings to co-ops, and in the process, Orsid developed a reputation for running them well and was being sought out as a third-party property manager. That’s where he wanted me, the third generation, to step in.”

Etingin was indeed looking for a partner with a new skill set. “Since I joined Orsid in 1969,” he says, “the business had shifted from being property owners to being service providers, and it wasn’t easy. With all the new state and city compliance requirements and much more detailed financial reporting, it had also become quite complicated. It was my good fortune that Neil said yes.”

For his part, Davidowitz feels his experience was the perfect complement to Etingin’s. “Maks and Albert were both electrical engineers, so they understood construction, systems, and building operations,” Davidowitz says. “But the fine art of property management – of dealing with board members and shareholders – is definitely not [Maks’s] forte.”

After joining Orsid in 1986, Davidowitz helped with the conversion of the last handful of the company-owned buildings, and then turned his attention to expanding the management business by hiring and retraining staffers and creating centralized departments for everything from insurance to refinancing to apartment alterations.

“Eventually, it came to the point where Maks agreed to take a step back and let me run the show,” says Davidowitz, who became the firm’s president in 2004. “I have to say, I enjoy the autonomy. Maks is hardworking and fair, but he’s a tough negotiator and is used to telling people how to run things and having his way. I like to call him the last of the old-time landlords.” In their 31 years together, however, there’s only been good blood between them. “We’re the original odd couple,” Davidowitz says. “I’m outgoing and gregarious, and Maks is very serious, all work and no play – in fact, I don’t think he even knows the names of New York’s baseball teams – but there’s been no friction or bickering between us. We’re always able to talk through our disagreements in a respectful way.”

Father and son-in-law have also learned a lot from each other. “Maks taught me that as a property manager, I have a fiduciary duty to treat a co-op’s money like my own,” Davidowitz says. “I like to think I’ve taught him to have more patience in dealing with people’s complaints – and to appreciate and laugh more at my jokes!”