Tucked away in a nondescript stretch of Ann Arbor Road in Plymouth lies the global headquarters of Plastipak Holdings Inc., a company born and bred locally that has grown since its 1967 founding into a multibillion-dollar global supplier of plastic bottles for consumer products.
Plastipak employs about 700 locally and 4,800 around the world, with businesses that touch nearly every area of plastics manufacturing.
Plastipak Packaging Inc. is the company's bottle-making engine. Other holdings include a shipping company called Whiteline Express Ltd.; a business, called Clean Tech Inc., that recycles more than 2 billion bottles annually; and a bottle manufacturing affiliate in Luxembourg called LuxPET AG/SA.
Put together, the businesses generated $1.9 billion in 2009 revenue, said Chief Financial Officer Michael Plotzke. Plastipak is the No. 1 supplier of blow molded plastic bottles to Pepsico Inc., while also supplying customers including Procter & Gamble Co. and Kraft Foods Inc.
We've been very fortunate where we've been able to develop close relationships with many companies in the industries we serve, and they've acted as consolidators, said William C. Young, CEO of Plastipak Holdings.
As they've grown, we've grown. As they moved and wanted to be in other locations, we did such.
But the company's founding purpose was simple.
In the early 1960s Young's father, William P. Young, wanted to get water bottled by the local distillery that his family had purchased in 1956 onto the shelves of grocery stores.
So he acquired a small blow mold plastics manufacturer in Ohio and began manufacturing plastic bottles for the distillery, Ann Arbor, Mich.-based Absopure Water Co.
Then, the plastics industry exploded.
William C. Young partnered with his father and founded Plastipak Packaging in 1967. The company first blow molded jugs for water companies and, later, milk companies.
After five years of running the business, the Young family sold both Plastipak and Absopure to Beatrice Foods Co. in 1973. Young said the deal was an opportunity for a larger player to invest in and build the business.
He remained on board and managed the companies as divisions of Beatrice, overseeing Plastipak's growth from about $5 million in annual revenue when it was sold to about $50 million when the family reacquired Absopure and Plastipak in 1982. Then the company's growth truly took hold.
In the 1980s, our growth was really driven by our consumer-products companies, who continued to expand their markets, said Plotzke. Liquid detergent just exploded when it hit the market in the early '80s, and today we're the exclusive supplier of liquid-detergent bottles to Procter & Gamble.
As P&G and its other consumer-products and food companies expanded their product lines, Plastipak followed by setting up new bottle-manufacturing locations or reaching new areas through acquisitions.
By the mid-1990s, Plastipak made its first move overseas into Brazil to supply AmBev now a part of the Belgium-based beverage juggernaut Anheuser-Busch InBev with plastic preforms for beverage bottles. Preforms are the test-tube-shaped plastic precursors of finished bottles. Manufacturers make preforms and ship them to bottlers, which blow mold them into the needed bottle shapes and fill them.
Plotzke said the beverage-packaging industry in Brazil had operated on that model, whereas in the United States and elsewhere in the world, finished bottles were shipped to bottlers.
Plastipak has been producing and supplying preforms to bottlers in Brazil for 14 years, but the trend only recently has begun to gain momentum in the United States, Plotzke said.
That's what you're seeing more and more today in our industry, and we're one of the leading suppliers of preforms in the world, he said.
In the 1990s, the company expanded into Europe, a move that fueled much of Plastipak's revenue growth.
The company acquired LuxPET, which generated about $75 million in revenue at the time of the 2005 deal. In 2008, Plastipak acquired Italy-based Europa Preforme srl and Preforme Sud srl renamed Plastipak Italia srl which generated about $200 million in revenue at the time.
The company also expanded its reach in Europe by opening plants as its customers introduced new consumer, food and beverage products throughout the continent. Plastipak now has 27 operations in nine countries, including its most recently opened plant in Romania.
A lot of our customers want us to be global, they want us to be growing with them globally, and that's where a lot of this growth has come from, Plotzke said.
The company also has grown in the United States, opening new production facilities from the ground up, which Plotzke said is a key to Plastipak's stability.
We've really grown, and all the U.S. growth has been organic, and that's really been a secret to our success, frankly, he said.
A lot of our competitors have made acquisitions, and they've had a tough time integrating, and you've got other issues that can be problematic.
Plasitpak has financed much of its growth with bond proceeds, from both public and private sales.
For example, Plastipak raised about $1.5 billion in public and private debt from 1989 through 2007, helping to increase revenue from $68 million in 1984 to $1.6 billion in 2007.
Ed Schmidt, a vice president and senior analyst covering Plastipak for Moody's Investors Service, said Plastipak customers such as P&G and Pepsi seek stable suppliers they can rely on as they grow, and the reason for that is that you've had a lot of bankruptcies in the industry, and you have some operators that are not so stable.
The thing you have to remember about this industry is that it's a very fragmented industry, Schmidt said. Even at their size, they are a leading player in the industry and they do have some long-standing relationships with their customers.
This story was published as part of a 25 Companies to Watch feature in the May 3 edition of Crain's Detroit Business.
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