National Can Corporation

8101 Higgins Road
Chicago, Illinois 60631
U.S.A.
(312) 399-3000

Wholly-owned subsidiary of Triangle Industries, Inc.
Incorporated: 1929 as Metal Package Corporation
Employees: 10,541
Sales:$ 1.9 billion

The National Can Corporation has for decades been the third largest can manufacturer in the container industry. Yet because it is so much smaller than American Can and the Continental Group (about one-sixth their size), National is both more flexible and responsive to changes in the industry. Even so, the company had 1985 revenues in excess of $1.9 billion and was producing cans in over 30 foreign countries.

The “big two” traditionally looked upon National Can with benign indifference. It controlled just enough of the market (8% compared to 30% for American Can and Continental) to keep anti-trust laws from being used against American Can and Continental. However, this ambivalent relationship has changed in the last 20 years to become one that is more competitive. In fact, National Can’s growth rate is better than those of all major can-makers except Crown, Cork & Seal. Moreover, it has done this with the unwilling assistance of American Can and Continental.

Most major can customers will not rely exclusively on one container company; and rather than play one rival against another and risk angering both, the clients will contract the majority of their can orders to either Continental or American Can and then assign what is left over to a smaller third party. As a result, the intense competition between American Can and Continental provides a lot of business for National. The company also benefits from the technology of its rivals. Customers usually insist that their cans all be made in uniform fashion. This means that the large canmakers, to their chagrin, are almost obligated to sell their technology to those small companies which are completing the order. This saves a corporation like National significant amounts of money in research and development costs.

National Can has used its strategic position to advantage since 1952 when the struggling Chicago-based firm merged with Cans Inc., a small Chicago canmaking company owned and operated by Robert Solinsky. Solinsky had founded Cans Inc. in 1939, and after the merger he became chairman of the new National Can. He had a reputation as a man who won and kept customers with his personal approach to salesmanship, and for implementing effective corporate austerity measures. Solinsky made a point of keeping payroll and other overhead costs within the company’s means.

In the early 1960’s Solinsky directed National Can’s attention and resources toward the small but burgeoning beverage can market. With the introduction of the pull-tab opener, the beverage can market exploded in the 1960’s and National Can, more than any other canmaker, took advantage of the “six-pack” revolution.

The rapid growth in the beverage can market predictably slowed toward the end of the 1960’s. Many major can users began to produce their own cans, thereby cutting into the profits of the container companies. National Can, like its competitors, diversified; but it remained closer to areas related to canmaking. Anticipating the industry shift to lightweight metal cans and renewed consumer demand for glass bottles, it purchased the Aluminum Can Company in 1967, and two glass companies in 1970. Also in 1967, National Can established can plants in Great Britain and Greece, and formed a wholesale grocery products division. The following year the company entered into the retail buiness by acquiring a fruit company and a dog food company, both of which were can users.

Canmakers also took measures to impede the trend towards “in-house” can production by major container clients. American Can and Continental agreed to build “on-site” plants for customers in an effort to reduce their transportation costs and dissuade them from notions of self-manufacture. National Can took a different approach, choosing instead to build “feeder” plants near steel mills that would shear, coat, and lithograph body sheets and can ends. These would then be transported to satellite facilities near the customer’s factories for final fabrication. This process was more cost effective because it was less expensive to freight flat metal than finished cans.

Despite the efforts of can producers to maintain control of their industry, it became clear that the business was changing fundamentally. Canmaking had been virtually immune to volatile economic cycles, canned goods being such a large part of the American way of life as to almost assure stability. In the 1970’s, however, the container industry showed itself to be subject to market fluctuations.

Self-manufacture of cans was the most important factor, but also contributing to the worsening state of affairs were overcapacity and changes in technology. The latter had the effect of making many container factories obsolete. Canmakers found the cost of re-equipping their plants to be so expensive that both Continental and American Can began to accelerate their diversification programs, reducing their dependence upon cans. National Can, though its uninterrupted year-to-year growth was halted in 1971, was positioned better than most companies within the industry as it had been following a careful program of modernization since the mid-1960’s. Before anyone else, National Can was producing the new two-piece can which was gradually replacing the old three-piece soldered seam can.

Canmakers also had to confront political challenges. Environmental groups cited the container industry as a chief contributor to the proliferation of litter. In 1971 both Vermont and Oregon passed laws requiring a mandatory deposit on most beverage containers; five years later similar legislation was effected in both Maine and Michigan. Recycling was the requisite measure, and aluminum cans and refillable bottles became more popular. A recycled aluminum can uses 89% less energy than a can made of virgin metal, and a bottle refilled 10 times over reduces the waste of the “one-way” non-returnable bottle by two-thirds. Tinplate steel cans became almost obsolete in the beverage market as the recycling process was complex and expensive.

In 1973 Frank Considine was appointed chief executive officer at National Can when Robert S. Stuart, who had been chairman since 1967, retired. Stuart was Robert Solinsky’s son and had changed his name upon his father’s insistence. From Stuart, Considine inherited a financially healthy, but potentially troubled company. Early investments in two-piece canmaking machinery and aluminum had allowed National Can to respond effectively to the industry’s changing complexion, but the diversification program was proving to be troublesome. Following the leads of American Can and Continental, National Can had initially planned to reduce its can sales to 50% of total revenues by branching out into other fields. However, the canned grocery and dog food business was more than National could handle. Competing with such formidable corporations as General Foods and Ralston-Purina proved to be beyond the abilities of the can company.

Considine quickly set about the task of reorienting National Can back towards the manufacturing of cans. In the eyes of those within the industry this move was both courageous and suspect. Many of these people, including the heads of both Continental and American Can, thought that Considine was taking National in the wrong direction; but Considine was steadfast. On the issue of diversification he once said, “We won’t buy a piano to see if we can play it.”

All of National Can’s business interests peripheral to the basic canmaking operation were sold, and the liquid capital from these sales was put into container production, particularly two-piece can manufacturing. Considine realized that the production problems which had traditionally hampered a full conversion to the two-piece can did not require increased research and development (at which National Can was not adept), but rather was a matter of process refinement, an engineering task at which National Can was experienced and skilled.

Considine hoped that by upgrading National Can’s bottle, plastic container, can, and bottle-cap operations it would be able to obtain those areas of the market ignored or abandoned by Continental and American. While the “big two” were closing down can plant after can plant, National was building new factories, mostly in the Sunbelt states of the southwestern United States where it had a firm market share and where beverage sales were particularly strong.

National Can was so eager to hasten the departure of Continental and American from the canmaking industry that it often agreed to unprofitable contracts. For example, it agreed to deliver cans to a customer in Kansas by a wholly unrealistic date. To make the deadline, National had to transport cans from a plant in Tampa, Florida, incurring prohibitive freight costs. Considine soon realized that forced growth in an industry with slim profit-margins could not be maintained, and that grossly underselling competitors in order to procure business is a dangerous tactic.

Considine has become known as one of the most “hands-on” corporate managers in business, involving himself deeply with the day-to-day affairs of the factories and the people who work in them. This allows National Can to retain the feel of a small, family operation while gradually growing into a $2 billion a year business.

In 1985 National Can became involved in the wave of takeover battles that has enveloped corporate America in recent years. Miami Beach investor and raider Victor Posner sought to increase his share holding in the company to obtain control of management. Considine was open to Posner’s offers at first until he realized the hostile nature of the takeover attempt. Considine and National Can then delayed the takeover in the hope that a better suitor would come along. The following November National was purchased by Triangle Industries of New Jersey in a leveraged buy out that cost close to half a billion dollars. Triangle Industries is a juke-box and vending machine maker owned by Nelson Pelz and Peter May with revenues under $300 million. Pelz and May acquired the much larger National by selling “junk bonds” and borrowing a great deal of capital, successfully making the purchase without putting up much of their own money.

In 1986 Triangle Industries purchased all of American Can’s (recently renamed Primerica) U.S. packaging businesses. Primerica’s shift away from packaging and toward financial services and specialty retailing prompted an enthusiastic response to Triangle’s offer. Thus, while the change in National Can’s ownership raises questions about the company’s future, its commitment to the business of canning remains strong.

Principal Subsidiaries

NCC International Sales Corp.; National Protein Corp.; Consolidated Cork International Corp.; A & Q Corp.; Apache Container Corp.; Clermont Fruit Packers, Inc.; Clermont West, Inc.; National Trading Corp.; Dura Closures, Inc.; McGhee Harris Corp.; M-H Packaging Systems, Inc.; NATADCO, Inc.; National Seed & Feed Co.; NCC Food Corp.; Packaging Systems, Inc.; NACANCO Service Corp.