Volume 37, Issue 12, December 2002

ISSUES@HAND

a message from the publisher

Chamber Made

It’s exciting to be back writing for you after having my page stolen from me the past two issues. There has just been so much breaking news of late that I’ve had to cut myself (which is as painful figuratively as it would be literally) out of the issue to fit it all in. Who else could we possibly cut? Deprive you of Dez? Never. Tell Hill to take a hike? Not and live amid reader wrath. So far better I take the knife to my own words …

STUART This month, however, we will not do that because of our exclusive interview with Stuart Chambers, the new group chief executive of Pilkington plc. The U.K. native, who took over his new duties just seven months ago, was kind enough to sit down with me in late October at the glasstec trade fair in Dusseldorf for a wide-ranging discussion. (For an interesting look at the show, please see Ellen Chilcoat’s article, “Memoirs of a glasstec Virgin.”

Exceedingly articulate, impeccably dressed, with an urbane wit and attractive profile, Chambers could just as easily be a blond James Bond as the archetypal CEO of a global, multi-billion dollar company. He brims with enthusiasm as he discusses the future of his company and clearly enumerates his goals for it. But these goals come with a price, as Pilkington North America is feeling right now. “There have been cuts and will be cuts,” said Chambers, “and North America is the last area we need to tackle.” His comments follow.

Q.—Thank you so much for meeting with me. I hear you had a great day today. Can you tell me what to expect from Pilkington in the future?

A.—Expect great things. Pilkington is first and foremost a technological innovator. We spend nearly $50 million USD a year on research and innovation. You will see that commitment continue in the future—our entire company is built on innovation and that will not change. 

It’s no secret however, that in the 1980s and ’90s, we lost the plot. We forgot some important aspects of what made us successful—such as being efficient and effective. So we were left with having to restructure in order to be efficient. Today, we make and sell the same products, but we use 14,000 less people to do so, even though the manufacturing is more complicated. We made a significant investment in technology and our restructuring efforts have been significant as well.

Q.—I know that restructuring has been a big worry for employees at the company, especially in North America. What would you say to them?

A.—We are 85 percent done with restructuring worldwide. What’s left to do? North America is left. We have one goal: to increase our profit to use net free cash. That’s our biggest goal. How do you do that?

One, you minimize overhead;

Two, you become the most competitive at manufacturing itself. That means becoming most competitive in plant yields, plant uptime and plant productivity;
Three, through cash generation.

Q.—What do you expect the future will bring for the glass industry as a whole?

A.—A move from a commodity to a value-based business. It is already starting and will continue. 

One key area in which this is happening is coatings. 

Energy efficiency and energy-efficient products, such as low-E, will also be important. It’s going to be a great market for the few that do it [manufacture] efficiently.

Q.—I know you recently released your quarterly results and, even though they were not stellar, you seemed upbeat about them. Can you explain this?

A.—Our results for the first half of last year were very strong, particularly in profit. In the second half of the year, market conditions became very tough. These conditions remain today and our results for the first half of this year are good under the circumstances. Our cash focus is beginning to bear fruit and we fully expect net free cash next year.

Q.—Pilkington has been given quite a tough time by some in the financial press. Do you think the comments made have been fair?

A.—The financial press does not believe words, they believe in numbers. I don’t have a problem with that. Look, glass is a great industry. If you can’t make money here, you can’t make money anywhere. But, the market conditions are very tough in the United States right now. Residential has carried us this past year. We see no recovery in the commercial sector until late 2003. Automotive has been very difficult. Even through all that, there is still tremendous opportunity.

Q.—Let’s talk a little about the restructuring in the United States. I’ve heard it said by some that Pilkington treats its U.S. affiliates like a distant outpost that isn’t very important. How important is North America to Pilkington?

A.—It is extremely important. North America makes up 30 percent of Pilkington’s sales worldwide. North America is and remains extremely important to us. You can not afford not to be world-class there.

Q.—What would you say to those people—employees and suppliers included—who are worried about the future of Pilkington in the United States?

A.—That the large scale restructurings are done. We’ve closed three plants. We have managed the changes and restructured what needs to be done. What remains now is to improve and bring our flat and automotive glass plants to a world-class level. Our goal is also to reduce overhead everywhere. A significant reduction in overhead staff is always difficult, but must be done. When we are done, we will be more efficient, in terms of our plants, than any other manufacturer there. 

Q.—You took over your new position rather suddenly. What parts of your job are you enjoying the most?

A.—Talking with customers. I have really enjoyed that. 

Q.—I am sure you have set goals for yourself in your new position. What will make you feel successful in the job?

A.—Not when I believe we are the best, but when our customers believe that we are the best. Only then will we truly be successful. Thank you.


All of our best for the most wonderful of holiday seasons and a happy and healthy new year. Our whole staff wishes you peace and joy only and a successful 2003. See you next year! 

Debra Levy


USG

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