During the weekend that Vitro S.A.B. de C.V. closed on its purchase of PPG’s flat glass business, a human resources official from the Mexican glass maker made the rounds at the Pittsburgh coatings company’s glass research center in Harmar, placing a shiny gray coffee mug with a Vitro logo at each workstation.
Though most employees weren’t in the building at the time, a few who were overheard him announce each worker’s name aloud as he approached their unoccupied desks and say, “Welcome to Vitro.”
When they showed up to work a few days later, employees at all the PPG flat glass locations watched a video in which Vitro workers greeted them with balloons, signs and applause.
Dick Beuke, a longtime PPG executive who is now vice president of Vitro’s U.S. and Canada operations, said those were powerful gestures to a workforce that in recent years had been unsure about its long-term fate.
PPG got its start in the 1880s as Pittsburgh Plate Glass. But for the last couple of decades, it has been transforming from glass and chemicals into one of the largest paints producers in the world through a series of coatings acquisitions and the sale of many old-line manufacturing segments including glass used in car windshields.
“Our business was important to PPG, but not strategic,” Mr. Beuke said of flat glass, which along with a fiberglass unit generated only about $1 billion of the company’s $15 billion in annual revenues last year.
PPG sold the flat glass business to Vitro on Oct. 1 for $750 million and on the same day closed the sale of its European fiberglass business to Nippon Electric Glass of Japan for an undisclosed amount.
The Pittsburgh company expects to sell its 50 percent ownership in two Asian fiberglass ventures by the end of the year. In April, it sold its 40 percent stake in Pittsburgh Glass Works to LKQ Corp., a Chicago-based auto parts maker.
Flat glass is used in residential windows and commercial construction; fiberglass is a reinforcing material. PPG still owns fiberglass plants in North and South Carolina.
As it became clear the flat glass unit was on the market, Mr. Beuke was apprehensive about whether it might go to an investment firm or be auctioned to “people who don’t care about the business.” Under Vitro’s ownership, he believes the unit is poised to become a growth engine.
Vitro has said it will expand production by investing in a jumbo glass coater at one of the former PPG facilities. That project, expected to cost $55 million, is likely to be completed at a plant in either Carlisle, Cumberland County; or Wichita Falls, Texas, and the coater would be the largest of its kind in North America, he said.
“At PPG, glass was pretty low in the capital interest game. Now we are the most strategic business in a glass company vs. being the least strategic in a coatings company,” he said.
Based in San Pedro Garza Garcia, a suburb of Monterrey, the 107-year-old Vitro is the largest glass producer in Mexico and had sales last year of $882 million. Commenting when the deal was announced in July, Adrian Sada Cueva, Vitro’s chief executive officer, said PPG’s flat glass business would complement Vitro’s, which has focused on growing the auto and construction markets. Last year, Vitro sold its food-and-beverage glass unit to Owens-Illinois for $2.15 billion, but it still makes glass cosmetics bottles and glass for appliances along with automotive, residential and commercial building glass.
Vitro last month said it had secured a seven-year, $500 million loan from Mexican bank Inbursa to help finance the PPG purchase.
Besides the Harmar research and development center and the plants in Carlisle and Wichita Falls, the Vitro acquisition from PPG includes plants in Fresno, Calif., and Salem, Ore; and four fabrication and distribution centers in Canada. The business has 1,200 employees, including 200 who work at the Harmar research and development center about 15 miles northeast of Downtown.
No layoffs are planned, Mr. Beuke said, adding that some workers who were on the verge of retirement from PPG have decided to stay and some recent retirees will work as consultants. “Vitro didn’t want people walking out the door,” he said. “They said they wanted 100 percent of our people to stay. That’s not bad when I was expecting a number of layoffs or maybe a fight over who would pay severance.”
Since the sale, Vitro has been leasing space at the Harmar glass center to PPG for about 80 researchers who work for PPG’s architectural coatings business.
“We still share the cafeteria,” Mr. Beuke said. “We still treat them like family.”