Volume 48, Issue 1 - January 2013

feature

Do You Know Joe?
One-on-One with Apogeeís CEO Joe Puishys
By Debra Levy

In 2011 Apogee Enterprises Inc. embarked upon a national search for its next CEO when Russ Huffer announced his planned retirement after a 25-year career with the company. Joseph F. (Joe) Puishys was selected to take over the reigns. In addition to serving as president and CEO, Puishys is also a member of Apogeeís board of directors. He has 32 years of experience with Fortune 100 manufacturer Honeywell and brings a set of ďfresh eyesĒ to the job. He took some time to sit down with USGlass publisher Debra Levy for an in-depth interview and spoke about his career, business views and the direction in which Apogee is headed.

USG: You spent 32 years with Honeywell before coming to Apogee Enterprises. That is a very long time at one company and a little uncharacteristic of todayís CEOs. Do you feel that such longevity at one place is more of a help or hindrance at Apogee?
JP: Itís actually both. I am different from all three previous CEOs [Russ Baumgardner, Don Goldfus and Russ Huffer] because Iím not an industry insider. On the positive side, that means I have the luxury of being without industry bias. I come to the game with fresh eyes.

I worked for a very long time at an organization that was totally growth-oriented. And now Iíve come to this organization that was growing, but was not nearly as focused on growth as Honeywell. I can say we now have a tortuous agenda for growth here. We are spending most of our waking hours on where we are going to be in three to five years. We have become rigorous about new product introductions (NPIs). We now have an NPI pipeline and a merger and acquisition pipeline. We [recently introduced] digital printing on glass Ö and itís quite a technology. So we are rapidly moving new products forward.

USG: So whatís the negative side of coming here after such a long time there?
JP: The bad part is learning the technology. Iím not an outsider to commercial or construction markets. I had 32 years at Honeywell, coming from AlliedSignal. And I did a lot of different things there. I spent my first 20 years in automotive. My last assignment there was as president of Bendix Brakes. There is just something about being in the automotive industry that stays with you. You start bleeding automotive blood.

Eventually I ran two of Honeywellís businesses in the Automation and Control Solutions (ACS) business segment. These businesses were both $3B global HVAC businesses, including the commercial construction/installation business. The goal was to get spec-ed. The advantage Honeywell had is that there was a robust service market and one-third of its annual revenues were recurring service contracts. Thereís really nothing analogous for glass; there is no such thing as a service contract for glass. When it does break, I consider that more of a will-call type business than a true service business. Another third of its business was retrofit work.

USG: Do you think retrofit work is viable for a company like Harmon?
JP: Absolutely. Thereís a tremendous opportunity, especially when guaranteed energy savings is in the value proposition. Itís a multi-billion dollar market opportunity; more than half the glass out there is monolithic uncoated. With changes in glass, lighting and HVAC, we can generate energy savings. Itís a little more difficult to do with glass than HVAC, but it can be done especially in the MUSH (municipalities, universities, schools and hospitals) markets. Itís a great opportunity in which our businesses participate.

USG: You know there are an awful lot of contract glaziers who are not enamored with the new green performance mandates. They feel itís just another way that architects and general contractors are shifting liability for energy performance to them. How do you feel about the green energy programs?
JP: Look, I hate subsidies and love regulations. Subsidies drive bad behavior and achieve lumpy results. Announce a stimulus package and everything comes to a grinding halt because everyone is looking for a free lunch. And once it ends, once the food fight is over, you are weaker than you were before. I like regulations instead that make more sense. It typically changes behavior in the right direction and achieves worthwhile results. Iím for the most stringent energy code there is. We will do well with it and it also drives up the barrier to entry in the business, which is better for the premier companies in the business.

The blast- and hurricane-resistant markets are much more heavily regulated and that has been good for us. It helps weed out the poorer performing players from the industryís top quality companies. Thatís good for us.

USG: You mentioned that Honeywell had a strong service program. Yet itís no secret that Harmon has spent months quietly dismantling its service business. Given your history that strikes me as strange.
JP: We did have something called a service arm in our Harmon business, but it wasnít really a service arm. It was more of a will call business. Our business was responding to requests for repair. You are either all the way in that model or you are out; you canít dabble in it. Itís very expensive to have people sitting on the bench waiting for glass to break. Service work can be profitable for quality, local operators, but itís hard to pull off on a national basis. We have pretty much exited what I would call our will call business.

Harmon has spent a good bit of time defining its target projects. They focus on medium-sized projects in the $3-5 million range, five to 40 stories. Now, we do make an exception for some of our valued customers who have a need for service repairs. We donít say no to them.

USG: Each segment of the glass industry sees the part of Apogee with which it deals. Yet the company is really six different business units. Can you explain how they fit together?
JP: Well, we have a large scale optical business that is a wonderful independent business ...

USG: And that is the one that doesnít seem to go with the others ... JP: Itís an $80 million dollar business and a real growth market for us using similar coating process technology as our architectural business. The financial analysts always ask me about its fit and I can state unequivocally that we are keeping it.

USG: Letís turn to the other business units for a minute. Along with Harmon, thereís Viracon, Wausau, Linetec and Tubelite. Thereís always been a concern among competitors that Harmon gets preferential pricing from the other four for projects itís bidding. How would you respond to that?
JP: We could offer a total package, but we donít choose to go to market that way. We anodize, we unitize, we install, but each unit is separate. We believe our glazing contractor customers when they tell us they donít want a bundled package. And thatís fine with me. I donít mind getting multiple bites at the apple. Maybe Viracon partnered with one contractor; Wausau another. It just gives us more chances at the project.

But we donít have a ďHarmon price.Ē Period. We couldnít keep our customers if we did that. Viraconís sales to Wausau and Harmon, for example, make up less than 8 percent of Viraconís sales. We donít collaborate commercially in that way. We do collaborate in sharing reliable, repeatable business processes.

USG: I donít think itís any secret that many in the industry saw Harmon as given up for dead a few years ago and now, it seems revitalized. What role did industry closings and bankruptcies play in that?
JP: Well, weíve been surprised that, given the economy, there havenít been more fall-outs. Really, thereís been almost none except on the installation side of the business. And the reason weíve survived it ourselves is that we did not chase prices into the gutter. We walked away from projects that required it. We have flexibility and, though our business definitely took a hit, a significant portion of those costs are variable so we contracted. Others did not and now they donít exist. Weíve also seen a number of general contractors make a ďflight to safetyĒ and theyíve flocked to us. When your glazing contractor goes out of business mid-job itís very disconcerting. Thatís one of the advantages to being a public company. We must report our financials every quarter; everyone, including our customers, knows how we are doing. Itís an advantage that we take to market. One of the reasons I was willing to leave Honeywell after so long was that I looked at Apogee and said ďlook, this is a terribly down market. Yes, this company has virtually zero debt and a lot of borrowing capacity.Ē Thatís an advantage for all of our business segments.

USG: Speaking of contractors going out of business, Apogee was widely seen as swooping in and grabbing a ton of Trainor work and Trainor people. How did that come about so quickly?
JP: We had Texas in Harmonís growth plan as a region to grow for awhile. When Trainor exited the market, Brad [Austin Harmonís president] was on a plane that afternoon to interview their people. He did a fantastic job of hiring their top talent and picking up some of their jobs. We also picked up a fair number of jobs through the bonding companies. So we were able to shorten up the timeline on one of our goalsóTexasóand beat it by about a year.

USG: Apogee also made a number of forays into international work with very mixed results. It also pulled back from international work. Any plans to grow outside the United States again?
JP: Harmon is not international. Its focus is on the U.S. and they had made the move away from international before I arrived. I agree with that model. I like our focus. We defined the types of projects we wantóthe ones that fit in our wheelhouseóand those are the ones we go after.

Our Tru-Vue business is ripe to become international, though. We can export it as the product is made in standard sizes and cut on site. We can export it easily and ship it on pallets. We opened a warehouse in Amsterdam and now are on the map in Europe.

USG: Letís talk a little bit about Viracon. As you know, Iíve spent more than 30 (yikes!) years in the glass industry. For much of that Viracon was known as just about the best, most efficient fabricator in existence. And then, for awhile, it wasnít. Things changed, as did quality, and lead times stretched to new records. Where do you feel Viracon is today in terms of quality and timeliness?
JP: Where we saw things that needed changes, we made them. We shut down one plant [Statesboro, Ga.] for six months so we could make a $7 million investment in upgrades there. The results show. We were underfunded there in terms of automation and productivity. We arenít anymore.

You know, we went to Statesboro and told everyone what was going on. We told them not to read anything into this other than what we were telling them. We said weíd be back and we were. More than 80 percent of our employees came back six months later. Some had even gotten other jobs, which they quit to come back to us. And we have great leadership at Viracon, too. Russ [Huffer] was gracious when he knew he was leaving and left the Viracon presidency open for me to fill. Within two months I knew Kelly [Schuller, president of Viracon] was the right person for the job. I couldnít be happier with what heís done. The whole leadership team at Viracon is extremely solid and stable.

USG: I just have a few more questions. I notice that you have mentioned a few times today that you retired from Honeywell. Yet, in reality, you really resigned. Itís almost like you canít bring yourself to say it.
JP: [Laughs]

USG: Am I right that leaving must have been one of the hardest business decisions of your life?
JP: It was a significant personal decision but, ultimately, I wanted to run the show. I had run three profitable, billion-dollar units, but Iíd always wanted to drive my own agenda. And the prospect of running a public company appealed to me. So when the executive search firm contacted me, it was very attractive.

USG: Beyond shareholder return, how are you going to judge your own success in this position?
JP: By the employees. Are the employees who report directly to me, as well as those below them, successful? My only priority is to make sure they are more successful. One of my characteristics, that is a strength sometimes and a weakness at other times, is that I take things personally. So employees are very important to me and I take their growth personally. I take it personally when they leave, too. But my goal is always to see them grow.

USG: Thank you for your time.

Debra Levy is the publisher of USGlass magazine. She can be reached at deb@glass.com. Read her blog at http://deblog.usglassmag.com, follow her on Twitter @keycomm and ďlikeĒ USGlass magazine on Facebook to receive updates.


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