Volume 36, Issue 2, February 2001

BRADFORD1 Reaping what you Sow
Jim Bradford talks about life and his career in the glass industry

by Debra Levy

If life had turned a bit differently, Jim Bradford just might have been a botanist. The 53-year old president and CEO of United Glass Corporation (UGC) holds a degree with an undergraduate minor in the subject. Instead, he has spent most of his adult life involved with the glass industry—first as an outside attorney, then corporate counsel for AFG Industries of Kingsport, Tenn., followed by a stint as president and CEO of that company for seven years. In 1999, Bradford left AFG for the newly-formed UGC, a novel company formed by the “roll up” of some of the country’s best independent fabricators. He has spent the past two years bringing these very strong companies together as one in a new industry form.

“No hybridization yet,” Bradford laughs, when asked about the botany degree. “Maybe I’ll do some of that when I retire,” he says, not quite recognizing that with UGC he already has created an alternative life form.

I caught up with Bradford at his offices in Kingsport in early January. Our conversation was free-wheeling and wide-ranging. It is evident that Jim Bradford is a true intellectual who has thought long and hard about the industry and other alternative life forms.

I guess we should start at the beginning. Tell me about your childhood and where you came from?
I was part of a military family. My father was in the Air Force and fought in every war from World War II to Vietnam. I spent my youth wandering from air force base to air force base. Dad was really gone from the time I was 15 until I went to college—he was part of a number of covert operations. I didn’t know about it then, but I figured it out later. I have a older sister (who claims to be younger) too. She lives in Boston now.

Where did you go to college?

I went to the University of Florida, for no apparent reason really. I just wanted to go there. I put myself through school, had a bunch of odd jobs. Mostly, I was a photo clerk. I majored in political science and English and minored in botany. I still garden today—that’s what Susan and I do together.

Susan is your wife?
Yes, we love gardening, traveling and reading. We do a lot of it together. We have been married 33 years. We have a great marriage … we have really grown up together. We have four kids—two boys and two girls. I like to garden, golf and and I love to play the hammered dulcimer. And we love to read. My wife is the best-read human being I know.

Why did you choose poli sci for a major?
Well, I didn’t have a lot of direction at the time and I liked government and the political system. So I studied it and changed a lot of my views. But I took a lot of things I liked to learn about, like literature and botany.

How did you handle being a military kid at the height of the anti-war movement in one of the more liberal colleges in the country?

Well, I always respected my dad. Always. I could disagree with him on some things and still respect him. He went in a squadron commander and came out a wing commander. This was during the Vietnam War, but it was pre-lottery. I did a brief tour in the Air Force and went to Officer’s Training School in Lackland. Of the 400 or so in the class, I was the only non-pilot.

Then I found out they were desperate for electronics officers and that’s what I became. I spent a year in Biloxi and then was released to the National Guard in 1970. I had previously been accepted at Vanderbilt Law School and they deferred my entry until my active military service was complete. I practiced law for 11 years, principally for national five clients.

That’s when you first worked with Dee Hubbard [former owner and president of AFG]?
Yes, I was spending almost half my time on his work. I did a lot of mergers, employment law and other corporate stuff. I got to know him pretty well and he asked me to become the corporation’s general counsel. I started on May 15, 1984.

Hard decision?

Yes, my wife was crying about it, thinking it was the world’s end. In fact, it was one of the better moves of my life. I don’t regret making that move.

Did you like practicing law? I know a lot of lawyers who hate their
jobs.

I found it intellectually interesting, yes, but nothing in comparison to the challenges of business. The challenges of business are harder than the challenges of law. In the law, the one that can muster the most troops, the biggest amount of force and apply the greatest amount of intellect usually wins. That’s not true in business. You can’t control everything, you can’t anticipate everything, so it is much more challenging.

I’ve heard a lot of Dee Hubbard stories over the years. What was he like to work for?
Dee was a great teacher. He had extremely high expectations and he’d give you an incredible amount of freedom. He had an innate sense of business and an innate sense of people. He taught me that success was in the people, not the technology. It was a fun place to work and we had a great time. Sometimes when I was in the middle of a deal that wasn’t going well, he’d remind me to think of the goal. “Just get the deal done, Jimmy”’ he’d say.

So it was a good place to work?
Oh yes, and I did a lot of different things. When I joined AFG, we had four plants and AFGD had five locations. In 1983 we acquired Gemtron, then the assets of LOF’s Scotia plant in 1984, and it went on and on. We acquired the Mueller Group in 1986.

Now I’ve also heard a lot of stories about the Mueller Group. It was an infamous group of people.

It was a wild group [laughs] … but we got the deal done. We bought Hamilton Glass in 1986 and purchased the Ford Glass Division of Canada in the late 1980s. In 1988 we did a technology transfer deal with Schott/Glasswerks. That’s also when we went through the leveraged buyout (LBO).

Why?
The 1980s were a very unique time. We had 25-26 quarters of profitability and the timing was right … maybe Guardian did it right—going public, enjoying and using a few years of capital and then going private again ... Anyway, we went private. It was also an exit strategy for Hubbard. We were sure the industry was going to slow down and we thought this was the right time to do it. I stayed general counsel through this until 1992 when I became president.

Wasn’t there a bit of an undercurrent when you were named president? You know, people saying “the lawyer is now president and what does he know about glass?”

Well, I’m sure there was. I wouldn’t be at all surprised. You know most presidents come from the technological side, accounting or sales. It’s almost never the lawyer. But I knew the operational side and I knew the corporate side. I needed to get up to speed on sales and marketing. I think Hubbard’s the smartest man in the world for picking me [chuckles].
So how did you gain trust and credibility?

Nobody outworks me. I am a very dedicated, hard worker and after awhile, nobody doubts my enthusiasm or sincerity.

Wasn’t the purchase by Asahi a bit of a surprise?
In 1988, Saint Gobain made the largest mistake in its history by not entering the U.S. glass market through AFG. We thought they would purchase an equity position, but I don’t know if they thought Glaverbel would pull off the negotiations ... Instead, Asahi began making inquiries about a purchase of AFG in 1992, a right they had gained through the Glaverbel investment in 1998. I often think how different things might be if Saint Gobain had won instead of Asahi.

So was the LBO a mistake?
Well, the timing could have been better. It was the early 1990s when we took on $1 billion of debt. Managing that debt at the time was very difficult … not sleeping nights and the whole bit … but it was the right decision for the stockholders and for the company.

It must have been an extremely frustrating time.
Well, there’s a great saying: “Nothing concentrates a man’s mind like knowing he will be hanged in the morning.” We had to focus on cost structures. There were rumors that we weren’t going to survive and I heard our competitors saying, “we will bury them,” but they didn’t.

How involved was Hubbard?
He was involved through the late 1980s and early 1990s. He wasn’t really involved after the sale.

And how did you make sure that those competitors couldn’t bury you?
Well, we shed some assets, trimmed costs in many operations and shut down the Cinnaminson, N.J. plant that we didn’t need. Sales was AFG’s strongest point. I have attended every sales meeting AFG had from 1984 to 1999. Manufacturing strongly improved during that time, but the sales force was always great. After I became president, I spent a lot of time meeting customers and listening to what they said. That’s important.

Let’s talk about UGC a bit. Why did you decide to leave AFG?
I was ready to move on. I love the folks there [at AFG] but I was ready for a different challenge. I wasn’t particularly pleased with Asahi’s strategy for AFG either. Part of it was ambition on my part. Americans like to own a piece of the pie in which they toil. Asahi had a different philosophy. Oh, I had a nice salary, a very comfortable salary, but I had to ask myself: “Do I want to be a salary guy for the rest of my career?” The answer was no.

What was Asahi’s reaction?
They weren’t extraordinarily happy, but they understood it. In fact, they were quite gracious about it. I had more people say to me, “Jim, I understand why you left AFG, but why the hell did you stay in the glass industry?” I got that comment more than any other [chuckles].

Can you take me through how UGC came to be?
It’s not that unique. You need to look at the market conditions at the time. They are pretty much the same as now. AFGD continues to expand. Oldcastle and VVP are both growing. There’s been a lot of consolidation in the window industry and the same is expected to be true with the fabricators.

So there were a number of independent fabrication companies unsure of their future. They might say, “Gee, I buy well, but I don’t know how I will fare. Guardian is being very active, has scared the old line mirror companies to near-death. We could be next.”

Well, what doesn’t kill you will make you stronger and these companies decided to become stronger. There were several companies talking about consolidation. PPG won’t admit it, but they had approached a group of companies in the Northeast to go public. So the idea was floating around. A gentleman named Larry O’Connell saw some opportunity. He is the president of TFC, an automotive mirror company and had been involved in the roll-up of a number of electrical contracting companies into one that eventually went public. Larry went to Bryon Snyder of Sterling City Capital thinking the same thing could be done in the glass industry. They set about to do it.
The owners of the companies that make up UGC sold 100 percent of their stock and got some cash and equity in the new company.

Do you have any plans to go public now?
Not right now, no. You have to remember that interest rates went up six times in the first 18 months we were putting the deal together. If the company is publicly-traded with a small market cap, then it will not attract and need institutional investors. But if we can grow EBITDA, differentiate the company and raise the raise the multiple, then there by be an opportunity in the future if the market changes a little. Right now there is no necessity to be public. You need a market cap of $500 million to $1 billion to make that work.

Did the companies involved expect to be public by now?
Let me say that they didn’t have an initial expectation that we’d go public, but that it would happen at sometime in the future.

Is UGC working?
I think so. The purchasing piece is very important, and so is their ability to share information. They can compare how they are running, what software they use, how they manage people and how to use credit as a piece of sales. That’s been helpful. By using a multi-plant approach, we are beginning to balance capacity, to develop more specialization.
We haven’t reaped the benefits of all this yet. There’s still a lot of room for improvement on our side and on the glass-making side.

How did you get involved with UGC initially?
Byron Snyder, Larry O’Connell and Steve Perilstein approached me. They asked me to meet with them. We just chatted about the opportunity.

Do you think part of why they approached you was because they were looking for ‘a name’—someone with a reputation in the industry?
That’s part of it, sure, but I think I developed a level of credibility and integrity in the industry. There are things I won’t do, that I feel are wrong and people know that. I also developed a lot of friends in Europe and Asia.

Was it tough saying goodbye to AFG?
Oh yes, and I must say Asahi was totally shocked. I quietly went over to Japan and said “Please understand. There is no disrespect intended at all. This is just something I want to do.” I tried to leave with style and grace. Saying goodbye to my friends at AFG was very difficult. We had worked hard and succeeded together. We buy some things from them today, but we are not a huge customer.

Did you call Dee Hubbard before you made your decision?
[Long pause] Yeah, I did. He said, “Ah, Jimmy don’t worry about it.” He wished I’d take it. I decided I could stay where I was and wonder what might have been or choose the other road and know. And that’s what drove me to do it.

Any regrets so far?
I would have liked for us to acquire Hoffers. I think highly of Kevin [Schultz] and his management team. I am sorry that they went to Oldcastle. Oldcastle must have made Hoffers’ owners [the Churchill Group] a good offer. I would have liked for them to be with us.
But other than that, no regrets. The beginning has been very exciting. We’ve learned a lot. You’ll probably see the way we structure acquisitions change in the future. We have never wanted troubled companies, we want healthy ones. We want the management to stay and take capital and some cash. But this does narrow the field of potential candidates, so we may have to change the way we acquire companies in the future.

We are just now learning how to allocate capital, who gets the money.

Now I would think that it would be very hard to have a group of people all used to running their own companies now part of something bigger. Is that tough?
Well, it hasn’t been without its struggles. Each of these people is a very strong leader. They are used to being the captain who calls the plays. It’s not always the easiest adjustment.

You know I am going to ask you about Thad Ziegler. What happened?
[The San Antonio company, one of the original founding members of UGC, recently left UGC. The Ziegler family re-purchased it from UGC.]

Ziegler, the company, is in the flat glass distribution business and the auto glass distribution and installation business. I didn’t pick all the companies that were part of the original formation of UGC. The kinds of margins they were making just didn’t meet what we needed. You have got to be able to pay your cost of capital or you are destroying your business. They are good people and I wish them the best.

I know the Zieglers have a whole different perspective …
Yes, I am sure they do. As I said, they are fine people, with a fine 100-plus year old company that will probably be better served on its own.
How will you judge UGC a success?

We will be successful when we are able to become a single operating entity and reap those benefits. I believe strongly that this is the right thing to do for the industry and will truly capture the value that is there. We will change the industry. It’s true size matters, but it isn’t everything. A company can take advantage of its strength at any size.

Can I ask you to assess some of your competitors? Arch for example.
I have a lot of respect for Leon [Silverstein, president of Arch-Amarlite]. He is a very sharp guy. He says, “I can be the low-cost producer and make my way into any market.” I don’t necessarily believe that is possible.
Oldcastle? They are our toughest competitors because they are most like us. They have an incredibly large organization. I can’t always figure out some of their strategies, but that’s my problem. I know John Whitstock better than I know Ted [Hathaway of Oldcastle]. John’s a great guy.
My assessment of VVP? I was very surprised by the exit of Ricardo [Gonzalez Sada]. VVP America is doing well. Mark [Burke] is very bright.

Some of those companies have retail shops. Do you see retail locations in your future?
No, I don’t. Retail locations are only as good as the store manager there. It’s not a good fit for us.

That raises an interesting people question. I would expect some companies became part of UGC because they lacked successors or maybe didn’t have quite the succession plan they wanted in place. What about succession at UGC?
That probably was a concern for some people, yes. UGC has a lot of depth. Our operations guy, Lanny Dickmann, was a great fit. We have got good financial people, too.

This interview came about because you were kind enough to answer my question: “what’s wrong with the glass industry?” So what is wrong with the glass industry?

Pricing is a problem—that is, how we price our products. This is because the glass industry has always been a commodity-based industry. What constitutes a commodity? Products that are fungible. Nobody’s glass is different than anyone else’s.

At the end of the day, fungible clear glass is a commodity, whether we like it or not. But all the manufacturers also make and sell glass that is unique to them, and that glass does not have to go to market in the same way. The proliferation of new products and coatings is a good thing all around.

Do you think the industry’s reliance on commodity pricing is more a characteristic of the industry or the traits of the personalities involved?

I get to see a lot of industries and – I’ll get hung for saying this—we have a hard time selling the value we bring. We have a generation of folks selling that may not see the value of what we sell—quality, delivery, etc. If you don’t sell the extra value your product has, then what are you going to sell on?

The glass industry is the only industry in the world where customers place their order and we make it to their specs and then they decide if they want it or not. I even see it on the customer side, as a buyer for UGC.

What else is wrong with the glass industry?
Overcapacity is a big problem. The fact that we don’t develop new technologies in stages—it doesn’t allow us to go through a multi-step process. It keeps us concentrating on volume and throughput.
I think that, as an industry, our lack of willingness to try something new or different hurts us.

And we tend to lose talent because of it.

Yes, that’s true. I almost feel guilty when I see a new MBA in a business that has a hard core, mental block against change. We are a closed industry and we need to open. It’s a vicious cycle.
A market share approach and volume orientation still exists. This, together with the fact that many people believe they know their costs when they really don’t, causes a lot of problems.

That’s part of the reason I think consolidation works. It changes the dynamic. It changes the parameters.

Sort of a new business life form, a hybrid of old and new?
I guess you could say that, yes.