Kerr Group Inc.
Kerr Group Inc.
500 New Holland Avenue
Lancaster, Pennsylvania 17602-2104
Fax: (717) 299-5844
Incorporated: 1903 as Kerr Glass Manufacturing Corp.
Sales: $104.7 million (1996)
SICs: 2821 Plastics Materials Synthetic Resins; 2891 Adhesives & Sealants; 3085 Plastics Bottles; 3086 Plastics Foam Products; 3089 Plastics Products, Not Elsewhere Classified; 3221 Glass Containers; 3466 Crowns & Closures; 5023 Home Furnishings; 5162 Plastics Materials & Basic Forms; 6719 Holding Companies, Not Elsewhere Classified
Kerr Group Inc., formerly Kerr Glass Manufacturing Corp., is a nearly 100-year-old company that is a major producer and distributor of plastic and glass packaging products worldwide. The Lancaster, Pennsylvania-based firm is recognized as a prominent manufacturer and supplier of a full line of plastic packaging products, including child-resistant closures, tamper-evident closures, prescription drug packaging products, as well as glass jars, other closures, containers, and prescription bottles.
Through strong design and process engineering capabilities, Kerr has garnered an impressive customer base, supplying closures to nearly all of the major prescription drug companies in the United States. The company’s tamper-evident closures can also be found on most liquor bottles, as well as on many food products. The company also manufactures and supplies prescription packaging products for major drug store chains, including Walgreen’s Co. and Eckerd Corporation.
The company is also a market leader in the child-resistant closure (CRC) industry, an industry producing approximately three billion closures per year which are used primarily in the pharmaceutical, automotive, and household chemical markets on products whose safety the U.S. Government regulates. The company is additionally the number two manufacturer of pharmaceutical packaging products (including the amber-colored vials and the associated closure used by pharmacies to package prescriptions filled by pharmacists on site) second only to Owens-Illinois and leading Sunbeam Plastics, a division of Rexham.
The company conducts manufacturing activities at four facilities located in Lancaster, Pennsylvania (plastic closure and container plant and warehouse); Jackson, Tennessee (plastic closure and bottle plant and warehouse); Ahoskie, North Carolina (plastic closure plant and warehouse); and Bowling Green, Kentucky (plastic closure plant and warehouse).
From Kerr Glass Manufacturing Corp. to Kerr Group Inc., 1903-92
Kerr Glass Manufacturing Corp. was first established in 1903 by A. H. Kerr to manufacture home canning supplies for people who canned their own foods, such as preserves, jams, jellies, and the like. The company was incorporated in Delaware that same year.
In 1927, the company was reincorporated with the same name and continued in the same line of work. Nearly 50 years later, in 1974, the company was reincorporated in Delaware, again with the same name (as Kerr Glass Manufacturing Corp.), and was a successor of the 1927 incarnation. The company’s present name, Kerr Group Inc., was adopted in May 1992, reflecting the fact that the company had grown to manufacture more than just glass containers.
Acquisitions and Divestitures, 1980-97
In July 1980, the company made one of its first acquisitions, purchasing the Maywood, California-based glass container manufacturing plant of Latchford Glass Co. for approximately $10 million in cash and stock. Acquisitions for Kerr continued when, in May 1981, the company acquired the Chicago Home Canning and Lid facility of the privately held Naperville, Illinois-based Phoenix Closures Inc., a manufacturer of plastic bottle cap lids, with a history dating back to 1890, for approximately $4.7 million in cash and stocks. Several years later, in July 1986, the company purchased a manufacturing facility in Ahoskie, North Carolina, and, in October 1987, the company completed the purchase of SCP Corp., a producer of injected molded plastic jars and closures for $9 million in cash and stock.
But the company’s growth was not without problems, and the sporadic acquisitions were interspersed with occasional divestitures. In September 1983, the company sold off four of its glass manufacturing facilities, located at Millville, New Jersey; Maywood, California; Waxahatchie, Texas; and Wilson, North Carolina, to National Can Corp.
Nearly a decade later, in February 1992, the company sold its commercial glass container manufacturing business to Ball Corporation for approximately $68 million. In December of that same year, the company sold its Metal Crown business to Philadelphia-based packaging giant Crown, Cork & Seal Co. Inc. for approximately $7.2 million. The sale included the company’s Arlington, Texas, metal crown plant and related machinery, equipment, and inventory. Sales for Kerr in 1992 reached $126.6 million.
Rough Waters, 1980s-90s
The company ended up floundering under the direction of Roger Norian, according to one industry analyst, who said in Forbes, “Roger Norian hasn’t done much for Kerr Group, but he’s done very nicely for himself,” and noted that “Kerr had been profitable less than 50 percent of the time from 1982 to 1993, although Norian himself had received over $1.8 million in three years.” When Norian was promoted to chief executive officer of Kerr in 1982, he was taking the helm of a basically sound company that faced a strategic dilemma: Should it stay in its old business, making glass bottles and jars, or branch into something new? Norian decided to do a little of both. He concluded that Kerr’s big competitors—primarily Owens-Illinois and Ball Corp.—had dominated the market for beer and soft drink bottles with standardized sizes. As a small glass bottle producer in a capital-intensive business, Kerr could not compete. So, in 1983, Norian sold four glass container plants to National Can for between $90 million and $95 million. Norian kept Kerr’s business of making glass jars for packaging peanut butter, mayonnaise, and other supermarket staples, plus some small sideline operations that made metal caps for beer bottles and plastic caps for medicine vials. But image problems dogged Kerr’s glass jar operations. Early in 1992 Norian threw in the towel and sold the glass jar operations to Ball for approximately $70 million. Eleven months later Norian sold the money-losing bottle cap division. That reduced Kerr to a company with two basic businesses: manufacturing plastic closures for pharma-ceuticals, food and spirits, as well as other containers; and consumer goods such as cookbooks and kits for home-preserving fruits and vegetables. Revenues in 1993 reached $127.4 million, but Kerr posted a net loss of $1.6 million.
Early that same year, the industries around Kerr (glass and plastics, container manufacturing, etc.) saw some consolidation, with Ball Corporation completing its merger with Heekin Can, and Crown Cork & Seal’s Constar International unit acquiring Wellstar. Airco Coating Technology picked up full responsibility for Eastapac, formerly a joint venture between Aireo and Eastman Chemical, and Sun Coast Plastics changed its name to Sun Coast Closures.
At the time, the company was attempting to reinvent itself under Norian’s direction. But, the consumer products business division, after posting stellar sales of $34.1 million in 1992, was devastated by numerous inclement weather factors, including the Mississippi River flooding and regional droughts, and sales rapidly fell to $29 million one seemingly endless year later. The plastic products group, however, grew to an estimated $98.3 million from $92.6 million in 1992 without significant price increases but, rather, by increasing market share and shifting product mix to high-value-added products.
In August 1994, Kerr moved its consumer products business operation from its old facility in Chicago to a new low-cost facility in Jackson, Tennessee. The company did a little better, hitting revenues of $139.2 million, and posting a net income of $3.4 million.
In mid-1995, the packaging and container industry began seeing more merger and acquisition activity, such as Crown, Cork & Seal with Carnaud Metalbox, and Ball Corp. with Foster-Forbes. By the end of 1995, though, the rollercoaster ride of Kerr’s finances swooped again, with a net loss of $5.3 million on total revenues of $109.2 million.
End of an Era, 1996
Until 1996, the company was a leading manufacturing of home canning supplies, through its consumer products business division, with an estimated 45 percent market share, continuing the work originally started by A. H. Kerr in 1903.
Those operations included the manufacture and sale of caps and lids and the sale of canning jars and lids used by consumers for home canning of fruits, vegetables, jams, jellies, and the like, together with the sale of other related products, including iced tea tumblers and beverage mugs, and plastic dinnerware and drinkware.
Due to a combination of cyclical demand based on annual growing, harvest, and weather conditions; a shift in retail distribution channels for such supplies away from smaller specialty stores and into the larger mass-merchandise retailers such as Wal-Mart and Kmart (with concurrent lower profit margins); and little growth in the unit, operations for the consumer products division were discontinued. Certain assets of the division were sold in March 1996 to Alltrista Corporation for a purchase price of $14.5 million in cash and stocks. Alltrista, parts of which formerly belonged to Ball Corp., was another Muncie, Indiana-based company. The manufacturer of metal stamped jar tops, rubber jar rings, and glass jars for packing, founded in 1991, also produced zinc blanks used to make pennies. Revenues for Kerr hit in the normal range for the struggling company, at $107.4 million, but net losses mounted to $22.3 million.
Through the Looking Glass, 1997-Date
By 1997, Norian was gone, with D. Gordon Strickland taking over as CEO and president. Later that year, Fremont Acquisition Company LLC and Kerr Acquisition Corporation (KAC) completed their previously announced merger, as the former tendered a cash offer for all of the shares of common stock in the latter. The company remained Kerr Group Inc. but was taken off the New York Stock Exchange and converted into a private company. Fremont Partners also had acquired Global Motorsport (a custom chrome manufacturer for companies such as Harley-Davidson) and Kinetic Concepts Inc. (a manufacturer of medical equipment such as hospital beds).
In March 1998, the company acquired Dallas, Texas-based Sun Coast Industries Inc., a manufacturer of plastic closures, tableware and dinnerware, and melamine and urea resins. The acquisition also included part or all of several Sun Coast subsidiaries, including Plastics Manufacturing Co. (Dallas, Texas); Sun Coast Closures Inc. (Sarasota, Florida), and Custom Laminates Inc. (Dallas, Texas). Most of Plastics Manufacturing Co. (PMC), established in 1946 and which had merged with Sun Coast in 1989, was sold in 1996 to Worthington Custom Plastics, itself a subsidiary of Worthington Industries Inc., for $60 million. Worthington, best-known for its steel-processing business, acquired the group so it could advance its non-automotive plastics sales. The sale included PMC’s own subsidiary, IDG Marketing, designer and manufacturer of plastic dinnerware, drinkware, and hardware-related products, which it acquired in June 1993.
Kerr, under new ownership, was looking forward to enjoying more stable waters and continued growth in the future, and was poised to remain a leader in the packaging industry.
Santa Fe Plastic Corporation.
Plastic Products Division.
Bohner, Kate, “Ask Not What You Can Do for Your Company,” Forbes, November 22, 1993, p. 120.
“Fremont Partners to Buy Kerr Group for $27 Million,” New York Times, July 2, 1997, p. C3(N)/D3(L).
“Kerr Group in Talks About Possible Sale of the Company,” New York Times, June 17, 1997, p. C4(N).
“Kerr Group Inc.,” Wall Street Journal, August 26, 1997, p. B4(W).
“Kerr Group Inc.—Company Report,” Moody’s Investors Service, November 11, 1997.”
Kerr Group Inc.—History & Debt,” Moody’s Investors Service, March 28, 1998.
“Kerr Group Reaches Deal on Pension Plan with Federal Agency,” Wall Street Journal, August 26, 1997, p. C17(E).
“Separate Talks Are Held on Sale, Unsecured Debt,” Wall Street Journal, June 17, 1997, p. B4(W)/B8(E).
“Sun Coast Shares Leap on Word It Will Be Acquired,” New York Times, January 29, 1998, p. C4(N)/D4(L).
—Daryl F. Mallett