Volume 48, Issue 9- September 2013
Survival of the Fittest?
A Look at the Changing
Face of the Independent Glass Fabricator
“It will be interesting to see how this company changes the industry,” wrote USGlass publisher Debra Levy in her August 1999 column.
Interesting indeed. Thad Ziegler soon bought his company back in 2000; Randy Steinburg followed in 2002 buying back Glasswerks; Nick Sciola, president of Hartung was next, in 2004. In 2009 Bill Stone, president of Louisville Plate Glass, bought back his company as well. And in 2010 UGC made the decision to close the Mid Ohio Tempering operations. Bradford exited the operations in 2001.
Throughout the 2000s the industry saw further consolidations. Both OBE and Arch were aggressive in pursuing and acquiring regionally owned and operated glass and curtainwall fabricators, and eventually, glazing contractors.
Then there was the brutal economic downtown. The once thriving Arch Aluminum & Glass filed bankruptcy in 2009 and, in 2010, was purchased by Sun Capital (a company that had also purchased the former Carolina Mirror in 2000). These purchases were only the beginning for Sun Capital, which bought both Vitro America and what was left of UGC in 2011. It was during this time that the industry got to know Grey Mountain Partners, which over the course of a few months, acquired seven companies in the glass industry, now operating them as Consolidated Glass Holdings.
And there have been others. Craftsman Glass in Houston was acquired by Cristacurva in 2010, and Joe Santelli, who, in 2005, started Santelli Tempered Glass in Monessen, Pa., ceased operations in 2012.
Most recently, Dlubak Corp. in Blairsville, Pa., filed Chapter 11 bankruptcy last month.
Bill Stone, president of Louisville Plate Glass, and one of the original founders of UGC, is more than familiar with how quickly companies are changing.
“Today fabricators are much more aware of the importance of both costs, judicious issuance of credit, and are using far more discretion with the purchase of equipment. While business is improving over recent years the pie is much smaller than pre 2008,” he says. “The independent at this time is beginning to garner more sophistication regarding return on investment when considering an expansion. If you are in the business and not dangerously leveraged you should be okay but for those considering a new investment there are better opportunities elsewhere.”
The industry—particularly the role and composition of the independent glass fabricator—has changed. But what spawned all of this?
“We certainly saw independents consolidating and pooling resources as well as [seeing] acquisitions by the larger fabricators. The increased purchasing power of these consolidated organizations coupled with global economics has impacted the supply chain, and consolidation or reduction in the supplier base has also been evident,” says Ren Bartoe, director of glass and industrial technologies with Vesuvius in Pittsburgh.
“Since the mid-to-late 1990s the rapid increase of fabricators has gotten close to its zenith—a saturation point for capacity in the U.S. and North America,” he says. “The availability of less expensive heat-treating and laminating equipment led some companies to acquire and operate said equipment.”
Brown continues, “This expansion of fabricating equipment—lots with folks new to the fabricating business—created a lot of regional and local fabricators. Many of these had always been consumers of fabricated glass products in their previous environment. Some were successful but some have fallen flat with their new product lines and business concepts.”
But independent fabricators are unique. Many of these companies are committed to standing strong and doing so without the backing of larger corporate entities. These companies find much of their strength in the benefits of being small.
Standard Bent Glass Continues to Thrive by Serving a Unique Marketplace Niche
Standard Bent Glass Corp. (SBG) in Butler, Pa., is no stranger to acquisitions; the company’s co-owners, the father and son team of Mike and Kent Hartley, have acquired and sold a number of companies. But through it all the two are committed to keeping SBG in operation as a specialty-focused, independent glass fabricator.
“We make very special products (bent tempered glass, heated glass, Department of Defense [DoD] certified glass, high-end decorative glass) on a national and international platform and it takes a certain understanding of the requirements and the process in order to do it correctly,” says Kent Hartley. “It’s not a product or a market where you can just decide to make vanilla products at 20 locations across the country. The knowledge is unique to both make and sell the products; the equipment is unique and I think the overall SBG philosophy is different.
The Hartleys purchased SBG in 1993. The company had been in business since 1936, primarily focused on bending monolithic glass, eventually expanding into safety laminated bent glass. Jeff Nichols, vice president of sales and marketing, explains that the company was founded by Archie Schottland who added value to his glass by bending it in sand/clay kilns—some of which the company still uses. When Schottland died his wife inherited the company and eventually the Hartleys took ownership. It was under their direction that that SBG’s mainstay of bending glass began to change. Today the company has approximately 100 employees and operates in a 160,000-square-foot facility where it focuses on producing an assortment of decorative glass products.
“The Hartleys quadrupled the business during that time and we saw sales growth and more market share,” says Nichols.
Then in 2000 they made their first acquisition, acquiring Globe Amerada’s architectural glass division. The company, which was renamed Global Security Glazing, produced security and hurricane glazing products as well as other laminates for architectural and transportation markets. In 2012 that company, though, was sold to Grey Mountain partners.
A New Face
“It’s been interesting,” comments Nichols of these changes. “And in some cases it didn’t work out. We’re [focused on] niche, value-added work and so we’re less sensitive to pricing than some of the commodity fabricators as we have fewer direct competitors.”
“The consolidation has created more of a corporate type of industry versus the old network where we all knew each other and did work and struck agreements on handshakes and knew the owners of all our suppliers and competitors,” says Hartley. “It felt like a much smaller industry than it does today.”
Tim Moore, senior process engineer for SBG, is all too familiar with consolidations and roll ups. He previously was the technical services manager for Arch Aluminum and Glass and prior to that spent 15 years at PDC Glass and Metal Services/UGC before joining SBG in 2009.
“We’ve seen general commercial fabricators try to come into niche markets, but they’ve not been terribly successful,” says Moore.
He adds, “We’ve seen a lot of people move around; but the common thread [looking at the] independents those guys are all there,” he says, explaining that with the independent fabricator the leadership has remained stable, while with some of the larger companies it often changes.
But be it acquisitions, mergers or consolidations, both Hartley and Nichols think this is a path on which the industry will likely stay.
“I believe the days of the smaller independent fabricator are nearing an end,” says Hartley. “I assumed that after 2008 independents would come out of the rubble and shine--and I still believe this would have been the case--but the market was down for too long. Many of the remaining independents could not sustain the continued downturn in the economy over the four- to five-year period and had to close their doors. ”
Hartley adds, “Independents always have much better flexibility with the customer and typically can react to changes in the market quicker.”
Nichols agrees that the flexibility within a smaller organization can be one of its greatest strengths.
“Smaller companies can manage to make quick decisions, whether about changing the schedule, work lead times, personal service,” he says. “Being more flexible, you can make quick decisions and service immediately.”
That flexibility to make decisions quickly is beneficial not only for customers, but also internally. One example came when it was time to upgrade the company’s chillers that are used for the autoclaves. Moore had the idea to tap into a well to generate power geothermally for the plant. “That’s a decision you can do as smaller company—a quick decision,” says Moore. “From the standpoint of cost saving, efficiencies, we had to do an upgrade to the chillers and we had received astronomical quotes, from $250,000 up to $500,000 to replace the equipment.” Moore had the idea, though, to explore geothermal. He got in touch with some experts, who put together a test board to see if it would pay off and once that was done, for about a $50,000 investment, “if you want to see chillers you can’t; they’re in the ground,” says Moore. The new system is connected to autoclaves as well as the waterjet line.
“The potential is there for use with other areas for HVAC control,” says Moore. “It was a solid investment.”
Meeting a Need
“We’re not just architectural [glass]; we’ve had several markets to tap into,” he says, noting the company’s work in areas such as security glass, the display case market and transportation, among others.
One big move for SBG came in 2008 when it became a licensed fabricator of DuPont’s SentryGlas Expressions, a decorative, printed polyvinyl butryl. The company is continuing to explore a variety of decorative possibilities, and Nichols says expanding into the growing segment has opened market share and new opportunities to work with designers. However, he’s quick to add that serving a niche market takes more effort and focus compared to those that are more of a commodity. According to Nichols, some larger companies have ventured into the decorative, niche market in the past, but have not survived.
“They see it as market, but a small market, and they often find they can’t maintain it,” says Nichols. “So the competition is limited. This is labor intensive work that goes into [making these products] so hopefully we can capture better margins than commodity companies.”
With that said, it can also be difficult to hire and retain good employees.
“It can be a challenge, especially with custom products because it requires a lot of trained labor,” says Nichols.
The company’s diverse product offering was also instrumental in seeing it through the recent recession.
“We were fortunate to have considerable DoD work in the 2008-2011 timeframe to assist us with the downturn of the architectural economy,” says Hartley. “Now with the downturn of the DoD we are hoping the architectural market continues to improve.”
“We know our products, we’re service-oriented and are able to lead customers in the right direction,” says Nichols. “Most glass contractors that call us for curved glass are rarely using it; a repeat customer might be one every three years. So we want to make the process easy.”
Looking ahead, the team at SBG plans to continue growing and diversifying to strengthen its capabilities.
“The future will be impacted by the energy codes, which I assume will continue to push coating technology and I am sure consolidation will have a continued impact—think about how much it has changed since 2003,” says Hartley. “We have been here since 1936, 77 years, I trust SBG will be around for another 77 years as long as we remain flexible, look at new products, new markets and focus on our customers.”
Bridging the Gap
That is what the company did in 2009 when sales were down 50 percent. David Dillmeier says his company prepared for the downturn in the economy and the glass market. He had attended some financial seminars where economists were predicting what was to come.
“We froze salaries and bonuses. We really watched what we were spending. It was 18 difficult months, but then we started to see business pick up again,” he says.
Be Sure to Diversify
While Dillmeier feels that many independents face the misfortune of not having the capital to invest in new products, he feels a strength that many do have is their ability to adapt to a changing glass environment.
Acquisition and Expansion
David Dillmeier says his company does just about everything when it comes to glass fabrication—cutting, drilling, edging, grooving, precision hole drilling, and more.
It works with other suppliers for bent glass and beveled glass.
“We partner with others on regional and national levels and have some very special relationships,” he says.
Dillmeier Glass has added many of these capabilities since the acquisition of the Arkansas manufacturing plant in 1980. The company expanded its manufacturing facility in 1990 to 70,000 square feet in Fort Smith, but the facility remained bound by property lines. In 2006, Robert Dillmeier decided to move the manufacturing facility six miles to Van Buren, Ark., where the company owns 20 acres. This move and expansion cost the company approximately $1 million.
But expansion did not end there. The company finished a 12,500-square-foot expansion at the end of July. It has allowed the company to manage its raw glass inventory more efficiently and to make room for a new roll-coating paint line. David Dillmeier says the cost of this expansion is, “$500,000 and rising.”
Focusing on Customer Needs
Alston refers to a trend in the glass industry that Dillmeier has seen for his company over the past decade. He says his company has to be more of a partner to develop the right solution for the customer, which often equates to “more responsibilities, [faster] turn-around times, and custom work.”
Dillmeier recalls an instance when a customer really needed help on a project.
“A customer needed tempered glass within 12 hours and delivered on a Sunday, we made it happen,” he says.
This instance directly correlates within David Dillmeier’s philosophy of doing whatever it takes to make the customer happy, and he relies on his employees to help make this happen, even if it means working late, extended hours, or on the weekend.
The Right Fit
“We hire temps first, so we can really get a look at [a prospective full-time] employee, and they can get a look at us. We are a family business. There are a lot of situations when things happen out of our control. Our employees really appreciate [when we empathize with them], and we have been able to accommodate some employees through some tough times.”
Cody Tran, plant manager who has worked for the glass plant for 33 years, affirms that Dillmeier Glass management really does care about the employees.
“They [the Dillmeiers] are the most generous, nicest people,” Tran says. He recollects a time when an employee’s family could not afford to pay for a child’s funeral, and the Dillmeiers paid for it.
Currently, the manufacturing plant works three shifts and has approximately 60 full-time employees, and 40 temporary employees.
Tran says by hiring everyone first on a temporary basis the company is able to see the employee’s work ethic. Can the person do the job? Does the person have a good attendance record? Those are questions posed when the decision is made to hire a temporary worker on as full-time.
Stone Crafter machine operator Dillon Rogers has been a temporary employee with the company for a couple months. He worked in a fiberglass plant before this position, and says he hopes that this leads to full-time employment. “There is more knowledge to be learned and more room for advancement to gain here,” he says.
Dillmeier entrusts much to his employees at the Arkansas plant. He runs the company’s corporate office out of Garden City, N.Y., and visits the plant monthly. Garrett Ames, the company’s head of sales, is located in Providence, R.I.
Technology Makes Distance a Non-Issue
“There is cash on the sidelines that people are looking to invest and people are looking for non-stock investments—real brick and mortar investments as private equity groups look to invest cash,” he says.
While there have been many consolidations, there have also been new independent fabricators in the market. Dillmeier says this new competition continues to make companies be the best businesses they can be and operate as efficiently as possible. He believes the competition will only get tougher.
When asked if his company has ever been approached by another company to consolidate or to be acquired, Dillmeier says, “I have been approached, but I feel an obligation to my family and a fifth generation to continue the business and pass it on to my kids, [Sean, Luke, and Chris]. I don’t know if it will be the exact path, but that’s what I would like—to have a fifth generation running the business.”
Surviving the Storm
Family Owned Independent Glass Fabricator J.E.?Berkowitz L.P. in Relatively Strong Position Thanks to Proper Planning
Arthur Berkowitz sees the glass industry’s first consolidation period many years ago as a deliberate one, based more on long-term corporate strategy than dire financial necessity.
But it was the most recent second consolidation period – this one predicated by corporate financial distress - that really changed the face of the industry with the elimination of so many independent glass fabricators. But the president of J.E. Berkowitz L.P. (JEB) takes great pride in the fact that his family-owned company is not only standing following the tough times, but thriving.
Based in Pedricktown, N.J., JEB emerged from the recession in a relatively strong position after planning accordingly during the 2009-2011 stretch.
“I like to think that we came out of the last recession in a lot stronger position [than some of other independent fabricators],” Berkowitz says. … “We didn’t take any shortcuts.”
His company’s continued success is a stark contrast to that of many other independent fabricators, many of whom either closed or were left financially vulnerable during the lean times and forced to yield to bigger name companies.
The glass industry’s first such consolidation period came years earlier, but was strategy-driven rather than financially-driven, the JEB president notes. Companies such as Oldcastle Building Envelope® (OBE) had distinctive plans in mind when they first sought to add smaller entities under their corporate umbrella.
Things were decidedly different during the most recent economic crisis as corporate financial distress fueled by a precipitous drop in demand forced the hands of many companies into capitulation.
There were no such problems at JEB, thanks in large part to Arthur Berkowitz’s foresight. He says that business is now “surprisingly good,” although he is quick to also point out that other independents continue to fare well, too.
Chief among his fateful decisions was his resolve to trust his own experience and gut feeling and dispel serious doubts from the bank when he opted to invest seven-figures in capital to continue buying sophisticated, new equipment even when the economy was down.
“There was no obvious ROI,” Berkowitz says. “There was no return on investment, but I didn’t want to be short-sighted. We needed to be state-of-the-art.”
The financial gamble of sorts proved spot-on, as JEB’s array of technological advances at the company’s centrally-located facility within easy servicing distance to all the major cities in the northeast corridor made the company uniquely qualified for some high-profile and lucrative jobs.
Certified with the International Quality and Service Standards set out by ISO 9001, JEB recently received a contract to supply more than 400,000 square feet of insulating glass units (IGUs) for the construction of The Tower at PNC Plaza, a new 33-story highrise in Pittsburgh. The units for the new world headquarters of the PNC Financial Services Group will boast PPG’s Starphire® ultra-clear glass and Sungate ® 400 passive low-E glass.
he building’s double-skin façade will feature laminated glass and dual IGUs fabricated by JEB to help the structure achieve “net-zero” energy status for more than 40 percent of the year.
Berkowitz attributes part of his company’s success to its ability to adapt to an ever-changing market. JEB was synonymous with mirrors when Jacob E. Berkowitz first founded the company in 1920, and was still nearly exclusively focused on building products when his son, Edwin J. Berkowitz, began overseeing daily operations.
The company remained a “100-percent wholesale distributor” when Arthur Berkowitz later followed in the steps of his father and grandfather and assumed control of the company in the mid-1980s. The third-generation Berkowitz quickly recognized changing market conditions and immediately took steps to make sure the family business remained viable in the future.
That meant moving the company in 2006 to its current 23-acre site in the shadows of the Delaware Memorial Bridge, where it operates in a 200,000-square foot facility, employing more than 250 people and operating with what the company describes as “the newest and most precise glass fabrication equipment.”
Architectural glass fabrication capabilities include insulating glass, heat-treated glass, silkscreen and spandrel glass, laminated glass, all-glass doors and entrances and point-supported glass systems and canopies for both the domestic and overseas markets.
The company’s three vertical, automated Lisec insulating glass lines are equipped with robotic sealing, treated water for washing, on-line argon gas filling capability, on-line edge deletion for coated products and continuous bent spacer frame manufacturing for both aluminum and stainless steel frames.
In many ways, JEB’s consistent successful adaptation to the ever-changing market conditions around it mirrors the change in personal athletic endeavors the company’s president has also undergone as life changes for him.
“I can’t play basketball anymore,” says the company’s youthful-looking, 60-year-old president and former Division III college basketball player. “I didn’t want to get hurt, so knew I had to find more low-impact sports like road biking, swimming, tennis or triathlons.
It’s like business – you have to evolve and change.”
But the company’s bottom line has always taken a back seat to the welfare of its employees, says Arthur Berkowitz.
hey have been and remain a family business, he says.
It still remains to be seen who the next Berkowitz might be to follow suit and guide the family firm into its next century. Arthur Berkowitz has three adult children – two daughters and a son – but none are entertaining such aspirations.
At least not yet anyway.