COVER

PACKAGED FOR GROWTH

FOR MANUFACTURER CCL, BIGGER IS BETTER

DEIRDRE McMURDY August 12 1991
COVER

PACKAGED FOR GROWTH

FOR MANUFACTURER CCL, BIGGER IS BETTER

DEIRDRE McMURDY August 12 1991

PACKAGED FOR GROWTH

COVER

FOR MANUFACTURER CCL, BIGGER IS BETTER

To mark his company’s 40th anniversary in June, Wayne McLeod consumed a piece of birthday cake at 19 of the firm’s 29 manufacturing plants around the world. McLeod is president and chief executive officer of CCL Industries Inc., a Toronto-based company that produces labels and containers for consumer goods, as well as a range of brand-name household and personalcare items for multinationals like Nabisco and Procter & Gamble. In the past two years, his determination to survive free trade and conquer foreign markets has spurred CCL to expand from its domestic base into an international operation with 5,200 employees across North America, Mexico, England and Australia. McLeod ate cake with them during a fourweek tour of CCL’s factories, which also included presentations on the company’s future plans. But such head-office visits to the field are rare. In fact, the company’s managers are strongly encouraged to operate autonomously.

Says McLeod: “We try to be as flexible as possible, and give everyone lots of rope.”

Aggressive: CCL began in 1951 as the Canadian packaging and custom-manufacturing partner of U.S.-based Connecticut Chemicals Ltd.

Over the years, it grew steadily by acquiring other companies, but the takeover pace picked up in the past two years under the Free Trade Agreement. Since 1989, CCL has completed nine purchases, transforming itself into the largest North American manufacturer of pressure-sensitive labels and antiperspirants—as well as becoming a major force in the global aerosol-container industry. “Free trade was the worst and best thing that ever happened to us,” says McLeod, 51, who joined the company as vice-president of planning in 1980. “It forced us to become more focused and much more aggressive to survive.”

Indeed, the FTA forced CCL to become a much larger company—or face going out of business. Before the agreement, large manufacturers of brand-name products like Javex detergent or Arrid antiperspirant found it more economical to use companies like CCL to serve the smaller

Canadian market, rather than establish separate plants in Canada. But, under free trade it became possible for these U.S.-based companies to serve the Canadian market from their U.S. facilities. Says William Chisholm, an investment analyst with Loe wen, Ondaatje, McCutcheon Ltd. in Toronto: “CCL had very little choice about becoming a North American entity. They had carved out a niche as the costeffective Canadian manufacturer for marketing companies, but they have to duplicate that role in a North American context to survive.” Although CCL has mastered the technique of buying out competitors, McLeod believes in

working with, rather than swallowing, takeover victims. Typically, CCL asks managers from newly acquired companies to participate in the integration of their operations. The ensuing dialogue, which frequently reveals differences in management style or sensitivities in regional markets unfamiliar to CCL, has led McLeod to adopt a decentralized approach aimed at preserving the competitive edge of the purchased company. Says Rami Younes, president of CCL’s North American container division, whose executive offices are in suburban Toronto: “People from head office probably don’t visit us enough—but if they did, it would probably mean we weren’t performing.”

In all divisions, employees are encouraged to volunteer suggestions to keep the company on its toes. At one of CCL’s container plants, in Rexdale, Ont., general manager Gunter Berk says that a recent suggestion enabled the company to reduce—from eight hours to under one hour—the time required to change the production fine from one product to another. That reduction is critical, he adds, because his customers are reluctant to stockpile large inventories and, as a result, are demanding smaller but more frequent product runs. Declares Berk: “It all helps our push to be competitive. There has to be a constant process of

improvement for us to stay in the game.” Having attained the critical size to compete internationally, McLeod says that CCL intends to seize more foreign markets. And in addition to exploring partnerships in countries like Germany and India, the company is also hoping to cash in on the growing demand for private-label products for huge retailers like K-Mart and Wal-Mart. The generic-drug industry may also bring some new opportunities to expand, he says. Clearly, CCL management is looking forward to more birthday celebrations, in more places, with more employees.

DEIRDRE McMURDY

CCL Industries Inc. HEAD OFFICE: Willowdale, Ont. MAJOR PRODUCTS: Personal-care and household products EMPLOYEES: 5,200 1990 REVENUES: $474 million 1990 PROFITS: $19 million ESTABLISHED: 1951