When packaging company Owens-Illinois Inc. opted to sell much of its blow molding operations earlier this year, many people assumed the company was prepared to focus strictly on its glass business.
Few could be criticized for that assumption. On Oct. 7, Toledo, Ohio-based O-I completed the sale of its blow molded plastic container business to Graham Packaging Co. LP of York, Pa., for $1.2 billion. The sale included a whopping 24 manufacturing plants, a considerable chunk of O-I's plastics operation.
O-I Chairman and Chief Executive Officer Steve McCracken said the sale would help to raise money for a glass company purchased in Europe and would help O-I focus on its core businesses.
Yet, it would be wrong to write off O-I's continuing investment in plastics as not part of that core, according to two top executives with the firm's remaining plastics-based divisions. The executives, interviewed by phone Oct. 13, said the company has every intent to keep and grow those businesses. And that includes some remaining blow molding work for prescription containers.
``We really have some unique opportunities,'' said Bill Negrini, vice president of global sales and marketing for O-I Healthcare Packaging Inc. ``In the past, we've been a North America-centric business. As a new company, we have a goal and a plan to expand globally.''
The same can be said for O-I Closure & Specialty Products, another unit that is girding for global expansion and new technology. That division now plans to seek international alliances and work more closely with O-I's worldwide network of glass plants, said David Beckmann, vice president and director of sales and marketing for the unit.
Both groups will continue to work from the company's Perrysburg, Ohio, technology and development center, which had been the locus of the company's plastics operations.
Together, the two plastics units have annual sales of about $700 million, split almost evenly between them, Negrini said. O-I claims to be the largest glass manufacturer worldwide and recorded total 2003 sales of $6.06 billion, including the now-sold blow molding businesses.
The firm has made a few adjustments to its remaining plastics operations. The largest switch might be the new Healthcare Packaging division, which has seven injection blow molding plants and three injection molding facilities in the United States, plus an assembly site in Mexico, he said.
One focus of the group is the launch of multilayer pharmaceutical containers and vials using a technology christened MLX. ``We're the only ones in the world that we know of'' with that technology, Negrini said.
The three- to five-layer containers combine polycarbonate, nylon and cyclic olefin copolymer, Negrini said. A typical construction features two layers of one material, with a second, barrier material sandwiched in the middle. The material is added to a preform during injection blow molding.
The containers provide an alternative to Type 1 glass used for pharmaceutical vials and bottles. The plastic version does not break when it is dropped, can increase the speed of a fill line by about 20 percent and prevent oxygen permeation. For biogenetic drugs, the bottles don't shatter when they are frozen and then thawed.
O-I already has one customer using the multilayer bottles, BioMerieux SA of Marcy L'Etoile, France, and the MLX bottles are being tested with more than a dozen other pharmaceutical companies, Negrini said. While several bottles should roll out during the next few years, O-I is earmarking 2007 to introduce them in large volumes, Negrini said.
The group is looking at identification systems that can prevent drug counterfeiting. A microscopic tag in the bottle can be read with ultraviolet light and magnifying devices and includes codes for identification.
The unit is evaluating where it needs to expand and is considering alliances and joint ventures, Negrini said. The group is looking at Europe, Australia, China, Latin America and some developing countries.
In contrast, O-I's Closure & Specialty Products business has been part of the company since about 1992, Beckmann said. The specialty products arm covers a series of injection molded items, including syringes and medical devices marketed through the health-care group, as well as electronic printing cartridges and other precision molded products.
The other, larger section of the business is plastic closures, where O-I claims to be among the largest producers worldwide, Beckmann said. About two-thirds of the division's work is done through injection molding, with the other third coming from compression molding.
The company opted to keep that unit, which has proprietary technology for future products and a number of global sites. ``We're one of the few global suppliers [of closures] still working at advancing the technology,'' Beckmann said.
The firm's 13 global molding sites include Singapore, Brazil, Mexico and Hungary, he said.
The closures unit will design products jointly with the glass group and maintain a presence at some of O-I's numerous glass factories worldwide, Beckmann said.
``We've done it to a degree before,'' he said. ``But, candidly, we've been more focused as a group in converting to plastic from other materials. This is one of the areas where we're no longer conflicted as a company. Glass really has a lot of virtue.''
The unit also is introducing new child-resistant closures, tamper-evident products and closures designed to be easy for seniors to open.
The firm has other product developments either on the market or nearing release: a food-related closure with a molded-in liner to improve sealing; a valve system that can be applied to all kinds of liquid or viscous food sauces; and a newly developed, retortable closure designed to help replace metal cans for food applications, Beckmann said.
The company also is looking at expansion in the next year or two, more than likely outside of North America, Beckmann said. The company even could branch out and do work with Graham Packaging and the former O-I plants that Graham now owns, Beckmann said.
``There might still be opportunities with some of our old friends,'' he said. ``I hope we have the inside track.''