Volume 37, Issue 12, December 2002
"Think of us as a Consolidation, Not a Roll-up"
UGC Management Discusses All That’s
Really Happening with the Company
by Ellen Giard Chilcoat
Larry O'Connell Bill Stone
United Glass Corp. (UGC) is a company that’s been in the news a lot lately. In order to find out all that was really happening, we sat down to talk with UGC president Larry O’Connell and Bill Stone a member of the UGC board and president of Louisville Plate Glass. Both O’Connell and Stone are UGC co-founders. The following interview is the result of that conversation.
Tell me about the status of your company today?
O’Connell: UGC was formed in July 1999 and the company has continued to move forward. The company is set up structurally with an East and West president [both of whom serve on the executive committee], and those two presidents tie the company together by meeting individually with the various managers in their locations. The East Coast president is Jack Deyo, who is in Columbus, Ohio, and the West Coast president is Nick Sciola in Seattle. The executive committee reports to a corporate entity. Plans [for the company] are made at the corporate level and then passed down through the East and West presidents. The structure is a communication device, which makes it easy to implement the corporate goals and objectives.
Stone: Each company operates individually to maintain local brand names. We coordinate the purchasing, buying, pricing, etc., and we try hard to maintain a feeling [for our customers] that they are dealing with a small company.
O’Connell: We are bringing service and timing to the table. We have tried to maintain the ability to service our customers in a timely manner.
In working with many different company heads, conflicts of interest have to occur from time to time. How are such issues resolved?
O’Connell: If a manager of a certain operation had a problem with purchasing materials, for example, he’d bring it to the attention of that area’s president. Very few issues rise above that level.
UGC was started as a great experiment in roll-ups. Some say the experiment has not achieved what it set out to do. How do you feel about this?
O’Connell: In July 1999 this type of roll-up was in vogue, and the concept of UGC fit that mold. But the market conditions changed and the ability to take a company such as UGC to New York as a public company did not exist. We changed our approach when we saw the writing on the wall. We [are now] in an operate-and- optimize mode to make ourselves as strong financially as possible. We have cut duplicate costs in various companies to get everything more centralized … we have also started concentrating on debt reduction. Reducing our overall debt allows us to expand—[A company] can grow larger by acquisition or it can strengthen and grow internally. We will emphasis the latter approach. We are reducing our debt and expanding our own operations to be stronger.
Stone: Think of us now as a consolidation rather than a roll-up. Optimization is our central attitude. It is absolutely the maximum use of our resources. It is our philosophy and our focus.
O’Connell: There is no duplication of our resources. [For example,] excess capacity in one facility is shipped to another.
What are some major changes to have happened to UGC since its inception? Did any of these come as a surprise?
O’Connell: Nothing has really shocked or surprised us … all of our companies that consolidated have learned to run their businesses in both good and bad times. Our youngest company is more than 20 years old; our companies have decades of experience.
You’ve recently divested a number of parts of the company. What were your reasons for doing so?
O’Connell: When the decision was made to sell Glasswerks (GLWA) back to the individual owner (Randy Steinburg), the decision was made based on what’s best for the company. Working in the Los Angeles market is a challenge, and the ability to sustain that market didn’t fit the long-range plans of UGC. [Selling the operation] was a business decision. We look at how we deploy our assets and where we get the best bang for our buck. The decision to sell was not made with the intention of breaking up UGC, but strengthening it.
That brings me to another point. We ran an article recently on this matter (see the August 2002 USGlass, page 26). You felt the article was fair, but took issue with the headline. Why?
O’Connell: The article was fine; unfortunately, some people only read the headlines. It was a tremendous influence on us with our suppliers and customers. We got much feedback from that headline and have had to reassure our customer base that we are not breaking up. We have never been as financially strong as we are right now.
You explained the factors behind Steinburg’s repurchase of GLWA, but what were the factors behind the Ziegler repurchase in 2000?
O’Connell: When we started UGC under a different chairperson and chief executive officer the Zieglers … were invited in by sponsors of the roll-up. They were the only glaziers in the group. With their location and business there was nothing synergistic about it. The only reason they were in it was for sales revenue. The board made an offer to Ziegler to take the company back. It was in their best interest, and friendly relations with them still exist.
In response to issues, such as these, that may be viewed as negative by some in the industry, what do you say?
O’Connell: UGC analyzed all operations and markets we are in currently, and the group [operates] in the markets it feels best suits the corporate goals of growing and strengthening in the market it serves. Our goal is to be efficient and strong financially and grow in the market that we serve.
Let’s talk about Jim Bradford’s leaving. What were the terms behind this situation?
O’Connell: Jim offered his resignation because when he came on board, there was the concept that we would become public and acquire other companies through public funding. Within six months of the companies coming together Wall Street painted a picture that made that happening impossible. When he realized this was not going to happen for UGC, it became a different game for him. He is now teaching at the graduate level at Vanderbilt, and he is still a great friend. We still call on him for advice when we need it.
Stone: Jim was a “pro coach,” capable of doing all the things UGC needed had we gone to Wall Street. As we changed and consolidated the company to work toward our new goals, his objectives changed.
What are some things you want people to know about UGC?
O’Connell: We pay close attention to the transitions taking place with all of the float glass manufacturers and all of the value-added glass [being created]. We want to position ourselves to take full advantage of those value-added glasses. UGC is following that closely because we feel as a player we can take those products and get them to customers quickly with high quality.
Stone: From the fabricator’s point of view, there is not a more customer-focused group than UGC.
What are some of UGC’s future plans?
O’Connell: We’re not ruling out future acquisitions of companies in the markets that we want to be in. We do have the cooperation of our banks should we find a good accretive opportunity, but we are not in an active acquisition mode.
Does UGC have any plans to ever go public?
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