Ball Corp. of Muncie, Ind., will locate a blow molding plant in California to supply PET bottles to Pepsi-Cola Co. Ball, the third-largest metal and glass container maker in the world, is considering a number of sites in southern California.
Last week's announcement follows last year's decision to enter the PET bottle market. Ball has already set up a plastics division, headquartered in Smyrna, Ga., to command its PET bottle strategy.
Harold Sohn, a spokesman for Ball, said the company has a search team in California and should have a plant up and running by the last quarter of this year.
``The site could be an existing building, or a green-field site,'' Sohn said. ``It depends on whether they can locate the right building.''
Ball, which reported $2.6 billion in sales last year, already sells aluminum cans and glass bottles to Pepsi. Ball also makes a variety of glass and steel containers for other uses.
Sohn said that, until a site is selected, it is impossible to say how large the plant will be or how many it will employ. He said Pepsi will determine the plant's product mix.
``We are a packaging maker,'' Sohn said. ``Our customers have told us that they need this kind of packaging, and so we are moving to make it.''
Ball officially will begin supplying Pepsi with PET by Jan. 1. Ball has a long-term agreement to supply Pepsi with PET bottles, Sohn said, but he would not specify the contract terms.
One analyst said the move isBall's attempt to gain informal preferred-supplier status with its longtime customer, Pepsi.
``I think Pepsi has been looking for that sort of relationship for some time, because Coke is so heavily reliant on self-manufacturing companies,'' said Peter Weggeman, president of Directions 21 Inc., a packaging information company, and a beverage packaging analyst.
``I think the purchase of Constar by Crown Cork and Seal [in 1993] changed the dynamics of the bottling picture a little bit, and Pepsi wanted to look for a strong relationship with another PET bottle supplier. Ball makes sense, since they have worked with Pepsi in metal and glass for so long.''
Weggeman said he was surprised by Ball's interest in California, saying the metal can market there has always been very strong.
``In the long term it may be shrewd,'' Weggeman said. ``There are other PET suppliers there, and Ball will have to create capacity quickly ... but that is what happens when you continue a long-term relationship like this.''