Volume 13, Issue 4 - July-August 2011

Feature

Carlex + Carlite = Confidence
Company Officials Discuss Recent Purchase of Carlite Business
by Penny Stacey

Confidence isn’t a word you hear mentioned too often in the auto glass industry. In fact, the unfortunate “C” words we all hear much more often are cost, crunching (of prices), control and a host of others. Recently AGRR™ magazine had the opportunity to interview Central Glass president Shu Sarasawa (SS), along with Jim Shepherd (JS), executive vice president of Central Glass subsidiary Carlex Glass America, about the company’s future. Carlex recently purchased the Carlite aftermarket business from Zeledyne. Carlex also acquired the former Zeledyne auto glass plant in Nashville, Tenn., and distribution operations in Lebanon, Tenn., as part of the deal.

Both Sarasawa and Shepherd displayed confidence and optimism in the interview, as they look to the future of the company and Carlite brand, and discussed a recent $100 million investment at the plant, which includes the installation of two new windshield fabrication lines and upgrades to the plant’s float line. Sarasawa also provided exclusive insight into how the acquisition came about and the matchmaker-type role that Ford played in the acquisition.

AGRR: I understand that Central Glass originally developed Carlex as a joint venture with Ford, so purchase of the Zeledyne plant (a former Ford plant) along with the Carlite brand, seems a natural fit. Had you ever considered a purchase of the plant or the Carlite business in the past?
SS: We had somebody contact us from Ford Motor Co. after Visteon. We kept some relationships [over the years], but during the Zeledyne period of ownership we had not had so much contact [with the plant]. Suddenly Ford asked us to negotiate and we came here (see box at right for more about the history of the plant and Carlite business).
JS: [turns to SS] With regard to the history, you were with the very early parts of Carlex …
SS: I was originally plant manager [at the Carlex Vonore, Tenn., plant]. I started in 1990. It was presented to my boss in Japan and I was assigned [to the role] … and so we started that plant 20 years ago. Central took over the technology and design of the plant, and the Ford side [handled] management and sales. So the Carlex Vonore plant has Central Glass technology and the old system from Japan.

But at one time Ford requested Carlex bring in the UAW, so we welcomed the UAW and that was the start of the business [with them]. At that time the UAW was not so friendly, but we started to work with them. Sometimes [they] were difficult, [and] sometimes they were very understanding. So that’s the reason why even if this is a UAW plant I’m comfortable running it, because they did change, and we understand how to [work with them]. They are smarter than they used to be.

AGRR: What made this an attractive purchase for the company?

SS:
The [plant’s main] customer is Ford Motor Co., one of the biggest motor companies. The customer requested us to [look at the purchase], which means we knew we would not be starting out by ourselves. Somebody called me and said, “Maybe you can start to discuss this.” This person used to be a Ford employee and he knows me, [and] somebody at Ford Motor Co. had asked him to contact me, so I sent some investigators from Japan, and [there were] many discussions. The point is, our customer, Ford, requested us to investigate, and [we thought] “maybe we’ll have a discussion about Ford buying glass from us.” This [purchase] is very attractive, and also this plant has the float glass capacity. Float glass sometimes is difficult. Float glass prices are high, and sometimes it’s over capacity. Some people sell cheap, so it’s up and down, but if we have float we can control the production costs ourselves.
JS: Zeledyne obviously was the owner, and Ford was the major customer, and I think with the downturn in the economy Zeledyne was struggling, and Ford was looking to protect its supply base primarily. Ford really played a matchmaker role in the transaction. And as we looked at it, as Shu said, clearly the float glass—the raw glass supply, [attracted us]. The location’s phenomenal. There are nine assembly plants within the region, so there’s a tremendous customer base here—not just Ford, but many OEMs. [The plant] has a strong aftermarket business that allows us to participate in that market to a greater extent, so a trained workforce and the existing location [also attracted us]. It needs some work—we understand that. We know how to do that, so we’ll take care of that, and I think it’s got great potential for us to grow in the future.

AGRR: Was there any consideration of purchasing the Tulsa [Zeledyne] plant? (Editor’s Note: Shortly before this interview occurred in early June, Zeledyne had announced that it was searching for a buyer for its Tulsa, Okla., auto glass plant, and that the plant would close sometime in the summer if a buyer was not found. At press time, no official decision had been made.)

SS: That’s a different story. We have not reached an agreement yet.

AGRR: What synergies exist between the two companies—Carlex and Carlite?
JS: Well, the technology to begin with. We have a strong technology base in Japan, and we have a similarly strong technology base in Vonore, and we’ll be able to bring that here. For example, one of the new windshield furnaces we’re putting in here is currently in operation in Japan, so we’ll be able to leverage the knowledge that’s been gained in Japan, and significantly speed up the learning curve here. We’ll have shared administrative opportunities, as we go forward, but it’s more than the technology base. It’s a complementary customer base, and the aftermarket, where we now can look at the production at Vonore, and we have a distribution system, an aftermarket system, that will facilitate us access into that market that didn’t exist before.

AGRR: Will the distribution methods change at all?

JS:The same channels will be in place, and our intent is to grow that business. I think Carlite’s a very well known brand, a very well respected brand. We certainly intend to build upon that. At the same time we have a Carlex brand that we’ll be building, and I think Carlite will be one of our products under the Carlex umbrella. So I think we have the opportunity now with more capacity, other customers and a distribution system in place, we have the opportunity to better serve a broader base of customers than perhaps was the case before.

AGRR: What is the timeframe for the investments and upgrades being made at the Nashville plant?

JS: It’s already begun. We’re well on our way. That’s one of the reasons we were able to tour the float plant (see related box at right).
SS: We spend the money first [chuckles].
JS: We were pretty confident, so we didn’t hesitate.

AGRR: Are you seeing a rebound in the automotive market?

JS: It’s a little early. We’re really in the beginning phases—first was demolition, second was site preparation. We’re just getting to completion of that phase, and beginning the installation phase for one of the new lines, so that won’t be up and running until the fall sometime. It’s a little early to see the benefits of that.

AGRR: You seem optimistic, though.

JS: Absolutely.

AGRR: I know that part of what Zeledyne has struggled with is the down automotive market. How do you think the changes Carlex is implementing will impact that for the positive?

JS: Well, first of all, we’re not in 2008. This is a different environment than we saw back then. Zeledyne had difficult timing, because they came on board just as the economy really, really hit the skids. We’re in probably a little big stronger demand base than they had at the time, and I think through a combination of our customer base out at Vonore, and our customer base here, we’ve got a more diverse customer base, and I think that diversification is something that will give us a little bit more resilience in light of probably a downturn in the future at some point in time. But none of us knows for sure when that’s going to happen.

AGRR: In general, we often hear from readers that they struggle with glass quality in today’s market. Do you hear that as well, and what do you think is needed in the industry to change that?

SS: Our strategy—Zeledyne’s strategy and ours at Vonore—has been one of superior quality, so that’s been a pretty high priority on our radar screen. In this business the Carlite brand, I think, has a reputation of very high quality, and we certainly intend to build upon that and take it to the next level. And on the OEM side of the business, I think we all know the quality level of Ford vehicles today is top of market. Glass is a pretty significant component, so we have to be right there with them—and we are.

AGRR: Do you expect to import more glass—or less—with the purchase?

JS: I think our intent would be to build upon what we have here and not import. We will certainly look at all options, but the goal here is that we’re a glass manufacturer, and we want to maximize our manufacturing performance.

AGRR: Is there anything else you would like to tell our readers about this new venture?

SS: The new venture is a very, very big opportunity, and here, there’s so much space also, and if we train well, people will be more efficient. I think we can eliminate some production costs, and be very competitive. I’m very confident. We’re [spending] more money to train the people here, and maybe the government will help for training, as training is key. If we properly train people, we can beat Japanese quality.
JS: As our new vision statement explains, we know we need to earn the privilege of being the supplier of choice, the employer of choice, the customer of choice, and I think in terms of customers, all we would ask is [for them] to give us that opportunity to earn the privilege. We understand it’s something we need to earn, and as we move forward on our investments and our training, we will be in a position to pleasantly delight our customers—both our current customers and our future customers.

Watch AGRR’s Monthly Newscast
The June edition of the glassBYTEs.com™ monthly newscast, sponsored by AGRR­™ magazine, includes footage from the grand opening ceremony of Carlex Glass America’s recently purchased Nashville, Tenn., auto glass plant, along with a tour of the company’s float glass line.

Scan the tag at left to view the newscast. Get the free tag reader at http://gettag.mobi.



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