One Michael Owens Way
Perrysburg, OH 43551
Glass is a true cradle-to-cradle material. Unlike plastics, glass does not degrade in the remanufacturing process, enabling a continuous cycle of use and reuse. Owens-Illinois, Inc. (OI—NYSE) is the largest global player in glass containers, with the technology to use 90% recycled glass in its manufacturing. OI is also the largest user of recycled glass containers in the US, recycling approximately one million tons per year. Although virgin glass forming is an energy-intensive process, with energy costs contributing 15-20% of total container cost, recycled inputs lower the cost substantially. Further, the company has developed a process to reduce the amount of glass in a typical bottle by 10-20%, resulting in increased strength and lower material and transportation costs.
On the consumer safety front, glass containers are considered the safest packaging material; they do not leach toxins into food and liquids as do plastics that contain toxins such as bisphenol A. OI’s business has fundamental strengths given the sustainability profile of its products, and although the company’s environmental, social, and governance (ESG) strategy is nascent, it is well positioned to become an ESG leader if it engages in sustainability reporting and target setting.
OI is also poised to benefit from a cyclical upturn in glass demand as the broader economy recovers. Glass demand bottomed in the first half of 2008, as global volumes fell 12-15%, but is showing signs of improvement. In the second quarter of 2009, OI’s volumes increased 14% on a sequential basis, boosting operating profit. OI is also actively working to improve margins through price increases and cost reductions. The company’s current operating margin is now greater than its peers and the strongest it has been in the last 15 years.