Document x1n2z0ZNB9y5B4LbBa3M1epyQ

PPG industries, Inc. One PPG Place Pittsburgh, Pennsylvania 15272 USA Telephone: (412) 434-2406 Fax:(412)434-2014 David C. Cannon Jr. Vice President Environment, Health and Safety November 23, 1998 Mr. John P. Connelly Vice President, Member Relations and Corporate Secretary Chemical Manufacturers Association 1300 Wilson Boulevard Arlington, VA 22209 Re: CMA Prime Network Contacts Dear Mr. Connelly: In response to your request, enclosed is an updated prime network contacts list for PPG Industries. If you have any questions regarding this list, please call me Copies to: J. A. Barter L. B. Boswell J. C. Diggs K. J. Fay L. C. Murphy E. K. Pollock J. C. Reichenbach Jr. R. E. Boston R. L. Crane G. B, Edwards R. K. Lee M. E. Petruccelli J. C. Pugh David C. Cannon Jr, -i cover story ANAGEMENT AT PPG INDUStries (Pittsburgh) is on a cam paign. The mission is to trans form the sleepy $7,8-billion maker ofcoatings, chemicals, and glass into a dynamic growth operation built around a core ofprior ity business es. Those businesses will be sus tained by leading lowoost positions in the compa ny's commodi ty operations. The cam- began four years ago, when jerry Dempsey, the first outsider CEO, was brought from WMX Technologies to reverse wavering earnings and establish a management team that would be prepared to take the helm within five years. Chairman and CEO Raymond LeBoeuf, 51, who succeeded Dempsey as chairman November 1, sees a dear mandate: Continue to improve the company's earnings per formance, and make PPG less cydical than S&P 500 companies. PPG's goals call for $ 10 billion/year in sales by 2000 and a doubling of 1995 earning per share of $3.70. Sales last year were $7.79 bil lion, generating net earnings of $729 mil lion, or $4.06/share. Those targets indude an ongoing share buyback program. LeBoeufs first task as CEO has been to oversee the shift to 15 strategic business units (SBUs), which are loosely organized around the company's three operating seg ments--coatings, chemicaLs, and glass. Each SBU falls into one of four cate gories--top priority, cash generator, emerging business, and what LeBoeuf calls the "fix or get out category." Top priority businesses must meet targets of 12%/year earnings growth and the companywide return-oncapital ratio of 15%. The top priority businesses include coatings, spe cialty chemicals, and fiberglass. Of PPG's 12 acquisitions in 1997, all but one were in top pri ority lines. Underperforming operLaBoeuh A dear mandate. ations in surfactants, specialty glass, and some Asian flat glass plants were disposed of. "In the top priority businesses we'll invest at a rate of 1.5-2 times deprecia tion," says LeBoeuf. "The cash flow busi ness will be reinvested at a rate of 60%-70% of depreciation." LeBoeuf says PPG's more mature busi nesses identified as cash flow generators are not candidates for sale. Those busi nesses, primarily chlor-alkali, and auto motive and flat glass, will still be held to aggressive earnings and retum-on-capjcal tar gets, says LeBoeuf. Most important, they will play key roles as cash providers to fund ambitions in othet areas. Right now, the top priority businesses account for just over of 60% of sales, says LeBoeuf. There will be internal growth, but the main driver will be acquisitions. He expects 12-15 deals to be completed this year, "all in top priority businesses. These are the businesses that will provide sustained earnings growth and the potential for stable growth." The deals are being driven by PPG's desire to expand its top priority lines as well as geographically. Analysts estimate that through 2000 PPG will make acquisitions that will add $300 million-$500 million/year in sales. Last year's deals will add about $400 million to sales in 1998. "We can afford any acquisi tion opportunity that makes sense to us strategically. There could be fairly significant acquisitions in the future," LeBoeuf says. The company bid on the Unilever spe cialties business, which was eventually sold CHEMICAt, WEEK, FF.BHUARY 25, 1998 27 CMA 175027 f expansion at La Porte, TX. The tine chem icals unir is aggressively targeting pharma ceutical actives and intermediates while it continues to expand its traditional fine chemical base in chloroformates and add chlorides used in agchems and polymer additives, says Thomas Von Lehman, v.p./spedalties. Early last month, PPG closed on the acquisition ofSipsy Chimie (Arvillti, France), a unit of Warner-Lam bert subsidiary Jouveinal. Sipsy will add $40 million-$50 million to 1998 sales and will expand PPG's pharmaceutical capabilities beyond phos gene chemistry into lithi um aluminum hydride reductions, chiral syn thesis, and catalytic hydrogenation. Von Lehman says the La Porte expansion will be adjusted to incorporate Sipsy's technologies. In the U.S., PPG is on target to bring its commercial-scale cGMP pharmaceutical intermediate facil ity at La Porte onstream in mid-1998, says Von Lehman. A pilot facility now oper ates at the site. "When you address the pharmaceutical industry, the key thing is that you have to be able to provide a variety of technologies," Von Lehman says. "They're looking for someone who can handle as many steps of a project as possible.'' He says the reception from the pharmaceutical industry has been encouraging, and notes that PPG already has made significant inroads by demonstrat ing its ability to handle intermediates based on phosgene. PPG is searching for acquisitions but will be selective, pursuing technology rather than manufacturing capability, Von Lehman says. "Were still aggressively looking for other technologies as we determine what our capability will be," he says. "We're looking to differentiate. We're not interested in being the biggest overall [but] in being the best in a specific technology." PPG's largest specialties operation is opti cal products, which has been one of the fastest-growing segments within the com pany--with sales and earnings advances of 30% or more in recent years. PPG is a leading supplier of GR-39, a specialty monomer used in plastic eyeglass lenses. The product is expected to continue to post significant growth as plastic lenses gain market share in Europe and Asia. In its Transitions jv with Essilor (Milan), PPG also has a btxjmmg consumer business for photochromic lenses, which lighten and darken with sunlight. "We have an 8% market share in the U.S. and 4% in Europe with our photochromic lenses," says Von Lehman. "Market research shows there's no reason it can't reach 20% with these kind of projects." PPG is also nearing the com mercialization of electrochromics, which would allow a wearer to manually adjust tint. Von Lehman says the product will be introduced in two to three years and that it presents significant growth opportunities for the company. PPGs specialty operations also includes a leading position in precipitated silicas. "Sil icas has been growing quite well," with 7%-8%/year growth in volume and about 10%/year in sales, says Von Lehman. Mar ket fortunes in silicas may lie with the green die, which improves fuel efficiency by decreasing rolling resistance. Michelin has introduced the tire successfully in Europe, and producers are waiting to see if it catch es on in the U.S. "Acceptance [in the U.S.] would represent tremendous growth oppor tunities that will drive the product into a higher gear" and growth into double digits, he says. Von Lehman also oversees new business development efforts at PPG. The company spends approximately $5 million-SlO million/ycar on such efforts. Electrochromic lenses recendy emerged from the division, and a coating used in ink jet printers devel oped by PPG is nearing commercializa tion. The coating would allow high-quali ty color reproduction of digital images on paper and allow customers to instantly reproduce an image with poster-like qual ity. Consumers could even select and design their own wallpaper and have it instandy printed in the srore on wide paper. PPG's largest chemicals segment, chloralkali, postal 1997 sales ofjust under $2 bil lion. The company's emphasis has been on building a low-cost operation to provide steady cash flow and earnings to fund its ambitions in top priorities. Its largest chlor-alkali facility, at Lake Charles, IA is well sit uated to take advantage of growth in polyvinyl chloride and uredtancs. Rae Burton, v.p./chloralkali and detivatives, says incremental expan sion opportunities are now being evaluated that may result in adding 300 tons-500/tons day ofcapacity. Burton says die project is contingent on securing long-term supply agreements being negotiated but adds that PPG is in a position to bring on incremental capacity at a very competitive cost without adding plant employees. PPG's chlor-alkali division includes its 50% stake in PHH Monomers--a 1,15-mil lion lbs/year vinyl chloride monomer jv with Condea Vista--and approximately 300 tons/day of perchloroethylene and 1,1,1 trichloroethylene. Analysts have applauded LeBoeufs efforts in improving costs and in shifting the PPG portfolio to growth opportunities overseas and to high priority areas. "LeBoeuf is quite focused on [reaching the perfor mance targets] and isn't afraid to chop underperforming assets if he has to," says Nancy Traub, an analyst with Donaldson, Lufkin & Jenrette (New York). She cites the recent swap of its underperforming sur factants business for BASF's industrial coatings and divestment of specialty glass and Chinese float glass operations. "I fully believe that by 2000 PPG will be a less cyclical company," says LeBoeuf. He adds that 1998 will be a pivotal year for the company if the sales and earnings tar gets for 2000 are to be met. "I under stand we have to demonstrate it, but keep an eye on us over the next two to four years and look at how the company is posi tioned to handle the next cycle. You'll see that we [perform] better." --ROBERT WESTERVF.IT in Pittsburgh CHEMICAL Wtf K. M-.HRIJARY 25, ORS 31 CMA 175028 I cover story to ICI. An analyst says PPG is prepared to every bit as large." PPG has been selective make a bid on Hoechst's coatings busi about its participation in the segment to ness, Herberts, which may be sold as part date, playing primarily in the technology- of Hoechst's restructuring plan. driven truck, appliance, and coil coatings Coatings posted just over $3 billion in segments. sales in 1997, about 42% of the company's "The greatest opportunity for us is indus total, and is expected to continue to be the trial coatings, because it's still the most frag focus of most of PPG's acquisition activi mented," says Kears Pollock, executive ty. All four coatings segments--automotive v.p./coatings. Unlike OEM, where six sup OEM, automotive refinish, industrial coat pliers dominate, there is no clear leader in ings, and architectural--have been tagged the industrial segment. "There's a tremen top priority. dous amount ofpressure from regulators to PPG is number one in automotive OEM, make more environmentally benign prod which has long been a strength. In auto ucts. You need critical mass to achieve com refinish it is neck and neck with DuPont and pliance economically, and for R&D and ahead of Herberts, BASF, Kansai, and Nip product development," Pollock says. pon Paint--all of which arc also active in PPG has already moved into one new OEM. PPG insists that it is not yet prepared area, acquiring BASF's packaging coatings to downshift in auto markets. "We still in exchange for PPG's surfactants business. have 70% of the market to capture," says The BASF operation is mainly in can coat LeBoeuf. PPG's emphasis will be on Asia, South America, and Europe. In the past few months, PPG has made deals to acquire German auto coat ings maker Bollig & Kemper and Max Meyer Duoo, an Ital ian maker of auto refinishes. Late last year, PPG also announced plans to build coatings pro ings. In addition to entry to a new market, duction facilities in Argentina and Brazil. the deal provides a channel for a PPG prod But the biggest opportunity for PPG may uct the company thinks could be a block well be the sprawling $20-biUion industri buster: a barrier coating for PET soda bot- al coatings market. That market ranges des that extends shelf life by preventing from high-end truck paints to products for the release of carbon dioxide. "We're now lawn and garden furniture. even testing it for plastic beer botdes, since "Industrial coatings historically have been it prevents oxygen from entering [the con dwarfed by automotive in PPG," says tainer]," Pollock says. LeBoeuf, "but five to 10 years out it will be The deal also allows PPG to build on BASF's relationships with PPG'S MIX Coca-Cola, Pepsico, and the major brewers, which will 1957 sales: 17.38 billion become increasingly impor tant as PPG looks to build Surfactants1. 2% Fina chemicals 1% Silicas 2% Optical manMierv lenses 4% CMor-alkall-^ 13% the market for its PET coat ing. Pollock says there are more industrial acquisitions to come. Architectural coatings, which Pollock admits was a "disaster" previously, has been taken off intensive care and the fix or get out list and has 1) Recently mpptd for BASF> packaging wnngi business Sources- PPG Indiums; CS First Boston (New York) emerged as a growth candi date after solid profitability gains the past two years. PPG management says the mistake it made in the segment was trying to trans fer high technology developed in auto motive and industrial sectors into archi tectural markets. "Architectural is not a high-tech business," says LeBoeuf. "It's a marketing business, a distribution busi ness, and a low-cost manufacturing busi ness. I think we understand that a lot bet ter now." He says the story would have been different two years ago. "I believed we had run our course in architectural, that it wasn't a business we should be in," he says. "Our people proved me wrong, and I feel real good about that." Pollock says the company turned the architectural segment on its head, evaluat ing profitability by each segment, customer, and salesperson. "The first thing we had to do was get some alli gators out of the pond," says Pollock. "We had some real ly bad deals out there in the U.S. causing us to lose money, and we weren't prof itable in Europe." The European oper ations were sold to ICI in 1996. The company that turned to its U.S. and Canadian operations and tried to get its house back in order. "We've concentrated on brand discipline," says Pollock. "Ifyou don't have that discipline you can't have a customer that likes you. You're hurting their ability to manage their business and damaging some real loyal customers." Last April, the company signed an exclu sive branded paint deal with Lowe's Home Improvement Centers, which has stores concentrated in the South. PPG sells Olympic Paints, an extension of its popu lar Olympic stains, exclusively through Lowe's, a deal that has exceeded expectations so far. Sales in the chemicals segment, which consists of chlor-alkali and three specialty chemical SBUs, totaled $1,647 billion in 1997. The specialties operations are built around positions in optical products, silicas, and fine chemicals. Fine chemicals--the smallest SBU with in PPG, with an estimated $85 million in sales in 1997--has been bolstered by the recent acquisition of a French pharmaceu tical intermediates maker and a major 30 CHEMICAL WEEK. FEBRUAYR 25, 1998 CMA 175029 IOn'1'.- 'W-M>*u'"e4J> PPG Industries, Inc. One PPG Place Pittsburgh, Pennsylvania 15272 USA Telephone: (412) 434-2076 Fax:(412)434-2134 Raymond W, LeBoeuf President & Chief Executive Officer August 22, 1997 VIA FAX Mr. John P. Connelly Director, Member Relations Corporate Secretary Chemical Manufacturers Association 1300 Wilson Boulevard Arlington, VA 22209 Dear John: Confirming our conversation, I am proposing that E. Kears Pollock, our Executive Vice President, replace me as a member of the CMA Board. In addition, he would also serve on the oversight committee responsible for the CUT. Kear's background and present responsibilities at PPG make him the ideal candidate to represent us on the CMA Board. If possible, I would like to effect this change as of January 1998. Sincerely, RWL/cwe cc: Mr. Frederick L. Webber Mr. E. Kears Pollock CMA 175030 THE WEEK: April 23, 1397 IHnidad and Tobago Methanol Price Set CH^has learned that the minority shareholders in Trinidad and Tobago Methanol Co. (TTMC; Point Lisas) will pay a total of $165.64 million, $150 million of it in cash, for the government's 69% stake in the firm (CWApril 16, p. 14). Equity interest in TTMC will be Ferrostaal, 62.5%; Helm, 26.25%; and Colonial Life Financial, 11.25%. Finbar Gangar, minister of energy, confirms that the partners plan to consolidate TTMC with the other producer on the island, Caribbean Methanol, and with one of the new projects, Methanol IV. "The purchasers have also signaled their intention to float a portion ofthe new merged company on the local and intemarionaJ^ssekrS&hanges," he adrfsh-- company would hnyr rotal rnpnr-iry for ?rrfflftmri m r./ysar of r ofworWjjrtdf'production and 20% of the merchant market. Designated PPG's CEO-Elect PPG Industries says president Raymond LeBoeufwill become CEO July 1; he will con tinue as president. Jerry Dempsey, current board chairman and CEO, will remain chair man until his retirement on November 1. Frank Archinaco, senior v.p./glass, andE. Kears Pollock, senior v.p./coatings and resins, have been elected executive v.p.s and assigned broader responsibilities. Archinaco and Pollock will join .Dempsey and LeBoeuf in the newly created office of the lief executive. Sigma Shareholder Combats Exacs Sigma-Aldrich's (St Louis) largest individual shareholder, Alfred R. Bader, is petitioning other shareholders to hold executives ofthe company responsible for paying a recent $480,000 fine involving exports of toxins to 17 countries. According to a March 28 proxy statement, Sigma paid the fine in July 1996 "to settle allegations by the department [of Commerce] that [Sigma] had ille^Uy export ed toxins that could be used to make bio logical weapons." The allegations involved 48 ^incidents during 1992 and 1993. Bader nottkA.6% ofthe company's stock. Sigma's board has urged investors to vote against the proposal, contending that "it would severely impair the company's ability to attract and! retain qualified management." "D\ f ;y4s 'Till M". \ L, . 1 /. atalysts joint venture in China, a development, tenlls uCWw. nEuU-lie venture; approval is expect- JL cWxUsZ. Wt > I'VV, Xi ,i- .Convention (CWC) this week. NC) released his hold on wo independent agencies into 7/16,p. 10). However, CWC . jt (R., MS) says he may oppose ification; several amendments 1 will be excluded from CWC 7C by April 29. ,;:f ' .< . ; j%, to $102 million, despite a olumes improved in every mar ket, weak European currencies put downward pressure on the bottom line. Earnings com pared favorably with year-earlier performance but fell 5% short ofWall Streets expecta tions (CWMarch 26 p. 5). R&H's stock lost more than 20% ofits value after the company warned analysts to adjust their estimates downward. ... Other Companies' Earnings Are Mixed Occidental Petroleum says higher feedstock and raw material costs sent its chemical earn ings down, from $118 million in first-quarter 1996 to $92 million in first-quarter 1997; chemical sales rose slighdy, to $ 1.07 billion. Sherwin-Williams's first-quarter net income grew 18%, to $23.1 million, as sales improved 25%, to $1.1 billion, reflecting the acquisitions ofThompson Minwax and other businesses. PPG Industries' net income dropped 4%, to $166 million, despite a 2% sales increase, to $1.8 billion. Nalcos earnings improved 13%, to $35.8 million, on an 11% sales gain, to $334.6 million. Rexene says a "temporary increase in raw materials costs" offset strong operating earnings. The company's net income slid 6%, to $6.1 million, despite a 17% ales rise, to $163.7 million, and a $6.5milhon accounting gain. Nova Chemicals' net was C$71 million ($51.4 million), 89% bet ter, as sales improved 25%, to C$892 million, on the strength ofthe polyethylene market RPM's third fiscal quarter, which ended February 28, brought a 7% drop in earnings, as the company netted $7.5 million on $297.2 million in sales, up 16%. Argentina loses Duty-Free Status The U.S. last week removed chemicals and other imports from the list of Argentine products that receive duty-free treatment under the Generalized Syscem of Prefer ences. The move stems from an intellectu al property rights dispute between the two countries. A recendy passed Argentine law exempts Argentine companies from paying royalties on pharmaceuticals until 2000. Mobil Plans PE Hlka Sources say Mobil Chemical has announced a4-cts/lb across-the-board increase for poly ethylene (PE), effective June 1. Current PE initiatives are in doubt following Exxon's announcement offlat pricing for April (p. 23), pushing a planned 3-cts/lb increase to May. Venezuela to Double Supermetamfl Pequiven, the petrochemical arm ofVenezue lan state oil company PDVSA, is conduct ing feasibility studies to double the size of its 750,000-m,t./year Supermetanol methanol joint venture with Ecofuel at Jose. The twin unit would be onstream by the end of the decade and would increase Pequiven's capacity to 2.3 million m.t./year. Dow Out of Canadian Implant Suit A judge in Vancouver, B,C. has ruled that Dow Chemical will not be a defendant in the first stage of a lawsuit filed by 1,600 women who claim silicone breast implants caused illness. The ruling follows decisions in several U.S. states in which Dow was excluded from silicone implant suits. CMA 175031 UK- CHEMICAL WEEK, APRIL 23, 1997 S John P. Connelly Director, Member Relations Corporate Secretary CHiza Chemical Manufacturers Association November 22, 1996 Mr. Raymond W, LeBoeuf President and Chief Operating Officer PPG Industries, Inc. One PPG Place Pittsburgh. PA 15272 Dear Mr. LeBoeuf: It is my pleasant duty to inform you officially of your election as a Director of the Association for a term ending May 31,1997. In this capacity, you will also be PPG's Executive Contact for official business with the Association. For your information and guidance, I am enclosing our Bylaws, Strategic Plan and User's Guide and Directory. A listing of CMA Officers and Directors, Board Committees and a Schedule of Meetings for the remainder of fiscal year 1996/97 are enclosed. Also enclosed is a form requesting some additional information for our records which will aid our communication with you and your office. Please complete and return this form as soon as possible. In addition, I have enclosed a computer printout of your company's participation in CMA activities. It notes program and issues contacts, committee and task group participants as well as those individuals on other newsletter and mailing lists. Your help in keeping this information up to date is greatly appreciated. Please contact me with any changes you might have. As an ongoing commitment to our Responsible Care* initiative, we ask that new Executive Contacts sign the Responsible Care*1 Guiding Principles. Enclosed is a customized copy of the Guiding Principles for PPG Industries, Inc. Please sign and return them to my office by December 20, 1996. You will notice that one of the ten basic elements of the intitiative is participation in Regional Executive Leadership Group (ELGs) meetings. The ELGs provide a forum for senior industry leaders to meet to discuss Responsible Care* and the progress each company is making in its implementation. You will be contacted in the near future regarding upcoming meetings. Again, welcome and if I can be of help, please call me. Sincerely, Enclosures cc: Frederick L. Webber CMA 175032 Responsible Care* 1300 Wilson Boulevard, Arlington, VA 22209 Telephone 703-741-5120 Fax 703-741-6086 A PublicCommitment John P. Connelly Director, Member Reiations Corporate Secretary cm Chemical Manufacturers Association 'wb-v. November 22, 1996 Mr, Raymond W. LcBoeuf President and Chief Operating Officer PPG Industries, Inc. One PPG Place Pittsburgh, PA 15272 Dear Mr. LeBoeuf: It is my pleasant duty to inform you officially of your election as a Director of the Association for a term ending May 31,1997. In this capacity, you will also be PPG's Executive Contact for official business with the Association. For your information and guidance, I am enclosing our Bylaws, Strategic Plan and User's Guide and Directory. A listing of CMA Officers and Directors, Board Committees and a Schedule of Meetings for the remainder of fiscal year 1996/97 are enclosed. Also enclosed is a form requesting some additional information for our records which will aid our communication with you and your office. Please complete and return this form as soon as possible. In addition, I have enclosed a computer printout of your company's participation in CMA activities. It notes program and issues contacts, committee and task group participants as well as those individuals on other newsletter and mailing lists. Your help in keeping this information up to date is greatly appreciated. Please contact me with any changes you might have. As an ongoing commitment to our Responsible Care* initiative, we ask that new Executive Contacts sign the Responsible Care*1 Guiding Principles. Enclosed is a customized copy of the Guiding Principles for PPG Industries, Inc. Please sign and return them to my office by December 20.1996. You will notice that one of the ten basic elements of the intitiative is participation in Regional Executive Leadership Group (ELGs) meetings. The ELGs provide a forum for senior industry leaders to meet to discuss Responsible Care*' and the progress each company is making in its implementation. You will be contacted in the near future regarding upcoming meetings. Again, welcome and if I can be of help, please call me. Sincerely, Enclosures cc: Frederick L. Webber CMA 175033 Responsible Care' 1300 Wicson Boulevard, Arlington, VA 22209 Telephone 703-741-5120 Fax 703-741-0086 APublicCommitment