The Owens Automated Glass Bottle making Machine 1904
Edward D. Libbey’s Toledo Glass Company was the developer of the automated bottle machine. Michael Owens gets the credit (rightfully so for the invention), but its full development and implementation required the organization of Toledo Glass, and Libbey gets credit for that. Glass making had hardly changed in three thousand years until the invention of the bottle-making machine. The automatic bottle-making machine would be a true manufacturing revolution compared to the Eli Whitney’s cotton gin in the cotton industry. Even more, the bottle machine changed society and culture. A fifteenth century Venetian would have felt right at home in an 1870 glass house prior to the automation of Libbey and Owens. The automatic bottle machine led to a revolution of packaging such as milk bottles, beer bottles, pop bottles, baby bottles, and glass jars. Business friends, Libbey Adolphus Bush and H. J. Heinz, were pioneering glass packaging in beer and vegetables but lacked volume glass bottle suppliers. The first costs of production using the bottle machine was around 10 cents a gross (144 bottles) versus $1.52 per gross for hand production of bottles. The lowered costs quickly opened up new markets for the use of glass bottle and jars. The automated bottle machine led to automated filling machines in industries such as ketchup making. The bottle machine guaranteed standard and equivalent weights and measures, paving the way for the Pure Food and Drug Act of 1906. An ancillary effect was the eventual elimination of child labor in the glass industry.
Libbey built Toledo Glass to do development work, and without it, Michael Owens could not have made the bottle-making machine commercial. Libbey hired the draftsmen, mechanics, and engineers needed to build the machine. Michael Owens, working from a model he developed while at the Chicago World Fair of 1893, functioned as project manager. The bottle machine was every bit an organizational triumph as an engineering triumph. It required an army of technical experts and Libbey’s leadership.
The bottle machine had near 10,000 individual parts, while the 1907 Model T had less than 3,000 parts. These parts had to be designed and manufactured. Every part required a two-dimensional blueprint, so it could be machined or cast. Amazingly, Michael Owens could not read blueprints. If more than one machine was to be made, it would require standardized parts, blueprints, and processes. Blueprints allowed Libbey to standardize his parts supply chain. Owens was incapable of such an engineering task, but Libbey supplied the necessary engineering backup. It was a huge undertaking beyond that of any individual. It was Libbey’s organization and Edward Libbey the CEO that allowed for the invention of the bottle machine to progress. Libbey not only held the organization together but also funded the vision when the board of directors wavered. The bottle machine as well as later inventions were the first real team inventions. It marked the end of the lone Victorian scientist making a breakthrough. Edison had an organization as support, while Libbey had a true developmental organization integrated into the effort. Libbey approached research and development as a craft, with engineers being innovation craftsmen. Libbey’s developmental company would become the model for corporate development in years to come.
The development of the automated bottle took years from 1898 with Michael Owens’s first semi-automated machine. The semi-automatic process could make bottles at 75 cents a gross (144 bottles). The commercial version in 1905 known as machine A could produce twelve beer bottles per minute or 17,280 in a 24-hour period. Compare this to hand production of 2,880 per day using a crew of six men and boys. Such production capacity and lower costs quickly opened up the beer and ketchup bottles markets. The national market in 1900 was about three million bottles of ketchup alone. These were hand blown bottles, and since ketchup was sold in barrels as well, the potential market was probably near seven million bottles. The beer bottle market in 1900 was about twice that size. Libbey made the decision not to become a machine manufacturer or bottle manufacturer, but developed a different business of forming a company manufacture and lease machines to end users. Leasing was a revolutionary business model, which Libbey perfected.
The first license of the machine was with Baldwin-Travis (Thatcher Manufacturing) in September of 1904. Thatcher was licensed to make milk bottles only. It cost Thatcher $250,000 for the license. The payment was made in $150,000 cash, $50,000 in preferred stock, and $50,000 in common stock. Royalties were based on a per bottle calculation of labor savings from the machine. One-half of the savings would go to the Owens Bottle Machine Company. Libbey would select companies exclusively for beer bottles, ale bottles, wine bottles, soda pop bottles, brandy bottles, etc. The royalties in 1904 were 50 cents a gross for Thatcher. The Thatcher machine required modifications for their thick walled square bottle. In addition, Libbey would supply Michael Owens to help in the machine start-up and installation. Owens quickly became a thorn in the side to a broad segment of the glass industry.
Licensing was the most important of these strategic issues of Libbey. Libbey personally took to selling licenses. Robotics companies are using the Libbey model of licensing and leasing today. Libbey and Owens believed the machine had a major advantage in longneck bottles favored by beer bottles. Iron City Brewing in Pittsburgh had been one of the first to come to Toledo to see the machine. In 1903, Libbey was in negotiations with a group of Pittsburgh beer bottle manufacturers but was getting nowhere. The group had negotiated as a group, fearing that the machine would give anyone of them an unfair advantage. Libbey secretly approached one of them, Edward Everett, after negotiations broke down. He started a secret letter exchange of letters using fictitious names. Libbey and Edward Everett joined together to take over three bottle plants in Ohio (Newark, Massillon, and Wooster). The new company became Ohio Bottle Company. Ohio Bottle Company was then given exclusive license for beer, porter, ale, and soda bottle bottles. This company would be the major supplier to Pittsburgh Brewing Company (Iron City Beer). So by 1905, Libbey controlled a complex web of glass companies, which had avoided the image of a monopoly.
Libbey would become America’s most adept monopolist, controlling the bottle market, while the government seemed unable to understand his control. Leasing gave him market control, which he could sell as a premium to companies. Once a company had first leasing rights such as Thatcher in milk bottles and Heinz in Ketchup bottles, Libbey refused to lease to their competitors. With Kent Machine as his manufacturing company, Libbey had started a process of vertical integration controlling the supply chain, but his horizontal integration of markets was overwhelming. In 1905, Libbey had control of the cut glass, bottle, and container markets. In the bottle and container markets, he was in a position to control pricing and production. He realized that the automatic bottle machine had the potential to cause disarray in the marketplace. Libbey chose to slowly change the market while maintaining price levels. This would also allow for an orderly transfer of skilled glass blowers and gathers to machine operators. Still, Libbey’s tactics were every bit as monopolistic in nature as those of J. P. Morgan. Libbey, in fact, had the power to decide segment winners because he sold exclusive rights in segments such as beer bottles, vegetable jars, milk bottles and other segments.
Libbey also moved quickly on expanding licensing to Europe with trips in 1904 and 1905. Owens European Bottle Machine was formed to sell licenses. Beer King Adolphus Busch who had first seen the machine in 1903 became a stockholder in the European Bottle Machine. Other than Busch and Julius Prince of Germany’s Apollinaris Company, the board of Owens European Bottle was the same as Toledo Glass. Owens European had exclusive rights for Europe, Central America, South America, Africa, Cuba, and Australasia. One of the unexpected results of the Owens bottle Machine was a huge reduction in child labor. A typical glass factory might have 100 boys working at low wages to make bottles. Wages were from 30 to 50 cents a day, often with room and board not included. While a boy might make $3 to $6 a week, he might be charged $2 to $3 a week for room and board. Company boarding houses were common in Ohio. Orphans were often shipped from eastern cities to take the jobs in the glasshouses of Ohio where labor was in short supply. The Owens Bottle machine effectively reduced the process to high paid machine operators. In 1910, Libbey would repeat the developmental and marketing process with the invention and application of an automated flat glass machine.
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