Train Partners Said to Take A Stake in PPG Industries

PPG Industries rallied more than 5 percent in after-hours trading Tuesday after Trian Partners revealed a stake in the corporation.  Trian, managed by activist fund manager Nelson Peltz, has accumulated a $690 million, 2.9 percent stake in the 135-year-old manufacturer.  In a securities filing on Tuesday, amending its holdings, Trian stated it had 2.6 million shares valued at $269 million as of the end of June.  Trian offered the following statement on the filing:  “Trian has filed an amendment to its Form 13F for the quarter ended June 30, 2018 reporting an ownership stake in PPG Industries, Inc. Funds managed by Trian now beneficially owns approximately 7.0 million shares (valued at approximately $690 million as of October 9, 2018).

This represents approximately 2.9% of PPG’s outstanding shares.”  PPG is one of the world’s principal manufacturers and distributors of coatings and specialty materials, with a market capitalization of about $26 billion. Due to PPG’s size and the breadth of other sectors it supports, the company is seen as a corporate barometer for the health and direction of the global economy.  Before the filing on Tuesday, PPG shares dropped more than 10 percent for their largest drop in nine years.  PPG offered the following statement to CNBC:  “PPG does not comment on the investments of specific shareholders. As we continually work to deliver increased shareholder value, we have always welcomed the productive input of our shareholders. PPG is looking forward to maintaining a constructive dialogue with Trian.”

A Tad Bit More on Manufacturing

  • The most recent data shows that manufacturers have contributed $2.17 trillion to the U.S. economy, compared to $1.7 trillion in 2009.  While this data tells us a number of things about the U.S. manufacturing sector, perhaps the most noteworthy is that manufacturing is experiencing an extremely healthy level of growth and development.
  • Manufacturing accounts for 12% of the U.S. economy. For comparison, agriculture accounts for just 4.8%.  Given that the overall GDP of the United States is $17.419 trillion, and that manufacturing alone contributed $2.17 trillion to that amount, that means manufacturing accounts for roughly 12.5% of the U.S. economy. This makes sense, given that GDP is based on the amount of production (i.e. manufacturing) taking place in a given country.
  • For every $1.00 spent in manufacturing, $1.40 is added to the economy. This is the highest multiplier of any sector.  The importance of this fact simply can’t be overstated. A strong manufacturing sector is the key to a strong national economy. Why? Manufacturing is the primary path to development, as both highly developed countries (such as the U.S.) and rapidly developing countries (such as China) have shown.
  • At $2.1 trillion in value, U.S. manufacturing would be the 9th largest economy in the world.  Of the 247 countries ranked in terms of GDP by the World Bank, the U.S. manufacturing sector would come in at number 9 on the list if it were its own country. Outranked only by the GDPs of the United States, China, Japan, Germany, the U.K., France, Brazil, and Italy, U.S. manufacturing GDP tops that of many powerhouse countries such as India, Canada, and Australia.