Sonoco Products Co. in Hartsville, S.C., is following through on its promise to beef up its plastics business.
The company is taking a three-pronged approach that includes a new plant in Ohio, an expansion project in Wisconsin, and growth via acquisition.
Sonoco announced the acquisition Nov. 30 of privately held container maker Clear Pack Co. in Franklin Park, Ill., a move that gives Sonoco a presence in food-service products.
The deal essentially makes Sonoco a competitor with companies like Pactiv Corp. And, it complements Sonoco's beverage-focused rigid plastics business, according to one source. The transaction is scheduled to close before the end of the year, officials said.
Clear Pack operates a 240,000-square-foot plant in Franklin Park and has roughly $45 million in sales with 120 employees.
``We've been looking to expand our rigid container packaging business for some time,'' Sonoco spokesman Roger Schrum said by phone Nov. 30. ``We've been looking for technological superiority and established market presence.''
Clear Pack was founded in 1968. The firm has 14 high-speed thermoforming machines that can run high-impact polystyrene, polypropylene, high density polyethylene and oriented PS, according to Sonoco. The plant also is home to five sheet extrusion lines that process HIPS and PP into roll stock. The plant also has coextrusion capacity, officials said.
One analyst said this acquisition is vastly different from others made by Sonoco, and that previous deals increased the company's scale in products such as tubes and cores.
``I think it's somewhat surprising, relative to [Sonoco's] product portfolio at this point,'' said Ghansham Panjabi, an analyst with Wachovia Capital Markets LLC in New York.
``That said, these [packaging] companies are trying to diversify to be a one-stop shop, so in that sense, it's not a surprising move. It's a new category for them, a very competitive category. So from a strategic shift perspective, it's somewhat surprising.''
Sonoco's organic growth will come through a new contract with Abbott Laboratories to supply 8-ounce bottles for nutritional drinks, Chief Executive Officer Harris DeLoach said during his company's annual analyst day, held Dec. 1 in New York. That has created the need for additional blow molding capacity.
``The first phase of this expansion will have us producing blow molded bottles from our Wausau, Wis., plant by the end of the first quarter of 2007,'' DeLoach said in his presentation. ``The second phase will have us starting up a new plant with multiple blow molders in Columbus, Ohio, by the end of December 2007.''
Sonoco spokesman Roger Schrum said Dec. 1 by telephone that the company's Columbus operation will be a 120,000-square-foot green-field site suited to house two blow molding production lines and roughly 40 employees. Sonoco opened its Wausau plant in 2004, where it currently runs three blow molding lines, one of which will be dedicated to bottle production for Abbott's Ensure product line.