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 Crown’s 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 Crown’s “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 companies—Alcoa 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 steel’s 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 industry’s 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 industry’s 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 high-capacity 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 Cork’s performance was outstanding by any measure, although we do not have all the evidence that we would like. During Connelly’s 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 Cork’s 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 Connelly’s leadership? Yes! Let’s look at Connelly’s 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 satisfaction—note his impromptu trip to Florida to respond to a customer’s 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 month’s 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 two-piece 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 Connelly’s tenure. Very frugal Spartan atmosphere throughout the organization.

International xxx A key to Crown’s success was Connelly’s early commitment to an international strategy. Crown’s 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 Crown’s 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 Crown’s 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 Crown’s 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 consolidation—with 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 Kiewit—is a threat to Crown’s 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 co-equal leader in the world with Pechiney’s 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 Crown’s 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 Crown’s 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 Continental’s 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 Crown’s 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; it’s 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 Crown’s 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 bottles—a 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. Crown’s 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 $330 million on November 22, 1989, and Continental Can U.S. for $336 million on July 15, 1990. Given the estimated sales of $1.3 billion, the relatively low-selling price suggests they also bought liabilities or facilities that were in need of investment. Crown moved to cut costs and restructure following these acquisitions. Crown bought Continental ROW for $125 million in May 1990.

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 |1993 |
| | | |
|Sales (millions) |4,452.2 |4,162.6 |
|Net income (millions) |131.0 |99.1 |
|Capital expenditures |400.0 (est.) |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 cans—its 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, CCK’s 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 |High |41.9 |
| |Low |33.2 |
| | | |
| 1994 |High |41.0 |
| |Low |34.0 |
| | | |
| 1995 (to date) |High |44.0 |
| |Low |38.2 |