Going Toe to Toe With Big Three Casket Companies Doesn’t Scare Chinese Importer, We’re Bulletproof

February 22, 2015
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Article originally published on Bloomberg.com

Armed with cheap Chinese imports, a Las Vegas entrepreneur takes on Big Casket

When Jim Malamas finally sat down to dinner with Steve Tzelalis, he knew his cousin was tired. Tzelalis had been up since 4 in the morning and working his shift at a Las Vegas strip club since 6. Haggling with liquor distributors. Glad-handing the daytime crowd. Auditioning talent. Malamas knew he would be in no mood to drive a casket into the middle of the Mojave Desert.

A peppy Greek Canadian with heavy bags under his eyes, Malamas, 58, owned a local company called ACE Funeral Products. A buyer in Los Angeles had missed a 4 p.m. deadline to have a casket shipped by FedEx. Meeting him halfway, in Barstow, Calif., would be a five-hour schlep. But ACE was young and feisty—one David up against the Goliath that has controlled the industry for decades. If a body needed a box, ACE was going to deliver. “This is a customer service business,” Malamas told Tzelalis that night, sometime in the middle of 2009. “Sometimes you gotta suck it up.”

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Malamas and Tzelalis tucked into their food as they waited for the buyer to call and arrange the meeting, and when he did, Malamas signaled for the check. Tzelalis sighed, his belly full. “I’m coming with you,” he said.

The company truck, an old U-Haul that Malamas had retrofitted with load-bearing shelves, sat in the restaurant lot. In the back lay a knockoff of the most popular casket for women in North America: the Primrose, made of 18-gauge steel with a crepe interior. The three major casket manufacturers that dominate the market sold the U.S.-made item for as much as $1,500. Malamas built his almost identical model in China, advertised it online, and charged $408. It was, after all, only a casket; it just had to look good for one day.

As the cousins turned south onto Interstate 15, night fell on Vegas. Casino lights pulsed on the Strip. At the edge of town, they passed the Silverton and the Grandview—buffet specials and $2 blackjack. And then: desert.

Tzelalis drove, and Malamas strained to be heard over the engine, which topped out at 55 mph. Revenue was doubling annually. How could they sustain that growth? What was ACE’s next move? As they got close to the rendezvous, Malamas’s phone rang every few mile markers.

Tzelalis pulled off at Exit 198 and cut the engine on the north side of the freeway. There was nothing but a few derelict signs and a shuttered gas station. The only light came from the stream of headlights on I-15.

The buyer pulled up in a Chevy Suburban. His name was John Kirk, the president of White & Day Mortuaries, a string of five L.A. funeral parlors. He had brought some extra muscle. Even without a body, a Primrose weighs 180 pounds. The four men shook hands. Tzelalis chuckled.

“What are you laughing for?” Kirk asked.

“If California Highway Patrol comes by,” Tzelalis said, “they’re gonna think there’s some shenanigans goin’ on.”

After the men transferred the casket, they snapped a group photo, shook hands again, and returned home—the buyer to his corpse in cold storage and a funeral the next morning, and Malamas to his base of operations and his war on Big Casket.

By importing from China, Malamas has followed a well-worn outsourcing playbook that’s upended markets for American-made goods from electronics to bedroom furniture. Working with four factories outside Shanghai, he imports 40-foot containers holding 64 caskets apiece and sells them to funeral homes and regional distributors for a fraction of the price. There is plenty of potential: In the U.S., caskets are a $1.6 billion business.

And yet since that night in the Mojave, Chinese casket imports haven’t gone as planned—for Malamas or anyone else. His revenue has stumbled. Where almost every other American manufacturer has failed to keep Chinese exports at bay, the casket industry has succeeded. Through aggressive litigation against importers, xenophobic admonitions to consumers, and good old-fashioned palm-greasing of funeral directors, Big Casket has made sure that 9 out of 10 Americans go into the ground in boxes made in the USA.

“The funeral industry has had a goddamn easy ride for the last 150 years,” says Joshua Slocum, the co-author of Final Rights: Reclaiming the American Way of Death and executive director of the Funeral Consumers Alliance, a Vermont nonprofit. “Why aren’t as many caskets imported as Chinese dishware? It defies all known rules of supply and demand.”

Click Here To Read Full Article From Bloomberg

Photo Credit: Bloomberg.com

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