Do most of your meals come straight out of can? If so, Silgan Containers would like to thank you for not going out to eat. The company, a subsidiary of Silgan Holdings, is North America's largest manufacturer of metal food containers, carving off for itself about half of the US market. Its steel and aluminum containers and traditional and convenience ends are used by food processors to package fruit, vegetables, meat, coffee, soups, sauces, and other products such as pet food. Customers include Campbell Soup, Nestlé, ConAgra, and General Mills. Silgan Containers, which operates some 30 manufacturing plants in the US, accounts for roughly 60% of Silgan Holdings' sales and more than 75% of its operating income.
Although demand for metal containers has flat-lined, Silgan has managed to increase its market share and income from operations by adding value-added features (commanding a higher selling price) to its standard metal offerings. Among them, it has introduced easy-open end containers, shaped and ornamental containers, single-serve cans, and a lineup of colored aluminum cans. (About 60% of the company's containers sold in 2010 had the easy-open end.) It also partners with sister subsidiary, Silgan Plastics, to produce such hybrid products as microwavable bowls with easy-open metal ends. The economic recession has had a silver lining, too; more budget-strapped consumers are picking up canned foods for dinner instead of a restaurant menu.
Concurrently, Silgan maintains a tight grip on its supplier agreements with its two largest customers, Nestlé and Campbell. In 2010, approximately 90% of its container sales came from multi-year contracts. Supplier agreements soften the impact of global economic ups and downs, providing the company a stream of sales over a specified period.
Another key to Silgan's growth has been its acquisition strategy. Its purchases, which reach across North and South America, Europe, and Asia, increase its proximity to customers, strengthening customer relationships. A number of acquisitions were driven by food processors that stopped manufacturing their own metal food containers in an effort to reduce costs. Silgan has capitalized on the trend by purchasing the can-making plants of Nestlé, Dial, Del Monte, Campbell Soup, and others, along with snatching up agreements to supply the processors. Simultaneously, the acquisitions have spurred Silgan to close and downsize less efficient facilities, enabling the company to cut its own operating costs. Since 2006, it has shutter three metal container manufacturing sites. – less