Carrillo Flies Under the Radar Picking
Off Glass Industry Targets
by Megan Headley
Imagine being 30 years old and being asked if you would
you like to be CFO of a $500 million company. Imagine being promoted to
president and CEO of a company that you knew had fallen behind its competitors
and having to set in place a strategy to return to the top. Imagine succeeding
in that goal, drastically turning that lagging company around and finding,
just as you’ve reached the point of the company’s greatest growth potential,
that everything you’ve worked for has dissolved into a murky legal quagmire.
When Arturo Carrillo spoke to USGlass
in March 2011, he was serving as president and chief executive officer
for Vitro America in Memphis, Tenn. A year later, the company has been
sold to private equity firm Sun Capital Partners; Carrillo then began
running one of Vitro America’s former subsidiaries, Binswanger Glass,
as president, until it was purchased by Grey Mountain Partners in January.
He now works directly for the private equity firm and recently completed
his first glass industry acquisition in that role (see related story on
page 10). Carrillo spoke with USGlass about his background, what he
learned during his time at Vitro, the direction he sees for the glass
industry, and his new role at Grey Mountain.
USG: I had read that you grew up
in Mexico City; can you share how you wound up studying in New York at
AC: I grew up in Mexico City, born
and raised there, but I went to school and lived in a neighborhood where
there were a lot of expats’ kids. A group of us all tried to study abroad.
One of my friends ended up applying to and getting into Cornell. I guess
he went a year ahead of me, and he would tell me stories about it. So
I applied to Cornell, among other schools, and then ended up being accepted
and going to Cornell for my undergrad.
USG: And then you learned what a cold winter
AC: I had never seen snow until I
saw it in Ithaca, N.Y!
USG: And your degree was in engineering, right?
AC: Yes, I’m actually an industrial
engineer. I did the five-year program so I have a master’s in operations
research and industrial egineering.
USG: What did you think you were going to be
when you graduated?
AC: I didn’t think through it too
much. My father was an engineer, so I wanted to be an engineer. I thought
I’d probably work at a factory, an industrial place. My father worked
in a steel mill when I was growing up and that’s what I would have done
except that … Cornell is an expensive school. I’d gotten a scholarship
that had a requirement to work during the summers. It required me to make
a certain amount of money in the summers. Back in Mexico after the 1994
peso devaluation there were not very many options that would pay you enough
to meet those minimum requirements. So then I said to myself, “Well, how
am I going to do that?”
In Mexico City there is a very nice, beautiful building where all the
foreign banks were, so I printed 50 copies of my résumé
in both English and Spanish and literally went up the elevator submitting
my résumé at each floor. Then that afternoon I got a call
from someone who said, “I went to Cornell, I’m the head of human resources
for JP Morgan, can you come work for us?” I ended up working in the sales
and trading department for JP Morgan at the fixed income desk that summer.
That is how I got started in finance.
After graduation from Cornell I went to work for an investment bank, Salomon
Brothers, in New York.
USG: That was a good time to be there, I would
AC: Correct. New York City is a fun
place to go right after college. It’s a bit harder to try to raise a family
there, though. I spent three years working mostly in mergers and acquisitions
and financing for both Latin American and U.S. companies. Then after three
years I decided to go to business school to get a master’s degree in business
administration. I attended Harvard Business School and graduated in 2002.
That was kind of weird because I was literally graduating right after
9/11 and Enron, and all the banks and everything had changed … I went
and called one of Salomon’s former legal outside counsel who, at that
point, was the CFO of Vitro in Mexico, and he said, “Look, I need help
with projects, we are doing some restructuring and I’m looking at buying
someone in Brazil. Come and work for us.” I went to work for Vitro in
Monterrey, Mexico, doing what was called strategic planning, which really
meant random projects. I looked at acquisitions, joint ventures, investment
opportunities, cost savings projects and the yearly budgeting process.
After about 18 months, they said, “we’re looking at expanding Vitro America,
why don’t you go to the United States?” So back to the United States I
went … They sent me to Memphis, Tenn. Within a few months, John Warner,
the CFO of Vitro America (who had been there for 15 to 20 years), retired
for medical reasons. They said, “Well, Arturo, would you be interested?
Would you like to be CFO of a $500 million company?”
USG: That’s pretty good at such a ripe young
AC: Exactly! I was 30. So I said absolutely.
USG: Then five years later in January 2010 you
took over as president. That must have been a tough time to take the helm.
What challenges did you first address?
AC: The Vitro [SAB] process had already
started with its debt restructuring so there had been some grumblings,
but it wasn’t on many people’s radar screens. What we were fighting was
the U.S. recession. We’d gone through what we all in the industry have
seen, which was unbelievable—cost rationalization, facilities closing.
And every time we thought, okay, the bottom’s there, next year it will
get better. And it just kept going, going, going. In 2010 we started to
see stabilize at a fairly low level but it was not going down anymore.
We re-started hiring and investing in our plants. But, unfortunately,
as we all know the Vitro SAB debt restructuring took longer than originally
anticipated and became very contested. Vitro America eventually got caught
in the middle of the litigation and in April of 2011 we had to start a
process to sell the company through a 363 bankruptcy sales process. Sun
Capital Partners was the successful bidder in the auction. While the distribution
and fabrication business was merged into Trulite, Binswanger was shortly
thereafter carved out and sold to Grey Mountain Partners.
USG: What is your new role with Grey Mountain?
AC: I am on the transaction execution
side of the team. So my role will be to work on transactions such as acquisitions
and sales, financings, recapitalizations, etc. It’s a little less on the
operations side and resembles more what I did as CFO and in my time in
investment banking. However, I am still fairly close the industry. One
of the first projects that I had to tackle was the acquisition of Hawkins’
glass fabrication business in Stafford, Va., which we announced on February
28. The new business will be called Hawkins Architectural Products and
will continue to serve the Virginia, Pennsylvania, Maryland and surrounding
"Everyone wants glass
walls and—it’s human nature; it’s not just because it’s en vogue right
USG: What do you think are the biggest threats
to the glass industry as a whole?
AC: Certainly capacity, and certainly
volume is an issue. Installers and fabricators are facing it everyday.
But in the long run it’s not facing the problem some other industries
face. In other words, the glass industry is on the right side of the future.
People want clear glass, people want aluminum— that’s what people like.
Nobody ever says, “Oh, please make me a darker home.” Everyone wants glass
walls and—it’s human nature; it’s not just because it’s en vogue right
now. Everybody wants light. This whole [daylighting] that we talk about
is not a fad. So I think the industry is on the right side of a long-term
trend, and the fact that the Viracons and the PPGs and the Guardians of
the world have invested in technology to allow glass to continue to be
part of the construction model is incredible. The glass will be more sophisticated
and there will always be a need, so yes, we’re suffering a terrible—temporary—set
of setbacks. But if you look at the [next] 5, 10, 20 years in the industry
you cannot be more hopeful because we’re not competing with China per
se; it’s a regional business in the glass business …
Yes, the bigger projects will have Chinese fabricators, you always have
foreign competition, [and] foreign fair competition isn’t bad. But the
majority of our business is still fairly U.S., regional, central-based,
and we have under that those other [industries] have been competing with
China, head-on, for years, or decades. We see that at the edges and we
have to be concerned.
USG: Long-term, where do you see glass demand
and products heading?
AC: Well, it’s clearly going to be
more sophisticated, whether we go to triple-glazing or whether we double-glaze
and we get enough advancement [in coatings] and thermally broken aluminum.
Clearly more clear glass, clearly more aluminum, what everybody’s been
doing [more of], the railings, the heavy glass structure—that will only
become more prevalent. I see more blast-resistant, and laminated, and
silk-screening. We always see Europe as probably 10 years ahead of the
United States. We see where they’re going, you know, and we’ll be there
in ten years with those types of structures. We’ve got a good future.
We just have to hang on to get there.
Megan Headley is the special projects editor for USGlass magazine.
She can be reached at email@example.com.
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