Can Competition

When it was launched at the Century's turn by the gaudiest crew of bigtime promoters in U. S. history, American Can Co. was very nearly a perfect monopoly. It had at the start, thanks to the tireless efforts of Judge William Moore, Daniel Gray ("Tsar") Reid and William Bateman ("Tin Plate") Leeds, over nine-tenths of the country's entire can business. But by the time the trustbusters of Roosevelt I got to work on it, American Can had already destroyed its virtual monopoly by its dizzying prices. Competitors had swarmed in under the "Tin Can Trust's" big price umbrella, capitalized on the wrath of the canners. One of the competitors, Continental Can, was founded by an old American Can man who set his son up in the business, thus getting around an agreement with his old company not to make cans on his own for 15 years within 3,000 miles of Chicago. Today, the U. S. can industry is more in the nature of a duopoly with American Can and Continental Can both frowning whenever attention is called to bow much of the business they divide, how much money they make.

In the past there have been good guesses on U. S. can statistics but official sales figures have always been a dark secret. American Can got an injunction against SEC to prevent release of its old data but finally capitulated in its 1936 report, out last fortnight. Last week National Can, a subsidiary of McKeesport Tin Plate and No. 3 U. S. can maker, also revealed its sales. Though Continental's report still omitted the vital figures, it was now possible to fill in most of the hitherto sketchy can picture. Total can production amounted to some $375,000,000. American Can's share was $185,000,000, just under one-half the total, as against the nine-tenths it enjoyed nearly 40 years ago. Continental's share was estimated $95,000,000, one-fourth the total. Thus American is about twice as big as Continental and together they do 75% of the U. S. can business. National Can was a poor 3% third with sales of $10,000,000.

Despite a record volume of business, all was not well in the can industry in 1936. American Can's profits of $17,226,000 were off slightly, and Continental's dropped from $11,223,000 in 1935 to $9,039,000 in 1936. McKeesport's share of National Can's income declined from $823,000 to $589,000. Stockmarketeers as usual did not wait for annual reports to register their low opinion of can shares. From a Recovery high of $149 per share American Can by last week was down to $109. Continental was off from a 1936 high of $87 per share to $62, McKeesport Tin Plate from $118 to $86.

For this poor year the can makers unanimously blamed the Robinson-Patman Act, which forced revision of their contracts with can users. For once that much-debated measure brought lower instead of higher prices to consumers. Since the law tends to make big and little customers pay the same prices, the general rule is to bring quotations in line by boosting prices to the big customers. In the can business, where the big customers are very big, this rule apparently could not be applied. It is too easy for the big canners to make their own cans, as Heinz and Phillips now do. And since the big fellows were uppish about a price rise, the can maker had only one alternative: cut the price to the little fellow.

Even worse would have been the can makers' showing last year had it not been for beer. Starting from scratch in 1935, canned beer caught so fast that the brewers in 1936 bought about 725,000,000 cans, 600,000,000 from American Can alone, or five beer cans for each & every U.S. citizen.

When the can makers began poaching on the beer bottle preserve of the glass makers, big Owens-Illinois glass came back with a can-making unit. Last year Owens sold about $6,000,000 worth of cans, which meant perhaps 300,000,000. More annoying to American and Continental is Baltimore's Crown Cork & Seal, No. 1 maker of bottle caps. Last year Crown sold a subsidiary automotive supply business called Detroit Gasket, started to put the proceeds into tin cans. Its production last year was trifling, and even this year after a big new Philadelphia plant is completed, Crown probably will account for no more than 2% of the total U. S. can output. Crown is also developing an aluminum plated can, supposedly cheaper than tin cans, which are sheet steel plated with tin. But Crown's importance at the moment is neither its potential production nor its mysterious aluminum can: it is the company's determination to get business by offering its product at a better price.

Price-cutting in the can industry is very unorthodox. Profit per can runs between two-tenths and three-tenths of a cent, which is not enough to tempt many people into the business unless they can hope for tremendous volume. Cans sell for about 2-c- each. At best it is a hard business to break into because the established can makers and their customers are usually tied together with long-term contracts, often with physical connections. Cans for Campbell soup in Camden, N. J. roll out of an adjoining Continental plant. And a neophyte can maker like Crown can hardly expect to sell its goods on the basis of "service" alone.

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