Ball Corporation Business Information, Profile, and History

Company Perspectives

The company's mission is to be the premier provider to beverage, food and aerospace and technologies customers of the products and services that we offer as we aggressively manage our business, and to explore and pursue acquisitions, divestitures, strategic alliances and other changes that would benefit Ball's shareholders.

History of Ball Corporation

Once identified with its glass home canning jars, Ball Corporation has traded its glass packaging activities for plastic and metal, while maintaining a thriving aerospace business since the 1950s. After spinning off its home canning line and other consumer-oriented business in Alltrista in 1993, the company quickly became a global leader in advanced plastic and metal food and beverage containers, with strong positions in China, Europe and the United States. The company has also acquired aerosol can operations in the United States and Argentina. Altogether, Ball has operations in a dozen countries, and has about 30 joint ventures or licensee plants.

19th Century Origins

The Ball Corporation began in 1880 when the Ball brothers (Edmund, Frank, George, Lucius, and William) went into the business of making tin-jacketed glass containers for kerosene lamps. From this type of operation it was an easy shift to the manufacture of canning jars and lids. Moreover, it was wise business strategy: Thomas Edison's recent invention of the incandescent light bulb had antiquated the kerosene lamp. The glass jar, on the other hand, had a great future. (After moving the business to Muncie, Indiana, in 1887, the brothers also launched what would become Ball State University.)

Until the end of World War II, Ball was primarily a jar and bottle manufacturer with few other interests. In the late 1940s, however, a problem had to be confronted--nearly 70 percent of the company's glass production facilities were in need of modernization. Ball had either to diversify and grow in order to underwrite necessary modernization costs or liquidate the company. The family decided to diversify the company because a 1947 antitrust ruling prohibited Ball from purchasing more glass subsidiaries. Under president Edmund F. Ball, they made a number of key acquisitions outside the glass container field. Before the company ventured too far afield, Ball hired a New York management consulting team to help establish a long-range program. In the words of Edmund Ball's successor, John Fisher, "We wanted to plan for growth, not just hope for it."

Space Age Opportunities

The significant changes at Ball, those which have molded the company's future, took place in the late 1950s and early 1960s. The launching of Sputnik by the Soviets in 1958 ushered in the Space Age and created many new opportunities in the field of aerospace. Ball had already decided to take advantage of the situation, establishing Ball Brothers Research Corporation in 1956. "We got into the space field because it was the beginning of the biggest scientific effort in our nation's history," said Fisher, adding "We knew it could be profitable for us, and that we could get commercial "fall-out' from it."

The Ball management proved itself correct on both counts. A substantial portion of the company's business would come from the sale of computer components, pointing controls for NASA satellites, electronic data display devices, and many related items such as Sound-Guard, a preservative for phonograph records that was a derivative of a lubricant developed for spacecraft. The company also built the cameras for the Viking I and II spacecraft that were used to determine the landing site on Mars; the Space Shuttle tether system, which allows small payloads to trail up to 65 miles away from the parent ship; and the telescope on the Infrared Astronomical Satellite launched in 1983 that helped scientists to determine more precisely the size of the Milky Way galaxy. Ball procured $180 million in defense contracts alone by 1987. Chief Executive Officer Richard Ringoen hoped the company's "strong position in infrared and ultraviolet instrumentation [would] continue to allow it to compete favorably with larger aerospace firms like General Dynamics."

Ironically, Ball had entered the high-tech market almost by mistake. In the 1950s, the company hired a small engineering firm in Boulder, Colorado, to develop a device that would more accurately weigh glass batch materials. The original device was never developed, but Ball was impressed enough by the technical skill of the small operation to purchase it. From this small start Ball invested heavily in research and development and made this sector a vital part of the company's overall business.

Postwar Container Boom

The 1960s were years of unparalleled growth in the container industry, especially in the consumer beverage area. Americans began drinking more beer and soft drinks than ever before, and innovations such as the pop-top can and the non-returnable bottle helped container companies make large profits. While not being a large-volume can manufacturer on the order of American Can or Continental, Ball was nonetheless extremely successful in this competitive market. Cans soon made up two-thirds of the company's packaging sales, supplanting jars and bottles as the company's primary container product.

Ball's success in this area can be traced back to 1968 when the firm made an early switch to two-piece cans. The two-piece can, which was lighter, less expensive, and faster to make, was by the early 1990s used to package 70 percent of all soft drinks and 94 percent of all beer. Since Ball was already in the container industry, it was able to win manufacturing contracts from such important customers as PepsiCo, Inc., The Coca-Cola Co., and Anheuser-Busch Co. In fact, Anheuser-Busch and Ball constructed a $32 million plant in New England to manufacture two-piece aluminum cans for the brewer on an exclusive basis. While Ball controlled less than one percent of the total can market in the 1980s, it had 7 to 8 percent of the two-piece can market.

Greater Diversification: 1970-1990

Ball's diversification efforts during the 1950s and 1960s were bold in concept but fairly modest in scope. The man responsible for creating the widely diversified company that the Ball Corporation would become, John W. Fisher, was chosen president and chief executive officer in 1971. Fisher directed Ball into such fields as petroleum engineering equipment, photo-engraving, and plastics, and established the company as a leading manufacturer of computer components and high-tech hardware for defense and space.

Fisher, the last company president to be a member of the Ball family (his wife was the daughter of one of the five founding Ball brothers), resisted the traditionalists within his firm and pushed Ball into new markets all over the world. In 1972, Fisher acquired a Singapore-based petroleum equipment company that built and sold production gear and provided engineering expertise to oil firms in the Pacific. This purchase gave Ball subsidiary operations in Singapore, Malaysia, Indonesia, Panama, and Japan. The following year the Ball-Bartoe Aircraft Corporation was established in Boulder, Colorado. It was involved in the development of an experimental STOL (short take-off and landing) military jet in the 1980s.

The company then acquired agricultural systems and prefabricated housing. Fisher established a Ball Corporation division in Boulder devoted solely to the production and sale of "turnkey" irrigation packages for agricultural development in arid but arable areas of Libya and other nations in the Middle East. Ball also designed a modular home that could be erected on-site in a little more than six hours. In desert nations where building materials are scarce and therefore expensive, Ball has succeeded in selling a large number of these "kit" houses. Then, in 1974, Fisher acquired a small California computer company. This concern was expanded into Ball Computer Products Division based in Sunnyvale, California, in the heart of Silicon Valley.

Following Ball's success in the foreign petroleum engineering equipment business, Fisher established similar operations in the United States. However, stiff competition, higher technological standards, and prohibitive start-up costs thwarted this venture from the start. Fisher wasted no time in selling it in 1976 for 40 cents per share. In the mid 1970s, Ball also developed and introduced Freshware food containers. Made of plastic with tight-fitting lids, these were designed to compete with Tupperware. The product was never actually marketed and Ball had to write it off as a loss, phasing out the project in a matter of months. But these were relatively small setbacks. Fisher's management strategy was long-term and he was willing to bear the burden of brief, small-scale problems. The two large obstacles he never surmounted, however, were the company's image and the stock market's ambivalent opinion of it. Despite its interesting acquisitions, the American public still associated Ball almost exclusively with its glass jars.

Ball Corporation became a public company on July 13, 1972. There were two reasons for going public. The company management wanted to establish accurately the market value of the Ball family holdings, and they intended to raise equity money to finance the company's diversification efforts. But despite its impressive history, Ball's stock price did not significantly increase. Fisher's efforts to give Ball a more technological image, his trips across the United States to speak with investors, and his dedication to growth did not change the minds of many people. The executive could not understand why a profitable company would not be an attractive stock purchase. He remarked, "We live in a world where products must be packaged, in good times or bad. This is all a bit mystifying to me." Originally traded over the counter, shares were admitted to the New York Stock Exchange on December 17, 1973.

When Fisher retired in 1981 he was replaced by Richard Ringoen. Ringoen concentrated on two areas, technology and packaging. Many of the other sectors, while being neither divested nor disregarded, had been left to operate on their own. From 1988 to 1992, Ball's annual sales increased dramatically, from $86 million to $2.177 billion, on the force of acquisitions. Net income only increased slightly, however, from $50.5 million to $69.1 million during the same period.

In the late 1980s, Ball began to focus on international packaging markets where growth far outpaced that of the United States. In 1986, Ball entered into a joint venture with Guangzhou M. C. Packaging in China. By 1993, that business ranked as one of that country's most successful foreign joint ventures, and Ball had established five beverage can manufacturing plants in China, one in Taiwan, and one in Hong Kong.

Consolidation: 1990-2000

Ringoen served Ball for a decade, and was succeeded by Delmont A. Davis in 1991. Davis led Ball's early 1990s consolidation and rationalization. In 1992, the company acquired Kerr Group Inc.'s commercial glass assets for $68.4 million, which helped boost Ball's share of that market. Heekin Can, Inc., one of the Midwest's largest food can manufacturers, was purchased in 1993 through a tax-free exchange of stock. The integration of Heekin and Ball's existing Canadian can operations made Ball the third largest supplier to the combined U.S.-Canadian food can market. At the same time, Ball spun off its Alltrista Corporation subsidiary, which was comprised of Ball's consumer products, zinc products, metal decorating and services, industrial systems, and plastics businesses, to shareholders.

Ball's aerospace business also faced challenges in the late 1980s and early 1990s, as the end of the Cold War and the shifting governmental priorities that resulted helped reduce the federal defense budget and intensify competition for contracts. Still, in 1993, Ball was proud to have played a major role in the well-publicized repair of the Hubble Space Telescope. The Ball-built COSTAR optics system helped correct the telescope's notoriously blurry vision.

The net result of these reorganizational activities was that Ball's sales more than doubled from $1.12 billion in 1990 to $2.44 billion in 1993, while the corporation's staff was reduced by over ten percent. Ball was compelled to take a $95 million pre-tax restructuring provision, half of which was used for plant shutdowns and consolidations. Although CEO Davis rightly called Ball's $65.1 million loss for the year "simply not acceptable," he also expressed confidence that the company's "unparalleled restructuring" would bring new opportunities for profitability in the last half of the decade.

Ball had shed its home canning line with the Alltrista spinoff, and would soon leave the glass business altogether. The company launched its first plastic container development in 1994, originally basing this operation in Smyrna, Georgia. A PET plant was soon opened in California.

In September 1995, the Ball-Foster Glass Container joint venture was formed by combining Ball's last remaining glass operations with Compagnie de Saint-Gobain's recently acquired Foster-Forbes. Saint-Gobain bought out Ball's 42 percent interest the next year. These changes were overseen by George Sissel, a longtime company veteran who had become CEO in 1994 after Davis left. Also in 1995, Ball grouped its aerospace business into the subsidiary Ball Aerospace & Technologies Corporation.

The 1997 purchase of M.C. Packaging Ltd. made Ball China's largest supplier of cans. Ball bought Reynolds Metals' metal beverage container business for $746 million in 1998. This made Ball the North American market leader (it also brought its total debt up to $1.6 billion). Ball was among manufacturers developing new contours for the ubiquitous aluminum can. It was taking advantages of new printing processes to offer customers cans with photo quality graphics. The company was also working on metal beverage cans with plastic liners.

Another major change in 1998 was the relocation of the headquarters to Broomfield, Colorado, from Muncie, Indiana, which had been its home for more than 100 years. By this time, noted Knight Ridder, divestments had reduced the company's employment in Indiana from 1,300 to just 180 administrative staff within a few years. Though Colorado housed Ball Aerospace and 3,000 workers, most of the company's 13,000 employees were at other sites around the world.

More Acquisitions in 2000 and Beyond

Ball's total sales were $3.7 billion by the end of the decade. In 2000, Ball joined ConAgra in a metal food container joint venture, Ball Western Can Company LLC, which was based in Oakdale, California. Ball would buy out ConAgra's interest in the plant in March 2004. Ball got a new CEO, David Hoover, in early 2001. Hoover had been with the company for 30 years. By this time, divestments had reduced the global work force to about 10,000 employees.

Germany's Schmalbach-Lubeca AG, a $1 billion metal beverage canning company, was acquired in 2002 in a deal worth about $855 million (EUR 900 million). Ball Packaging Europe was created around this acquisition. In 2004, the company began building an $80 million aluminum can plant near Belgrade to serve the Eastern European market.

The company's packaging technology development operations were consolidated at a site in Westminster, Colorado in 2004. Ball also had an R&D Center in Bonn, Germany. Sales reached $5.75 billion in 2005. The largest segment was North American Packaging, with revenues of $3.7 billion. International Packaging accounted for $1.4 billion, while Aerospace and Technologies reported record sales of about $695 million. The unit was enjoying the success of America's Mars rovers, for which it supplied electronics and antennas. It was also participating in the Deep Impact comet exploration project.

Ball began 2006 by announcing two major acquisitions. First was that of the U.S. and Argentinean operations of U.S. Can Corporation, the leading producer of aerosol cans in the United States. Second, Ball acquired the North American plastic bottle container assets of Alcan, providing Ball with new manufacturing facilities, greater technologies, and a broader range of customers.

Principal Subsidiaries

Ball Aerospace & Technologies Corporation; Ball North America Corporation; Ball Packaging Corporation.: Ball Aerospace & Technologies Corporation; Ball Packaging Europe GmbH (Germany).

Principal Competitors

Alcan Inc.; Alcoa Inc.; Crown Holdings Inc.; Rexam plc; U.S. Can Corporation.

Chronology

• Key Dates
• 1880 Ball brothers form the Wooden Jacket Can Company in Buffalo, New York.
• 1884 The renamed Ball Brothers Glass Manufacturing Company begins making home canning jars.
• 1887 Business moved to Muncie, Indiana to benefit from abundant natural gas.
• 1947 Company begins diversification push.
• 1956 Ball Brothers Research Corporation (later Ball Aerospace) formed.
• 1969 Ball Brothers Corporation renamed Ball Corporation, buys Denver's Jeffco Manufacturing Company.
• 1972 Ball Corporation goes public.
• 1973 Ball-Bartoe Aircraft Corporation established in Boulder, Colorado.
• 1974 Ball acquires small California computer company.
• 1986 Packaging joint venture established in China.
• 1992 Kerr Group's commercial glass assets acquired.
• 1993 Ball exits home canning with spinoff of Alltrista; Heekin Can acquired in stock swap.
• 1994 Ball launches plastic container business.
• 1995 Ball Aerospace joint venture, Ball-Foster Glass Container, is formed.
• 1996 Ball sells its interest in Ball-Foster to Group Saint Gobain, exiting glass business.
• 1997 Purchase of M.C. Packaging makes Ball China's largest supplier of cans.
• 1998 Ball buys Reynolds Metals' metal beverage container business, relocates headquarters to Colorado.
• 2002 Germany's Schmalbach-Lubeca AG acquired; Ball Packaging Europe formed.
• 2006 Ball acquires U.S. and Argentina operations of aerosol can leader U.S. Can Corporation.