‘Perseverance & Persistence’

Ernest Scheller Jr., IM 52

Two traits instilled in Ernest Scheller Jr. as a Tech undergrad helped him overcome his father’s death, expand the family business and transform his alma mater.

In June, it was announced that Ernest Scheller Jr., a 1952 Georgia Tech industrial management graduate, had made a commitment totaling $50 million to the Institute’s College of Management.

Once fulfilled in December 2013, it will be the single largest cash gift made in Tech’s history.

It is transformational in both size and intent: Scheller has earmarked the funds not for a new building or renovations, but to be invested in people—in endowed chairs, professorships, undergraduate scholarships and graduate fellowships. Quite appropriately, the college has been renamed in his honor; it’s now the Ernest Scheller Jr. College of Business.

Scheller is chairman emeritus of Silberline Manufacturing Co., based in Tamaqua, Penn., which his father founded in 1945. It’s now one of the top global suppliers of high-quality pigments used in the automobile industry and other sectors. Scheller became president of the company in 1964, at age 34, when his father died of cancer. In 2004, he was named a College of Management Distinguished Alumnus; he and his wife, Roberta, are honorary chairs of the Campaign Georgia Tech Steering Committee. “Working with Ernie Scheller has been one of the highlights of my professional life,” said Steve Salbu, dean of the College of Business. “He’s a wonderfully amiable, friendly and supportive gentleman who has achieved great success by insisting on ‘quality with integrity.’”

The Alumni Magazine spoke with Scheller this summer to learn more about his time at Tech, his work with Silberline and his unwavering support for education. Here, he tells his story in his own words.

Scheller entered Georgia Tech in the fall of 1947, though his original plan had been to attend the Massachusetts Institute of Technology.

MIT wasn’t my first choice; it was my father’s first choice. [Laughs] And I didn’t get in. That was the only school I applied to. So I scurried around the application to a lot of schools, and at the top of the list were the University of Michigan and Georgia Tech. Because I thought the climate in Atlanta would be more appealing than the climate in Ann Arbor, Mich., I picked Georgia Tech.
I wanted to be a chemical engineer, and they required German and organic chemistry. And between the two of them, after the first year, I decided this wasn’t going to work.

That was one of the lucky breaks I’ve had in life. I learned after my freshman year, at least, that chemical engineering was not for me. [Laughs]

I didn’t realize it at the time, but not getting accepted to MIT turned out to be one of the best things that ever happened to me. My dad made a deal with me to pay my $400 per quarter tuition provided that I pay my room and board. When I got to campus in the fall of 1947, the first thing I did was join the ROTC, which provided me with some regular income. I also joined the Georgia Air National Guard, where I made staff sergeant.

I was table manager at a fraternity house. I was the advertising manager of the Yellow Jacket [the campus humor magazine], where I earned commissions from ad sales. I even set up a silk-screening business in the basement of a fraternity house making posters for campus events. While it may not have been the best thing for my grades, taking on all those enterprises taught me how to not only provide for myself, but also to figure out how to deliver a product that someone really wants, how to be successful in the real world.

Instead of chemical engineering, Scheller chose an industrial management major. He graduated in 1952 and debarked for Air Force service in California.

I started giving to Roll Call as soon as I went into the service and had a steady income. [Laughs] It was important for me to receive the Alumni Magazine and keep up to date. I was grateful to Tech for the opportunity to be in the ROTC. Because of my study habits at Tech I lucked out—the closest I got to Korea was California.

They sent me out to Norton Air Force Base in San Bernardino. I ended up as a procurement officer for the B-45 jet bomber. They only made, I think, 124 of them, and they were all stationed in England. The bomber was made by North American in Columbus, Ohio, and that plant was converted into making F-86s and the F-86D. So they had taken all the machinery and tooling for the B-45 bomber and moved it all out into a parking lot in Englewood, Calif., put it under tarpaulins, no markings or anything. I’d go down to Englewood with somebody from North American to find the tooling for a part and spend one or two days looking for the damn thing under tarps. It was pretty ridiculous. I wrote a letter to my superior officer and I said, “This is kind of dumb, and since they’re phasing out the B-45 anyway why don’t we just cannibalize an airplane that’s over there for the part?” There was a rule in the Air Force at the time: You do not cannibalize a flyable airplane. But I convinced my superior officer that this was a good idea and we went up the chain of command, and they said yes, that’s what they want to do. I received a letter of commendation and a promotion to first lieutenant. Just by suggesting the obvious.

Scheller comes from a long line of self-starting problem-solvers.

My dad went to Cooper Union night school [in Manhattan]. He went there because it was free, and he went at night because he had to work in the daytime.

He was born in Vienna, Austria, and came over here when he was quite young. My grandfather on that side of the
family was a private in the Austrian army and it was my grandmother who came over to the States first. The whole deal was that after she found some way to make a living over here, she’d bring her husband—my grandfather—and my aunt and my father over. She opened up a boarding house in Coney Island, N.Y., and after she got some tenants to make a decent living she brought my grandfather over and my father and aunt. My father’s first job was at a bathhouse on the boardwalk.

In 1945 the elder Ernest Scheller founded Silberline, a small pigment manufacturing company.

My dad had a lot of courage to start the business. He worked for Reynolds Metals Company and left right at the end of the war. His expertise was in foil and he wanted to get in the foil business. Those days it took a million dollars of capital to set up a foil mill, and he couldn’t raise the million dollars. But it only took $100,000 to get into the pigment business, and he was able to raise it.

The big producers were Alcoa, Alcan and Reynolds Metals Company. They all made about the same thing. My father’s philosophy was that we couldn’t afford to be market leaders as far as new products was concerned—we didn’t have the muscle or the dollars to do it. But the one thing we sold back in the very early days was uniformity from batch to batch. If you bought some paint today and you wanted to match it a year or two years later, it would match. That wasn’t true of our big competitors. We were selling the consistency of product. We also undersold the big guys by a few cents a pound.

We had quality control. That was my first job in high school, when the company was very young. It was just my father, a part-time secretary, one production employee and me doing some quality-control work. That was the job I had all through my senior year of high school, before going to college.

Foil scrap was our basic raw material. We did some atomization of aluminum—I still have the scars on my arm. We’d shatter a stream of aluminum with a continuous air blast and that would make these tiny aluminum droplets, atomized powder. If you get any moisture on the scrap when you’re charging it, it’ll pop—the moisture turns to steam and pops the metal up. I got a few residual scars going back to when I was 15 or 16 years old. I guess I started in April or May of 1945. I worked that summer and the following summer and then went down to Tech, then worked there [during the] summers after I went to Tech.

Silberline was founded in Stamford, Conn., but in 1963 relocated to Lansford, Penn. (Today, Silberline operates seven locations worldwide.)

We were leasing our facilities in Stamford and several things happened. Number one, the complexion of Stamford changed from a manufacturing town to really more of an office area. All the big corporations who were in New York City moved out to the suburbs. The price of real estate was going up and our rents were going up accordingly—besides, we were considered a dirty industry. People wanted these properties for office buildings. The complex where we were located, everything but Silberline had changed to offices. So, number one, we couldn’t afford the rent; number two, there wasn’t space available; number three, we checked with Connecticut and they said, “We don’t have any industrial development revenues to help you find a place. We only have it, by law, for industries outside the state to attract them.”

Well, back in those days there was a publication called Dunn’s Review, and I happened to look in Dunn’s Review and there was an ad for Pennsylvania Industrial Development Authority, PIDA. They had a mail-in card, and I mailed that card in and, by golly, within a week I got a telephone call from PIDA. They said, “We’ve got just the place for you.” It was the old Lehigh Coal and Navigation Company machine shops; it was about 40,000 square feet, about 14 acres of accrued property with sewer and electricity. They sold us that property for $25,000 and loaned us $100,000 at 2.25 percent to fix it up. This was 1962.

My father thought that 40,000 square feet would last us for 20 years of expansion. By the time we moved we were about about 30 percent larger. We grew from 15 or 20 employees in Stamford to about 30 employees in Lansford. Within one year after moving here we bought the building next to us. Then we took the space within the 40,000 square feet where we had built individual offices and turned that into a laboratory and manufacturing space. We were pretty cramped.

My father, very shortly after the move to Pennsylvania, became ill with cancer. It was a long process of illness, and in the middle of the year he could no longer work. He appointed me president of the company and my younger brother, Joe (the best engineer I’ve ever met), executive vice president. My father spent a lot of time in the hospital, and then he died when he was 62 years old.

Joe helped grow the company until my side of the family bought out his side of the family in 1996. My son Ernest became president of the company on the first of January 1997, and that was short-lived because he died in August of 1997. My daughter Lisa then became president.

A turning point for Silberline came early in Scheller’s tenure as company president. He had a choice: Play it safe and stay small, or take some risks to grow the business. He decided to go big.

In early 1964, Alcoa, Reynolds and Alcan got in a price war. I knew we weren’t going to be around very long if we didn’t do something that would differentiate us from our large competitors. So I went up to Detroit and talked to all the paint companies. Then I went to the individual automobile companies—there was American Motors at that time, as well as Ford and Chrysler and GM. They each wanted to be different. And I said, “Well, we can help you be different. We can give you what you want. You just tell us what you want and we’ll develop it and we’ll do it.” And that’s exactly what we did. Even though there was a lot of talk as to wanting to be different, everyone was only willing to talk in general terms: “We want something more bright, we want something with more flash, at the same time, we don’t want to give up coverage.” Except Ford. They were willing to work with us.

The first problem they wanted solved was, they were getting something called “skinny films” on certain surfaces of the automobile: curved surfaces on fenders, for instance, or sharp curves on a trunk lid. In some cases it was so thin you could see the primer under the topcoat of paint. And they wanted to have something, especially with metallics, that would hide the primer. We developed a product based on particle-size distribution, which gave them the brightness or the lightness of the color. Ford liked what we were doing, and then all the other paint companies started to take notice.

We had a big advantage custom-making these products because our equipment was relatively small. We could make these small batches to order. In the pigment industry, our competitors all had big equipment and relatively few grades they offered the paint manufacturers. We began offering people material on a custom basis, the grades proliferated, and by the time we were finished I think there were more than 300 grades of aluminum pigment.

We normally kept blend stocks and we could make a number of these grades by just blending in a mixer. We could do that within a 48-hour period.

We came out with a new grade that revolutionized the business called Sparkle Silver 3500. This was in the ’70s, just when Volkswagen was converting from the Beetle to the more conventional automobile, what they called the Golf. On the Beetle there were no metallic colors—they were mostly black or bright yellow or bright green. To introduce the new styling they came up with five champagne colors, all metallic, all based on our Sparkle Silver 3500. We were getting inundated. The country was going metallic—from about 20 percent metallic on automobiles up to 40 percent.

Now it ranges from 60 to 80 percent. The fashion has changed. We’re actually having to struggle. The market is having what they call “silver fatigue.” You’ll notice that among new cars, black and white have become popular. There’s straight reds mixed in. That cut our market down.

And then the modern application techniques are going to robotics. In the old days, with the manual spraying, half the paint ended up in the spray booth because of the overspray. Today, every drop ends up on the car because the electrostatic spray technique and the robotics give you a very uniform film thickness. The application method and the chemistry changed, all to reduce the amount of paint needed. The paint manufacturer raised the price for these more sophisticated paint systems and the amount of metallic paint on a volume basis became much less. And as a result we have a shrinking market.

Scheller is semi-retired from Silberline, but he stays active—both in business (as the company’s chairman emeritus) and in personal pursuits.

I play a lot of golf, and I’m better at most other things than I am at golf, but I still enjoy it. I’m a relatively better skier today, because there’s not much competition among guys my age. Roberta’s bugging me to play bridge, but I’d rather do more athletic things.

Scheller’s gift to Tech is not the first instance of his or Silberline’s transformational support of scholarship. He’s been a booster of education throughout his career.

I’ve always been interested in education. Shortly after my son Ernest died, my family set up a four-year scholarship in each of the five areas we had manufacturing facilities. The recipient doesn’t have to be a Silberline employee’s child, just a student chosen by the local high school. It’s $3,000 a year for four years as long as they maintain a 2.7 GPA. It has to be a four-year college.

Silberline had a policy that any employee that wanted to go to school, we would take care of tuition while they’re working. Didn’t have any stipulations, just had a pact, as long as they were a full-time employee. The courses they studied had to be job-related in some way, and we were quite liberal with that—for instance, if someone who was a production employee wanted to get a degree in sales and marketing. I believe in promotion from within and would rather make that opportunity available to an employee than bring somebody in from the outside.

There was a guy by the name of John E. Morgan—he made a lot of money making knitted underwear. He never went to college and in his will he left money to build an extension of the Lehigh Carbon Community College, located down in Schnecksville, Penn., up here in Tamaqua. Any graduate of Tamaqua High School can go to this junior college absolutely free. I thought, “I want to do something in my lifetime, so I can see the results, to continue with John E. Morgan’s idea.” I came up here to the campus and saw this building called the Morgan Extension.

Across the street was an old dilapidated firehouse, unused. I donated the money to fix it up. They call it the Scheller Center. They turned this into a student lounge. I put $100,000 into it and we got some state money to do the rest of it. This was three years ago. I’m really proud of that. And then we also set up a scholarship program so the top students that graduate from this Morgan Extension of LCCC can continue on to get a four-year bachelor’s degree, and that program’s working out very well.

Scheller’s gift to Georgia Tech was made to ensure the future success of the Institute and its College of Business—but he has a personal connection, too. One of his eight grandchildren, Zary Peretz, is currently a second-year business administration major.

Georgia Tech taught me the importance of perseverance and persistence. Over the years, I’ve applied those same principles to my support of Georgia Tech and its College of Business. In order to build a college that will rank among the world’s best business programs, you’ve got to have great leadership, a broad-based vision and a lot of determination. The college has been fortunate these past six years to enjoy such leadership under Dean Steve Salbu. By any barometer you could choose, the college has improved dramatically during Steve’s tenure. I have never been more optimistic about the future of Georgia Tech and its College of Business, and I am eager to see the great things that will happen there in the coming years.

My granddaughter was in China when the announcement was made about the gift. She was the first one I heard from. She sent out to her Facebook group—well, I’m not on Facebook; I’m computer illiterate to tell you the truth. But she sent out a message: “I’m going to be graduating from the Ernest Scheller Jr. College of Business!”
I feel that I can benefit those who come after me more by making educational opportunities available than any other thing I can do.

Campus Reacts to Scheller’s Gift

“The Bergmark Family Dean’s Scholarship [funded in part by Scheller] completed my decision to commit to Tech. The scholarship is not only extremely generous, but it helped motivate me academically since I was being financially supported by people who believed in my success. I look forward to every chance we scholars are given to meet with our donors; they are truly inspiring people.”
—Carli Walker, second-year business administration major

“Ernie Scheller has a distinguished track record of success in leading and growing one of the top family-owned businesses in the country. Ernie rightfully takes great pride in building upon his father’s legacy and passing on the fruits of his labors to succeeding generations. While his generosity has had an unprecedented impact on our College of Business, I believe that impact will ultimately inspire the larger Georgia Tech community to continue boldly envisioning a future of globally renowned excellence and quality.”
—G. P. “Bud” Peterson, president of Georgia Tech

“Mr. Scheller’s gift, along with gifts from the Holland Underwood Foundation and Judy D. and Stephen P. Zelnak, Jr., has generated several scholarships for Denning Program business students experiencing financial hardship. With these scholarships, the program is able to recruit the most talented business students to the College of Business. As the quality of our students continues to rise, so does the Scheller College of Business rise to become the world’s preeminent business school for technology and business.”
—Linda Oldham, director of the Steven A. Denning Technology & Management Program

One Response to ‘Perseverance & Persistence’

  1. Zulikha Hussain says:

    Enjoyed the story very much. It was well written, inspiring and gave me a great insight of this very humble, wonderful donor (Mr. Scheller). God Bless Mr. Scheller and all the rest of the dedicated, generous donors.

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