Most companies don't make the plastic containers used to package their products; rather, they turn to companies like Silgan Plastics to design and manufacture whatever packaging they desire. A subsidiary of Silgan Holdings, Silgan Plastics serves customers from the food and beverage, health and pharmaceutical, cosmetics and toiletry, household, automotive, marine, agricultural, and industrial products markets. To suit its diverse group of customers, Silgan offers more than 1,200 different bottles, jars, tubes, food containers, and closures, which it manufactures at some two dozen US and Canadian facilities. It also provides engineering and creative design services through its commercial development center.
Under Silgan Holdings' direction, Silgan Plastics is determined to increase its profitability. During 2010 the plastic container maker represented less than 20% of its corporate parent's sales and roughly 3% of its operating income. Its lack luster results, a more than 65% tumble from 2009's income from operations, were driven by high rationalization charges tied to plant closures, an inability to sufficiently pass on increased resin costs, and an unfavorable product mix.
To improve results, Silgan Plastics has a dual agenda of strengthening productivity and continuing cost cuts. From 2006 to 2010 it shut down two manufacturing facilities. It announced in 2010 the closure its blow molding plant in Port Clinton, Ohio, and relocation of plant production to a Ligonier, Indiana facility. The company also closed one of its Woodstock, Illinois plastic container making facilities, and consolidated administrative positions in the US and Canadian corporate offices.
Concurrently, Silgan Plastics pumped over $5 million into machinery upgrades at the Indiana facility. Other efforts to realize manufacturing efficiencies include licensing the injection molding technology of Kortec in 2010 for use in three of its packaging markets (pet food, fruit cups, and microwaveable containers). The products are traditionally packaged in thermoformed containers and metal cans. Kortec's injected polypropylene process, which yields a more transparent packaging, allows for uniform packaging and quicker line-filling speeds at food plants.
Over the long term, Silgan Plastics benefits from multi-year customer supply contracts. Such relationships provide a steady stream of sales over a set period. Since 1987 the company has expanded its market share and increased sales by more than six-fold. Its corporate parent is pursuing acquisition opportunities to expand the plastic container maker's customer base. Silgan Plastics already boasts capacity to produce customized packaging across a full range of resin materials, decorating techniques, and molding processes. – less