To have an idea of what kind of impact the economic crisis has had on PPG Industries Inc., we must consider the company“s automotive glass facilities in Troy, Michigan, close to the heart of the US c…
To have an idea of what kind of impact the economic crisis has had on PPG Industries Inc., we must consider the company“s automotive glass facilities in Troy, Michigan, close to the heart of the US car industry. “Our headquarters there is now half empty and I don“t think we“ll ever use the other half again,” Robert Dellinger, PPG“s CFO informed investors at the beginning of December 2009 during an industry conference in New York. Even if Dellinger said PPG is positive that a post-recession recovery is already taking place, the company carried out drastic measures such as job cuts and other cost reductions to help the company through the crisis, which it is now hoping will make a difference when the economy finally comes out of the recession. One of the steps taken by PPG (and other companies) was that of closing plants in the US and Europe. At the same time, it also continued focusing on global expansion and growing its coatings and speciality chemicals rather than struggling segments such as auto glass. “The key has been transformation of our portfolio,” Dellinger said in his New York presentation. This strategy to emphasize coatings and speciality products, which began in 1995, has led coatings, opticals and speciality materials to now account for 85% of PPG“s business. With regards to global growth, targeted particularly in Asia, North American sales have been reduced from 74% of all revenues in 1995 to 46% today. In 2008, PPG made its largest acquisition ever with the purchase of Dutch paints maker SigmaKalon for USD 3.2 billion. Coatings and speciality units, such as optical lens maker Transitions, “are growth businesses,” for PPG, Dellinger said, compared to automotive glass, which is among the company“s “challenging segments.” Even if the forecast is not so optimistic for that business, the company“s other glass segments could benefit from an expected increase in the construction markets in 2010, especially with regards to solar windows and other energy-efficient products, added Dellinger. “That would be a big, potential market for us, but we“re not holding our breath.” PPG“s restructuring, which included cutting 2,500 jobs or 6% of its global work force, is expected to save the company USD 150 million in 2009 and USD 100 million in 2010, he said.