Glass act

WINDSOR — In the annals of glass manufacturing — man learned to mold glass about 7000 B.C. — Owens-Illinois Inc. is a pup.

In the modern glass industry, the 100-year-old company is a colossus.

The company, which introduced automated production of bottles and jars in 1903, recorded $5.6 billion in sales last year. As of last year the company led all rivals in market share, claiming 41.8 percent of all glass container sales in North America.

According to O-I, the company or one of its licensees makes one of every two beverage bottles produced worldwide.

While Owens-Illinois doesn’t live on glass alone — nearly one-third of its second-quarter sales were in plastic containers — the company’s history was built on glass production.

Founder and namesake Michael Owens joined the New England Glass Co. in 1888 at its Toledo, Ohio, plant. Owens eventually developed the automatic bottle machine in 1903 and formed his own company in Toledo that year.

The first Owens machine could make10 bottles a minute. Owens’ invention spelled the end of glass blowing as a significant form of production.

At first, Owens focused on making machinery for other bottle makers. Then in 1908 the company decided to make bottles. Twelve years later Owens became the nation’s largest bottle maker.

The company became Owens-Illinois Glass Co. in 1929 after a merger with the Illinois Glass Co.

“The key issue is, over those 100 years, we maintained some level of internal R& D,´ said Ken Lovejoy, Owens-Illinois’ vice president and manager of facilities engineering. “Because of that, in many ways, we’ve become the world’s leader in glass container production technology.”

Much of that technology investment will be evident in the new O-I plant in Windsor, which is scheduled to open in early 2005. The plant will be Owens-Illinois’ first new glass bottle facility in 23 years.

The company expects to produce one billion bottles a year at its new plant in Windsor — a rate of more than 1,900 bottles a minute.

One hundred years is also ample time for the corporate condition to experience numerous peaks and valleys.

Owens-Illinois was prosperous through The Great Depression. A recent account in the Toledo Blade said that the company’s chief executive William Levis in the early 1930s anticipated the end of Prohibition. Levis “geared up early to produce beer and whiskey bottles and captured a huge market share when alcohol production resumed in 1933.”

By the 1950s, O-I had become the 75th largest company in the United States and eventually became one of the 30 Dow Jones Industrial Index companies.

Owens-Illinois also ventured into development of fiberglass, a move that spawned creation the Owens Corning, a major maker of fiberglass insulation.

Fiberglass also became an albatross for Owens-Illinois, which still hampers the company today.

During the 1940s and 1950s, Owens-Illinois produced insulation for industrial pipes, a product it stopped making in 1958. However, the company’s product was found to include asbestos, later shown to cause cancer.

Owens-Illinois continues to pay out hundreds of millions of dollars each year to cover legal claims from asbestos victims. In the first of six months of 2003, the company spent $99.9 million on legal payments, and has roughly 30,000 claims pending.

Changing demands in the packaging industry also squeezed profits. In just four years, between 1980 and 1984, Owens-Illinois was forced to close 40 plants and dismiss 20,000 workers — one-fourth of its workforce at the time.

Over the past decade Owens-Illinois has also experienced unstable stock prices, tied primarily to the asbestos liability.

In 1998 Owens-Illinois stock soared as high as $49 per share. By 2000, with mounting concerns over asbestos prices, the shares had dipped below $6. In December 2000 Owens-Illinois was dropped from the Standard & Poors 500 Index.

Prices have inched back to the current price of about $11, and company officials have declared “asbestos situation is manageable,” according to O-I spokeswoman Sara Theis.

Still, current legislation before Congress proposes could be favorable to O-I and its shareholders. Congress is considering establishing a trust fund for asbestos claimants, which could limit future legal exposure for O-I.

Owens-Illinois’ largest shareholder is the leveraged buyout firm Kohlberg, Kravis, Roberts & Co., which owns 24 percent of the company’s outstanding stock.

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