TOLEDO, OHIO — When Glen Hiner left GE Plastics to run Owens Corning in 1992, he knew OC had growing asbestos claims stacked against it.
But Hiner, chairman and chief executive officer, never anticipated that the company would have to file for Chapter 11 protection eight years later.
Despite the asbestos pitfall, Hiner says he will continue to stand by the company that he's helped grow to $5 billion in annual sales.
"I guess I could get real mad, or real philosophical, and take my marbles and go home," Hiner said during a Feb. 20 interview at Owens Corning's headquarters in Toledo. "But I think when you are in the position I'm in, I think you learn to play the cards you're dealt. I didn't ask for this hand, and I'm going to do the very best with it that I can do."
Hiner, 67, discussed his retirement, his legacy and industry speculation that OC might sell its vinyl siding business.
On that key question, Hiner had a quick answer: "No."
Hiner started planning for his retirement a few years ago, initially targeting a 2000 departure. When OC filed for Chapter 11 protection, he tacked on two more years. He has vowed to get the company out of bankruptcy "as fast as we possibly can."
In fact, the company's 20,000 employees worldwide have adopted an unofficial motto: "Clear and Free By '03." Hiner compares the zeal to his earlier goal to reach $5 billion in sales.
"I really felt ... to keep the company going, we really needed to grow, and we adopted a vision that said we're going to be a $5 billion company by the year 2000," he said. "And that, everybody was able to grab onto. They not only grabbed onto it, they owned it, and they loved it, and they lived it, and we made $5 billion in 1998."
Pushing the company toward a 2003 emergence from bankruptcy, does Hiner feel there would be unfinished business with a 2002 retirement?
"It ain't over till it's over," he said. "Who says we have to wait till '03? I'm driving our people to get out of this as fast as we can, but I'm also a realist. I have other things I want to do. I'm not going anywhere. I'm living down on River Road and we're here running the company every day."
Skeptics say exiting the Chapter 11 process by 2003 is unlikely.
"They will probably not get out within two years," said Gary Schneider, an analyst with Bear Stearns. "Historically, it's closer to five years. That's the average number. If they do, God bless them. I think two years is optimistic, not impossible. Are they ultimately going to get out of bankruptcy? Of course."
Schneider compared OC's experience to that of Johns Manville Corp., the Denver-based building products manufacturer that filed for Chapter 11 protection in 1982 and emerged in 1988.
But Hiner said the companies are not at all comparable.
"We don't think that someone comparing the Manville bankruptcy to the Owens bankruptcy is realistic at all because they're two totally different points in time, two entirely different processes," he said. "We have all of our current liabilities quantified. Our general counsel negotiated what we call the National Settlement Program with 110-plus different law firms, and we have quantified that amount of liability in those current claims. So, in that time, we're far ahead of where Manville was and we're in a different kind of process. The Manville bankruptcy probably broke a lot of new ground."
Creating a giant
Hiner spent 1978 through 1991 as head of GE Plastics, taking the Pittsfield, Mass., company from $1 billion in sales in 1978 to $5 billion in 1990.
In a move that foreshadowed his future at OC, GE unveiled its Living Environments concept house, under Hiner's tenure, in 1989. The 2,900 square-foot home showcased plastics potential in residential construction, with applications including siding, windows, electrical systems, skylights and heating and air conditioning systems.
After taking over as chief executive officer at Owens Corning Fiberglas Corp. in 1992, he discarded Fiberglas as part of the name and implemented "Systems Thinking," an approach that integrated plastics as one of Owens Corning's major materials.
The first part of that strategy, running roughly through 1996, saw OC aggressively tackle the market for foamed polystyrene insulation. Two acquisitions were central to the strategy: UC Industries Inc., then headquartered in Parsippany, N.J.; and expanded PS maker Falcon Manufacturing of Michigan Inc. in Byron Center, Mich., which Owens later sold.
The UC Industries deal continues to shine, Hiner said.
"That, to us, was an acquisition made in heaven with their manufacturing the styrenic foam, the rigid board, in pink, and blending right into our trademark," Hiner said. "We have absolutely no plans but to continue to grow that business, and we're very happy with the way that business is running."
Following the foam insulation moves, OC kick-started a consolidation trend in vinyl siding. In 1997, the company acquired Dallas-based Fibreboard Corp., a manufacturer of vinyl siding and other building products.
Add Raleigh, N.C.-based Amerimark Building Products to the mix and OC became one of vinyl's lead players virtually overnight, leap-frogging from zero sales to an estimated $339 million. After never before appearing in Plastics News' ranking of pipe, profile and tubing extruders, OC secured the No. 9 position in 1997's report.
But in 2000 the company started to streamline vinyl siding operations. OC closed a Fair Bluff, N.C., facility while adding capacity in Atlanta and increasing space at locations in Joplin, Mo., and London, Ontario.
"Our consolidation has not reduced the amount of siding we produce," Hiner said, arguing that the moves made OC more efficient.
"We're producing as much now, or have the capacity to produce as much now, as we did prior to the closing," he said.
As vinyl enters the maturing stage of its life cycle, expect consolidation to continue, Hiner said. OC will be a player.
"I think we have to be a player in that. Is it going to be timely for us?" he asked with a laugh. "Well, I guess only time will tell."
At the International Builders' Show in Atlanta, speculation swirled that OC might be looking to sell part of its vinyl siding business. Hiner did not attend the show because of other business obligations but addressed the speculation during the interview.
"We have no need to dispose of any of our businesses nor do we have plans to dispose of any of our businesses for bankruptcy reasons," he said. "But we're not driven to get rid of anything or to divide up the company in order to increase cash as a way of resolving the bankruptcy."
If OC does want to sell off anything, the company would have to obtain approval from the bankruptcy court, he said.
Schneider agreed that speculation about dispositions has no credence.
"There is no economical or financial reason for doing such," he said in a Jan. 31 telephone interview. "Everything is frozen from an expense standpoint. Bankruptcy means there is no necessity to sell assets since there is no determination at this point as to what the settlement terms will be."
Systems Thinking transformed Owens Corning. But it wasn't perfect. A foray into window production failed, company officials acknowledge, when a pultruded composite window turned out to be too expensive. Owens Corning followed that with a botched move into vinyl windows.
Owens Corning became a vinyl window producer in late 1995, when it picked up St. Louis fabricator Delsan Industries Inc. At the time, Hiner hinted at more window acquisitions. But Owens Corning ended up closing Delsan after just two-and-a-half years.
Today, Owens Corning-brand vinyl windows are manufactured by Simonton Building Products Inc. under a license agreement. Hiner said Owens Corning still runs an aluminum window factory in Florida.
Long-standing vinyl window producers say Owens Corning did not hire people who understood windows but instead seemed to follow the GE style of rotating managers through different posts to gain the experience. Plus, OC was used to manufacturing businesses that relied on mass production — flipping on the switch to run the shingle machine then turning it off months later — but not the more-customized window business.
Bob Franco, Owens Corning's vice president of exterior systems business, said the window business was a learning experience.
"We went into it too fast. We didn't think it through," he said at the International Builders' Show.
Hiner admits windows flopped.
"It's a job shop. It's really a materials-handling process, an order-ship-bill system, which you have to be very efficient at. ... We were trying to produce windows on a much longer cycle that didn't fit in."
But Hiner disputed the suggestion that inexperienced management was to blame.
"The people had nothing to do with the inherent costs that were in that product," he said.
Hiner said the pultruded window was developed for the wrong reason — to consume pink fiberglass insulation, instead of to meet a market need.
He said OC's experience with a company-owned distribution business, Norandex/Reynolds Distribution Co., has taught management that OC does not have to manufacture everything it sells.
"They do about 1 million window units a year, and we saw what they were able to do and the products they were able to buy and the cost of the relationship. We found that was not a game we were good at. I think when you understand there's a business situation you're not good at, you ought to get out of it."
Hiner openly admits that all OC's acquisitions are not golden, but they certainly did not burden the company financially.
During his tenure, Owens Corning has acquired 17 companies. That includes six in foam insulation, two siding companies and a mix of nine others in businesses including glass-fiber reinforcements and composite systems.
"Look, if the acquisitions were the problem, we wouldn't have had $425 million in cash," Hiner said, addressing the company's on-hand cash at the time of bankruptcy. "This is not a bankruptcy about poor business performance. This is not a bankruptcy about a company not having cash flow to pay its bills. This is a company with a mass tort litigation on its hands of asbestos that goes back to the 1960s. Are all those acquisitions golden? No. But in the whole, I think the acquisitions that have been fueling the growth of the company have really extended the viability of the company to where we are today."
The acquisition of Fibreboard, however, did not produce the benefits from earnings that management had anticipated, Schneider said.
"OC management made the acquisition, apparently, to get larger more quickly," he wrote in a March 6 e-mail. "It did not see that it was buying Fibreboard at the top of the cycle. The siding market became much more price competitive shortly after this acquisition was completed."
Some critics contend that Owens Corning has experienced profitless growth under Hiner, a claim figures do not support, said Mike Thaman, OC's chief financial officer.
Thaman said OC has seen profit grow 150 percent under Hiner, while sales have grown 70 percent.
"We feel like we're in as strong a position as we can be," Thaman said.
Schneider agreed that Hiner has built OC over the years.
"Under the auspices of Glen Hiner, OC showed growth in earnings going from $3.00 in 1997 to $3.59 in 1998 to $4.67 in 1999 before hitting the wall in 2000. Most of the sales growth was external, for example, from acquisitions. But you can't take away the fact that earnings grew."
Asbestos has not tainted Owens Corning, officials maintain, but the bankruptcy was necessary to relieve the company from mounting asbestos liabilities.
"When we come out of this, we will be free and clear," said Bill Hamilton, Owens Corning spokesman. "We will be free to operate as a normal company. This was the only way."
Only about 20 OC employees are working on the bankruptcy case, which represents about 1 percent of OC's total work force.
"As far as operations are concerned, it's business as usual, and we're going to do everything we can to protect our No. 1 market position that we have in the various building materials market segments," Hiner said.
Perhaps part of Glen Hiner's legacy will be the headquarters building at One Owens Corning Parkway in Toledo, where the company moved from a 28-story high-rise in downtown Toledo.
The building does not have an executive lunch room. Hiner eats in the same cafeteria as the other employees and parks in the last section of the company parking lot, if need be, with no spaces reserved for him or other executives.
Unlike the old headquarters, where executives were isolated on the top floors, Hiner's office is centrally located on the second floor of the three-story building.
"He brought focus to the company," Hamilton said, sitting in the company cafeteria. "He re-energized the company. He liberated a lot of people to make their own decisions."
Hiner knew of the asbestos problems when he came to Owens Corning after a 15-year career with GE Plastics, Hamilton said.
"He took the helm," Hamilton said. "He knew this was a problem coming in and he took the job. I think he tried to put the asbestos problems behind us. He wanted to get it out of our consciousness."
Hiner's reputation has not escaped unscathed. GE executives who leave to run other companies get placed under a microscope. A Business Week article grading the "GE Alumni Club," measured Owens Corning against its peers and listed Hiner in the "laggards" column.
As he looks toward the end of his plastics career, Hiner said he does not have feelings of personal failure.
"If I have a feeling of failure, it's the story I just went through," he said, referring to the company's employees who lost substantial retirement benefits as a result of the bankruptcy.
According to Hamilton, OC employees saw their 401-K savings lose more than $100 million in value between late 1999 and the company's Chapter 11 filing.
"It's a terrible thing to think about," Hiner said. "I mean, these people are working for what they believe to be a very fine company with outstanding products, with great market position. They're doing a good job every day and yet, they look at us paying out more and more money year-in, year-out for a liability that they don't even know anything about. And the point that we finally had to go to the Chapter 11 process to resolve this ÃÃ that's disappointing."