Corning Has Flexibility to Respond to On-Shoring of Production, Says Weeks
Wendell Weeks said Corning is ready for any new orders from customers due to President Donald Trump's push to onshore manufacturing jobs back to the U.S. The CEO declined in Q&A on a Tuesday earnings call to comment on Monday’s CEO meeting with Trump (see 1701230045). On the meeting, Weeks said: “This administration has formed a small group of leading manufacturing executives in the U.S. for him to be able to listen to ideas and exchange ideas on how to improve manufacturing in the U.S., and more specifically, how to significantly increase manufacturing employment in the U.S.” Among other CEOs said to have been at the meeting were Dell CEO Michael Dell, Tesla/SpaceX CEO Elon Musk, Ford CEO Mark Fields and Lockheed Martin CEO Marillyn Hewson.
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Responding to an analyst’s question on Corning’s flexibility in U.S. manufacturing capacity, Weeks said Tuesday that only 20-25 percent of the company’s revenue is U.S.-based, “but 35 percent or more of our people are in the U.S.” Corning is set up “as a pretty strong exporter from the U.S.,” he said. “Our fundamental philosophy is that we make in the countries where our customers are,” Weeks said, citing “responsible business practice” and “being close to your customers” as governing principles. “If we see some significant on-shoring of our customers’ production capability, we do have the capability to flexibly react to that" in all segments, he said. “If that does become a trend, I think that would be fabulous for the country and it would be really good for us.”
Corning had Q4 sales of $2.5 billion, up 11 percent from the year-ago quarter, reporting profit of $1.6 billion vs. $224 million. Ending 2016 with growth in revenue and profit and “record” Gorilla Glass volume, Corning expects to double sales of Gorilla Glass in its mobile business despite “flattening” smartphone unit growth, said Weeks. It will do that through Gorilla Glass 5 performance that has delivered a “meaningful price premium,” Weeks said. Corning is selling more glass per device as a result of handset antenna requirements to support increasing data rates and “a desire for wireless charging,” said the CEO: The premium glass is becoming a “preferred material in more places on phones.” Additional revenue is coming from Gorilla Glass designed specifically for screen protectors, from Vibrant decorative cover glass for handhelds and notebooks and Gorilla Glass SR+, which is said to provide scratch resistance for wearables.
Chief Financial Officer Tony Tripeny cited acceleration of Corning’s optical communications business as a contributor to Q4 results, citing strong North America carrier network business and demand for its fiber-to-the-home solutions. He named strong opportunities in the telecom market based on fiber market demand exceeding market supply, key telecom leaders investing in optical solutions ahead of next-generation networks, and industry consolidations that favor some of Corning’s partners.
Corning expects progress this year toward commercialization of Gorilla Glass in the automotive market, for vehicle exteriors and interiors, said Weeks. The company will “reapply its core technologies” and reuse manufacturing assets for Gorilla Glass to create automotive products that are “cleaner, safer and more connected.” Weeks referenced Corning’s concept car at CES that featured a lightweight Gorilla Glass hybrid windshield with augmented reality capability to show real-time updates on traffic and landmarks.
Shares closed up 6 percent to $26.18.