Brian D. Kenneth Scott Parks. Todd Fister. President, Insulation. Marcio A. President - Composites. Gunner Smith. President - Roofing. New Stories. Quote and financial data from Refinitiv. Fund performance data provided by Lipper.
All quotes delayed a minimum of 15 minutes. Just as in the early s, when Owens-lllinois and Corning Glass delved into a highly speculative joint venture, Owens Corning was again placing its bets increasingly on long-term, costly research.
The year brought the most significant--and traumatic--changes for Owens Corning in the company's history. Wickes chairman Sanford Sigoloff had already bought almost 10 percent of Owens Corning's shares earlier and now was out to capture the company to expand Wickes's operations into roofing and insulation.
Wickes was on the rebound from bankruptcy proceedings and looking for acquisitions. At a tense meeting in Owens Corning's New York offices, chairman William Boeschenstein, son of the former chairman, rejected Sigoloff's offer and, according to affidavits filed later by Wickes, countered by threatening to "make a substantial financial investment in Wickes," which Wickes labeled the "Pac-man defense.
The company was also hoping for a buyout from a friendly suitor, but this was not forthcoming. The company chose as its most viable strategy for survival as an independent company a leveraged buyout, borrowing huge sums of money to recapitalize.
Other shareholders were happy with the windfall. The company that emerged, however, was laden with debt and was almost unrecognizable in terms of organizational structure and goals. In , Owens Corning bore little resemblance to its former self. Its goal could be put succinctly: retire the debt. The company set about doing that in two ways. It had economized and instituted massive layoffs, early retirement, and mothballed or closed plants in several locations. From a mid employee roll of 29, the company in had only 17, The second strategy was to sell the company's many subsidiaries that were not immediate profit generators.
Owens Corning thus sold 10 companies in very short order, including Hitco and the entire aerospace and strategic-materials group, Olympic Fastening Systems, the glass-fiber-reinforced-plastic-components division, and Performance Contracting, Inc. There were enormous cutbacks in long-term research and development. In its research-and-development division, the company laid off nearly 50 percent of its work force or lost them through divestiture of assets.
Long-term research projects with little hope of short-term profit or even markets are difficult to justify in publicly held corporations. Owens Corning had, for instance, been developing liquid crystal polymers, for which no application could be foreseen at the time. The cost and lead-time for such a project require a large research investment, patience, and creative vision, three areas in which the "new" Owens Corning could not afford to indulge.
The project was sold to an Italian company after the recapitalization. The company did a solid job of retiring the debt. Indeed, in the wake of several leveraged cash-outs in the late s, the Owens Corning example had become a textbook example of how to survive. Earnings were solid enough in to allow it to buy up the 50 percent share of Fiberglass Canada that had been owned by PPG Industries, a major competitor.
Costs were down and profits were generally up, but the company still had a negative book value, that is, its debt outweighed its assets. After the restructuring, the company emerged as a leaner, more centralized concern with a profit and structural emphasis on its leading cash generators. Owens Corning had organized its remaining divisions into three major units: Construction-products division, industrial-materials division, and international division, which consisted of overseas operations exclusive of Europe.
The cyclicality of the housing market and the overall slowdown in housing starts affected the company's profitability in , although the industrial materials division accounted for more and more of Owens Corning's earnings. The "soft" nature of the housing market had affected sales and profitability in the wake of the restructuring, although reroofing, not affected by housing starts, accounted for 75 percent of the demand for shingles.
Net income and operating profit were both down in compared with the previous year. The economic slowdown in and especially had cut into the company's construction products, automotive, and pleasure boat components. The former European divisions had been absorbed into the construction-products and industrial materials divisions, primarily due to the similar consumer and industrial purchasing patterns.
The emphasis in the international division was on the smaller but growing markets in the developing world. The Asia-Pacific area was the fastest-growing, with automotive manufacturing and electronic equipment providing the largest markets. Owens Corning had affiliates--less than 50 percent ownership--or subsidiaries--more than 50 percent ownership--in Japan, South Korea, and Taiwan.
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This acquisition will help us accelerate market transformation by providing a compelling alternative to steel reinforcements in concrete structures.
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