Glass half full?
UK float glass supply is creaking under the pressure of demand, but could it have longer term ramifications for supply? Mark Herbert, joint managing director at Mackenzie Glass, discusses.
The UK glass sector isn’t alone in feeling the pinch of rapid growth in demand coupled with disruption to supply: the construction press is spilling over with stories about the availability (or more accurately the lack of it) of everything from cladding and roofing materials, to steel and cement.
The net effect has been the increase in prices seen throughout the building products sector, leading some analysts to suggest that building material costs will see price inflation hit as much as 5% by 2025.
Is this representative of a fundamental readjustment in material costs? And what are the ramifications for glass processors and IGU manufacturers longer term?
In glass we need to talk long and short-term, because I think we’re looking at two very different scenarios.
Today it’s about availability and price increases. That doesn’t define where we’re going long term, but it will still contribute to a change in the landscape.
While the glass sector has been hit by the same exponential growth in demand as the rest of the building products and construction sectors, it has faced a unique set of challenges: namely, the cold maintenance programmes pre-committed to by Guardian and Saint Gobain for this spring and summer, which have compounded Covid disruption.
These run for 12-20 weeks and we’re only at the start of that process, and it’s already led to a significant reduction in capacity. Allocations were already tight, and as we see reduced output meet sustained demand, that’s going to put a lot more pressure on supply through to the summer.
We’re only just starting to feel the impact and, in my opinion, it’s going to get worse before it gets better.
This has been compounded by specific pressure on supply of laminates, which has led to shortages of other, more specialist, products.
The IGU sector is swallowing up masses of glass, particularly laminates but also soft coats. Float glass manufacturers are trying to keep IGU manufacturers fed, and that in turn is disrupting supply of other products such as tints or mirrors. Float glass manufacturers don’t want to disrupt their core campaigns.
With resurgent demand in the US swallowing up product from China, plus freight costs, we’re also seeing some very significant pressures on price, and expect some further movement in the market very shortly.
We hold more than 200 products in stock. This includes a wide range of laminates including standard stock sheets of 3.2m x 2.5m in 4.4mm-14.8mm laminates, plus over-sized 4,500mm x 3,210mm 8.8mm,10.8mm 11.5mm and 13.5mm laminates, which we added to our range in response to demand from commercial suppliers last year.
Our mirror range includes more than 25 different products, including: 3mm-6mm silvered; safety-backed products; greys, bronzes, pinks, golds, champagne, black tints; Italian antique; and LED options.
Our supply chain is holding up, but the allocations we’re on are tight and we’re working very hard to source product. Our focus is on those customers who we have an established relationship with.
There is product there to buy, but we’re having to pay more for it. That’s a reflection of the specific set of circumstances that we’re seeing in the market now. While it would also be nice to think that going forward prices to a point will hold up and we can build a little more margin into our models, I don’t see them staying where they are for the long-term.
Glass supply is under very specific pressures, in addition to high levels of demand seen by construction in general. As that demand slows and float glass production capacity comes back online, those challenges won’t be so pressing, and we should see a normalisation in the supply chain.
However, Covid has demonstrated two things: a fragility in the supply chain, particularly global supply; and the strength of partnerships and the contribution they can make to your business.
A lot of people who have jumped around for supply have caught a cold because they haven’t had established relationships with suppliers, and those suppliers have been prioritising those customers who do.
I personally hope that that will provide a foundation for a far more sustainable model of doing business in the glass sector going forward.
