Crown Cork thrives with no-frills approach


February 02, 1992|By Ross Hetrick

The name Crown Cork & Seal Co. Inc. may not evoke the same response from consumers as McDonald's, Coca-Cola or Ford. But millions use its products every day when they zip open cans of soft drink or beer, or pop the tops off bottled drinks.

Crown Cork, founded in Baltimore 100 years ago today, is one of the world's largest makers of aluminum and steel cans, turning out billions annually. It is also the leading producer of bottle caps, which were invented by the company's founder, William Painter.

It has 144 plants around the world and annual sales of nearly $4 billion.

Its strategy of concentrating on manufacturing in the 1980s has left it as the last major U.S.-owned can company. Its competitors either moved into non-manufacturing businesses or were bought foreign companies.

"Most [stock] analysts on Wall Street think the company has a strong profit outlook," said Cornelius W. Thornton, a packaging analyst for First Boston Corp., a securities firm in New York. "They have a reputation as a well-managed company."

Part of this reputation includes being a no-frills operation that has traditionally kept its debt low. And even though the company has spent about $861 million in the past two years in an acquisition program that has increased its assets from about $2 billion to $3 billion, the debt level has remained moderate, Mr. Thornton said. At the same time, the company's stock price in the last year has jumped from about $50 to $85 a share.

The statistics are impressive. Crown Cork's 25,000 employees turn 850,000 tons of aluminum into 30 billion aluminum cans and 1.5 million tons of steel into 250 billion steel cans and billions of bottle caps.

The company's history has not been an easy one. Twice, it almost went down the drain. But in both cases Crown Cork was rescued by tough-minded businessmen who put it back on a solid footing.

Though the company stopped paying dividends in 1956, a policy that continues today, the stock price has steadily increased. Stock that was worth $100 in 1956 is worth $41,845 now.

The last rescue of Crown Cork was in 1957, when John F. Connelly became the chairman of the company and moved the corporate headquarters from Baltimore to Philadelphia. Along with the move, Crown Cork lost the distinction of being one of Baltimore's largest employers, with a work force of about 5,200 in the early 1950s.

But the company kept its machinery-manufacturing headquarters in Baltimore, along with various can-production facilities throughout Maryland.

Crown Cork's Maryland work force now stands at about 675. But its influence extends beyond its current work force: There are about 850 retirees in the state.

The largest of the Maryland operations is the machinery-manufacturing plant on South Newkirk Street in Southeast Baltimore, where 300 people work. The 330,000-square-foot plant was the largest machine shop east of the Mississippi when it was built in 1947, according to B. Douglas Goodell, vice president of the machinery division.

The plant builds massive filling machines, some of which can handle up to 2,000 cans a minute. The operation builds a couple of dozen of the custom-made machines each year for major bottlers and canners. The price tags range from about $300,000 to more than $1 million, Mr. Goodell said.

Other Maryland operations include two plants in Baltimore that manufacture aluminum cans and can ends, and two plants on the Eastern Shore that provide steel cans and ends for food processors. There is also a 30-person art department at the machinery operation on South Newkirk Street.

William Painter, the founder of the company, got into the bottle-sealing business in the late 1880s with a business associate, Baltimore hardware merchant G. B. Cook. Under the name Bottle Seal Co., the company marketed a rubber and canvas seal that became popular in the United States and England.

Then, on Feb. 2, 1892, Painter patented the "crown cork," and Crown Cork & Seal was founded. The new bottle sealer was simplicity itself -- a metal cap with a corrugated flange and a cork disc and specially prepared paper inside to prevent the bottle's contents from coming into contact with the metal.

Painter went on to develop various "crowning" equipment to apply the new caps and in 1898 produced a foot-powered filler and crowner that could fill and cap 24 bottles a minute if the operator was nimble enough. By 1902, the company was producing machines that could fill and cap bottles at a rate of 60 to 100 a minute.

To convince retailers that the new caps worked, Painter staged a demonstration in 1894, when he shipped bottled beer to South America and back with no loss of carbonation.

By the time Painter died in 1906, the crown cork cap was gaining wide acceptance and the company had a worldwide presence. But then the company began a slide under the staid management style of Painter's son-in-law John Hood, according to Crown Cork's company history.

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