Volume 48, Issue 9- September 2013
More than an Ounce of Courage
I am one of the few who have switched sides,Ē he says. But the glazing industry, he says, was appealing. ďAs a general contractor you look at curtainwall contractors as the trade that typically gets what they want.Ē
Though Arian is originally from Germany, he had worked in the U.S. with AT Construction and Development before making the move to seele, which is also a German company.
It was a good switch because I had an understanding of both German and U.S. systems,Ē he says.
As he tells us over the next few pages, the U.S. glazing industry is very different than Germanyís. seele, however, is a company that thrives on such challenges. In recent years the company has been carving its own little niche here for specialty glass and construction workóand is showing no signs of stopping. Arian spent time talking with USGlass magazine editor Ellen Rogers about some of the companyís developments, challenges and the direction in which it is headed.
USG: What are some of the biggest differences you see when comparing the U.S. glazing industry to Germanyís? Europe?
AA: In Europe the construction contracts are based on a comprehensive set of rules, regulations and standards. For example, in Germany the so-called VOB book of law regulates the entire contracting process from bidding to the final acceptance of the work. In the U.S. everything revolves around the contract and the parties have to be very diligent negotiating the terms as there is very little outside of the contract on which they rely. In Germany contracts are smaller because of the whole legal system regulating it. Likewise, contract interpretation is more complex in the U.S. There is also a different methodology of project management. In the U.S. people like to coordinate on the fly verbally and in Europe everything is mostly written, which is good for record keeping, but it also creates a more combative nature; when youíre not face-to-face you tend to be more courageous. So there is an apparent softness in the U.S. when it comes to projects. Project management is an integral part of glazing because, as the contract glazier, you are always on the critical path of the project: you are enclosing the building and everyone is looking up to you Ö to hold the schedule, etc. Building envelope contractors are the trade through which architects see most of their expressions and visions realized. So it can become a challenge to balance requirements of the architects and the general contractor. It all boils down to solid project management as the key.
USG: Whatís it like operating here in the U.S., but still having corporate headquarters in Germany?
AA: Itís a big challenge, not only because of the geographic distance, but because you have to bridge cultural differences as well. The way [business is] done in the U.S. is different than in Germany so our role is to be the voice of the project internally while making our methodology palatable to contractors and our partners. Itís like you are an ambassador to both sides so itís important to have a deep understanding of the needs and wants of each side as well. For example, during project phases in the U.S. there is a lot of brainstorming that takes place. The German engineer thrives at finding solutions to difficult problems and he demands a quiet time to work on his assignment and does not like to participate in brainstorming sessions during that time. Then he comes back with the final solution. In the U.S. people get nervous when one party is quiet and they assume heís not working on the project. We are being contracted in the U.S. because of our German engineering; they want to see German fabrication and material arrive from Europe.
USG: seele has grown quite a bit as a contract glazier in North America. What do you think has contributed to this growth?
AA: The growth has to do with becoming established here and becoming courageous enough to take on larger projects. We see more and more projects built in the U.S. that fit the portfolio of our company. At the same time a lot of in ternationally operating architects with whom we have established relationships are working in the U.S. now. The latest innovations in glass fabrication, which is our core competence, has created new opportunities for the architectural community. The larger glass sizes are becoming more attainable to architects so weíre seeing a broader use of that technology in the U.S.
USG: Does the company do as much work in Europe as a contract glazier as it does in the U.S. or is it more focused on fabrication?
AA: Right now we feel the need to focus more on glass fabrication. More than 90 percent of our work is design, engineering, installation and project management of entire projects, in both the U.S. and globally.
USG: During the AIA show you were focused on showing the companyís fabrication abilities. Why did you decide to grow that presence here?
AA: We do feel the glass we are supplying adds value to both the architectural community and contract glaziers. We realize there are smaller projects where we donít have enough presence and even if weíre just supplying the glass we could help others bring the design intent to fruition and create more impact. We are only one glazier in the country; and feel there are others that would love to buy glass of these [large] sizes and put them into their projects. We have found that sometimes even our competitors will sub[contract to] us for certain glass types.
USG: That takes us to my next point. As you grow your presence in the U.S. as a fabricator, it may create situations where youíre supplying glass to contract glaziers who would otherwise be competitors. How will you work through situations such as this?
AA: Letís say we bid a job, and part is a complicated storefront in combination with unitized curtainwall. There are lots of good glaziers that could take the whole job if they have the resources. We could add value with the glass, but we do not do unitized systems. So by working together we could add value, just providing glass or working jointly on the engineering for the storefront. We have learned that it is better to have a small piece of the pie rather than pie in the face. It can create some sticky situations, but we address these up front with integrity and through open communication. If a competitor has a job and does come to us for glass, we set the rules of conduct together with the contractor and accordingly.
USG: As you grow here, one thing to think about is the lead time. How can seele make sure customers are still receiving their glass on schedule?
AA: We are operating primarily in the area of custom fabrication, and are not tied into huge, long lead times. We can react relatively fast and try to make up for extended delivery time through sea freight. Often, the glass already is supplied from Europe so we feel there will be no disadvantage with glass coming [to the U.S.] from Europe. Also, we are very experienced in importing, shipping and handling glass from Europe and are able to be more efficient. Besides the know-how to ship, import, etc., we can, if need be, provide advice on installation or even do the installation Ö what we have is more like a custom shop.
USG: What are some other challenges of fabricating in Europe and then supplying for a job in, say, Chicago?
AA: You rarely can supply just a piece of glass. There is always some engineering that goes along with it; that is a part underestimated. Someone needs to double check if the glass needs a certain make-up, if the coatings are properly done, etc. There is a lot that goes with the type of glass we supply that encroaches the engineering area and that is another area where we can help and support. One thing I feel is that the type of engineering available for specialty glazing in Europe is not yet as available in the U.S.
USG: Do you think U.S. glass fabricators will be nervous about the potential of a new competitor in seele?
AA: I donít think so because our market niche is currently not covered. Sometimes we get inquiries from certain contractors and fabricators when they realize that they canít do something, so we can partner with them. It does not make a difference if we supply to another glazier or fabricator. We have no intention to compete with the enormous glazing fabricators; we want to cover the specialty market that we understand. There are many projects where the general contractor has an existing relationship with a contract glazier. They like to work with who they know. In such a case, they could work with their contract glazier for all of the glass, but also then work with us for their specialty glass needs.
USG: What are some of your growth/future plans as far as the possibility of bringing fabrication here as well?
AA: The fabrication of this type of glass is very engineering-intensive. The challenge, though, is finding a supply of engineers who have the level of expertise to work in our market niche. There are more in Europe and that is why weíve been holding off. Fabricating in the U.S. has its advantages; the fabrication though goes hand-in-hand with engineering. The challenge is to establish the same level of engineering that we have in Europe.
USG: Which projects has seele glass been used on in the U.S.?
AA: We supplied the tallest hurricane tested glass for the Miami Art Museum. Also, if you look at the Institute of Peace, the glass dove on the roof, was our glass, and an example of the type of work we do.
USG: During the AIA show we asked you about plans for that massive lite of glass you displayed (see the July 2013 USGlass, page 46) and whether itóor glass of its sizeówas going to be used in any projects here. You did not say yes or no; is there anything you can share now about where that glass is?
AA: There are some high-tech companies taking on prestigious buildings with unique architecture and calling for maximum transparency. That panel specifically, though, is in a warehouse. I would like to be able to put it on display because I think itís something people should see.
USG: Speaking of that huge piece of glass, how much of a demand do you think there will be for glass of that size?
AA: I am not anticipating a huge demand. Displaying that piece was like when car manufacturers do a study car where they put something out thatís really pushing the envelope to serve as inspiration. How far can we go today? Itís good to know how far technology is feasible. And, not everyone can afford that size of glass. We do see areas where an unobstructed view is important, such as in a high-end residence. I donít see full curtainwall facades equipped with glass of that size.
USG: One of the challenges the U.S. market has been facing is a movement by some groups to decrease a buildingís window-to-wall ratio which will in turn, reduce the amount of glass used. How can you take glass of this size and make it high-performance/energy-efficient?
AA: I think energy efficiency, especially in the U.S., is a very valid and legitimate concern. We feel a good balance between energy efficiency and transparency needs to be found. But I donít see jumbo sizes having major use in big towers, but there are certain areas such as storefronts, glass cubes, vestibules, etc. where the design calls for a particular statement.
USG: Obviously, increasing transparency has been a huge trend; what are some other trends you are seeing?
AA: Speaking of energy efficiency, which is a big topic in the U.S., [there is the use of] onsite photovoltaics. A lot of energy is wasted through non- performing building envelopes and there is a gap that needs to be filled with innovation and education. Another is that the glazing industry as a whole has become more international. There is more participation and more products globally. The contractors who are successful are the ones looking for the best possible materials around the world. Itís becoming more and more noticeable in the U.S. that the traditional glazier will have to face not only international competition, but also increased challenges from an international supply chain. And we do see glass becoming a more integral building component, a structural component, and that brings back the whole engineering [component] which could be a challenge for some glaziers.
USG: What do you think of the announcement recently that Benson was acquired by MiTek?
AA: This type of deal is normal for the industry. We are coming out of a recession, companies are coming back and itís natural to expand and merge, so I am not surprised. We have always looked at Bensonís work with a lot of respect.
USG: Speaking of consolidation, the industry has seen quite a bit of it, even among contract glaziers. Do you think there will still be regional contract glaziers in ten years? How do they compete with the large, well-financed companies?
AA: Yes, I think they are filling an essential role in the marketóthey are filling a gap a [larger company] canít fill directly. I feel the regional contract glazier is essential to doing regional projects and at the level needed, as well as in providing a service for after-installation needs. The big guys are not interested in going back to do, for instance, replacement work. As far as competing, the well-financed companies typically have certain volumes of business they do; smaller projects require dedication and service that might fall on the sidelines if all the contractors are big. The high-end residential market, for instance, is lucrative and growing and the big guys arenít really looking at that.
USG: seele is also known to work with local contract glaziers as subcontractors. What do you look for?
AA: We look for quality. For installations, it is good to work with a local glazing contractor who also has the local expertise of the market. We like to work with them as they are the ones who can help us around the project.
USG: If you were a local contract glazier how would you compete?
AA: I would look for a niche and what I could do better than othersóthatís an answer everyone needs to have. Some have an efficient way of installation; others have fabrication capabilities and can respond fast; focusing on that area is the key. Another thing is learning to say no. Donít tackle any job at any price. There are still glaziers struggling because they took unviable jobs during the recession. It is critical to know what weapons you have and when to use them. Have the courage to make a statement. Also donít leverage too highly. The recession showed us that those who stretched too thin with capital and work capabilities are the ones with the biggest problems.
USG: Another topic that has been very much in the news is the anti-dumping duties on curtainwall. What are your thoughts on this?
AA: I look at it as a political issue. As painful as it may be, it hurts the economy in the long run to limit competition. Look at steel, which has always been within a protected class of building materials. Any regulation of the market is limiting. Competition is healthy to the market; as a businessman I learned that you can only become better at what you are doing when you face competition and always strive to be better at what you are doing than everybody else.
Contract glaziers have been scratching their heads over the connection between glazing work and the financial market. For example, when I look at high-end retailers, they used to change the face of their stores every ten years and they spent a lot of money to do so. Now that has been reduced to five years, but in doing it more often they are watering it down, making it simpler and cheaper. So I think if there was a way to provide something like leasing [as with a car], contract glaziers could approach the retailers with the option to make a payment upfront and then have them pay the rest over the lifecycle of the storefront. Itís a way to outsmart competition while creating value to the client. Instead of a huge upfront investment, the owner will make payments when the added revenue from the new look has already kicked in. In return the contractor will not be nickled and dimed.
USG: What do you think†are some of the pros and cons of doing custom work opposed to working with†different suppliers?
AA: The challenge with custom work is you cannot 100-percent plan for the future. You always have a bottleneck with capacity. Custom business is non-scalable and that requires a different method of managing the business and looking at projects. You need to take only what you can chew and you do have to sometimes stop bidding for jobs, which is very painful. Every little piece [of glass] has to go through a serious engineering effort.
Also, with specialty work, the workforce has to be specialized. With custom work, you cannot add more people when you have more work and reduce when you donít. Our experience is you can never have enough qualified people. As I said before, there is a limited supply of engineers out there.
USG: What do you think are some of the things that seele does that makes it a unique operation?
AA: What really makes us unique is that we are, across the board, courageous people. We grew by taking work that others felt was too risky and could not be accomplished. We have a lot of people working for us here because of the challenges the projects present. Itís all about pushing the envelope. We find something in every project where we can bring a certain value.
USG: If we had this same conversation a year from now, what would be different?
AA: We will have an established and solid glass supply business. It is our goal to put an effort into becoming the prime source in the glazing industry for jumbo size and specialty glass. We will continue with the high profile jobs weíre doing in the U.S. Personally, I would like to have an impact in Canada where weíve not been present in the past and feel the demand is there for our type of work.