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Anchor Hocking Glassware Business Information, Profile, and History



1115 West Fifth Avenue
P.O. Box 600
Lancaster, Ohio 43130-0600
U.S.A.

History of Anchor Hocking Glassware

Anchor Hocking Glassware has been one of the world's leading producers and marketers of glass tableware and ovenware for most of its nine decades in business. Acquisitions and mergers expanded the company's interests into glass containers, plastics, and hardware, increasing annual sales to a peak of more than $900 million in the early 1980s, but intense competition forced Anchor Hocking to sell out to the Newell Co. in 1987. The various operations that made up Anchor Hocking before the merger contributed $440 million to Newell's 1994 sales of $2.08 billion. The sales of the Anchor Hocking Glassware unit were estimated to make up $150 million of that figure.



The company's roots can be traced to 1905, when founder Ike Collins convinced a group of seven investors led by E. B. Good to contribute to the Hocking Glass Company's original capitalization of $25,000. By the end of its first year of manufacturing and marketing lamp chimneys and other glass items, the company had generated sales of $20,000, offered its first dividend, and acquired the equipment of a defunct competitor. Technological innovation helped promote speedy growth in those early days. Within its first year, the company upgraded its facilities to incorporate new continuous furnace technology, as opposed to outdated day-tank operations. By 1919, Hocking boasted 300 employees (many of them highly skilled glass blowers) and $900,000 in annual sales, and had diversified from lamp chimneys (which were made obsolete by the invention of the incandescent light bulb) into glass tableware.

Even a disastrous fire, which destroyed the Lancaster, Ohio, plant and offices in 1924, could not hinder the company's progress. Engineer William V. Fisher, who had been hired in 1919 and would go on to become company president, decided that this was the perfect time to build a new, state-of-the-art plant. The rebuilt factory featured gravity-fed glass tanks and small-batch feeders that provided flexibility, especially in the area of color changes. Fisher also worked with a local machinist to develop a device that would automatically manufacture pressed, rather than hand-blown, pieces. As a 1965 corporate memoir declared, it was "a turning point in Hocking Glass history." Automation expanded Hocking Glass's rate of production from one piece per minute to 20, then to 35. By 1928, the company had introduced a full array of pressed, colored dinnerware. These inexpensive manufacturing methods would become a company hallmark, and propel it to the forefront of the glass tableware market.

In order to remain competitive during the Great Depression, Hocking's Fisher developed a machine that could manufacture 90 glasses per minute at half the previous cost. Technological advances such as this enabled the company to gain an advantage over competitors. In 1931 Hocking entered the glass container market with the acquisition of Turner Glass Company, which was renamed General Glass Corporation. Fisher turned his engineering expertise to this new aspect of the business, developing lightweight glass jars and tumblers in 1932.

In 1937 the Hocking Glass Company merged with the Anchor Cap Corporation of Long Island, New York, creating a powerful force in the glass container industry, with sales of $21.5 million in 1938. The unified firm went on to convert the baby food industry, among others, from tin packaging to the now-familiar glass jar. Vertical consolidation through acquisition over the ensuing years expanded or established capabilities in glass containers, closures, cartons, mold equipment, and closure machines. The company even built a 38-mile natural gas pipeline to supply its growing energy needs in the 1940s.

The company's lines of inexpensive glassware were expanded as well. In 1944 Anchor acquired Carr-Lowrey Glass Co., a 55-year-old Maryland manufacturer of small specialty bottles for the cosmetics and toiletries markets. Other glass products included automotive lenses and reflectors. By the 1960s, Anchor Hocking was producing more than 2,500 different items and adding hundreds of new products and designs each year. These were sold in supermarkets and mass merchandise chains and were used as premiums by fast food chains, gas stations, and banks. The Anchor Hocking brand enjoyed a strong reputation among price- and quality-conscious consumers.

Anchor Hocking benefitted from the rapid growth of the container industry in the 1960s. More than three decades after William Fisher had first developed the non-returnable bottle, rapidly rising consumption of soft drinks and beer led to increased profitability. Anchor Hocking ranked among the top three producers of glass containers nationwide, as well as retaining its leading position in glass tableware. Annual sales topped $150 million by 1963, and profits reached more than $6 million.

The company formalized its overseas operations around this time as well, establishing an International Division in 1963. With operations in 105 countries in 1965, the company became the world's leading manufacturer of glass tableware and ovenware.

In spite of its indisputable success in the 1960s--sales and profits increased to $199 million and $10.38 million, respectively, by 1967--Anchor Hocking began to be criticized for managerial conservatism. Bill Fisher, who had succeeded founder Ike Collins as president, was honored for his many contributions to the company, but was also viewed by some as an aging symbol of that conservatism. Some observers pointed out that the company's risk-averse leadership had never officially taken on debt, while others criticized the company's lack of a coherent succession plan. In 1961 Anchor Hocking's board of directors recruited an outsider, John L. Gushman, to breathe new life into Anchor Hocking's corporate strategy.

Gushman succeeded to the chief executive office in 1967 and quickly set a new course for the company. A subtle, but telling name change in 1969, when the company dropped the word "Glass" from its title, signaled the transformation that was to come. Over the course of Gushman's first decade in office, Anchor Hocking experienced a comprehensive turnover of managers and acquired nine companies. In 1968 Anchor acquired Plastics, Inc., a top manufacturer of disposable tableware for the airline industry, through an exchange of shares, giving Anchor a "hedge" in the container market, where injection-molded plastic packaging had begun to replace many glass packages. In 1975 the company acquired Amerock Corp., the leading U.S. producer of cabinet and window hardware, for $32 million from the Stanley Works. Gushman financed these purchases with more than $35 million in long-term debt. A modernization program that included automation helped reduce operating costs in an era of rising labor expenditures. Centralized distribution at a massive warehouse (the largest in the U.S. glass industry) also reduced expenses.

Although sales increased steadily from $293.2 million in 1970 to $411 million in 1974, earnings did not follow suit, peaking at $20.7 million in 1972, then declining to $18.7 million in 1973 and $16.3 million in 1974. Industry analysts blamed short supplies of raw materials, surging fuel costs, and a 10-week strike, which combined with price controls and "stagflation" to squeeze profit margins. Fuel expenses alone shot up 25 percent during this period. The middle of the decade brought good news, however, when both supplies of raw materials and demand for glass containers briefly rebounded.

Nonetheless, Anchor Hocking's return on equity had dropped from 17.2 percent in 1969 to nine percent in 1974, far short of the 16 percent average for all industries. In 1975 company leaders set their sights on recovering that level of return. As plastic bottles and lightweight aluminum cans quickly replaced glass throughout the packaging industry, especially in the beverage sector, Anchor Hocking struggled in the early 1980s to maintain any level of return, let alone a double-digit percentage.

J. Ray Topper, an Anchor Hocking executive since 1971, succeeded Gushman as president in the late 1970s and assumed the role of chief executive officer in 1982. Although Topper decreased Anchor Hocking's dependence on the rapidly declining glass container market from over 60 percent of annual sales to just over one-third, the company's annual return from 1975 to 1982 averaged a meager one percent. In 1982 the company elected to divest its $300 million container division--dubbed an "albatross" in a May 1983 Forbes article&mdashø Wesray Corp. for a mere $68 million. Anchor walked away from the deal with $55 million in cash, only to attract the unwanted advances of corporate raider Carl Ichan. By mid-1982, Ichan had accumulated six percent of the undervalued, cash-rich firm. Anchor maintained its independence only by buying back his shares at 35 percent more than their book value. The company subsequently adopted a "poison pill plan" in an attempt to deter future takeover attempts.

The divestment left Anchor Hocking with a strong focus on consumer goods, including plastic dinnerware and food storage containers, decorative hardware, and its traditional glassware. More than one industry observer predicted that Topper's decision to shed the glass packaging division would bring a swift turnaround. However, intense competition from imported glassware and a strong dollar hammered Anchor's earnings both domestically and abroad. The company lost more than $4 million in 1983 and nearly $19 million in 1984 despite sales growth from $678 million to nearly $713 million during that same period. The company closed a major glassware plant in its hometown of Lancaster, Ohio, in 1985, eliminating 650 employees in the process.

Anchor's readily apparent weaknesses brought a new takeover threat, this time from Newell Co., a burgeoning housewares manufacturer. Daniel Ferguson, chief executive officer and son of one of Newell's four founders, had formulated a program of expansion through acquisition that had given the company a seemingly diverse collection of manufacturing subsidiaries ranging from Mirro brand cookware to BernzOmatic propane torches. Newell's acquisitions were united by their distribution through mass merchandisers and their leading positions in their respective product categories.

Neither Anchor's size--over twice Newell's--nor J. Ray Topper's clear aversion to selling out deterred Newell. When negotiations with Topper proved fruitless, Ferguson went over the CEO's head to Anchor's board of directors and shareholders. In 1986 Anchor accepted a so-called "friendly" $338.2 million offer ($32 per share). Topper, who reportedly wept at the deciding shareholders' meeting, and more than 100 other Anchor executives and headquarters personnel were sacked within a week of the merger's approval.

Ferguson himself took charge of Anchor Hocking, applying his customary post-purchase measures--known internally as "Newellization"&mdashø the new acquisition. First, the CEO focused on selling off non-core divisions like packaging products, food services, and a retail chain, and applying the proceeds to acquisition-related debt. Next, he installed new managers who were already acclimated to Newell's high standards of customer service and fiscal performance. The parent split Anchor Hocking's remaining operations into separate subsidiaries: Anchor Hocking Glassware, Anchor Hocking Plastics, and Plastics Inc., all of which were added to the parent's housewares division, and Amerock Corp., which became part of Newell's hardware division. Newell centralized Anchor Hocking Glassware's administrative offices at the corporate headquarters in Illinois, and consolidated all manufacturing at Lancaster, Ohio, which reduced capacity and tightened supply in the process. Although Anchor's annual sales dropped by about one-third to $100 million as a result, the subsidiary was left with more efficient operations.

In 1992 a reinvigorated Anchor Hocking Glassware was able to acquire the assets of Toscany Co., a bankrupt manufacturer of upscale glassware. Known as Anchor Hocking Specialty Glassware after the merger, Toscany gave Anchor access to high-end retailers like Macy's, May Co., Williams-Sonoma, and the Pottery Barn. Anchor maintained Toscany's exclusive image by resisting the temptation to offer the brand in its mass merchandising outlets. Anchor Hocking Glassware also launched new lines of its own featuring popular licensed cartoon characters and fashion colors. Ovenware, including pieces specially designed for use in microwave ovens, were also introduced. New sales programs, some of which were formulated in concert with mass merchandisers like Kmart and Wal-Mart, included point-of-purchase displays, gift with purchase promotions, and special packaging.

Despite a relatively high rate of turnover in top positions (Anchor Glassware had as many presidents from 1986 to 1995 as it had had in its entire pre-merger history), Anchor's businesses appear to be thriving under their new management, which has worked to trim expenses, boost product development, and improve retail distribution.

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