Sonoco Products Company

views updated May 11 2018

Sonoco Products Company

1 North Second Street
Hartsville, South Carolina 29550-3305
U.S.A.
Telephone: (843) 383-7000
Toll Free: (800) 377-2692
Fax: (843) 383-7008
Web site: http://www.sonoco.com

Public Company
Incorporated: 1899 as Southern Novelty Company
Employees: 17,700
Sales: $3.66 billion (2006)
Stock Exchanges: New York
Ticker Symbol: SON
NAIC: 322214 Fiber, Can, Tube, Drum, and Similar Products Manufacturing; 322130 Paperboard Mills; 322211 Corrugated and Solid Fiber Box Manufacturing; 322212 Folding Paperboard Box Manufacturing; 322213 Setup Paperboard Box Manufacturing; 322215 Nonfolding Sanitary Food Container Manufacturing; 322299 All Other Converted Paper Product Manufacturing; 332115 Crown and Closure Manufacturing; 326160 Plastics Bottle Manufacturing; 326199 All Other Plastics Product Manufacturing

EARLY HISTORY

EXPANDING AND DIVERSIFYING IN THE POSTWAR ERA

FURTHER DIVERSIFICATION THROUGH NUMEROUS ACQUISITIONS

CONTINUED DEALMAKING

EARLY 21ST CENTURY: RESTRUCTURING TO STAY PROFITABLE

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

EARLY HISTORY

Sonoco had its beginnings in 1890, when Major James L. Coker and his son, James, Jr., founded the Carolina Fiber Company in Hartsville, South Carolina, to manufacture pulp and paper from Southern pine trees. The enterprise was based on James, Jr.’s senior thesis, which outlined how to make paper pulp using a chemical process.

A few years later, after unsuccessful attempts to sell the pulp commercially, the Cokers decided to use the pulp to make paper cones for the textile industry. On May 10, 1899, Major Coker and Walter F. Smith, an experienced cone maker from New Bedford, Massachusetts, formed the Southern Novelty Company, with Coker as the first president. (These paper cones were known as “novelties,” hence the company name.) The company, also based in Hartsville, ordered a Fourdrinier paper machine, which was built for $19,050. The machine was capable of turning out five to eight tons of paper in 24 hours.

One year after its founding, the new company had sales of $17,000 and net earnings of $2,400. As the 20th century dawned, the textile industry in the South began to grow and prosper, and Sonoco’s yarn carriers were in high demand. The advent of new uses for cotton and innovations in high-speed cotton spinning helped revolutionize the textile industry and fuel Southern Novelty’s growth. The company also quickly expanded its product line to include paper tubes. Smith was involved with the company until his death in 1912. When Coker died in 1918, his youngest son, Charles Westfield Coker, who had been the company’s first treasurer and first salesperson, was named president.

In 1923 the company changed its name to Sonoco Products Company, deriving the name from the first two letters of each word in the original name. That year, when earnings had grown to $134,100 on sales of $770,200, Sonoco also entered into a joint venture with a company in Manchester England. The joint venture introduced the manufacture of Sonoco-style textile carriers in Manchester, and served as the origin for the Textile Paper Tube Company, Ltd., which eventually grew to include five plants in England, one in Ireland, and subsidiaries in Holland, Germany, South Africa, and India. The joint venture in Manchester was the first of many subsequent international affiliations. The 1920s also saw Sonoco gain its first branch plants, through the 1927 acquisitions of Forney Fiber Company of Jersey City, New Jersey, and Economy Cone and Tube Company of Rockingham, North Carolina. Revenue exceeded $1 million for the first time in 1925, and Sonoco ended the decade with earnings of $352,000 on sales of $1.9 million.

Although the Great Depression devastated many other businesses, Sonoco continued to thrive and expand. Throughout the 1930s and into the 1940s, Sonoco built additional paper machines and acquired other paper tube companies, including operations in Mystic, Connecticut, and Lowell, Massachusetts. When Charles W. Coker passed away in 1931, his son, James Lide Coker III, was named president of Sonoco while still in his late 20s. Under James Coker, who held a master’s degree from Harvard Business School, Sonoco flourished. New plants were set up or acquired in eight new locations, and Sonoco established a subsidiary in Canada in 1933.

It was during this era that manmade fibers were introduced, changing the textile industry dramatically. Sonoco kept up with the times and focused on developing new product lines, new types of finishes on its cones, and faster means of production. By the end of the 1940s, Sonoco had eight paper machines at the Hartsville mill. Profits for 1949 totaled $1.1 million on sales of $13.8 million.

EXPANDING AND DIVERSIFYING IN THE POSTWAR ERA

Sonoco looked south of the border in 1950, and expanded its international operations by forming Sonoco de Mexico, S.A. The decade of the 1950s was a period of continued growth and stability for Sonoco. The company posted sales in 1950 of $18.9 million and income of $1.6 million. Tube operations began in Indiana, Texas, and California. In 1957 the company acquired Atlanta-based National Paper Company. By the end of the decade, Sonoco had branched into the production of corrugated material.

The 1960s opened on a positive note, with sales at $38.2 million and income at $2.5 million. In a string of acquisitions in 1960, Sonoco launched operations in Richmond, Virginia; Holyoke, Massachusetts; and Munroe Falls, Ohio. The robust tone set that year continued throughout the decade. In 1961 Sonoco began a spiral tube operation at Ravenna, Ohio, and acquired Industrial Steel and Fibre Limited of Terrebonne, Quebec, and Toronto, Ontario. This acquisition took Sonoco into the realm of fiber drums and composite containers (containers with a paper body and metal ends).

COMPANY PERSPECTIVES

Sonoco intends to be the low-cost global leader in providing customer-preferred packaging solutions to selected value-added segments, where we expect to be either number one or two in market share. Shareholder return, customer and employee satisfaction, commitment to excellence, integrity, environmental stewardship and a safe workplace are the hallmarks of our culture.

James Lide Coker III died in 1961 at the age of 56. His brother, Charles W. Coker, another of Major Coker’s grandsons, became president of the company. Under his leadership, Sonoco started tube operations in Washington, Wisconsin, Missouri, Tennessee, New York, and South Carolina during the 1960s. The company also began manufacturing composite cans in Florida, South Carolina, and Kentucky.

Sonoco ventured in a new direction in 1964 by beginning a business relationship with Showa Products Company of Japan. Further business with Japan would follow two decades later. In 1970 Charles Coker became chairman of the board, and his son Charles, Jr., became president. Sales were $125 million, and income was $6.6 million. That year, Sonoco merged Downingtown Paper Company into its business. Sonoco also acquired a lumber mill in Darlington, South Carolina, and leased timberlands. The company set up tube operations in Puerto Rico in 1971, the same year it acquired a Richmond, California, paper mill from Western Kraft Corporation.

Further diversification occurred in 1972, when Sonoco purchased Paper Stock Dealers, Inc., and Gaston Paper Stock Company, Inc.. of Statesville, North Carolina. These acquisitions marked Sonoco’s entrance into the business of wastepaper collection and processing. The company embarked on another type of operation in 1973 by starting folding carton and fiber partitions operations in Georgia.

By 1974 Sonoco had 36 U.S. branch plants, and the international division had operations in 11 foreign countries. Sonoco also operated a wastepaper company and a steel fabricating company. Vertical integration was standard, and Sonoco produced its own paper, adhesives, lacquers, and varnishes. From its humble origins of 12 employees in a rented warehouse, Sonoco had grown to number 2,700 people in Hartsville alone.

Tube, composite can, and fiber partition operations began in six states during 1974 and 1975. During the United States’ bicentennial year, 1976, Charles W. “Charlie” Coker, Jr., became the company’s chief executive officer. Sonoco was, by this time, one of the top employers in South Carolina.

The latter half of the decade was characterized by continued and vigorous expansion. Sonoco Limited of Canada opened a new plant in Moncton, New Brunswick. In the United States, Sonoco gained five composite can lines from the American Can Company and started composite can operations in Chicago and St. Louis. The company established Sonoco Containers of Puerto Rico in 1978.

Always evolving, Sonoco in 1979 bought a 49 percent interest in the can division of Domtar Inc., of Canada, closed the folding carton plant in Georgia, and sold folding carton plants in Virginia and Pennsylvania. As the decade closed, Sonoco purchased virtually all of T.P.T. Papierfabrik of Nordhorn, West Germany, and T.P.T. of Nederland, Holland.

KEY DATES

1899:: Major James L. Coker and Walter F. Smith form the Southern Novelty Company in Hartsville, South Carolina, to make paper cones for the textile industry.
1923:: Company changes its name to Sonoco Products Company and enters into its first overseas venture, in the United Kingdom.
1933:: Canadian subsidiary is established.
1961:: Acquisition of the Canadian firm Industrial Steel and Fibre Limited takes Sonoco into the realm of fiber drums and composite containers.
1972:: Sonoco enters the wastepaper collection and processing business.
1980:: Company begins production of plastic grocery bags.
1987:: Sales pass $1 billion; Sonoco acquires the Consumer Packaging Division of Boise Cascade Corporation, then the nation’s largest producer of composite cans.
1993:: Sonoco diversifies into flexible packaging with the purchase of Engraph, Inc.
1998:: Peter C. Browning becomes the first company CEO from outside the Coker family.
2001:: Phoenix Packaging Corporation, producer of steel, easy-open closures, is acquired.
2003:: Company divests its high-density film business, thereby exiting from the production of plastic grocery bags.
2004:: Sonoco acquires CorrFlex Graphics, LLC, a leading U.S. producer of point-of-purchase displays.
2007:: Matrix Packaging, Inc., a Canadian firm specializing in rigid plastic containers, is acquired.

FURTHER DIVERSIFICATION THROUGH NUMEROUS ACQUISITIONS

The 1980s got off to a fast start on various fronts: Sonoco acquired Alabama-based Baker Industries, Inc., a leading manufacturer of reels for the wire and cable industry, started producing plastic grocery bags at a Massachusetts plant, and launched a new division at T.P.T. England to make “Bag-in-Box” liquitainers. Sales for 1980 reached $490.4 million and income was reported at $32.5 million.

Sonoco made the Fortune 500 list for the first time in 1981. The company ranked 457th among the top 500 public manufacturing companies in the United States. That same year, Sonoco de Mexico opened a plant in Monterrey, Mexico. Among numerous deals the following year, the company bought most of Container Corporation of America’s composite can division. In 1983 Sonoco opened a second plastic bag production site in Santa Monica, California. The company bought Robinson Hardwood Corporation to produce furniture squares and opened a new tube production plant in West Chicago. Sonoco Limited of Canada, meanwhile, purchased another Canadian company, Federal Packaging and Partition Co.

By 1984, tube production was still going strong, and the company added three new tube operations in Menasha, Wisconsin; Cincinnati, Ohio; and Clifton Forge, Virginia. The following year, Sonoco began plastic bag production at a third facility. The company continued to move into the fiber drum business, acquiring Continental Fiber Drum of Stamford, Connecticut, then the top U.S. producer of fiber drums. Sonoco also acquired Fibro Tambor, S.A. de C.V., a Mexican fiber drum business.

By 1986 the company had 150 plants operating on five continents and a total of more than 11,000 employees who produced hundreds of products ranging from the original textile cones to drainage pipe, composite cans, shipping and storage tubes, plastic grocery bags, and construction tubes for forming round concrete columns. Textiles, formerly 100 percent of the business, had shrunk to about 15 percent. Sonoco had carved a niche for itself in the paper industry by collecting wastepaper from about 30 sites, mainly in the South, and recycling it into paperboard. In 1986 the company acquired the West German Ka-Ro Werke and the South Carolina-based American Ka-Ro, producers of plastic tubes and cones. The company also added Mako, B.V., of Maastricht, Holland, to its roster of fiber tube and drum operations.

In 1987, when sales passed the $1 billion mark for the first time, Sonoco completed its largest acquisition to date, the $165 million purchase of the Consumer Packaging Division of Boise Cascade Corporation, then the nation’s largest producer of composite cans. The following year, Sonoco completed construction of its Packaging Development Center in Hartsville and purchased Gunther, S.A., and its subsidiaries, French producers of paperboard, tubes, cores, cones, and protective packaging.

In terms of innovations in packaging, Sonoco teamed up with Procter & Gamble Company (P&G) to create Ultraseal, a closure for P&G’s composite cans of Crisco solid shortening. The new closure was designed to be “in control,” that is, the consumer did not have to use a can opener to break the seal. Sonoco developed a tight-sealing membrane with a ring for easy removal. Also in the realm of packaging, Sonoco started a new plastic grocery bag operation in Telford, England, and acquired Hilex Poly Co., Inc., of Los Angeles, another plastic bag manufacturer.

A significant feature of 1989 was Sonoco’s international activity. The company acquired the Udo Fischer Company of Maulburg, Germany. The move added to Sonoco’s coreboard and tube production capabilities. Also in 1989, Sonoco set up Sonoco Taiwan Ltd., with headquarters in Taipei, and opened a new plant in Taiwan; bought Mygind International, a manufacturer of plastic bags and produce bags, of Roskilde, Denmark; announced a joint venture with CMB Packaging, for production and marketing of composite cans throughout Europe; and bought Unit Group plc, a British manufacturer of reels. Sonoco also expanded into Argentina.

Sonoco’s sales in 1989 were $1.66 billion and income was $103.6 million, the highest sales and earnings in the company’s history. Income per share was $2.36. By the beginning of the 1990s, Sonoco’s venture into plastic grocery bags had richly paid off; plastic bags accounted for about 65 percent of grocery bags used in U.S. supermarkets, and the company had the largest share of that market. In another area of packaging, Sonoco set up a plant in Georgia to produce intermediate bulk containers. The company made this move in response to consumer demand for packages larger than fiber drums.

By 1989 Sonoco was the largest manufacturer of uncoated recycled cylinder paperboard in the world. The company recycled about a million tons of wastepaper annually, and controlled about 44,000 acres of woodland as part of its corrugating business.

CONTINUED DEALMAKING

From these peaks in 1989, Sonoco entered the 1990s with more than 15,000 employees at 200 locations around the world. Sixty-five percent of Sonoco’s business was in industrial packaging, while the remaining 35 percent was in consumer packaging. By 1991 economic recession had affected every division and operation. Sales for the year were $1.7 billion and income was $94.8 million. Sonoco decreased its U.S. workforce by 6 percent and embarked on an extensive restructuring program.

The picture was not completely bleak, however. The joint venture with CMB Packaging in Europe did well, and the bag-in-box liquitainers were expected to be an area of growth for the company. Sonoco’s Liquid Packaging Group set up a bag-in-box operation in California in 1991. On the international front, Sonoco’s Industrial Products Division set up a joint venture relationship with Showa Marutsutsu Co. Ltd. of Japan to produce film cores. In 1990 Sonoco purchased Lhomme S.A. to become the largest tube producer in Europe. Sonoco also became the largest tube producer in Australia when it bought Rolex, an Australian core and tube manufacturer.

By 1992 Sonoco employed approximately 16,000 people worldwide and had 250 operations in 22 countries. Sales reached $1.84 billion, an increase of 8.2 percent over the previous year. Income in 1992 was $43.4 million or $1 per share. Sonoco added to its consumer packaging operations in Mexico, Puerto Rico, Colombia, and Venezuela. The Industrial Products Division made Sonoco the leading producer of tubes and cores in Europe and Australia. By the end of 1992, the workforce in the Industrial Products Division had been reduced by 15 percent. In Asia during 1992, Sonoco opened an office in Singapore for Sonoco Asia and launched a new tube and core production facility in Malaysia.

Sonoco diversified further in 1993 with the completion of two significant acquisitions. In April the company purchased Chatham, New York-based Crellin Holding, Inc., a major manufacturer of injection-molded products with annual sales of more than $75 million. Crellin, which provided plastic carriers for textiles and plastic reels for fiber optics, had nine plants in the United States and one in the Netherlands. The second deal, an October acquisition that with a value of approximately $300 million was Sonoco’s largestto date, was for Engraph, Inc., a firm based in Atlanta that had generated $235.4 million in revenues in 1992. The purchase of Engraph significantly bolstered Sonoco’s consumer packaging side. Although some of the En-graph businesses were later sold, including its screen printing and North American labels operations, the deal served as Sonoco’s entrée into the flexible packaging sector, which quickly became one of the company’s major growth areas. Sonoco followed up the purchase of the Engraph flexible packaging business with the 1995 purchase of the Edinburgh, Indiana, plant of Hargro Flexible Packaging Corporation. In December of that year, the company formed the Sonoco Flexible Packaging unit, which was generating annual sales of nearly $100 million. Overall revenues for 1995 totaled $2.71 billion, a record total, as was the earnings figure of $164.9 million.

Among other significant events from 1995, Sonoco’s stock was shifted from the NASDAQ to the New York Stock Exchange, where it began trading under the ticker symbol “SON.” Sonoco also entered the Chinese market for the first time that year, establishing a joint venture to produce paperboard in Shanghai. Acquisitions continued in 1996 with the purchase of Specialty Packaging Group, Inc., of Wausau, Wisconsin, a regional producer of composite cans, plastic and metal closures for composite and metal cans, and fiber tubes with five plants and around $38 million in annual sales. In 1997 Sonoco and Rock-Tenn Company combined their fiber partition operations into a joint venture called RTS Packaging, LLC, with Sonoco holding a 35 percent stake. Earnings that year totaled just $2.8 million as Sonoco recorded a pretax charge of $226.4 million to write down the value of certain operations that had been gained through the Engraph acquisition. These operations were subsequently divested.

In another important divestment, Sonoco in early 1998 sold its industrial containers business, which produced fiber barrels and plastic barrels for shipping a range of products, to Grief Bros. Corporation for $225 million. While this business operated in the black for Sonoco, it was deemed expendable because its profit margins were not as high as those of a number of other company units. The biggest news of 1998, however, involved a change in leadership. Peter C. Browning was named CEO, becoming the first company leader to come from outside the Coker family. Browning had joined Sonoco in 1993 as an executive vice-president and had been promoted to president and COO three years later. He had previously headed National Gypsum Company, leading that firm through a bankruptcy reorganization, and before that had spent nearly a quarter of a century at Continental Can Company. Charlie Coker remained Sonoco’s chairman.

The new leader picked up where his predecessor had left off, as Sonoco continued to grow its various product lines through acquisitions. In August 1999, its centennial year, the company acquired the composite can business of Crown Cork & Seal Company, Inc., gaining plants in Massillon, Ohio, and Murfreesboro, Tennessee. The purchase price was $44 million. Sonoco doubled the size of its flexible packaging business via another 1999 acquisition, a $105 million deal for the flexible packaging division of Graphic Packaging Corporation. This division operated six plants in the United States and Canada and generated annual sales of approximately $125 million. This latest purchase in a high-growth area for Sonoco propelled the company into new markets such as beverage labels and coffee and personal care packaging, building on its existing strengths in flexible packaging for cookies, crackers, and confectionary products. Sonoco ended the 1990s on a strong note, with 1999 revenues of $2.55 billion and record earnings of $187.8 million.

EARLY 21ST CENTURY: RESTRUCTURING TO STAY PROFITABLE

In July 2000 Browning resigned abruptly for reasons that were never revealed. Harris E. DeLoach, Jr., who had joined Sonoco in 1985, was named the new president and CEO after serving as senior executive vice-president and COO since 1999. DeLoach took over at a difficult time. The U.S. manufacturing sector was entering a prolonged slump at the same time that the cost of raw materials, particularly old corrugated containers, Sonoco’s main raw material, was on the rise. As a result, cutting costs became a top company priority, and the first of a series of major restructurings was launched in early 2001. That makeover, which aimed at trimming expenses by as much as $30 million a year, involved the closure of nine plants in the United States and abroad and the elimination of nearly 500 jobs worldwide, or 3 percent of the total.

Several more plants were closed in the succeeding months of 2001 and in the following year as well, leading to the elimination of hundreds of more jobs. In the meantime, of the several acquisitions completed during this period, the most significant was the purchase of Phoenix Packaging Corporation completed in September 2001. This deal enabled Sonoco to enter a fast-growing new sector: steel, easy-open, pop-off closures for metal, plastic, and composite containers. Based in North Canton, Ohio, and generating about $80 million in annual sales, Phoenix was the leading North American producer of such closures, which were being increasingly used for canned food products, including soups, seafood, and vegetables. Continuing its tradition of innovation, Sonoco in 2001 also began supplying the Minute Maid Company with flexible, stand-up pouches for its line of ready-to-drink coolers. Earnings for 2001 were down sharply because of restructuring costs, to $91.6 million, while the revenue figure of $2.61 billion represented a slight decline from the preceding year.

The downturn in the manufacturing sector continued into 2003, prompting additional cost-cutting efforts. In August 2003 Sonoco launched another major restructuring, this one entailing the closure of 20 plants, mainly in the United States and Europe, and another 2,000 job cuts, all toward permanently cutting costs by around $60 million. The company further slimmed down in late 2003 by selling its high-density film business, which produced plastic grocery bags and agricultural film, to an investment group for $119 million. While Sonoco had claimed credit for converting numerous supermarkets to plastic bags, and this business had been one of the firm’s key growth areas in the 1980s, its growth had since leveled off and it was no longer viewed as a core operation. An added benefit of this divestment was that it reduced Sonoco’s exposure to highly cyclical resin markets.

One of the key initiatives that DeLoach had launched after becoming CEO was a concerted effort to garner an increased portion of revenues and earnings from the consumer product side of the packaging industry. Traditionally about 60 percent of the firm’s business had come from industrial products and 40 percent from consumer products. The ultimate aim was to reverse this ratio because the consumer side of the business had less tendency to move in concert with the ups and downs of economic cycles and also had the potential for higher rates of growth. As a result, Sonoco’s industrial businesses, which were in a more mature state in North America, were seeking growth overseas, particularly in Europe, Asia, and Latin America. By contrast, Sonoco had set a particularly ambitious goal for its consumer operations to provide “total solutions” for the packaging needs of consumer product companies. Diversification to attain this goal remained on the agenda in consumer packaging, with acquisitions playing a key role. Thus, in May 2004, Sonoco completed one of its most significant acquisitions of this period, the $250 million purchase of Statesville, North Carolina-based CorrFlex Graphics, LLC, one of the leading producers of point-of-purchase displays in the United States. Generating about $200 million in annual sales, CorrFlex manufactured in-store displays for such products as Pampers diapers and Duracell batteries. Through this and subsequent initiatives, Sonoco managed to put its industrial and consumer sides on about equal footing by 2006.

Sonoco completed another significant deal in November 2004 when it combined its European paper-based tube and core operations with those of the Finnish firm Ahlstrom Corporation to form the joint venture Sonoco-Alcore S.a.r.l. Sonoco initially owned 64.5 percent of this venture, but in 2006 it acquired full control by buying out Ahlstrom’s interest. Upon its formation, Sonoco-Alcore had combined sales of $337 million. Improving economic conditions coupled with higher prices, new product introductions, and the company’s latest business combinations pushed sales up more than 14 percent in 2004, to $3.16 billion. The $151.2 million in earnings represented a slight improvement over the previous year.

When Charlie Coker reached Sonoco’s mandatory retirement age of 72 in May 2005, DeLoach added the chairmanship to his duties and became the first company chairman to come from outside the Coker family. DeLoach continued to keep a keen eye on costs. Late in 2006 Sonoco launched another restructuring, this one centered on Europe and aimed at cutting annual expenses by around $23 million. The plan called for 12 plant closures and the elimination of approximately 540 jobs. At this same time, Sonoco was seeking to beef up its plastics packaging business, and in December 2006 the company acquired Clear Pack Company of Franklin Park, Illinois. A $45 million company, Clear Pack produced rigid plastic containers, particularly for foodservice products, making the acquisition complementary to Sonoco’s previously beverage-focused rigid plastics business.

Overall, the year 2006 was a particularly strong one for Sonoco as it recorded records in net income ($195.1 million) and revenues ($3.66 billion), while increasing its dividend for the 24th consecutive year. Sonoco had paid out dividends to its shareholders every year since 1925, a testament to the firm’s long and consistent history of financial stability. The company remained on track during the first half of 2007, completing another significant acquisition in plastics packaging. In May, Sonoco spent approximately $210 million for Matrix Packaging, Inc., Inc., a firm based in Mississauga, Ontario, with annual sales of around $140 million. This acquisition further extended Sonoco’s position in rigid plastic containers as Matrix specialized in producing such containers for personal care, household chemical, and pharmaceutical products.

Marinell Landa
Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

Sonoco Flexible Packaging Co., Inc.; Gunther of America, Inc.; Sonoco Development, Inc.; Paper Stock Dealers, Inc.; Inspiral LLC; Sonoco (SPG), Inc.; Sonoco Crellin Holding, Inc.; Keating Gravure USA, LLC; Gunther U.S.A., Inc.; Sonoco Paperboard Group LLC; Sonoco Crellin International, Inc.; Sonoco Crellin, Inc.; Sebro Plastics, Inc.; Injecto Mold, Inc.; Crellin Europe, B.V. (Netherlands); Convex Mold, Inc.; Crellin, B.V. (Netherlands); Southern Plug & Manufacturing, Inc.; Sonoco Partitions, Inc.; Industrial Machine Co., Inc.; Sonoco Structural Fiber, LLC (90%); Polysack AS, Inc.; Georgia Paper Tube, Inc.; Sonoco CorrFlex, LLC; Sonoco Hutchinson, LLC; Sonoco-U.S. Mills Corp.; Hayes Manufacturing Group, Inc.; Sonoco Canada Corporation; Wisenberg US, Inc.; Sonoco Montreal Corporation (Canada); Sonoco Flexible Packaging Canada Corporation; Sonoco Holdings UK Ltd.; Sonoco Products Co. UK Unlimited; Sonoco Capseals Liners Ltd. (U.K.); TPT Ltd. (U.K.); Sonoco Polysack UK Ltd.; Sonoco Packaging Tapes (U.K.); Sonoco Board Mills Ltd. (U.K.); Sonoco Reels (U.K.); Capseals Ltd. (U.K.); Sonoco Europe Ltd. (U.K.); Unit Reels and Drums Limited (U.K.); Grove Paper Mill Co. Ltd. (U.K.); TPT Board Mills Ltd. (U.K.); Heathfield Reels Ltd. (U.K.); Sonoco Packaging Ltd. (U.K.); Nathaniel Lloyd and Co. Ltd. (U.K.); Sonoco Corepack Ltd. (U.K.); Sonoco Consumer Products Ltd. (U.K.); Sonoco Iberia, S.L. (Spain); Sonoco Bonmati, S.A. (Spain); Sonoco Pina, S.A. (Spain); Sonoco Alcore Nederland B.V.; Sonoco Consumer Products NV (Belgium); Sonoco Holding Italia SRL (Italy); Demolli Industria Cartaria SpA (Italy); Sonoco Norge AS (Norway); Sonoco Ambalaj Snaai Vs Ticaret AS (Turkey); Sonoco Alcore Sp Zoo (Poland); Sonoco International Holdings Gmbh (Switzerland); Sonoco Alcore NV (Belgium); Sonoco Paper Mill & IPD Hellas Sa (Greece); Sonoco CPD Greece SA; Sonoco SAS (France); Sonoco Euro-core SA (Belgium); Tubetex NV (Belgium); Sonoco Paper France SAS; Sonoco Consumer Products SAS (France; 99.99%); Sonoco Plastics Germany GmbH; Sonoco Deutschland CPD GmbH (Germany); Sonoco Deutschland Holdings GmbH (Germany); Sonoco Caprex Karton und Papierverarbeitungs AG (Switzerland; 72%); Sonoco Deutschland GmbH (Germany); Sonoco Alcore GmbH (Germany); Beteiligungen Sonoco Deutschland Vermogensverwaltungsgesellschaft mbh (Germany); Sonoco Australia Pty Ltd; Sonoco New Zealand; Sonoco Thailand Ltd. (78.7%); AGD (Thailand) Limited (78.7%); Sonoco Taiwan Ltd. (78.7%); Sonoco Singapore Pte Ltd (78.7%); Sonoco Holdings Sdn Bhd (Malaysia; 78.7%); Sonoco Malaysia Sdn Bhd (78.7%); Sonoco Products Malaysia Sdn Bhd (78.7%); Sonoco Hongwen Paper Co. Ltd. (China; 63.1%); PT Sonoco Indonesia (78.7%); Sonoco (Suzhou) Packaging Co. Ltd. (China; 78.7%); Sonoco Kaiping Packaging Company Ltd. (China; 78.7%); Sonoco do Brazil Ltda.; Sonoco Participacoes LTDA (Brazil); Sonoco For Plas do Brazil Ltda. (51%); Sonoco de Colombia Ltda.; Inversionne Sonoco do Chile LTDA; Sonoco do Chile SA; Sonoco Venezolana (Venezuela; 90%); Sonoco de Mexico SA de CV; Manufacturas Sonoco SA de CV (Mexico); Servicios Mexicanos Ejecutivos Sa de CV (Mexico); Sonoco SA de CV (Mexico); Sonoco Weifang Packaging Co. Ltd. (China; 78.7%); Sonoco Yatai Pinghu Packaging Co. Ltd. (China; 78.7%); Sonoco Alcore OY (Finland); Sonoco Alcore AB (Sweden); Sonoco Alcore SAS (France); ZAO Sonoco Alcore (Russia); Sonoco Alcore OU (Estonia); Sonoco Operadora S de R L de C V (Mexico); Sonoco Ventures International Holding Gmbh (Switzerland); Sonoco Alcore Sarl (Luxembourg); Sonoco Cores and Paper Ltd. (U.K.); Sonoco Poland Packaging Services Sp zoo; Keating Gravure Corporation (Canada); Sonoco Luxembourg S.N.C.; Sonoco Plastik Sanayi ve Ticaret Ltd. (Turkey); Sonoco (Xiamen) Packaging Company Ltd. (China; 78.7%); Sonoco India Private Limited (78.7%); Sonoco Shanghai Company (China; 78.7%); Clear Pack Company.

PRINCIPAL COMPETITORS

Smurfit-Stone Container Corporation; Bemis Company, Inc.; Rock-Tenn Company; Caraustar Industries, Inc.; The Newark Group, Inc.; International Paper Company; Greif, Inc.; Smurfit Kappa Group.

Sonoco Products Company

views updated May 23 2018

Sonoco Products Company

North Second Street
Hartsville, South Carolina 29550-0160
U.S.A.
(803) 383-7000
Fax: (803) 339-6076

Public Company
Incorporated: 1899 as Southern Novelty Company
Employees: 16,000
Sales: $1.84 billion
Stock Exchanges: NASDAQ
SICs: 2655 Fiber Cans, Tubes, Drums & Similar Products; 2421 Sawmills and Planing Mills, General; 2426 Hardwood Dimension & Flooring Mills; 2499 Wood Products, Nec; 2631 Paperboard Mills; 2653 Corrugated and Solid Fiber Boxes; 2657 Folding Paperboard Boxes, Including Sanitary; 2673 Plastics, Foil and Coated Paper Bags; 2675 Die-cut Paper and Paperboard and Cardboard; 2679 Converted Paper and Paperboard Products, Nec; 2891 Adhesives and Sealants; 3082 Unsupported Plastics Profile Shapes; 3089 Plastics Products, Nec; 3499 Fabricated Metal Products, Nec

Sonoco Products Co. is one of the largest packaging manufacturers in the world. With 16,000 employees and 250 operations in 22 countries, Sonoco provides containers and carriers made of paper, plastic, wood and metal to worldwide industrial and consumer markets. Among numerous innovations in its nearly 100-year history, Sonoco is noted for pioneering the use of the plastic “T-shirt” grocery sack common in supermarkets and retail stores and for creating Ultraseal, a closure system for Crisco shortening cans that eliminated the need for a can opener.

The company originally manufactured paper cones used by the textile industry to wind yarn. As the company expanded and diversified, Sonoco began to manufacture additional products such as molded plastic cones and tubes, toner cartridges, caulking cartridges, composite containers (used for refrigerated dough, frozen juice concentrates and other foods), fiber and plastic drums used for chemicals and pharmaceuticals, tennis ball containers, paperboard, packaging forms, and cap seals, to name a few.

Sonoco had its beginnings in 1890, when Major James L. Coker and his son, James, Jr., founded the Carolina Fiber Company in Hartsville, South Carolina, to manufacture pulp and paper from Southern Pine trees. The enterprise was based on James, Jr.’s senior thesis, which outlined how to make paper pulp using a chemical process.

A few years later, after unsuccessful attempts to sell the pulp commercially, the Cokers decided to use the pulp to make paper cones for the textile industry. On April 15, 1899, Maj. Coker and W. F. Smith formed the Southern Novelty Company, with Coker as the first president. The company ordered a Fourdrinier paper machine, which was built for $19,050. The machine was capable of turning out five to eight tons of paper in 24 hours.

One year after its founding, the new company had sales of $17,000 and net earnings of $2,000. As the 20th century dawned, the textile industry in the South began to grow and prosper, and Sonoco’s yarn carriers were in high demand. The advent of new uses for cotton and innovations in high-speed cotton spinning helped revolutionize the textile industry and fuel Sonoco’s growth. By 1923, when the company changed its name to Sonoco Products Company, sales were approaching the one-million mark, and income was nearly $40,000.

Although the First World War and the Great Depression devastated many other businesses, Sonoco continued to thrive and expand. In 1927 the company grew from one main plant in Hartsville when it acquired Forney Fiber Company of Jersey City, New Jersey. Also in the 1920s, Sonoco entered into a joint venture with a company in Manchester, England. The joint venture introduced the manufacture of Sonoco-style textile carriers in Manchester, and served as the origin for the Textile Paper Tube Company, Ltd., which eventually grew to include five plants in England, one in Ireland, and subsidiaries in Holland, Germany, South Africa, and India. The joint venture in Manchester was the first of many subsequent international affiliations.

Sales reached $1.6 million in 1930, and profits hit $200,000. Throughout the 1930s and into the 1940s, Sonoco built additional paper machines and acquired other paper tube companies. Charles Westfield Coker, the Major’s third son, who had been president since his father’s death, passed away in 1931. His son, James Lide Coker III, was named president of Sonoco while still in his late 20s. Under James Coker, who held a master’s degree from Harvard Business School, Sonoco flourished. New plants were set up or acquired in eight new locations, and Sonoco established a subsidiary in Canada.

It was during this era that man-made fibers were introduced, changing the textile industry dramatically. Sonoco kept up with the times and focused on developing new product lines, new types of finishes on its cones, and faster means of production. By the end of the 1940s, Sonoco had eight paper machines at the Hartsville mill.

Sonoco looked south of the border in 1950, and expanded its international operations by forming Sonoco de Mexico, S.A. The decade of the 1950s was a period of continued growth and stability for Sonoco. The company posted sales in 1950 of $18.9 million and income of $1.6 million. Tube operations began in Indiana, Texas, and California. In 1957 the company acquired National Paper Co. of Georgia. By the end of the decade, Sonoco had branched into the production of corrugated material.

The 1960s opened on a positive note, with sales at $38 million and income at $2.5 million. In a string of acquisitions in 1960, Sonoco launched operations in Richmond, Virginia, Holyoke, Massachusetts, and Munroe Falls, Ohio. The robust tone set that year continued throughout the decade. In 1961 Sonoco began a spiral tube operation at Ravenna, Ohio, and acquired Industrial Steel and Fibre Ltd. of Terrebonne, Quebec, and Toronto, Ontario. This acquisition took Sonoco into the realm of fiber drums and composite containers (containers with a paper body and metal ends).

James Lide Coker III died in 1961 at the age of 56. His brother, Charles W. Coker—another of the Major’s grandsons—became president of the company. Under his leadership, Sonoco started tube operations in Washington, Wisconsin, Missouri, Tennessee, New York, and South Carolina during the 1960s. The company also began manufacturing composite cans in Florida, South Carolina, and Kentucky.

1964 marked a new direction for Sonoco when the company began a business relationship with Showa Products Company of Japan. Further business with Japan would follow two decades later. In 1970 Charles Coker became chairman of the board, and his son Charles, Jr., became president. Sales were $125 million, and income was $6.6 million. That year, Sonoco merged Downingtown Paper Company into its business. Sonoco also acquired a lumber mill in Darlington, South Carolina, and leased timberlands. The company set up tube operations in Puerto Rico in 1971, the same year it acquired a Richmond, California, paper mill from Western Kraft Corporation.

Further diversification occurred in 1972, when Sonoco purchased Paper Stock Dealers, Inc., and Gaston Paper Stock Co., Inc. of Statesville, North Carolina. These acquisitions marked Sonoco’s entrance into the wastepaper packing business. The company embarked on another type of new operations in 1973 by starting folding carton and fiber partitions operations in Georgia.

By 1974 Sonoco had 36 U.S. branch plants, and the international division had operations in 11 foreign countries. The company featured six distinct divisions—plastic, paper, forest products, packaging, construction products, partitions, and general products (which included products to the textile industry). Sonoco also operated a waste paper company and a steel fabricating company. Vertical integration was standard, and Sonoco produced its own paper, adhesives, lacquers, and varnishes. From its humble origins of 12 employees in a rented warehouse, Sonoco had grown to number 2,700 people in Hartsville alone.

Tube, composite can, and fiber partition operations began in six states during 1974 and 1975. During America’s bicentennial year, 1976, Charles W. Coker, Jr., became the company’s chief executive officer. Sonoco was, by this time, one of the top employers in South Carolina.

The latter half of the decade was characterized by continued vigorous expansion. Sonoco Ltd. of Canada opened a new plant in Moncton, New Brunswick. In the United States, Sonoco gained five composite can lines from the American Can Company and started composite can operations in Chicago and St. Louis. The company established Sonoco Containers of Puerto Rico in 1978.

Always evolving, Sonoco in 1979 bought 49 percent interest in the can division of Domtar, Inc., of Canada, closed the folding carton plant in Georgia, and sold folding carton plants in Virginia and Pennsylvania. As the decade closed, Sonoco purchased virtually all of T.P.T. Papierfabrik of Nordhorn, West Germany, and T.P.T. of Nederland, Holland.

The 1980s got off to a fast start on various fronts—Sonoco acquired Alabama-based Baker Industries, Inc., a leading manufacturer of reels for the wire and cable industry, started producing plastic grocery sacks at a Massachusetts plant, and launched a new division at T.P.T. England to make “Bag-in-Box” liquitainers. Sales for 1980 reached $490 million and income was reported at $32.5 million.

Sonoco made the Fortune 500 list for the first time in 1981. The company ranked 457th among the top 500 public manufacturing companies in the United States. That same year, Sonoco de Mexico opened a plant in Monterrey, Mexico. The following year, 1982, was one of numerous acquisitions. Sonoco bought Capseals, Ltd., of England, Linear Products of Puerto Rico (later sold) and acquired the Briggs-Shaffner Division, a major producer of textile beams based in Winston-Salem, North Carolina. The company also bought most of Container Corporation of America’s composite can division.

In 1983 Sonoco opened a second plastic bag production site in Santa Monica, California. The company bought Robinson Hardwood Corporation to produce furniture squares and opened a new tube production plant in West Chicago. Sonoco Limited of Canada, meanwhile, purchased another Canadian company, Federal Packaging and Partition Co.

Sonoco added a new product to its roster in 1984, when the company began producing plastic motor oil bottles. Tube production was still going strong, and the company added three new tube operations in Menasha, Wisconsin, Cincinnati, Ohio, and Clifton Forge, Virginia. The following year, Sonoco began plastic sack production at a third facility. The company continued to move into the fiber drum business, acquiring Continental Fiber Drum of Stamford, Connecticut, then the top U.S. producer of fiber drums. Sonoco also acquired Fibro Tambor, S.A. de C.V., a Mexican fiber drum business.

By 1986 the company had 150 plants operating on five continents and a total of more than 11,000 employees who produced hundreds of products ranging from the original textile cones to drainage pipe, composite cans, shipping and storage tubes, plastic grocery sacks, and construction tubes for forming round concrete columns. Textiles, formerly 100 percent of the business, had shrunk to about 15 percent. Sonoco had carved a niche for itself in the paper industry by collecting waste paper from about 30 sites, mainly in the South, and recycling it into paperboard. In 1986 the company acquired the West German Ka-Ro Werke and the South Carolina-based American Ka-Ro, producers of plastic tubes and cones. The company also added Mako, B.V., of Maastricht, Holland, to its roster of fiber tube and drum operations.

1987 saw the acquisition of the Consumer Packaging Division of Boise Cascade, then the nation’s largest producer of composite cans. In 1988 Sonoco completed construction of its Packaging Development Center in Hartsville and purchased Gunther, S.A., and its subsidiaries, French producers of paperboard, tubes, cores, cones, and protective packaging.

In terms of innovations in packaging, Sonoco teamed up with Procter & Gamble to create Ultraseal, a closure for P&G’s composite cans of Crisco solid shortening. The new closure was designed to be “in control”—that is, the consumer didn’t have to use a can opener to break the seal. Sonoco developed a tight-sealing membrane with a ring for easy removal. Also in the realm of packaging, Sonoco started a new plastic grocery sack operation in Telford, England, and acquired the Hilex Poly Co., Inc., of Los Angeles, another plastic sack manufacturer.

Another merger occurred in 1989, when Sonoco joined its Petroleum Products Division with the Graham Container Corp. of York, Pennsylvania, a manufacturer of plastic bottles, to form Sonoco Graham Co. Sonoco owned 40 percent of the new company, but by 1990 wanted to sell its share for $60 million. Sonoco eventually sold its 40 percent interest back to Graham in 1991.

A significant feature of 1989 was Sonoco’s international activity. The company acquired the Udo Fischer Co. of Maulburg, Germany. The move added to Sonoco’s coreboard and tube production capabilities. Also in 1989, Sonoco set up Sonoco Taiwan Ltd., with headquarters in Taipei, and opened a new plant in Taiwan; bought Mygind International, a manufacturer of plastic sacks and produce bags, of Roskilde, Denmark; announced a joint venture with CMB Packaging, for production and marketing of composite cans throughout Europe; and bought Unit Group plc, a British manufacturer of reels. Sonoco also expanded into Argentina.

Sonoco’s sales in 1989 were $1.7 billion and income was $103 million, the highest sales and earnings in the company’s history. Income per share was $2.36. By the beginning of the 1990s, Sonoco’s venture into plastic grocery sacks had richly paid off—plastic sacks accounted for about 65 percent of grocery bags used in U.S. supermarkets, and the company had the largest share of that market. In another area of packaging, Sonoco set up a plant in Georgia to produce intermediate bulk containers. The company made this move in response to consumer demand for packages larger than fiber drums.

From these peaks in 1989, Sonoco entered the 1990s with more than 15,000 employees at 200 locations around the world. Sixty-five percent of Sonoco’s business was in industrial packaging, while the remaining 35 percent was in consumer packaging. By 1991 economic recession had affected every division and operation. It was the second down year in two decades. Sales for the year were $1.7 billion and income was $94.8 million. Sonoco decreased its U.S. work force by six percent and embarked on an extensive restructuring program.

Sonoco continued to pursue innovative packaging. The High Density Film Products group developed the “Enviromate/RCB” sack in 1991, which contained 25 percent post-consumer recycled resin.

By 1992 Sonoco employed approximately 16,000 people worldwide and had 250 operations in 22 countries. Sales reached $1.8 billion, an increase of 8.2 percent over the previous year. Income in 1992 was $43.3 million or $1 per share. Sonoco added to its consumer packaging operations in Mexico, Puerto Rico, Colombia, and Venezuela. The Industrial Products Division made Sonoco the leading producer of tubes and cores in Europe and Australia. By the end of 1992, the work force in the Industrial Products Division had been reduced by 15 percent.

In Asia during 1992, Sonoco opened an office in Singapore for Sonoco Asia and launched a new tube and core production facility in Malaysia.

As Sonoco entered 1993, it acquired Crellin Holding, Inc., a major manufacturer of injection molded products. Crellin provides plastic carriers for textiles and plastic reels for fiber optics, and has nine plants in the United States and one in the Netherlands. Crellin’s products represented new industries and a growth opportunity for Sonoco.