150 North Orange Grove Boulevard
The Company's vision is to be the global leader in self-adhesive base materials and self-adhesive office products. An almost unlimited potential for self-adhesive applications and technology allows Avery Dennison to expand its broad industrial and consumer base continually. Self-adhesive products are integral to such diverse industries as data processing, office products, health care, industrial tapes and food. Self-adhesive and other Avery Dennison products can also be found in the transportation, durable goods, apparel and textile and retail markets.
Avery Dennison Corporation was formed in the fall of 1990 by the merger of two Fortune 500 companies, Avery International Corporation, based in Pasadena, California, and Dennison Manufacturing Company, headquartered in Framingham, Massachusetts. Best known for its office labels, the merged firm also manufactures consumer packaging labels, self-adhesive stamps, MARKS-A-LOT and HI-LITER markers, automotive films and labels, tapes, specialty chemicals, and stationery.
The two companies had a relationship that dated to 1941, when, following the resolution of a patent dispute involving a dispenser for self-adhesive labels, Dennison became Avery's customer. Avery supplied labels to Dennison that the Massachusetts company sold under the brand name Pres-a-ply, competing with Avery products. By formally joining their two companies Avery and Dennison now share a history dating back almost 150 years.
Dennison Manufacturing Company: 19th Century Origins
Dennison Manufacturing began in 1844 when Aaron Dennison, a Boston jeweler, returned to his family home in Brunswick, Maine, and with his father, Andrew Dennison, and his sisters began making paper boxes. The father and son soon created a machine to facilitate the making of cardboard boxes. At the time most jewel boxes were imported semiannually; the new Dennison business had a ready-made domestic market.
Andrew Dennison presided over the manufacturing of the boxes while Aaron continued working at his jewelry business. As a sideline he purchased materials for the boxes and sold the finished product. In 1849 Aaron Dennison became a full-time manufacturer of the machine-made watch, turning the sales end of the box business over to his younger brother, Eliphalet Whorf (E.W.) Dennison.
Fourteen years later, the family business was a partnership, Dennison and Company, between E.W. Dennison and three nonfamily members. Working out of a small factory in Boston, the company produced jewelry tags, display cards, and shipping tags, while the boxes continued to be made in Maine. The development of the shipping tag represented Dennison's continuing attempt to diversify, to provide a better product than was currently available, and to create new markets. In 1863 Dennison patented the placement of a paper washer on each side of the hole in a shipping tag, thus providing a more durable tag. Dennison and Company sold ten million tags that first year.
By 1878 the company had a large factory in Roxbury, Massachusetts, the box plant in Brunswick, Maine, and stores in New York, Philadelphia, and Chicago. The company incorporated, becoming the Dennison Manufacturing Company, headed by E.W. Dennison. Henry B. Dennison, E.W.'s son, became president in 1886, the year of his father's death. He served until 1892, when a conflict between the production end, which was Henry's responsibility, and the sales management led to his resignation. Henry K. Dyer, based in New York, became president.
The company returned to family leadership in 1909 when Charles Dennison, another son of E.W.'s, became president. He had previously held positions as vice-president and treasurer. In 1911 Charles Dennison presided over the reincorporation of the company under the same name. When the company originally incorporated in 1878, the managers held all of the stock. Under the terms of E.W. Dennison's will, however, employees participated in profit sharing, receiving stock and the privilege of purchasing additional stock under favorable terms. Over time, people not directly involved in manufacturing acquired on the basis of stock ownership substantial influence on the board and were able to direct policy in ways that Dennison family members found undesirable. The reincorporation plan, spearheaded by Charles Dennison and his nephew Henry Sturgis Dennison, a director of the company, returned control to the managers of production through creation of different categories of stock.
In 1898 under Dyer's direction all of the company's manufacturing operations had been centralized in Framingham, Massachusetts. Under the reincorporation plan, sales operations as well moved to Framingham. By 1911 Dennison Manufacturing's line included tags, gummed labels, paper boxes, greeting cards, sealing wax, and crepe paper. The firm supplied a variety of stationery and paper goods. There were Dennison stores in Boston, New York, Philadelphia, Chicago, St. Louis, and in London, England.
Crepe paper eventually became a major sales item for Dennison Manufacturing Company. In the 1870s the firm began to import tissue paper from England to sell to retail jewelers. Its supplier also provided it with colored paper, which was sold to novelty companies. Crinkling the paper expanded its uses; by 1914 Dennison manufactured its own crepe paper.
The production of crepe paper led to the creation of a line of holiday supplies, including Christmas tags and seals. Eventually the company manufactured items for all of the major holidays including Halloween, St. Valentine's Day, Easter, and St. Patrick's Day. Dennison also had a thriving side business selling pamphlets about parties, crafts, and holidays, highlighting the many uses of Dennison products, particularly crepe paper. The holiday line folded, due to declining profits, in 1967.
Progressive Management in Early 20th Century
In 1917 Henry Sturgis Dennison, grandson of E.W. Dennison, became president of the company; he held the position for 35 years. As a believer in the scientific management theories of Frederick W. Taylor, Dennison initiated many reforms, including reduction in working hours, establishment of health services and personnel departments, creation of an unemployment fund, and nonmanagerial profit sharing.
Although Henry Dennison served as president of Dennison Manufacturing Company until his death in 1952, he made a significant mark on the world outside the family business. Dennison served as a member of the Commercial Economy Board of the National Defense Council during World War I and, following the war, served as a member of President Harding's unemployment conference. He was the author of several books, including Profit Sharing: Its Principles and Practice, 1918, written with Arthur W. Burritt and others; Toward Full Employment, 1938, written with Lincoln Filene and other industrialists; and Modern Competition and Business Policy, 1938, co-authored with John Kenneth Galbraith.
Many businessmen did not support Franklin Roosevelt and the New Deal; Dennison did, chairing the Industrial Advisory Board of the National Recovery Administration (NRA). This body examined all NRA codes while they were being developed. When the Supreme Court declared many of the NRA's codes unconstitutional, Dennison became an adviser to the National Resources Planning Board.
During the Great Depression, Dennison Manufacturing suffered, along with the rest of the nation, recording net losses in both 1931 and 1932. The following year the company recovered, once again showing a profit. Profits, however, did not return to pre-Depression levels, making recapitalization necessary and rendering inoperative the profit sharing plan of 1911.
The war economy of the 1940s helped put Dennison back on its feet, and in 1942 sales passed the level of 1929. By 1951 sales were $37.3 million and net earnings were $2.1 million.
Henry S. Dennison suffered a heart attack in 1937 and turned over the active management of the company to John S. Keir, vice-president. Dennison's death in 1952 ended more than 100 years of Dennison family leadership of the Dennison Manufacturing Company.
Attempts at Diversification in the 1960s and 1970s
During the 1960s Dennison experienced further change when, in 1962, it incorporated in Nevada, in a move to decrease taxes. In 1966 Nelson S. Gifford became a director of the company.
By the 1960s analysts considered Dennison Manufacturing Company as part of the label, or marking, industry. Its major operations focused on paper and tag conversion and the production of imprinting and price-ticketing machines.
In 1964 Dennison became the majority shareholder in Paul Williams Copier Corporation. This step was part of its strategy for producing a copier to challenge Xerox. The plan originated in 1957, when, under license from RCA, Dennison began work on a dry copier that differed in several important technological ways from Xerox machines.
Dennison also produced print-punch machines for generating price tags in a relationship with Cummins, the maker of Data Read Machines. Dennison in the 1960s was a high-tech firm, particularly in the arena of packaging. The company could, through an instantaneous heat process, transfer a graphic design to plastic. The process, therimage, was cheaper than more conventional methods.
Building on this technological base, Dennison continued to invest heavily in research and development. In 1979 Dennison formed a joint partnership with Canada Development Corporation (CDC)--Delphax&mdashø develop high-speed, nonimpact printers. Using proprietary technology, the company sought to create products to compete with laser printers. Xerox subsequently bought CDC's 50 percent interest in Delphax.
Late 1980s Retrenchment
In the 1980s Dennison's other technological ventures took it further afield. The company held the majority interest in Biological Technology Corporation, which was working on diagnostic products, using researchers from Massachusetts Institute of Technology and Harvard University. Potential products included pregnancy test supplies.
Returning to its office products base, Dennison stayed abreast of computer technology, producing floppy discs as well as office furniture. In the 1980s Dennison's stationery division accounted for almost half of sales and profits. The attempt to develop a copier to challenge Xerox, begun in 1957, had not succeeded.
In 1985 Dennison experienced a significant economic downturn, which prompted a five-year restructuring plan. A large source of Dennison's problems came from heavy investments in research and development. In 1985-1986 Dennison, streamlining, sold seven businesses and shut down four others. This process left the company with three key businesses: stationery, systems, and packaging. The stationery division, actually two units, Dennison National and Dennison Carter, remained the major contributor to profit. Systems was divided into retail and industrial units, produced barcode printing machines, and was the world's leading manufacturer of plastic price-tag threads. The ongoing restructuring plan involved the consolidation of Dennison National and Dennison Carter, and the integration of systems was scheduled for completion in 1990.
Because of the company's commitment to this program, the news in the spring of 1990 of a merger between Dennison and Avery caught industry observers by surprise. Both companies, however, had been suffering depressed earnings and sought strength in union.
Avery International Corporation: Founded 1935
R. Stanton Avery founded the company that would eventually become part of Avery Dennison Corporation in 1935 with capital of less than $100 from his future wife, Dorothy Durfee. Avery created Kum-Kleen Products to produce self-adhesive labels using machinery he had developed while working at the Adhere Paper Company.
Based in Los Angeles, Kum-Kleen first marketed its labels to gift shops and antique stores and then expanded to other retail establishments, including furniture, hardware, and drug stores. In 1938, Avery Adhesives, the company's new name, suffered a fire that destroyed all of its equipment except a stock of labels. While rebuilding, Avery implemented changes in the die-cutting machinery; the technology Stan Avery developed remains the standard for the industry.
Before the development of self-adhesives, labels were either pregummed or applied with glue. Initially self-adhesive labels did not have a coating that would facilitate removal of the label from its backing and, therefore, they were difficult to use. Early labels were punched rather than cut. The innovation of Avery Adhesives occurred on two levels: technological, improving and streamlining the manufacturing process; and product definition, creating a market.
World War II and the total economic mobilization it necessitated created problems for Avery Adhesives as well as for other industries. The raw materials needed to produce the adhesive for the labels, natural and synthetic rubber and solvents derived from petroleum, were needed by the military. Avery Adhesives, needing permission from the federal government to continue production and to obtain materials, focused on manufacturing industrial items rather than the labels for consumer goods it had previously produced. Among the products were waterproof labels bearing "S.O.S." in Morse code that were stuck on rescue radios. When the war ended, this focus on labels for industrial and commercial uses persisted. The war economy hastened market acceptance of pressure-sensitive labels.
Postwar Incorporation
In 1946 Avery Adhesives incorporated, becoming the Avery Adhesive Label Corporation. At the time of incorporation, more than 80 percent of the company's output consisted of industrial labels that were sold to manufacturers who placed them on their own products, usually consumer items, using automatic label-dispensing machines. The original retail base of Avery Adhesives persisted, providing ten percent of output. The company sold unprinted labels in dispenser flat-pack boxes to stationery stores and other retail establishments through a distribution network. The final aspect of the new corporation's business consisted of selling pressure-sensitive material to printers and others who used them in other products, such as masking tape. Tape rolls produced by Avery were used in the manufacturing of department store price labels. This aspect of Avery's business, which contributed ten percent to output, was known as converting. These industrial categories were the forerunners of Avery's divisions in the 1960s and 1970s.
In the 1940s Avery perceived itself as the only company in the self-adhesive label industry to offer a full line of products. Competition did exist for transparent mending tape, not part of Avery's line. Minnesota Mining and Manufacturing--3M--was the leader in that field.
A challenge to Avery occurred in the 1950s in the form of a patent suit. Avery had taken out a patent for its method of producing self-adhesive labels. Because other self-adhesive products predated Stan Avery's technological innovations, the label itself could not be patented. In 1950 Avery Adhesive brought suit against Ever Ready Label Corporation, then the leader in the industry, alleging infringement on Avery's basic patent. In 1952 a New Jersey court ruled against Avery, stating that there was "not an invention" and that the patent was only a method, not a unique product.
Meeting the Challenge: The 1960s
The loss of the patent had serious consequences for Avery, ultimately changing the nature of its business, and had a ripple effect on the self-adhesive and label industry. The short-term outcome of the patent decision of 1952 was the creation, in 1954, of a new division, the Avery Paper Company. The division produced and sold self-adhesive base materials, often to competing label companies. Eventually this division dominated manufacturing at Avery, eclipsing label sales.
In the 1960s four different branches made up the loosely defined label industry. There were manufacturers of various rubber stamps for paperwork, metal labelers including engravers and stencilers, adhesive label manufacturers, and producers of specialized marking devices. The total volume of this diverse industry was approximately $150 million with annual growth of three percent. In the adhesive label category the leading manufacturers were Avery Products Corporation (the name was changed in 1964), 3M, the Simon Adhesive Products and Eureka Specialty Printing divisions of Litton Industries, and the Kleen-Stik products division of National Starch and Chemical Corporation.
Avery had four divisions in the marking or identification aspect of the industry. Fasson, the new name of Avery Paper Company, was a supplier of raw materials. A second division used these raw materials to manufacture Avery labels. Another division, Rote, manufactured hand-embossing machines, and Metal-Cal, acquired in 1964, made anodized and etched aluminum foil for nameplates. Another aspect of Avery's business in the 1960s was machines that embossed vinyl tape. Avery's main product continued to be self-adhesive labels used in a range of products, including automobiles and airplanes.
The 1960s represented a period of much growth for Avery and U.S. industry in general. The period witnessed the rise in mergers and the development of the diversified corporation, culminating in the emergence of the conglomerate.
In 1961 Avery became publicly owned; it was listed on the New York Stock Exchange in 1967. That year, the company had 2,500 workers and two major components. Label products included the domestic Avery Label division and four wholly owned foreign subsidiaries. The other component was base materials, predominantly Fasson and Fasson Europe. The major buyers of base materials were industrial firms, including the graphic arts trade. In 1968 Avery's share of the industry's $200 million of sales was $63 million. The late 1960s were good years for Avery, as it developed specific units to target specific markets.
In 1974 Avery made the Fortune 500 list for the first time. Avery was last on the list, and its competitor 3M was fiftieth. The 1970s presented Avery with the first major impediment to growth since World War II. Once again the company faced problems caused by a situation outside its immediate control. The oil crisis of 1975 heavily affected Avery, a company dependent on petrochemicals. Avery faced increased costs, oversupply, and declining demand. The price per share of Avery's stock dropped to $22, from a high of $44 the previous year.
Diversification in the 1980s
By 1980 Avery had reversed its downward slide by diversifying and by controlling costs, prices, and employment levels. The materials units included raw materials, Fasson, and specialty materials, such as Thermark. Thermark produced hot stamping materials for automobiles and appliances. Fasson continued to be the bread-and-butter unit of Avery; its self-adhesives were now being used on disposable diapers. The converting unit had moved into the production of labels for data processing and home and office use. Avery continued to maintain foreign operations, centered in Western Europe and located as well in Canada, Mexico, and Australia.
Seven years later Avery International was the nation's leading producer of self-adhesive materials and labels. The company's revenues were three times greater than ten years previously. In the late 1980s, however, profits flattened. The main reasons were Avery's involvement in the disposable diaper market and its ongoing competition with 3M. Avery first began producing tape for diapers in 1977 and by 1984 was the sole supplier to Kimberly-Clark, manufacturers of Huggies. 3M did the same for Pampers. 3M's tape was one piece while Avery's contained a tiny piece of plastic that could fall off and perhaps be swallowed. Kimberly-Clark turned to 3M. In 1986 Avery developed its own one-piece tape in an attempt to win back Kimberly-Clark's business. Avery also attempted to challenge 3M in two other areas--transparent tape and self-sticking notes. Avery later abandoned this effort.
In a thorough restructuring, beginning in 1987, Avery closed some manufacturing facilities, domestic and overseas, and announced plans to cut the number of employees by eight percent. Avery was, however, succeeding in its attempt to strengthen its share of the diaper tape market.
1990 Merger of Avery and Dennison Caps Decade of Competition
Avery's merger with Dennison was the culmination of 50 years of infrequent negotiations between the two companies. Dennison had made the first overture in 1941, but balked at the $200,000 price demanded by founder Stan Avery. That figure increased considerably in the ensuing five decades. Charles ("Chuck") Miller, who had advanced to Avery's chief executive office in 1977, turned the tables on Dennison, embarking on more than a decade of negotiations. He hoped that Dennison would cap a string of acquisitions in the early 1980s, but the 1987 talks failed once again.
Success came in 1990, when Dennison employees and officers, who controlled more than 20 percent of the company's stock, accepted Avery's $287 million bid. But Miller, who retained the top spots at the merged firm, soon realized that his was a Pyrrhic victory. Dennison lacked proper controls, its overseas operations were losing money, and its domestic businesses were fraught with inefficiencies. To make matters worse, a mild economic recession worsened shortly after the union was completed.
Miller moved quickly to reorganize Dennison while rationalizing it with Avery. He hired a consultancy to evaluate Dennison's subsidiaries and spun off or liquidated about $350 million (sales) unprofitable divisions and product lines by 1995, eliminating about 900 employees in the process. Miller cut another 900 workers outright in the meantime. The adoption of time-based management principles helped the merged companies increase efficiency via inventory reduction and expedited ordering, among other strategies.
Avery Dennison also sharpened its focus on research and development in the early 1990s. By 1996, products developed after the merger contributed one-third of its annual sales. Innovations included America's first self-adhesive postage stamp, PowerCheck on-battery tester (created in cooperation with Duracell Inc.), new Band-Aid adhesives, and Translar recyclable label stock. Perhaps more important, the company instituted a customer-oriented new product development process.
The year in which Avery Dennison became a reality, 1990, was not a good one for the new company. Sales increased only one percent, from $2.4 billion to $2.6 billion, and net income declined from $114.2 million to a scanty $5.9 million. But as CEO Miller's reorganization began to take effect, Avery Dennison's bottom line improved. By 1995, revenues had increased to more than $3 billion, and profits burgeoned to $143.7 million. With its domestic operations back on track, the company could be expected to devote more attention to its neglected overseas businesses in the waning years of the 20th century.
Principal Subsidiaries: A.V. Chemie Ag (Switzerland); AEAC, Inc. (Delaware); Avery (Thailand) Co., Ltd. (Thailand); Avery Automotive Ltd. (United Kingdom); Avery Buroprodukte GmbH (Germany); Avery Chile SA (Chile); Avery China Company Ltd. (China); Avery Coordination Center NV (Belgium); Avery Corp. (Delaware); Avery De Mexico SA de CV (Mexico); Avery Dennison (Hong Kong) Ltd.; Avery Dennison (India) Private Ltd.; Avery Dennison (Ireland) Ltd.; Avery Dennison (Retail) Ltd. (Australia); Avery Dennison Argentina SA; Avery Dennison Australia Ltd.; Avery Dennison CA (Venezuela); Avery Dennison Canada Inc.; Avery Dennison Danmark AS; Avery Dennison Foreign Sales Corp. (Barbados); Avery Dennison France SA; Avery Dennison Holdings Ltd. (Australia); Avery Dennison Mexico SA de CV; Avery Dennison Office Products Co.; Avery Dennison Office Products U.K. Ltd.; Avery Dennison Overseas Corp.; Avery Dennison Singapore (Pte) Ltd.; Avery Dennison U.K. Ltd.; Avery Etiketsystemer AS (Denmark); Avery Etiketten BV (Netherlands); Avery Etiketten NV (Belgium); Avery Etikettier-Logistik GmbH (Germany); Avery Etikettsystem Svenska AB (Sweden); Avery Foreign Sales Corporation BV (Netherlands); Avery Graphic Systems, Inc.; Avery Guidex Ltd. (United Kingdom); Avery Holding AG (Switzerland); Avery Holding BV (Netherlands); Avery Holding Ltd. (United Kingdom); Avery Holding SA (France); Avery International France SA; Avery International Holding GmbH (Germany); Avery International Overseas Finance NV (Netherlands Antilles); Avery Korea Ltd. (South Korea); Avery Label (Northern Ireland) Ltd. (United Kingdom); Avery Maschinen GmbH (Germany); Avery Pacific Corp.; Avery Properties Pty. Ltd. (Australia); Avery Specialty Tape Division NV (Belgium); Avery, Inc.; Cardinal Insurance Ltd. (Bermuda); Dennison do Brasil Industria E Comercio Ltda (Brazil); Dennison International Co.; Dennison International Holding BV (Netherlands); Dennison Ireland Ltd.; Dennison Ltd. (United Kingdom); Dennison Magnetic Media Ltd. (Ireland); Dennison Manufacturing (Trading) Ltd. (United Kingdom); Dennison Manufacturing Co.; Dennison Monarch Systems, Inc.; Dennison Office Products Ltd. (Ireland); DMC Development Corp.; Etikettrykkeriet AS (Denmark); Fasson (Schweiz) AG (Switzerland); Fasson Belgie NV (Belgium); Fasson Canada Inc.; Fasson de Mexico SA; Fasson Deutschland GmbH; Fasson Espana SA; Fasson France Sarl; Fasson Hemel Hempstead Ltd. (United Kingdom); Fasson Ireland Ltd.; Fasson Italia SpA; Fasson Luxembourg SA; Fasson Nederland BV (Netherlands); Fasson Norge AS (Norway); Fasson Osterreich GmbH (Austria); Fasson Portugal Produtos Auto-Adesivos Lda.; Fasson Products (Proprietary) Ltd. (South Africa); Fasson Produtos Adesivos Ltda (Brazil); Fasson Pty. Ltd. (Australia); Fasson Scandinavia AS (Denmark); Fasson Suomi Oy (Finland); Fasson Sverige AB (Sweden); Fasson U.K. Ltd.; Indumarco Comercial Ltda (Brazil); LDNA Corp.; Metallised Films & Papers Ltd. (United Kingdom); Monarch Industries, Inc.; Novexx Modul Vertriebs GmbH (Germany); Presto Sarl (France); Retail Products Ltd. (Ireland); Security Printing Division, Inc.; Soabar Systems (Hong Kong) Ltd.; Soabar Systems Hong Kong BV (Netherlands); Societe Civile Immobiliere Sarrail (France); Tiadeco Participacoes, Ltda (Brazil); Avery-Toppan Company, Ltd. (Japan; 50%); Avery-Petofi Kft (Hungary; 51%).
Principal Operating Units: Materials Group North America; European Operations--Materials; Automotive and Graphic Systems; Chemical Divisions; Office Products; Converted and Fastener Products; European Operations--Converting; Asia Pacific.
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