Sonoco Products Company History

Company History:

Sonoco Products Co. is one of the largest packaging manufacturers in the world. With 16,000 employees and 250 operations in 22 countries, Sonoco provides containers and carriers made of paper, plastic, wood and metal to worldwide industrial and consumer markets. Among numerous innovations in its nearly 100-year history, Sonoco is noted for pioneering the use of the plastic "T-shirt" grocery sack common in supermarkets and retail stores and for creating Ultraseal, a closure system for Crisco shortening cans that eliminated the need for a can opener.

The company originally manufactured paper cones used by the textile industry to wind yarn. As the company expanded and diversified, Sonoco began to manufacture additional products such as molded plastic cones and tubes, toner cartridges, caulking cartridges, composite containers (used for refrigerated dough, frozen juice concentrates and other foods), fiber and plastic drums used for chemicals and pharmaceuticals, tennis ball containers, paperboard, packaging forms, and cap seals, to name a few.

Sonoco had its beginnings in 1890, when Major James L. Coker and his son, James, Jr., founded the Carolina Fiber Company in Hartsville, South Carolina, to manufacture pulp and paper from Southern Pine trees. The enterprise was based on James, Jr.'s senior thesis, which outlined how to make paper pulp using a chemical process.

A few years later, after unsuccessful attempts to sell the pulp commercially, the Cokers decided to use the pulp to make paper cones for the textile industry. On April 15, 1899, Maj. Coker and W. F. Smith formed the Southern Novelty Company, with Coker as the first president. The company ordered a Fourdrinier paper machine, which was built for $19,050. The machine was capable of turning out five to eight tons of paper in 24 hours.

One year after its founding, the new company had sales of $17,000 and net earnings of $2,000. As the 20th century dawned, the textile industry in the South began to grow and prosper, and Sonoco's yarn carriers were in high demand. The advent of new uses for cotton and innovations in high-speed cotton spinning helped revolutionize the textile industry and fuel Sonoco's growth. By 1923, when the company changed its name to Sonoco Products Company, sales were approaching the one-million mark, and income was nearly $40,000.

Although the First World War and the Great Depression devastated many other businesses, Sonoco continued to thrive and expand. In 1927 the company grew from one main plant in Hartsville when it acquired Forney Fiber Company of Jersey City, New Jersey. Also in the 1920s, Sonoco entered into a joint venture with a company in Manchester, England. The joint venture introduced the manufacture of Sonoco-style textile carriers in Manchester, and served as the origin for the Textile Paper Tube Company, Ltd., which eventually grew to include five plants in England, one in Ireland, and subsidiaries in Holland, Germany, South Africa, and India. The joint venture in Manchester was the first of many subsequent international affiliations.

Sales reached $1.6 million in 1930, and profits hit $200,000. Throughout the 1930s and into the 1940s, Sonoco built additional paper machines and acquired other paper tube companies. Charles Westfield Coker, the Major's third son, who had been president since his father's death, passed away in 1931. His son, James Lide Coker III, was named president of Sonoco while still in his late 20s. Under James Coker, who held a master's degree from Harvard Business School, Sonoco flourished. New plants were set up or acquired in eight new locations, and Sonoco established a subsidiary in Canada.

It was during this era that man-made fibers were introduced, changing the textile industry dramatically. Sonoco kept up with the times and focused on developing new product lines, new types of finishes on its cones, and faster means of production. By the end of the 1940s, Sonoco had eight paper machines at the Hartsville mill.

Sonoco looked south of the border in 1950, and expanded its international operations by forming Sonoco de Mexico, S.A. The decade of the 1950s was a period of continued growth and stability for Sonoco. The company posted sales in 1950 of $18.9 million and income of $1.6 million. Tube operations began in Indiana, Texas, and California. In 1957 the company acquired National Paper Co. of Georgia. By the end of the decade, Sonoco had branched into the production of corrugated material.

The 1960s opened on a positive note, with sales at $38 million and income at $2.5 million. In a string of acquisitions in 1960, Sonoco launched operations in Richmond, Virginia, Holyoke, Massachusetts, and Munroe Falls, Ohio. The robust tone set that year continued throughout the decade. In 1961 Sonoco began a spiral tube operation at Ravenna, Ohio, and acquired Industrial Steel and Fibre Ltd. of Terrebonne, Quebec, and Toronto, Ontario. This acquisition took Sonoco into the realm of fiber drums and composite containers (containers with a paper body and metal ends).

James Lide Coker III died in 1961 at the age of 56. His brother, Charles W. Coker--another of the Major's grandsons--became president of the company. Under his leadership, Sonoco started tube operations in Washington, Wisconsin, Missouri, Tennessee, New York, and South Carolina during the 1960s. The company also began manufacturing composite cans in Florida, South Carolina, and Kentucky.

1964 marked a new direction for Sonoco when the company began a business relationship with Showa Products Company of Japan. Further business with Japan would follow two decades later. In 1970 Charles Coker became chairman of the board, and his son Charles, Jr., became president. Sales were $125 million, and income was $6.6 million. That year, Sonoco merged Downingtown Paper Company into its business. Sonoco also acquired a lumber mill in Darlington, South Carolina, and leased timberlands. The company set up tube operations in Puerto Rico in 1971, the same year it acquired a Richmond, California, paper mill from Western Kraft Corporation.

Further diversification occurred in 1972, when Sonoco purchased Paper Stock Dealers, Inc., and Gaston Paper Stock Co., Inc. of Statesville, North Carolina. These acquisitions marked Sonoco's entrance into the wastepaper packing business. The company embarked on another type of new operations in 1973 by starting folding carton and fiber partitions operations in Georgia.

By 1974 Sonoco had 36 U.S. branch plants, and the international division had operations in 11 foreign countries. The company featured six distinct divisions&mdash+astic, paper, forest products, packaging, construction products, partitions, and general products (which included products to the textile industry). Sonoco also operated a waste paper company and a steel fabricating company. Vertical integration was standard, and Sonoco produced its own paper, adhesives, lacquers, and varnishes. From its humble origins of 12 employees in a rented warehouse, Sonoco had grown to number 2,700 people in Hartsville alone.

Tube, composite can, and fiber partition operations began in six states during 1974 and 1975. During America's bicentennial year, 1976, Charles W. Coker, Jr., became the company's chief executive officer. Sonoco was, by this time, one of the top employers in South Carolina.

The latter half of the decade was characterized by continued vigorous expansion. Sonoco Ltd. of Canada opened a new plant in Moncton, New Brunswick. In the United States, Sonoco gained five composite can lines from the American Can Company and started composite can operations in Chicago and St. Louis. The company established Sonoco Containers of Puerto Rico in 1978.

Always evolving, Sonoco in 1979 bought 49 percent interest in the can division of Domtar, Inc., of Canada, closed the folding carton plant in Georgia, and sold folding carton plants in Virginia and Pennsylvania. As the decade closed, Sonoco purchased virtually all of T.P.T. Papierfabrik of Nordhorn, West Germany, and T.P.T. of Nederland, Holland.

The 1980s got off to a fast start on various fronts--Sonoco acquired Alabama-based Baker Industries, Inc., a leading manufacturer of reels for the wire and cable industry, started producing plastic grocery sacks at a Massachusetts plant, and launched a new division at T.P.T. England to make "Bag-in-Box" liquitainers. Sales for 1980 reached $490 million and income was reported at $32.5 million.

Sonoco made the Fortune 500 list for the first time in 1981. The company ranked 457th among the top 500 public manufacturing companies in the United States. That same year, Sonoco de Mexico opened a plant in Monterrey, Mexico. The following year, 1982, was one of numerous acquisitions. Sonoco bought Capseals, Ltd., of England, Linear Products of Puerto Rico (later sold) and acquired the Briggs-Shaffner Division, a major producer of textile beams based in Winston-Salem, North Carolina. The company also bought most of Container Corporation of America's composite can division.

In 1983 Sonoco opened a second plastic bag production site in Santa Monica, California. The company bought Robinson Hardwood Corporation to produce furniture squares and opened a new tube production plant in West Chicago. Sonoco Limited of Canada, meanwhile, purchased another Canadian company, Federal Packaging and Partition Co.

Sonoco added a new product to its roster in 1984, when the company began producing plastic motor oil bottles. Tube production was still going strong, and the company added three new tube operations in Menasha, Wisconsin, Cincinnati, Ohio, and Clifton Forge, Virginia. The following year, Sonoco began plastic sack production at a third facility. The company continued to move into the fiber drum business, acquiring Continental Fiber Drum of Stamford, Connecticut, then the top U.S. producer of fiber drums. Sonoco also acquired Fibro Tambor, S.A. de C.V., a Mexican fiber drum business.

By 1986 the company had 150 plants operating on five continents and a total of more than 11,000 employees who produced hundreds of products ranging from the original textile cones to drainage pipe, composite cans, shipping and storage tubes, plastic grocery sacks, and construction tubes for forming round concrete columns. Textiles, formerly 100 percent of the business, had shrunk to about 15 percent. Sonoco had carved a niche for itself in the paper industry by collecting waste paper from about 30 sites, mainly in the South, and recycling it into paperboard. In 1986 the company acquired the West German Ka-Ro Werke and the South Carolina-based American Ka-Ro, producers of plastic tubes and cones. The company also added Mako, B.V., of Maastricht, Holland, to its roster of fiber tube and drum operations.

1987 saw the acquisition of the Consumer Packaging Division of Boise Cascade, then the nation's largest producer of composite cans. In 1988 Sonoco completed construction of its Packaging Development Center in Hartsville and purchased Gunther, S.A., and its subsidiaries, French producers of paperboard, tubes, cores, cones, and protective packaging.

In terms of innovations in packaging, Sonoco teamed up with Procter & Gamble to create Ultraseal, a closure for P&G's composite cans of Crisco solid shortening. The new closure was designed to be "in control"--that is, the consumer didn't have to use a can opener to break the seal. Sonoco developed a tight-sealing membrane with a ring for easy removal. Also in the realm of packaging, Sonoco started a new plastic grocery sack operation in Telford, England, and acquired the Hilex Poly Co., Inc., of Los Angeles, another plastic sack manufacturer.

Another merger occurred in 1989, when Sonoco joined its Petroleum Products Division with the Graham Container Corp. of York, Pennsylvania, a manufacturer of plastic bottles, to form Sonoco Graham Co. Sonoco owned 40 percent of the new company, but by 1990 wanted to sell its share for $60 million. Sonoco eventually sold its 40 percent interest back to Graham in 1991.

A significant feature of 1989 was Sonoco's international activity. The company acquired the Udo Fischer Co. of Maulburg, Germany. The move added to Sonoco's coreboard and tube production capabilities. Also in 1989, Sonoco set up Sonoco Taiwan Ltd., with headquarters in Taipei, and opened a new plant in Taiwan; bought Mygind International, a manufacturer of plastic sacks and produce bags, of Roskilde, Denmark; announced a joint venture with CMB Packaging, for production and marketing of composite cans throughout Europe; and bought Unit Group plc, a British manufacturer of reels. Sonoco also expanded into Argentina.

Sonoco's sales in 1989 were $1.7 billion and income was $103 million, the highest sales and earnings in the company's history. Income per share was $2.36. By the beginning of the 1990s, Sonoco's venture into plastic grocery sacks had richly paid off&mdash+astic sacks accounted for about 65 percent of grocery bags used in U.S. supermarkets, and the company had the largest share of that market. In another area of packaging, Sonoco set up a plant in Georgia to produce intermediate bulk containers. The company made this move in response to consumer demand for packages larger than fiber drums.

By 1989 Sonoco was the largest manufacturer of uncoated recycled cylinder paperboard in the world. The company recycled about a million tons of wastepaper annually, and controlled about 44,000 acres of woodland as part of its corrugating business.

From these peaks in 1989, Sonoco entered the 1990s with more than 15,000 employees at 200 locations around the world. Sixty-five percent of Sonoco's business was in industrial packaging, while the remaining 35 percent was in consumer packaging. By 1991 economic recession had affected every division and operation. It was the second down year in two decades. Sales for the year were $1.7 billion and income was $94.8 million. Sonoco decreased its U.S. work force by six percent and embarked on an extensive restructuring program.

The picture was not completely bleak, however. The joint venture with CMB Packaging in Europe did well, and the bag-in-box liquitainers were expected to be an area of growth for the company. Sonoco's Liquid Packaging Group set up a bag-in-box operation in California in 1991. On the international front, Sonoco's Industrial Products Division set up a joint venture relationship with Showa Marutsutsu Co. Ltd. of Japan to produce film cores. In 1990 Sonoco purchased Lhomme S.A. to become the largest tube producer in Europe. Sonoco also became the largest tube producer in Australia when it bought Rolex, an Australian core and tube manufacturer.

Sonoco continued to pursue innovative packaging. The High Density Film Products group developed the "Enviromate/RCB" sack in 1991, which contained 25 percent post-consumer recycled resin.

By 1992 Sonoco employed approximately 16,000 people worldwide and had 250 operations in 22 countries. Sales reached $1.8 billion, an increase of 8.2 percent over the previous year. Income in 1992 was $43.3 million or $1 per share. Sonoco added to its consumer packaging operations in Mexico, Puerto Rico, Colombia, and Venezuela. The Industrial Products Division made Sonoco the leading producer of tubes and cores in Europe and Australia. By the end of 1992, the work force in the Industrial Products Division had been reduced by 15 percent.

In Asia during 1992, Sonoco opened an office in Singapore for Sonoco Asia and launched a new tube and core production facility in Malaysia.

As Sonoco entered 1993, it acquired Crellin Holding, Inc., a major manufacturer of injection molded products. Crellin provides plastic carriers for textiles and plastic reels for fiber optics, and has nine plants in the United States and one in the Netherlands. Crellin's products represented new industries and a growth opportunity for Sonoco.

Principal Subsidiaries: Paper Stock Dealers, Inc.; Sonoco Asia/Pacific; Sonoco Limited (Canada); Crellin Holding; Showa Products Company, Ltd. (Japan; 20%).

Further Reading:

• "Businessman of the Year: Charles W. Coker," South Carolina Business Journal, January 1, 1986, Vol. 6, p. 53.
• Coker, Charles W., The Story of Sonoco Products Company, New York: The Newcomen Society in North America, 1974.
• Erickson, Greg, "Peelable Lid Enters Era of Zero Defects," Packaging, September 1988, Vol. 33, No. 11, pp. 8-10.
• "Graham Completes Acquisition," Wall Street Journal, April 2, 1991, Section C, p. 14.
• Puffer, Dick, "Sonoco Reports Excellent 1992 Operational Results," PR Newswire, January 21, 1993.
• ----, "Sonoco to Acquire German Tube Manufacturer," PR Newswire, November 25, 1992.
  The Sonoco Products Company Annual Reports, Hartsville, N.C.: Sonoco Products Company, 1989-1992.
• "Sonoco Restructuring to Include Selling its Stake in Venture," Wall Street Journal, August 29, 1990, Section C, p. 8.
• "Sonoco to Buy Plastics Company," Florence Morning News, January 6, 1993.

Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.