Crown Cork & Seal Case

Crown Cork & Seal

Case Analysis

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Industry Analysis

* 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 0.5% from the year before.

* The can industry employs more than 28,000 people with plants in 33 states, Puerto Rico and American Samoa; and generates about $17.8 billion in direct economic activity.

* Markets served – 74% were for the beverage market, 22% for the food market, and 4% for general packaging.

* The long-term outlook for the maturing metal can industry is dependent on the industry's ability to exploit burgeoning foreign markets and recycling opportunities.

Potential Industry Earnings (PIE) – Value Creation Factors

Industry Demand – The demand for metal containers is estimated to be $10.8 million. This is a derived demand from the soft drinks, beer, food market and pet food. The industry demand has been under serious threat because of the substitution of tins with large multiuse bottles, the PET containers and paper packing. So the threat of substitution is the greatest threat to this industry.

Changes in Technology – The changes are technologies are the bottle shaped steel tins. Steel is more amenable to shaping than aluminum and can produce interesting shaped bottles. Currently, a self-cooling can is being introduced, a self-refrigerated can that can function like and air-conditioner.

Availability of Inputs – With the acquisition of National Steel by US Steel, this company has become a major supplier of steel to the metal packing industry. On the other hand Alcoa, Pechiney, and Alcan are the main suppliers of aluminum to the tin producers. In terms of the six forces, the metal packing industry is having strong supplier power and this has the...