Viewpoint: Arthur Berkowitz and Paul Cody

Execs discuss J.E. Berkowitz’ future within Consolidated Glass Holdings
January 16, 2017
FABRICATION : MANAGEMENT

On Nov. 3, officials from J.E. Berkowitz LP, a nearly 100-year-old family-owned glass fabricator, announced the company joined Consolidated Glass Holdings Inc., an affiliate company of private equity group, Grey Mountain Partners.

The deal marks the latest high-profile glass industry acquisition for Grey Mountain Partners and Consolidated Glass Holdings. Since 2012, GMP has purchased companies across the glass industry, including Global Security Glazing, Solar Seal and Dlubak, which are all now part of CGH, and Binswanger, which operates separately.

CGH, with seven fabrication facilities, focuses on security glazing, transit and architectural flat glass applications. The combined CGH-JEB will consist of 1,000 employees at eight manufacturing locations occupying 900,000 square feet of plant space, and offer a wide breadth of processes, products, capabilities and capacity, according to the announcement.

Glass Magazine spoke with Arthur Berkowitz, executive vice president of JEB and the company’s third generation owner/manager, and Paul Cody, president and CEO of CGH, about the transaction, the future of JEB within CGH and other developments in the glass industry.

Arthur Berkowitz

executive vice president of JEB, and third-generation owner/manager

Can you talk about how this deal came about? What were the primary motivations?
Succession, clearly, was the driver [of the CGH deal]. It goes back to early 2015 during a board of advisors meeting where we began to explore our options for succession. It was clear there was not a fourth generation [of JEB family owners]. I have three children, and nieces and nephews, who are all successful, but pursuing their own careers.

At the prodding of the board of advisors, we recognized this was the moment in time to think about the future of the company. We have 96 years in business, and we would like that to continue for years to come. We had to figure out what to do to build that foundation.

We hired an investment banking group to come up with plans, and we looked at various solutions. We looked at an Employee Stock Option Plan, bringing in outside management, etc. Ultimately, it was recommended we pursue an avenue of finding an interested suitor to purchase the business. One category of this is private equity; the other category is strategic. That was the direction we took—to allow the investment banker to pursue private equity and strategic buyers.

Why was Consolidated Glass Holdings a good fit?
CGH was able to meet my requirements—for me to keep an ownership position, to keep the real estate, and to continue to have the opportunity to run this location. Additionally, CGH was the right fit because of the hybrid of private equity and strategy. CGH is a portfolio company of Grey Mountain Partners, a private equity firm, and has a platform in our industry. It was the correct fit for myself, the company and employees.

In addition to yourself, will the rest of the J.E. Berkowitz management team remain at the company?
Yes. One critical item of succession planning is having your management team in place. This is one of our strengths. We have a relatively young management team in finance, operations, marketing and sales. Whatever direction I took [with the sale], I was always thinking about the management team. And, this experienced team was attractive to CGH.

What changes can customers expect, now that J.E. Berkowitz is part of CGH?
We expect to take advantage of our relationship with CGH to benefit our customers. We do a lot of processes [at J.E. Berkowitz's location in Pedricktown, New Jersey]. But within CGH, there are new processes that we now have access to, products like bent, curved glass, security glazing, and the Opaci-Coat process [from ICD High Performance Coatings]. Processes that we don’t do in Pedricktown, we can combine, or bundle, for our customers.

We will also see rationalizing capacity in the supply chain. If I find myself having too much capacity in one process and not enough in another, I can fill my hand and fill their hand. We will be rationalizing facilities. It’s a win-win for customers, because it means we will be adding to our capacity.

What was your message to J.E. Berkowitz employees?
Our number one concern was to manage employee anxiety and provide a level of confidence. We have about 20 people in middle management—a credit manager, IT manager, quality assistance manager, and others. They average 20-plus years of service, and I was concerned that they be comfortable and confident through this process. In May [2016] I brought them into the process and said I needed complete confidentiality. I let them know that we’ve undertaken an initiative with an investment banker to help deal with succession planning, to help us grow and succeed for years to come. There was a collective sigh of relief, because many had wondered what would happen after me. While I plan to work for years to come, they saw that there were no other Berkowitzes behind me.

Will the J.E. Berkowitz name and brands continue?
We will keep our name. For me, emotionally, this was important. But, it was done for the good of the business. We are a strong name in the industry. We are a company with a strong emphasis on marketing, including print, website, etc. We spent significant monies and time in that area in the last eight years. We will keep the name, keep the branding and focus on the basis of design.

What’s next, now that J.E. Berkowitz is part of CGH?
We have a pretty aggressive four-year plan, taking us through 2020. That plan includes substantial growth, both in top-line revenues and capital expenditures. We are budgeting for new equipment and are looking to expand our footprint of success in the Mid-Atlantic and beyond in project work. We have key business between Boston and Virginia, but we’re also expanding our footprint into large coverage, with a project in Las Vegas, several jobs in Texas, and in North Carolina.

J.E. Berkowitz’ 253,000-square-foot manufacturing facility in Pedricktown, New Jersey. The plant features advanced glass fabrication equipment and employs more than 200 people. The facility becomes the eighth manufacturing location for Consolidated Glass Holdings.

Paul Cody

president and CEO of Consolidated Glass Holdings

What made JEB an attractive acquisition candidate for CGH?
To start, there was the reputation of the company. We were competing with J.E. Berkowitz in the market, and had great respect for the company because of its capabilities and its quality. Arthur has invested in the business, helping to raise the level of quality and service, [and] pushing it to a level ahead of the competition. You see this in their facility, with the investment in equipment, like new furnaces and in quality control instrumentation.

We also looked at J.E. Berkowtiz’ capabilities. J.E. Berkowitz brings capabilities that we didn’t have previously. For example, J.E. Berkowitz is good at large projects of monumental size that we weren’t capable of handling. Now we are able to service customers from small service organizations to major glazing companies.

There is also some collaboration [between existing CGH businesses and J.E. Berkowitz] to be gained. J.E. Berkowitz has a national presence, with work across the country and even some international work. We may be able to find synergies with our existing security offerings.

As someone with roots outside of the glass industry, when did you first become familiar with J.E. Berkowitz?
I first met with Arthur when I was new in the industry in 2013. [Mark Levine, Consolidated Glass Holdings CFO] and I got an invitation from Arthur to come and meet him, tour the plant and learn about the company. We walked away from that meeting thinking that we would like to someday have facilities like that, or, thinking that sometime [the businesses] might be able to come together.

What was CGH’s message to J.E. Berkowitz employees during the acquisition process?
We met with J.E. Berkowitz employees prior to announcing the deal. We communicated that we are excited and honored to be joining forces. We are excited to collectively build a team and a great organization with focus on quality and customer service. And, we are excited to be doing business together.

There is always a nervousness when a company is being sold, particularly when a family-owned business is being sold after all these years. But, we expressed that we are excited to have them on board and that we look at this as a growth initiative. There is no cost cutting taking place—not in this case. Instead, we plan to learn from things that they’ve done, and to give them the opportunity in a larger organization to grow personally and professionally.

What is your message to JEB customers? Will anything change for them?
The main message to customers is that they will have a lot more to draw from as part of the greater CGH organization. Through one company they can now get high-end security products, bent, tempered or laminated glass. They can go to one source to complete any large complicated project. Also, the concentration of plants in the Northeast increases our flexibility in capacity. We will be able to do things quickly—have things on a more planned-out basis. Some types of jobs might not have been attractive to a company like J.E. Berkowitz previously, but now they have the capability to fulfill and execute those jobs.

Will customers continue to work with their current sales representatives?
Initially, they will continue with the same sales person. But, in the long term, we don’t want two people calling on the same customers. We want to take advantage of the full sales organization. So, at some point there will be some rationalization. This will not be a head count reduction, but an account reconciliation.

Glass Magazine featured the growth of CGH in the April 2015 edition. What changes have taken place at the company since then, in addition to this acquisition?
We continue to form the CGH company. [In 2015], the company had a lot of independent organizations coming together. We have made good progress, and are headed toward being an integrated operating organization. We have extensive market knowledge and talent across the organization, from the security side of the business to the commercial fabrication side, and we’re seeing a lot of collaboration across the company.

Additionally, we’ve continued to make investments in existing plants. We’ve added a bent tempering furnace at Dlubak, invested in a furnace and cutting line in Texas, and added other equipment in other various locations.

Does CGH have any other immediate plans for growth?
Nothing immediate. After this [deal] we’re taking a breath, but as opportunities pop up, we will continue to look. We are looking to grow the business organically.

In recent years, the glass industry in North America has witnessed quite a bit of consolidation. What is your response to concerns about industry consolidation?
Consolidation is not a bad thing. There are certainly a lot of independent fabricators still out there, and I don’t know that they will ever go away. The independent companies out there are doing very well. I know people get nervous as competition gets smaller. But there will always be competition, and customers will always be able to vote with their purchase order. Every day is an election day, and customers still have a fair amount of choices. They can go with those that have the best value.

There are opportunities for customers with larger entities. The larger industry companies—and we have become one of those companies—have a lot of capabilities in terms of bandwidth and flexibility. Depending on the type of customer, whether it be a window manufacturer or a large glazing contractor, there are benefits of dealing with a single entity. A large company has the capability, capacity and flexibility to execute larger, more complex jobs.