Expanding glass opportunities

Glass Times talks to Ryan Green of Clayton Glass about the recent acquisition of Romag.

Why did you choose to acquire Romag rather than grow Clayton organically?

It wasn’t an actual choice, rather than a carefully measured and reasoned decision to acquire Romag. Clayton Glass has organically grown every year for the last ten years with an average of 12% growth in each of the last five years, and by the close of 2018 we expect a turnover of £20million.

Romag was a strategic acquisition to complement and enhance the activities of Clayton Glass; the acquisition enables us as a larger group to diversify into a much wider market sector, yet still remain in our area of expertise. Sales from Romag are very much additional to those of Clayton Glass, which will continue to operate autonomously and grow in its own market sector.

Romag’s technical prowess and production capabilities offer some fantastic product development opportunities for Clayton Glass, while clearly Clayton’s infrastructure offers Romag additional resilience and support to grow in its chosen markets of transport, security, architectural and solar.

On top of the £3 million capital expenditure in 2015 and £1 million this year, the board has also agreed a further investment of £1.5 million for 2017, including another new furnace for our ever expanding roof glass operation. This level of investment will enable us not only to grow, but more importantly to do so while improving levels of service, quality and communication, rather than the traditional method of stretching existing assets like so many of our competitors.

Clayton’s reputation is built on supplying IGUs and conservatory roof glass – why was it important to expand the business to offer other glass processing services?

Romag is a discrete business and operates in completely different market sectors to those of Clayton Glass. By combing Clayton’s IGU abilities with Romag’s capabilities to laminate, bend, polish, drill, screen print, along with fire glass and solar PV solutions, we are now better placed to be a one stop shop for both existing and new customers alike. The group now has the ability and infrastructure to develop some really exciting new products for the glass industry.

Do the demands placed on the industry (from customers, focus on machinery, regulations) make it difficult for smaller companies to operate effectively in the glass processing sector?

In my opinion, the complexity of products that are now being specified and requested by the industry, dictate that significant ongoing investment is needed, hence our strategy to continually invest in the group. Our greatest strength is our staff and being owner managed, we can act decisively and without the constraints of having to give investors a short term return, at the expense of long term success.

Has there been added investment following the acquisition, and will this put extra pressure on the sales team and margins?

Romag is a very dynamic place to work at the moment, we’ve already made significant investment installing state of the art, bespoke business software, together with a new IG production line. We have also begun to evaluate additional machinery that will be a UK first, which will increase both our production capabilities and the variety of products we are able to offer our customers. I would not say the pressure is on the sales team, but the shackles are certainly off.

What business synergies do you expect to realise with the acquisition and how quickly can they be adopted?

Clearly, both companies use glass as a raw material. Romag has become the latest member of National Glass Group, which includes Northern Express Glass where we have a minor shareholding and is already benefiting from the increased buying power of the group. We have a simple rule: ‘if it makes sense to work together, then do so … if it doesn’t, then don’t.’ So yes, we’re already sharing operational and technical resources, knowledge, finance, HR, health and safety, and IT support, but equally Romag now has access to an additional fleet of 20 vehicles, allowing us to increase frequency of deliveries across the UK. This dynamic approach has already had a transformational impact on the Romag business model.

Romag has experience of the solar PV market, will this be a fundamental part of the business strategy going forward?

Absolutely, although we have moved away from low margin, high volume manufacturing of standard ‘on roof’ PV panels (although we can still provide supply integrated PV solutions, both incorporating roof tiles and integrated into glass units).

The potential market is immense and about to change significantly with the development of the likes of the ‘Tesla Gigafactory’ and, as an example, battery storage technology now allows us to have a self-powering conservatory (heating and lighting) by storing the power in the dwarf wall. We plan to use our facilities and technical skills to grow our presence both in the UK and in overseas markets.

Do you have any worries about a potential loss of work following the decision to leave the EU?

Raw material price pressure is of course a concern and we are already feeling this. However, we now have an additional opportunity: we are significantly more competitive in our overseas markets and the order book is already reflecting this. While the Brexit decision was unexpected, it’s now a reality and we will deal with it in a positive and proactive manner.