Crown Zeller USA has purchased a 49 percent stake in a Hispanic-owned closures maker, helping both companies reach customers that encourage minority suppliers.
Crown, a producer of dispensing closures based in Libertyville, Ill., bought into Torres & Towers LLC, a company formed in January. Torres & Towers had been searching for a partner to boost volumes, while Crown wanted a means to attract customers with large minority-sourcing programs.
``A lot of our major customers have established some pretty significant internal goals for purchasing from minority-owned businesses,'' said Steve Nelson, Crown Zeller vice president and general manager. ``We've been asked to continually increase our involvement in minority-owned businesses. The best way to achieve that is to invest in a minority-owned company and offer an option for certain products to end users.''
Nelson acknowledged that few companies in plastics packaging fit the definition of minority owned. Yet, such end users as Procter & Gamble Co., Colgate-Palmolive Co., L'Oreal USA Inc. and PepsiCo Inc. have set goals to increase spending from minority sources, he said.
Cincinnati-based P&G wants to spend $1.5 billion annually, or about 11 percent of its budget, to purchase products from minority- and women-owned companies by next year. Minority-owned companies made up 7 percent of New York-based L'Oreal USA's supplier purchases in 2003. PepsiCo spent $335 million last year on business with minority suppliers.
Others are beginning to follow their lead.
Ray Torres, Torres & Towers' founder, president and managing partner, had served as president and chief executive officer of White Cap Inc., a closures maker that shifted hands among several joint venture partners. The company now is owned by Silgan Holdings Inc.
Torres left White Cap in August 2003 to establish a minority-owned closures competitor. He purchased Zapata Innovative Plastics Inc., the closures unit of Miami-based Zapata International Corp., and changed the name.
T&T, based in Hazleton, Pa., is small, with 22 workers and six injection molding presses, Torres said in a Nov. 22 telephone interview. But the company plans to grow quickly, with Crown's help, to fill its expansive, 80,000-square-foot plant, he said.
``I did my research on minority-owned businesses in the packaging sector before buying [Zapata],'' Torres said. ``It was evident to us in the plastics closures business that there were few minority-owned companies. There were entry barriers within the business itself that became major hurdles.''
The highest hurdles were the technology disadvantages facing small companies, and not having the economies of scale to buy resin at an affordable price, Torres said. Plus, newer companies undergo lengthy approval cycles from customers, requiring patience and money in the bank before projects can begin, he said.
Torres believes his firm can overcome those barriers. Because he bought a company that has made closures since 1986, the approval process was shortened, he said. And with Crown's help, T&T will add technology and pool resin purchases with those of the larger producer, he said.
Crown Zeller is one of North America's largest closures makers, owned by Philadelphia-based Crown Holdings Inc. Crown Zeller changed its name from Zeller Plastik earlier this year and runs a recently expanded plant in Libertyville and a newly relocated manufacturing site in Mexico.
The company plans to offer a broader product range, merging some closures with those of T&T, Nelson said. Crown sells dispensing closures for health, beauty, personal care and food products, while T&T specializes in nondispensing products, such as closures for carbonated soft drinks, bottled water and motor oil. But the company would like to expand to other product areas, Torres said. Its largest accounts today are Coca-Cola Co.'s Dasani bottled water and PepsiCo's Aquafina brand, he said.
T&T hopes to expand to 40-50 people by the end of next year, Torres said. The partners also will make joint sales calls and share customer lists, Nelson said.
Since the agreement was just inked Nov. 22, both firms have yet to work out details. But for Torres, the alliance is another step toward the success of his small business, he said. He had thought about that possibility while working for White Cap from 1999 until 2003.
``It was something always in the back of my mind while part of corporate America,'' he said. ``I reported to big companies who wanted to expand minority business expenditures. I kept saying to myself that I'm a minority - why don't I move in that direction?''