Editor's note: This article originally ran April 5, 2023.
“Be an engineer: you’ll always have a job.” Tim Knavish, president and CEO of global paint and coatings company PPG, is proof positive of that advice from high school guidance counselors everywhere. Other than college “and the odd jobs of bartending, landscaping and waiting tables,” Knavish has spent his entire 36-year career at PPG, the global paint and coatings manufacturer based in Pittsburgh.
Knavish began as a design engineer in PPG’s flat glass business, in an era when “I had to wear a suit and tie every day. I had one suit, so I had to run out and buy more suits.” His list of subsequent titles could potentially fill PPG Paints Arena (home of the Pittsburgh Penquins): process supervisor, operations manager, production superintendent, senior vice president, chief operating officer, and many in between. An engineering graduate and M.B.A. from the University of Pittsburgh, he’s led PPG divisions in Europe, Asia Pacific and Latin America.
In October 2022, Knavish succeeded Michael McGarry in the top role. McGarry, who in his retirement is now executive chairman of PPG, praised Knavish for being a key player in PPG’s growth in recent years, leading several acquisitions and strengthening global operations. The company entered 2023 on solid ground with a record $17.7 billion in sales for 2022, and that has continued with first quarter 2023 earnings coming in above forecast.
Knavish talked with IndustryWeek about where he sees growth in PPG’s markets, where strides are being made in sustainability and why post-pandemic suburban driving habits have been good for business.
IndustryWeek: You’ve been at PPG most of your career. What’s been the most critical experience in preparing you to be CEO?
Tim Knavish: The biggest thing I've learned along the way is it becomes less about what you know and more about, “Can you get people to do the right thing or the best thing for the company or the customer?”
You go to school to be an engineer. And it's all about money and how well you do on your exams. That mattered when I was a design engineer, but all my other jobs, what really mattered was, “How do you get people to follow you and do what's best for the customer every single day?”
PPG has over 50,000 employees. How do you take the pulse of people in an organization that large?
It gets harder the higher you go in the enterprise. One of the things that helps: I've worked in almost every one of our businesses. I’ve been to most of our factories. I’ve moved for PPG many, many times. So I've been based all over the country and all over the world. I know a lot of people—and a lot of them, even though I'm the CEO now, don't hesitate to reach out to me.
I also try to get out on the front lines where we make stuff as much as possible. I always say, as a reminder to folks, “We have this beautiful office building in Pittsburgh, but we really don’t make anything here and we really don’t sell anything here.” This is the back office. Our customers and the frontline employees are out there.
Why would a recent college graduate want to work for PPG? What do you say to the best and brightest talent about working for your company?
One story I tell is about how we protect things around the world. Cars used to rust out. Now they last 15 years, and that's because of the coatings on the car. We help airplanes stay in the air. That's pretty important. And how do we do that? Through lightning-strike protective coatings, sealants that seal the fuel tanks.
The other thing I share is that the customers that we get to interact with at PPG are people at Tesla and Apple and Google and Yeti. We get to work with Penske’s Racing team. The diversity of experiences you get from a customer standpoint are exciting. My predecessor used to always say, “If it moves, we paint it. If it doesn’t move, we paint it. “
From a social responsibility standpoint, think about the impact that a company like PPG can have on sustainability—on an automotive assembly plant. More than half of the carbon footprint of that entire plant is the paint shop. So to the extent we can formulate to reduce the carbon footprint—work with our customers to eliminate ovens or reduce curing temperatures—we can have an impact on the environment and help our customers meet their sustainability goals.
Where is PPG at with sustainability efforts?
We've committed to science-based targets to reduce our carbon footprint. We expect to get validation in the first half of 2023. In the meantime, we have a robust sustainability scoring system for any product that we sell, and how it impacts the environment.
Products are categorized according to whether they are driving improved sustainability or not. We’ve been focused on that metric for the last few years, and this past year, we reached 39% of everything we sell is a sustainable product. We’ll continue to drive that.
What we’ve found is that well over 90% of our carbon footprint is Scope Three [indirect emissions]. So yes, we can do everything we can in our own factories, but 90% of our impact is either upstream or downstream. We’re investing our R&D dollars to improve in both directions.
What are PPG’s biggest hurdles to creating more sustainable materials?
One hurdle is that most industrial coatings require heat to cure in order to meet the performance attributes of a car or an airplane or a beverage can.
So how do we reduce or eliminate the need to add energy for that curing process without sacrificing performance attributes? We just launched some low-temperature-cure products for one of our automotive customers. To the extent that we're able to drive that adoption across the across the industry, then that helps not only our sustainability but the whole planet.
Where do you see weaknesses and strengths in PPG’s markets?
Our softness is in things closest to the consumer. DIY housepaint is probably the softest area we've seen in the United States and Europe and Asia-Pacific. Also, coatings for consumer products, cell phones, laptops, kitchen bakeware, food and beverage cans. Some of that is the macro-economic environment—what inflation is doing to discretionary spending around the world. Some of it is what I would call a “COVID hangover.”
On the other side of the ledger, aerospace is booming as travel returns. We see it in our aerospace aftermarket products, and our OEM products for new aircraft. And we see it in our aerospace military products. Right now, literally everything we can make in that business, we can sell.
Another area of real strength is the automotive refinish market—collision paint, body shops. As the world opens up, we see more and more traffic again and more congestion, even if it’s not as much in the cities. Because people are working from home, there are a lot more traffic accidents out in suburbia. So that refinished that automotive aftermarket business is really strong.
Are you able to keep up with the demand in aerospace and automotive?
We are challenged in aerospace to supply everything the industry needs. And it's for three reasons. One is in that first year of COVID, nobody knew what was going on, including our customers. And so everybody ran their inventories down, protected their cash and depleted inventories across the entire supply chain. And so as things recover, not only do you have to meet today's demand, you have to rebuild that safety stock inventory that allows the supply chain to operate smoothly.
Second, we do struggle to get parts, whether it's a component that goes into a coating or a sealant or a part. We make transparencies or windshields for aircraft. Parts for those are still hard to get.
And third, you're working on getting productivity levels back to where they were pre-COVID and just keeping up.
Everybody in the industry is struggling with those same three challenges. It's getting better every single month. And we're confident we'll get caught up. Refinish is in a better spot: some selected raw materials are still hard to get, some rebuilding of safety stock levels around the chain, but a little better condition than aerospace.
What are PPG’s biggest opportunities for growth?
Our biggest opportunities to take share and grow organically through share gains are around investing in innovation in two key areas of improvement for our customers: productivity and sustainability. From a productivity standpoint, think of a body shop customer. What really helps their business is how do they get more cars per week, through that process, end to end. Color-spray cure is a critical part of that. We’re able to help them with what I call “innovation inside the can,” which is the chemistry but also innovation outside the can, which is digital tools to help them with color matching, mixing speed, mixing accuracy. Then on a sustainability side, a lower temperature cure solution for the customer that helps them with their own sustainability targets. Those are the two areas that we’re most heavily focused on in our R&D spending.
Have you shifted your supply chain strategy? There's lots of talk about regionalism, and you have plants all over the world. So are you looking strategically at where your suppliers are?
We think about it all the time. With paint and coatings, you make local for local. We're a capital-light business so we have a lot of plants, but a lot of smaller plants around the world because our products don't ship well. We follow our customers. And if people move from country A to country B for either cost or geopolitical reasons, it's a pretty good chance that we already have facilities in country B because we've got facilities in 70 countries. We don’t see any major shifts happening for us in the short term. But longer term, we’ll just have to see what happens in the world with the geopolitics in China. And with the energy situation in Europe. We will go where our customers go.
