Van Leer Packaging Worldwide - The TOTAL Account


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-Founded in 1919 by Bernard Van Leer-Started Manufacturing steel drums in the Netherlands in 1925,launching into closuresystems in 1927

-In 1930s became the global leader in both the segments

-Expanded its product lines to flexible packaging, using paper and plastic materials in 1960and 1970s which facilitated penetration into consumer goods sector -In 1992 Van Leer acquired 4P from Unilever(packaging subsidiary)

-Van Leers worldwide sales reached NFL 3,958 billion(approx.$2.5 billion) in 1994 -Profits soared to NFL 67 million-Van Leer held 25% of the worlds large steel drums in 1994


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Corporate RelationsExecutive Board

STRATEGIC BUSINESS UNITS

IndustrialContainersNorth America

4P FoldingCartons &Tubs/Lids

Latin America

4P ConsumerFlexibles &Films

Moulded FibreProducts NorthAmerica

FlexiblePackagingEurope/NorthAmerica

Steel IndustrialContainersSouth Europe

IndustrialContainers UK& Ireland

Fibre & Plastic

Containers &IBCs ContinentalEurope

Steel InContain

Mould

Fibre E

Closures Africa For East Austrand Zeala


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Joined the company in 1968 and held executive positions in Argentina and Brazil

Chairman and CEO of Van Leer since 1992 and an executivesince 1989

Served at general management role in Akzo Nobel, between

Willem de

Vlugt(b.1942)

CFO of Van Leer since 1992 Served at managerial positions at Air Canada, Alcan, Canad

Corp in both Canada and Switzerland Also served as VP finance and treasurer of Le Groupe Video

Andre Saint-Denis(b.1944)

Member of the executive Board since 1995, responsible fodevelopment of consumer packaging business

Headed the strategic business in Flexibles, including Van Leers

strength films, metallised products and industrial flexibles,board

Francisco de Miguel(b.1944)

Christian Betbeder(b.1942)

Appointed to the Executive Board in 1995 with a special brindustrial packaging activities of Van Leer

Joined Van Leer in 1968 and held several major positions inLatin America


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CLAUDE HOAREAU,Business unit Manager,

France

PAUL LAVISI

TEN CATE,International Accounts

Manager, NL

Mail from TOTAL to

reduce unit pricesof Steel drums inFrance

6% ofexpectedsales from

TOTAL

JEAN CLAUDE DPurchasing

MICHEL CHOUAInternal Consulta

HAL SWINSOTotal North Amer


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Total Fixed assets are 71% of capitalemployed

Net Working Capital is 29% of Capitalemployed

NWC-TA Ratio approx. 39%

PAT is low at 2.07% of Net Operating costs are 49.74% Lot of money lost in interes

close to 824,143,000 NLG fiBanks through loans


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IND

ROCE is 2.22% in 1993 but in 1994 its 4.03% ROCE isimproving over the years This may reflect an improving

macroeconomic climate

Steel Drums account to 74% of InPackaging

Manufactured close to client site Van Leer had 25% of the overall s

market


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Massive exposure to all markets; from large corporations to small local players were its clients Numerous Suppliers, small local drum makers; 213 litres and 150 million unit market in 1995 50% OF COST OF MAKING A STEEL DRUM WAS STEEL AND HENCE PRICES WERE CLOSELY LI


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37%

20%

12%

31%

Market Share of steel drummanufacturers in Europe

Van Leer Blagden Gallay-Mauser Others

Van Leer was the onlglobal manufacturer iworld

Price of steel was risisurpassed $450/tonthreshold

Shot up to $590/ton ifinal quarter

Plastic and Fiber packbecame viable substit


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Drums store and facilitate transportation of goods Customers had improvised their logistics

Clients demand lower prices and better quality

Now:

Difficult

Manufacturing process was widely accessibland easy to imitate

Earlier:Easy

Organizations global presence assuredcustomers with standards of quality, serviceand responsiveness that local manufacturerscouldnt offer


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RATIONALIZERationalize the packaging material

CONSOLIDATIONConsolidating their purchasing into the hands of fewer suppliers to achieve price

advantages

TRANSFER

Transferring production to cheaper and emerging economies

Management sensitive to the following actions of global client companies -

Result would be a lower demand for steel drums in parts of Europe and asmaller number of competitors.

Requirement of an efficient cooperation among the business units of Van Leer

on international contracts.


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Overview

9th largest oilconcern in theworld and one ofthe largest Frenchcompanies

Sales reached $27billion in 1994

Presence in 5continents and 80countries

Operations in oiland gas extraction,refinery anddistribution, crudeoil and oilderivatives, etc

Business Departments TOTAL Lubricants

Automobiles

Devoted to sellingautomobilelubricants

IndustrialLubricants

Devoted to sellingindustrial lubricants

MaP

Selservsouintepricdep

DivPacMaMa


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WorldwideReengineering

Effort

ImplementingPurchasing

Strategy

GlobalizePurchasingActivities

Company took the initiative of consolidating international purchasing so thatthe company could reduce the types of drums bought, thereby standardizingand cutting costs

Instill genuine collaboration between TOTAL and its suppliers in the form ofadvice, assistance, technical information and R&D

Delvallee and Chouarain would implement the purchasing strategy as well asnegotiate with the major suppliers.Every supplier would have to:1. Offer goods on an international scale

2. Factor in TOTALs international standards requirements 3. Keep track of sales volumes and negotiate globally via a single representati

Globalization came after a purchasing price had been reached locally based olocal competitive conditions and the establishment of personal relationships.

Global contracts would sometimes obtain significant price reductions Market conditions in other markets could provide better local conditions than

global purchasing would obtain


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The proposal from Van Leer has identified everything that TOTAL was seeking to obt1

Assess more on the TOTALs needs, demonstrating to TOTAL that Van Leer has a clearunderstanding of their situation2

Establishing a cumulative discount policy on all purchasing in Europe, the problem ohigh unit costs in France and lower costs outside it will be improved

3

Quality Assurance programs and Drum Recovery and reconditioning program, theirquality of services can be collaborated by both TOTAL and Van Leer.

4

Van Leer Packaging Worldwide - The TOTAL Account

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