425 Winter Road
We will achieve superior return on assets while consistently increasing revenue. We will strive to be one of the most desirable companies to work for in our industries, focusing on establishing a work atmosphere in which our employees can excel. We will continually add value to our customer relationships, with an emphasis on providing packaging solutions on a global scale. We will capitalize on our leadership position and pursue profitable growth in the Industrial Packaging & Services business. We will pursue internal growth in addition to strategic acquisitions to profitably expand the Paper, Packaging & Services business. We will grow our Timber business both in terms of land holdings and revenue generation.
Greif Inc., formerly Greif Bros. Cooperage Corporation, is a leading producer of industrial packaging products such as steel, fibre and plastic drums, and drum closure systems. Grief also makes corrugated shipping containers and manages timberlands in the United States and Canada. It has been involved in the bulk packaging industry since its foundation in 1877. Michael J. Gasser became CEO in 1994 after succeeding John Dempsey, who had led the company for nearly half a century. With Gasser at the helm, Greif has focused on international expansion. Van Leer proved to be its most successful acquisition as it doubled the company's size and provided opportunities in the markets of Europe, Asia, and Latin America. With more than 9,800 employees in more than 40 countries, Greif aims to be a global leader in industrial packaging products and services.
The company, founded in Cleveland in 1877 by four brothers from the Greif family, was initially a manufacturer of wooden staves, headings, barrels, and kegs. By 1926, Greif owned 216 manufacturing plants and eight divisional offices, as well as timberlands, logging equipment, sawmills, and cooperages.
John Raible (later characterized by William Baldwin of Forbes as "a wealthy investor with enough other interests to make cooperage only a sideline") took over from the founding Greif brothers in 1913. It was perhaps the worst time in the history of the cooperage industry for less than interested management. Wooden packaging, although buoyed during the first two decades of the 20th century by the rise of the petroleum industry, was devastated by the one-two punch of prohibition and the development and introduction of 55-gallon steel drums. Although Greif Bros. sales more than tripled from $11.4 million in 1940 to $36.1 million in 1946, its profitability decreased; net income increased by only 67 percent from $720,000 to $1.2 million during the same period. It was increasingly clear to some observers that traditional cooperage companies would have to diversify or die.
New Vision in the Postwar Era
In 1946, John Dempsey, a 33-year-old accountant, mounted a challenge to Raible's corporate control. Dempsey's wife and mother-in-law had held stakes in the company, and he accumulated enough other shares to garner a controlling interest in 1946. While the new leader continued to buttress the cooperage business with the acquisition of timber acreage in the postwar era, he also tried to develop a proprietary machine to make the lightweight, disposable kraft-paper drums that were replacing old-fashioned wooden barrels in shipping.
Dempsey assigned a team of Greif mechanics the task of designing a proprietary fibre drum machine, but their attempts were unsuccessful. Faced with the imminent demise of his company, Dempsey acquired the rights to a drum winder from an outside inventor. Throughout the postwar era, he purchased the equipment necessary to manufacture steel, plastic, and paper packaging and containers. The company also boosted its container capabilities with the acquisition of an interest in Brooklyn's Carpenter Container Corp. in 1948. By the mid-1950s, revenues from the new operations had drawn about even with the original cooperage business.
Dempsey's reorganization was costly. Sales declined by 15 percent from $31.7 million in 1946 to $26.9 million in 1949, and profits dropped by 40 percent, from $2 million to $1.2 million. In fact, it took the company more than a decade to regain the annual revenue and net income records established in the late 1940s; it was not until 1959 that Greif Bros. recovered its record fiscal levels of $40 million sales and $2 million profit.
Although Dempsey eliminated half of the company's 240 factories by 1963, he parlayed Greif Bros.' relatively small, but widespread, plants into a competitive advantage. Having production facilities near its clients' plants helped the company forge close ties with those customers, as well as to save on Greif's own shipping costs. By the early 1960s, Greif's product line had expanded to include steel drums, plywood drums, fibre drums, corrugated cartons, wire products, and multiwall bags. In 1964, the company's headquarters was moved south from Cleveland to Delaware, a suburb of Columbus, Ohio.
Greif's sales more than doubled over the course of the decade, from $45 million in 1961 to $103 million in 1971. Net income followed suit, growing from $2.1 million to $5.5 million as the company grew accustomed to its new emphasis. The company formally recognized its exit from the barrel-making business by dropping "cooperage" from its name in 1969.
Expansion in the 1970s
Unlike some of its larger, more diversified rivals such as Continental Group, International Paper, and Mobil's Container Corp. of America, Greif Bros. did not buy or build any paper mills, even though the company had hundreds of thousands of acres of timberland. Instead, the company acquired 50 percent of Macauley & Co. and its Virginia Fibre Corp. when they were created in 1974. Company namesake Robert Macauley was a "longtime Dempsey associate" and Greif Bros. board member. Dempsey believed that by limiting the parent company's investment in this capital-intensive business he would limit its exposure to risk and debt. By the early 1990s, however, Greif had increased its stake in Virginia Fibre to 100 percent.
Greif expanded via acquisition during the 1970s, acquiring Chipboard, Inc. and Narad, Inc. Although the disposition of these purchases is unclear, it appears that they developed into Greif's Michigan Packaging Company and Down River International, Inc. subsidiaries. Michigan Packaging was founded in 1967 and grew into a corrugated sheet board company with three plants in the eastern United States. Established in 1963, Down River started out manufacturing corrugated boxes and evolved into a specialty producer of corrugated honeycomb filler for packaging and other applications. Acquisitions helped fuel a dramatic decade of growth. Sales nearly tripled from $103 million in 1971 to $307 million in 1981, and net income more than quadrupled, from $5.5 million to $25.2 million. This high level of profitability, combined with the stable majority ownership of the Dempsey family, allowed Greif to fund plant expansions and modernizations internally without incurring debt.
According to William Baldwin of Forbes, Greif ranked second only to Continental in the American fibre drum industry into the early 1980s. At 5 percent, Greif's average annual sales increases slowed significantly from the double-digit rate of the 1970s, but outpaced the fibre can industry's overall annual growth rate of 3.5 percent from 1982 to 1988. Annual profits increased at an average of three percent each year to a peak of $30.3 million in 1988.
But while sales continued to increase fairly steadily in the waning years of the decade and into the early 1990s, Greif's net income declined by more than one-fourth to $22.1 million in 1990. The reduced profitability was attributed to high capital investments ($66 million in 1989 alone), raw materials price increases, customers' price sensitivity, and increased global competition in Greif's primary markets. The company combated these trends by concentrating more intensely than ever on customer service. In the early 1990s, for example, Greif designed an ingeniously simple new shipping drum for Kraft General Foods. The custom-made containers revised the traditional cylindrical drum shape into a cube with rounded corners, allowing vastly more efficient transportation and storage. Whereas Kraft's trucks could hold 500 of the traditional cans, they could pack in 640 of the new drums.
Greif's 1990s-era environmental efforts included production of recycled and reusable packaging. The company's Greif Board subsidiary had been producing recycled-content corrugated board and kraft paper for nearly 30 years, and was working to incorporate more post-consumer corrugated board into its products. In 1993, Greif's Canadian container subsidiary worked with Ingersoll-Dresser Pump Co. to develop an award-winning reusable container for chemicals and hazardous materials. Progressive efforts such as these reflected Greif's heritage of meeting market challenges and helped ensure its place in the packaging industry.
By the mid-1980s, John C. Dempsey's more than $300 million personal fortune ranked him as one of America's richest individuals, according to Forbes magazine. Dempsey was known among his colleagues and friends as "a deeply righteous person who gave of himself." His strongly-held religious beliefs were reflected in an illustration that graced the back cover of Greif Bros.' annual report virtually every year he was CEO. It was a photo of the corporate board room featuring Warner Sallman's famous "Head of Christ" painting. Dempsey served as Greif's chairman and CEO for 47 years, until 1994, when the 80-year-old's failing health forced his retirement from day-to-day leadership to the honorary post of chairman emeritus. Dempsey was succeeded by Greif Bros.' vice-president and controller, Michael J. Gasser. The new leader noted that the moral principles embraced by his predecessor would "continue to play an integral part in the Company's operating policy."
A Change in Leadership in the Mid-1990s
The advent of new leadership for the first time in nearly half a century ushered in what the new CEO called "an era of great anticipation and virtually unlimited potential" in his first annual letter to shareholders. Gasser vowed to evaluate and reorganize Greif Bros.' operations, and even suggested the possibility of diversification and acquisition in pursuit of "aggressive growth." In 1995 the company applied to have both its classes of stock listed on the National Association of Securities Dealers Automated Quotes, suggesting the possibility of an equity flotation to fund expansion.
As the new CEO had promised, Greif expanded almost immediately. In September of 1996, the company acquired Kyowya Corrugated Container Co., a packaging supply maker from Huntington, West Virginia. Less than six months later, Greif made plans to purchase the steel drum operations of North American Packaging Corp. The next year, Greif completed its acquisition of Sonoco Product Co.'s industrial-container business. The company also decided to pursue Sonoco's intermediate bulk-container business. The corrugated box maker, Great Lakes Corrugated Corp. in Toledo, Ohio, was next in a long list of acquisitions in the late 1990s. In order to manage all of the new business, Greif consolidated 18 plants in 1998 as part of a restructuring plan. It was decided that three plants would close in the United States.
Growth in the New Millennium
Up until this point, Greif's operations had been successful, but relatively small. Some of its business was exclusive to North America, like the management of 280,000 acres of timberlands in the United States. The acquisition of the Van Leer industrial packaging division from Huhtamaki Van Leer Oyj of Finland in 2001 changed its position. Royal Packaging Industries Van Leer NV of Amsterdam was already a global producer of steel, fiber, and plastic drums and bulk containers. Greif's size doubled in the $540 million deal, and it gained a foothold in the markets of Europe, Asia, and Latin America.
Success for Greif continued in 2003. The company increased its ownership of CorrChoice, a producer of corrugated sheets, to 100 percent. CorrChoice began as a joint venture in 1998, and operated seven corrugated sheet feeder plants in the United States. The business increased and performed well outside of North America with the opening of a steel drum facility at a port near Shanghai in China. This operation supported the petroleum, chemical, agrochemical, pharmaceutical, and food and fragrance industries. In the same year, Greif removed "Bros." from its title and became Greif Inc. The company hoped that this modification would promote a unified and global image.
Greif showed no signs of slowing down going into 2004. The company opened a plant in Perm, Russia to produce large steel drums. Greif had additional plans to expand business globally and Gasser set goals for Greif to become an organization that was "more market-focused and performance-driven." In order to support employees, plans were made to open the "Greif Center of Excellence," which would educate its people in "The Greif Way." Michael J. Gasser remained extremely optimistic about the role of Greif for years to come with his statement, "Positive change is occurring in every Greif plant, office and distribution center around the world. We are, indeed, making Greif a better partner with our customers, a stronger and more competitive force in the marketplace, and a more valuable long-term investment for our shareholders."
Principal Subsidiaries: CorrChoice, Inc.; Great Lakes Corrugated Corporation; Heritage Packaging Corporation; Michigan Packaging Company; MultiCorr Corporation; OPC Leasing Corporation; Ohio Packaging Corporation; Van Leer.
Principal Divisions: Industrial Packaging & Services; Paper, Packaging & Services; Timber.
Principal Competitors: Longview Fibre Company; Smurfit-Stone Container Corporation; Temple-Inland Inc.