Speculators offering millions to force out the last of Kensington's manufacturers

On a gritty block on Berks Street in Kensington just west of the El, the land speculators come knocking - knocking on the doors of men trapped by love.

There's factory owner Michael DiPietro, an escapee from corporate, in love with the idea of being a man who makes things and who makes things happen, who handles deals, sales, and loading docks, and has a fresh idea every minute.

"A builder told me he could put eight houses in here," said DiPietro, whose factory has recently been sold and whose businesses, Penn Scale Manufacturing Inc. and DuraCart USA, may soon be evicted from the two-story plant he has rented since 2011.

When people talk about gentrification, it's all about the perils of displacing longtime residents who have built lives in the rowhouse neighborhoods suddenly popular with the latte-toting elite.

The speculators know newcomers will pay dearly for high ceilings, quartz countertops, and walk-in closets deep in the neighborhood's postindustrial space.

Problem is, the postindustrial space is not yet post.

Nor are the employees post, nor the contracts, nor the connections, even though every day for a week last month, speculators came knocking on Sam Oteri's door at 179 W. Berks St., offering $1 million, then $1.5 million.

And it's the same story up and down the 100 block of West Berks Street, from Mascher to Palethorp.

Oteri, 76, knows his screen-printing business, in a four-story brick factory with big, alluring windows, could thrive once more, if only someone top-notch could work internet sales for him.

"Why give up something you are good at?" Oteri said.

His father, an artist, started Photo Process Screen Mfg. Co. Inc. in 1945, and Oteri needs to keep it going for his son, 56, who works there, too, but hates it.

The trap? Love for a business started by his father. Love for his son, who eyes Oteri moodily from across the factory floor.

Three doors down, Brett Freedman, 60, still engaged in his business despite its ever-tightening margins, would be a reluctant retiree from Globe Paper Co. Inc. Started in 1935 by his grandfather, the packaging company now operates in a ripe-for-condos former feather factory - big windows, high ceilings, generous space.

Investors also visit Freedman.

"If they are giving me gold bars, I might consider something," he said.

Problem is, he, too, is trapped by love for the business his grandfather started 80 years ago, and what he still can do with what is left.

"When they started building up Northern Liberties, I knew it was a matter of time," Freedman said. "Do I continue the business or do I sell it and be done with it?"

"I wrestle with that constantly."

Here's what DiPietro wants to know:

At a time when the political establishment touts the value of manufacturing to the city's economic and labor base, at a time when the School District of Philadelphia is touting its new advanced manufacturing program at Ben Franklin High School, is there any room for actual manufacturing?

And what will happen to businesses such as DiPietro's and his industrial neighbors' when every factory in the neighborhood turns condo and DiPietro can't find any place affordable to expand?

"I'm the only one left here," he said. "Now you get what my concern is."

Stephen Jurash, chief executive officer of the Manufacturing Alliance of Philadelphia, gets what DiPietro's concern is.

"That's why we fight this battle," Jurash said. "There has always been pressure from the developer to try to run in and grab a piece of industrial land that has been vacant, or it could be occupied.

"That's been the battle between developer and those in the city who understand the inherent value of the industrial land and their jobs," he said.

"It seems like every time you get a new crop of Council people, you have to educate them about the value of industrial land.

"You are talking jobs that may pay $17 an hour versus zero dollars an hour if it is residential," he said.

Look at the numbers.

Industrial space within a half-mile of DiPietro's businesses rents for $2.50 to $12 a square foot and costs about $58 a square foot to buy, said Gary L. Lozoff, of Tactix Real Estate Advisors.

Now imagine $147 a square foot on DiPietro's block.

That's the math on 19 three-bedroom townhouses - each 2,900 square feet and priced at a minimum of $425,000 - in South Square, a high-end development under construction in a former no-frills used-car lot down the block from Penn Scale.

"The real estate market in Philadelphia is really prosperous," said Frank Mazzio, a partner in AGA Developers, which is building South Square with quartz countertops, hardwood floors, and private balconies.

In February, AGA spent $712,500 to buy the property. "We've already sold eight units," Mazzio said.

In 2011, DiPietro bought Penn Scale Manufacturing Co. from two cousins running the business their grandfather began in 1923.

Fed up with corporate America and being passed over for senior leadership, "I decided I just wanted to make things," said DiPietro, 52, of Medford.

He dreamed of buying small manufacturing businesses, consolidating them in one place to save money on overhead, taking advantage of seasonal ebbs and flows to keep increasing numbers of employees busy year-round.

Because Penn Scale already had operations on Berks Street, he set up business there, leasing the space and employing about seven people.

He bought DuraCart, a plastic-piping business based in Hanover, and moved it to Philadelphia. He's in the market for another business or two, if he can stabilize his building situation, now distressingly insecure.

Some of his manufacturing is done elsewhere - Florida and China, in particular - but much of the assembling and packaging occurs on Berks Street.

That's also where DiPietro sources his supplies, spending 25 percent of his supplier dollars around Philadelphia and South Jersey, from Boyertown, Pa., to Williamstown, N.J.

A half-dozen of his vendors are within walking distance, including Oteri's business, which silk-screens the numbers on scales, and Freedman's Globe Paper, where he buys packaging.

"What happened is I actually started to like the neighborhood," despite the state of the building, which DiPietro calls "demoralizing," with its cracks, leftover equipment, and structural problems.

Some of his employees walk to work.

These days, DiPietro, fast-talking and chain-smoking Marlboros, is beside himself with worry - and excitement.

The excitement comes from a new line of colored plastic pipes that DuraCart's collegiate customers can customize in their schools' colors when designing storage carts for their athletic equipment.

"Look at these colors - how rich they are," he said, pointing to samples piled precariously on his desk.

As for the worry, it depends whether he can find room to grow before his new landlords order him to vacate. He's trying to find something in the neighborhood and on Wednesday put an offer on a building not too far away.

"I should be looking at Jersey," he said. "But I'm stuck. Stuck mentally."

DiPietro would like to buy the warehouse next door owned by C. Erickson & Sons, a general contractor. He's not alone.

"We've been approached a couple of times from developers," said Charles Erickson, company president. Price offers have doubled in two years.

Erickson likes the new residents.

"It was a second-rate neighborhood, and it is going to be a first-rate neighborhood," he said. South Square's ritzy townhouses are just across a narrow street from his chain-link fence parking lot.

"We're an active business," Erickson said. "We haven't been enticed to sell the thing yet. It makes no sense for us to participate in this feeding frenzy."

jvonbergen@phillynews.com

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@JaneVonBergen

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