Volume 46, Issue 1 - January/February 2011

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View From The Top

Gary Danowski Shares His Observations on PPG and the Glass Industry
by Megan Headley

Gary Danowski has been something of a rolling stone within PPG Industries. He joined the company in 1982, just one year before the Pittsburgh-based company brought the world’s first low-E glass to the marketplace. Armed with a mechanical engineering degree from Gannon University, Danowski started as production engineer at the former Crestline, Ohio, automotive glass fabrication plant. But, unlike that proverbial stone, Danowski has gathered a range of experience from a collection of titles as diverse as sales engineer, director of market development, plant manager and, since January 2009, vice president of the performance glazings segment. With time spent in the company’s automotive glass, aerospace and flat glass segments, Danowski is able to call on an array of experiences to guide him as he, in turn, guides the flat glass business out of the economic downturn.

In January, Danowski sat down with USGlass to share his views on the industry, how he’s honed his decision-making skills and his take on allegations that glass is not important to today’s PPG. Danowski also explained why he’s excited for the glass industry in the years ahead.

USG: Let’s start with some background. What was your first job out of school?
GD: It was, unfortunately, too long ago. I graduated from Gannon University up in Erie, Pa., where I grew up, with a mechanical engineering degree. At that time PPG was interviewing on campus, and I actually went to work with them in Crestline, Ohio, one of their automotive glass fabrication plants. I was hired right out of school as a process engineer in one of their facilities. It was a great start.

USG: And you’ve been with them ever since. That’s impressive.
GD: At times I feel like a dinosaur because you don’t see that happening in today’s world anymore. But yes, at that time PPG had, and we continue to have, a very good on-boarding process. We had more engineers at the plant then, but the learning process and the methodologies to help fresh kids out of school truly understand processing of glass, tempering of glass, cutting of glass, painting of glass—all of those issues—were excellent. They had a good mentoring program inside of the plant and a result of that is you learned a lot about basic processing of glass. That continued to help me throughout my whole career, from an understanding and a knowledge perspective, but also how to ask the right questions.

USG: Although you’ve been with the same company all this time, you’ve worked for the automotive, aerospace and flat glass segments in various positions. What are some of the advantages to this diverse training?
GD: There are two things. One is I had an opportunity to jump around all of the different glass divisions and, as you mentioned, aerospace. The other great thing that PPG allowed was the ability to work through different functions. I started as an engineer, I was in technical sales up in Detroit for a while so I got a taste of the sales side, including interaction with customers, then I moved to engineering management at our Evansville plant. After that, I had a great opportunity to go overseas, and lived in Paris for three years; that was more of a staff function around market development in Europe associated with the glass businesses … it was a broad perspective involving all aspects of the glass markets in a different region, and a different culture…

I came back as float glass plant manager and then [moved] to a marketing role in the early 2000s, responsible for I came back as float glass plant manager and then [moved] to a marketing role in the early 2000s, responsible for flat glass marketing and product development. The point behind all that is that I had a chance to hit different businesses and different functions—and enjoyed them all. The most recent role prior to this job was in aerospace … All of those things I learned early on, from understanding the operation side, are pertinent across different segments of PPG’s businesses …

USG: In getting to try on these different hats did you find any surprises?
GD: I would say when you enter a new role there’s always a learning curve. As much as you think you’ve got broad experience, every time you enter a role there are a lot of learning opportunities that go with it. Whenever I go into a job I try to be observant. … You’ve got a tool belt and you keep hooking on things you want to remember going forward—very good practices or very good management or good boss-type of learning opportunities. And then you have the other side of the belt which is “I would never do business like that … ever.”

USG: So who were some of the role models who offered good “boss-type of learning opportunities” for you?
GD: I’ll tell you, there are several. If you go back to glass, Frank Archinaco [PPG Industries’ former executive vice president] is just one of those guys who is truly a great leader. He was the type of guy who was extremely tough, but would be the first one to reach out his hand and pick you up after a tough discussion and say “Now what are we going to do about it?”

USG: You might say that the primaries once had a “face,” Archinaco being a “face” for PPG. Do you think that personification is important?
GD: It’s interesting. Twenty-eight years ago, when I started with PPG, it was a different company. I think companies today are much more business-focused, head to the grindstone to make things happen, and so from the perspective of having that one “face” that you can always relate to, while there’s probably some importance to it, I think it’s changed over time and in today’s world. At least from my perspective, it’s less of an issue.

USG: Now how exactly do you define your current job description?
GD: I’m responsible for our performance glazings business, so it’s our flat glass business within PPG. It includes everything we do relative to producing glass, coating glass and selling it, with the exception of automotive. So anything that’s not automotive related that’s associated with glass, I have accountability for.

USG: Previously you reported to Victoria Holt, who resigned as senior vice president in September 2010; how have your duties changed since then?
GD: Vicky had responsibility for glass, our performance glazings strategic business unit and the fiber glass strategic business unit. Since she left, these businesses report up through Rich Alexander who is executive vice president of performance coatings inside PPG. It really didn’t change responsibilities at all it just changed reporting relationships.

USG: What would you say are your goals for your segment?
GD: I started in this job almost two years ago so I probably couldn’t have come into this business at a worse time based on the economy. It’s been a really tough couple of years. We’ve done a lot of things to position ourselves for emergence from this down cycle. We’ve obviously had to, as I think most of the people in the industry have, really pay attention to where our costs are and make sure we drive forward operational excellence and good business processes to make sure we’re in the best position when volume comes back. That’s more of a basic insight, having to survive through a down cycle, but a real focus continues to be on technology. I think we’ve got a good track record of developing step-change type of products … That engine needs to continue to keep running and we need to stay focused with resources to assure that we can continue to deliver on the new products front.

The other thing, and I don’t think we’re unique with this, is that, geographically, our whole business is located in the same building with our R&D community. That started about 10 years ago … The ability to communicate quickly to have people on the same page, to understand market needs versus where the product development is going, all of those are critical. Having everyone co-located, I think, helps us with speed to market and alignment to assure that things that we’re working on are the things that are going to win in the marketplace.

USG: What would you say is PPG’s overall plan for its glass segment going forward?
GD: I will tell you that PPG is committed to the glass business. And I’ll give a couple data points to support that. First of all, in the last two or two and a half years, during this down cycle, cash is king and PPG supported the glass business for a cold repair in 2009 and again in 2010. Cold repairs in glass are very expensive capital projects—they’re $30 to $50 million depending on how much environmental work you do during those cold repairs. So PPG, during a down cycle, continued to support the glass business and continues to support us today with continued investment in coaters—both from a capacity and capability perspective. So we’re kind of excited that we invested when the market was down—and we’re ready to grow with a relatively young fleet of tanks going forward. We’re excited about where we’re going and what’s going to happen as the economy picks back up again.

USG: You mentioned that PPG has invested in new technology for rebuilt furnaces. Can you share more details on that?
GD: As we’ve continued to look at things like environmental issues and how we get the most out of our assets—when we went through the cold repairs in Texas, we invested in oxy-fuel firing technology for that furnace, a line on which we make our tinted glass … Those things help us; they’ve certainly improved the “sox and nox” [sulphur dioxide and nitrogen oxide] air emissions and at the same time we gained throughput and quality of product coming out the other side. So we continue to try to not only look at new products, but we also look at new glassmaking technologies…

USG: Let’s talk about the product technology for a minute. What’s next for coatings?
GD: We always have a pipeline of products that we’re looking at relative to next generation or step-change type of products. We have some that we’re in development on today. I really can’t speak to those, but a lot of our products today, especially around the commercial side, continue to be driving energy efficiency. I think that continues to be an important mega-trend, and it continues to be a place where we invest R&D resources to make sure that we’re driving as much of the improvement efficiencies of buildings as we can.

Also, it’s only been within the last two years that we’ve introduced five products into the solar side. They’re all brand new products; in fact, we’ve done a bit more development on two of those products during the last 12 months. We actually have a very good arsenal of products that, as that industry continues to mature in the United States, will position us well to serve that marketplace. We’re excited and I think that we’re just seeing the beginning of what’s going to happen there. There’s always some uncertainty when you’re into an emerging market like that, but that being said, we’re excited that the solar market’s starting to grow. It’s going to be a big consumer of glass and with the products that we’ve come out with, our Solarphire PV, Solarphire AR and Solarphire TCO, which is a transparent conductive oxide, I think we’re ready to take advantage of that marketplace.

At the end of the day, the solar industry is almost the exact opposite of the architectural business. On the architectural side, we’re about keeping the heat or the energy out of the building—solar is about getting more energy through the glass and into the module. So the products are almost polar opposites. The good news for us is that we’ve had Starphire glass around for almost 10 years now. That ultra-clear, low-iron product is really the basis for driving some of the product development in the solar side of the business. We’ve learned a lot from some of our proprietary tints as well. The combination of those technologies play very well as we are developing substrates for the solar market.

USG: There’s some discussion about how glass manufacturers need to stake their claim, whether offering a commodity or a value-added product. What’s your take on this?

GD: Although we produce a lot of commodity products today, our strategy continues to be focused on the value-added technologies. Those are the types of products that drive the investment in R&D. As we look at our portfolio we continue to grow our value-added products year over year over year—even during the down cycle our value-added products continued to go up. From that perspective, we truly believe that technology and new products are the key to this industry and the key to continued improvement of our performance. We’ll continue to drive toward investment in technology and new products—driving our value-added mix up.

USG: To jump back a minute, you mentioned you spent some time as director of market development for PPG’s European glass business. Did you come away with any practices that you feel they do better overseas?
GD: The glass business has been mature in Europe, as in the United States, and been around for a long, long time. I think the challenges we were facing over in Europe were very aligned with the challenges we continue to face in the United States. There are always things that certain plants do better than other plants. I’ll start with Starphire ultra-clear glass—we had a plant in Italy that was probably the best clear and extra-thick plant, well known for its clarity of product, its edge color and its thickness. They made it for the Italian market which included a lot of furniture makers and really focused on beautiful-looking glass. Things that they did in that plant that were not silver bullets, but just lots of small, good practices. We were able to take advantages of learning those things and bringing those process improvements back to the U.S. as part of the overall joint businesses at that particular time.

USG: PPG’s Glass Group is really a North American based company now, at a time when it seems many manufacturers are reaching for global presence. Is there an advantage to either approach?
GD: I would say today, when you’re looking at companies and where they’re expanding, most are all expanding into emerging, developing markets. Due to the low demand, the United States has a lot of capacity—probably somewhere around 25 percent of the capacity in North America has been shut down as a result of low demand. So when you’re talking about companies going and spending money overseas, they’re typically going to the regions that are on the growth side versus the mature side relative to glass and overall development in general. Although we aren’t there with bricks and mortar, PPG has a very strong international strategy. A pretty big segment of our business we classify as international licensing. We also have export sales that we do relative to some of our value-added products that shipped overseas. On the licensing side we have taken some of our past, maybe slightly older-generation technologies and have actually gone and helped independent companies in multiple regions through licensing agreements. There are lots of prospects in other developing countries that we’re working with, to be able to use PPG technology to help them get on the ground to start producing glass in those regions.

USG: What’s the benefit for PPG of this licensing approach?
GD: There’s significant reduction in investment. Then with that capability you obviously drive income through different means; you can get the benefit of royalty structures. The big positive is being able to take advantage of our strong, global brand and our technical capabilities in those regions where, at this time, we’re going to invest.

USG: You had commented on glass capacity in this country. When do you think we’ll reach the point where it will start to grow again?
GD: I think it’s been a tough couple years for the whole channel, starting at the producers like us all the way through the fabricators. When I look at the indicators going forward, and at the different analysts that try to forecast what’s going to happen with construction, I do think that we’re flopping around the bottom and the economy is at a point where it’s going to start to move in the other direction. There’s no doubt that we—we being the float producers—have taken a lot of capacity out of the system, so I’m hopeful that as we look ahead that we’re actually going to see growth relative to the demand.

USG: Looking globally again, PPG has been fairly vocal regarding concern over Chinese imports, for example with its involvement on One World Trade Center (see December 2010 USGlass, page 10). So how do U.S. manufacturers compete with these low prices?
GD: … It’s always a threat, it’s something that we have to pay attention to. As you continue to add value to products and you continue to add labor to products, you have to continue to pay attention to how big of a threat low-cost countries pose. I think the World Trade Center is an example of that. The pre-fab curtainwall coming in is a threat you have to pay attention to. But there are off-setting issues to that at the same time. When you start to look at trying to meet the schedules of buildings and trying to have product at the right place at the right time and manage around things that break, I think you’ve got to understand that those build schedules and the service requirements associated with that are restrictors to some imports. I believe there’s always going to be a niche opportunity [for Chinese products], but in the near-term I just don’t see, even for curtainwall, that it’s going to take over a significant share of the marketplace.

USG: When you spoke with USGlass about PPG getting the World Trade Center glass contract after all this time, you commented that you too were surprised about being selected to provide the glass—can you elaborate on that?
GD: You know, I would still tell you that I haven’t gotten any direct feedback on the decision-making process that was made by the owner or glazing contractor at that time. I don’t really have much to add to what exactly went on. But we’re glad to have it.

USG: Speaking of competition, we’ve heard from some glazing contractors that there’s been more pressure for suppliers to sell glass direct. How do you manage that channel?
GD: We have very capable, excellent customers and our certified fabricator network that we rely on very heavily as access to markets and to fabricate products for glazing contractors. To be honest with you, we rely on those customers and will continue to do that, so I don’t see us bypassing the channel and going directly to the glazing contractors.


USG: What concerns you about the industry as a whole?
GD: I don’t think we’re through this downturn yet, and the construction market, being a lagging piece of the economy, will still cause some concern for both us and the whole customer base. The industry should be able to continue to manage through, hopefully only for one more year of mediocre demand. That concerns us both from our own perspective and it’s also a concern to see whether the customer base can manage going forward. When you look at the indicators out there, maybe we’ll see some light on the residential side. I think the nonresidential side is still going to be weak for at least the first six months of the year, but hopefully we’ll see some of that improving the second half of the year. The economy certainly still has us concerned about the whole health of the channel.

The second issue is associated with inflation. Through this last couple of years we’ve not seen a lot of inflation because the overall demand has been an issue. As we start coming out the other side there are some concerning signs of inflation out there that we’ll have to manage through, things you don’t always think about when you think of glass. An example of that would be silver. Silver doubled in price last year and we use a lot of silver in low-E coatings. The working layers of those nano-coatings that are in low-E glass are silver based. So when you start to think about cost base—batch materials are going up this year when you look at sand and soda ash. With the price of gas and diesel going up we’re certainly seeing transportation costs going up. And it’s not just us. I think when you look through the whole channel you can see that there’s some concern. On the materials that you purchase, those raw materials we’re already starting to see move and creating implications for an already “depressed industry.”

"PPG, during a down cycle, continued to support the glass business and continues to support us today with continued investment in coaters…"

USG: Where do you see the glass industry in five years?
GD: Actually I’m excited about it. You know, nobody wants to live through what we’ve all lived through over the last couple of years. But the survivors at the end of that process will be stronger companies. It’s forced everyone to look at themselves differently, to look at waste, to look at how you’re positioned, to look at what your strategy is and where you want to be at the end of the process and how you want to work yourself through the other side of the cycle. The results of those things, at least from our perspective, I think we’re a much stronger company as a result ... a much stronger business. We understand our business a lot more, we understand what we have to do to succeed, we understand where we need to put our resources, we understand the value of eliminating waste and the value of good business processes to take advantage of opportunities. And we positioned ourselves as a result of that, with a lot of hard work by a great team, to be ready to come out the other side. So I actually think the next five years are going to be good for the glass industry. I think you’re going to see demand go up, you’re going to see industries that are looking to use glass pop up; solar is one of those but lighting, whether it be organic light-emitting diode technology or similar types of technologies that are low-cost means of generating light. There’s a lot of glass applications associated with those types of technologies. From a glass perspective I’m very optimistic going into the future.

USG: Is there anything else you’d like to share with our readers?
GD: I would only reinforce that we’ve come through, and the industry has had, a couple really challenging years. I feel one thing about PPG that I will always go back to is our people. I don’t think I could go through an interview without at least mentioning that we have some of the best people, if not the best people, in the industry. We rely heavily on our integrity. I don’t think we or the history of PPG would be where it is without the people. The fact that we continue to do what we say we’re going to do when we step up to the challenges that are in front of us. These are just great people to work with.

 


USG
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