By Tripp Mickle
A scare over bottle production last year accelerated
Constellation Brands Inc.'s move into the glass manufacturing
business.
The Corona Extra brewer discovered bits of glass in bottles last
summer and issued a national recall that cost $37 million. A few
months later it bought the glass manufacturing plant next door to
the brewery from Anheuser-Busch InBev NV, which was operating it at
the time. Constellation formed a joint-venture with Owens-Illinois
Inc. to run the plant.
Michael Othites, Constellation's senior vice president for
operations in the beer division, said the company made the move so
it could control its "own destiny."
When Constellation and Owens-Illinois took over the glass-making
plant, the inspection equipment wasn't calibrated to detect the
defect that occurred. The companies changed that and also worked to
improve efficiency at the plant.
About 30% of the glass bottles the plant could have produced
when Constellation and Owens-Illinois took over didn't get made or
needed to be discarded. The companies cut that percentage in half
with a series of changes, including switching the molds it used to
make bottles. The plant went to European-made molds from
Mexican-made molds. The European-made molds needed to be repaired
less often than their predecessors, which boosted efficiency, said
John Kester, Constellation beer division's senior vice president
for operations services.
A two-percentage point improvement in efficiency equals about 10
million more bottles during production, Mr. Kester said, adding
"It's not trivial."
Now that the operation is running more smoothly, Constellation
and Owens are moving ahead with plans to expand the plant. They
currently have one furnace and about 300 employees, but they plan
to add three more furnaces in the coming years.
Each furnace will produce 1.5 million to 3 million bottles a
day. When the fourth furnace is added in 2018, the plant will
supply 50% of Constellation's glass needs and employ 800
people.
Mr. Kester said he has some of the lowest freight costs in
business. The glass is made in a furnace that heats sand, soda ash
and limestone at 2,800 degrees Fahrenheit. It then travels to a
molding machine and is gradually cooled before going through
inspection. Afterward, it moves to a machine where a Corona label
is printed on it and then it is put in cartons.
The glass bottles "come off the line and go through the wall and
once they pass through the wall, the brewery has purchased them,"
Mr. Kester said.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
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