by Debra Levy
The big story did not emerge until Wednesday morning of Glass Week 99. There amid the lush golf courses and luxurious surroundings of Palm Springs, CA, came a stinging admission from the countrys primary glass manufacturers. They said what has long been suspected and somewhat feared. No one, it seems, is making money, or any of the right kind of money anyway. Oh sure, times are relatively good and profits are adequate, but the numbers that lead to long-term capital investment in the industry are not strong.
"Weak share prices and low return on investment certainly do effect capital investment," said Steve Kalosis, president of the Pilkington/LOF building products group, "and right now its hard to justify that investment." Russ Ebeid, president of the glass group at Guardian Industries agreed. "To invest $100 million in a float plant is an awful lot of money," he said, "Can the industry support it? If you cant get paid for your product, why should you invest more?" James Bradford, president of AFG concurred. "The incentive to invest back in to the glass industry is becoming more and more difficult."
The CEOs made their comments during an open discussion featuring Paul Gill, outgoing vice president and general manager of Visteons glass systems division, Richard Leggett, vice
president of flat glass for PPG Industries of Pittsburgh, PA, Ricardo Gonzalez, president of Vitro Vidrio Plano in Monterrey, Mexico, along with Bradford, Ebeid and Kalosis. Leo Karas, of Karas and Karas in South Boston, MA, served as moderator.
It was one of a number of engrossing sessions held in the mornings during the event, which is sponsored each year by the Glass Association of North America (GANA) in conjunction with the Sealed Insulating Glass Manufacturers Association (SIGMA).
Gill also introduced his replacement at Visteon, newcomer Paula Winkler-Doman (see USGlass, December 1998, page 10) and provided a bit of future shock. "We forget the customer and the competition in our business," said Gill. "The customer is looking for certain things such as different shapes and thinner glass. He is more safety-conscious than ever. The competitor is more active than ever. There are subtle changes occurring with each." Gill said that GE has launched a $30 million initiative to see what types of products can be used in place of glass in a variety of applications.
"The businesses that thrive will be the ones that successfully read the trends and respond to them" said Leggett. "There is a generation coming forward for whom plastics are acceptable. There is no stigma attached." All on the panel agreed the industry has to do a better job marketing the benefits of glass as a material and providing information about their products.
Primary manufacturers were not the only group in the hot seat. An "Ask the Fabricator" program was held on Monday. John Dwyer of Syracuse Glass in Syracuse, NY, served as host to Roger Kennedy, president and CEO of AFGD Inc., Tony Hobart, group vice president of North American sales for Guardian; John Wittstock, president and CEO of HGP in Dallas, TX, Larry Beese, sales and marketing manager of Interpane in Clinton, NC, and Brad Austin, president of Viracon in Owatonna, MN.
Kennedy said his company is looking to cut costs significantly this year, but is looking for alternatives to cutting people, such as a reduction in workmans comp and other insurance costs. He said his company experienced a four percent increase in factory wages last year and was expecting a 3½ percent increase this year. Beese said PPG was trying to hold its increases to three percent.
The lack of qualified employees also has affected the industry on all levels.
The group had a thought-provoking discussion of the difficulties involved in finding good, young talented new employees. "As an industry, we are just not attractive to people," said Austin. "Twenty years ago there was a structure to business. You worked your way through and you worked your way up. We have no clear career tracks now and young people know this," said Kennedy.
The fabricators seemed to scratch their collective heads as much as the manufacturers when discussing why pricing in the industry is so flat when compared with other building product industries. "The problem is capacity and utilization," said Hobart. "Everyone seems to have a lets go buy a plant mentality. There are 155 tempering lines in North America and only 65 percent are close to full utilizationin the mirror industry its only 50 percent. We need to be responsible for what we buy and where we buy it." Whittstock had an alternative theory. "Its because we are sending out commodity sales people to do the job and we shouldnt be selling glass as a commodity anymore."
The panelists did put their collective hopes for the future in new products. Austin said his companys most profitable area of growth is high-performance insulating glass. Kennedy sees a range of products, including storefronts and metals, security glazing and high-performance laminated glass among AFGDs growth areas. New and different paints and coatings are expected to be the future at Guardian, according to Hobart.
Sandwiched between the two panels was an economic update by Robert Frye, an economist for Dupont, and GANAs membership meeting on Tuesday morning. The latter included very informative discussions about the current state of the association and of ANSI Z97.1 (see February 1999, USGlass, page 16), new and tighter environmental regulations about to be put on mirror manufacturers and the price fixing lawsuit currently underway (see USGlass September 1998, page 66).
This was GANAs 13th annual Glass Week, and the event was well attended, although attendance did not reach all-time highs. Some cited the high hotel rates as a factor, others the fact that the association had visited that area of the country within the last few years which might have cut down on visitors.
The event began with an exhilarating keynote speech by Olympic gymnast Peter Vidmar, captain of the first U.S. mens Olympic gymnastic team to win a gold medal in nearly 100 years. Vidmar, who actually used a horse to show some of his gymnastic prowess, gave a speech far more enthralling than the usual "jock-turned-businessman-speaker." Vidmar did not try and inspire his audience by convincing them that he was a sports-hero-turned-businessman who used his lessons at the gym in business. Rather, his stories and self-deprecating comments made the audience believe those in the glass industry could become gymnasts in business. Given the dour predictions voiced by many of the other panelists during Glass Week, the industry may well have to.
Debra Levy is the publisher of USGlass magazine. She wants to learn how to play golf.
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