The world is changing fast and to keep up you need local knowledge with global context.
A few years back, Nick Binedell, former Dean of SA’s leading business school GIBS, researched the impact of South African businesses which had moved into the global arena. He was pleasantly surprised to discover how, pound-for-pound, they handsomely outperformed. Many of those who manage global companies with South African roots keep a relatively low profile, like the grandson of Morrie Lubner, architect of SA’s dominant glass company, the PG Group. Gary Lubner was involved in the early stages of PG’s European expansion, joining after completing his MBA in London. He began with every intention of returning home, but two and a half decades later runs what he’s helped build into the world’s biggest automotive glass repair and replacement group, Belron. Based in London, Belron’s sales of Euros 3.2bn (R53bn) and pretax profit of Euros 182m (R3.1bn) account for around three quarters of its parent, family controlled listed Belgian group D’Ieteren, I met Lubner last week to find out about this low profile South African entrepreneurial success story. It was a rare pleasure – he retains many of the family traits for which the Lubner family is famous – humility, integrity and an obsession to give back to society. The South African roots are strong in other ways too, with Afrika Tikkun the company’s favourite charity, and even though there is no direct business connection with the country, the annual gathering of Belron’s 100+ managers from around the world is still held annually in South Africa. – Alec Hogg
How long have you been in London…and did it take you long to settle
Twenty-eight years. In some ways you never do settle – my South African roots are very firmly planted and are very much part of who I am. That’s an advantage because coming here as a South African, people sometimes find it difficult to place you, so the school you went to and other things that come with the culture are irrelevant. So I found myself being accepted and fitting in quite easily. It was fortunate that I came over to study. My MBA was a full-time, two year course that allowed me in a much more relaxed and natural way to learn about London, to learn about people, and to make friends in a very non-pressured environment. I was luckier than most people who come over, where they’ve made a huge step to come to a new country. Mine was more gradual, so yes, I feel very comfortable living in London. My kids were born here, so it feels very much like home but home still is South Africa, if that makes sense.
Your company Belron has a fascinating history…
It was founded more than a hundred years ago, at the end of the 19th Century. My grandfather, Morrie Lubner, joined a little bit later. His family couldn’t afford to keep him at school so he went into the streets of Johannesburg pushing a barrow around and selling glass to furniture makers and building merchants. He then became a significant part of the business and eventually a major shareholder. I grew up very much with him as a constant presence – he died when I was in my 20s – and he taught us all so much.
Firstly, it was his ability to understand business. He wasn’t a university educated person but had an intuitive ability to “get” things. His philosophy was all based on what the customer wanted and understanding the person rather than just the numbers. He made it an absolute priority to see and visit customers. Then, at the same time, the importance he put on people who worked in the business – no one was more important than anyone else. His deep interest in people and their families was something that I lived with from an early age.
My dad was, in a sense, even better at that. He had learnt from my grandfather and took the business significantly forward in South Africa and then made some very brave steps outside of the country at a time when many South African companies were struggling to work out how they could grow. He first went to Australia, then the US and then the UK. So yes, the business has been in my blood all the way through.
Today it is the biggest windscreen repairer and replacer on earth, the biggest in the world, Rand terms R50bn a year in sales with 26 000 people – and you run it…
It has been an extraordinary journey. Unfortunately it’s not our family’s business from a financial point of view, but for me it still feels like a family business. Many of the 26 000 around the world will describe Belron as a family business. As the business grew, even in South Africa, the family weren’t able to fund that growth. So we took on partners, Liberty Life was the major shareholder for a period; South African Breweries for a long time and then in 1999 when SAB listed here in London, it sold the whole PG business to a Belgian family-owned company. They weren’t interested in South Africa, so they sold the South African business back to the Lubner family. At the time I was already in London at Belron, the non-South African bit, running all of our European operations.
Belron’s CEO at the time had decided to leave and the new shareholders asked me to take over his job. That was at the end of 2000. This was a big event for me because it was really moving away from the Lubner family business. Belron still has its roots in PG, but today it is owned by a Belgium group, D’Ieteren. I have a small shareholding but it’s not a family business in that sense.
You put a high value on integrity and kept the family business feel…
Very much so. Being the leader of a business our size means there’s actually not a lot I can do, day-to-day. But I can certainly set the direction and the tone of what I want the business to be like. And that definitely comes from my family values and the roots that we have. So for me the responsibility of running a business is a huge one. Because I’m responsible, as you say, for 26 000 people; but I never look at it like that. Each one of those people probably has three, or four, or five dependents.The way that we treat our people, the way that we make sure that they are engaged in what they are doing, is very important.
Equally, I feel very strongly that business has not a responsibility but an obligation to give back to the communities we work in. So that’s something, again, which has come from my family. Giving back has always been part of our life since I was very small. It’s not about how much money you’ve got. It’s about what you actually believe in. What we’ve really tried to capture within Belron is this obligation. So as a result, that’s what we do. That kind of thing has now become much more fashionable and people want to join businesses who give back. It’s not just become fashionable for us. We’ve been doing this for a hundred years. We do more and more of it. We support literally hundreds of charities.
One of my proudest achievements is what we call the ‘Spirit of Belron Challenge’, a triathlon that we run every year, which I started after my 40th birthday, 16 years ago. I remember my uncle Bertie Lubner talking about the charity he had started, Afrika Tikkun. He told me about a girl they had found in the streets of Alexandra who had been on the verge of death and how they saved her. He and I were sitting on this aeroplane with tears streaming down our faces. He asked whether I could do something in London to help raise money for Afrika Tikkun. I got six people from work to join me in the triathlon and we raised a few hundred Pounds. It’s been growing ever since and last year we had 1 200 hundred people from 18 countries competing. We raised €800 000 – which is a lot of Rand. Over the years we’re raised tens of millions of Rand, all of which goes to Afrika Tikkun.
We’ve managed to create a magnificent Belron event, from a company point of view, where we have people coming from all over the world. They all have to raise money to participate. We cover their costs to get here and obviously the accommodation, but there’s a minimum amount that they have to raise for the charity. Coming here they not only meet their colleagues from around the world – I’m talking about glass technicians and call centre operators as well as senior managers, it’s a complete cross-section. And they’ve done something physical, they’ve trained, they’ve conquered challenges. Some people have even had to learn how to swim. But they also find out about this incredible charity we’ve got in South Africa. I mean I could go on and on about the stories – like how our German team were so excited they’ve now got their own triathlon in Cologne in a few weeks.
Also supporting Afrika Tikkun?
Also supporting Afrika Tikkun. And six years now in Las Vegas our American team has their event because we just couldn’t afford to bring all of Americans here so decided to have one there. We employ 13 000 people in the US so we had lots of them wanting to come to London. They’ve just raised another $270 000 for Afrika Tikkun. It’s been an unbelievable thing but this is about our obligation. People often say to me why is an international business that doesn’t even operate in that country raising money for South Africa? I quite unashamedly say, “The reason that we’re doing it is that without South Africa none of us would be here. Belron would not exist.”
Yes, the shareholders have changed, but the roots of this business are firmly in South Africa, and they’re firmly with my family. I think that we have an obligation to give back from all of the success Belron has enjoyed worldwide. We give lots of money to charities locally, in every country where we operate, but our global charity is Afrika Tikkun, in South Africa.
So if the late Bertie Lubner, your uncle, hadn’t sat next to you on a plane and bent your ear all of this wouldn’t have happened…..
Probably not. I think we sometimes forget what one person can do. Certainly we are a big part of the Afrika Tikkun funding but we’re not the major part. We play our role – it’s a very important part of the Belron culture and the Belron spirit.
Belron is somewhat different to the PG business in SA…why the focus only on windscreens?
I think that really came in probably in the early 90s. I joined after I finished my MBA in 1991. Then we realised that actually where we thought we could add the most value was very much at the front end, which is the repairing and replacing people’s glass.
In motor vehicles specifically?
Yes, we are very focused and we have a powerful business model. It relies on strong and longstanding relationships with insurance companies who recommend us to their policy holders; and at the same time building strong brands. People always are amazed that we’ve managed to build a brand for a windscreen company. Repairing or replacing windscreens is a distress purchase – low interest and infrequent. Yet, if you ask people here in the UK where would you go if that happened, 90% tell you Autoglass. People know us just as well on the Continent where we also have 90% top of mind awareness for our brand Carglass. We’ve invested in building a brand in a particular way. In the US, which has always been a difficult place to go, we’ve grown our brand awareness to over 40% in the space of six or seven years.
So if you’re a Texan and you have a crack in your windscreen, you’ll think about going to a Belron company?
To Safelite, yes. I go to the States a lot. I’m there probably every month. More often than not, when I come in, the Customs guy says to me ‘what’s your business’ and after I say ‘Safelite’ he’ll sing the Safelite jingle to me. That’s always a good measure of whether we’re getting our message through.
You’re big advertisers?
Huge, we’re spending hundreds of millions of Dollars a year on advertising. But we do it in our own special way, using use our own people to advertise, using the same messaging around the world. Advertising agencies keep telling us it’s the wrong way. But we think we’ve cracked the way to do advertising.
Is it a personal interest of yours?
Very much so. Whilst I’ve got financial training – at UCT I did business science and then accountancy – I very quickly learnt that I wasn’t going to ever be a good accountant as I much prefer marketing, sales and the general management side. Yes, marketing and the brand is definitely one of my big interests.
Apart from the triathlon, you have another big annual get together at Belron…
Ever since I took over in 2000, we get all of our global leaders together. We’ve had just had our last one now, in Cape Town in March. Each management team from 30-odd countries comes along and we meet every time in South Africa.
You say ‘team’. How many is in a team?
Each team would be somewhere between four to seven people, so we have about 160 to 180 people coming. It’s the senior leaders of Belron from, as I say, from all over the world and we always do it in South Africa.
That helps the family feel of the company?
Very much so. People love hearing the story of Belron, its the roots. At this last conference I talked a lot about that and was very fortunate that my dad and Bertie were there to hear it and to talk about it too. The feedback we get is amazing. I mean, we were on the Waterfront, which is less than a kilometre from Buitenkant Street, where the first branch was. So I could say “This is where this business actually started.” It’s an important meeting that we have obviously for business reasons but also again, to re-emphasise the values. Every time we come we spend a day in one of the townships. This time we were in Mfuleni. We did a whole range of activities. If I showed you some of the letters I get from my people about what this experience means, it’s incredible. I’m a firm believer if you’ve got an engaged leadership team, they’re going to put in the discretionary time and effort – and you’re going to get the results from a business perspective.
Getting back to the business model itself. As an outsider you would have thought, there are better margins in just replacing all the windscreens that get broken, rather than repair them?
You’re absolutely right – this is I think a little bit of what makes Belron different. It is significantly more profitable to replace. The very first thing I did when starting to run Belron was buy a repair business. It was tiny, a few hundred thousand US Dollars. But they had developed this repair technology. Around 25% of all damaged windscreens can be safely repaired. We showed insurance companies if we repaired the windscreen rather than replace, it would save them significant amounts of money.
Even though it hurt our margins, my thesis was that if we demonstrated this is the kind of organisation we are, on that puts its customers first, they would give us more business and that they would give us more volumes. So if an insurance company giving us 20 percent of their business would increase our slice if we put in this repair promise and we actually delivered on it. That is exactly what happened. There is no question at all that our repair strategy was a game changer for the industry because this was complete anathema to our competitors. From the insurance company’s point of view it made them think ‘wow this is a company that we want to partner with that we want to deal with, and that we can grow with’.
That’s been the case. So today we deal with literally every insurance company in the world in the countries where we operate. Many of them only use us and that has been largely off the back of our repair strategy. Short term it might not be great for results. Long term sustainability, I have no question at all that it was a very, very good business decision and one that’s made us more money and a bigger return than we otherwise would have had.
What about various qualities of windscreens produced now all over the world… is this a threat to your business… you could have competitors undercutting by using poor quality products?
I don’t see it as a threat. It worries me that there’s the poor quality because a windscreen is a very important part of the structural safety of your car. If a windscreen is either not fitted correctly or the quality is not good and you have a rollover, for example, the chances of a serious injury or death are significantly higher than if you had it installed properly. For us the windscreen itself is not the service that we’re offering. We offer something much more than that; we’re offering to solve someone’s problem.
For someone who has broken their windscreen, this is a pain in the ass. It was unplanned, not something they were expecting. They don’t know what to do. It probably hasn’t happened to them before. If it did then it happened ten years ago. Our service offering is to take all of that hassle away, so we tell them to give us a call or come to us online, a part of the business that’s growing significantly. We deal with the insurance company. We will make sure that the job is done fantastically, with well-trained people, with guys who are amazing individuals. And it will be guaranteed.
Is there an incentive for the driver to have the windscreen repaired rather than replaced?
Yes most insurance companies certainly here in Europe and in the US – will charge no excess if you repair. There’s some that don’t do, so obviously when a customer is faced with ‘well I’m going to pay £50/€50, whether it’s repaired or replaced’ they’ll go for the replacement. That makes our job harder. But when an insurance company waives the excess on a repair, then the customer is usually very happy to do that. We obviously encourage that because it saves them all money.
And reduces the waste, too?
Yes, glass is fairly easy to recycle. What’s difficult to recycle is the plastic interlayer. A windscreen is a sandwich of two pieces of glass and a plastic interlay. That plastic interlay, which is really where all the strength lies, is very difficult to recycle. We tell insurance companies and motorists that repairing is a much more environmentally friendly.
Gary, how much runway have you got left, when you look around the world?
There are two areas for our growth. One is we’re only in 34 countries around the world. There are a lot more geographies we can enter. We are not particularly well represented in South America, for instance, although we are in Brazil have and a small business in Chile. In South East Asia we really haven’t done much. In China we had a difficult experience and have actually exited from that market.
What happened in China – you’ve been there since 2009…
We just couldn’t make the business work. A lot had to do with the values and the way that we operate. We will not compromise on our ethics, on the way that we do business, what we call the ‘Belron way’. I’m not interested that a country operates in a different way. We have our way of operating and that’s about the way we treat our people, it’s the way we treat our customers, it’s the way we treat our suppliers. In China we just couldn’t get that balance right. So we took the decision that, for the moment, we’re leaving the country. We had some bad experiences and the way of doing business there, frankly, was not acceptable from our point of view, so we decided to exit.
There are some geographies that we can go to. But we still have runway, as you call it, in many of our existing businesses. For instance the US which is huge. It’s our biggest business, but I reckon we could grow that business still. Germany is our second biggest business. And there is significant growth opportunity too. It’s great that our market share in both the US and Germany is much lower than many of our more mature businesses like the UK and France, so we’ve got quite a lot of room to grow.
Would the South African business ever come back onto the radar, given that your Belgian owners weren’t interested first time around?
I don’t think we would totally discount that but the only business worth us acquiring in South Africa is PG and that’s owned by my dad.
And Ronnie Lubner is not a seller?
He’s not a seller. So yes, we’ve got a very close relationship with the South African business. We help them with training and various initiatives and they’re a big supplier of ours. Shatterprufe in Port Elizabeth is one of our global suppliers which has been the case for 20 to 30 years. They’re a very important supplier, so there’s a very strong commercial relationship. But it’s a little bit stronger because we see ourselves as cousins, if you like.,,,
What about your children – are they likely to follow you into Belron?
The truth is I don’t know. I learnt a good thing from my dad. Even though I was brought up in the business I was never, ever pressurised to join PG. In fact, as a normal, rebellious teenager and then in university, I made it quite clear I didn’t want to go into the family business. Even though it wasn’t strictly family, we had big majority shareholders then. I was never pressured to do that but obviously the business was around me all the time. So I went off, did my degree and joined Arthur Andersen. One day I met someone at my dad’s house who was working in the company. A South African guy who had been living in the UK and had gone back to South Africa and he said to me…“What the hell are you doing working at Arthur Andersen when you’ve got this business here, which has so much opportunity and so many things to do?”
I decided then that I was going to join it. I can’t say it was easy to start with being a Lubner in the business. Yes, I had a degree and I was a chartered accountant, but there were lots of categories of people. There were people out to make sure that I failed. Those ones I didn’t really worry about too much because I knew that whatever I did, they would envy me. The ones that were really difficult were those who kind of pandered to you because of your surname and tried to do favours. That I didn’t like either. After a while I realised that the business was big and a meritocracy, and so I would succeed or fail on my merits. To answer your question, I’m not pushing my kids at all.
Have they shown any interest?
Not really. My youngest, who is only 14, loves hearing the Belron stories and he’s on the website all the time and he’s telling me all the ‘why’s this going on’ and ‘what’s going on here’. So who knows?
Maybe your next chairman in training.,.the younger they start, the better.
Many South Africans, like yourself, have over-performed in the global environment. What causes this?
What I have noticed over here is South Africans are incredibly hardworking. I obviously come across lots of South Africans. Every time I see them and meet with them, there seems to be a different work ethic. I don’t know whether that’s born out of the fact that they’ve come over here and need to make it. But there’s no question about that. I think there’s also this thing about coming from, if you like, a smaller country and almost this feeling that anything can be accomplished. South Africans don’t know about the traditional barriers that exist in the UK. And what you don’t know is sometimes very helpful – you just get on and do things.
Certainly when I ran the UK business for five years definitely, being South African was an advantage in a sense. You just get on with things and you’re not worried about what people are going to be thinking because you don’t know what they should be. The other thing is the education in South Africa, particularly the tertiary education, was excellent. I was at UCT. I got a fantastic degree and I think we come here well-equipped. I feel very strongly that South Africans living here in the UK should be supporting those institutions, particularly now, because I think that that is really important. Certainly, UCT gave me that leg-up. I think it is important now that we support them as well.
Gary, just to close off with, imagine you are back at UCT now, you have a room full of students, of all colours of the South African rainbow…what would you like to leave them with?
By the way my daughter is studying at UCT.
OK, so she’s in the audience…
I’m very proud of the fact that she’s at UCT, I mean she was born here in the UK. She’d hardly been to Cape Town but decided that that’s what she wanted to do, so she’s studying social work there. I was actually there just a few weeks ago. They had a little ceremony and it was fantastic to see this room full of students again.
So what would I say? Alec, I think the truth is my views on success have changed over the years.
So what does success look like? For me success isn’t just about making a lot of money or being highly successful in the traditional sense, as a business leader. What I would be saying to the students is go out and be as successful as you can be, but measure your success in different ways. It’s not just about money. It’s about what you can give back to communities. How you can support others, whether those are people within your organisations or not.
So create jobs, create businesses that employ people that can do different things. That, for me, is success. Go out and develop things that excite customers that give customers a different kind of experience. The creativity that I still see in South Africa is amazing as are the skills. So for me there shouldn’t be any barriers to creating things.
I would say, for me the biggest thing – and I try that with my children – is self-worth and believing in yourself and believing that you can go out and do amazing things. I’ve seen that time and time again. I see that in my own business. I’ve seen it in my family, with family members who have done the most incredible things just because they sometimes won’t take no for an answer. Believe that something different can happen. For students it’s using that energy, because you know what students are like. They do think they can do anything. Let’s try and harness that in a positive way and redefine success.
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