Inland Container Corporation
Address:
4030 Vincennes Road
Indianapolis, Indiana 46268
U.S.A.
Telephone: (317) 879-4222
Fax: (317) 879-4234
Statistics:
Private Subsidiary of Temple-Inland Inc.
Incorporated: 1925 as Inland Box Company
Employees: 7,500
Sales: $1.25 billion
Stock Exchanges: New York Pacific
SICs: 2653 Corrugated & Solid Fiber Boxes (Primary); 2631 Paperboard Mills; 2679 Converted Paper & Paperboard Products Nec
Company History:
Inland Container Corporation, based in Indianapolis, Indiana, is one of the United States' largest producers of containerboard and corrugated shipping containers. In 1992 the company ranked among the top four producers of containerboard, with about 8 percent of U.S. production. In 1984 Inland Container and Temple-Eastex Inc., those subsidiaries of Time Inc. conducting its forest products business, were spun off and merged as Temple-Inland Inc., a holding company with interests in paper, packaging, building products, and financial services. By the 1990s, Temple-Inland's operations were divided between Inland Container and two other major subsidiaries: Temple-Inland Forest Products Corporation, responsible for the Bleached Paperboard and Building Products groups; and Temple-Inland Financial Services, conducting financial activities ranging from mortgage and consumer banking to land development and insurance. Of the three subsidiaries, Inland Container represented the largest manufacturing unit, accounting for approximately 46 percent of revenues in 1992.
Inland Container Corporation dates back to 1918, when Herman C. Krannert founded Anderson Box Company in Anderson, Indiana. Though this original business would eventually become a subsidiary of its larger successor, company records officially trace Inland's origins to Krannert's founding in 1925 of Inland Box Company in Indianapolis. After nearly a year of production in rented space, the fledgling company moved into a newly constructed plant. By 1929, Inland Box Company had grown sufficiently to warrant purchase of a second plant, the Gardner & Harvey Container Corporation in Middletown, Ohio. In 1930 the company name was changed to Inland Container Corporation. By the end of the 1930s, the company had expanded operations to Chicago, Milwaukee, and Evansville.
The 1940s marked a period of ambitious planning cut short by World War II. With no paper supply of its own, Inland moved toward a joint venture to build a kraft mill with Agar Manufacturing Company, which already ran four operations in the Northeast. But plans were deferred, first by the war, and then by Agar's acquisition by International Paper Company.
Following the war, however, renewed efforts in mill development culminated in a joint venture, Georgia Kraft Company, of which Inland owned 40 percent and the Mead Corporation owned the other 60 percent. With the 1948 completion of its first mill in Macon, Georgia, the joint venture began production of linerboard. To accommodate expanding business, Georgia Kraft began construction of a second mill at Rome, Georgia, in 1952. Two years later construction was completed, and the Rome linerboard mill began production. In 1955 Inland acquired an additional 10 percent of the joint venture, granting Inland and Mead equal shares in a lasting partnership.
The 1960s marked a period of continued growth and new business ventures. By 1960, the company boasted 19 box plants, including several sheet plants, and sales of $93 million, up from $77 million five years earlier. In April of that year, 175,000 shares of Class A common stock were put on the market, representing Inland's first public trading. Inland entered the glass container business with its purchase of Fairmount Glass Company in 1961 (this attempt at diversification was relatively short-lived, and Fairmount was sold in 1969). Also in 1961, Georgia Kraft met higher demand with an additional paper machine at Rome and construction of a new mill in Mahrt, Alabama, which started production in 1966. Anticipating continued growth in the 1970s, Inland broke ground for its first wholly owned paper mill, at New Johnsonville, Tennessee, in 1969.
The 1970s marked a period of internal change for Inland, with changing duties of key officers and important changes in asset management. On January 1, 1970, Henry Goodrich, who had joined the company in 1968, was elected both president and chief executive officer. As CEO, Goodrich replaced Herman Krannert, the company founder and CEO since 1925. As president, he filled a post that had been filled first by George Elliott, from 1952 to 1963, and Philip Holton, president from 1963 to 1970. The 1972 death of Herman Krannert further changed the company's profile. The founder's wife and the Krannert Charitable Trust made a secondary offering of the company's stock in the fall of 1972, setting the ground for company stock listings on the New York Stock Exchange. Inland stock was first traded on the exchange on December 12, 1972.
The 1970s were also characterized by continued growth resulting in new plants and geographic expansion. In 1970, with sales at $197 million, the company moved to the West Coast with the acquisition of a Bell, California, plant. Western potential was further developed in 1973, when Inland acquired the Newark and Santa Fe Springs box plants and the Newark mill. Growth continued closer to the home front as well, as the construction of the Newport, Indiana, recycle mill was completed in 1975, beginning production of containerboard using recycled material as its furnish. The success of this mill, paired with growing emphasis on recycling, would foster unprecedented recycling innovation into the 1990s.
In May of 1978 it was announced that Inland would become part of Time Inc., a move that many analysts, such as Robert J. Cole of the New York Times, expected would reduce Time's dependence on publishing as its primary business. Inland had become an attractive target for acquisition, with 1978 sales of $397 million, over twice the figure at the start of that decade. The merger, finalized in November of that year, provided extra impetus to the already established pattern of growth. By 1980, Inland sales had jumped to $597 million.
In addition to the merger with Time, the late 1970s brought yet another shift in upper management. In October of 1979 Henry Goodrich returned to Alabama to become chief executive officer of Sonat, Inc., and was replaced by Jack Ames as third CEO of Inland.
In the early 1980s changing market conditions together with continually increasing costs, prompted new strategies to supplement Inland's core container business. Georgia Kraft Company entered the lumber and plywood business with sawmills in Greenville and Rome, Georgia, and Cottonton, Alabama, and a sizable plywood and lumber mill at Madison, Georgia. In 1981 the corrugated box plant in Indianapolis was closed. Because it was the original plant built by the Krannert family in 1926, the decision was a difficult one, according to company officials. But new market conditions under the relatively new ownership of Time called for new business strategies.
Trying new strategies of its own, Time Inc. in 1983 formed Temple-Inland Inc. to hold all the stock of Temple-Eastex Inc. and Inland Container Corp. for purposes of stock distribution. Time's board of directors authorized the distribution of 90 percent of the outstanding common stock of Temple-Inland Inc. to holders of Time common stock of record on January 11, 1984, at the rate of 0.36 of a share of Temple-Inland common stock for each share of Time stock.
On January 26, 1984, Temple-Inland was spun off from Time Inc. Standard & Poor's reported that although the spinoff eliminated a significant source of earnings and cash flow for Time, these businesses generated lower returns on capital than Time's magazine publishing and video operations. A January 4, 1984, article in PR Newswire anticipated that Time's earnings base would be less cyclical and operating margins and returns would improve measurably. Standard & Poor's raised the ratings of Time's outstanding senior debt to "AA" from "AA−" and maintained its "A-1+" commercial paper rating. Publicly rated industrial development revenue bonds and pollution control bonds issued by Temple Eastex Inc. and Inland Container--which were still guaranteed by Time, despite the spinoff--were also raised to "AA" from "AA−."
After the spinoff, Temple-Inland was poised for conservative but constant growth. Despite a severe recession in the forest products industry in the early 1980s, the company fared comparatively well in large part because of its high operating efficiencies. Furthermore, Temple-Inland inherited a conservative capital structure from Time Inc., with total debt to total capitalization at 23 percent and debt leverage checked by moderate capital spending plans.
Despite moderate capital spending plans after the spinoff, Inland measured substantial growth. Construction of a recycled linerboard mill in Ontario, California, began in 1984, and production started in 1985. In October of 1985 Inland completed the sale of its Eastex Packaging Inc. unit to Manville Forest Products Corp., a subsidiary of Manville Corp., to generate an after-tax gain of about $7 million. That same year Georgia Kraft Company was dissolved, with Inland becoming the sole owner of the Rome, Georgia, linerboard mill. Inland undertook a five-year, $190-million improvement program to increase the production capacity of Inland-Rome by approximately 25 percent. In 1986 Inland acquired a linerboard mill in Orange, Texas, along with three box plants from Owens-Illinois. These and other investments reinforced the company after a recessionary debut to the 1980s.
On July 24, 1987, Jack Ames retired as chief executive officer of Inland, and Ben Lancashire became chairman, president, and chief executive officer of the company. Lancashire oversaw unprecedented growth early in his tenure. In 1988 Inland sales exceeded $1 billion for the first time. In November of 1989 Temple-Inland's board of directors approved capital expenditures for Inland of $200 million, to be distributed between a $160-million recycle mill, a $25-million white top production line at its Orange, Texas, mill, and a new, $15-million box plant in the Richmond, Virginia, area.
These and other investments marked the late 1980s. In 1989 Inland moved to a new corporate headquarters building in northwest Indianapolis. In 1990 the company purchased Indianapolis-based Pakway Container Corporation, operating three box plants, and California-based Crockett Container Corporation, operating four box plants; this brought Inland's box plant total to 40.
Construction of the Maysville, Kentucky, 100 percent recycled linerboard mill began in 1991, continuing recycling concerns that began in the 1970s and became a socially and economically mandated process by the 1990s. Among other groups promoting recycled goods, the "Buy Recycled Business Alliance," comprised of major American corporations, began pressuring suppliers to provide higher volumes of recycled packaging materials and greater recycled content in finished goods. Temple-Inland's 1992 annual report projected that over 40 percent of the company's containerboard would be recycled by 1993. On October 8, 1992, just 18 months after groundbreaking, the Maysville mill began production. Located on a 250-acre site on the Ohio River, about 60 miles east of Cincinnati, the mill was capable of producing 600 tons per day--210,000 tons per year--of 100 percent recycled linerboard. The Maysville mill was the first in North America to use a proprietary ultra-efficient lightweight contaminant removal process that Inland called "advanced recycling." Overall yield from the process on incoming OCC (old corrugated containers) was about 90 percent, with the remaining 10 percent flushed through the system and sent to landfills. Anticipating growing markets in recyclables, the mill was designed to expand capacity to as much as 300,000 tons per year. With the Maysville mill, Inland maintained its position as the largest U.S. producer of 100 percent recycled containerboard and linerboard.
In addition to its dependence on 100 percent recycled furnish, a particularly unique aspect of the Maysville mill was its energy provision negotiated with the nearby East Kentucky Power Cooperative's Spurlock generating station. The utility signed an agreement to sell Inland 250,000 pounds of steam per hour and between 20 and 25 MW to heat process water and dry paper. Low-pressure steam was supplied directly to the mill, eliminating the need for smokestacks at the mill and totally eliminating air emissions.
While most capital projects of the 1980s and 1990s focused on expanding capacity and increasing quality of containerboard mills, Inland also emphasized increasingly complex graphics needs in packaging. In 1992 the company's $17-million Graphics Resource Center began operations in Indianapolis, representing one of the largest preprint linerboard presses in the world. The press is capable of running at 1,200 feet per minute, with an eight-color central impression cylinder with two additional downstream print stations and full robotics capability. The main product is preprinted linerboard printed according to client specifications and then shipped to Inland plants and converted into boxes.
Even with a weak national economy and high costs of raw material paired with low selling prices, Inland entered the 1990s with considerable promise. In 1992, record production of both containerboard and corrugated boxes helped post earnings of $112.3 million, up 49 percent from $75.4 million in 1991. And even though the average selling price of boxes in 1992 remained six percent below the historical highs of 1989, it rose two percent above 1991 levels. Further price recovery depended on overall economic prosperity, both domestic and international, as Clifford J. Grum, chairman and CEO explained in Temple-Inland's 1992 annual report: "The growth momentum of the U.S. economy this year and the pace of recovery of other world economies will determine the ability of our company to restore profit margins in our paper businesses."
While Inland's price recovery depended on uncertain, international economic recovery, its overall stability was insured, in part, by the stability of its parent company. In a December 20, 1992, article for the Dallas Morning News, David LaGesse noted that Temple-Inland's financial services group helped feed the company's bottom line during lean years for its wood-based products--boxes, paper, and lumber--in the early 1990s. As a result, the company was able to continue capital investment in its paper, box, and saw mills, while many competitors cut corners to survive the recession. Many analysts predicted a strong recovery in the event of economic turnaround. "Temple-Inland is among the best-positioned companies," said Evadna Lynn, an analyst with Dean Witter Reynolds Inc. in New York, in the same article. With its seven paper mills, 39 corrugated box manufacturing plants, and the support of its Inland-Temple holding company, Inland Container was poised for uncontained prosperity.
Principal Subsidiaries: Rexford Paper Company; Crockett Container Corporation; Pakway Container Corporation; Glass Container Plant, Owens-Illinois de Puerto Rico (20%); Chemical Company, Harima M.I.D. Inc. (Japan; 25%).
Further Reading:
"Ben J. Lancashire Elected Chairman," PR Newswire, July 14, 1987.
"East Kentucky Co-Op Begins First-Ever Steam Sales to Inland Container Mill," Industrial Energy Bulletin, April 9, 1993, p. 2.
Ferguson, Kelly H., "Inland Starts up Greenfield Recycled Containerboard Mill at Maysville, KY," Pulp & Paper, December 1992, p. 40.
Holtzapfel, Mike, "Inland-Rome Rebuilds Machines for Major Boost in Production," American Papermaker, December 1990, p. 45.
Inland Container Corporation: A Brief History, Diboll: Temple-Inland Inc., 1993.
"Inland to Close Original Box Plant," Reuters, August 28, 1981, AM Cycle.
Jones, Alex S., "Time Inc. Profit Widens," New York Times, January 31, 1984, p. D5.
LaGesse, David, "S&L Purchase Keeps Firm out of the Woods; Temple-Inland Profits by Branching Out," Dallas Morning News, December 20, 1992, p. 1H.
"S&P Lowers Inland Container Rating," PR Newswire, February 3, 1984.
"Standard & Poor's Raises Time Ratings," PR Newswire, January 4, 1984.
Temple-Inland Annual Report, Diboll: Temple-Inland Inc., 1992.
"Temple-Inland Approves Unit Expenditures," Reuters, November 3, 1989, BC Cycle.
"Temple-Inland Completes Sale of Eastex Packaging," PR Newswire, October 28, 1985.
"Temple-Inland Inc.; Planned Capital Expenditures for Subsidiary," S&P Daily News, November 6, 1989.
"Time Distributes Temple-Inland Shares," PR Newswire, November 17, 1983.
Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.
