300 Madison Avenue
Libbey Inc. is a leading producer of glass tableware in North America; is a leading producer of tabletop products for the foodservice industry; exports to more than 80 countries; and provides technical assistance to glass tableware manufacturers around the world.
Libbey Inc. of Toledo, Ohio, is North America's top producer of glass tableware. In existence for nearly 200 years, the company bills itself as "America's Glassmaker." Since going public in 1993 and gaining its independence after many years operating as a subsidiary or division of Owens-Illinois, Libbey has expanded into new tableware products. Through acquisitions it has grown into a major provider of ceramic and metal flatware to America's foodservice industry. Subsidiary Syracuse China produces dinnerware and World Tableware makes metal flatware and hollowware. In addition, a joint venture with Mexican glassware manufacturer Vitrocrisa has allowed Libbey to further its efforts to market its products internationally.
Origins of Libbey Reaching Back to Late 1700s
Glassmaking was one of the earliest industry start-ups attempted in the New World, dating as far back as 1608 to the London Company's Jamestown, Virginia, settlement. The venture failed, but over the next 150 years other businessmen followed, so that by the time of the American Revolution the Colonies had an established, although unsteady, glass industry. New England became a natural location for glassmakers, the forests offering a cheap and readily available source of fuel, a dependable workforce, and access to world markets through Boston harbor. Libbey's most distant ancestor is the Boston Crown Glass Company, which was chartered in the late 1700s to produce crude window glass, so-called crown glass, and is credited with introducing lead glass to the North Atlantic states. In 1814 some of its employees struck out on their own, forming the Boston Porcelain and Glass Company to produce fine glass at a plant located in East Cambridge. Within three years, however, the business failed, and in November 1817 its assets were auctioned off to a group of four investors. In February 1818 the new company, Libbey's direct ancestor, became known as the New England Glass Company, a name it would retain for the next 60 years.
The most influential man of the investment group was Deming Jarvis, the son of a wealthy Boston businessman who had worked at Boston Porcelain as a clerk. He now became the first agent, or general manager, for New England Glass, a position he held until 1826. Perhaps of more importance to the company's future prosperity was his exclusive holding of the American rights to the production of red lead, which was required in the making of fine tablewares. Most of the country's other 40 glasshouses continued to produce crown window glass, but Jarvis's monopoly permitted New England Glass to compete with European glassmakers on an even playing field. In its first year of operation, with a workforce of 40, the company produced goods valued at $40,000. By 1849 New England Glass became the largest glassmaker in the world, employing 500, with the value of goods produced growing to $500,000.
New England Glass was well known for its high quality glass products. Not only did it produce blown pieces in both clear glass and a range of colors, it also pioneered the process of pressed glass. Technical advances in the industry and other factors, however, would mitigate the advantages of an excellent reputation for quality craftsmanship. In 1864 a former employee, William Leighton, developed a soda lime formula to replace lead in the making of glass. It was cheaper and safer, lessening the risks of lead poisoning to workers, and also produced glass that was thin and hard, easy to cool, and ideal for pressing. While most glassmakers soon switched over to the new mix, New England Glass refused, its management firmly believing the new lime-based glass to be of inferior quality. The company suffered a further economic disadvantage because of the distances it had to ship coal to serve as its fuel, now that the pine forests of New England were depleted.
Libbey Family Becoming Involved with New England Glass: 1870s
As New England Glass struggled to compete in the 1870s, barely managing to survive the depression of 1873, the Libbey family became involved with the company. William L. Libbey joined New England Glass as agent in 1870. He had been part owner of Mount Washington Glass and shared New England Glass's commitment to quality. In fact, when the business began to operate at a loss and the directors voted in 1874 to close the company, Libbey convinced them to continue. Despite cutbacks, New England Glass continued to post losses, and in 1878 the directors elected to lease the properties to Libbey. Until 1880 the company continued to operate as New England Glass, then changed its name to W.L. Libbey and Son, Proprietors. The son was Edward Drummond Libbey, who had gone to work for his father at New England Glass in 1872 as a chore boy, apparently as a way for the father to convince the son to enroll at Harvard University, which young Libbey had refused to do. Eventually Edward enrolled at Maine's Kent Hill Academy with the intent of becoming a Methodist minister. A throat infection, however, permanently impaired his voice and destroyed his ability as a public speaker. As a result, he returned to New England Glass in 1874, taking a position as a clerk and learning firsthand the financial difficulties that the company now faced. By 1880 he was made a partner, precipitating the change in the name of the business, and when his father died in 1883 Edward, at the age of 29, assumed control.
Over the next five years Edward Libbey managed to keep the company afloat despite chronic fuel shortages and labor difficulties. With the discovery of natural gas fields in the Midwest, Libbey began to search the area for a suitable place to relocate the business. In February 1888 he signed a generous contract to transfer his glass works to Toledo, Ohio. The city fathers agreed to provide a four-acre factory and 50 lots for workers' homes. Moreover, Toledo was ideally situated, close to natural gas fields, a major railroad center, as well as Lake Erie. As part of the move, the business was incorporated in Ohio as W.L. Libbey & Son Company, then renamed in 1892 as Libbey Glass Company.
In August 1888 a special train arrived in Toledo from Boston containing 50 carloads of machinery and 250 workers. Perhaps the most valuable asset of all was a young glassblower named Michael J. Owens. Born to poor immigrant parents in West Virginia he had gone to work in a glass factory at the age of ten. Ambitious and eager to further his own education, Owens developed his talent for public speaking and became a union organizer. Libbey quickly recognized Owens's leadership abilities and put the 29-year-old glassblower in charge of the new Toledo plant. Despite the advantages of the Toledo location and Owens's talents, however, the company continued to lose money. A turning point came in 1892 when the Corning Glass Works was shut down by a strike and Libbey Glass was able to secure a contract from Edison General Electric to produce handblown light bulbs. In that same year Libbey made a decision, opposed by some directors, that would result in transforming the struggling business into the most important cut glass manufacturer in the world: He secured the exclusive rights to build and exhibit a fully operating glass factory at Chicago's 1893 Columbian Exposition.
Well positioned on the Midway Plaisance of the Exposition, the Libbey Pavilion was designed to look like a palace. Visitors for the price of 10¢ (later increased to 25¢) could observe the craft of handblowing and cutting glass. The price of admission could then be applied toward the purchase of a glass souvenir, such as a slipper, hatchet, paperweight, or cup and saucer. More expensive cut glass items were also offered for sale. The highlight of the Libbey exhibits was a spun glass dress. With over two million people visiting its pavilion and garnering considerable press attention, Libbey Glass was now able to place its fine cut glass wares at some of the most prestigious stores in the country, including New York's Tiffany's. Cut glass now entered its "Brilliant Period," a run of popularity that lasted for 25 years.
With Libbey Glass enjoying the fruits of prosperity, Edward Libbey was able to back the pioneering work of Michael Owens. After designing machines to produce light bulbs, tumblers, and lamp chimneys, Owens in 1903 invented the automatic bottle blowing machine, one of the most important advances in the history of glassmaking, resulting in a variety of glass products that now became affordable to the masses. Owens also perfected the first automatic flat glass making machine. Several new companies grew out of Owens's inventions: the Toledo Glass Company to make tumblers and lamp chimneys; the Owens Bottle Company; and Libbey-Owens Sheet Glass Company. Libbey Glass, meanwhile, continued to focus on the fine cut glass market. Although Edward Libbey remained the company's largest stockholder, he withdrew from active participation in its affairs in 1896, choosing instead to devote most of his time to the businesses created to exploit Owens's inventions.
The "Brilliant Period" for cut glass began to wind down during World War I, when not only did consumers' tastes begin to change, but wartime restrictions limited necessary chemicals. Libbey attempted to maintain the business by introducing "Lightware," a less expensive product because the walls were thinner and required less cutting time, but the effort was poorly promoted and proved to be a disappointment for the company. Edward Libbey continued to hold a controlling interest in Libbey Glass until 1920, three years before his death, when the business was reorganized as the Libbey Glass Manufacturing Company.
Libbey Glass enjoyed something of a resurgence in the 1920s with the introduction of the "safedge" tumbler, the rim of which was chip resistant. The company was especially successful in selling this line to the restaurant market. With the repeal of prohibition in 1933, the demand for glassware products from restaurants and bars grew even greater. Unfortunately, a poor decision in 1931 to attempt to reestablish the Libbey name in the fine art glass market more than offset these positive developments. A. Douglas Nash, who had been more of a sales executive than a designer for Tiffany, was hired to create a new line of luxury stemware. Despite the friction Nash caused with longtime Libbey craftsmen, he did produce some beautiful work, which received considerable attention when it debuted in 1933. Given the wide-reaching effects of the Depression, however, the timing could not have been worse and the line proved to be a disaster for the company. In 1935 Owens-Illinois bought Libbey Glass for $5 million. Owens-Illinois was the result of the 1929 merger of the Owens Bottle Machine Company and the Illinois Glass Company.
Libbey Glass became a wholly owned subsidiary of Owens-Illinois and with better management in place was able to regain its equilibrium and prosper during the remainder of the Depression. Of note during this period was a promotional tie-in with Walt Disney's highly successful animated film Snow White and the Seven Dwarfs. Countless tumblers featuring characters from the movie were filled by dairies with cottage cheese and sold across the country. Now on a better financial footing, Libbey was able to make a successful return to the fine glass market, launching a new line of crystal called Modern American. The series ended with the advent of World War II, as the company turned its attention to producing tubes for radar, x-ray machines, and other electronic equipment. In 1944 the company was folded into Owens-Illinois and began operating as the Libbey Glass Division of the parent corporation.
Post-World War II Focus on Household Market
Shortly after the United States entered World War II, Libbey Glass began making plans to focus on the household market for glassware in the postwar world. This strategy, coupled with the Baby Boom, resulted in a period of robust sales growth. Pre-packed sets of eight tumblers, "Hostess Sets," introduced in 1945, were especially successful, and by offering a variety of changing styles and designs, Libbey Glass became a major force in popular-priced glassware. Annual sales, which totaled $7 million in 1943, grew to $40 million by 1968.
Although Libbey Glass was a profitable business while a part of Owens-Illinois, by the 1990s it was becoming stagnant, prevented from pursuing acquisitions or expanding into new areas. Owens-Illinois, burdened with debt, decided to spin off the Libbey Glass Division as Libbey Inc. in a public offering, completed in June 1993. At the same time, the new company also acquired Libbey-St.Clair, Canada's top producer of glass tableware. According to a Barron's profile of Libbey written several months after the IPO, "Owens-Illinois had drained Libbey of $310 million of dividends the prior three years, leaving Libbey with a negative net worth of $95 million at 1993 year-end. Fortunately, the freeing of Libbey occurred as the company's earnings were hitting a record pace, and cash flow was accelerating."
Leading the independent company as chairman and CEO was John Meier, a man with 24 years of experience with the Libbey Glass Division. He set an ambitious goal of becoming a $500 million company within five years, to be achieved by expanding into department stores with more upscale products while at the same time growing the mass merchandise side of the business by pursuing new glassware categories. There was also a willingness to move beyond glassware to other complementary tabletop items. In October 1995 Libbey paid $40.7 million in cash to acquire Syracuse China, a major maker of ceramic dinnerware to the foodservice industry. It was originally founded in 1871 as The Onondaga Pottery and over the course of its history earned a strong reputation for its high quality dinnerware and ability to adjust to changing tastes in American dining. The addition of Syracuse China contributed to record results for Libbey in 1995, the company posting sales of $357.5 million, a 7.1 percent increase over the previous year's $334 million. Net income reach $30 million, a 12.5 percent bump over 1994's 26.7 million.
In 1997 Libbey expanded its international presence and broadened its product lines when it agreed to purchase a 49 percent interest in Mexico's top glass tableware supplier, Vitrocrisa, a subsidiary of Grupo Vitro S.A., the country's largest glassmaker. Libbey also acquired World Tableware from Vitro S.A., a supplier of dinnerware, metal flatware, and serveware to the foodservice market. For Libbey, World Tableware provided a way to enter the flatware business, part of a strategy to coordinate the colors and patterns of the company's glassware with dinnerware and flatware. Although these transactions bode well for the long-term health of Libbey, in the short run the company experienced some sluggish quarters in the late 1990s, necessitating some restructuring measures. Nevertheless, the company attempted to acquire its main rival in the tabletop business, Oneida Ltd., a move vigorously opposed by Oneida's board. Libbey ultimately backed away from the takeover bid.
In 2001 Libbey agreed to buy the Anchor Hocking glass business from Newell Rubbermaid Inc. for more than $330 million. In addition to beverageware, Anchor Hocking produced bakeware and ovenware. Although Libbey's management maintained that the primary purpose of the acquisition was to bolster its bakeware and serveware business, the Federal Trade Commission opposed the deal because it believed that competition in foodservice glassware would be adversely impacted. In June 2002 Libbey was forced to abandon this deal as well. Despite these setbacks, Libbey was clearly a company eager to continue its expansion beyond glassware into all aspects of the tabletop market.
Principal Subsidiaries: Syracuse China; World Tableware.
Principal Competitors: Lancaster Colony Corporation; Newell Rubbermaid Inc.; Oneida Ltd.