Amcor Limited History

Company History:

Headquartered in Australia, Amcor Limited manufactures and sells a diverse assortment of paper, plastic, and metal packaging materials. Amcor products are used in the creation of paper wrappings, corrugated and solid fiber containers, rigid plastic containers, plastic bags and tubes, and cans for processed foods. Amcor also has substantial interests in pulp, paper, and other forest products, in tissue and personal-care markets, and in the trading and distribution of paper and packaging products. The company has operations located in 14 countries throughout the world, with its headquarters office in Melbourne, the capital of Victoria, Australia. Amcor adopted its current name in May 1986, and its major period of expansion and acquisition has taken place since that time.

The Early Years

Amcor began as a paper making business called the Australian Paper Manufacturers Ltd. (APM). The origins of APM--although it was not incorporated under this name until 1926--can be traced back to the 1860s and to some of the earliest Australian ventures in paper making. The 1860s were years of rapid industrial growth in Australia's New South Wales and neighboring Victoria. The gold rushes initiated not only rising prosperity, but also an explosion in the area's population and available labor force. Furthermore, the introduction of a governmental protection policy for manufacturers in Victoria created a climate in which factories exploded in number. The paper making industry was no exception to this trend.

In 1864, the Collingwood Mill at Liverpool, New South Wales, was constructed for the Australian Paper Company. Four years later in Melbourne, Samuel Ramsden built his own mill and began production with the Number One Paper Machine. In 1871, William Fieldhouse erected Melbourne Number Two Paper Machine adjacent to Ramsden's mill; this operation was subsequently purchased by Ramsden. By the time a new entity--the Australian Paper Mills Company--was formed and registered in 1895, mills had been combined in Melbourne, Broadford, and Geelong. The company's capital was A$214,000 and its output was approximately 730 tons per year. The following year, it became the Australian Paper Mills Company Ltd.

Meanwhile, in the New South Wales capital of Sydney, John Thomson Brown had started a business of his own, trading in meat, grain, and farming and household goods. In 1885 David Henry Dureau became Brown's Melbourne partner. Their company would later play an important role in APM/Amcor's future. Brown and Dureau's company thrived, and was incorporated as Brown & Dureau, Ltd. in 1910. Over the years, as general commission agents, Brown and Dureau handled a wide range of goods.

In the first two decades of the 1900s, the Australian Paper Mills Company Ltd. entered a period of expansion as Australia's overseas trade doubled since the turn of the century. In 1920, the Australian Paper Mills Company Ltd. combined forces with Sydney Paper Mills Ltd. to form the Australian Paper and Pulp Company Ltd. This entity then merged with the Cumberland Paper Board Mills Ltd. in 1926, and the operating company of APM was finally formed. This company would continue to function under that name for years to come, and into the 1990s as the pulp and paper making arm of Amcor.

The War Years: The 1930s and Beyond

In 1936, an agreement was signed between APM and the Victorian Forest Commission covering the procurement of wood pulp. Later that year, the 1936 Wood Pulp Agreement Act was passed by the Victorian parliament and led to the establishment of the Maryvale pulp mill. This pilot mill began semi-commercial production of eucalyptus kraft pulp in March of 1938, and the main mill started commercial production the following year.

The year 1939 saw the outbreak of World War II and the worst bush fires in Victoria's history. APM's mill buildings survived, but the majority of its prime pulp wood source was destroyed. The company found, however, that fire-killed timber could still be used for pulping. This was fortunate, as the advent of the war brought about drastic changes in APM's operations: imports ceased abruptly, price controls were imposed by the federal government, a war-time profits tax was imposed, and Australian industries were required to provide military equipment to meet defense needs. Within two years, 70 percent of APM's total production was directed toward the manufacture of ammunitions and war equipment. During this period, the company demonstrated its strength as an innovator, supplying purified cellulose for the manufacture of smokeless cordite and other propellants for the Allied forces. APM also developed special papers and boards to resist moisture penetration for the troops fighting in tropical regions.

War-time conditions also prompted APM to increase its self-sufficiency. For example, before the war began, 80 percent of APM's total pulp requirements were imported, compared to times during and after the war, when 80 percent of its necessary raw materials were derived from local sources. Also, the war demanded self-sufficiency in fuel; in 1946, the company acquired a controlling interest in Maddingley Brown Coal Pty. Ltd. This acquisition, combined with the purchase of further coal-bearing land, soon produced 10,000 tons of coal per week and supplied all of the Victorian mills as well as other commercial and public enterprises.

Although APM was designated a "protected" industry by the Australian federal government during the war, the company nevertheless saw 25 percent of its work force enlist. Therefore, it recruited women to work in the mills. The company still operated with a decreased staff, but despite this and other hardships--such as a coal strike in New South Wales and further bush fires in 1944--the company managed to continue the expansion of its mills. Production grew dramatically from 92,000 tons in 1938, to 131,000 tons in 1942.

Toward the end of the war, APM's managing director, Sir Herbert Gepp, set up a Post-war Planning Committee to win back freedom from government control and the war-time profit tax, and to prepare a case for reasonable tariff protection against the inevitable resurgence of competitive imports. The committee also discussed APM's future strategy, which was to include the extension of operations in wrapping paper and board; expansion into converting operations, such as the manufacturing of cartons and containers from APM's paper and board; and the manufacture of allied products such as cellophane and tissues.

Post-World War II Diversification Efforts

War time had resulted in major reorganizations, both financial and administrative. The development of public relations at APM was changed, and a new emphasis on industrial relations was adopted. The company still possessed a monopoly on the country's wrapping paper and board markets, and was firmly established in mainland Australia as the country's largest paper and pulp company. In the 1950s, APM initiated a foray into the corrugated packaging industry in which it was later to make significant acquisitions. Before 1940, there were four Australian companies operating in the corrugated packaging field; J. Fielding & Co. was the earliest, installing the first corrugator in 1914 at Buckingham Street in Sydney to produce the corrugating medium for packaging. In 1950, APM bought the first 96-inch corrugator, with plans to install it on the Springvale wastepaper recycling site, but instead sold it to Fieldings.

The 1960s saw APM extend its interests to the production of other paper products. In 1963, it established the jointly owned Kimberly-Clark Australia Ltd., in partnership with the Kimberly-Clark Corporation of the United States. The subsidiary produced all kinds of tissue products.

It was in the 1970s that Brown & Dureau, Ltd. took on a significant role in the history of APM/Amcor. Brown & Dureau acquired the Eastern Tool Company, Lukey Mufflers, and Angus Hill Holdings, which would later form the nucleus of Amcor's automotive division. In 1975 Stan Wallis became the deputy managing director of APM, which marked the beginning of many years of strong leadership for the company. Under Wallis, APM began a process of diversification in the late 1970s. One of the most important acquisitions was that of Brown & Dureau in the financial year 1978-1979. This purchase brought APM substantial interests in the fields of international trading, automotive, retailing, and aviation.

Acquisitions in the 1980s

In the following decade, more major acquisitions for APM included the Ingram Corporation Ltd. and Edwards Dunlop & Co. Ltd., a paper merchant and stationery manufacturer, respectively. From these acquisitions grew the merchanting, stationery and designer products division. During the same period, APM acquired 40 percent of James Hardie Containers, manufacturers of corrugated fiber boxes for packaging food and drink.

In 1982, APM acquired Containers Packaging, the fourth major wholly-owned subsidiary. That same year, New Zealand Forest Products (NZFP)--that country's leading forestry group--formed a joint venture company with APM, allocating 50 percent of the shares to each corporation, and called it Anfor. This was set up to develop a corrugated box plant in Hong Kong, with NZFP supplying liner board and APM supplying the corrugating medium to make boxes to be sold to Chinese, South Korean, and Japanese customers.

In 1986, APM bought the balance of James Hardie Containers and an era of rationalization began. During this time period, plants were acquired from Reed Corrugated Containers, J. Fielding & Co., Tasman U.E.B., United Packages, Corrugated Paper, Fibreboard Containers, Fibre Containers, J. Gadsden Paper Products, Tasmanian Fibre Containers, and Cardboard Containers. Also in 1986, the company adopted the name of Amcor Limited, in order to better reflect the company's emerging diversity in its holdings.

Near the middle to end of the decade, Stan Wallis embarked on an ambitious program of capital investment in import-substituting plants, and in reopening existing plants to supply growing export markets. But not all of Stan Wallis's plans were successful. In April 1987, a possible merger between NZFP and Amcor was announced. The proposed merger would have covered only the pulp and paper production and marketing of the two companies, thus stopping short of a full merger of operations. But in August 1987, Amcor received the New Zealand Commerce Commission's decision: the merger would not go ahead.

The principal reason for the commission's rejection was that the proposed new entity would have a virtual monopoly of the manufacture and import of kraft paper and paperboard in New Zealand. The same obstacle did not impede Fletcher Challenge, Amcor's main domestic rival. Amcor promptly sold its 11 percent stake in NZFP to the Rada Corporation, which some thought was a defense against a Fletcher Challenge takeover. In 1986-1987 Kiwi Packaging of New Zealand also became a wholly owned subsidiary of Amcor, running five corrugating plants and two sheet plants.

Amcor then turned its eyes to offshore investment opportunities. In 1988, the year following the failed merger with NZFP, the group announced it was concentrating on overseas business expansion; as evidence, it switched Don B. Macfarlane to the newly-created post of general manager of international business development. According to Amcor, the creation of Macfarlane's new post signified its commitment to a structured and systematic approach to expansion outside Australia.

Throughout the decade, Amcor's packaging division established two plants: one at Smithfield, New South Wales; and another at Scoresby, Victoria. In the financial year 1988-1989 it bought 46 percent of Sydney's Universal Containers. During the 1980s Amcor's key objectives were to broaden its range of activities, particularly into packaging; to restructure its core pulp and paper businesses and integrate forward into paper converting in Australia; and to commence major overseas expansion. In June 1989, Amcor bought Twinpak, the largest plastics containers producer in Canada with 13 plants spread across the country. The acquisition accounted for a significant proportion of the 32 percent increase in containers packaging sales in the financial year 1989-1990.

In 1989 Amcor appointed a new chairman, Sir Brian Inglis. He replaced Alan Skurrie, who had held the office for five years and had an association of more than 55 years with Amcor. Amcor's 1989-1990 annual report recorded expenditure during the five years through June 1990 of A$2 billion on capital equipment and acquisitions. The company's commitment to growth was clear. Yet for all the ambition of the program, funding for Amcor's investments came principally from internal cash flow, as well as from the sale of assets and some borrowing. The program was financially conservative.

It was at that time that Sunclipse Incorporated was acquired, which was a California-based corrugated box manufacturer and distributor of packaging products. Amcor Packaging (Europe) Ltd. was another development, constituting Amcor's first direct investment in the United Kingdom--a corrugated box plant on a greenfield site in Cambridgeshire. A 49 percent share in SACOC, a French corrugated box manufacturer, was also acquired near the turn of the decade.

The 1990s and Beyond

After setting out to diversify in the 1980s, paper accounted for only 19 percent of Amcor's 1990 sales, compared with 57 percent a decade earlier. Much of this diversification was achieved through acquisitions, which typified almost all of the company's activity in the 1980s and 1990s. In June 1990 Amcor Fibre Packaging was formed to manage the group's international corrugated box manufacturing and related activities. It included APM Packaging, Kiwi Packaging, Sunclipse, Amcor Packaging (Europe), SACOC, and Anfor. At that time, in total, it had the capacity to manufacture almost one million tons per year of corrugated products, accounting for more than half of the capacity of others outside Australia.

The following year, Amcor's Containers Packaging subsidiary added New Zealand Can Ltd. to its holdings for A$45 million. Amcor also purchased an eventual 42 percent stake in Spicers Paper Ltd., an Australian stationary producer, and a 49 percent portion of Willander Holdings, another corrugated box manufacturer that was stationed in the United Kingdom.

1993 saw Amcor make moves to consolidate its rapidly expanding holdings into three main divisions. Its Containers Packaging division was mainly responsible for the production of plastic and metal containers for food packaging; Amcor Fibre Packaging dealt with the company's corrugated cardboard products; and the Amcor Paper Group division was responsible for the manufacture of paper, stationary, paperboard, and coated paper products. In the wake of numerous acquisitions that year, Amcor also began to sell off operations that either deviated from the above categories, or that were generally unprofitable. Divestitures included the company's games division (including Amcor's rights to "Scrabble"), Amidale Industries Ltd./Croxley Collins Olympic N.Z., and Petersen Contact Stationers. Amcor also purchased almost 20 new holdings in 1993 and 1994.

In 1994, Amcor also began operations at a new paper mill in Prewitt, New Mexico in the United States. This mill, dubbed the McKinley Paper Company, was constructed to be a cost-effective operation and was strategically positioned to service the market in Southern California and surrounding areas. The McKinley location immediately received high accolades from Amcor's top Australian-based executives due to its high-quality production and efficient operations, as well as to its intelligent geographic placement and ability to serve the surrounding market.

Internationally, Amcor continued its expansion-throughacquisitions plan, making 12 substantial purchases and selling 4 of its holdings in 1995. The company increased its revenue that year by over A$1 billion from its 1994 figures. Activity in 1996 followed suit, as the company again consolidated its holdings with new purchases and the divestiture of inconsistent and unprofitable operations.

Entering the end of the century, Amcor was positioning itself for continued future success. Major challenges facing the company would be the ability to adapt to vastly increasing public awareness of environmental issues, and also the ability to continue its trend of becoming even more competitive at the international level. Amcor's focus on the second goal was obvious, however, after the company had spent almost the entire span of the 1990s acquiring holdings on a global level that would help position it for growth and success.

Principal Subsidiaries: Amcor Plantations Pty. Ltd.; Australian Paper Ltd.; Amcor Insurances Pte. Ltd.; Amcor Investments Pty. Ltd.; Anneckum Pty. Ltd. (93%); Brown & Dureau Pty. Ltd.; Brown & Dureau Building Materials Pty. Ltd.; Cellulose Australia Ltd.; Containers Pty. Ltd.; Australian Paper Chase Pty. Ltd.; Maryvale Project Leasing Pty. Ltd.; Micabank Pty. Ltd.; Multix Pty. Ltd.; Advance Packaging Pty. Ltd. (46%); Amcor Trading (Japan) Ltd. (49%); CapVision International Co. Ltd. (HK) (50%); Kimberly-Clark Australia Pty. Ltd. (50%); Pinegro Products Pty. Ltd. (50%); Rota Die International Pty. Ltd. (49%); S.G. Sociedade Grafica, S.A. (36%); Spicers Paper Ltd. (42%); Zac's Packs Pty. Ltd. (46%).

Principal Divisions: Containers Packaging; Amcor Fibre Packaging; Amcor Paper Group.

Further Reading:

• "Cardboard is Gold in McKinley County," New Mexico Business Journal, October 1994, p. 66.
• "McKinley Paper Co.: New Mexico's First Mill Will Tap the Lucrative L.A. market," Pulp & Paper, September 1993, p. 72.
• Sinclair, E.K., The Spreading Tree: A History of APM and AMCOR 1844-1989, Sydney: Allen & Unwin, 1991.

Source: International Directory of Company Histories, Vol. 19. St. James Press, 1998.