Bounce back?

Will the glass industry bounce back post-lockdown? Or will any recovery be a precursor to market contraction towards the end of the year? Glass Times talks to Mackenzie Glass.

Just weeks into the easing of lockdown, the shape of the UK’s economic recovery and the cost of Covid-19 to the glass industry specifically, is still unclear.

What is apparent is that UK economic growth as a whole is going to take a hit; the Office for National Statistics has said that it expects the economy to contract by 14% this year.

The flip side of that coin is that UK growth is expected to rebound by 15% next year, reaching its pre-virus peak by some point in summer 2021.

So, where does that leave the glass processing and IGU industries?

“We’ve seen sustained growth in demand since the end of April,” Mark Herbert, joint managing director of Mackenzie Glass, said. “We shut down on March 25 like the vast majority of glass companies. That was the right thing to do to protect our colleagues and our customers, but also because demand simply dried up overnight.

“We then saw developing demand from customers working in emergency repair and on essential projects, and on that basis returned to work in April to support a very limited and specific supply to customers working in those markets.

“What we have seen since the tail-end of April is more customers coming back to work and demand for glass starting to build. That includes a number of new market opportunities, as well as fulfilling orders placed before the restrictions were put in place.”

This includes significant growth in laminates, as glass processors access demand from the healthcare sector to retail for protective screening.

“We have a number of customers who have supplied product into Nightingale hospitals, as well as the wider NHS and healthcare sectors more broadly. This includes partitioning and screening.

“Our customers have also seen demand from retailers for protective and ‘sneeze screens’.

“Given that a lot of furnaces have been shut down during lockdown, which has limited availability of toughened product and, given the nature of end-user applications, we have seen a very notable uplift in demand for laminates.”

A key area of operation, Mackenzie Glass stocks laminate sheets in 4.4mm-12.8mm thicknesses. It reported a 30% jump in demand for cut-to-size laminate prior to lockdown, driven by new regulatory requirements under PAS24, as well as the increased specification of larger IGUs.

This prompted investment in a new Bottero 515LAMe laminated glass cutting table, Mackenzie’s second laminate cutting platform, giving it the capacity to handle 4.5m x 3.2m laminated sheets.

Mark said that he expected this growth trajectory to continue in the short-term.

“There was an underlying demand for laminate, and now further demand is being generated through new and Covid-19-specifc applications,” he said.

“Short-term, we expect those volumes to continue to increase.”

He is, however, more circumspect about the longer-term implications of Covid-19 on the UK glass sector.

“I genuinely believe that we’re going to see a short-term bounce in the economy,” he said. “There were a number of commercial projects that stopped when the crisis first hit, and now they’re coming back.

“Our challenge right now is to work out which of those jobs are back and if any have been stopped. We had a strong order book going into this and we need to catch up on that work.

“My concern is for the second half of the year and consumer confidence. People have been furloughed and they have had their salaries paid. Unfurloughing, and how businesses will respond is, however, an unknown quantity.

“If we start to see job losses on any scale, consumer confidence is going to drop and that could lead to a slowdown at the end of summer and into autumn.”

Mark added, however, that into the coming year, the glass sector could be expected to recover in line with forecasts for the UK economy as a whole.

“The start of this year and pre-lockdown, we were seeing growth in home improvement and commercial sectors,” he said.

“Markets will have changed; I’m not convinced that the office sector will ever look the same again. However, as an exception, we will see return demand from house-building and home improvement.

“The demand we were seeing in the post-Brexit bounce hasn’t simply evaporated, and will return.”

www.mackenzieglass.co.uk