Metal Cans

SIC 3411

Companies in this industry

Industry report:

The metal can and shipping container industry includes companies engaged in the manufacture of metal cans from purchased materials, primarily steel and aluminum. The majority of the cans and containers produced in this industry are used to package various foods and beverages. Foil containers are excluded from this classification.

Industry Snapshot

The metal can industry consists of the manufacture of cans made of mostly aluminum or steel, with aluminum being the most commonly used material. Throughout the first decade of the 2000s and into the 2010s the metal can industry sought new, innovative designs and methods by which to compete with the rising plastic can and bottle market. According to the Can Manufacturers Institute, 129.54 billion metal cans were shipped in the United States in 2010, down about a half a percent from the year before. Of that total, 74 percent were for the beverage market, 22 percent for the food market, and 4 percent for general packaging. The most common food items that used metal cans for packaging included coffee, fruits and vegetables, soup, pet food, and miscellaneous items. In the beverage market, about 65 percent went to nonalcoholic drinks and 35 percent to alcoholic beverages. The long-term outlook for the maturing metal can industry was dependent on the industry's ability to exploit burgeoning foreign markets, new production technologies, and recycling opportunities.

Organization and Structure

The metal can industry is divided by the raw material used in manufacturing, steel and aluminum. Of the two types of cans, steel was less expensive to produce, easier to heat, and stronger, while aluminum offered a greater strength-to-weight ratio, making it less expensive to transport. Moreover, consumers generally preferred aluminum cans over steel for some products, particularly beverages. Technological advances in the recycling industry generally applied to aluminum rather than steel cans.

The manufacture of steel cans typically involved three pieces--a top, bottom, and body. The body of the can was rolled and then soldered, welded, or cemented at the seam, and the can's top and bottom were later mounted to the ends of the body. However, tin-plated steel cans were generally constructed from two pieces, a body and bottom, which were stamped and drawn from one piece of metal, and a top that was later attached. Aluminum cans were also produced from two pieces of metal but usually featured a slight "neck" at the top of the body, which reduced the amount of material needed.

Steel was used to produce the vast majority of food cans and containers made from metal in the late 1990s because of its packaging properties. Steel also comprised about half of all non-food metal containers. Vegetables, pet food, aerosol cans, fruit and fruit juices, seafood, and baby food all were commonly packaged in steel cans.

Aluminum cans were used primarily as beverage containers, largely because they were recyclable and held a greater appeal for consumers. Aluminum can manufacturers used more aluminum than any other U.S. industry.

Recycled cans provided an important source of production material for manufacturers. While steel and aluminum cans were both nearly 100 percent recyclable, aluminum can manufacturers favored the process due to the high price of new aluminum, which was nearly double that of steel. Recycling saved 95 percent of the energy necessary to produce finished aluminum and completely eliminated the mining, shipping, refining, and reduction processes. While new steel production was a less expensive process, many steel can producers also used recycled materials, given its cost-effectiveness and the country's increasing concern for environmental conservation.

Background and Development

The canning industry traces its origins to 1809, when French confectioner Nicolas Appert developed a method for preserving food using glass jars that had been boiled in water. The ability to keep raw food from spoiling over long periods of time proved an important discovery, of particular benefit to French troops at war during this time. The basic canning principles developed by Appert are similar to canning processes still used in many applications in the 2000s with carefully prepared raw food sealed in a container, heated to a predetermined temperature to destroy spoilage organisms, and cooled.

The glass bottle was eventually replaced by the tin can in a procedure patented in England by Peter Durand. In 1861, Isaac Solomon discovered that adding sodium chloride to the preserving and canning process allowed for a longer shelf life. Subsequent advances in canning during the Civil War hastened industry growth. Although canning technology reached the United States in 1820, the tin-coated steel container did not gain widespread use in the United States until 1939.

The canning industry experienced rapid growth beginning in the early 1900s, when advances in can and glass jar technology lowered costs and improved canning reliability. For instance, soldered seams, which sometimes contaminated the food, were replaced with more reliable welding techniques. Furthermore, the development of new machinery allowed producers to manufacture and fill mass quantities of cans.

Progress in can coatings and preservatives during the 1950s, among other technological breakthroughs, helped establish the United States as a world leader in the canning industry. By 1965, the United States was producing about 1.7 billion cans annually. The canning industry continued to enjoy high growth rates over the next two decades as potential uses for the traditional steel can increased dramatically, perhaps most notably as a container for carbonated beverages. Although carbonated beverages constituted a negligible market for cans in the 1960s, by 1975, manufacturers produced more than 26 billion beverage cans per year, eclipsing the use of cans for food.

However, while the market for cans expanded, alternative packaging methods began to offer stiff competition. Plastic and aluminum containers, which became viable canning techniques during the early 1960s, began to enjoy widespread use in the 1970s. Because they offered price, weight, and convenience advantages important to beverage producers, aluminum cans quickly began to overtake that market segment. Furthermore, in 1974, Reynolds Metals Co. developed a pull-tab for the aluminum can that remained attached to the can after opening. This innovation proved safer than the traditional steel pull-tab and also produced less litter, making the aluminum can especially attractive to the beverage market.

The market for metal beverage cans continued to escalate in the 1980s, growing from about 50 billion cans in 1980 to more than 97 billion by 1995, and aluminum cans captured an increasing share of the market. Having entered the industry in 1961, aluminum's market share reached 79 percent by 1975, 82 percent by 1980, and 95 percent in the 1990s. Moreover, the beverage can market had grown to dominate the entire can industry. By the early 1990s, nearly three times more aluminum cans than steel cans were produced. Plastic containers, which accounted for more than 25 percent of all food container production, also competed for can consumers.

During this time, the introduction of the aluminum can recycling industry bolstered the popularity of the aluminum can. The amount of aluminum cans recycled annually jumped from about 300 million pounds in 1979 to nearly two billion pounds by 1991. In 1995, 62 percent of the 100 billion cans produced were recycled.

Although they had effectively been nudged from the beverage can industry, steel can manufacturers continued to control the food and consumer products can market. Throughout the 1980s and early 1990s, steel cans represented approximately 95 percent of that market. Nevertheless, by the mid-1990s steel container revenues were declining, largely as a result of increased competition from plastic packaging used for microwave and frozen food products. During this time, shipments of steel cans and containers remained between 4.1 and 4.5 billion tons.

U.S. aluminum can manufacturers faced a slow economy and a mature domestic market in the mid-1990s. Growth in this segment of the industry slowed to 3.9 percent in 1990 and just over 3 percent in 1992. Sales to breweries declined as new products and microbrewers turned to glass bottles. As a consequence, can shipments to the beer industry fell from 36.8 billion units in 1994 to 35.1 billion units in 1995. Furthermore, sales to the soft drink industry, which had been a growing segment, dropped from 66.3 billion units in 1994 to 62.6 billion units in 1995.

A rise in aluminum prices at the beginning of 1996 prompted can fillers to pre-buy sizable shipments in late 1995 and early 1996 to beat the increase. This price-sensitive purchasing caused gains for those periods, but overall, aluminum can manufacturers cut back on production. In 1996, Reynolds Metals Co. closed a 1-billion-cans-a-year plant in Fulton, New York, and in 1997, it discontinued operations of a 14-million-cans-a-year plant in Houston. Crown Cork & Seal Company Inc. closed two can plants and shut operations on another plant that produced beverage can ends. However, while both companies reduced their U.S. can capacity, they began to expand their operations in other parts of the world.

In addition to the industry-wide maturation of markets, steel can manufacturers were especially challenged by slight gains experienced by producers of aluminum and plastic containers. Shipments of steel containers posted disappointing declines of 4.4 percent in 1991 and 5.7 percent in 1992, following nearly a decade of stagnation. The most notable blow to the industry was delivered in 1993, when Bev-Pak Inc., one of the nation's largest remaining producers of steel beverage cans, announced plans to switch to aluminum cans. Weirton Steel Corporation also announced its decision to end marketing efforts of steel cans.

Between 1982 and 1992, the number of metal can manufacturing companies declined from 397 to 301. By the late 1990s, only 272 companies were involved in can production, and 198 of these were larger companies with more than 20 employees. The most significant event in the late 1990s occurred when Ball Corp. acquired the can-making division of Reynolds Metal Co. to vault ahead of its competitors.

Despite growth in the aluminum can sector in the late 1990s, the value of metal can industry shipments declined steadily and recovered only marginally in 2000. The value of shipments in 2000 was $11.58 billion, compared to $11.93 billion in 1997. The cost of materials declined from $8.49 billion in 1997 to $7.64 billion in 2000. Employment during this period fell from 26,747 workers to 23,581 workers.

After declining to $10.9 billion in 2003, metal can industry shipments rebounded later in the decade, to $11.6 billion in 2005 and $13.5 billion in 2008. Throughout the late 1990s and into the 2000s, aluminum cans faced fierce competition from polyethylene terephthalate (PET) plastic bottles, which claimed an increasing share of the beverage container market each year. However, by the mid-years of the first decade of the 2000s, the can was being used again with new shapes and uses. The entire metal can industry had consolidated as companies attempted to remain profitable.

Several daunting challenges threatened the metal can industry. Foremost among these was the rise of PET plastic bottles in the soft drink industry. Just as aluminum cans once overtook steel as the packaging material of choice for soda companies, PET bottles made substantial inroads into the market, beginning in the late 1970s. In 1990, plastic bottles claimed only about 34 percent of the soft drink packaging market, while aluminum cans had a 54 percent share. However, by the late 1990s PET had acquired a 51 percent of soft drink packaging, compared to aluminum's 48 percent share. PET bottles proved especially successful in the "on-the-go" market of gas stations and convenience stores, where consumers appreciated the convenience of 20-ounce PET bottles.

Aluminum can manufacturers fought back as producers stressed the benefits of aluminum cans to beverage companies and bottlers, including the ease of stacking and storing on shelves and the ability to use them like miniature billboards. Aluminum can manufacturers also began to tinker with can design to offer beverage companies aluminum packaging that could differentiate products. For instance, the development of thinner aluminum in the early 1990s enabled can manufacturers to adjust can shapes and production methods. The fluted can body resulted from these experiments, as did the "202" beverage can, which sported a top that was one-quarter of an inch smaller than what was used on most beverage cans. Furthermore, Ball Corp. developed a spin-flow necking process that slimmed down both ends of its aluminum cans and thereby reduced the amount of aluminum required for manufacture, as well as the amount of energy required in the production process. Even more promising, though, was the development of embossing techniques and high-definition graphics by can manufacturers.

By the mid-2000s, the can was a natural way for manufacturers to differentiate products. Packaging was emphasized, particularly in the food and beverage industry, which gave packagers a reason to investigate new can designs to make products stand out. One surprising design that took off in 2004 was the aluminum bottle can. Resealable, appropriate even on beaches, and better at keeping products cold or hot, the aluminum bottle captured the interest of consumers. One of the most popular products was the easy-open can, called the "EZO can," with a pull-tab lid or pop top. These cans had one-third of the market in 2004. Other innovative designs included cans with peelable aluminum foil lids, shaped cans, and resealable cans.

The metal can industry continued to evolve with new product introductions. One industry leader, Silgan Containers, launched its "shaped can" manufacturing capability followed by an independent study they conducted, which revealed 81 percent of shoppers prefer metal cans compared to 9 percent for plastic and 6 percent for glass. Findings also concluded that "shapes" may even bolster market share whether or not the unusual packaging comes with a price increase.

According to the Can Manufacturers Institute, 62.6 billion aluminum cans were recycled worldwide in 2003, including 49.9 billion in the United States. More than 70 percent of the recycled cans were carbonated soft drink containers. Aluminum cans continued to be recycled more often than any other beverage container in the late 2000s, despite falling recycling levels overall.

Current Conditions

According to industry statistics from Dun & Bradstreet, there were 400 metal can and shipping container manufacturers in 2010. Together these firms generated $23.2 billion in sales and employed 22,954 people. All of these figures were down slightly from 2008. Based on revenues, Pennsylvania led the industry with sales totaling $7.9 billion, followed by Colorado with $7.6 billion, North Carolina with $3.2 billion, and Connecticut with $3.0 billion.

In 2010, metal cans constituted about 39 percent of the market share or $9.0 billion in sales. The manufacture of food and beverage containers accounted for 33 percent of market share, with sales totaling $7.6 billion. Manufacturers of aluminum cans accounted for 14 percent of market share with $3.3 billion in shipped goods, whereas shipments of metal food containers held 13 percent of the market share, generating $3.1 billion in sales.

The Aluminum Association, Can Manufacturers Institute (CMI). and the Institute of Scrap Recycling Industries (ISRI) reported U.S. aluminum can recycling climbed slightly to 54.2 percent in 2008, compared to 53.8 percent in 2007. By 2010, 58.1 percent of all aluminum cans were being recycled. This figure, which represented about 56 billion cans, was the highest recycling level for aluminum cans in a decade, according to the Aluminum Association, the CMI, and the ISRI.

Industry Leaders

Based in Broomfield, Colorado, Ball Corp. was the largest can producer in the United States and in the world in the early 2010s. In 2010, sales were $7.6 billion and the company had 14,000 employees. A significant portion of Ball's annual worldwide sales was derived from its can business with Coca-Cola and PepsiCo bottlers. Formerly the second-largest can manufacturer in the United States, American National Can Group was acquired by London-based Rexam PLC in 2000. Rexam was the largest can manufacturer in Europe, recording $7.1 billion in 2010 sales. Another important player was Philadelphia-based Crown Holdings Inc., which operated 135 plants in 41 countries in 2010. The firm employed 20,500 people and recorded sales of almost $8.0 billion in 2010. Silgan Holdings Inc., through subsidiary Silgan Containers, based in Woodland Hills, California, was the leading manufacturer of metal food containers in the United States. The company accounted for about 60 percent of its parent company's sales, which reached $3.0 billion in 2010.

Although these companies were much larger than most of their competitors, their revenues were augmented significantly by a wide variety of operations outside of metal can manufacturing. The metal can industry as a whole remained somewhat diversified. About 50 percent of metal can manufacturers employed fewer than 50 people, but firms with more than 50 people accounted for just under half of the industry's total revenues.

Workforce

Increased productivity in the industry prompted a reduced workforce between 1982 and 1990, as industry employment declined from about 50,000 to around 35,000, according to the U.S. Census Bureau. By 2002, employment stood at 38,274, but fell to 35,204 in 2005 and 29,141 in 2009, including employment by metal box and other light gauge metal container manufacturers. Of the total employees in the industry in 2009, 78 percent were production workers earning an average hourly wage of $22.61. Employment reductions were fueled by increased automation and the movement of production facilities to less-regulated, low-wage countries such as Mexico and China. The majority of the industry's workforce worked in California, Colorado, and Pennsylvania.

Research and Technology

In addition to the strides made in improving aluminum cans, several steel beverage can developments occurred as some producers tried to revive that market, including several Japanese firms. Despite these developments, most countries, including Japan, switched to aluminum in the 1990s. Nevertheless, steel cans rebounded slightly in 1995 as six European can makers changed from aluminum to steel. Additionally, Northern Can System of Canton, Ohio introduced a steel can made with a steel end (instead of the industry norm of aluminum) to be used with a variety of noncarbonated beverages. In Germany, Coca-Cola debuted a contoured can that could only be made from steel because of the distortion limitations of aluminum.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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