The metal can and shipping container industry includes companies engaged in the manufacture of metal cans from purchased materials, primarily steel and aluminum. The majority of the cans and containers produced in this industry are used to package various foods and beverages. Foil containers are excluded from this classification.
332431 (Metal Can Manufacturing)
After declining from $11.93 billion in 1997 to $11.52 billion in 1999, metal can industry shipments rebounded slightly to $11.58 in 2000. Throughout the late 1990s and early 2000s, aluminum cans faced fierce competition from polyethylene terephthalate (PET) plastic bottles that came to claim a greater share of the beverage container market each year. The steel can market also dwindled in the late 1990s, and the entire metal can industry consolidated, as companies sought to remain profitable. The long term outlook for the maturing metal can industry depends on the industry's ability to exploit burgeoning foreign markets, new production technologies, and recycling opportunities.
The metal can industry was divided along the lines of the raw material used in manufacturing: steel and aluminum. Of the two types of cans, steel proved less expensive to produce, easier to heat, and stronger, while aluminum offered a greater strength-to-weight ratio, making it less expensive to transport. Moreover, consumers generally preferred aluminum cans over steel for some products, particularly beverages. Technological advances in the recycling industry generally applied to aluminum rather than steel cans.
The manufacture of steel cans typically involved three pieces—a top, bottom, and body. The body of the can was rolled and then soldered, welded, or cemented at the seam, and the can's top and bottom were later mounted to the ends of the body. Tin-plated steel cans, on the other hand, were generally constructed from two pieces, including a body and bottom, which were stamped and drawn from one piece of metal, and a top that was later attached. Aluminum cans were also produced from two pieces of metal, but usually featured a slight "neck" at the top of the body, which reduced the amount of material needed.
Because of its packaging properties, steel was used to produce the vast majority of all food cans and containers made from metal in the late 1990s. Steel also comprised about half of all non-food metal containers. Vegetables, pet food, aerosol cans, fruit and fruit juices, seafoods, and baby food were all commonly packaged in steel cans.
Aluminum cans were used primarily as beverage containers, largely because they were recyclable and held a greater appeal for consumers. Aluminum can manufacturers used more aluminum than any other U.S. industry. Of containers used by soft drink manufacturers in 1998, 48 percent were made of aluminum, while about 53 percent of the beer industry's containers were aluminum.
Recycled cans provided an important source of production material for manufacturers. Of the 102 billion aluminum cans produced in 1998, 63 percent (or 64 billion) were recycled, according to The Aluminum Association. While both steel and aluminum cans were nearly 100 percent recyclable, aluminum can manufacturers favored the process due to the high price of new aluminum, which was nearly double that of steel. Recycling saved 95 percent of the energy necessary to produce finished aluminum, and eliminated altogether the mining, shipping, refining, and reduction processes. While new steel production was a less expensive process, many steel can producers were also using recycled materials, given its cost-effectiveness and the country's increasing concern for environmental conservation.
The canning industry traces its origins to 1809, when French confectioner Nicolas Appert developed a method for preserving food, using glass jars that had been boiled in water. The ability to keep raw food from spoiling over long periods of time proved an important discovery, of particular benefit to French troops at war during this time. The basic canning principles developed by Appert closely resembled canning processes still used in many applications in the 1990s; carefully prepared raw food was sealed in a container, heated to a predetermined temperature to destroy spoilage organisms, and then cooled.
The glass bottle was eventually replaced by the tin can in a procedure patented in England by Peter Durand. While canning technology reached the United States in 1820, the tin-coated steel container did not gain widespread use in America until 1939. In 1861, Isaac Solomon discovered that adding sodium chloride to the preserving and canning process allowed for a longer shelf life. Subsequent advancements in canning during the Civil War hastened industry growth.
The canning industry experienced rapid proliferation beginning in the early 1900s, when advancements in can and glass jar technology lowered costs and improved canning reliability. For instance, soldered seams, which sometimes contaminated the food, were replaced by more reliable welding techniques during this time. Furthermore, the development of new machinery allowed producers to manufacture and fill mass quantities of cans.
Progress in can coatings and preservatives during the 1950s, among other technological breakthroughs, helped establish the United States as a world leader in the canning industry. By 1965, in fact, the United States was producing about 1.7 billion cans per year. The canning industry continued to enjoy high growth rates over the next two decades, as potential uses for the traditional steel can increased dramatically, most notably perhaps as a container for carbonated beverages. Although carbonated beverages constituted a negligible market for cans in the 1960s, by 1975 manufacturers were producing over 26 billion beverage cans per year, eclipsing the use of cans for food.
However, while the market for cans expanded, alternative packaging methods began offering stiff competition. Plastic and aluminum containers, which were developed into viable canning techniques during the early 1960s, began to enjoy widespread use in the 1970s. Because they offered price, weight, and convenience advantages important to beverage producers, aluminum cans quickly began to overtake that market segment. Furthermore, in 1974, Reynolds Metals Co. developed a pull-tab for the aluminum can that remained attached to the can after opening. This innovation proved safer than the traditional steel pull-tab and also produced less litter, making the aluminum can especially attractive to the beverage market.
The market for metal beverage cans continued to escalate in the 1980s—from about 50 billion cans produced in 1980 to over 97 billion by 1995—and aluminum cans captured an increasing share of the market. Having entered the industry in 1961, aluminum's market share reached 79 percent by 1975, 82 percent by 1980, and accounted for 95 percent in the 1990s. Furthermore, the beverage can market had grown to dominate the entire can industry. By the early 1990s, nearly three times more aluminum cans than steel cans were being produced. Plastic containers, which accounted for more than 25 percent of all food container production, were also competing for can consumers.
During this time, the introduction of the aluminum can recycling industry bolstered the popularity of the aluminum can. The amount of aluminum cans recycled annually leapt from about 300 million pounds in 1979 to nearly two billion pounds by 1991. In 1995, 62 percent of the 100 billion cans produced were recycled.
Although they had effectively been nudged out of the beverage can industry, steel can manufacturers continued to control the food and consumer products can market. Throughout the 1980s and early 1990s, steel cans represented approximately 95 percent of that market. By the mid-1990s, however, steel container revenues were in decline, due largely to increased competition from microwave and frozen food products that utilized plastic packaging. During this time, shipments of steel cans and containers remained between 4.1 and 4.5 billion tons.
U.S. aluminum can manufacturers faced a slow economy and a mature domestic market in the mid-1990s. Growth in this segment of the industry slowed to 3.9 percent in 1990 and just over 3 percent in 1992. Beer sales showed a decline as new products and microbrewers turned to glass bottles. As a consequence, can shipments to the beer industry fell from 36.8 billion units in 1994 to 35.1 billion units in 1995. Furthermore, sales to the soft drink industry, normally an increasing segment, dropped from 66.3 billion units in 1994 to 62.6 billion units in 1995.
A rise in aluminum prices at the beginning of 1996 had can fillers pre-buying sizable shipments in late 1995 and early 1996 to beat the increase. This price-sensitive purchasing caused gains for those periods but overall aluminum can manufacturers were cutting back on production. In 1996, Reynolds Metals Co. closed a 1-billion-can-a-year plant in Fulton, New York, and in 1997, discontinued operations of a 14-million-can-a-year plant in Houston. Crown Cork & Seal Company, Inc. closed two can plants and shut operations on another plant that produced beverage can ends. While both companies were shrinking their U.S. can capacity, however, they began expanding their operations in other parts of the world.
In addition to the industry-wide maturation of markets, steel can manufacturers in particular were challenged by slight gains experienced by producers of aluminum and plastic containers. Shipments of steel containers posted disappointing declines of 4.4 percent in 1991 and 5.7 percent in 1992, following nearly a decade of stagnation. The most notable blow to the industry was delivered in 1993, when Bev-Pak Inc., one of the nation's largest remaining producers of steel beverage cans, announced plans to switch to aluminum cans. Weirton Steel Corporation also announced its decision to end marketing efforts of steel cans.
Despite growth in the aluminum can sector in the late 1990s, and predictions that the aluminum beverage can market would grow by about 2 percent per year through 2002, the value of metal can industry shipments as a whole declined steadily during the late 1990s and only recovered marginally in 2000. The value of shipments in 2000 totaled $11.58 billion, compared to $11.93 billion in 1997. The cost of materials declined from $8.49 billion in 1997 to $7.64 billion in 2000. Employment during this period fell from 26,747 workers to 23,581 workers.
Several daunting challenges threaten the metal can industry. Foremost among these is the rise of PET plastic bottles in the soft drink industry. Just as aluminum cans once overtook steel as the packaging material of choice for soda companies, PET bottles have made substantial inroads into the market, beginning in the late-1970s. In 1990, plastic bottles claimed only about 34 percent of the soft drink packaging market, while aluminum cans had a 54 percent share. However, by the late 1990s PET had acquired a 51 percent of soft drink packaging, compared to aluminum's 48 percent share. PET bottles have proved particularly successful in the "on-the-go" market of gas stations and convenience stores, where consumers appreciate the convenience of 20 ounce PET bottles.
Aluminum can manufacturers have fought back. Producers have stressed to beverage companies and bottlers the benefits of aluminum cans—they are easier to stack and store on shelves than PET bottles and can be emblazoned like miniature billboards. Aluminum can manufacturers also began to tinker with can design to offer beverage companies aluminum packaging that could differentiate products. For instance, the development of thinner aluminum in the early 1990s was what enabled can manufacturers to adjust can shapes and production methods. The fluted can body resulted from experiments in this arena, as did the "202" beverage can, which sported a top that was one quarter of an inch smaller than most beverage cans used. Furthermore, Ball Corp. developed a spin-flow necking process that slimmed down both ends of its aluminum cans and thereby reduced the amount of aluminum required for manufacture as well as the amount of energy required in the production process. Even more promising, though, was can manufacturer's development of embossing techniques and high definition graphics. By 1999, worldwide sales of embossed cans neared 1 billion.
The overall can industry of the late 1990s has been marked by consolidation, as manufactures seek to maximize profits. Between 1982 and 1992 the number of metal can manufacturing companies declined from 397 to 301. By the late 1990s, only 272 companies were involved in can production, and 198 of these were larger companies with over 20 employees. The most significant event in the late 1990s occurred when Ball Corp. acquired can-making division of Reynolds Metal Co. to vault ahead of its competitors.
Based in Muncie, Indiana, Ball Co. is the largest can producer in the United States and the world. 1998 sales topped $2.89 billion, and the company employed 12,100 workers. About 25 percent of Ball's annual worldwide sales was derived from its can business with Coca-Cola and Pepsi Co bottlers. American National Can Group, was the second-largest can manufacturer in the United States. Operating over 22 plants in the U.S., American National provided cans to the Adolph Coors Company, as well as to the Coca-Cola Company and its bottlers (which accounted for nearly half of American National's sales). The biggest can manufacturer in Europe, American National's 1998 sales were $2.45 billion and it employed 4,735. A third key player in the can industry was Crown Cork & Seal Company, Inc. based in Philadelphia, with 38,459 employees and sales of $8 billion in 1998.
Although these three companies were much larger than any of their competitors, their revenues were augmented significantly by a wide variety of operations outside of metal can manufacturing. The metal can industry as a whole remained relatively diversified, supporting several firms that generated revenues of less than $50 million and employed fewer than 500 employees.
Increased productivity in the industry prompted a reduced work force, and between 1982 and 1990, as industry employment declined from about 50,000 to around 35,000. This trend continued in the 1990s with total employment in the industry falling from 30,900 to 23,581 between 1994 and 2000. This reduction was fueled by increased automation and the movement of production facilities to less-regulated, low-wage paying countries, such as Mexico. Jobs for machinery mechanics, which accounted for 10 percent of the work force in 1993, were expected to decline by about 20 percent between 1990 and 2005. Positions for machine forming operators and tenders (7.4 percent of the work force) were expected to see declines in work force of over 45 percent during the same period. In fact, every occupation in the industry would likely plunge by 10 to 50 percent, with most job opportunities—including those for top executives and managers—decreasing by at least 30 percent.
Nevertheless, production workers were essential to can manufacturing in the late 1990s. 20,265 of the 23,581 industry employees were directly involved in production in 2000. These workers earned an average wage of $18.79. California had the most employees in the industry in the late 1990s, with 4,082, followed by Ohio with 3,348 and Illinois with 2,151.
Foreign food and beverage markets offered huge growth potential for U.S. canners, particularly aluminum can producers, who stood to benefit from the global shift away from steel cans. While 50 percent of all beverage cans produced outside the U.S. were steel in 1992, U.S. aluminum canners, operating the most technologically advanced and productive plants in the world, were poised to gain market share as other countries sought the environmental benefits associated with aluminum.
In addition to the strides made in improving aluminum cans, several steel beverage can developments also occurred in the early 1990s, as some producers tried to revive that market, including several Japanese firms. Despite these developments, most countries, including Japan, switched to aluminum in the 1990s. But steel cans had a slight resurgence in 1995, as six European canmakers changed from aluminum to steel. Additionally, Northern Can System, of Canton, Ohio, introduced a steel can made with a steel end (instead of the industry norm of aluminum) to be used with a variety of non-carbonated beverages. And in Germany, Coca-Cola debuted a contoured can that could only be made from steel because of the distortion limitations of aluminum.
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