Rishi Kumar | Ashesh Agarwal| Sharad S| Ashish Jain | Abhilash

Chandran| Anuj Vir | Akshay Dhar

-Founded in 1919 by Bernard Van Leer

-Started Manufacturing steel drums in the Netherlands in 1925,launching into closure
systems 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 1960s
and 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

Executive Board

Corporate Relations

STRATEGIC BUSINESS UNITS

Industrial
Containers
North America

Moulded Fibre
Products North
America

4P Folding
Cartons &
Tubs/Lids

4P Consumer
Flexibles &
Films

Closures

Latin America

Flexible
Packaging
Europe/North
America

Industrial
Containers UK
& Ireland

Steel Industrial
Containers

Steel Industrial
Containers
South Europe

Fibre & Plastic

Containers &
IBCs Continental
Europe

Moulded
Fibre Europe

Africa

For East

Australia
and New
Zealand

Willem de
Vlugt(b.1942)

Joined the company in 1968 and held executive positions in US, France,
Argentina and Brazil
Chairman and CEO of Van Leer since 1992 and an executive board member
since 1989
Served at general management role in Akzo Nobel, between 1977 and 1983

Andre Saint-Denis(b.1944)

CFO of Van Leer since 1992

Served at managerial positions at Air Canada, Alcan, Canadian and Kinburn
Corp in both Canada and Switzerland
Also served as VP finance and treasurer of Le Groupe Videotron in Montreal

Francisco de Miguel(b.1944)

Christian Betbeder
(b.1942)

Appointed to the Executive Board in 1995 with a special brief for the
industrial packaging activities of Van Leer
Joined Van Leer in 1968 and held several major positions in Spain, Brazil and
Latin America

Member of the executive Board since 1995, responsible for the

development of consumer packaging business
Headed the strategic business in Flexibles, including Van Leers activities in
strength films, metallised products and industrial flexibles, before joining the
board

Mail from TOTAL to

reduce unit prices
of Steel drums in
France

CLAUDE HOAREAU,
Business unit Manager,
France

PAUL LAVISIERE

JEAN CLAUDE DELVALLE,

Purchasing

TEN CATE,
International Accounts
Manager, NL

MICHEL CHOUARAIN,
Internal Consultant
6% of
expected
sales from
TOTAL

HAL SWINSON,
Total North America

 Total Fixed assets are 71% of capital

employed
Net Working Capital is 29% of Capital
employed
NWC-TA Ratio approx. 39%

PAT is low at 2.07% of Net Sales

Operating costs are 49.74% of Net Sales
Lot of money lost in interest because of
close to 824,143,000 NLG financed by
Banks through loans

INDUSTRIAL PACKAGING
SALES

26%
74%

Steel Drums

ROCE is 2.22% in 1993 but in 1994 its 4.03%

ROCE is improving over the years
This may reflect an improving
macroeconomic climate

Rest

Steel Drums account to 74% of Industrial

Packaging
Manufactured close to client site
Van Leer had 25% of the overall steel drum
market

 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 LINKED

Market Share of steel drum

manufacturers in Europe
Van Leer

Blagden

Gallay-Mauser

31%

37%

Others

Van Leer was the only truly

global manufacturer in the
world
Price of steel was rising
surpassed $450/ton
threshold
Shot up to $590/ton in 1995
final quarter

12%
20%

Plastic and Fiber packaging

became viable substitutes

 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 accessible

and easy to imitate

Earlier:
Easy

Organizations global presence assured

customers with standards of quality, service
and responsiveness that local manufacturers
couldnt offer

Management sensitive to the following actions of global client companies -

TRANSFER
Transferring production to cheaper and emerging economies

CONSOLIDATION
Consolidating their purchasing into the hands of fewer suppliers to achieve price
advantages

RATIONALIZE
Rationalize the packaging material

Result would be a lower demand for steel drums in parts of Europe and a
smaller number of competitors.
Requirement of an efficient cooperation among the business units of Van Leer
on international contracts.

Business Departments TOTAL Lubricants

Overview

9th largest oil

concern in the
world and one of
the largest French
companies
Sales reached $27
billion in 1994
Presence in 5
continents and 80
countries
Operations in oil
and gas extraction,
refinery and
distribution, crude
oil and oil
derivatives, etc

Automobiles

Devoted to selling
automobile
lubricants

Industrial
Lubricants

Manufacturing
Purchasing
Logistics

Devoted to selling
industrial lubricants

Selling products and

services that it
sourced in at
internal transfer
prices to other
departments
Divided into
Packaging, Raw
Materials, Special
Materials

Worldwide
Reengineering
Effort

Company took the initiative of consolidating international purchasing so that

the company could reduce the types of drums bought, thereby standardizing
and cutting costs
Instill genuine collaboration between TOTAL and its suppliers in the form of
advice, assistance, technical information and R&D
Delvallee and Chouarain would implement the purchasing strategy as well as

Implementing
Purchasing
Strategy

Globalize
Purchasing
Activities

negotiate 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 representative

Globalization came after a purchasing price had been reached locally based on
local 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

1. Maintain current drum prices through March,1995

2. Best prices at each location, based on overall purchasing
volume
3. First year firm prices, raw material cost escalation clauses
from the second year
4. Annual rebate based on global purchasing levels
5. Information to be provided by suppliers on drum
reconditioning program and quality assurances

TOTAL EUROPEs Consumption

100%
90%
316000

80%
70%

23000

60%

50%
40%
458000

30%

1. The relationship between Van Leers Management and

TOTAL UK was very strong
2. Van Leer UKs price was competitive
3. TOTAL, France cannot impose a competitor of Van Leer on
TOTAL, UK

20%
10%
17000
45000

0%

TOTAL's Consumption

Germany

Spain

France

Italy

UK

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

Assess more on the TOTALs needs, demonstrating to TOTAL that Van Leer has a clear
understanding of their situation

Establishing a cumulative discount policy on all purchasing in Europe, the problem of

high unit costs in France and lower costs outside it will be improved

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