How Libbey Inc. Grows, One Broken Glass at a Time

Toledo, Ohio — The popular maxim “It’s not a party until something gets broken” might make a questionable consumer tagline for a global glassware manufacturer, but it’s one that likely should resonate with the folks on Wall Street — at least when it comes to glassware innovator Libbey Inc., whose replacement sales drive 90 percent of the firm’s annual U.S. food service sales.

“The more times we see people going into a restaurant, the more times we’ll have replacement opportunities from people breaking their glasses,” explains Libbey’s CFO, Sherry Buck, who, when asked how she gauges demand inside Libbey’s far-flung markets these days, begins listing a number of factors impacting the dining and entertainment habits of populations around the world.

“We’ve been impacted fairly significantly in China, where the new government has put in what are known as ‘The Eight Rules,’ which are really consumption policies that are not encouraging eating out or hosting gatherings,” says Buck. A little more than year after being recruited by Libbey CEO Stephanie Streeter, Buck finds herself manning the financial levers of a middle-market firm that churns with all of the financial complexity and global dynamics of an enterprise many times its size.

Upon her arrival at Libbey, Buck was charged with working closely with her new CEO to help implement a strategic transformation of the $825 million firm — one that has involved increasing manufacturing efficiencies and profitability and improving the firm’s cash flows. Chief among her goals was to deliver sustainable margins (EBITDA) of between 15 and 18 percent, a feat she delivered this year after the firm had garnered $10 million in savings from salaried workforce reductions and productivity enhancements across the company’s market segments of 3 to 5 percent.

However, Buck says, the transformation under way at Libbey has led the firm to narrow its lens on its workforce — and not just numbers.

“This goes beyond just costs and head count. This is about understanding the skills and people assets that we need to be able to deliver our strategy,” explains Buck, who has worked closely with the firm’s human resource leadership to put in place a new talent management system designed to help Libbey define new workforce competencies and help the firm to develop its next generation of leaders.

Says Buck: “Anybody can have a great strategy, but if you don’t have the right people to execute, it won’t matter.”

This strategy execution is increasingly taking place outside of the U.S., where Libbey captures 44 percent of its overall revenues as its products find buyers in more than 100 countries.

“Most of the glassware we make in China today is for the China and Asia markets, and likewise in Europe, but we end up shipping a percentage of products,” explains Buck, who says that the firm is always looking for ways to curtail shipping costs. “When you ship across a country, you’re shipping a lot of air — and this can get very expensive from a transportation standpoint.”

According to Buck, the battle to defray shipping costs has led finance to become keenly aware of the art and design capabilities of each of Libbey’s plants.

“There’s a lot science and art to making glass, and Europeans may prefer a different style of glass from what’s popular in the U.S. — this requires that we have the right machinery in the right markets,” she explains.

It’s a challenge, Buck says, that Libbey shares with manufacturers in general: “Glass-making is a process, and from a manufacturing standpoint, it’s about being as efficient as you can. It’s about Lean techniques and how to get better at job changeovers and watching input costs.”