Volume 35, Number 11, November 2000

NEWSNOW

                            latest news developments

Visteon and Pilkington End Talks
of Forming a New Glass Venture

After five months of negotiations to form a new glass company, the glass division of Visteon Corp. and Pilkington plc have mutually agreed to withdraw from further discussions of the matter, leaving the glass division of Visteon pondering the future. In June, the two companies had signed a letter of intent to discuss forming a new glass company, the majority of which would have been owned by Pilkington (See related story in June USG.).

“We are very disappointed that we could not come to an agreement regarding this venture,” said Visteon president and chief executive officer Peter J. Pestillo. “We remain committed to developing an acceptable business solution for our glass operations. The United Auto Workers (UAW) understands Visteon’s business equation and has agreed to work with us on finding the best alternative that will protect our customers, our overall business and our employees.”

According to Liane Smyth, Visteon’s corporate news manager, it is too early to say what exactly Visteon is planning for the future of its glass division. “We are developing solutions for our glass business that are consistent with our overall strategy,” she said.

According to a press release issued by Visteon, as the two companies progressed through the extensive due diligence process, a number of factors contributed to ending the negotiations. Though unable to say specifically, Smyth explained that the reasons for the end of discussions were “centered around the evaluation of the business, a retention of liability and the form of future employee contracts.”

Likewise, on November 4, 2000 the Financial Times stated: “It is understood that breakdown resulted from Pilkington’s fear that it would not be able to do as much reorganization as it would have liked. Visteon is said to be highly unionized with many highly paid workers.”
“I think that over the next month [Visteon’s] glass division will be sitting down with its employees and looking at strategies and options [available] from this point on,” said one Visteon Glass employee, who preferred to remain anonymous. “Visteon will look at its business to see what it needs to do.”

Operations for Pilkington, however, are continuing the same as they did prior to the discussions. “Despite the best efforts from both sides through extensive and amicable negotiations, we have been unable to reach such an agreement,” said Pilkington’s chief executive Paolo Scaroni. “Our strategy for North America, and in particular the Step Change programme, remains unchanged. We are confident of delivering the benefits we have promised.”
One Pilkington employee agreed, “It was business as usual during the talks and after the talks. This is not going to change our focus or our goals.”
Some in the industry believe that the mutual agreement to end the discussions may have been a result of the 9.5 percent drop in Pilkington’s shares, which fell to 4.75 pence after the company announced it was considering a “possible sale of the Group.” The company also posted a first-half pre-tax profit of 861,000 pounds, a 57 percent drop compared to the same period in 1999. According to Pilkington, in the six months ended September 30, sales dropped 26 percent to 17.1 million pounds “on the back of intense price pressures and competition.”

Pilkington and St. Gobain Team to Build Fourth Brazilian Float Glass Plant
Santa Catarina, located in the southern part of Brazil, will soon be home to the fourth float glass line built by joint shareholders in Cebrace Cristal Plano Ltda, Pilkington and St. Gobain. The new plant will be located in Barra Velha.

“The float glass market in South America has seen increasing demand with steady growth in recent years, despite the recession there last year, and that is expected to continue,” the companies said in a joint statement. “The new float line will mean that local capacity will be able to match this growing demand with high-quality glass.”

According to a Pilkington news release, the new plant will be constructed and designed by Pilkington, incorporating the latest in float glass production and will be operated through the joint venture. The release also said the plant will have an output of 200,000 tonnes per year and will offer additional capacity to the three other lines located in Jacarei and Caçapava, Brazil.

The line is expected to begin operation at the end of 2002.
In other news, Saint-Gobain Group has released its consolidated net sales for the nine months ending September 30, 2000. Sales amounted to $21,302 million, a 27.3 percent year-on-year increase over the same time last year, which totaled $16,721 million.

“This performance must be considered in relation to the strong sales momentum, which the group experienced in the third quarter of 1999, and it reflects the group’s growth ability, especially as conditions proved less favorable over the third quarter of this year, namely in the U.S. construction market,” stated a news release issued by the company.

Tacoma Breaks Ground for Museum of Glass
The Museum of Glass, for which ground recently was broken in Tacoma, Wash., has announced that it has received almost $12 million in new funding. At this point, the museum has reached a large portion of its $57.3 million goal, hitting a total of $34 million in funding. According to Josi Callan, director of the museum, the surge in funding should help the museum meet its ultimate goal. “This museum is building a community. We will provide opportunities for learning that will build connections between art and the individual, the family, the student, the artist and the community,” Callan said. “These significant donations demonstrate how much enthusiasm this marvelous project is generating.”

The Museum of Glass is scheduled to open in July 2002.

USG