We know they sold these because they have huge debt to repay, not because they were not profitable. They borrowered 45 billion and this sale netted 577 million so that’s a whopping 2% of that borrowered amount. So in more lay mens terms if I have a $25,000 credit card balance and I make a $500 principal payment I still owe $24,500.00, not much of a dent or much of a interest savings either.
So my point is where is the rest of this HUGE amount going to come from, that’s what makes me nervous.

By my mathe InBev still needs to come up with about 3.8 Billion in divestiture sales to meet thier obligations as part of the AB buy out. InBev has some 11 european breweries up for sale and so far no takers. Little no no interest in Busch Entertainment so where will the money come from??? If a company offered the right price for additional MCC Lid & Can Plants I think AB/InBev would jump on it. Not that they want to but they are running out of options.

I’ve always heard Ball is a great company that parallels MCC in many ways. It’s no real surprise to me that Ball has offered everyone to stay on after the sale is completed. MCC is the bench mark when it comes to cost per thousand, safety and many other areas. That only happened because of the people and the culture in those plants. So it really is the only smart option Ball had. To do anything else would be disasterous for them.

SoCal,

You heard right about Ball! Having been with them as they purchased US Can (aerosol) and some plastics plants from Alcan, they focus on keeping as many people at the plants as possible.

This only makes sense as Ball hardly has a ready-made set of employees they can send into those locations!

For anyone reading this that work at FTA, Columbus, Rome or Gainesville, welcome to the family!

Forgot to mention this. If InBev has no plans to sell the remaining can & lid plants then why did they have potential buyers touring the west coast plants prior to the sale? Just another reason to support my thought that the remaining MCC plants are still for sale regardless of what the press release states.

BallITguy, where are you located?

So if Inbev sells the remaining plants they still have to pay for the cans. Why would someone buy plants that sell to the “parent” company and then have to deal with Brito and his penny pinching ways and have him threaten to go elsewhere if they don’t do it cheaper and if he does go elsewhere they are left holding a plant that has no one to sell to? Not being sarcastic or any thing just wondering.
Still believe Inbev over paid.
The amount they got for this transaction is still just a drop in the bucket of what they owe.

Ball Inc. had just sold its soul to the devil-If Britto and In-Vest Bev don’t get their cans from Ball cheap,cheap,cheap you can bet your last wooden nickle they will go some place else for the cans.

SteveM, Correct me if I am wrong but I don’t think ABInbev makes soft drinks, the plants they sold mainly make soft drink containers so I don’t think ABI will be buying much of their product.

This seems odd…and maybe someone more knowledgeable than me can explain this. Aren’t most manufacturers vertically integrating these days in order to have more control over the price of the factors of production?

Selling off assets seems like a short-term gain to me.

jr, you are correct as I see it, it is simply a short term gain. I don’t know what those companies added to the bottom line each year but in the long run that profit is gone and the 577 million gained went directly to the debt. That debt repayment is only 2% of what is actually owed, so the reduction and net decrease in interest expense is not much.
My guess is that in the loan agreement signed with the bank stated certain assets HAD to be sold.

These can plants provided a reliable and efficient supply of aluminum cans to the breweries and also sold to various soft drink manufacturers. They were profitable on their own. Although InBev can now throw this money at the debt, they have lost yet another revenue source. Each time they sell a valuable asset, they lose a stream of revenue. Also, the can plants were originally set up so that A-B would not be vulnerable to the price fixing and arm twisting tactics of the aluminum manufacturers. (We will just make our own). Personally, I hope Ball keeps all the employees and then turns around and jacks up the can prices to InBev.

SoCal,

You’re probably right on the other plants; you can bet that Ball will be right in the thick of things if they do go up for sale.

KD,

I’m in the Chicago area!

Regarding buying plants that have to deal with Brito, (I presume he’s an InBev big wig?), the answer is simple; the major can manufacturing companies, (i.e. Ball, Crowne and Rexam), already do business with AB/InBev. As I understand it however, August Busch III only had 45% of his production made in house anyway, the rest was outsourced to the rest of the packaging industry, so it’s not like MCC had a stranglehold on all of Busch’s business.

I can’t speak for InBev, I agree they probably overpaid. One thing I can almost guarantee however is companies like Ball and Rexam have done their research into these facilities and wouldn’t buy them unless if failure was as easily achieved as laymen like us make it sound.

On the other hand it makes sense for Ball to purchase these plants as they’re already a major manufacturer for Pepsi (which was MCC’s biggest customer, even bigger than AB).

To show how far that 577 million will go. Let’s say that Inbev is paying a 2% interest rate (most of the what the bank made on the deal was up from fees so the rate probably isn’t much higher than 2% if that, it’s probably less) on that 45 billion ( I realize they have paid a small portion back)that 577 million doesn’t even pay the interest for one year. Money down a rate whole.

should have read “rat” hole.

KD - A-B produces 180 Energy Drinks. They also distribute Pepsi and Monster energy drinks. Some of the cans from the plants sold probably filled those purposes.

After reading some of the comments let me help with understanding why the sale of the MCC plants is a good deal for both sides.

As a industry there has been over capacity for some years now. As a result of this many companies have shut down production lines and indeed entire plants. This is especially true on the lid side of the business. Ball and other companies have done so. The only company to not do this is MCC. Now that Ball has purchased the 4 MCC plants you can bet there will be further closures of lesser efficient / profitable lines. That will only strenghten MCC’s position in my opinion.

It is true that can / lid suppliers have contracts but at some point that business will be up for grabs. When that time comes you can bet that MCC will get the lions share of the AB/InBev business. Potential MCC plant expansions will keep prices low and nobody will raise prices. So In/Bev gets a short term gain and no harm in the long run. Ball gets plants that make them better and more competitive and less likely to close plants down the road. Sorry Rexam but I see closures in your future. InBev feels you’ve been gouging them on prices for a while now so beware when it’s contract time. Now that MCC is in the fold you’ll need to make major concessions or lose business.

AB/InBev stock price says it all. In 18 months it will double again. Maybe sooner so who cares about dividends when the share price is going nuckin futs. Buy now…enjoy later.

As an employee at one of the plants that were purchased by Ball Corp. I still have some concerns as to the benefits packsge offered by Ball. After 24 1/2 years working for the same MCC plant adn ebing treated like the preverbal ” RED HEADED STEP CHILD “, I breathe a sigh of relief that we are now going to become part of a very respected main stream Corporation like ball. However, I for one am concerned that we wil be losing some of the benefits that we have grown accustomed. First, MCC offered 4 weeks vacation after 25 years of employment and as you see I am within 6 months of that anniverary date. Next, is we were rewarded with quarterlt bonus that amount to around $6500.00 per year, based on plant preformance around a set of specific goals. Then there is 401k concerns, pesion plans and the list goes on. Not to mention the case of beer issued each month we worked without having a reportable injury.
If anyone have has input on these concerns I would love to hear form you.

July 01, 2009
Dear Colleagues,
Today we announced that we have reached an agreement to sell four metal beverage can and lid manufacturing plants from our U.S. metal packaging subsidiary, Metal Container Corp. (MCC), to Ball Corp., a world-class supplier of metal and plastic packaging to the beverage and food industries. We also announced that as part of the transaction, Ball will enter into a long-term supply agreement to continue to supply AB InBev with metal beverage cans and lids from the divested plants.

Attached is the press release we issued today, which provides more details on the transaction. In addition, I want to highlight a few important points:

The divested plants overall, as a group, are more focused on soft drink can production.
The divested can plants are located in Fort Atkinson, Wisconsin, Columbus, Ohio, and Rome, Georgia, and the divested lid plant is in Gainesville, Florida.
MCC’s remaining footprint, consisting of seven metal beverage can and lid manufacturing plants, as a group, will be more focused on beer-can production and represents more than 60% of MCC’s current capacity.
We have great respect for Ball, a supplier we know well and have worked with for many years, and are pleased to find a strategic buyer who shares our high opinion of these facilities and their people. To this end, Ball has committed, as part of the acquisition agreement, to offer employment to each active employee of the plants.
Cash generated from the sale will help us continue to pay down debt, and will reduce the amount of capital being employed in the production of beverage cans, while retaining packaging capability to support our beer business.
The transaction is still subject to certain conditions, including regulatory approvals, and, until closing, which we expect by the end of the year or early in the first quarter of 2010, it will be business as usual for all. We are committed to providing updates with you as soon as we can. Thank you for your continued hard work.

All the best,
Brito

ABInBev, in selling the can plants, is outsourcing their manufacturing. It makes good business sense. Unless they are selling to Ball Corp with a contract to buy the finished product back (cans), they are free to bid for the product at the lowest cost and have rid themselves of real estate, high labor, benefits, etc. Good decision by ABInBev. Now if they only made a good product to go inside of the cans.

Bigbob, read Brito’s letter I posted… “Ball will enter into a long-term supply agreement to continue to supply AB InBev with metal beverage cans and lids from the divested plants.”

jim63129-sorry, I thought the letter you posted was a joke, not the real thing. Depends on the terms and pricing of the long tern supply agreement. My experience is long term supply agreements is a good way to get screwed. Time will tell on this one.

As far as MCC goes, we have always been a tiny little hidden gem in the AB machinery. Managed completely different than everything else in Ab’s portfolio. Even Brito was pondering this shortly after the buyout. We have always been better managed than AB, and were supposed to be the prototype for AB to change their management system 20 years ago. If it worked with us, then it was going to be applied to the corp…The Demming management system was the guidelines…Multitasking and complete committment to the process. And we went from a losing, last place company within AB, To a profitable diamond in the entire industry. A thorn in the side of every competitor. All the August Busch’s since our inception have been asked in every meeting with investors when they were going to sell us. They never would. But now some of us lucky ones will take our number one producing can plant in the world, and work for a business that only cares about making cans..We are extremely excited about this..we get to strut our stuff for employers that want to see us do it and are not totally concerned more with Beer sales or Shamu. Now we always understood that the beer was more important, But if they had stuck with the original plan and changed management systems 25 or 20 years ago, no one would have ever been able to approach them…We can’t wait to work for people that will appreciate that fact…

As an employee of Mcc this is an exciting time but also a time to hope Ball does keep us and not change pay scales or benefits. We are looking forward to our time to shine. I will always be proud to work in a world class manufacturing plant with the best AU and spoilage #’s around.
Maxamillion2- you guys get 4 weeks of Vac!! We only get three!

Ball purchased the four properties that fit their needs.The other four properties no one was interested in or had the money available to spend.So AB to save face came up with this ” core business crap again”.The industry capacity to produce and the market need are so closely aligned now in the container business that AB has leverage when negotiating can price even if they sold all their packaging facilities, and was dependent totally on buying cans from outside sources.As far as those who are worried about their benefits,you should have voted the union in (Rome)when you had the chance.At least Ball would have to negotiate with the union.But I guess selling your souls to the devil for that extra $6500 a year if you actually got it was more important.You had no backbone then and you want have any now.

Anyone entering into a supply agreement with these unethical cutthroats is asking to get screwed. Brito has no reservations about breaching contracts with suppliers and others and has proven this by his actions. Good luck to anyone that deals with this Psychopath - You’re gonna need it. This deranged foreigner is way over the top and out there big time.

I have worked at a Rexam can plant for 35 yrs. and have a friend who works in supervision for MCC. My 2 cents worth, if you worked for MCC and will now work for Ball you will have “job shock” when Ball is done with you. The can business is tough and Ball will make your life tougher. I am a proud union worker and we try to organize other non-union Rexam plants and also Ball plants (one being only an hour away). I can state flatly they do not receive the wages, health insurance, pension and certain fringe benefits that MCC does. BallTGuy knows what he is talking about (a can man no doubt) what many do not mention here is the quality of life/work. Our other non-union Rexam plants and Ball run their plants under a blanket of fear. OK I am biased, but I think union workers leave a somewhat better existence. I truly believe, and this can be proven, as union’s wither so does the quality of life in our great country. We have millions of working poor who work part-time with no or little health insurance and sub-standard wages while the parent company makes HUGE profits. ie Walmart and many more! Tell me what you think out there ex MCC workers.

As far as Unions go we have not needed one. Our pay and benefits have been excellent so far. By far the best in the area. They have of course jacked us around here and there but nothing life changing. Only 3 weeks vacation was our main gripe. Corporates exact word “You guys only work half the year anyway”! Our hope is that Ball does not drastically reduce the quality of our wage and benefits as to make it not worth working there anymore. A union may be the answer-only time will tell!

MCC……….All 4 plants need to enter in contract with Ball as one .Rome and Fort you need to read our contract we have at Columbus.One thing is for sure brito did not want us! Ball does I hope we will be better off working for an AMERICAN company.

Rome has had no need for a Union, we are thinking that we should at least see what Ball has to offer before we go ruffling their feathers, just remember, Ball doesnt have to offer us a job. An in response to Realitycheckjaxmcc comments,Rome has always had a backbone and we continue to have one! We are very honored to be joining Ball, the worlds largest can makers, all I can say for Jax is you better hope Rexam, Crown or Silgan comes along and picks you up or your in for a rude awakening! Rome, Gainsville, Fort and Columbus are the lucky ones!

We will never, ever, enter into a contract with you guys. Why should we? We produce over 13,000,000 cans a day with 34 members per crew…Cans per thousand we can not be touched….Period..Do you think Ball is going to gloss over this fact…Do you think they are Blind? A joint contract would benefit YOU, but kill us…Maybe you should throw out your union and start multitasking and stop relying on those dopes who control you. Even the Brewery Union couldn’t prevent them from going to 8 hour days and losing tons of overtime…Why would YOUR Union fight for us when they can’t even fight for themselves…As far as being spineless JAX…why dont you WIPE THE SMOKE FORM YOUR EYES AND try standing up to management as an individual and persuing your goals instead of hiding behind your shop stewart…Hell we can argue any point with management, and do, without the fear of any reprisals…Except for a few malcontents, Who are actually glorified primadonnas, we don’t care for your attitude toward the company, your attitude toward work, or your general attitude period….We have carried you, and your toxic subsoil, for 16 years. We are tired of it…Rome and Fort are going to Ball. No matter what happens, we will be the bain of your existence.. We thrive on numbers…What is the days production, that is what we care about…in return…The 6500$ you mentioned, youmight want to increase that a little, and yes we do get it…constantly, as long as we produce…no laurels here..we dont sit on them, but we are well aware of who we are…and what we mean to the company..

Hey MickyDry sorry to hit such a sensitive spot.The 13,000,000 might impress some people but since your au is only 85.70% as of May theres close to 2,000,000 more you could have made,so obviously you are resting on your lauerals.A good can facility knows what they have done today,its what they do tomorrow when they try to get that little extra they left on the floor the previous day back is where the rubber meets the road.Being close to twenty years newer then us you should be making us look like rookies, our au is 84.9 and our spoilage 2.66 versus your 2.58 so where are you carrying anybody.Maybe you should take that gainshare and buy a dictionary, its steward not stewart.

Reality check for you. The plant in Georgia has beat you out in asset utilization and spoilage all while completing 4 can size conversions this year. I don’t believe the plant in Florida has had one conversion yet, and the Florida plant was originally designed to run different can sizes.

Also, since your corporate office has invested over $50 million last year alone into your Jax can plant, I would hope that you guys could run as well as a 16 year old plant. There isn’t an original piece of equipment in the Florida plant, everything that was original has been ripped out or rebuilt within the past 4 years. So, you should be running good numbers, it is about time Jax has started paying some if its debt to the rest of the company off.

You’re welcome.

Reality Check, I know better too. Why don’t you run Arnold cans through your sorter and take that hit on your AU. Why don’t you upset your production schedule because your sister plant (jax) can’t run retort or 16oz very well. do this 4 times a year…And while you are at it why don’t you pay more attention to your quality control. You are a completely new plant, take some pride in it..Any improvements to our plant in the last couple of years have made us more versatile, but slowed us down..But still we produce more now than ever…Why don’t you follow our lead and do what you always do….Follow… Oh wait a minute, next year you will be expected to lead….Good luck….You’re welcome

P.S. anytime you want some nice shining slow running 16oz oil sieves we will trade them to you for those fine sleek Thoroughbred bodymakers we gave you. Stewarts, Stewards, have never ever needed one, or found one I could trust.

I truly hope everything works out well for everyone at the new Ball plants. As a proud union worker, I have my doubts that Ball will let these plants stay union once their contracts are up, let alone honor the present contracts/local supplements). As a Rexam employee in the Steelworkers union I feel we have a great contract/fringe benefit package. I hope you get everything you want, it just strengthens us also! I get 5 weeks vacation and we have NO FORCED OVERTIME! (plenty of it voluntarily), how many plants can say that! At the end of the day it’s about quality of life, you can’t take it with you! I’ve heard that older plants force the hourly to work many consecutive days off in the summer to fill vacations. I would like to hear from some of you poster’s if this is true. The most consecutive days I have worked in 35 years….6.

It appears to me that everybody hates Jax, is it because we were the first can plant and helped make the money and pave the way for the rest of the mcc family. Our quality control sucks so bad, we just won first place at the National Metal Decorators Association Meeting for one of our soft drink cans made here in this “union plant” and lets not forget the Kasey Khane 16 oz Budweiser can from 2008 that won the same award. Maybe thats why, we can stay on 16 oz and not convert constantly.Maybe these companies like Hansen and other energy drink producers have heard of our quality cans here in Jax and continue to have us produce them.Besides we only have had hundreds of successful conversions, unlike the struggles of our sister plant on the plains of Ga.If we were so inept and a dead weight for the corporation they would have invested their money elsewhere.Good luck Rome,maybe when you get to be a Ball plant, they will have a older facility tht you can find fault with and be critical of.I would hate for you to look inward at the real issue.

What issues? I’ve heard nothing but good things about that plant this year.

Also, the inside of the Florida facility is no older than the Georgia facility now.

Hey, Realitycheckjax. We are not against Jax per say. We know your plant has been around for 35 years, good job on that. We ARE against having someone that has been behind the times for 2 decades at least tell us that we have no backbone, sold ourselves out to the Devil for 6500$ a year and that somehow a union would solve all our issues, which we don’t have. All I ever did in my original post was to sing the praises of Metal Container and her employees and management. And instead of saying yes you are right michdry, MCC is a great place to work,sorry to see you go. Thanks for funding our upgrade so we can keep on going. You jumped down my throat and insulted everyone of my team members. You owe Rome an apology, in public, in the same way you attacked her. You also owe an apology to all of management, especially the guys up high, because they provided the atmosphere to make ProEmployee work in all the newer plants. Ever notice that none of them came close to voting in your buddies, but chose the Devil instead. I guess you mean upper management and Deming principles when you refer to the Devil. Well Satan just gave me my Sellout check and I thought about buying a dictionary with it, but then I realized maybe I should buy you a Rand Mcnally instead because you seem to think that we are in the plains of Georgia. I will not respond to you anymore until we in the foothills North Georgia receive your apology.
And as for you rexam, if I were as oppressed as you guys are I might want a union. We know people that have worked for rex and know that that kind of atmosphere would for sure be culture shock for us, none the less, why don’t you mind you own business. If we won’t shack up with colombus or Jax we SURE ain’t entertaining the thought on YOUR recommendation.
We for the most part enjoy going to work, enjoy our teammates, and enjoy the atmosphere when we get here. Just because we are not management does not mean we have to be at odds with them, or have to have someone speak for us. Or have to have some impenetrable wall between us. We get fair raises, bonuses and medical coverage. We don’t see and drastic changes coming form Ball, especially since they actually mentioned the workforce at our plants in their conference call. How often do you EVER hear a CEO mention the workforce in a positive way in a conference call with investors…Are you kidding me, we would be nuts to even entertain the thought of upsetting this apple cart. We may, just may end up in better shape because we don’t buddy up with you guys than if we even hinted that we were.
As for you guys in Rome who have been reading this, you should be on here defending your company instead of waiting to see what I write…You may not all agree with me on everything, But you should be as vocal here as you are in the cafeteria….Oh and you girls in the storeroom who are trying to figure out who I am….mmmmmm maybe next time….
We want out apology..