Forecasts for the glass industry
While 2021 was bittersweet, Mark Mitchell, chairman of the Cornwall Group, explores what 2022 will hold for the glass industry
I’ve recently returned from a visit to one of our companies, Mackenzie Glass. It’s one of the things that I continue to do as chairman: sit down and make the time to talk to colleagues and really understand how things are going.
What I’ve come away with is a sense of how hard and how exhausting the last couple of months of 2021 have been.
Cold repairs to furnaces in the spring and summer were the tip of the iceberg. The demand and disruption that we have seen throughout the year has, without wishing to be too negative, been draining for almost everyone.
I’m saying this in a year where we have sold more product, continued to expand our business, and had more success than perhaps we’ve ever had.
But that has come at a price, which is that colleagues have had to work incredibly hard to deliver product and maintain service levels.
And that’s also true of us as a business. We have had to contend with price increases and energy surcharges. The increase in energy costs was perhaps the final sting in the tail. With three toughening plants across our group, it’s the only time in 34 years in business that I have written to our local MPs to express my concern about the damage energy-price volatility is doing to business.
To say that anyone with a toughening plant or high energy consumption is sitting between a rock and a hard place is an understatement. It’s crippling some tougheners, and forcing others, including us, to sign agreements which, in normal circumstances, we wouldn’t have entertained for a moment.
Why am I saying this when I’m meant to be providing a forecast for 2022? Well because I believe that a lot of the challenges that we have seen in the last year – allocations, pressure on labour, and massive increases in energy prices – will still be with us for much of 2022.
We know that allocations will be with us through much of the year because the float glass suppliers have said so – all of them. We know that energy prices will continue to be eyewatering because we have had to agree to them, and we know pressure will remain on labour because there is a shortage of skilled workers.
We also know it will be busy, because we went into Christmas with full order books that are running already running through into the spring. And that is a very good thing, don’t get me wrong. It’s fantastic to be busy but there is a cost to that.
Colleagues are tired, and we are very conscious of the need to take steps to protect them from burnout. And customers aren’t always being told what they want to hear, because we aren’t prepared to tell them that product is going to be available to them if it isn’t going to be.
And to reiterate: it’s a global issue. You can’t pull in product if it doesn’t exist. Turkey, Italy, Germany, the rest of Europe, China – everyone is in the same boat. We’re now seeing pressure on sealant supply, because of resurgent demand in the US and Canada. Raw materials are going to the highest bidder.
That’s why we believe that there will be further price increases in 2022. That may soften as we go into the second half of 2022 if domestic markets in Turkey and China, for example, start to slow down, then we may see things ease as product starts to trickle in, but we’re certainly not counting on it. And we’re prepared for allocations to run through right through to 2023.
If demand continues to outstrip supply, which we think it will, we’re going to see more of the same in 2022.
That doesn’t change our long-term plans or our long-term strategy. We continue to invest across our group and are building for the future, but we are also prepared for further challenges as we move forward through this year because not to would be naive.
