Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Videos
    • Podcasts
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CFO of the Year
    • Notable Leaders in Sustainability
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics Caps + Closures: A Global Online Event
    • Women Breaking the Mold Networking Forum
    • Bioplastics Live
    • Numbers that Matter Live
    • PFAS Live
    • Plastics in Politics Live
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Resin Prices Overview
    • Commodity Thermoplastics
    • High Temperature Thermoplastics
    • Engineering Thermoplastics
    • Recycled Plastics
    • Thermosets
    • Europe - Virgin
    • Europe - Recycled
    • Europe - Feedstock
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
News
April 21, 2003 02:00 AM

Streamlining keeps Sonoco a contender

Joseph Pryweller
  • Tweet
  • Share
  • Share
  • Email
  • More

    Since 2001, packaging leader Sonoco Products Inc. has been all too familiar with change, to the point that many ex-employees have changed addresses.

    The Hartsville, S.C.-based company still is undergoing a major restructuring of staff and operations that is necessary for the company to retain its leadership position, said President and Chief Executive Officer Harris DeLoach, speaking April 1 at Packaging Strategies in Atlanta.

    The company has eliminated 1,100 positions in the past 15 months. It has closed 14 plants. It has scrutinized and upgraded the 150 top management positions within the company, making a change in 16 of the top 21 corporate slots, DeLoach said.

    And while the work is not fun, it has been mandatory for a company that wants to hold onto its No. 1 or No. 2 market position in most of its business categories, DeLoach said. Doing that requires making hard choices to control costs and improve profit, especially with weak economic conditions bearing down on packaging companies, he said.

    Some of the work will help Sonoco remain a low-cost producer, gamely tackling the price pressures in its core areas, DeLoach said. But the company also believes that by cutting out some fat and focusing on its areas of strength, it can deliver more to customers, he said.

    ``We've gained a sense of urgency,'' said DeLoach, who became CEO of Sonoco in 2000. ``By adding value to customers, we gain the speed to move products to market. We gain added leverage as a strong market leader in our product segments.''

    The work continues at Sonoco. The firm now is evaluating the next 500 positions in its corporate chain, those in the layer under the top positions, DeLoach said.

    The need for industry retrenching, whether it be through staff reductions or consolidation, was on the lips of many participants at the annual meeting of packaging executives. Already, many of the end users served by processors have gone through massive changes.

    In the food industry, giants Nestle SA and Kraft Foods Inc. have made acquisitions to dominate that market, said Barry Shoulders, president and CEO of machinery supplier Packaging Technologies Inc. of Davenport, Iowa. Other once-dominant names, including Quaker Oats Co. and Nabisco Holdings Corp., have been purchased and are losing their brand identities, he said.

    And in meat production, the top three companies produce 55 percent of the products in the United States, Shoulders said.

    While consolidation helps those large producers thrive, it can have a potentially negative effect on the rate of innovation, Shoulders said. Product development suffers when fewer competitors bring ideas to the table, he said.

    ``There is uncertainty when people are not sure whether a business will continue,'' Shoulders said. ``And there's a bit less risk-taking. It is difficult for guys like me to figure out sometimes.''

    Yet, there is an inverse side to the same coin. Consolidation is necessary to gain efficiencies in a down economy, Shoulders said.

    Among packaging processors, consolidation has not happened at the same pace as it has for end users, said Ken Brooks, senior vice president of Ernst & Young Corporate Finance Inc. in Montreal. But two trends might boost acquisitions later this year, Brooks said. First, there remains a strong need for consolidation,

    Many glass and metal packagers already have gone through that process, Brooks said. But flexible and rigid plastics still have some overcapacity issues, he said.

    Secondly, large amounts of money are available to private equity groups that might be looking for packaging investments, Brooks said. With the reins on bank financing expected to loosen this year, that could lead to a new seller's market, he said.

    The market for plastics acquisitions has slowed since mid-2002, Brooks said. In early summer, a flurry of major plastics-related packaging transactions shook the market. Those included Amcor Ltd.'s purchasing of the plastics business of Schmalbach-Lubeca AG, Alcoa Inc.'s buy of Ivex Packaging Corp. and the purchase by equity firm Goldman Sachs & Co. of Berry Plastics Corp.

    Since then, few acquisitions have made a tremor, Brooks said. Prices still are high for companies. ``And there seem to be more consolidators than there are consolidatees,'' Brooks said.

    But companies might be looking for acquisitions as a way to broaden their business approach. Sonoco, a producer of everything from printed and high density polyethylene film to composite cans to uncoated paperboard, would consider both offensive and defensive acquisitions, DeLoach said.

    The offensive purchases would widen market share, while a defensive buy would be that of a competitor, he said.

    PET container leader Amcor would like to grow its flexible packaging business in North America, possibly through acquisition, said Bill Westwood, chief operating officer for Manchester, Mich.-based Amcor PET Packaging. The company, with headquarters in Melbourne, Australia, has a major share of the flexible film market both in Europe and Australia.

    Yet, the company is prepared wait for the right company that would give Amcor the required 15 percent return on investment, he said.

    ``We expect all of our businesses to move positively toward the target of 15 percent,'' Westwood said. ``We're making steady progress toward this goal. But we are very deliberate in the [mergers and acquisitions] area.''

    At Sonoco, a similar push for high returns has been made since DeLoach's arrival. The company is challenging existing assumptions and attacking costs in each of its businesses, he said. Through staffing changes and other measures, the company has reduced about $60 million in structural costs since early 2001, DeLoach said.

    At the same time, the publicly traded company has added about a quarter per share in productivity gains, a needed step to keep a market leadership position, DeLoach said. The cost measures affect the price that Sonoco can charge, the most significant lever for performance in a time when customers demand volume discounts and rebates, he said.

    The company ended 2002 with sales of $2.81 billion on profit of $135 million. Those figures both were higher than in 2001. But the company remains diligent to reduce expenses, DeLoach said.

    ``Business as usual is not an option,'' DeLoach said. ``To retain a leadership position, change is necessary. You must find the right people for the right job.''

    RECOMMENDED FOR YOU
    Ampacet workers in Luxembourg go on strike
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Dow moving ahead with $6.5B Path2Zero project
    2
    A tale of two industries for compounders at close of 2023
    3
    TC Transcontinental closing flexible packaging plant
    4
    Kickstart: Quieter pickleball play
    5
    Numbers That Matter Live November 2023: Will plastics markets recover in 2024?
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Find more newsletters at plasticsnews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CFO of the Year
        • Notable Leaders in Sustainability
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Videos
      • Podcasts
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics Caps + Closures: A Global Online Event
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
      • Editorial Livestreams
        • Bioplastics Live
        • Numbers that Matter Live
        • PFAS Live
        • Plastics in Politics Live
        • PN Live: Mergers and Acquisitions
        • Polymer Points Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Resin Prices Overview
      • Commodity Thermoplastics
      • High Temperature Thermoplastics
      • Engineering Thermoplastics
      • Recycled Plastics
      • Thermosets
      • Europe - Virgin
      • Europe - Recycled
      • Europe - Feedstock
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified