Volume 10, Issue 5 - September/October 2008

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Belron chief executive officer Gary Lubner and Belron US president and chief executive officer Tom Feeney recently took the time to conduct an exclusive interview with AGRR magazine/glassBYTEs.com™ publisher Debra Levy. The two discussed a number of industry issues, and provided an update on the integration of Diamond Glass into Belron US.

In the following pages, you’ll find the highlights from this lengthy interview. For video coverage, please visit the AGRR Studio at www.agrrmag.com/studio.

Lubner on Cash Pricing
“I’ve said this before, but North America is the only place in the world that insurance prices are above cash prices,” Lubner said. “It’s the only place in the world, so the problem isn’t with insurance prices, it’s with cash prices.”

Lubner described common cash prices as “uneconomical, for what we are expected to do for that price, properly installed glass with properly trained technicians, making sure [the vehicle] is safe and ready for people to drive away.”

“Once cash prices are above insurance prices, that [will be] a proper reflection on the service that we provide,” Lubner said. “That’s what we see around the world, and I don’t see why it should be different in the United States.”

Lubner on Fuel Prices
and Breakage Rates
On the topic of fuel prices, and how this might affect glass breakage, Lubner said that he doesn’t see fuel prices as the biggest determinant of glass breakage rates.

“I think weather has a bigger impact, though it’s much shorter and a little sharper,” he said. “Miles driven are dropping, statistics are there, and the market size around the world will decline. Now I think as an automotive glass company, you then have a choice: do you become a victim of circumstances, or do you actually try to take the future into your own hands?”

Feeney on Duplicate Positions
When asked what Belron US officials plan to do with duplicate positions between it and Diamond Glass, Feeney said that this is “the most difficult part of an acquisition like this.”

“That’s probably the most difficult part of an acquisition like this, because there are redundancies, and what we committed to all the associates was to tell them within the first 60 days, no later than 60 days, the finality of what we’re going to do,” he said.

Diamond Employee Says “Transition is Going Smoothly”
Brett Decker, vice president of field operations for Diamond Glass, and several of his Diamond colleagues also took the time to speak with AGRR magazine/glass- BYTEs.com™ publisher Debra Levy during her visit to Philadelphia to meet with Lubner and Feeney.

Decker says that the transition is going smoothly.

“You’ve seen a lot of people who’ve grown up with this organization, some that have been here for 20 years,” he said. “It’s difficult, yes, but the transition is going smoothly.”

Duane Hromada, vice president of field sales for Diamond Glass, echoed this sentiment.

“I think we know what we did, we know what we were a part of and it’s time to move forward. I think you’re going to find that people want to be a part of it,” he said.

Garth Beck, vice president of field operations for Belron US, also was on-hand.

“I think our intent is to welcome the Diamond team as part of the family at Belron US,” he said. “Everybody’s really excited as we go forward, and now the work begin

Lubner and Feeney on Industry Associations
“I just think there’s an opportunity and too many industry bodies,” Lubner said. “This is an industry that is from many points of view in crisis, and yet we have the Independent Glass Association (IGA), the National Glass Association (NGA) [and the] AGRSS [Council], all having a go at each other, all trying to do what is, in my opinion, driven often by egos rather than the actual issues facing the industry.

“And, if you want my simple solution, there should be one. There should be one body representing this industry, and it should be a body that represents the industry, rather than represents interest groups, and that would be something that Belron would support,” Lubner said. “But we’re not going to be putting our necks out, to start, for example, inventing pricing strategies, only to then be given a hard time. It’s just not going to happen.”

Feeney was asked to comment on whether he agreed with Lubner’s assessment.

“I would hope [the industry’s unity] is fixable, but it requires people to really lay down some of the personal issues they have and put the industry’s wellbeing far ahead of their own personal well-being, and in my experience with our industry, we haven’t done that yet,” Feeney said.

Lubner on Belron’s
Branding Strategy
“If you’ve done your branding correctly, when that infrequent purchase happens, one thing should come to your mind,” Lubner said. “When you’re not, that means you’ve got to invest a significant amount of money, get a lot of coverage in the media, to make sure that when people do think of an automotive glass company to deal with, they’ll think of yours, and that’s, quite frankly, our strategy.”

He also noted that promoting windshield repair is a crucial part of the company’s strategy.

“Our objective is to keep the average costs as low as possible, and repair is certainly a way to do that, and, so, yes, most of the advertising is around repair,” Lubner added.

Feeney on What Diamond Does Better
Though Feeney would not comment on specific practices he feels Belron US can improve upon, as compared with its latest acquisition, Diamond Glass, he saluted Diamond’s approach to what he called “commercial business.” “I’ll compliment Bill Cogswell and his commercial sales team and his national accounts team,” Feeney said. “They’ve done a terrific job in understanding a segment of the business that I would say we didn’t understand as well.”

Lubner on the
PPG Auto Glass Sale
Lubner said he wasn’t surprised by the fact that a private-equity firm has signed on to purchase PPG Industries’ auto glass business and services unit.

“I don’t have to tell anyone what a tough market the U.S. automotive market, as well as the OE market, is right now, and a business with the size and complexity of PPG—I think it was going to be difficult to attract industry buyers, so a private equity buyer was the way to go,” he said.

As for what the future will hold, Lubner predicted the possibilities— but like the rest of the industry, is not sure what will come of the Kohlberg & Co. purchase of the business (see page 20).

“Private equities are going to find a way to make a return, and I suspect that they will look at all options,” he said. “They will look at every possibility—breaking it up, combining it, diversifying it … ”

Feeney on Industry’s Negative Focus
According to Feeney, most of the reaction to the acquisition of the assets of Diamond Glass he has received has been negative.

“Most people tend to focus on the negative, instead of the possible and positive about what bringing two companies that were very successful in their own way together can mean not only to all the 9,000 associates that now work here and that we take very, very seriously, but also to the industry as a whole, and how they can, as strange as it may sound, how they can benefit from this too,” he said.

Lubner on the Possibility of Plastic Glazing
When it comes to the possibility of plastic windshields, Lubner says the chances of them flooding the automotive replacement glass market soon are small.

“I’m simple on these things,” he said. “If plastic windshields were invented tomorrow, and they put them into every vehicle tomorrow, by the time that filtered into the automotive replacement glass market, I’ll be dead, so I don’t need to worry about it.

“Work out the numbers—you know what the breakage rates are,” he said. “It’s not going to happen tomorrow and it’s not going to happen to every single vehicle … ”

Lubner’s Thoughts on the Coming Year
Lubner predicted that the coming year will be challenging.

“Everywhere you look, and we’re seeing this around the world, [there are] cost increases from everyone of our suppliers. Labor’s going up. Fuel’s going up,” he said. “We do a lot of mobile. We do nearly 50,000 mobile jobs a week now … so I think it’s going to be a challenging time.”

He added, “Having said that, from a Belron point of view, because we’re committed to this industry, we’re going to continue investing—we’re going to continue investing in people, training, tools, branding [and] developing our leaders, because these things don’t last forever and we’re going to be strong coming out of it.”

Feeney on 24/7 Auto Glass Service
Feeney said that the company recently tried out “24/7” auto glass service in Las Vegas. While the 24/7 model didn’t work out, Feeney said, Belron US has begun offering weekend service—and had planned to do so before Belron acquired Safelite in early 2007.

“Everything about doing what’s right for the customer Belron’s helped us to see in a slightly different way, but it really was two companies coming together with similar beliefs, and so we were always around extending hours,” he said.

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