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Crown Cork & Seal in 1989

Teaching Note
I introduce the class by remarking that John Connelly ran Crown Cork & Seal for over 30
years and followed essentially the same strategy for the entire period. The total return to
shareholders over the 32-year period was just under 20% compounded. Now that Connelly has
stepped down as CEO and given control to William Avery, is it finally time for a change? I begin by
asking what are the key strategic issues facing Avery in the summer of 1989.

Question 1.

What are the key strategic issues that Avery needs to consider? What
strategic options are open to him?

Here I just want to develop the list and save the analysis of the issues until the end of class.
The list of issues should include some of the following: (1) The old Continental Can is apparently for
sale either in whole or in part. Should Avery consider bidding on some or all of the business? (2)
Metal containers are very slow-growth and plastics is forecast to make significant inroads. Should
Avery consider entering plastics? If so, in what segments, and should they build their capability or
acquire someone? Who? (3) Expand the product line to a full line of metal containers, not so focused
on beverage and aerosol? (4) Diversify into other packaging materials and product categories? (5)
Diversify into other less-related businesses? (6) Exit, or sell the business?
How should we go about addressing these issues? Presumably we should analyze the
appropriateness of Crowns future competitive strategy. We must first understand the industry in
which Crown competes and then identify and evaluate the strategy that Connelly followed to see if it
is indeed time for a change. Finally, we will return to the question of what should Avery do?

Question 2.

If we are going to analyze the industry that Crown competes in, what is
the appropriate industry to analyze? (Do not write anything on the
board.)

The responses should range from the "packaging industry to the container industry to the
metal container industry and, perhaps, to the beverage and aerosol can industry. Start with the
packaging industry and ask: Why packaging? Who is in the packaging industry? The response
should be all of the players in the case. Who else? All glass manufacturers, all plastics
manufacturers, all paper and cardboard manufacturers, all composite manufacturers, etc.?
Eventually we end up with almost all manufacturing in North America. In a real sense, the
packaging industry is too broad and includes many different industries to be included in our
discussion. Not because various packaging manufactures are unimportant and can be ignored, but
because we will treat them somewhat arbitrarily as substitutes in our analysis.
Then ask: Why not focus our analysis on the beverage and aerosol segments of the market?
These are Crowns served market and reflect their strategic positioning. Many companies, in fact,
tend to focus on analyzing their served markets. However, this is clearly too narrow a view of the
industry since it completely misses potential threats, as well as opportunities, that the company faces.
It is useful to point out that after we carry out our industry analysis we may need to go back and

segment the industry and refine our analysis by segment to develop appropriate tactics for the
segments they serve. So we agree to analyze the metal container industry.

Question 3.

How attractive has the metal container been over the years?

Here we carry out a straightforward five forces structural analysis of the industry. Although
you can start anywhere, analyzing buyers is probably the best place to begin.
Buyers xxx Are these the types of buyers that you want to sell to? No, why not?
Many of the buyers are large powerful companies: large breweries (Anheuser Busch, Miller
Beer, etc.), soft drink bottlers (Coke, Pepsico, etc.), and food companies (Campbell Soup, Kraft General
Foods, etc.). These companies buy in large volumes that affect your economics through long,
continuous runs with few production line changeovers. In order to attract this business, can
manufacturers aggressively pursue this business but give away much to its value in their zeal? Why?
Cans are commodity products. There is no way to differentiate what you do, with the possible
exception of superior service. However, buyers demand and receive just-in-time inventory and
punish suppliers with cuts in the size of orders for either poor service or out of line prices. Quality
appears to be a strategic necessity and not a possible source of competitive advantage. Most buyers
use two or three suppliers, and, with essentially zero cost, can adjust their orders and, with very
minor cost, switch to an alternative supplier. Some manufacturers have built plants dedicated to a
single buyer and found themselves in a vulnerable position.
In addition, buyers are very knowledgeable and many are backward integrated into cans to
supply some of their own needs. They know the cost to manufacture cans and represent a credible
threat of increasing their level of backward integration. This is very important for large brewers and
food companies who have long runs of identical cans, but less true of soft drink producers who have
smaller plants and more product variety. Smaller buyers in the industry are apparently also quite
knowledgeable on current prices, being kept informed by information leaks from larger buyers.
The can is very important to buyers since it represents up to 45% of the cost of, say, a canned
soft drink. Any savings achieved when purchasing of cans drops right to the bottom line. Given the
cost of cans and the fact that buyers tend to be in rather competitive industries, their incentives are
price, price, price, and delivery.
Substitutes xxx What are the substitutes for metal containers? Do they make the industry more or
less attractive? Less, why?
There are many substitutes for metal containers: glass, plastic, paper, fiberfoil, paper and
plastic combinations, etc. What impact does the availability of substitutes have on the structural
attractiveness of the industry? First, substitutes limit prices. In the short term, price increases can be
met with a shift to glass or plastic by brewers or soft-drink bottlers. Hence, immediate retaliation is
possible. What other structural impacts do substitutes have? Second, they may limit long-term
demand for metal containers. In the longer term, alternative packaging innovations may emerge that
assimilate entire segments of the industry. Fiberfoil for oil cans was followed by plastic bottles with
long spouts and resealable screw tops. At the time these plastic oil bottles were launched by
Quakerstate in the United States, Bethlehem Steel had a large stake in the steel tops and bottoms of
fiberfoil cans. They considered introducing their own steel spout for a fiberfoil can, but by then the
market segment had moved to plastic bottles. Plastic soft drink bottles, plastic orange juice cans, and
paper and plastic juice boxes, are all examples of segments that moved away from metal containers
for reasons of ease and convenience. Hence, substitutes limit and possibly reduce long-term
structural demand.
Suppliers xxx Who are the suppliers and who has leverage in the relationship?

Suppliers are the major aluminum and integrated steel companies. Since aluminum over
time has come to dominate the industry (accounting for 71% of the cans produced), we first look at
aluminum companiesAlcoa and Alcan combined represent 65% of the aluminum can stock market.
Is it possible for can manufacturers to successfully trade one off against the other in a price
negotiation? Perhaps to a certain extent in the short term, but basically the aluminum industry is a
classic oligopoly with few suppliers and price leadership exercised by Alcoa and Alcan. (In the late
1980s, the deteriorating structure of the aluminum industry, driven by slowing growth, threats of
substitutes, and exit barriers for marginal players, may have offset this historical pattern.)
Is it a problem that Reynolds is both a supplier and a competitor? It would be clearly
incorrect to credit them with a raw material cost advantage simply because they are vertically
integrated (aluminum sheet and aluminum can manufacture are clearly separate businesses).
However, if by being vertically integrated, Reynolds is able to benefit from lowered transactions costs
or research and development carried out elsewhere in the company, then they may have a competitive
advantage. The case suggests that this may indeed be true since they are the leader in the technology
for metal can manufacturing equipment. Not mentioned in the case is the fact that they are the leader
in redesigning the tops (using spun aluminum) and bottoms of the can (shape) to make thinner
walled cans resulting in raw material costs savings. Although this technology would ultimately
disseminate to other can manufacturers, Reynolds would clearly gain first-mover advantages from
introducing the technology.
Are integrated steel companies friends of the can manufacturing industry? To a certain
extent they are as they have an incentive to defend steels market share in the metal container
industry. There is some evidence that aluminum prices have not risen as much as they might have
because of the steel industrys pricing strategy. However, it is clear that this is a declining industry for
steel, and their incentives are to maximize the cash generated over the decline. This means pricing as
high as possible short of accelerating the can manufacturing industrys change over to aluminum.
Hence, they may help can manufacturers but they are not entirely incentive compatible.
Barriers xxx What are the barriers to entry? How difficult would it be for, say, Alcan, to forward
integrate into the industry?
Historically, it was probably not that difficult to enter the industry and more than 100
competitors did (mostly on a regional basis). Transportation costs (7.5% of overall costs) limited
efficient operations to 150 to 300 miles of a plant, and capital costs for three-piece lines were relatively
low ($7 million in 1989 dollars).
In 1989, entry is more difficult, but certainly possible. Although used three-piece lines are
available for $200,000, this does not help in North America due to the shift to two-piece cans. A new
minimum efficient scale plant with one two-piece line would cost roughly $25 million in 1989. The
capital costs are small relative to the size of the market ($12 billion in the United States), but it is
necessary to capture market share in a particular region. The capital cost barrier is basically the
return on investment which, in turn, is driven by (1) size of the market; (2) growth rate of the market;
(3) market share that the investment will gain; and (4) margins the investment will sustain. If capital
is to be a barrier, it must be either market share or margins. Given our analysis of buyers, a new
entrant with an efficient low-cost plant will be able to capture the market share needed. The biggest
barrier to capturing market share is competitor retaliation due to overcapacity in a region, but this is
not very credible once a plant has been built. The major reason for lack of entry over the recent past is
the low and deteriorating margins in the industry.
Rivalry xxx What is the nature of the rivalry in the industry? Is it possible to find profitable segments
or differentiate oneself?
This is basically a low-growth, capital-intensive, somewhat cyclical, commodity product
industry. Although aluminum had grown rapidly in the past at the expense of steel, this has played

out as it represents 99% of the beer can segment and 94% of the soft drink segment. Margins have
fallen significantly in the recent past as raw material prices rose and rivals were unable to pass on cost
increases to customers. High capital costs relative to variable costs require volume to support highcapacity utilization; hence, pressure on prices.
Is there some way to differentiate yourself? Service may be possible and there is some
evidence that Crown Cork provides superior service in the form of helping to solve customers
problems. It does not appear, however, that a price premium can be obtained for this service.
Customers buy primarily based on price. All suppliers provide just-in-time inventory, and product
quality is a strategic necessity in the sense that customers will not pay extra for exceeding the
standards. Buyers punish suppliers for poor delivery and service. Most of the rivalry discussion will
have been covered in the discussion of buyers so it can be cut short here.
Bottom line xxx So what is the bottom line? Is this an attractive industry?
Clearly not! Buyers have a great deal of leverage which they exercise. (General Cinema said
in the past that they would not backward integrate into can manufacturing because the can
manufacturers are practically giving away the cans). There are many substitutes which limit price
and limit or reduce long-term demand. The suppliers are few, relatively large, and members of
oligopolies. Reynolds is both supplier and competitor and may have a competitive advantage as a
result. There is a threat of possible further forward integration. Barriers are moderate, but intense
price-driven rivalry in the industry makes it unattractive to potential new entrants as margins are
squeezed.
So what is the conventional wisdom when faced with such an industry? Diversify away from
the industry! This is exactly what major competitors did in the 1970s and 1980s. American Can first
diversified into packaging more broadly and then, due to a lack of financial success, moved into
financial services, divesting all of its packaging business and becoming Primerica under Sandy Weil.
Continental Can diversified and became Continental Group in 1976 and further expanded into energy
with particularly poor timing and ultimately disappeared in a leveraged buyout. National Can
diversified into other packaging products, packaged food, and international packaging operations
with limited success. What did Crown Cork do under John Connelly? Crown focused on particular
segments of the industry and did not diversify.

Question 4.

How well did Crown Cork do under John Connelly? What were the keys
to their success?

Given the competitive structure of their industry, Crown Corks performance was
outstanding by any measure, although we do not have all the evidence that we would like. During
Connellys entire 32 years the stock appreciated at a compound rate of 19.5%. Given the duration of
his tenure, this is a very impressive record. During the 1968-1978 period Crown Cork was ranked 114
in total return to shareholders, well ahead of both IBM (rank 183) and Xerox (rank 374) which would
have been considered high performers. During the 1978-88 period Crown Cork ranked 146 ahead of
DuPont (rank 154) and IBM (rank 289) with a compound rate of 18.6% even though this included a
period of weakened performance in the early 1980s. The limited evidence that we have on
competitors in their industry is that Crown Corks ROE was 15.8% for much of the 1970s versus
10.7% and 7.1% for Continental Group and American Can, respectively.
How did Crown achieve such superior performance? Was it their strategy? their
organization? their culture? Was it John Connellys leadership? Yes! Lets look at Connellys
strategy. What was it and what was key?
Product line xxx Focused on beverage and aerosol cans, the so-called hard to hold segments.
These were high-growth segments when he committed to them and they continued to grow

throughout his tenure. Committed to a focused strategy: early on he exited the oil can segment when
fiberfoil came in, even though they had over 50% of the segment. Also committed to international
expansion at an early date (see below) and had strong positions in closures and the manufacture of
filling equipment.
Marketing xxx From the beginning customer satisfaction was emphasized, as well as being close to
their customers. Believed that fast answers get customers. The keys were quick responses to
customer, high levels of customer service, and just-in-time inventory deliveries. Connelly clearly
committed to customer satisfactionnote his impromptu trip to Florida to respond to a customers
problem.
Manufacturing xxx Built 26 plants around the United States to be close to customers. Never built a
plant for a single customer to avoid too much dependence. In the early years, when capital intensity
was relatively low, Crown kept extra lines in setup condition for immediate response. More recently,
some plants kept up to one months inventory on hand to provide quick response. Strong emphasis
on continuous cost reduction. Emphasis on quality with a belief that better quality helped drive costs
down through fewer manufacturing rejects and customer service problems. Invested early in twopiece lines to gain experience and first-mover advantage.
Research and development xxx Connelly eliminated basic research as unnecessary and costly. R&D
emphasized continuous cost reduction and solving customer problems. Customers were helped with
problems from plant layouts to designing a new dust cover. The fact that Crown was also designed
and manufactured filling equipment gave them a core competence that permitted them to assist their
customers with equipment and layout problems. Their limited product R&D emphasis was on being
a quick follower of any innovation. Overall, a low-cost responsive capability.
Organization xxx Connelly emphasized decentralized responsibility at the plant level. Plant
managers were developed to be owner-operators. Tight financial control at corporate but most
other decisions made at the local level. Exceedingly cost conscious and tight control of overhead
expenses. It is important to point out that SG&A as a percent of sales was kept very low and
continuously decreased throughout Connellys tenure. Very frugal Spartan atmosphere throughout
the organization.
International xxx A key to Crowns success was Connellys early commitment to an international
strategy. Crowns strategy was to target developing countries and obtain pioneering rights which
guaranteed limited or no competition, tax holidays, low wages, and a market for their products. From
Exhibit 8 in the case we see that all others (i.e., non-U.S. and non-Europe) account for 19.7% of
sales, but 38.9% of operating profits in 1988. The operating ratio is 17.9% for all others versus 6.6%
and 7.5% for the United States and Europe, respectively. By 1988 Crown had 62 plants outside the
United States, with a substantial number located in developing countries.
Finance xxx Crowns strategy had been to eliminate preferred stock and any dividends on the
common stock and continuously reduce long-term debt. By 1988, long-term debt, as a percent of total
capital, was less than 2%which is essentially no long-term debt at all. One could argue that their
focused strategy was potentially at risk to any forces that would eliminate the segments on which
they focused; for example, substitution risk from plastic bottles, or environmental concerns with
aerosols. The conservative financial strategy would offset these risks. A prominent feature of the
financial strategy was the continuous repurchasing of stock. This had the effect of increasing
earnings per share and driving the stock price up. As Connelly owned a substantial number of shares
but paid himself a relatively low salary, this was the key to his accumulation of wealth. Through
most of his tenure the tax laws strongly favored capital gains over dividends.

Overall xxx What should be emphasized in analyzing Crowns strategy is the way in which each
functional policy is consistent with their overall strategy of being a focused, customer-responsive
company. However, their superior customer service definitely helps get them the business but
probably does not get them much of any price premium in such a highly competitive industry. Their
strong financial performance relative to others must be driven by their overall low-cost position in the
industry.
What role did John Connelly play in all of this? At the broadest level he had the vision,
developed the strategy, and created a culture that positively reinforced his strategy. He led by
example: hard work and frugality. He was very demanding of his people and apparently generated
strong loyalty from them. He set demanding goals for the organization and generally achieved them.
That is, he continually stretched the organization.
Now that we have analyzed the industry and Crowns strategy for success in the industry, we
turn to the problems confronting the new CEO, Bill Avery.

Question 5.

What significant changes are taking place in the industry? How should
the new CEO, Bill Avery, respond? Is it finally time to change the
Connelly strategy that has been successful for over 30 years?

What changes are taking place in the industry? The growth of metal containers is slowing
and the industry may actually decline in the 1990s as plastics continue to make in-roads. Plastics
appears to be a major threat in the coming years. There has been a continuing margin squeeze in the
United States and Europe. In the United States, beverage manufacturers have consolidated from 8,000
to 800 in the last decade giving them increased leverage. As Reynolds introduces a new generation of
can-making technology, Crown will be forced to make substantial capital investments to follow suit.
With inroads from plastics and the new manufacturing technology, there is the potential for
overcapacity in the industry. Finally, further industry consolidationwith Pechiney purchasing
American National (25% of the U.S. market) and Continental Can (18% of the U.S. market) being put
up for sale by Peter Kiewitis a threat to Crowns position.
How should Avery respond?
(1) Stick to the John Connelly strategy that has been successful for the past 32 years.
Maintain the focused strategy, provide superior customer satisfaction, and defend their low-cost
position in the industry. This would include continuedaggressive international expansion primarily
in developing countries. Since they have only 62 plants outside the United States (including Canada),
there must be plenty of room of expansion. They could also review and expand the product line to
any growing segments with similar customer requirements. Aluminum food cans may be such a
segment but you could not discern this from the case. However, this strategy may be under attack
from competitors like Ball, Van Dorn, and Heekin.
(2) Buy all or part of Continental Can. If they buy all of Continental Can they would be coequal leader in the world with Pechineys American National. The question is: Can we take enough
cost out of Continental to develop a competitive advantage or will the acquisition of Continental
destroy Crowns efficiency? The European operation is large ($1.5 billion in sales), manpower
intensive (10,000 workers), and runs head to head with Pechiney. Perhaps we should pass on the
European operation and consider the remaining parts. If the operations of Continental Can outside
of North America and Europe are available, these would complement our current strategy very nicely,
so why not try to buy them (price rumored to be $100 to $150 million). That leaves Continental
Canada and Continental U.S. to be decided upon.
Acquiring Continental Canada would make Crown the leading supplier of all types of cans in
Canada. This would be a departure from Crowns traditional strategy of focusing on beverage and
aerosol cans but it could be justified as similar to its country-based strategies in the rest of the world.

We do not have the information to do much of an analysis, but the acquisition probably could be
justified and would prevent Pechiney from consolidating Canada to their advantage.
Acquiring Continental Can U.S. (sales of $1.3 billion) is a more difficult decision. There is
reason to believe that Pechiney would not be able to make the acquisition for antitrust reasons, given
their 25% market share. This leaves Reynolds, Ball, one of the smaller regional players, or one of the
bigger European competitors. Whoever makes the acquisition becomes a strong number two in the
United States. The question is: can Crown make the acquisition, take out the remainder of the excess
costs (presumably Peter Kiewet has already done the obvious cost reduction but probably has not
spent much to upgrade their facilities), and integrate the Continental operations into theirs. A big
question is whether or not Crown can change Continentals culture to be more like theirs without
losing the cultural advantage that they apparently have.
Further, acquiring the U.S. operations of Continental Can would be a major strategic change
for Crown. No longer would they be a second-tier focused player but a full-line number two
competitor in the country with a market share of 32%. Presumably there would be problems
maintaining Crowns service and customer responsiveness to such a broad customer base with a full
product line. In addition, to make the acquisition Crown would have to borrow substantial sums,
taking on a level of debt far beyond anything Crown has done in the past and requiring debt service
that would drive up their costs. For Avery this could not have been an easy decision; its a major
break with past success.
(3) Diversifying into plastic packaging is presumably an attractive opportunity. All analysts
agree that this will be the growth area of the 1990. However, we have no information upon which to
make a decision. We need to know enough to do an industry analysis similar to the one we have
done above for metal containers; evaluate various competitors in the segment, and understand
Crowns core capabilities related to this diversification. Crown had already expanded into plastic
closures but in a small way and they have yet to expand into plastic bottlesa major substitute threat
in the 1990s. One of the largest plastic packaging companies, Constar, was having financial
difficulties and might have been for sale.
(4) Other completely unrelated diversification is, of course, possible, but we are in no
position to evaluate their prospects. Certainly any such proposal would need to be justified on a
transfer of core capabilities argument. Crowns core capabilities are die forming, metal working, and
designing and manufacturing filing equipment. What are the right industries to target?
(5) Selling the business is also an option. If your analysis convinces you that the industry
structure will be quite unattractive in the future, then selling the business before it deteriorates may
be a reasonable strategy. The current market price of the stock is near an all-time high and you have a
terrific balance sheet.

Update
At the end of the class I would have the participants vote on which option they feel Avery
should follow. Make sure you vote on all of Continental Can and Europe, Canada, and the rest of
their operations separately. Clearly vote on further diversification into plastic packaging, especially
bottles. Finally, determine how many participants would not tinker with success and stick to the
Connelly strategy of product line focus, customer service, and international expansion. You should
get a wide range of responses.
Crown bought Continental Can Canada for
Continental Can U.S. for $336 million on July 15, 1990.
relatively low-selling price suggests they also bought
investment. Crown moved to cut costs and restructure
Continental ROW for $125 million in May 1990.

$330 million on November 22, 1989, and


Given the estimated sales of $1.3 billion, the
liabilities or facilities that were in need of
following these acquisitions. Crown bought

In addition, Crown took a major expansion into plastics, purchasing Constar, the largest
manufacturer of plastic containers in the United States, for $515 million on October 30, 1992, and
reached agreement on the purchase of Van Dorn for $175 million in December 1992 which they
concluded in 1993. Van Dorn expands the product line into drawn aluminum food containers as well
as providing a substantial capability in plastic and composite containers and injection-molding
machinery. By the end of 1993, Crown had become a strong number two behind Pechiney, with a full
product line of metal containers in the United States and Canada. In addition, Crown had developed
a strong product line in plastic containers as a result of the two acquisitions cited and several other
smaller acquisitions. In Europe, Crown operated their plastic bottle business right out of their can
plants, servicing the same customers that they had in the past.
As a footnote, Bill Avery received $2.2 million in salary and bonuses alone in compensation in
1989, making him the highest paid CEO in the Philadelphia area. Nationally, 119 of Forbes 800 made
more than $2 million. So much for frugality.
Crown Cork and Seal, 1993-1995 Update, March 27, 1995
1994
Sales (millions)

4,452.2

Net income (millions)

131.0

Capital expenditures

400.0 (est.)

1993
4,162.6
99.1
271.3

Acquisitions
Since December 1989, CCK has spent $1.6 billion on 18 acquisitions that have more than
doubled its sales.
In January 1994, CCK agreed to acquire the Container Division of TriValley Growers,
expanding into the food can business. TriValley is an agricultural marketing cooperative which
processes and markets fruits and vegetables. CCK and TriValley entered into a long-term supply
contract.
In April 1993, CCK acquired the Van Dorn Company, which provided CCK with two-piece
(drawn) aluminum cans for processed foods and additional manufacturing capacity for metal, plastic,
and composite cans for products in a variety of industries.
CCK acquired CONSTAR in October 1992, including its Dutch affiliate Wellstar, a leading
manufacturer of PET (polyethylene teraphlate) bottles. As a result of the acquisition, CCK now
conducts business in two separate industry segments: Metals and Plastic. The Plastics segment
represents 20% of net sales in 1993, compared to approximately 2% in 1991. Capital expenditures for
plastic packaging were approximately 44% of total capex in 1993, as compared to 5% in 1991.
(In 1991, CCK acquired Continental Can Corporation. See earlier update.)

Other Expansion
The company continued to shift can production to plants in China, Hong Kong, Korea, Saudi
Arabia, United Arab Emirates, Argentina, and Venezuela. As a result, can-making capacity outside
the United States will rise to 10 billion per year in 1996 from 7 billion currently. Capacity in North
America is 27 billion cans. CCK had 158 manufacturing facilities in 42 countries.
In July 1994, CCK announced a new joint venture with two local companies near Hanoi,
Vietnam, for the manufacture of two-piece aluminum beverage cans. Construction was expected to
begin in 4Q 1994. The facility would produce 400 million cans per year and serve the North
Vietnamese soft drink and beer market, as well as regional export markets.

In June 1994, CCK announced that it would set up a joint venture in Beijing, China, to
manufacture two-piece cansits third in China. The plant, expected to be complete by 1996, would
produce 400 million cans a year for the beer and soft drink markets in northeast China.
During 1993, CCK invested $83 million in the international division, constructing new plants
and installing both beverage can and plastic cap production lines in Dubai, United Arab Emirates,
Jordan, Argentina, and Shanghai, China. CCK also constructed an aerosol plant near Amsterdam,
expanded plastic cap production in Italy and Germany, and installed single-serve PET equipment in
Portugal. (CCK invested $93 million of capex in North America mainly to open a new technical center
and aerosol plant in Illinois, and two-piece steel food lines in Minnesota.)
With the acquisition of Continental Can in 1991, CCK acquired minority interest in joint
ventures in the Middle East, Korea, and South America, and a majority interest in a joint venture in
Hong Kong.

Restructuring
CCK closed or reorganized 24 plants since 1991 and will continue to shut down slower
production lines in favor of faster plants.
In September 1994, CCK announced plans to restructure 13 metal packaging facilities in the
United States and Canada within one year. As a result, the number three-piece facilities would be
reduced by 20%. Two plants will be closed and three reorganized, for a restructuring charge of $114.6
million. Approximately 850 jobs would be eliminated. CCK estimated that the restructuring would
generate $36 million cost savings after tax annually.
In 1993, CCK closed certain operations in France and the Netherlands, and downsized
operations in Belgium and the United States.
During 1992, CCK closed three Canadian plants and took other restructuring actions due to
unfavorable market conditions there. In 1993, CCKs Canadian operations improved.
In 1992, CCK organized into four divisions by adding Plastics to its previously established
North American, International, and Machinery divisions.
Market Shares:
U.S. PET packaged goods market:
CCK

43%

Johnson Controls

30%

Stock Prices:
1993

1994

1995 (to date)

High

41.9

Low

33.2

High

41.0

Low

34.0

High

44.0

Low

38.2

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