PPG Industries, Inc. History

Address:

One PPG Place
Pittsburgh, Pennsylvania 15272
U.S.A.

Telephone: (412) 434-3131
Fax: (412) 434-2448

Website: www.ppg.com

Public Company
Incorporated: 1883 as Pittsburgh Plate GlassCompany
Employees: 31,300
Sales: $7.22 billion (1996)
Stock Exchanges: New York Pacific Philadelphia
SICs: 2812 Alkalied & Chlorine; 2816 Inorganic Pigments; 2821 Plastics Materials, Nonvulcanizable Elastomers & Synthetic Resins; 2851 Paints, Varnishes, Lacquers, Enamels & Allied Products; 2869 Industrial Organic Chemicals, Not Elsewhere Classified; 3211 Flat Glass; 3229 Pressed & Blown Glass & Glassware, Not Elsewhere Classified

Company Perspectives:

PPG Industries' mission is to serve customers through effective use of our resources, to provide a fulfilling workplace for our employees, to be recognized as an outstanding corporate citizen, and to generate superior returns to our shareholders. In achieving this mission, our enterprise will be publicly owned, diversified, and global in operation.

Company History:

PPG Industries, Inc. is a global producer of flat glass, fiber glass, fabricated glass products, coatings and resins, and industrial and specialty chemicals. It is a world leader in the manufacture of flat glass, is the second-largest maker of continuous-strand fiber glass, and is the world's largest producer of automotive and industrial coatings and of optical resins. PPG is a leading supplier of products for manufacturing, building, automotive, chemical processing, and numerous other industries. The company operates about 75 production facilities in Australia, Canada, China, France, Germany, Ireland, Italy, Mexico, the Netherlands, Portugal, Spain, Taiwan, the United Kingdom, and the United States; and supports nine research-and-development facilities worldwide. PPG has grown from the dream of two men into a global corporation that derives more than one-third of its revenues from outside the United States.

Founded in 1883 As a Plate Glass Manufacturer

Captain John B. Ford and John Pitcairn created the Pittsburgh Plate Glass Company (PPG) in 1883. The first financially successful U.S. plate glass manufacturer, the company was located in Creighton, Pennsylvania, northeast of Pittsburgh. It moved its headquarters to Pittsburgh in 1895. Prior to the 1880s over a dozen plate glass makers had tried unsuccessfully to compete with their European counterparts. Despite American technical ability, plate glass for America's growing cities continued to be imported from Belgium, England, France, and Germany.

Manufacturing profits on glass were inconsistent partly due to the independents who controlled glass distribution. In 1896 Pitcairn established a commercial department and PPG became its own warehouser and distributor. Due to disagreements with Pitcairn regarding distribution, John Ford's sons sold their PPG interests and formed the Edward Ford Plate Glass Company. During the Great Depression, Ford merged with Libbey-Owens Sheet Glass to form Libbey-Owens-Ford Glass Company, now owned by Pilkington plc of the United Kingdom.

Pitcairn became president of PPG, and in 1899 he built the Columbia Chemical Company at Barbeton, Ohio. This independent company produced soda ash, a major raw material used in making glass. This plant was a forerunner of PPG's chemical group. By the following year PPG was selling 13 million square feet of plate glass a year and had become the nation's most successful plate glass maker.

Expanded into Paints by Early 20th Century

Pitcairn continued to expand PPG's product line. Because paints and brushes were distributed through the same channels as glass, they were a logical addition to the company. By the end of 1900 PPG had acquired a major interest in Milwaukee, Wisconsin based Patton Paint Company, the precursor to PPG's current coatings and resins group.

In the early years PPG had manufactured only plate glass. It marketed but did not produce window glass, or sheet glass. In 1907, however, the first window-glass factory was added to company operations, in Mount Vernon, Ohio. In 1915 a second plant was opened in Clarksburg, West Virginia. Pitcairn's strong interest in innovation and diversification led to the opening of the company's first research-and-development facility in 1910.

The first stage of PPG's development came to an end in 1916 with Pitcairn's death. In 33 years he had led the company through economic panics, foreign competition, and restrictive distribution channels to become the nation's largest plate glass manufacturer. He was also the force behind diversification of the company's product line as well as the development of raw material sources and expansion of marketing outlets for its many products.

In 1919 subsidiaries yielded more than 50 percent of net return for the year. In November 1920 PPG stockholders voted unanimously to fold the company's subsidiaries into the parent company, making them divisions.

Became Automotive Supplier During the 1920s

The 1920s were prosperous for PPG. As steel-cage and concrete-reinforced construction became the standard for building, architects were able to design structures with larger window units, and glass consumption reached record levels in the United States. During this decade, the automobile industry also began using more glass. The switch from the open touring car to the sedan caused an expanded need for glass, and PPG met the demand.

PPG also made several technological innovations during the 1920s. In 1924 the company switched from the batch method of making plate glass to the ribbon method. With this technique, molten glass from a constantly replenished melting furnace flowed through water-cooled shaping rollers. The glass was then cooled and cut into large plates.

In 1928 PPG first mass-produced sheet glass, using the Pittsburgh Process, which improved quality and sped up production. For the first time PPG became a major supplier of window glass. The Pittsburgh Process, invented by PPG, involves drawing a continuous sheet of molten glass from a tank vertically up a four-story forming-and-cooling line. In 1928 the Creighton Process was developed. An economical process for laminating glass for automobile windshields, PPG introduced Duplate laminated safety glass through a glass-plastic unit.

In 1924 PPG produced its first auto lacquer which the company marketed in only a limited number of conservative colors. By 1929 PPG supplied "no less than 500 harmonious hues" to 40 automakers. The company had also begun using a long-lasting, fast-drying finish developed by the Ditzler Color Company, a subsidiary acquired in 1928.

Always seeking to diversify, in 1923 PPG began to use limestone screening, a waste product of soda ash, to manufacture Portland cement. During the Great Depression, PPG developed new paint and glass products. In the 1930s the company developed titanium dioxide pigments, which greatly increased the opacity of light colors. It also created fast-drying Wall-hide flat paint, which made it possible to apply two coats of paint in one day. In 1934 PPG introduced Solex heat-absorbing glass. Also in 1934, it perfected a glass-bending technique that made the production of car windshields easier. In 1938 PPG introduced Herculite tempered glass. Herculite glass was several times stronger and more shatter resistant than ordinary plate glass.

Diversification paid off again for PPG during World War II. In 1940, the year before Japan attacked Pearl Harbor, the glass division had developed Flexseal laminated aircraft glass. During the war, when production of automobiles was temporarily halted and building was curtailed, PPG converted much of its production into materials for military use. Due to the shortage of raw materials during the war, PPG worked hard to develop synthetic resins, which inspired the development of plastics and high-performance paints and industrial coatings.

Explosive Postwar Growth

During the 1950s car production and construction of new homes and glass-and-steel buildings exploded. PPG stepped up production to meet demand, and continued to diversify. Fiber glass had been a laboratory novelty until the 1930s. By 1950, however, it was being used in decorative fabrics and for insulation. In 1952 PPG opened its fiber glass business, making both textiles and reinforcements.

Also during the 1950s, PPG developed lead-free house paints. In 1951, the company created the first latex-based interior paint and three years later brought a latex exterior house paint to the market. PPG was also one of the first companies to produce a no-wax car finish, and its chemical division introduced several new products, including a swimming pool purifier.

In 1955 PPG's sales topped $500 million. The company employed 33,000 people in seven glass plants, three glass-fabricating plants, two specialty plants, two fiber glass plants, 17 coating and resins plants, and five chemical plants. In the early 1960s PPG produced materials for the building, transportation, appliance, container, boating, textile, paper, television, and chemicals industries. In 1963 it became the first U.S. company to manufacture float glass, used in place of plate glass by architects. In the same year, PPG introduced Herculite K, glass three to five times more shatter resistant than ordinary window glass. Herculite K became popular for residential storm- and sliding-door units because of its low cost.

During the early part of the 1960s a heavy capital-investment program moved the company toward $1 billion in sales, a goal it reached in 1968. In the same year, the company changed its name to PPG Industries, Inc., to reflect its size, diversification, and global presence.

During the mid-1960s the company developed a coating process called electrodeposition. Electrodeposition involves submerging positively charged metal parts in a tank containing negatively charged paint particles suspended in water. The opposite charges attract each other, and the metal is coated more uniformly than if it had been sprayed or dipped. In 1969 the chemicals group won the Kirkpatrick Chemical Engineering Achievement Award for developing a process for the simultaneous production of perchloroethylene, widely used in dry-cleaning, and trichloroethylene, a degreaser.

The oil embargo, the increased price of oil, natural gas, and electricity, and the dwindling production of fuels in the United States revived interest in solar energy in the 1970s. PPG was the first major corporation to develop a flat-plate solar collector, a unit first marketed in 1975. PPG also continued to work on high-luster, long-life automotive finishes. It improved its acrylic lacquers and developed acrylic dispersion topcoat finishes with lower solvent emissions during baking, which are less harmful to the environment. In the early 1970s more Americans began to repair and refinish automobiles in order to extend their cars' life span. PPG's Ditzler unit developed easy-to-apply primers and topcoats that matched factory-applied coatings in performance and appearance.

During the 1970s tinted, insulated, and reflective plate and float glasses came to be known as "performance" glass, or "environmental" glass, as the energy efficient and attractive glass became the preferred material for curtain walls. In 1973 the last plate glass production line was phased out and was replaced by the float glass production method. Also in 1973, Wallhide Microflo consumer paints were introduced. The Microflo process created air pockets in paint films that helped reflect light more efficiently as well as producing easy-to-apply paint with a smooth, washable surface. In 1975 PPG continued to broaden its color line by introducing a new custom-tinting system for consumer paints called the DesignaColor System.

In 1975 PPG established a fifth division, plastic fabricating, and closed several outmoded plants. The corporation also restructured its marketing organization, disbanding the merchandising division established by John Pitcairn in 1896, and continued to develop high-performance glasses, coatings, and fiber glass products. In 1976 PPG reached $2 billion dollars in sales.

The year 1985 was the end of a chapter in PPG's history as the heirs of John Pitcairn sold their remaining stake in PPG back to the company for $530 million. PPG's biomedical systems division was established in 1986 and 1987 with the acquisition of medical-electronics operations from Honeywell, Litton Industries, and Allegheny International. The group produced computer-assisted cardiac recording equipment, patient-monitoring systems, electrocardiogram instruments, defibrillators, and related products for the health-care industry. In 1989 PPG significantly expanded its standing as a leading producer of architectural finishes with the acquisition of Olympic stains and paints and Lucite paints from the Clorox Company for $134 million.

The drop in the U.S. auto and construction markets during the late 1980s hurt PPG's sales. Automakers were PPG's largest customers, and fluctuations in that market reduced the company's profits. In 1989 the company's earnings dropped one percent, interrupting a six-year upward trend. Nevertheless, Vincent A. Sarni, who became chairman in 1984 and CEO in 1983, felt PPG was making progress toward goals set for the ten year period from 1985 to 1994. On February 26, 1990, Barron's reported that "The company has stayed consistently ahead of a goal to show an average annual return on equity of 18%." Sarni believed that by 1994 PPG would reach targeted annual sales of $8 billion even without acquisitions.

Difficult Early 1990s Gave Way to Mid-1990s Recovery

PPG fell far short of Sarni's ambitious sales goal as growth was derailed by the recession of the early 1990s, which hit the construction and automotive sector particularly hard. Following the 1990 peak of $6.02 billion in 1990, revenues actually declined to $5.75 billion by 1993. Nevertheless, PPG did manage to stay profitable throughout the recession, despite the difficult environment.

Sarni was more successful with his aim of expanding PPG globally. About one-quarter of the company's revenues came from outside the United States in 1986, but by the early 1990s the figure had grown to more than one-third. Much of this growth was accomplished through acquisitions. In 1990 the company acquired its partners' interests (the two-thirds not already owned by PPG) in Silenka B.V., a Dutch fiber glass producer, bolstering its already strong position in the European fiber glass market. That same year, PPG also bought Finland's Tamglass Automotive OY, which gave PPG a significant presence in the European replacement glass business, and Etablissements Robert Ouvrie S.A. of France, a maker of surfactants and paper specialty chemicals. In June 1991 PPG acquired the automotive coatings business of ICI Canada.

In September 1993 PPG's board surprised many when, for the first time in company history, it appointed an outsider, Jerry E. Dempsey, as chairman and CEO, to replace the retiring Sarni. The board evidently felt that none of the in-house candidates were quite ready to assume the leadership mantle. Dempsey, an engineer by training, had been president and COO of auto parts maker Borg-Warner Corp. from 1979 to 1984 before heading Chemical Waste Management. Meanwhile, the company decided in 1993 to sell off its Biomedical Systems Division. This noncore operation was completely divested by January 1995. The move left PPG with its three core segments: coatings and resins, glass, and chemicals.

Under Dempsey's leadership, PPG enjoyed sales growth of 10 and 11.5 percent in 1994 and 1995, respectively. Profits grew even faster, highlighted by a 50 percent increase in 1995. Fueling this revival was Dempsey's emphasis on heightened marketing efforts, with a particular stress on seeking out new niches for PPG that required skillful marketing. For example, by 1995 Dempsey had transformed Transitions, a troubled unit that made color-changing sunglasses, into a $100 million business growing at a rate of 40 percent per year. Dempsey also sought out new ways to leverage PPG's existing expertise, as for example in the coatings unit's running of entire paint operations in auto plants. During this period, growth was also achieved through acquisitions, including the 1995 purchases of the American Finishes refinish coatings business of Lilly Industries and of Matthews Paint Co., a leading manufacturer of paints for outdoor metal signs.

Dempsey retired in late 1997, with PPG on the upswing and his having overseen an orderly leadership succession. In December 1995 Executive Vice-President Raymond W. LeBoeuf, who had joined the company in 1980 as treasurer, became president and chief operating officer. LeBoeuf subsequently succeeded Dempsey as CEO in July 1997 and as chairman in November 1997.

LeBoeuf immediately set lofty goals for PPG for the remainder of the decade, aiming for $10 billion in sales (compared to $7.22 billion in 1996) and a doubling of net earnings from the $744 million of 1996. To achieve these goals, the company was likely to continue Dempsey's emphasis on marketing, to seek out profitable acquisitions, and to continue to expand geographically, with emphasis on the Latin American and Asia-Pacific regions.

Principal Subsidiaries: LYNX Services from PPG, L.L.C.; Market View, Inc.; Matthews Paint Company; PPG Architectural Finishes, Inc.; PPG Industries International, Inc.; PPG Industries Securities, Inc.; Transitions Optical, Inc. (51%); PPG Canada Inc.; PPG Iberica, S.A. (Spain; 60%); PPG Industries, (Deutschland) GmbH (Germany); PPG Industries Fiber Glass B.V. (The Netherlands); PPG Industries France; PPG Industries Glass S.A. (France); PPG Industries Italia S.r.l. (Italy); PPG Industries (U.K.) Limited; PPG Industries Chemicals B.V. (The Netherlands); Transitions Optical Limited (Ireland; 51%); PPG Holdings (U.K.) Limited; PPG Holdings B.V. (The Netherlands); PPG Industries Holdings GmbH (Germany); PPG Coatings (Hong Kong) Co. Ltd. (60%); PPG-Feng Tai, Ltd. (Hong Kong; 55%); PPG Industries Asia/Pacific Ltd. (Japan); PPG Industries Argentina S.A.; PPG Industries de Mexico, S.A. de C.V.; PPG Industries Export Sales Corporation (U.S. Virgin Islands); PPG C.I. Co. Ltd. (Japan; 51%); PPG Industries Taiwan Ltd. (55%); Taiwan Chlorine Industries Ltd. (60%)

PPG Industries, Inc. History

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