All right. Good morning, everyone. And again, thank you for a very fun evening last night for those of you here in the room and for those of you joining on the webcast, welcome. Last night, we had a chance I talked about a bunch of different things and you all have the slide deck now. I'm not going to go through the first twelve pages, but just for the benefit of the people that weren't here tonight, I just want to talk very briefly about what we discussed.
And we talked a lot about culture. We talked a lot about history. We talked a lot about our people. We talked about Ball being 138 years young and for its 1st 100 years being owned and operated by a family. And really what inspired that was about the values that we have and hold dear to our company, whether it's about uncompromising integrity, about being close to the customer, behaving like owners, which is a critical part of who we are, the attention to detail or about being innovative in all that we do.
We also talked about our Drive for 10 journey, which began in 2010 about broadening our geographic reach and focusing on new customers, new products and new markets. We talked about sustainability, which we're going to talk a lot more about today. We also talked about the progress we've made here at Ball Corporation since 2010 and we talked about the goals that we had set out for ourselves at that time. In terms of doubling the amount of EVA dollars 10 years hence by 2020, we also talked about a goal of having $10 per share of earnings before the split. And I'll remind everyone that we split our stock twice since then.
I also pointed out that through the Q2 on an LTM basis of 2018, since 2010 that our revenues have gone up by approximately 50% and our EBIT has gone up by 75%. I talked about the headwinds that we've experienced over that journey. Nothing ever goes from
the lower left to the upper right exactly how you think about it.
And we talked about the China pricing, some of the things in the food can business and why we ultimately got out of the food can business. But it's all good. And the thing I want to leave with you before I kind of jump into this is that we really only have just begun. I think what we're going to try to do today is peel away the onion a little bit more based on the discussion last night. And so I'm going to kind of give an overall arching view of each of our three businesses and why we truly believe that we have a once in a lifetime opportunity in front of us in each and every one of those businesses.
Then Dan Fisher, our Chief Operating Officer of Global Beverage is going to talk away come up and talk and he's going to peel away the onion even a little bit more from what I'm talking about. And then Rob Strain is going to get up talk a little bit more context and perspective about aerospace and then Scott Morrison will get up and give a financial perspective of this. We'll then take a break and then we'll come back and we're going to have a 1 hour Q and A session with the various presidents of our regional businesses. So that's the agenda for today. What I'll ask everyone to do on the webcast is we're going to move ahead.
Here's the forward looking statement. I'm obviously not going to read it, but it's in your materials. I'm going to quickly hop ahead to Page 13 because the pages prior to that is what I effectively just covered and what we talked a little bit about last night. Excuse me, on Page 16, and talk about a once in a lifetime opportunity. That truly is what gets us excited and I'll go into the beverage can.
We've made some great progress over the last couple of years as part of the Rexha acquisition against our integration plans, whether it be sourcing, whether it be G and A and the move to GBS. I know we'll talk a little bit about that. We talked a lot about our footprint last night and even today and you all are well familiar with it. Just last week, a bunch of us were in Spain officially starting up our new plant there, two line plants, everything looks terrific there. We also at the same time this summer started up 4 lines in our Goodyear, Arizona plant and touch wood everything is going very well there.
We're in the process of taking down the 3 plants that we talked about. So a lot moving in terms of footprint and it's all good and it was part of our delivered plans starting in upon the close back in June 2016. So let me talk about now more importantly where we're going and taking our franchise otherwise known as our beverage can business, our aerosol business as well as our aerospace business and taking out for a spin. So I'll go into the beverage side of the business. Let me just start by saying plastic is polluting our planet And there's no other way to say it.
It's as simple as that. Our world has shifted to a much more sustainable world focused on this whole sustainability issue and we're on the right side of this equation. It's a once in a lifetime opportunity to take advantage of it and when the can wins we win. And I will point out last night, I didn't go into great detail, but we've been in 46 different businesses over the lifetime. We're in 3 now.
So by definition, we're out of 43 of them. Three different times in our history, we've been in the plastic business. And we got out last time in 2011 because we saw the tsunami of plastic polluting our world. We knew at that time it was uneconomic to recycle plastic and that issue still holds today. Now I want to point out that many people don't know this, but 75% of all aluminum ever produced in the history of mankind is still in use today.
Well, 90% of plastics has never been recycled just once. Think of that. So you think about how the plastic is polluting our world. That's obviously the reason why. There's 8,000,000,000 tons of virgin plastic produced in the history of mankind and only 9% as I mentioned has only been recycled, 12% has been incinerated and 79% is being thrown in our landfill or otherwise thrown at the side of the road or in our oceans.
I'm not making this up at all. We are truly drowning in plastic. Last year around the world 480,000,000,000 units of plastic packaging for the beverage side was sold globally. And some scientists believe that by the year 2,050, there'll be more tons of plastic in our ocean than aquatic life. Think about that.
More tons of plastic in our aquatic life than in our oceans than aquatic life. And if you don't believe me, we're here in Colorado, but if you don't believe me, go to any beach on any ocean anywhere and look down when you see where the water comes up to the sand, you will see plastic shards down there at your feet. They weren't dropped there. They came from somewhere and they've been washed up from our oceans. And if that's what's on the shore, just imagine what's in the water and what's in the aquatic life.
And so you want to talk about sustainable. Is that? I doubt that. On the other hand, as I mentioned, that? I doubt that.
On the other hand, as I mentioned, cans are infinitely recyclable. Most people don't
realize this, but when cans are recycled, there's no loss of yield
at the aluminum. That's why 75% of aluminum is still in use today. What little plastic is recycled is actually not recycled. Most of it is downcycled. And so it breaks down as time goes on.
So it goes from a plastic bottle, goes into fibers that makes carpets and clothing and other things like that. And ultimately, it loses its ability to be recycled. The other thing that most people don't realize is, while other substrates talk about recycling, what they're really talking about is collection. As I mentioned, when you have 79% of all plastic bottles being thrown either in the landfill or in our oceans, they're not being recycled. Yes, they're being collected, 45% around the world, but they're not being recycled.
And I think the world is quickly catching on to this phenomenon. And you have to ask yourself why. 1% of all collected waste stream is aluminum, but yet it's 17% of the value. Why is that? It's real simple.
It's economics. There's an economic case for recycling aluminum. At current rates, just to give you context, at current rates, you can buy a ton of recycled aluminum for approximately $1300 I haven't checked in the last week or so, but it's usually in and around that, Whereas plastic is probably between $100 $200 per ton and glass sometimes has negative value. In fact, here in the United States, approximately 1 third of all the municipal reclamation centers don't even accept glass anymore. So when you talk about living in a sustainable world, I ask you a real simple question.
What is sustainable? Cans are the most sustainable package in the world. Back in 2010, when we started on this Drive for 10 journey, we always focused from a sustainability perspective on what we internally have called the big 6. I have it up there now. And we've made very good progress on it.
It started with safety. We've had a 41% improvement in our safety record off already world class level since 2010. We've done a truly awesome job and we still have a ways to go because our goal is to have 0 accidents in our facilities. Our electricity and natural gas is down 9% 19% respectively, water down 11%. And our new plant in Spain, we're hoping to get an 80% reduction in the water that we use.
It's truly phenomenal. From a waste perspective, we're recycling more and reusing more, but we also are sending more to landfill as well. So we have some work to do there. But overall, I think a very good job on that and the progress is terrific. But today sustainability is far more than that.
The big six is just a precondition, a license to operate, if you will, in today's environment. I know Dan Fisher after me is going to get up and come and talk a bit about the ton of the work that we've done led by him as well as Kathleen Petrie who heads up our sustainability efforts to truly develop a strategy around how to commercialize the sustainability agenda, and how to do it do well by doing good. And let me tell you why because I think it's really important. Let me just begin by saying, as I mentioned, we're in a different place around the world. And when an NGO called 8, 10 years ago, we would hide, we would demure, we would not we would avoid the contact with them because there was really no upside engaging in the conversation because honestly we truly didn't have our sustainability act together at least an act that was not ready for the outside scrutiny.
And this time it's different. This past March, we were the lead sponsor in the World Ocean Summit hosted by The Economist down in Mexico. And it was quite an eye opener for all of us. During that time, we had a series of half hour meetings with a bunch of NGOs, world class NGOs, Tier 1 NGOs. And at the meetings, the meetings generally went like this.
For the first couple of minutes, they'd ask us about our greenhouse gas strategy check. We were able to talk about exactly what we're doing, not only as Ball Corporation, but also as an industry to try and push recycling. Then we talk about a couple of minutes talking and answering questions about our BPA and I strategy. As many of you know, we've been on this migration within the next couple of years, largely due to shortness of supply of the material, we'll be fully out of BPA materials. But then the next 25 minutes or so were spent on discussions about how we with these NGOs could partner with them to eliminate plastic.
And it was truly an eye opener for all of this. And we recognize that we can't position the can. Ball Corporation cannot position the can as the most sustainable package by ourselves. We need partners and that's a big eye opener for us in trying to engage the world and using the army of armies as we like to call it to really bring this issue about sustainability to the forefront. So how do we address this to make this successful?
In the past, we talked to our customers. It makes a lot of sense. But they're not the only ones with skin in the game. It's a whole different supply a new supply chain. We've got customers.
We've got consumers. We've got retailers. We've got NGOs. We've got governments. For years, we've been doing this.
In every region, we've been engaging with them, but not at the level we need to. And if you want to be brutally honest with ourselves, we're hard pressed to think of a proactive win we've had across the entire supply chain. We've been a little bit more reactive in the past. Our industry has been a little bit more reactive in the past. Keep your head down and plow ahead.
I think what you're hearing from us is we've woken up that as an industry leader, you have to take this responsibility very seriously. And so we are going to be engaging with the whole supply chain beyond just our customers. Yes, we are going to be talking to our customers about how to utilize a wide variety of can formats to help them position their brands and make it more profitable for them. And I'll go into that a little bit later on because we indeed are on the right side of the debate here and they can get on the right side of the debate. But it's also with consumers by leveraging the vast and free social media that we have to take advantage of the younger generations who fundamentally get this.
They grew up on Red Bull. They grew up on craft beer and increasingly they're growing up on sparkling water. They understand the difference between a number 1 bottle, a number 2 bottle, a number 3 bottle and number 7 bottle, far greater than certainly our generation does. And so we are going to be take this out because they ultimately are the can's greatest advocate and that's what we're seeing right now. We're going to be focused on the retailers to clear all the plastic from our aisles because that's what their consumers want these days.
And we're starting to see that happen in the U. K. And we've had discussions elsewhere around the world about how to make plastic free zones in many of these retailers in which we our products are sold at. But also as I mentioned before with the NGOs build a marching Friends of Friends, if you want to call it that, army to work with the retailers through legislative and non legislative means, but not only the retailers, also working with our customers and our consumers and also the governments. And then lastly, speaking of governments and working with the legislators to rethink conventional wisdom.
I recognize what I'm about to say is a bit provocative, but we have to be provocative. Should we have deposits when the playing field is level? I know given the economics of what I talked about scrap value, retailers would love to have their hands on used aluminum as opposed to the used plastic or used glass. Should there be a producer responsibility tax where each substrate should stand on its own based on its own economics. I'll take my chances with the can in this environment because the economics of recycling favor the can, but we have to do it right.
And so we're being very methodical about trying to figure out what to do as we go forward there. As I start as I mentioned, it all starts with the consumer. We got some third parties to help us look at some Google searches on plastic awareness both in the U. K. As well as here in the U.
S. And look at these charts and look what happened late last year. There's a huge spike in awareness, a 5x to 6x increase in the awareness of how plastics is bad and how it's creating a health concern for the world in which we live. But at the same time, the question is how do we take advantage of it because you also see relative to aluminum, there wasn't much movement there. So people are very much focused on the problems of plastic, but they haven't quite recognized the advantages and we have a solution to the plastic problem.
It's called aluminum. So we're putting a lot of work into there. As I mentioned, Dan is going to talk a little bit more about that. Now to be fair, we, Ball Corporation and the can in particular, are not perfect either. In fact, recycling, we would be in trouble.
There's huge amounts of energy required to make aluminum. And that's why hydro and other forms of cheap electricity are so important from the smelting process. That's why you find a lot of smelters in Iceland and Canada and Brazil and the Tennessee Valley and Saudi Arabia and Russia because that's where cheap electricity and cheap energy come from. We do have a good story from an aluminum perspective. More than 75% of all aluminum, as I mentioned, is currently recycled right now.
It's just not a great story. So what we've been focusing on is how to accelerate our efforts about recycling, whether it's the things we're doing with the various associations, whether it's working with every can counts in Europe, with the recycling partnership here in the United States, the ReCircus Waste Picker program in South America or a myriad of other initiatives and programs in each and every region. The question is not how good the recycling is right now. How do you get it globally to 80% to 85% 90% because given the economic sustainability of the can, if we can get the sustain if we can get the recycling rates even higher, it's going to just further distance the can relative to plastic and glass. But at the same time, we also can't ignore the economics of our customer.
And 20 years ago, the can was pedestrian and plastic was cool. If you all remember that back in the '80s when plastic was first really rolling out, it was the it package. It was re closable. And honestly, it was also the most profitable for our customers. And so to highlight this, a few weeks ago, I went on walmart.com.
And I looked at the price points. And on the website, this was just to give you context, I went on and said, what could I buy as a consumer if I bought it online and then went to Walmart to pick it up? And I looked at 6 different products, a standard 12 ounce can in multi packs, 7.5 ounce can in multi packs, the sleek 12 ounce can in multi packs. I looked at 16 ounce sold in cans. I also looked at the retail price per ounce for each container and indexed it to the standard 12 ounce can.
And I also looked at PET and I looked at the single serve PET, the 20 ounce PET and I looked at another format, which I'll show in a second. But what you see here is plastic, the single serve PET bottle is 3x the retail price per ounce than a standard 12 ounce can. And so my point in saying that is we can talk all we want about the environmental sustainable attributes of the can, but when you have a 3x profit differential relative to plastic, that's a tough pill to swallow for our customers. And so what we've tried to do is over the past couple of years using our specialty capabilities, and I know Dan is going to talk more about this, we've helped increase our customers increase their revenue per ounce anywhere from 2 25% to 300% by using different formats in different channels and be able to reposition their products relative to the standard 12 ounce can and we've been able to improve it anywhere from 2.25 percent to 300% relative to the standard can. Pretty good, Yes, but not good enough.
When looking at PET, we've made up a meaningful ground, but still have more work to do. In order for our customers to embrace the conversion from PET to glass, we have to think about how to close the profitability gap for them between cans and PET. You heard us over the last year talk about profit pools of our customer. This is exactly what I'm talking about. Customers want to do good, but we have to give them the economic reasons to do to embrace this tide.
Otherwise, as I mentioned before, we're going to be beating our heads up against the wall. So we need to continue to focus on our leveraging our specialty portfolio to create greater profit pools for our customers to you cans. And if we're successful, we've engaged some outside help to help us think through and dimension the size of the prize, if you will, of this. And so the numbers I'm about to show you are representative of each and every region in which all corporation operates today. It's not Africa.
It's not parts of Southeast Asia where we currently don't operate. But what we looked at is for every 1 percentage point increase in the share of cans relative to plastic and other substrates, there is a 24 23 $1,000,000,000 can opportunity. Now that sounds huge and I recognize that. We're not going to capture all of it. But I'm talking about 1 percentage point change.
I'm talking about going from 50% to 51%. That's the size of the prize. It's huge. And just to walk you through some numbers. On the soft drink side, there is a $5,000,000,000 incremental can opportunity just in carbonated soft drink.
It's broken approximately $1,100,000,000 of that opportunity for every 1 percentage point increase in North America. Why? 57% of all CSD in the United States currently is sold in PET. There's another 1,100,000,000 can opportunity because 83 percent of all CSD in Europe today is packed in PET. There's a 500,000,000 in China.
The CSD market is not nearly as big. There's $400,000,000 opportunity in Southeast Asia and there's $900,000,000 can opportunity in EMEA. And again, remember, that's just a 1 percentage point shift. I'm not talking 10 percentage point shift, 1 percentage point shift. In beer, there's a 6,000,000,000 dollars incremental can opportunity for every 1 percentage point share shift to cans.
Over $700,000,000 in North America seems a little bit low. Why? The can is currently winning. Over the past decade, we've gone from 50% of all beer packaged in cans to 57%, 58%. We're winning right now and we still have a long way to go.
In Europe, 1,500,000,000 dollars can opportunity because 63% of all beer is packaged in glass and another 15% largely driven by Eastern Europe, but 15% of beer is packaged in plastic. So in total, 78% of all beer in Europe is currently not in a can. In South America, there's a $600,000,000 opportunity because 71% of all beer is in glass. In China, a $2,300,000,000 can opportunity because 79% is still in glass. Southeast Asia, 300,000,000 dollars can opportunity because 77% is in glass.
In EMEA, where beer consumption is low, there's even a $900,000,000 can opportunity because only 5% of the beer package in EMEA is in cans. When you go now the real opportunity is a $132,200,000,000 incremental can opportunity in still products. And again, remember, that's just a 1 percentage point shift. Dollars 2,400,000,000 in North America because 92% of all still products when I say still, I'm talking water, teas, juices, etcetera, 92% in North America are currently packaged in PET or cartons. There's a $2,800,000,000 opportunity in Europe.
Why? Just 1% of still products in Europe are packaged in cans, just 1% right now. There's a $1,000,000,000 can opportunity in South America because only 1% is packaged in cans, 1.2% in Southeast Asia, 3.4% in China, 7% in China is packaged in cans. So think about teas, teas are a very big part of it. So it's a huge opportunity.
In EMEA, dollars 2,300,000,000 can opportunity for still products because only 2% of all still products in EMEA are packaged in cans. Now I know how do we compete at the price points with PET and still water where bottles are literally the consistency of Saran wrap at times. Let me tell you, we're not going to shift at all, but I'm just talking a 1 percentage point change. The addressable opportunity probably is not nearly as big as this and I know Dan Fisher is going to go into think about the opportunity that we have and this is just a 1 percentage point shift and there's over 24,000,000,000 cans in the regions we currently operate today, that's the opportunity for us. Is it going to happen overnight?
No. But the question is how do we get 2%, 4%, 6 percentage point shift going because that number will multiply accordingly. And that's the opportunity for us. So let me just quickly summarize the beverage can. Our world has shifted to a much more sustainably focused world and we're on the right side of this argument.
We do have a once in a lifetime opportunity to take advantage of it. And when the can wins, given our size and scale, Ball Corporation wins. Now from a footprint perspective and how specialty plays in with this, we're more we have are more than twice the size of our nearest competition in general. And while that's great, it's our footprint that differentiates us. I could go around the world, whether it's in Europe, whether it's in South America, whether it's in the United States.
But when you think about let's just focus here in the United States, we make over 32 different can sizes in the United States alone. And we can make them from California, we can make them in Arizona, we can make them in Texas and here in Colorado, We can make them in the Midwest. We can make them in the Southeast. We can make them in Florida. We can make them in the Mid Atlantic and we can make them in New England.
Our nearest competitor can only do it in 2 or 3 different areas and almost all of those are east of the Mississippi. So we have a once in a lifetime opportunity to leverage the footprint we have. Thirdly, and I think Dan will talk a little bit about this more from a commercial perspective, our contracts in this industry, generally speaking, were designed in the 1980s and we have a once in a lifetime opportunity to change that. Historically, what has when we've renegotiated with our customers, we've more or less changed some numbers in the contract but rolled over. When you think about the 1980s when we sold very few specialty containers and the retail world was quite different, it made a lot of sense to have the contracts back then.
And it made it because we were able to accept orders from our customers with, for example, 72 hour turnaround time. Well, today, our customers change their orders 1.5 times in 24 hours before they're shipped. And as I said, when you're making 32 different sizes and the proliferation of labels that you're seeing and we're operating in an environment from the 1980s, When we talk about commercial, I know a lot of people talk about what's the value over volume and all things, but it's about the efficiency of that. And so what we've been embarking on for the last 2 plus years is looking into whiteboarding what we need to do from a commercial perspective to make our business much more flexible. If our customers want to buy cans with 72 hour call offs, terrific.
We're more than happy to do that. But if they want to do it with 36 hours, terrific. We'll do that too. But there's a different price for that. If you want to do it at $12 terrific.
But there's costs associated with that that we need to recover. So that's part and partial of what we're doing from a commercial perspective to try and get value for the what we deliver to our customers. Lastly, I want to just show this as a good example because we're going to continue to push this sustainability agenda and the differentiation and the specialty agenda to make sure that Canon is front and center with our customers because it's going to help them improve their profitability. Just to give example of that, here in North America, we looked and year to date, 50 6% of all new beverage SKUs on the retail shelf today are in cans. In 2015, that was 35%.
That is a huge change. And this is a good proof point of what we've been trying to do by leveraging our specialty to get it front and center with our customers to allow them to reposition the profit pools for themselves. The question is how do we accelerate this? And Dan is going to talk a little bit more about this because it really does get into this 2019 and more importantly and beyond. Yes, it's about sustainability, but it's also about footprint.
And so when you think about it, think footprint, think sustainability, think specialty and think about improving the economics for both our customers and for the can. So in closing, the ball is in our court. Our Drive for TEN journey has been about a greater sense of urgency and about being proactive. We've got the footprint now. We've got the specialty capability.
We have the leadership and the ability to bend the demand curve for aluminum relative to other substrates. And we have the chance to use all three of these tools to transform our commercial strategy. So that is what is beyond these tools sustainability, specialty, redesigning the profit pools for our customers. That's how we're going to generate EVA dollars as we go forward. So what I'd like to do now is quickly transition to our global aerosol business and talk a little bit about the opportunity in there.
When we think about our aerosol business, let me point out a couple of things. I mentioned last night that we divested the TIMPLATE business in North America. It was a difficult thing to do, but it was the right thing to do. Particularly on the food can side of the business, it was a structurally declining business. There was a void of leadership in the industry.
And as number 3 and a number 4 industry, it was very difficult for us to provide that leadership. And in fact, it was a good lesson for us about being talking about being market leaders and what you should do and what you should not do and we've taken that very seriously on the beverage can side. But the industry does need some restructuring and we were just not in a position to do it and we couldn't do it on our own. So why do I mention this? I mention this because the aerosol business, particularly the aluminum aerosol business is very different than that.
It's growing, it's fragmented and it has a global customer base that's yearning for leadership and they need a go to partner. And we have that opportunity to create in the aerosol business largely what we've done in the beverage can business, which so instead of Coke and ABI and Pepsi and Heineken and Molson Coors, think Procter and Gamble and Unilever and L'Oreal and Beiersdorf. We're the only supplier on 2 continents. We have the opportunity to create a supplier that can be anything, anytime, anywhere to this global and regional customer base. Now I will tell you it's not a particularly large business right now.
It's a little under $400,000,000 in revenue, but it's a terrific business and the management team is there is doing a great job and I'm going to very quickly walk you through the opportunities that we see in that business. First, let me go through the growth of it. First, it's a growth market with demand growing 6 percent on a global basis over the past couple of years. India, which we opened a new greenfield plant in 2015 and subsequently have added more capacity there continues to grow very quickly and is only going to accelerate as the middle class continues to grow rise and the large multinationals begin to enter that in a big way, and we're starting to see that right now. South America, particularly Brazil, is another strong market where not only increased use of aerosol packages are occurring, but the migration from Argentina to Brazil filling is occurring due to the growth in Brazil as well as Argentina's economic woes.
Other regions including North America are exhibiting good growth to a low share of aluminum aerosol packaging, while Europe, a bit more of a mature market, still has pockets of growth that we're seeing. However, one of the key opportunities related to all this is further consolidation. This is just a quick snapshot of the various where we are positioned and where many of our other competitors are positioned. What you will see there is this industry is fragmented with no global competitors. In fact, other than Nexol, which operates in North and South America, there are no competitors that can be that one stop shop to the multinationals.
There's no competitors other than Ball that operate on more than 2 continents. We operate in 3 in fact, North America, Europe and India. And there's
a great opportunity to become that one stop shop
and further distance ourselves from the competition due to our capabilities and global reach. We have greenfield opportunities, I mentioned, in certain of these regions, particularly South America. We have further consolidation in other regions, particularly in Europe. And what's most exciting about that is the customer base. Unlike the beverage industry, there are global customers with truly global brands that are marketed globally as well.
So when Unilever buyers' store rolls out a new product, they're not just doing it regionally, they're doing it truly globally. And currently, if they were to roll out, for example, a new body spray, just imagine how complicated their supply chains are. They need an innovation partner to help develop the new package. Then they need to either contract with multiple suppliers on each geographic continent in multiple regions or consider filling the product and shipping it globally. In any event, it really is a nightmare.
And our experience with many of these customers has proven to us that we indeed can create this one stop shop where we can be their innovation partner and then roll it out on a truly global basis. They have shown an ability and willingness to pay for the innovation, the quality, the service and most importantly is the consistency they can get on a global basis. And this is not just in theory. This is reality and it's our reality. Due to the creativity of our people and customer focus, we're already recognized as the innovation partner to many of our customers.
You saw the display we had last night. We won numerous awards over the last 12 months, the Canada Year, the Aerosol Package of the Year and other awards that highlight that number 1, it is valued by our customers number 2, we can create more stickiness with our customers through innovation And number 3, we have the geographic growth opportunities if we can further scale this business out. And at the same time, we also have sustainability on our side. Similar to the beverage can part of the business, we have a huge opportunity to create incremental demand through leveraging our sustainable position in the aluminum aerosol can. What you see behind me is a good example of this.
This is the global deodorant market. It's a big segment, but certainly not all that we do. In fact, it's well less than half of what we do in the markets that we serve. But what you can see is the aluminum aerosol can is underrepresented relative to the roll on deodorants and other forms of packaging. And not to mention the aluminum aerosol can is a premium part of this category where our customers enjoy much higher margins due to the reshell shelf space of the package.
A 1 percentage point increase in the regions we currently operate from other forms of packaging to aluminum aerosol represent 80,000,000 cans. Now that doesn't in the beverage world certainly that doesn't sound like a lot. Let me point out that, that is number 1, 2 full lines and number 2, that would be 10% of our global output currently. And that's just a 1 percentage point change. So there's huge opportunity for us on the aluminum aerosol as well And we have a once in a lifetime opportunity.
So as I summarized in the beverage can side, it's the same message. The ball is in our court. Drive for 10 is about being proactive with a much greater sense of urgency and now is our time and now is our moment. Last but not least, I want to go through our aerospace business. It's our little gem as many of you saw here in the room last night when we went up to Boulder and it's perhaps the single greatest opportunity for growth on a percentage basis across our portfolio.
Our aerospace folks have done a great job positioning this business over the past decade or so. Most people don't appreciate this, but throughout the 1990s, we were primarily known as a ragtag group of NASA engineers. And we did exquisite things for NASA. But basically, the other parts of the government, we were just selling components. We were at what was known as a Tier 3 supplier.
And starting in the late 1990s early 2000s, we started moving up that food chain. We went from a Tier 3 supplier to a Tier 2 supplier. And we were selling not only components, but we started selling sensors. And what has happened since then is we've actually been moving up into the Tier 1. And so the difference between the three is that Tier 1 is really you are the mission partner.
You are in charge of the whole mission. Tier 2, you're providing sensors or satellite buses as they're known. And Tier 3, excuse me, you're selling components to it. We've been able to move from Tier 3 to Tier 2 to Tier 1. And the reason for it, Dave Kauffman mentioned it last night, but for the benefit of everyone, it was really about 10 years ago that something fundamentally changed, profoundly changed.
Coming out of the financial crisis and faced with government budgets that were flat at best, The world in terms of its needs around intelligence, surveillance and reconnaissance was booming. We're in several different wars. The technology was changing very quickly. And the government woke up and realized that the way that it has worked for 40 years, building exquisite systems, for very high prices through the traditional industrial complex, so think the primes, it was no longer sustainable. So the leaders of the government began to change their thinking.
They solicited outside and more diverse thoughts and ideas and they invited us to the And then we took advantage having a seat at the table and not being tethered to the past, we were asked to join design teams that were never thought imaginable. We won a number of study contracts back then, which were a bit like strategic planning consultants winning work that they actually get to help plan the future. And so we had a seat at the table. And it was really a lot of fun because the government was listening to what we had to recommend. So you fast forward 8 years later and we've been the great recipient candidly of this change of thought.
And we've been growing not only on the sensor side, this Tier 2, but also on the mission side, this Tier 1. And in today's world of highly resilient distributed systems that are cost effective, we are perfectly placed to take advantage of this once in a lifetime opportunity. And let me give you some examples of exactly what I'm talking about and how it's played out. This is a chart of our backlog, which means contracted, wins that have been funded. So it's won and funded, contracted backlog.
And then also something that we don't talk a lot or at least historically had not talked a lot about, which is 1 not booked. What that means is we won a variety of contracts, but due to the government funding mechanisms, they haven't officially been funded. So we've won the contracts, but we haven't booked it in the funded backlog because as we described it, it's not money good. Now when you look over the past, 80% to 90% of the one not book ultimately gets funded. So not all of this will get funded, but we have high confidence that what we've been doing has been working.
And a lot of it has to do with the study contracts. So when you go from the study contract and then you get a seat at the table, then you can help design the future and then you win that and then ultimately gets funded, that's what we're talking about here. So I want you to take a look. Back in 2011, our wonknot book began to decline as the government took a fresh look at what they did. The budgets were relatively flat and a lot of the PROMs in sourced a lot of the Tier 2 work that we've been doing.
And you can see our 1 not booked in 2011, 2010 begin to decline a little bit. That typically translates a year to 2 years later into the funded backlog side of it. And you can see it right there that 18 months to 24 months later, we start to see a decline in our funded backlog. Now a few years later, our one up book began to pick up and follow that out to 1 or 2 years later on the funded backlog, Tom, it's the same story. The slope of the line is about the same.
Now look at what happened over the past year. Yes, our backlog is at record highs, but that's not the interesting thing. What's more interesting is our one not book has spiked meaningfully. Why? It's those study contracts that we've won over the last 8 years or so.
Those are the acorns that are turning into the oaks and they're not just components, they're not just sensors, they're full missions. And now granted some of these are not going to move forward, but if we're so excited about where our backlog is right now, let's dream and look ahead of what might be happening over the next couple of years. I don't want to be a prognosticator and do it, but you can see the slope of the line and you can see the one not booked. This is why we're so excited about aerospace prospects and why I said it probably has a single greatest percentage increase opportunity ahead of itself of all of the businesses in our portfolio. So what do we need to do to enable that?
We need to execute. We need to grow the development of our people. As we mentioned last night, over past 18 months, we've hired over 1200 people in this business. That represents approximately 40% of the people working at Ball Aerospace today. Now imagine the hiring process of that.
Imagine the onboarding process, how to get them computers and phones and cubicles, not to mention how to get the right skill of staff and the right programs. I give our aerospace folks a tremendous amount of credit for stepping up to this insurmountable task. But at the same time, we've only just begun. But how do you integrate them? How do you instill the values of Ball while allowing the diversity of creativity and thought?
That's one of the things that keeps me up at night. But this is where all of us, old and new at Ball Corporation need to act as 1 and look to building the best people and culture. And so we have a variety of programs within our aerospace business to make sure that the 60% of the people that have been around for a long time are the greatest advocates and the greatest mentors for those 40 percent of the people that are coming on board. We also need to scale our facilities for tomorrow, our manufacturing areas, our engineering areas, our support areas. This is the primary reason why our corporate folks actually moved out of our corporate headquarters to free up space and room for our aerospace people.
I often joke with Rob Strain each day, I want to look out in the parking lot and see a bunch of trailers pull up that are going to be mobile offices. And while that's a joke, it really isn't. That's how quickly we're growing. But at the same time, that's why we're spending over $100,000,000 on our facility expansion in aerospace. And we need to make sure that that's on time and on budget and so far so good.
Thirdly, we need to leverage our technology. It's what's gotten to the table gotten us to the table and where we are right now. But at the same time, all eyes are on us and we recognize that our customers, our competitors, our teaming partners with these great wins come great responsibility and we need to execute. It's a once in a lifetime opportunity to prove to these customers that we have the capability and know how and we can do it. And rest assured, we are on it and we are going to execute on this technology.
But at the same time, we're not taking our foot off the gas. We're still winning those study contracts for they have the backlog 6 or 8 years from now. And with the success that we're experiencing is while the success we're experiencing is terrific and tremendous, we've got to live in the moment, execute today and at the same time plan for tomorrow. So let me just quickly wrap up. The last couple of years when you take a step back, they've been both extremely rewarding and at the same time challenging.
Challenging from the perspective that when we embarked upon our drive for TEN journey, were many who thought that the best days at Ball Corporation were behind us, that our aerospace business was too small to be a mission partner, that our aerosol business could not grow and that the benefits of the Rexam acquisition were candidly unrealistic, that we couldn't generate the cost synergies that we said we could and that our customers had too much power, that the effects of truly creating a market leader with real organic growth would be watered down and that our vision of leveraging our footprint, our size, our sustainability attributes and our people to position the can as the most sustainable package in the supply chain were simply unrealistic. And you know what I say, watch what we do, not what we say. We believe in ourselves. We believe in our culture. We believe that we've done it before and we believe we're going to do it again.
And so we're going to let others think it's unachievable. We're going to let others question our passion and our work ethic and our team and our character. We're going to show others that with our humility, with our grit, with our perseverance that we can make these dreams come true. There's an old saying that I've always held dear that when your memories exceed your dreams, the end is near. So while we're very mindful of our past and we're very respectful of our past and in some ways a reflection of our past, Our dreams of being the most sustainable beverage can in the whole supply chain, of being the go to partner with our aerospace customers and of being anything for anyone at any time in our aerosol business, those things are in our control.
And so there's a lot of people think that their best day is behind this and we'll let them. I can tell you us I us, Ball Corporation, we don't think that way and we're not going to think that way because we have a once in a lifetime opportunity in each of our businesses and that is the basis of 2019 and beyond. So with that, I'll turn it over to Dan and Rob and Scott to begin to peel away the onion just a little bit more and show you why we have conviction around the and beyond. Dan?
Thank you, John. And thank all of you for being here at our coming to Denver, Colorado for our biennial Investor Day. I know our folks out in Golden are really excited to have all of you come by this afternoon. I think one consistent theme you'll find when talking to any of the Ball employees that the most energy we ever get is when we get to go out to the shop floor and work with our folks and see all the incredible empathy and energy and excitement they have for doing some really herculean things on a daily basis. Today, my goal is to help you understand how Ball is playing offense in the global beverage can industry and leveraging our global scale following the June 2016 Wrexham acquisition.
On a side note, if you ask my college basketball coach, he will tell you I'm uniquely positioned to talk about offense, but I'm not the person you want talking about defense whatsoever. I don't have much of an appetite for that. The opportunities for growth are numerous, as John pointed out. So let's dig in. Slide 43 represents a high level summary of our global beverage can business at the end of 2017.
And as John pointed out and we've talked numerous times on calls, we can truly serve our customers anywhere, anytime with any size shape of aluminum beverage container to help them grow their profit pools. Scale matters. It does in the biggest markets for sure. And in 2016, we broadened that global scale. When we embarked on the journey to acquire Rexam, John had the vision and the team's support to get through the complicated Rexam regulatory process, lay out a 3.5 year synergy capture plan, integrate a very large and complex global business and optimize our plant network to ensure significant EVA returns for our shareholders.
And throughout the balance of my presentation, I'll paint a picture of how we capitalize on our pillars for growth beyond 2019. Back in December 2016, I was new in my role and had the pleasure of meeting most you for my very first Investor Day. I think I was in the role for 48 hours. I was new in my role, and all of you were full of questions about what initiatives Ball would undertake to achieve the aggressive synergy case that we had laid out. This slide is the exact slide I spoke to back in December 2016 to help all of you understand the areas we would leverage to extract cost savings, value and position our global business for long term growth.
In the spirit of time, I'll touch on and highlight the operations and footprint sections and speak to commercial in a few coming slides. For those of you who attended the product showcase last night and learned about light weighting and specifically the Star can. Ball is moving to a global sub-9.5 gram can. You saw the time lapse of the Goodyear, Arizona facility and how we were able to install and start up 4 beverage can lines in 1 year. You saw how we can use technology for training and executing line simulations to ramp up new specialty lines quicker than ever before.
And by using that simulation software, we can deploy capital with the most efficient view. When it comes to optimizing our plant network or footprint, though very difficult, supply demand for standard containers, both across the U. S. And our Europe network, is in much better shape than at the time of the acquisition. Reidsville, North Carolina Recklinghaus in Germany, both closed in mid-twenty 17 and the Birmingham, Longview and Chatsworth plants have now all ceased production in the U.
S. Per the schedule laid out last year. One note to help reframe some of our comments in a little bit more detail. If I look at the U. S.
In particular from a footprint standpoint, we removed 8 lines. We added back in 5 lines. Of the 8 lines, 4 were 12 ounce lines. Of the 5 added, 1.5 were 12 ounce lines. So it's a net reduction of roughly 1,500,000,000 to 2,000,000,000 units.
My good friend Carlos Maderos, the President of North America and his teams have been challenged to increase efficiencies and reduce spoilage in an attempt to gain back that volume to secure contracts going forward. In South America, we have completed the closure of our Cuiaba facility and look forward to completing construction of our new Paraguay plant in late 2019, which will complement our Southern Cone plant network and serve contracted customer growth. At the time we laid out our value capture initiatives, many people outside of the walls of Ball said it was too aggressive. One thing our investors should always remember, our teams are owners too. All the way down to the plant floor, we're aligned and we appreciate the sacrifice our colleagues have made to execute and position us for future growth by focusing on supply demand, embracing new technologies and embracing challenging projects to bring product innovation and capabilities to our customers and growing beverage categories.
John referenced last night the global beverage can business is well positioned through the medium and long term to grow at a 2% to 3% clip. This identifies a number of the volume projections that we see that we've experienced here recently and we believe will continue. In short, the beverage can business is alive and well. And we're going to talk about how we're uniquely positioned to capture and win in these markets. When we look at Slide 47, I've summarized how we are uniquely positioned to grow.
Whether it's our well capitalized and flexible specialty commercial opportunities that are continuing to present themselves in the term of long term, commercial opportunities that are continuing to present themselves in the term of long term contracts that will continue to open up over the next 2 to 3 years New category growth, we'll go into that in more detail. Sustainability has been a really dramatic shift. I think as most recently in the CCE public release, they talked about how there's been a big transition. And John referenced, we were over in Europe last week. Conversations with some of our bigger customers last year were all predicated on the elimination of sugar and the avoidance of sugar taxes.
It is absolutely moved in a very steep way, in a very sharp way, in a very dramatic way toward how they prevent the onslaught of the negative press associated with plastic contamination. All of these levers, including supply chain investments to help us manage the increased complexity that faces us as we shift into providing what our customers want, when they want, where they want it, are all going to be catalysts for us moving forward. When you look at our specialty portfolio here on Slide 48, this highlights 2 things. Number 1, this is a sample of the over 30 can sizes that we manufacture in our European business. I know John has already highlighted that we're north of 32 can sizes now in the U.
S. But that system of product offerings has allowed us to on a pro form a basis from 2015, if you look at a pro form a Rexam acquisition, we've grown our specialty container volumes by 40%. We have also got a product portfolio now that has specialty at 40%. So that 40% number is a big deal since we've embarked on this journey. A couple of examples, I highlighted one already relative to Goodyear, but Cabanelis and Goodyear were also significant investments that were contemplated as we went through the due diligence process of the acquisition.
These two facilities combined are $350,000,000 worth of capital investments. I know Scott's highlighted them previously and probably talk about them again. We believe that we've got outsized returns above our cost of capital and we've provided a much more flexible footprint from a specialty container perspective. We're also preparing, not highlighted on this slide, but we're also preparing obviously for the construction and start up of our new plant in Paraguay, which will come online at the end of 2019. And in addition, specialty can line conversions are occurring at multiple plants as I speak.
A big thank you to all of our teams. Their execution has been phenomenal, another side benefit of our ownership culture at Ball. So why would we invest? We continue to capitalize on commercial opportunities and position ourselves to be the supplier of choice to our customers. Our customers also have a mandate to grow and they need partners like Ball that can embrace the complexity necessary to win for years to come.
With complexity comes opportunity. We're actively in the process of garnering this value. We negotiate with our customers in private, not on investor webcast, no, with 15% to 20% of our commercial contract volumes being negotiated by the end of 2019. The opportunity is now and we have the product portfolio and global footprint required by our customers. It's a good place to be.
This is a snapshot of our North America business and how we're evaluating and looking at that over the next 3 years. This is something that we do in each of our regions as we build up our strat plan 3 year cycle. North America, we believe, is expected to grow just ahead of 1.5% between now and 2021, largely due to new categories and the can being the package of choice for new product introductions. John has mentioned this earlier with the SKU proliferation and new levels, labels coming online at a higher clip than they have historically. Sustainability, we're in the early innings of that.
A lot of that upside is not necessarily built in here. But how you if you were to walk through this, I'm sorry, I can't step away from the microphone. But we very much understand that the U. Growing. Is what products and what brands are growing and or decreasing.
So there's another set of information that we've invested heavily in from a marketing and a business development standpoint that goes into our evaluation of who are going to be the winning customers and who we win with. There's a lot when you see the Mexican domestic bars, we continue to see excess outsized growth there. FABs are where your spiked seltzers are in domestic U. S. Craft continues to be a great growth story for the can.
On down the line, we're very bullish on wine. I'll talk to that here in a second. And then you shift over into CSD, there'll be a continued decline in certain categories within both the large CSD providers. But they're also winning in sparkling waters and teas and juices. And I think the substrate penetration that is available to us from a plastic to can substrate shift could move these numbers north.
I just wanted to give you an indication in how we look at things and how we prioritize our resources and why we're excited. Even in markets where we think domestic beer and CSD are challenges, we still think there's macro growth there. And as a market leader, it's incumbent on us to make sure that these categories and these new products have a home and we can facilitate that growth. The story of wine is quite exciting. I mean since the last time we were together a couple of years ago, there's a time sequence up here.
But wine in cans is happening in the U. S. Referenced PET not being accepted in MRFs across the U. S. Glass is having a challenge as well.
And so some of the big wine consortiums are all looking for a home for price points of certain wine. They're looking at the can. They understand the sustainability attributes of the can. And we have made filling investments that will be coming online in North America. And we've cultivated through a lot of the business development folks that some of you saw last night, great relationships in the early stages out on the West Coast.
We've invested in our Fairfield facility to make sure we have the appropriate can sizes to make sure that we're in line for the legislation and around alcohol. The sequence here, if you look back in 2002, was essentially Coppola was the customer. And our most recent IRI data shows that there's over 68, almost 69 brands now, new customers, and we have a really good head start. A lot of the innovation required in and around this is very different than other categories. You need food scientists, you need a sophisticated technology center and lab.
All of these wines require a different coating and a different interface with the metal. They're all living, breathing organisms. So you have to make the appropriate investments. You have to work with a supply base that you can have an effective job from a leverage standpoint to pull them into these innovation pipelines and customer discussions. I was asked what I thought the size and scale of this opportunity was.
It's pretty early to call. I would reference similar patterns to craft beer. And if it's half the size, I think we'll really like that 5 years from now. But we've seen this opportunity. We've been engaged in this opportunity.
And I think with some of the investments and some of the capabilities we put in place, we should start to see those benefits here in the not too distant future. I could talk about some I could talk about LaCroix and water and countless others, but I think that one's the newest and one of the most aggressive opportunities that we've been pursuing, and it's probably not highlighted in a lot of your thought process. Again, John has talked about the sustainability message. And it's interesting in talking with a number of you last night, it's still a challenge. I was talking to Scott.
There's just so much misinformation out there about what plastic really is and what you can do with it. And I think John dispelled some of those rumors in a pretty dramatic and compelling way. But there's an education process and whether it's social media, advertising, I've gotten a lot of really good recommendations from all of you here, but it's definitely going to take a layering effect. It's going to take NGOs that want to partner with us that value one way packaging. It's going to take retailers that we can help to convince that putting cans in plastic free aisles is a way for you to margin up your business.
Profit pools to our customers, we've got a pretty good idea on how to innovate and how to talk to them about that. But there's countless layers that have to be involved in this because candidly, the misinformation is so real and so evident that we've got to we need an army of folks to kind of overcome that. And we are clearly focused on making that happen and engaging with people in a way to make sure that, that message gets out. The pockets of opportunity, the real tangible markets, we are not going after this. John is very passionate about this subject and can evoke a lot of emotions.
And then the $24,000,000,000 I have to tell them might not show up in the budget next year. But I think there's some markets where we can go after in pretty short order. Our colleagues in Europe have kind of been on the front lines in the U. K, but we've done a lot of work to kind of right size or size the opportunity. And when you talk about the U.
S, Mexico, Brazil, obviously the U. Cans into. And those would be the targets and those would be the markets that we target. And the reason why we would target those markets is all in and around what John highlighted relative to social media and what we can glean from the sentiment scores that are out there. We understand who is serious about talking about plastic as a polluter in the environment.
And then you have to look at per capita GDP and things of this nature to know who may be willing to pay for this transition and who may be willing to demand that transition. And so we've built our case and our target based off those countries largely based on where the activity is on social media in and around this topic. We've achieved some significant short term wins in and around places that 2 years ago, I would have said would have been far more challenging than they are today. Our colleagues in Europe and UK have really benefited. You continue to see this customer can of water in the UK.
They've done a wonderful job facilitating this. This is a can of water that I believe Colin has filled in Austria. And they're growing by leaps and bounds. You will see them in Tesco value meals where they've transitioned out plastic bottles in lieu of this can. So it's happening and it's happening real time.
Our ball water still water business is up nearly 20% in Europe year to date. And we have far more opportunities than I would have anticipated even a year ago. So kudos to the team for a lot of the progress they're making there. This slide, I think you could find from probably any major consulting firm talking about 4.0 Digital Manufacturing. I think you saw where Ball takes a very pragmatic approach to this in the areas, whether it's working on automation or how to get better use out of by using data and sensors getting better use out of our wear parts and our tooling to extract better efficiencies.
And maybe even more important when you sell the 3 d training, in some parts of the world, domestic U. S, look, it's a tight labor market and we pay people very well, take great care of them. But it's right now, it's not that exciting of an opportunity for folks to step into. And so we don't have We have to use technology to get folks engaged very quickly to show that this business is actually a little sexier than other people would think. And that's principally how we're using automation and technology is to bring on and maybe even mix our skill into higher engineering class of laborers so they can use these tools and they can automate these lines.
We can right size our productivity efforts in terms of labor and we can benefit from the technology. So as we look out in terms of the earnings profile and how this lends itself to what Scott's going to talk about and what John's already highlighted, New categories, new category introductions, us taking a leadership position in those as we have. Price, mix, global versus regional customers. We have globally over 1,000 customers. It's exponential compared to what our other competitors have.
We pride ourselves in embracing complexity and working with folks and getting into every market, every channel possible. We see real value in that, and we will continue to pursue that because there's where there's complexity, there's opportunity. Geographic growth, there are still places that we're not at in the same level, that I think even some of our competitors are at. But we were last week, John indicated, we're in some spots with great opportunity set into Moscow and Spain last week, but great sustainability paths for the can to continue to win. We have great people, great infrastructure, great footprint.
So there are pockets even within our existing infrastructure. Argentina, I know a lot of folks have talked to Piraeus about that over the last 24 hours. Great opportunity set in front of us. Plant efficiencies, I marvel at the way our plants continue to drive and gain output 90,000 plus label changes. That's probably up 40% from 4 years ago.
So we will eclipse 100,000 probably in the next 18 months. And our efficiencies are going up. And that takes commitment and that takes process change and that takes thought and that takes capability and that takes a culture that we've built and we lean on heavily. And I think as both Scott and John have also talked about, we've launched our global business service initiatives. There's been a lot of structure and thought that have gone in behind that.
I think Scott will touch on that a little bit more. But we'll continue to right size the organization to make sure the folks that are working on strategic initiatives are working on strategic initiatives and the folks that need to be working on managing KPIs and driving efficiencies and back office functions are doing that full time. So we've already begun to execute on these opportunities. I'm excited to see the sustainability search, continued growth in specialty and how well capitalized and positioned we are for these opportunities going forward. Ball is proud to be the industry leader for beverage cans.
It comes with great responsibility and humility, is an important part of our culture. With every will everything break our way? No. But I also know that we will make decisions based on the best economic outcome for our fellow shareholders and we will have the team and assets to be able to execute and serve our growing customers and categories with the most sustainable package in the world. Thanks.
And I'll turn it over to Scott
or Rob.
Yes. 1 of them.
Good morning. First, I'd like to thank those that took the time yesterday to go up to our Boulder, Colorado operations. Our team got a real kick out of being able to show off some of the stuff they're involved in and your interest in questions keeps them motivated. John talked a bit about we've been and a little bit about where we're going. I will try to dig a little deeper into that, if I can figure out there we go.
So this year, the first half of the year, we've had pretty close to $50,000,000 worth of operating profit, dollars 5 $54,000,000 of sales, which represents a 12% growth year over year. John told what is for us a kind of remarkable story on the backlog, the winning new business portion of our business. Just a couple of years ago, we had backlog of $600,000,000 and now at $1,800,000 almost $1,900,000 and hope to win some other programs here in the next few weeks actually that could take it even beyond that. John talked a bit also about the hiring pace that we've been on. We've hired over 700 new people this year.
That's been the fastest pace of hiring in our company's 62 years of existence. And I have to tell you, I spent a lot time with a lot of the new employees. We keep raising the bar. It's incredible to me the capability of some of the folks that we've brought on. It also has given us an opportunity to in a very material way address our diversity of our staff.
Over 40% of the new hires this year are women and minorities, well above our industry's average. So a question could be how have we done this? And we've done this in a number of ways. 1, we've leveraged the expertise across our entire company, not even just Spall Aerospace, but across the entire corporation. The investment we've made is building strong relationships with our customers well earlier than we ever had before.
The other thing we touched a little bit yesterday is we made a major investment in people, time, energy in our D. C. Office. Almost all of our customers are D. C.
Based and we've had to ramp up over the last several years our presence there to make sure people know our story. Most importantly, what we've had to do is we've had to deliver on our commitments and execute on the programs we currently have. There is no better way to win new work is to execute well on the work that you have. The other thing is and it's been talked about over and over and you'll hear it from me as well because I believe strongly that it's a discriminator with our in our industry and with our customers and that is we have to have and continue to have a culture of transparency, integrity, innovation, humility and collaboration. Without that, we'll just be one of those other guys and we really, really don't want to do that.
We use that in how we behave with our customers, how we behave amongst ourselves and we use it as a criteria as we hire people. Do they pass that to us? So we've been about staffing up to take on the work we've already captured. As I said, we've hired 700 so far. We'll hire another 200 to 300 yet this year, and the talent is absolutely terrific.
Okay.
I don't know if I'm battery challenged. Thanks. Okay. A word a number of people have asked me questions on how do we contract with the government. First of all, if you go from the far right, we are a government contractor through 98%.
And we service the civil market, the DoD market and the Intel market. In the civil, that includes NASA, NOAA, USGS. And DoD, that includes Navy and Air Force, Army, the others. And then there's an Intel community, which I won't go into, but is a big part of our business. This changes from time to time, but our current mix, most of our contracts are contracted either on a fixed price basis for products to be delivered or on a cost plus basis.
And typically, if there's a great deal of development or new technology, they tend to go the cost plus. Those brings a little bit less profitability, but they have very, very low levels of risk. We, while Aerospace have done extremely well in doing fixed price contracting And that will change over time as the mix of our contracts or where we are in our contracts change. And then you can also see the mix. Right now, and this is a material change over the last 5 years, we are highly defense and intel oriented right now, but it goes back and forth depending on where the government budgets are in that regard.
Next chart. Thank you. On the innovation front, those of you who had a chance to get up to Boulder yesterday, 1, again, thank you. 2, you got a chance to look and see firsthand and talk to some of our staff about some of the exciting technologies we're working on. Innovation is the key for us and there's no way around that.
We recently won a quite large contract for us with NASA, which will build on our many, many year history of working on their most important missions. The newest of their important astrophysics missions is a program called WFIRST. That is a space based observatory designed to answer essential questions in the area of dark energy, exoplanets and infrared astrophysics. It is the new over the next 5 or 8 years will be the new research areas of the scientific long history of other great astrophysics missions, the last of which was the Hubble Space Telescope, of which continues to fly today and has 6 of the 6 instruments flying today provided by Ball Aerospace. Next chart please.
So John talked a little bit last night and again today about our view of being a mission partner, which is terribly important to us. We don't use the term mission prime. We use mission partner, which represents a mindset that we approach our customers with and that is to be part of their mission, part of their success. And it also broadens our role on these missions. As John said a number of years ago, we were a sleepy little provider of really good little instruments.
We've grown from that to spacecraft, to integration, to testing, to launch. We also do launch and now bringing the data down to the ground to scientists or war fighters, whatever the case. This has come about as we've crawled up this food chain. We've had a couple key customers give us opportunities, starting with studies, as John said, onto small missions or demo missions and now we're into operating or program of record missions. And we're off actually to a very good start on that.
And that opportunity space looking forward is really, really good for us providing we continue to perform. Next slide, please. On the technology side, just to highlight a couple. We have done data analytics for the military and for the Intel community for 35 years. And we do it well.
We have 400 scientists and engineers that do that. Over the last few years, we've taken that group and teamed it up with some interesting commercial opportunities, and it's an area we think we can grow. So that's one area of technology. Another which fits neatly in the sustainability category and that is we've developed for the government methane monitoring instruments that can measure with very, very high accuracy from aircraft or from space, for pipeline operations, for safe community safety and we've more recently teamed with an organization that takes that to market and we're kind of excited about where that might go also. And the 3rd area to touch on just briefly is in the area of LiDAR.
We have worked in the LiDAR world with the Air Force and Navy for years years years, and that technology is really advancing. There's some very clever work that was done by MIT that was transferred and then we recently bought the rights to that technology that help identify objects from very, very far away with just a few protons and something that could really change the game for us. And we've after having just this spring acquired that technology, we've already won our first program that will take advantage of that. Next chart, please. On the people and culture, you've heard that in Boulder yesterday, you heard it last night, you heard it from John and Dan, you'll hear it from me again, and I have no doubt you will hear it in Golden this afternoon.
As we grow and as John mentioned, 40% of the people working at Ball Aerospace today didn't work there just 2 years ago. So maintaining, protecting that culture is terribly important to us. We talk about it all the time in every communication we have. Our customers value it. We value it.
And again, it really embraces integrity, humility, transparency, innovation and collaboration. It's important to us and whatever size we get to be, it will be through that lens. And last chart, I believe, John and Scott will also talk a little bit about we've made some major investments, not only in people, which I've talked about, but we've made major investments. You can see the charts and those that you were on the tour yesterday saw some of that in a new office space, new labs, new test facilities in order to do the work that we've already captured. This isn't a case of if we build it, they will come.
They have come. We need the facilities. And finally, as John said, on the once in a lifetime aspect of our business and the other businesses, Ball Aerospace has been around 62 years, Colorado based. There has never been a moment where the opportunities were as rich as they are today. And my team and myself are very excited about taking on that challenge and seeing where we can take this business over the next 5 years.
So thank you for your attention. And now to
Scott. Good morning. Going with Dan's basketball analogy, I obviously don't possess Dan's height and apparently I didn't possess his offensive skills. And to go with that, I have virtually no vertical leap, but I actually did play college basketball. And the way I got to play college basketball was I played tenacious defense and I had the broken bones and broken teeth to prove it.
And I scored more than half my points off of free throws and layups. Now you laugh, but to me, that was an easy way to add value to my team. And I think about when I think about our free cash flow and returning it to shareholders, I think about it the same way. It seems like an obvious and impactful way to add value to our team. I'm going to talk about that later.
It's great to be here. It's been nearly 2 years since we did our last Investor Day. And the good news is we're on track to achieve many of the near term goals that we laid out for ourselves. And more importantly, the longer term opportunity, I think, is even bigger. I'm going to review some of our original Drive for 10 goals that John talked about last night that we laid out in 2010.
And what we've achieved in terms of our goals of growing EBITDA, EVA dollars, free cash flow generation and returns. And we look at those goals, we really have accomplished a lot. But what's more exciting is that the opportunities are in front of us, I think, are even greater. And we really do have a once in a lifetime to reshape all the businesses that we're in as we go forward. Now operationally things footprint changes like Reidsville and Recklinghausen and Chatsworth and Longview and Birmingham are always difficult.
But the added flexibility that we're building and have built into our system in places like Cabanillas in Spain, Goodyear, Monterey, Belgrade, San Luis Potosi, Pueblo Alegre, Argentina, Chile, Myanmar, India Aerosol, the Aerospace Manufacturing Center and Paraguay add greater opportunity and flexibility for us going forward. We've invested heavily in our future, and we need to ensure that the returns for all this capital show up. And we need to execute on the incredible backlog that we have in Aerospace. So it's been talked about a couple of times, but not less than 3 years ago, that backlog stood at just over $600,000,000 and now is approaching $2,000,000,000 And we need to execute on our commercial strategy of returning or of ensuring we get the proper value for what we bring to our customers and that runs across every business that we operate. And we need to transform the way we do work.
The world, as people have talked about, is more complex. And oftentimes, we make things even more so, and we need to master this complexity and simplify where possible and not just think business as usual. When we acquired Rexam a couple of years ago, we laid out goals that we wanted to accomplish by the end of 2019. And you can see from this slide that we're doing our part in 2018 to essentially achieve these goals. Through tremendous work by all the businesses and support functions, the things we are doing are working.
We're growing the earnings, the free cash flow, reducing our debt as planned. And frankly, I think if we take a look back at, from where we were 2 years ago to where we are today, all the hard work is paying off. And the one area that we're easily exceeding is on the capital spending front. And this isn't all bad because I think the things that we've spent money on, we're going to like a heck of a lot as we go into the future and really create the next leg of growth for our company. Now when we started Drive for 10 back in 2010, we laid out a few financial goals, as John mentioned, like doubling our EBITDA over 10 years.
And we knew if we focused on what was important and gave ourselves flexibility to invest in our businesses or acquire new businesses we could get there. Now early on, you could see we're relatively flat as in the 1st few years we dealt with currency headwinds, a big change in the market environment in China and declines in our recently sold steel food container business. All told, those headwinds were over $300,000,000 But through this period, we focused on improving our businesses that we had and maintained a strong flexible balance sheet to be able to orchestrate the last big consolidation play in the global beverage can business. That platform and what we've been able to do in growing our other businesses has given us a clear path to the goal of doubling our EBITDA and our goal of $2,000,000,000 for 2019 is within sight. Probably more importantly than growing EBITDA was our focus on doubling our EVA dollars.
Our real value creation comes when we grow EVA dollars. It's not about getting bigger, it's about EVA, and I'll show you in a slide in a few minutes how this proves out. If you look at the line in this chart, even when our EBITDA from the previous chart was relatively flat, we were able to grow our EBA dollars by focusing on our balance sheet, receivables, payables, inventory and being prudent with our capital spending. During the period of 2010 to 2015, we grew EBA dollars by 50% without much growth in EBITDA. Now this chart only goes out to 2020, but I can tell you that even more opportunity to grow EBA dollars is in front of us as we execute on the capital and commercial plans that we have that we're executing.
And at times, pruning businesses can also improve your EBA dollars. Recently, we sold into a JV the majority stake of our U. S. Tinplate food and steel aerosol business and that move will result in a $16,000,000 improvement in our EVA dollars as the tinplate business wasn't earning its targeted returns. Not only and not to mention, it also gives us a lot of cash to be able to buy back additional stock and reduce our debt even faster.
The other big financial goal was to double our free cash flow from around $500,000,000 to year per year to more than $1,000,000,000 As important as EVA dollars are, free cash flow is a close second. Cash flow is the life of any lifeblood of any business and it's what allows you to return value to shareholders through share buybacks and dividends as well as continue to invest in your business and pay for acquisitions. Now 2016 was an anomaly on the chart given the timing of the Rexam acquisition and the cash flow effects of that transaction. But you can see our goal of doubling, our free cash flow is within reach and we're laser focused in 2019 to hit that $1,000,000,000 target that we laid out a couple of years ago. And again, this only goes out to 2020, and it's based on last year's strategic plan.
But I believe the opportunity to continue to grow as we grow our earnings and our CapEx modifies somewhat to grow that even further. And so how do we do that? It's really things now that are really right in front of us. It's a lot more in our control today than it was 2, 3, 4 years ago. And it's really about unlocking the potential that we have today.
Now if you've been around us for a while, you've seen this chart a number of times and there's many things that have changed that ball, but this is something that isn't changing. This strategy works. It's the primary for EVA is the primary financial lens that we use and will continue to use. We focus on generating cash in all of our businesses. We then prudently allocate that capital to those investments or acquisitions that will further improve and grow our EBIT and all these things with an EVA lens focus.
And this disciplined approach to running our businesses and investing for the future works. All the projects that I'm going to talk about in the next couple of minutes are not about growth for growth's sake, but about improving our returns even further and growing that cash flow pool and those EBA dollars. John showed us a version of this slide earlier and we know when we do these things right, it translates into higher share price. And here's a few examples of large acquisitions or deployment of capital and the resulting change in EVA dollars and the translation to improved stock price. So the first example was the rental deal way back in 1998 in U.
S. Beverage cans. The EVA generated from this transaction over 4 years was nearly $90,000,000 and our share price increased 2.5 times over that same 4 year period. The second example is from the Schmabach acquisition of European beverage cans back in 2002. Again, over the next 4 years, we nearly doubled EVA dollars and our stock price increased over 80%.
The 2009 ABI plant acquisition is next. Over the next 4 year period, we again nearly doubled EVA dollars. Now the stock price increased only about 30%, but remember this is during the last financial crisis, so valuations were a little distorted to the downside. So now we come to 2016 in Wrexham. So far, we've achieved roughly $150,000,000 improvement in EVA and the stock has moved up only modestly.
A couple of things to point out. First, we're only about 2 years into the post deal period and something as complicated as this will take a bit longer and the previous examples were all after 4 years. We also issued shares to pay for part of the Rexam deal, which dilutes the existing shares. And the next point is we're just at the beginning phases of really the execution of the large capital that we've spent since the acquisition, our footprint changes and our commercial strategy and transformation work. When we do this, I have no doubt that this will translate into share price.
The other interesting thing that we've combined these acquisitions with taking on financial leverage and then quickly paying down the debt and turning that free cash flow to buying back our shares. This tracks the same transactions from the previous slide, plus one additional one. And you can see from the red line, the increase in leverage to finance the deal, then the quick deleveraging afterwards where we're paying down the debt And the blue bar on the bottom is our free cash flow. The lighter blue part of the bar is the amount of free cash flow we use to buy back stock and again the resulting share price in the green boxes at the bottom. There are not a lot of there are a lot of numbers on this chart, but the summary is really threefold: make smart acquisitions, generate the hell out of EBA and cash flow, pay down your debt quickly and then buy back your stock.
This works back in 1998. It's worked in every subsequent transaction and I have no doubt it's going to work again. Now the other point about this chart is that we're not done yet. The value creation opportunity with the latest acquisition is really still in front of us. And you also see that there tends to be a bit of a lag in the stock price reaction to the share buyback activity.
And we're really just at the beginning stages of starting to return the majority of our cash flow back to share buyback. And we really have a lot more to go in the last 4 months of the year. I think through the 3rd end of the third quarter, we'll be roughly we'll repurchase roughly 12,000,000 shares or about $470,000,000 And so we still have a ways to go here in the 4th quarter. Then we see next year with our leverage being where we want it to be, returning essentially all of those free cash flow dollars back to shareholders in the form of dividends and share buyback. The other part of the value creation opportunity is the capital that we're spending to improve and grow our businesses.
And you can see the last couple of years as well as this year, we spent a lot of capital across all the businesses. And much of that capital is really still ramping up and we've yet to achieve the full financial potential of that spend. And we need to make sure that the execution and maturing of this capital shows up to drive the next leg of our growth in earnings. The spending just since we closed Wrexham a couple of years ago will generate will need us to generate an incremental $117,000,000 in net operating profit after tax for all this capital. And all these projects play important roles in what's next for us and the value creation opportunity ahead of us.
And I'm highly confident in all these projects that we're going to like what we've got once these capital plans mature. We talked about the incredible growth in aerospace backlog and that's one of the areas where we're spending a lot of money. Those of you that were on the tour yesterday saw the big D chamber over here in Westminster, we're adding on to that facility for additional production and test facilities. And so as they've won a lot of this new business, we've had the capital in that business seems to come in chunks every 5 to 7 years or so. We've got a big phase this year and next year, and then I see that moderating back to more of a like a $50,000,000 to $75,000,000 range.
But the capital programs are going well, and then it's the execution of the contracts, which I'm highly confident we'll deliver on that as well. So how all this comes together? This is a busy slide, but it's important. When we invest and grow our business through acquisition or capital, we get returns greater than the cost of capital. The way to kind of decipher this chart is the bars across the bottom represent the return on capital, with the gray being up to the cost of capital, now around 6% and the white being the amount of returns in excess of that cost of capital.
The numbers at the top are the total returns for each year. And also very important from an EVA perspective is the size of the capital base that we're using. So that's the blue bar across the bottom. As an example, in 2004, we had roughly $2,300,000,000 of capital deployed, earning just over 16% or roughly $370,000,000 of total return dollars. Go forward a couple of years, in 2,006, we had $3,100,000,000 of capital deployed, so a bit more capital, but earning only 11.7% or $362,000,000 of total return dollars.
Again, not much change in the returns or in the EVA dollar returns that are generated and so not much movement in our stock price over that period of time. Roll forward to 2014, when we had $5,000,000,000 of capital deployed, earning 13.7% or nearly $700,000,000 of total return dollars and the corresponding stock price movement you can see in the green bar. Today, we have over $10,000,000,000 of capital at work earning 11.4 percent or $1,140,000,000 of total return dollars. That's a 63% improvement in total returns, but again, you have to account for the dilution of the shares that we issued for the transaction. And as those shares get taken off the market, we're going to see the resulting change in our share price.
So what do we need to do? We can control what we control. That's getting the returns, on all that capital that we spent over the last couple of years and making sure that the growth in earnings shows up. And then with our leverage kind of where we want it, for a run rate, it's really turning all that cash machine over the next couple of years back to the shareholders in terms of buybacks and dividends. And you can see by the end of 2020, essentially we'll have retired all the shares that we issued for the transaction.
And I think we'll like the end result of that. So what we need to focus on in the near term, we need to continue to aggressively manage our balance sheet. That's everything from receivables to payables to inventory, whether it's sitting on our floor or in warehouses. It's finance transformation, HR transformation, IT. This really touches every part of our back office operations.
If you use data anywhere in our business, it's going to affect you. Really everything we do translates into some kind of financial figure, whether it's spoilage or efficiency or indirect cost. And we need to get much better and much more efficient as to how things are done and how we support the business. And so this can mean changing things from what we've done in the past but with a clear line of sight to making us better. Cost savings and capturing further synergy opportunities is something we focus on every day.
We're in a penny business and we don't forget that ever. And then the commercial strategy, this is about making sure we're getting the right and fair value for what we deliver. And again, this goes across every business that we're in. And we're really just at the beginning of capturing those that value. So all this translates into a lot of cash flow generation.
We think over the past decade, we'll have been able to triple our free cash flow. So we used to just show just one stack of cash, but since we tripled and I like to look at cash, we added a couple more stacks of cash. So the equation, John touched upon this last night. I think what's important as we look forward, everybody's been so focused from when we did the Wrexham deal to the end of 2019. And we did we had a 3.5 year game plan of a lot of things that had to occur during that time period.
But frankly, all of the things we've been doing in that time period, the real value creation opportunity from a lot of that work will come in 2019 beyond 2020 beyond. And that's what I think people really haven't recognized yet. Some people have, but not everybody. And so how do we get to that 10% to 15% over the longer term? It's really the return of that the stock to returning that value to shareholders.
We're going to buy back 5% to 7% of the company every year with our free cash flow. It's maximizing existing operations. It's the footprint things we're doing, the commercial strategy that we're employing. The beverage can is winning around the world, so it's further growth CapEx. The aerosol is winning around the world.
So it's growth CapEx to keep up with that growth around the world to again add kind of that 3% to 5%. So we think we have again kind of back to when we've done different acquisitions over the years, we've delevered. We're in a great place to be able to invest in our business and return a heck of a lot of value to shareholders. And we know that when we do this well with an EBA mindset, we talked about ownership and culture with people thinking this is their own money because it is. We're highly confident that we will continue to have opportunities to exploit and to take advantage and that the best times aren't behind us, the best times are ahead of us.
So to look forward, what we do 2019 and beyond, it's really reaping the benefits of all that CapEx. It's executing on those commercial strategies that Dan talked about earlier. It's investing with an EVA mindset and could be bolt on acquisitions. Grow our diluted earnings per share over time 10% to 15%, generate significant free cash flow and return that cash flow to shareholders. It may not be the most exciting thing, but for me it is incredibly exciting because I think where we're sitting here today, we have more opportunities in front of us that we can control and direct than really we've ever had.
And so to me, it's a really exciting time and I think the future is even more exciting. So with that, I think we're going to take a break and we'll take a 15 minute break and then come back and we'll do Q and A. So thank you very much.
Hello. If everyone could please find their seats, we're going to start our Q and A panel. Thank
you. Okay.
Hi, everyone. Ghansham Panjabi at Baird. Thanks again for hosting this. First off, I guess, John, going back to your comments on customers changing complexity, ordering last minute and you're having to be paid accordingly. Can you dig into that trend a little bit?
How long has that been occurring? Has it changed as you mix this change towards specialty versus conventional? Is it more specific to a geography? And is that shift going to continue given as grocery, for example, penetrates into e commerce? Thank you.
Good question.
Does this work?
Yes. Thank you. Good question. It's a little bit of everything you just described. I mean, when you think about the think about the first the retailing side and the movement here in America but even elsewhere.
And I'll turn some of those questions so if you guys can think about how it affects your region. But you think about the Walmart effect and literally some of these big box stores are calling up our customers Thursday night saying we want to run end of aisle display in Boulder, Colorado starting Friday night. So they have to jump through hoops and we recognize that. It's also the specialty. I mean, you close your eyes and go back and think about how 1980 was and the whole supply chain itself, it was much more simplistic.
There wasn't nearly as much just in time. And so you have this just in time movement combined
with this added complexity that Dan very
eloquently talked about with 90,000 Is it going away? No, it's not going away. And maybe I'll turn it over because it varies much by region, but I would say we're dealing with this situation in every region in which we operate. So maybe I'll just start with Gi hun and quickly go down the road.
Yes. Example, China, I think the largest e commerce market now in the world. Some of our customers are trying to figure out what's the package because in China when they buy on e commerce, the expectation it's going to be cheaper. So how do you ensure that you can keep your premiumization and then have a package for e commerce that's a little bit different to give a price point, but also keep the premiumization that's forcing us into some different packaging, working with the brands, understanding the profit pools, but that's opportunity and that's what we're doing with innovation.
Well, much like John explained, in our business, it is in the moment. And our retail level. And in order to keep up with changing consumer demand, they place orders very last minute and expect us to deliver so that they can deliver as well. I think specifically in the UK, because of the sugar tax, a lot of our customers had to figure out a new way to avoid paying the tax. And in some instances, it was reformulation, which added to a fair amount of complexity and others to ensure that sugar remained on the shelf for those who wish to buy it, there was a size change.
So again, we're paid for complexity. And I think if we embrace complexity as opposed to abort, we win.
Yes. Just add to that. So given all the volatility that's in the EMEA region, the market and the way that the customers were traditionally generating their value is turned upside down. And basically they're looking at, let's just call them saying, they're looking at new ways or how to adapt to that to drive the value. And the heavy complexity that we get in the EMEA region is some of our supply chains on raw materials are very complicated, while we're bringing metal into these countries and coatings.
And they're looking for those profit pools. So the complexity is what's going to really help us as we go forward to look at driving those that value and then we get a share in that
value. It's
very similar in South America. The one thing that think I can add is we try to use more technology to enhance our productivity at the same time that we are increasing our complexity.
We note here in North America that our customers, they tend to through the revenue management, they tend to maximize their profits. So they have clearly realized that there is an appropriate packaging for every drinking occasion. So you saw earlier the chart showing the different price per ounce for different packaging. And this is the driving of the for the growing SKUs. We noted that there is a double digit growth in numbers of SKUs here in North America.
And this is the answer that we help our customers for them to grow and also that helps us growing our business as well and creating value.
Hi, I'm Stan. I'm the aerosol and slug guy with my beverage brethren here at the table. So our market is beauty and personal care. So you can imagine by looking at the table in the back, I mean, we have a very complex range of products. At the same time, we're lightweighting and offering a sustainable solution for our customers.
It's really about being a strategic partner instead of a transactional supplier. And in order to do that, you have to be able to help sell their products. So that means innovative products that pop on the shelf. You have to be able to check their sustainability block. And then you need to be in the regions of the world where they need you to be.
They really only want solutions in the end of the day. So customers are a little bit like electricity. They find the path of least resistance in a good way. So if you can offer solutions for them, I think they naturally want to come to you.
Thanks. Scott Gaffner from Barclays. When you look at the shift around sustainability and what obviously consumers and brand owners are talking about. I mean that could potentially be a long term tailwind, but can you talk about it by region? Because I think if kind of look at the U.
S, it doesn't seem to me at least that there's really an environment for increased regulation under the current administration. And that plastics actually perform relatively well under the current standards based on the by the EPA. So can you talk about sort of how you see this evolving over time through government regulations because that can really shift the tide on this movement pretty quickly? Thanks.
So as you said, it is very difficult to associate a timeline for these events. But what we know is that as we move along with all these initiatives with several NGOs, all these activists, these will eventually change help changing public opinion and these will drive law changes. That's the normal flow. Now, on the other hand, as shown also earlier today on the new launches, the IRI is showing that 6% of the new launches are already taking place into cans. So question becomes, why is this happening?
Is it already public opinion influenced to that? It's very difficult to dissociate, but it's clear it's very clear to us that all the most of the new launches are using cans and that's positive. And not also, it's important to mention that all of our main customers, they're talking about sustainability. So they are also they will also be driving changes. So when we are going to see the tipping point, it's not clear.
For us, we don't know, but we believe that there is huge potential ahead of us and we are working with all of customers to reach this point sooner than later.
Thank you. Anthony Pettinari from Citi. John or Dan, I think we've seen packaging markets where as margins and returns improve, you see new market entrants or maybe some customers trying to do it for themselves. Just wondering as you talk about being a market leader, how you balance between obviously maximizing your profitability near term, but also kind of partnering with your customers so they don't go in a direction you don't want them to go to?
This really gets to the whole network and complexity is our friend. And as I mentioned, the example I gave in the U. S. Where we can make all sorts of different specialty sizes from California to New York and everything in between. I could go through we could go through Europe and do the exact same thing.
We could go through South America and do that, the exact same thing. We live in a competitive world. And we're not going to either shy away from that or have our head in the sand that says that those types of things won't happen. But if we're able to supply our customers, I think as Stan was just saying, what they need when they need it, and you can do it in a way that we're actually helping them create these profit pools and helping them create value. You're always going to run you're going to have a one plant operation that pops up somewhere.
It just happens. You've got to deal with it. But if we have a whole network approach that we can service our customers better than any individual plant, that's one of the ways. Will we win 100% of the opportunities we're talking about? No, we're not going to win that.
And we're conscious of that, but we also have this mindset a little bit like we were talking last night about this close to the customer thing. It's we need our dreams are fueled by the revenues that our customers pay us and that's not lost on us. And so we just have to be humble and hungry and go a little bit after a little harder and leverage the network that we have and embracing the technology or embracing the complexity that they were just talking about, that's what's going to win in the marketplace.
Steve Wilson, Lupitas Asset Management. I'm curious on a couple of fronts. We've built this mega plant in Arizona, and we've closed a bunch of smaller older facilities scattered around the country. We're doing this at the very time that freight rates are skyrocketing and availability of trucking is becoming more and more challenging. Are we now sort of moving away from or being caught more exposed to that phenomenon as we look for longer travel from these larger plants that obviously at a plant level are more efficient, but now it's going to be that much more expensive to get the cans to the customer.
Well, first, the concept of building these mega plants is fundamentally they replace less efficient plants. And not only that, but also this new plant is capable of producing a lot more specialty cans than the other plants, the plants that were closed. Now on the freight side, the then the situation is that some of this freight is passed through our customers, some are not. So the answer to that is we have a much more sophisticated way to manage our logistic operation than we had years ago. So that follows the complexity that has grown our business.
We also have adjust our capabilities across our system. So it's not only what that we built a mega plant, but also when you look at the whole system, our capability of producing specialties in several other lines are very different to what they were years ago. And the intent is to have the right can closer to the customer. And lastly, we also, as Dan mentioned, we have a productivity challenge where as we produce more cans in the right spot, we tend to at least offset some of these logistic costs that it's well known, it's growing the U. S.
So these are the main roads or the work streams that we are using to face or to fight against this growing cost.
Steve, I might add though, it's to answer your question directly, no, the fundamentals of freight is important in our business and will always remain important. But in Goodyear, Arizona, in particular, it's a great example. Carlos just talked about in Southern California and actually all of California, we were kind of short certain sizes. We're actually shipping them even further from Arizona. It should be not lost on anyone that our Goodyear Arizona plant is about a quarter of a mile off of Route 10 right to LA Basin, and it also can touch Texas.
So we look at this as a system approach. So when you look at where that is relative to Longview, Texas as well as Chatsworth, California and what we can do in let's not forget we added capacity in Conroe, Texas as well. And so you look at it as almost a spoken hub concept. And you're trying to optimize freight while at the same time recognizing that different cans are going different places. And so you should not expect that we're close your eyes and we're always going to build 4 line plants because that doesn't make sense.
In Goodyear, Arizona, it certainly did given where the population is, given where our service points are and given where we took out those two plants.
Yes. My concern was more that you've mapped this all out prior to seeing this huge spike that most people say is not going to just fade away. So the ROI that you expected on all this gets altered.
No, not meaningful. So the other thing people don't talk about, there's really two aspects of freight and logistics. There's first the distance, which you're getting to fuel really and the trucker availability. But then the whole other thing is how many touches you have. I can't tell you how many times because of this complexity you've created, we will make a pallet in a plant.
We'll have to go to a third party warehouse and put them closer to the customer. Then they get drawn twice and you're touching it 4 times. And when you have wage rates in California where they are, that adds up meaningfully. And so what we're trying to do is as much direct to the customer as possible, and that's what some of these plants like Goodyear actually help cure.
George Staphos, Bank of America Merrill Lynch. Thanks for the details and the presentation today. John, I had a question for you piggybacking off of Slide 5455 where you're talking about the new opportunities. The first question is, and you've mentioned it, in years past, not everything goes right. And when you used to have a business mix that was so concentrated in a few SKUs, there was greater risk in any year that something wouldn't go right.
And you diversified the portfolio rightly. If we think about your business for next year and everything is more or less as you expect, how much of your revenue or EBITDA either in North America or globally, however you want to answer, would be driven by craft and non traditional cans? Would it be 5%, 10%, 20%? And then I had a follow on question.
It's hard to answer that only because we're not done with the integration of Rexhawn. So we still have all these cost savings from the footprint we just talked about. Those are going to be flowing through and that's separate and apart. But here's what I'd tell you and Dan's Dan had that slide about all the category growth, and that was in North America. We look at it in virtually every facility.
I'd go back to there and look. And what you see is what I would describe is traditional the way people think of traditional 12 ounce packages, which is domestic beer and just 12 packs of soda, those are declining. They are. But we're seeing a lot of good growth in all those other categories. And we've had it's a hunter versus gatherer mindset, and we have a hunter's mindset.
And that's why sparkling water, the hard seltzer Stan mentioned, the wine, the coffee that you see here and certain customers announcing they're going big into that in a packaging format. So there's not just one stock answer to it, but I would say the preponderance of growth is coming from things like that. Okay.
I appreciate that. The other question related to it is we look at again specifically Slide 55 and you have the $120,000,000 to $240,000,000 of I think contribution margin was what you were referencing there. Is there a way to quantify how much your capital intensity increases by offering more of these custom size and seeing a proliferation of your business mix. Presumably, EVA is going up, so the capital intensity is going down. But is there a way that you can quantify that for us so that we can come up with our own EVA calculations?
Thanks.
Well, again, it varies by region. But let's start here in North America and we can go into Europe and then South America. But our big capital throws with this Longview, Texas or excuse me, the Goodyear, Arizona as well as what we've done in Conroe, Texas, that largely builds out that flexibility. So the capital intensity now we get to leverage it to Scott's point wherever he is. Now we've invested this.
Now we get to leverage that. And in Europe, we're still we just have this new Spain plant coming on. We've been adding some in a very small way some capability here and there. There could be some more down the road that we're looking at doing. And then in South America, we've been doing the same thing.
And in fact, even with Paraguay, that creates a right now what's happening is Argentina and Chile have been growing so strong. We've been shipping cans from Brazil down there. The Paraguay frees up and we can create a southern cone system effect around that. And so the capital intensity for all that ought to be getting better. The other thing is that we talk a lot about internally, it's we're talking all about the commercial growth and how we're going to make this stuff.
Well, our operations around the world, they've been doing a tremendous job and we have still so much opportunity, and Dan referenced this, so much opportunity that if we could be best in class in every one of our facilities, the free cans coming out of that just through the efficiency gains and the spoilage gains is huge. Now do we have natural impediments that won't allow us to do that? Absolutely, we do. But you close your eyes and dream and say, how high despite the number of labels going up 40% over the last few years, we our efficiency has been able to go up and how much more can we get out of it because when you have a system that makes over 100,000,000,000 cans and you can get 1% efficiency more out of it, that's 1,000,000,000 more cans. Now they may not all be in the right spot, but that's across the it's a
lot of fun to go
into our manufacturing plants and you see the folks wearing T shirts that say 85 and 2, which is 85 efficiency, 2 percent spoilage. They know what their goal is and they know how it affects EBA also.
Maybe I think the other thing, George, is we're using integrated business planning in our business to be a lot more efficient as to how we look at where line loads are and how we maximize the network. And that just rolls opportunity to the bottom line to increase our capacity.
I think you know this, but just to reinforce this point on the capital investment going forward in order to attack this growth opportunity, especially in all of our regions, but most appreciably in North America over the last 6 to 7 years. When we go in and convert a line, we've got multiple can sizes on that. And so there's upside. We are basically forward investing like in Goodyear and 12 sleek and 16 ounce and 24 ounce. And so 12 ounce still plays a role, but we are anticipating that that will be less because of the major categories.
But then we've also built in another can size that we believe and we're making bets on that based on our very good market due diligence that we'd be able to step into some of that. So a lot of the investment is actually just leveraging previous investment. Thanks.
Yes, thanks. Tyler Langton from JPMorgan. I think John, you mentioned it's much improved, but can still make a little less profit for your customers than PET and there's a scenario you want to address and improve mix. Could you just talk a little bit about the initiatives that you want to take there to help them with that? Well, yes,
I could spend hours talking about this, but I think at its highest level what we're really focusing on and it's different than we've done in the past is whether it's existing categories or new categories, focusing on the channel that it's going into and focusing on the price point. So for example, 5 years ago, you didn't see and I know we're spending most of this about North America, so I'll turn it over to South America because people have realized more than 50% of all cans in South America specialty. And actually, on the European side, it's as well. But 5 years ago in North America, you didn't see a 16 ounce can in the single serve cold bowl. We're selling 500,000,000 cans I think these days doing that.
And that's they're selling them at $0.99 as I showed you up there. That didn't exist before. And so those are the types of things that in the past we would say, well, our customers know a heck of a lot more about marketing than we do, and that's right. But we because we get to see across categories, we get to see what's working where and when and how. And so we can actually now accumulate that and actually go to our customers and say, Dear beer customer, this may not be relevant to you, but what we've been seeing in the energy space is X, Y and Z.
And hopefully, you're getting these light bulbs turned on in people's minds and then they start trialing and doing some things and not all of them are successful. We know that. But the more you can bring ideas to it, the more it actually helps our business and actually helps the stickiness with our customers. I don't know, peers or Colin, do you want to say anything else about Europe or South America?
Well, I was referencing sugar taxes in the UK. So one of our customers who have a sugar product downsized the package, same price. So you can get 250 milliliters of a full sugar product versus 330 mill of a no sugar product, same price. So guess what, they just margined up. Yes, there's probably a little bit of tax to pay, but overall, selling their same product in a smaller package allowed them to margin up.
And it's an example of how we can use that to leverage other opportunities. Water is such a it's a commodities commodity. How can you leverage up by creating new space for water in premium packages such as cans and allow our customers we have to make it about our customers. Can we help them create value through the products we sell them.
In South America, we also can see different things like there is a new market growing a lot, it's quality beer, it's pure malt beer. And also when we have different shapes and covering the cans, it helps a lot the product to be completely differentiated in the supermarket shelves and help the customers to grow their margin. And this thing is also related to occasions. Can we imagine to drink a beer in a beach in Rio de Janeiro when the temperature outside is close to 100 and it's big size or not enough in terms of or too much in terms of volume that the temperature goes so high in the liquid that doesn't allow you to have the flavor of the nice beer. So those occasions help us in the same way that there is this perception from the customers that they need to have a premium product.
It could be in the soft drink side or in the beer side.
Edlain Rodriguez, UBS. This is a question for John. In one of Scott's slides, he talks about bolt on M and As. Can you talk about that where those opportunities would be? Like is it outside of the mix
of business? Or is it
in aerosol? Like where would you see bolt on opportunities?
Yes. Well, let me start by saying, hopefully, you've got an appreciation that we have more opportunities in the businesses we're On the beverage can side, it's the fact that we had to divest assets in United States, in Europe and in Brazil in particular, probably say it's a difficult putt unless other things break to do something in there. But you look everywhere else, we could do something in China. I wouldn't expect us to. But there's 17 other competitors that aren't publicly traded companies there that there's probably consolidation opportunity there.
You go into Africa, we're really nowhere there. There's a handful of small operators there. Some have one plant, some have multiple plants throughout, whether it's all the way from South Africa, all the way up the Western Coast there and as well as into Kenya and other flavor of the size and the opportunity on the beverage side. On the aerosol side, we're the largest in Europe, but still it's a very fragmented industry. And I think most of them are family owned and operated.
And so there's going to be generation change. And so I think there's consolidation opportunity there. I think down in South America and Asia, as in 2 other places where there's probably opportunity, it gets to a risk adjusted return and you think you can make money doing that. Argentina, for example, is a very difficult place to be doing business right now. I don't know how much you follow, but the finance minister resigned a week and a half ago and IMF is bailing him out.
So it's tough to do there. Brazil has had a very difficult environment, but we've been doing quite successfully there. And so there could be opportunities there. There could also be greenfield opportunities there. All throughout Southeast Asia as well as other places, there's people and so we kind of hang around the hoop, but they're not this is why we call them bolt on because they're not big bet the ranch type of things.
And even in the aerosol or excuse me, the aerospace business, Rob Strain talked about actually you don't have to have pure M and A. We actually acquired perpetual license for the LiDAR side. Those are technologies that we saw an opportunity for that we thought we could leverage in a certain end market that they the people who own the technology didn't have an interest in. So those are the types of things when we talk about bolt on acquisition.
John, I wonder if it's possible for you
to give us some sense
of sort of timing and cadence on a couple of things. One is the kind of commercial opportunity that you've talked about to kind of restructure how contracts are written. And the other thing is this movement to shared services where it sounds like you actually increased your costs last year because you were building out some of these regional shared services operations and some of that ought to fall off next year as you pull the services out of the plants and put them in those locations. So maybe you could just help us with both of those.
Let me start with the second question first, which is about shared services. So when Ball had embarked upon a journey to move to the shared service concept back in 20 14, 2013. And we had to put it on hold because of the Rexam acquisition at the beginning of 2015. And so when we restarted it, it was kind of late 2016 going into 2017. And what we did is we actually staffed up.
So we really haven't gotten as much of the G and A savings as we could have because we built a new shared service facility and facility office in Belgrade, Serbia as well as Queretaro, Mexico. And we're actually doing the same thing outside of Sao Paulo in Brazil. And so we've what you have to do when you're doing these types of things is you got to staff up there, you got to fix your processes and harmonize and standardize your processes and then move them there. We're right in the middle of that game plan. And so as we go forward, where a lot of the activities that we're doing at the plant level, whether it's paying invoices or payroll and other things like that, even accounting, that will diminish over time because now we have these shared services centers stood up.
But it really wasn't until, keep me honest here guys, really the end of last year is when we didn't get them staffed up. And even now we're going through in the process of migrating of these things. So there is opportunity going forward there. On the commercial side, as we have said, this is a long term game. And what I mean by that is we have since the close of the acquisition has spent the last couple of years retraining muscles is the best way to describe it.
From our commercial folks to our even our operations folks, we've taken a look. We haven't had any major contracts up for renewal in any major extent. And over the next couple of years, some of our contracts will start rolling off. And so we spent the last couple of years getting ready, whiteboarding different what does the perfect contract getting to the question earlier, given that many of these contracts were designed in the 1980s, what's different today? And how does flexibility build on that?
We don't want to say no to our customer. What we want to say, we're delighted to deliver you cans in 12 hours and there's a cost to that. Our current contracts don't allow for that. So as these contracts come off, we're going to be looking at those things and they vary by region and geography. But Dan said it, 10% to 15% as we go forward of our contracts are going to be rolling over on an annual basis, but we really haven't had much over the past couple of years.
Yes, John. I just had a little bit of a smaller issue, but it could be significant. On Slide 52, you talked about how wine in cans is taking off. And I just want to clarify, it's at a 3 19% growth and I assume 14,000,000 cans in North America, if I'm reading that right annualized, that's big. I mean, that's like double digit share of the market.
Maybe I'm misreading that. But even going so if you could clarify that. And then maybe secondly, if you could talk a little bit about how this opportunity could unfold. I noticed last night we had red wine in cans, but it would seem like white where you drink it cold or cool at least might even be a bigger opportunity especially in the smaller sizes. So any developments on those fronts?
I'm going to turn it over to our sommelier.
Yes, those numbers are real. It's been exponential the last 12 months, the number of customers. And you've seen product launches for the wine like products. For instance, a product launch for I think one of the Barefoot brand, it's 20,000,000 cans as a product launch, a test market. So that's the size and scale of those things when you see it show up in a 711, for instance, which I think that was the SilverServe outlet for that.
So what the wine industry is doing is there are the wine that you're talking about, red wine in particular, So there's wine like that's not even wine. This is and you can see it in all of you can see it in all the other substrates from a retail price point etcetera. They're driving trial and the wine like and they started there in cans so they could get a comfort level relative to the product. It's great at picnics, travels well, ready to drink, it's appropriate single serve size, all of those things. And what will eventually happen is you'll see them move into higher price point wine, higher price point bottled wine and the can is going to play a certain role.
Now we've made investments in, as I said, in Sonoma in particular to fill those higher price point bottle wines that will move into cans. And you'll see those in probably in can shapes that look a lot more like a craft beer offering. And the thought process is simply people are willing to pay $2 to $3 a can for that. They can step into this. That gets you to a $13 to $17 per bottle retail price point.
So those brands are going to be it's the domestication of wine. It's the fact that we didn't talk about this, but there's a huge one of the biggest wine consortiums. They were facing a choice to build a they're vertically integrated to build another wine bottle manufacturing facility. California is probably not going to let them do that. There isn't a place to find collet for the recycled content going into the bottle.
So all of these wine construct, they're all looking at this and they've been looking at it for the last several years. And at the lower price points, they're in Tetra. There's a market obviously for the boxed wine. You'll see most of that in restaurants. And as you move up the value chain on the price point then you start stepping into cans.
At some point we hope that bottle aluminum bottles play a role at higher elevated price points. But right now, it is a big opportunity. It is a big opportunity not only for sustainability purpose, but as John indicated the Red Bull and the energy drink craft beer folks are familiar with this and they want to get out of their houses and they want to go experience life and they want to have a ready to drink beverage with them. So all of those things are playing really well into this space. The competitive advantage I've had and I've had a number of conversations here is, every single one of these wines is different.
It's a living, breathing organism and you have to have made investments in and around innovation. We have food scientists on board down in our technology center that a lot of you have toured before. We have made investments because we stubbed our toe. It was not a small thing for the wine industry to go from cork to synthetic cork. So it's a similar transition into this package in terms of the amount of oxygen, light, all of those things play a role in the formulation.
So we're working with all these wineries on our internal coat that partners and pairs best. We're working with formulations of these wines. For those of you who met Melanie Viera, I'm completely passionate about this, so I'll shut up in just a second. But Melanie Viera, who was talking to a lot of you, she's Head of Business Development and Marketing for Ball, she spent 2 years in San Francisco living there developing this relationship. I mean this is not an insignificant investment that Ball has made and it's not an insignificant head start that we have in this area.
And so we will much like the craft beer space, it's a ton of complexity, a lot of customers, a lot of small volumes, but it adds up and it's great margin. And we are going to continue to put our shoulder into this because it's a hell of a great opportunity. Thanks. And just to add on this, it's this and we haven't talked about this, but when we formulated post rexim kind of the global structure, we have consolidated engineering and we've consolidated innovation. And so just last week when we were in Cabanillas, Colin introduced me to the largest wine consortium in Europe.
And immediately the conversation was I need to come over and learn about cans. I know they're a big deal in that, but we need to look into it. We're having problems with the formulation and the off notes. It's like we have done all those learnings. Come over.
We can't we painfully we have learned on this. So that gentleman is going to be coming over the next couple of weeks. And all of Chile, Chile is very interested and I know a lot of this. We have big customers there that own big, big vineyards. So it's probably not going to be the size and scale as what's going to happen in California here in the short term, but this is a great building block for us in that particular segment.
Thanks.
Gabe Hajde, Wells Fargo. Thanks for all the transparency, guys. Maybe just a question around thinking about your business differently and you talked about revisiting kind of just the approach. Is there a Cogent sort of investment case around co locating facilities? I mean, I talked to Collin last night about a couple of customers that you guys are collocated with and sort of just as they rethink efficiencies and their go to market strategy and the like?
Well, yes, I think as we discussed last night, so we have several opportunities. I think co location depends well, there's a relationship, a very long term relationship and size. Clearly, you can be our Red Bull operations, for example, are through the wall, seamlessly integrated through the filling location. We have some other customers where we have either across the parking lot or through the wall opportunities. It's a relationship thing.
We tend to do long term relationships with those customers. We're well integrated with each other. We understand the needs of each other. A lot of communications, comparing maintenance schedules. So when they would take maintenance, we do it with them.
So it is partnership sort of a tired word, but you really need a depth of integration to make stuff like that successful. Where you do have it though, it's good stuff because it takes an awful lot of supply chain cost out and definitely adds to both our sustainability credentials as you're not chewing up miles on
the road. Yes. I'd just add that that's something that we look at all the time, but it's not the only piece of the playbook. And as Colin's point, it very much is not only customer by customer, but location by location specific. In our business to be economic, you have to have scale within a plant.
There's a lot of one line plants out there that are either going to be coming 2 line plants or they're probably going to be going away as various regions improve. And so if you can't see a line of sight of getting scale within a plant, you're not doing your customer any good or you're not doing yourself any good. So the examples Colin just gave, there are multiple lines, and it makes a lot of sense. But there's not a lot of filling, our customers filling locations that have that capability on a global basis. But we look at it all the time.
Hi, Brian Maguire from Goldman Sachs over here. Just a question on aerospace actually. It seems like the business is in a great spot these days and tour yesterday was really helpful in helping understand the transformation it's had over the last 10, even 5 years to how it's performing now and the outlook going forward. Just my question is really kind of around, do you think that you get enough credit for it from the investment community as part of a packaging company? And given the growth algorithm and outlook for that business, do you think I think in the past you talked about it maybe doesn't have enough scale and size today to be its own entity spun out.
But if it continues to grow, is that something that 5 or 10 years down the road do you think could be a possibility to
unlock some value, assuming you don't think that investors recognize the value today? Yes.
Well, 1st and
effectively, how are we making money? It's effectively how we're making money. They don't care if we make cans. They don't care if we make satellites. They care if we make money, 1st and foremost.
And it's a moneymaker. And so does it get recognized? I think it does, but I turn to you in the audience to suggest that. I do know this, the single greatest opportunity Ball Corporation has is continue to do the things we're doing with aerospace right now. There could be a point in time where it gets the size and scale that is big enough to spin off.
It is very low tax basis. And so people always ask, well, what's a metal packaging business doing within aerospace business? It's a fair question. Don't get me wrong. And it has a lot to do with we homegrown that 62 years ago.
But it's a terrific business and it probably doesn't make sense just to go and pay a bunch of dollars to U. S. Government. At some point in time, could it be big enough that it could stand on thrive on its own, not just stand on its own, but thrive? Yes, it could.
But one of the things that a little hidden synergy, if you want to, Rob and team are bidding on $1,000,000,000 contracts right now. And if they were standalone, it would probably limit the opportunity set because the creditworthiness of parent actually helps out in those situations. And there's once in a blue moon, Rob says, hey, you got to come and see these customers just to show that we're all in it together. And we're delighted to do that because that's what we can do to help. But at some point in time, it could be big enough.
But I put it this way, we got to execute over the next 3, 4, 5 years on this growth that we see. And then if that happens, then it's just option value to us.
Maybe a question for Scott or John. Looking at your 2019 goals, so I see your EBITDA is going up by $125,000,000 Your CapEx is coming down by $200,000,000 plus and your free cash flow though is only going up by 200,000,000. I recognize that there is a plus sign to the $1,000,000,000 number. But can you help us kind of bridge the EBITDA to free cash flow? Are there like other moving parts like working capital or
Yes.
And I think it's largely working capital. Yes. And at some point in time, we've done a very good job effectively managing our working capital. At some point in time, we don't think it's going to be going to a use, but it's probably not going to continue to be sourced in the way been before. So that's far and away the biggest bridge.
Arun Viswanathan, RBC. Just want to ask the big question in the room, I guess, more head on. So on pricing, we cover a lot of industries in this room. Why isn't the beverage can more upfront about pricing industry, but more upfront about pricing? I mean, is there an opportunity that you can go out and say raise 5% on price for next year in North America, given that you are consolidated, you've seen freight increases?
And what's the opportunity in Europe as well? Thank you.
We've spent the last 24 hours talking a lot about how our customers are our partners. There's always opportunity to recover our costs and other things. We are going to negotiate with our customers in private, not public.
Thanks. Just a couple of quick follow ups. First one is just, I guess you're going to answer John or Scott. Just on the $500,000,000 of CapEx that Satish mentioned for 2019, that number is absent growth CapEx. What's a more normalized CapEx number after 2019?
Is that because if you're growing at 2% to 3% a year, I would assume you'd actually have some growth CapEx built into the model on a go forward basis?
Well, it actually does include a level of growth CapEx. Our D and A is about $540,000,000 And we think on a current run rate basis, our true maintenance that if we just pulled this spigot in, but wanted to maintain state of the art status quo as we like to talk about, it's probably in the range of $275 ish million. So we're spending embedded in that is approximately $200,000,000 of growth CapEx. The biggest single biggest one is probably Paraguay. We have aerospace.
Some of the things that's all embedded in that $500,000,000 So, as we go forward, folks, I'd love to give you a better answer, but this is the truth. We're an EVA company. We start with 0 each year and say what is the opportunity scent present itself. We know we have to we are going to maintain our facility state of the art status quo. So we know we have to spend something.
But I'd go back to 2,008. Again, we're a different company, but the concept is still the same. Our maintenance CapEx was about we always saw between $175,000,000 $200,000,000 there. And if I remember in 'eight, we spent $188,000,000 of CapEx because we said, you know what, we have no idea what this means to us and to the rest of the world. Let's pull it back.
And so we have that opportunity. So there's always a level of some level of growth opportunities that are embedded. And so as we sit here right now, $500,000,000 is a little bit below D and A. Does that kind of feel right? Yes.
But the truth be told is if we see an opportunity, we're going to jump at it. And if we see no opportunity, we'll scale it back.
Great. And then just lastly, for the panel, when you look at the one of the big opportunities that John mentioned upfront, it was moving water out of PET into cans. And just sort of thinking about that a little bit, we've got the Olumetec bottles here on the tables and it's probably not the right venue for moving a lot of water into cans. But can you talk about some of the innovation in the emerging markets where you've maybe had better gains on re closability in other products where maybe you can bring that innovation to the U. S.
Market and have re closability on cans for water in the U. S?
Okay. The market for water in Brazil is very small. And in the reality, what we are trying to achieve is to find the right customer to launch this product in the right channel through the right way. Very recently, we have some measures going to the legal side. In Rio, about 1 month ago, is forbidden to sell things using plastic straws.
It's not only in the beaches, but it's in the entire seat. So McDonald's cannot sell anything using straws in plastics anymore. And it's very it's a little bit of a result from the job we are doing together with the NGOs. Some of those NGOs think plastic is not the right thing to be used in some of those places. So they're not really looking for the reclosable products right now, but the right moment to be the launch for the water.
And I think the key products will be launched in the standard can just with different shape and size because it's they are not looking for their profitability right now. They are looking much more for the occasion of this consumption. And it's not so far from the day that plastic is not allowed to be sold in the beaches. And in Brazil, there is the habit to have water bottles in the beaches and also the tea. There is lots of standard tea being sold in the beaches in the plastic cups.
And those are the products that will be probably replaced by water cans. And we're not people are not really thinking about reclusability at this moment.
Well, I think maybe to your point, if we recreate the category and size it right, is reclusability important? If you think for a lot of other beverages, Scott, the whole thing is drink it and go to the next one.
Why can't we do that with water?
I know the paradigm is it's a big bottle and you have a screw cap. Does it have to
be that way? So that would be
the first question. I think there was a graph showing in the UK the growth of water. We have our first water customer in Russia, Hard Got. This is years of work and now we finally have somebody putting canned water out in the market in Russia. So the opportunity set is there.
I think it's there's a lot of patience, a lot of perseverance and trying to help our customers understand the value proposition to get away from the commodity side of water into the value added side.
We're just starting in China in the qualification process, private label with re closability. Small, it will start with $40,000,000 next year, but it will grow. It will be the first one. The re closability feature in China is to create a newness, a wow factor of the entrepreneur wants to say, let's bring a package with something new that's not seen in China and we'll then introduce water in the can as a result of it. So that's why we as a packaging company are creating the wow effect.
Just to build on Colin's point, the conversations we're having most recently with the really big CPG companies, they're not at all happy with the profit they're making in their water portfolio. So this is not going to be a like for like at a price point that the end consumer understands. This will give us the opportunity to put different opportunity sets in front of them. Sparkling water has done really well in slate cans and other things. I think the opportunity for to get away from resealability because candidly all the resealability products outside of our cap can, they have plastic.
So that's not a good solve. We're not going to solve a plastic problem with plastic. And I do think Colin's comment is spot on. It's changing the size and dimensionality and the channels that these go into, just in the domestic U. S, right, when you've got colleges moving very, very quickly away from plastic or having plastic free campuses, The conversations again we're having with the big CPG companies, it's not about resealability, it's like what can we get in these channels and what can we get to reset the value proposition on water because water should be making a heck of a lot more money for them.
So a great question.
We're going to go ahead and take one last question.
Thanks, Ann. Adam Josephson, KeyBanc. Thanks for taking my question. Just two quick questions. One for Dan or John.
I think on one of the slides, you have North American beverage volume growing, I think, 1.7% over the next 3 years. What is the comparable number over the past 3 years if you
have that?
Just out of curiosity.
I think the number that's actually shown from the U. S. Is kind of like flat to down 1%. We've experienced growth and we've seen over the past year kind of a stabilization really with what's really happened, we've talked about this on calls, is we've probably about 2014, 2015 we saw the folks like ABI and Molson Coors really start to move toward innovation and getting into alternative categories to step into spiked seltzers etcetera, use their existing capacity in their breweries and move into that. I think Coke's done a really good job maximizing profit pools.
And then sparkling water has outperformed any and all expectations. And those along with Mexican export that has moved kind of from a flattish last 2 to 3 years into what we believe will be a growth
Slide 50, the commercial opportunity slide. You have a footnote saying most of the near term opportunities will be in North America over the next couple of years, that 15% to 20% is largely North America. Presumably, you have contracts rolling everywhere, not just in the U. S. So can you just help me understand why you expect most of that opportunity to be in the U.
S. Over the next couple of years?
Sure. I think we've said this repeatedly, but maybe it bears reinforcing. We do the price point for the more commodity containers in North America is at close to the lowest levels anywhere in the world. So we like our margins. We'd like to hold on to our margins in other parts of the world.
So that would be where that dynamic of supply demand balance and getting paid for the value of the products and making sure that we're getting paid for the complexity that have been thrown into that category specifically. That's where the focus is. And as John has indicated, in North America in particular, we have longer contracts than we have in other parts of the world. So those longer contracts will begin to mature and give us an opportunity to start to reset some of the contractual language and manage this complexity and get paid for it.
Well, thank you all. On behalf of everyone here at Ball, first, I want to thank Anne. I want to thank Chris and all. Renee, you're there. I see you as well.
Thank you for putting this all together. We're going to sign off now on the webcast. We appreciate your participation. I know sitting 3 hours on a webcast is not the easiest thing in the world, but we certainly appreciate it. So we're going to sign off on the webcast