Volume 41, Issue 12 - December 2006
|Coming Up Short
Is a North American Glass Shortage
On the Way?
by Peggy Georgi
Is a glass shortage on the way? Not in North America, according to discussion with a number of leading North American fabricators, manufacturers and contract glaziers. While the residential and automotive markets have slowed, the commercial side of the industry is robust, growing at about 4 to 8 percent annually.
“I don’t see a shortage of glass in our market at this time, but there’s not an over-abundance of supply either,” explains Pilkington’s vice president of sales and marketing, Stephen Weidner. “We are in a robust period of demand. This is not new or unusual, especially for this time of the year when demand traditionally is high. The late summer and fall season[s] are historically the busiest period[s] for our industry and there will be spot shortages of certain products by certain manufacturers until production can catch up with demand.”
Fred Wallin, vice president of marketing for AFG in Kingsport, Tenn., doesn’t believe there will be a glass shortage in the near future, either.
“We have a good market, not a fabulous market, but historically one of the best in recent years,” says Wallin. “I get the sense that next year will be similar to this year, although it will be slower early in the year, and finish stronger.”
Barry Swaim, secretary/chief financial officer of Tower Glass, a commercial contract glazing company serving Southern California, says his manufacturers have not given any indication that there are any problems or shortages of product.
“Normally, our manufacturers will give us a heads-up if there is a change or if certain products won’t be available,” says Swaim. “Right now we’re busy and have what we need when we need it.”
John Goodison, technical sales manager for the Guelph, Ontario-based Barber Glass Industries, does not anticipate a shortfall of supply either.
“It is anticipated that the overall rising demand for flat glass will slow somewhat as a result of a combination of the automotive market downturn coupled with a steady decline in the residential housing market,” Goodison said.
Mauro DiFazio, director of sales and marketing for ACH Versalux™ Float Glass, says the slowdown in both the residential construction and automotive markets will afford an ample supply of product for future demand in these areas as well as other segments of the commercial market, which remains strong.
And in Europe …
While a shortage is not foreseeable for the United States in 2007, there is a huge shortage taking place in Europe.
“Europe is in dire need of glass,” says Max Hals, president of Intercontinental Glass Technologies, an importer of specialty architectural glass in Scottsdale, Ariz. “Europe has had a 45-percent increase in pricing and customers are accepting this price increase without question and are prepaying for their shipments—or they will have to shut down their production.”
He continues, “I cannot recall in recent memory when a glass market has been so short of glass and where industry forecasters seemed to be caught off-guard. There are no primary glass manufacturers in Europe accepting new customers and they are essentially performing ‘triage’ so to speak on who gets glass and when it will be delivered.”
Hals says there are a number of reasons for this situation. “The German economy has rebounded from a 5-year economic decline and many cold repairs [of furnaces] have taken capacity off the market. Europe is not able to receive help from other parts of the glass world, as they are only able to receive jumbo shipments, which is extremely difficult to ship from other locations.
With the commercial market bursting at the seams in terms of capacity, spot shortages of certain products by certain manufacturers and at certain times may be expected.
“It’s not unusual or surprising for a particular manufacturer to be out of a particular SKU during a period when there is a high demand for that product,” Weidner explains. “Currently, capacity utilization is at about 90 to 91 percent. This simply shows that various types of glass may be a little tighter in terms of supply and there will be some spot outages by certain manufacturers. As soon as production catches up on that SKU, the product will be more readily available. There are not huge stock outs, but certain glass types are a little more difficult to come by than others.”
“The market is running close to capacity or over,” says Dan Romine, general manager for Architectural Glass & Aluminum’s (AGA) Southern California office in Irvine. “While AGA manufactures some 80 percent of its own curtainwall systems, we still partner with suppliers and they are all very busy. As a matter of fact, some of our glass suppliers are out 40 to 50 weeks, with some engineered aluminum suppliers booked out for the next two years.”
“I would say we are in good shape in terms of overall supply for the foreseeable future,” says Doug Sampsel, president of Tempered Glass Inc., a glass fabricator located just outside of Atlanta. However, Sampsel says he sees indications that that there could be sporadic shortages by certain types of product.
“Any shortages can cause issues for us, the fabricator,” explains Sampsel. “For example one supplier is out of the jumbo packs of glass but has inventory in smaller packs. They will be out of the jumbos until February of 2007. Another supplier is out of product until January of 2007. Size limitations can impact how we cut our product and product shortages can cause our customers to either wait or modify the building specifications. We must carefully scrutinize incoming orders against our inventory and we must always know what shortages exist so we can accept new orders and finish all existing orders in a timely fashion.”
Preparation and Planning is Paramount
In a tightening market, the key to success is planning and communication. Looking ahead on projects, working closely with the owner/architect on projects, staying in constant communication with manufacturers and providing plenty of lead time when placing orders are essential factors in increasing the probability of receiving product within the scheduled time.
“With proper planning you can schedule production times well in advance during periods of high demand as long as the owner, architect and contractor can agree on a design, dimensions, and hold to their schedule,” explains Lawrence Cartner, president of Cartner Glass Systems in Charlotte, N.C. “Time slots for glass production can be booked in advance if glass sizes can be provided to the glass fabricators. For this to happen, shop drawings must be approved and dimensions guaranteed by the architect/contractor. Last-minute changes or field verification of openings cannot occur if today’s fast track schedules are to be met.”
“We will face some challenges if our market slows further and it will prove to be interesting from a float standpoint,” says Tom Kaiser, president of Cardinal IG in Eden Prairie, Minn. “Geographically, in some areas of the country, there could be concern about a glass shortage but this is more related to the freight component than it is with an actual shortage of product. The reality is that the costs involved in transportation, lack of drivers, diesel surcharges and lack of backhaul do and will factor into a producer’s willingness to transport product over far distances.”
“Certainly, the availability of equipment and drivers may have some bearing as will placing your order with plenty of lead time in order to secure your product when you need it this time of year,” noted Weidner. “We experience this scenario to a certain degree every year and I don’t think that it’s any big deal right now. With that said, however, and armed with the knowledge that there are a number of factors that could impact receiving a particular product in a timely manner right now, placing your orders sooner rather than at the last minute would be advantageous.”
“During these robust times, the key to project success is finding the right suppliers for the job and managing the risk on each job well,” says Romine. “When work is plentiful, it is even more important to fall back on solid project management processes, and to not become complacent or cut corners.”
While running full-bore across the continent, the vision and planning on the part of the North American float glass suppliers has been instrumental in avoiding a shortage scenario similar anywhere close to what is taking place in Europe’s glass industry.
“The North American float glass supply side is expected to remain stable, with new capacity being developed, which will offset those lines going down for rebuilds,” Goodison points out. “It is always important that customers maintain strong partnerships with suppliers to ensure continuity of supply. The Chinese domestic Asian market is growing quickly and may impact our imports. It will be interesting to see what impact there will be, if any, on North America’s float glass operations.”
“In a float glass operation our suppliers must cycle through many products and it can be an overwhelming task to look to the future and try to determine what the market will order and keep inventory levels adequate to meet the customer demands,” notes Sampsel.
“With the opening of our fifth float line in Winlock, Wash., Cardinal has taken steps to ensure that we have glass to support our national customer base,” adds Kaiser.
“With Cardinal’s new float glass capacity online, overall demand for 2007 should be about the same as this year,” says Wallin.
“In terms of the impact of other market factors such as energy costs and surcharges, I don’t see this having much impact on production or availability of glass now or in the foreseeable future,” says DiFazio.
“A number of glass companies are expanding their facilities or building new plants to meet the increased demand,” Cartner notes. “I don’t believe there is going to be a shortage, even with the increased building activity. The only shortage I could see happening is if it is brought on as a convenience to our energy suppliers, which would affect the raw glass manufacturers.”
From time to time float lines must go down for normal and necessary repair work to ensure the lines continue functioning. The following list provides information about float lines in North America that will be offline for repairs or other reasons in 2007.
ACH Versalux Float Glass Systems: No cold repairs are scheduled for 2007.
AFG Industries: At press time, AFG had announced that it would stop production at its Cinnaminson, N.J., plant in February. See www.usgnn.com for details.
Cardinal Industries: Plans to take down its Portage, Wis., line for about two weeks for minor modifications, but does not anticipate any problems maintaining supply requirements during that time.
Guardian Industries Corp: Repairs are underway on its line in Corsicana, Texas.
Pilkington North America: Plans on rebuilding one of its Laurinburg, N.C., float lines as part of a regularly scheduled/planned repair. The process is expected to take 90 days and will occur in the first quarter of 2007. According to the company’s Stephen Weidner, Pilkington has been preparing for this repair and has adequate inventory to meet the needs of customers during the repair period.
PPG: Has no scheduled repairs for 2007.
Vitro: According to sources, Vitro closed its Mexico City float line, but at press time, USGlass was unable to confirm this with the company.
Peggy Georgi is a contributing writer for USGlass magazine.
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