PPG has been out of the automotive glass business since divesting its automotive business in 2008 and selling its stake in Pittsburgh Glass Works to LKQ Corp. in late April of this year. However, Mexican-based Vitro is purchasing the assets of PPG’s flat glass business for $750 million. Vitro produces both OE and aftermarket automotive glass and plans to tap PPG’s research center to expand these offerings, said PPG vice president of flat glass Dick Beuke.
“Vitro is a very big automotive supplier, so our research capability should be able to help there,” Beuke told USGNN.com™, a sister publication to glassBYTEs.com™/AGRR™ magazine, in an exclusive interview.
PPG has a large research and development center in Harmar, Pa.
“Research drives value for our customers,” he said, adding that success in that department depends on this question: “How will the research going on now play out in the next two to five years, to expand our market and opportunities?”
Beuke said Vitro is “really excited to get into the coatings business.” PPG’s operations will add low-E capability to Vitro’s offerings, and Beuke is particularly excited about the potential for research geared toward the automotive industry.
“Everybody will eventually have low-E glass in the automotive industry,” he added.
The company will also work on a solution to replace the need for sun reflectors under windshields, Beuke noted.
What Led PPG to Sell its Flat Glass Business?
Beuke said the company came to believe over the last ten years that “glass was an important part of the business, but it was not strategic.”
“I never want to say it’s always been for sale, but we all knew if the right partner came along, we’d talk to them,” said Beuke. “And that’s what happened when Vitro approached us a couple years ago with interest in getting deeper into the U.S. business.”
The companies began discussions in October 2014 at the glasstec show in Germany regarding the potential for a sale. The opportunity became more of a reality when Vitro sold its container business a year ago, which freed up capital to pursue an investment into the U.S. market.
Beuke said the company “learned a lot” from selling its automotive business to private equity in 2008. “[Corporate] wanted a strategic partner, and one where there was not a lot of overlap,” he said. “[PPG] was looking for someone that would keep the business alive.”
Discussing the deal, Michael H. McGarry, PPG president and chief executive officer, said: “This transaction represents the end of an historic era for PPG as a manufacturer of flat glass, and it is another major step in our portfolio transformation to focus on paints, coatings and specialty materials. Upon completion of this transaction, the flat glass operations will become part of a company that is focused on growing its core glass business.”
Beuke said with the purchase, Vitro will retain all employees and that it will continue to operate as usual at its various facilities throughout the U.S. and Canada. “The people and the processes will be the same,” he said. “From a customer appearance, nothing should change.”
Vitro’s Automotive Glass Footprint
Vitro has a growing presence in the production of OEM and aftermarket automotive glass. In early April, the company announced it is building a production plant for the automotive glass replacement market as well as a new OE automated line for the bending process.
The company is investing $35 million USD to expand operations. Vitro plans to fabricate 550,000 windshields and 650,000 tempered parts per year. The company offers windshields, door, quarter and back glasses under the CRINAMEX® and VPM® trademarks in Mexico, the United States, Brazil, Colombia, Ecuador, Venezuela and Panama, according to the company’s website.
“In the case of aftermarket, we seek to expand our market share mainly in the U.S. and Canada, taking advantage of our strategic location that will allow us to reach those markets in a highly competitive way,” said Baldomero Gardea de la Fuente, director of the automotive glass business, when the automotive glass expansion was announced.
Vitro also runs a large Mexican-based AGRR service chain called Vitrocar. It has more than 180 offices spread across 123 cities in Mexico.
Vitro’s deal with PPG is expected to close by the end of 2016, subject to customary closing conditions.
Under the terms of the agreement, PPG will divest its entire flat glass manufacturing and glass coatings operations, including the production sites in the U.S., distribution/fabrication facilities across Canada and a research-and-development center located in Harmar, Pa. PPG’s flat glass business includes approximately 1,200 employees.
—Nick St. Denis contributed to this report.