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No Time For The Timid

by Russell J. Ebeid

Editor’s Note: the following is the transcript of Mr. Ebeid’s keynote address given at the 12th Glass Performance Days (GPD) on June 17. Ebeid’s “farewell address” to the industry (see box below) includes a number of interesting insights.

Good afternoon ladies and gentlemen. Welcome to the future, a future that will be completely different from the past, rapid change in work practices, the way we communicate and the tools we use. The global relevance of advancement takes place even in remote parts of the planet. Change comes fast and furious in a world of information, choices, challenges and demands.

We are not immune from change in the glass industry and that is what we will discuss today. We’ll look at changes in the major players, the structure of our industry and the impact of globalization. We will look at industry leadership and the evolution that is going on throughout the world. There will be an opportunity to ask the question that always arises with major change—what business are we really in? Who is king—the industry or the consumer? Finally, we will talk about the new tools used to communicate and conduct business in the future. This will be filtered through why today is different than previous eras of upheaval.

If we do it correctly, our time will allow us to challenge each other to be at the forefront of change. Here in Tampere, we can ignite inspiration and innovation and touch projects and people in Beijing, Berlin, Boston or Brasília.

Driving Change
What does change mean to this industry? These occasions make us smarter and more integral to the markets we serve if we are visionary instead of reactionary. We should drive change that impacts our business rather than just let it happen to us. We must provide leadership and clarity in meeting the needs of a changing world. The people gathered here are responsible for change in their companies. So I challenged you to adopt the title to my speech; this is no time for the timid. This is a time for the bold.

Since I have been involved in this industry for 41 years this is not a passing fancy of mine. It is not even my first visit to Finland. I have learned previously that the saunas are warm and the lakes are cold. Nor is this my first GPD. I had the pleasure to address this prestigious forum in 1999 and again in 2007. Since this is my last opportunity to speak as president of the Guardian Glass Group (Editor’s Note: Ebeid is set to retire this September; see May 2011 USGlass, page 50) to this assembly of experts, I would like to build on the themes of my previous speeches. Let us examine how these predictions have held up under the ravages of time and rapid change.

The types of adjustments predicted back in 1999 and revisited in 2007 seem to be self-evident today. The perceived wisdom of hindsight is that everyone saw what was coming. The smart money in 1999 was the “dot.coms;” Internet companies that didn’t manufacture anything but had high stock values.

In those days, industry producers were dominant and customers took the products they could get. The industry was dominated by a handful of large companies centered in traditional markets. A calendar, rather than a stopwatch, measured the pace of change. Technology was stodgy and coatings a novelty. Entire regions of the world imported their glass. At the 1999 GPD, I took the liberty of making forecasts on the realities of the day and suggested we were in for big changes and trends in entirely new directions.

While it seems quaint today, almost like another century, instead it was just over a decade ago. At the GPD in 2007, I asked the attendees to grade my forecasts, confident that a glassmaker would fare better than economists. By then we had seen the industry’s shift from producer to user with enhanced products that every company needed to stay in the game. We saw that a company’s size did not predict profitability or market value. It was clear then that the group of global glass players would consist of Japanese, French, American and, soon, Chinese companies. The clockspeed of our industry accelerated and technology and innovation was found throughout the world. Coatings kept opening new frontiers of applications and we had reason to be optimistic about serving new markets. Indeed we were starting to think of ourselves as an energy conglomerate rather than a traditional glass company.

Changing Winds
By the glasstec of 2008, the economic forecasts had turned cloudy and ill winds blew into most parts of the world, stalling growth and chilling projects around the globe with economic stormy weather. While some regions stayed sunny, most endured turbulence and are just now seeing signs of growth. The rapid change of the past two years has carried gloom as well as promise depending on your point of view. As always, more lessons are learned in hard times rather than good times.

In challenging times and rapid change, companies must be smart, nimble and wise, focusing on their customer’s needs. It is not the time to be hesitant or timid—it is an opportunity to prune for future growth. It is time to have the best people. It is time to be the best at what you do and make sure your customers know it. Paradoxically, during such challenges it is judicious to identify new opportunities that build upon your core strengths and use new technologies and tools. Whatever your chosen road map for moving ahead, there remains the core reality of the glass industry today. Do you continue to follow a commodity strategy of vanilla products and compete on price—or do you pursue the model of adding value for your products and services at an enhanced price? These latter attributes allow you to survive and flourish.

Remember, iPads are not a panacea. Facebook won’t fix a faulty strategic plan and Twitter can’t tweak a furnace in need of reir.

Global Players
The global nature of the glass industry continues to reveal itself. The representatives here are from all over the world and the GPD now has conferences in India and China. Recently we participated in GPD technical sessions in Shanghai because the growing uses of coatings are being embraced and enhanced in the Asian region. Infrastructure investments proliferate in these new economies and the emerging middle class clamor for the beauty and elegance of glass that range from interior home furnishings to consumer electronics. Capital market maturity allows smoother adjustments to the demands of international economic activities as the glass industry in China continues to evolve at a rapid pace with consolidation paving the way for national champions and the emergence of a global player.

In India, the industry continues to emerge. The subcontinent has both global, as well as local players. Similar to China, the infrastructure investments continue to increase in major cities throughout the country. India recently has expressed a desire to commence a solar industry, suggesting new opportunities for industry players.

A trend discussed in 2007 was the emergence of processors in developing countries. Traditionally, distributors served many of these markets. While they provided a service, they added little to its value. Increasingly, processors have emerged, flourished and helped create a domestic glass industry—a force that increased value and demanded better processees, systems and products. We witness this phenomenon in Asia, Latin America and the Middle East.

In the same speech we forecasted that in Europe these trends would be to the East and to the South. There are many increasingly sophisticated fabricators in Russia, Poland, Hungary, the Czech Republic and elsewhere in the region. They bring a broader base of new products and are closer to the end consumer. In North America, these changes were driven by acquisition and consolidation strategies that were exposed by the Great Recession of 2009. Companies that had taken on debt in pursuit of bigger purchasing power were ill-equipped to survive the financial storm. Many prominent names are now memories and buried beneath the banner of history.

Leadership Transition
It is not just the names of companies that are changing; the leadership of this business is undergoing transition depending on the culture of the firm, the depth of their personnel and the nature of succession planning. In 2007, I was joined on the dais by the presidents of three other firms. None of these gentlemen were with their companies a year later. While there are a variety of leadership styles and management theories, there is no substitute for ambitious, self-motivated people who aren’t afraid to take risks and learn from their mistakes. Remember, iPads are not a panacea. Facebook won’t fix a faulty strategic plan and Twitter can’t tweak a furnace in need of repair. Only people can assess a situation, evaluate the data and act in a timely and decisive manner.

The primary role of leadership is to promote change and to anticipate the opportunities, resources, technologies and timeliness required. During the Great Recession, the best companies focused on finding new products and services to differentiate their offerings. Others focused on debt and survival.

Adding Value
Glass is becoming more elegant and sophisticated rather than merely a “see-through” product. Consider your smartphone or iPad in the latest electronic devices. Visit the new landmarks of the world like the Burj Khalifa or the Guggenheim Museum in Bilbao. Ride in an automobile that has a panoramic sunroof with intelligent photovoltaics that look stylish.

Over the next few days in your technical sessions, innovation should be a key topic. The consumer is willing to pay an attractive price for items they consider prestigious. In the past, this industry has done itself a distinct disservice as it has kept the focus on commodity pricing and purchasing agents. It is time for us to reinvent ourselves. This may seem disingenuous since glassmaking has been around for a thousand years but during transitional times even history needs to meet challenges.

You have heard the veritable story about the transition from the horse and carriage to the automobile. Companies didn’t make it because they remained in the horse and buggy industry. Others flourished because they realized they were in the transportation industry. The crossroad is similar for us today as we contemplate the mantra of who we are and how we work.

We know that industry alone cannot ensure that energy-efficient products become the product of choice. It takes knowledgeable consumers who make responsible decisions and governments who make it a matter of national public priority. We have seen this before in the case of safety glass, insulating glass or low-E glass. Government drives product acceptance. The price of fossil fuels demand government implement higher requirements for energy policies. The world has changed and the stakes are high. Industry is responding by using nanotechnology and other advancements to provide superior performance. We encourage government to adopt them and industry to deliver them.

But government directives are not enough. They must be enforced with code regulation and inspection. In the U.S., low-emissivity glass began as a high cost feature with less than a 5-percent acceptance rate. Today, because of concern about energy independence, all windows are mandated by a tougher code. That grew the business for all.

We could talk about solar and other technologies that are being explored, developed and applied. There are solar technical conferences just about every other week. I am sure the technical details will be discussed in workshops here so we will leave that topic for you to unpack over the next couple of days. This is an area that gives strength to the assertion that we are in the green energy business and need to think larger than unprocessed glass.

In the past, this industry has done itself a distinct disservice as it has kept the focus on commodity pricing and purchasing agents. It is time for us to reinvent ourselves.

Consumer is King
The devices that tether you to your office while you are in Finland make the point even more strongly. The tools have changed; the communication is constant and interactive, and increasingly similar to high tech. We now operate in an era where companies use new tools to address the reputation of their brands, products and services. We can access the wisdom of consumers and their interest in our value proposition. Customers and prospects have an instantaneous platform for their ideas, experiences and knowledge about us. The nature of decision-making has evolved rapidly and with impressive strength, connecting professionals to each other, and changing the dynamics of customer, management, marketing and communications relationships. Today’s global environment is a vast network of seamlessly connected devices with nearly one billion people connected to the Internet and four billion mobile phones. More than four hundred million people are sharing billions of pieces of content and experiences each week via online exchanges.

This means the consumer increasingly is king and will demand preferred brands in the most basic of products. It happened long ago with gasoline and more recently with coffee. Now that we have moved along the continuum from commodity thinking to value-added glass, the next era will be one of brands marked by performance and customer service. The companies that comprehend that aspect will be the winners of the future.

I trust that you will ponder the comments of today and take advantage of opportunities to make a difference.

Russell J. Ebeid is president of Guardian Glass Group

USG
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