A turbulent year ahead?
The last year was proved a tumultuous one in IGU supply. Should we expect 2019 to be any different?
According to administrators, Diamond Glass had been hit by competition on prices and falling orders. The rise in the price of raw materials as a consequence of the weakened pound had also ‘significantly impacted the company’s margins’, according to its administrator, BM Advisory.
Judged insolvent in November, its assets have been liquidated, writing off a business that had served the industry for more than two decades, including through two recessions.
“There is something much more industry specific happening within IGU supply,” John Spiby, CEO of Padiham Glass, said. “It’s not simply about economic growth, or the weakening of sterling since the referendum (although this hasn’t helped).
“A far more fundamental change is happening and, regardless of the fortunes of the wider economy, there are some fairly substantial challenges ahead in IGU supply. This includes manufacturers and those buying them.”
The glass sector has been on something of a roller coaster for the past few years. This has included industrial unrest, closures and acquisitions to challenges in the supply chain, including the glass shortages that made headlines within the industry last summer.
This included Emplas’s acquisition of Padiham Glass in May last year. A strategic rationale for which, the new Padiham boss and former Pilkington AG managing director argues, was driven in part at least by the continuing uncertainty in the IGU supply chain.
“Ryan Johnson was quoted at the time as saying that Emplas’s decision to acquire Padiham was driven by a desire and need to establish more control over its IGU supply chain because of the uncertainty and the direction of travel of the market,” John said.
“With two dominant suppliers, that direction of travel has been towards prices that are unsustainable for the vast majority of IGU manufacturers in the UK who don’t have the infrastructure to compete.
“With the uncertainty that has accompanied Brexit, but more specifically the weakening of the pound, these trends have been accelerated – they aren’t, however, its cause. That’s come from much closer to home.”
Since acquisition in May last year, Padiham Glass has restructured internal processes, introducing a new bar-coding system, to introduce new visibility to production.
With capacity to supply more than 15,000 units a week, including Saint Gobain’s Planitherm range, the company has already committed to a six-figure spend on further software integration, a new automatic sealing robot, plus new handling equipment, in 2019.
“We’re targeting a number of different areas within our business,” John said. “The increased visibility that we now have within our operation means that we’ve identified that we’re wasting far too much glass, through inefficient batching but also damage.
“The investment we’re currently making in software gives us the capability to batch product far more effectively. This allows us to maximise what we get out of the sheets but also introduce new efficiency to our toughening process, releasing product to the lines more quickly reducing lead times.
“The investment that we’re making in handling and movement of glass within the factory through a £120K spend on new Hegla trolleys, will allow us to protect product and particularly softcoat products more effectively in transit, reducing the risk of damage and rejections at quality control.
“This does two things: it increases our yields and reduces wastage; but critically cuts lead times and brings new flexibility to our processes, which are key in effective trade supply.”
This focus delivers not only more flexibility in supply but also makes Padiham more sustainable.
“The challenges that were there in float glass supply in summer 2018 are still with us in spring 2019,” John said. “There are limits on domestic float glass supply in the UK and increased capacity can’t be turned on at the flick of a switch.
“Previously, some of that shortfall was met through European imports but new growth in European economies and the accompanying increase in demand for float glass in those home markets, combined with the weakening of sterling, mean that imports have fallen significantly. The net effect is that the pressure on supply of float glass are still there.
“Our partnership with Saint Gobain means that while we are insulated from the supply challenges that have impacted float glass supply more generally, there is still an incentive to reduce waste.
“The investment that we are making in software handling and the new sealing robot will support us in growing efficiently, reducing our own demand for increased supply simply by reducing wastage.
“For our customers, that means increased reliability and sustainability in supply, in addition to giving our customers access to a more flexible service offer.”
This emphasis on sustainability and reliability in trade supply echoes that made by Ryan Johnson and Emplas last May. John said that they may be even more relevant in the year ahead.
“The challenges that are hitting IGU manufacturers aren’t going to go away,” he said.
“That by default, has ramifications for anyone buying IGUs. In many cases your IGU supplier is going to be vulnerable, either through the impact of unsustainable pricing or the availability of raw materials. They’re the reasons why Emplas acquired Padiham.
“The investment that we’re making, and the gearing we are applying within our business to bring guaranteed reliability of supply to Emplas, combined with our partnership with Saint Gobain, puts us in a very different position to most IGU manufacturers.
“The product and service offer that we have put together for Emplas – efficient, sustainable, cost-effective but above all high quality supply – is just as relevant to any other trade fabricator or anyone else. It’s also available to them.
“Emplas is an important customer but no more or less so that the other fabricators and trade customers we work with. The point is, that if we’re getting it right for the business that owns us, we are also set up to guarantee reliable, high quality and assured IGU supply to other customers from within the industry.
“We’re investing in the infrastructure that will give us the capacity to deliver growth. Growth, however, is nothing unless it’s underpinned by product quality and customer service excellence.
“We have a couple of things that we’re still putting in place but we have a very clear direction of travel: that is to become the industry’s IGU supplier of choice, delivering the best product and underwriting it with the a commitment to customer service excellence.”