While plastic containers continue to grab market share from glass in some industry segments, such as fruit juices and food packaging applications, some in the industry believe this trend has slowed. Glass is expected to continue to perform well in higher-end packaging applications, such as wine, beer and specialty foods, where image is a key component of marketability. To capitalize on this trend, glass producers such as Saint-Gobain Containers are actively promoting glass as a custom packaging solution. "We're constantly looking for unique ways to combine geometry, color and decorations to enhance our customers' products," says Bruce Cowgill, president and chief executive officer of Saint-Gobain Containers.
To meet an anticipated boom in demand, U.S. glass container producers are upgrading their facilities and increasing capacity. In June 2004, U.S. industry leader Owens-Illinois, Inc. broke ground on a new state-of-the-art glass container manufacturing plant in Weld County, Colo. The new facility will reportedly be among the highest output glass container plants in the U.S., producing over one billion bottles annually, and will serve as the primary supplier to the Anheuser-Busch brewery in Fort Collins, Colo. Owens-Illinois said this is its first new facility in the U.S. since 1980 and the industry's first new glass manufacturing plant since 1982.
In the architectural sector, demand will continue to benefit from the increased emphasis on security, as concerns about terrorism are unlikely to disappear any time soon. This will primarily support growth in nonresidential building market niches, such as in government, large commercial and institutional types. However, the greatest growth in architectural security glass will evolve in residential niches, albeit from a small 2003 base. Demand for fire-rated flat glass products will continue to shift from wire-reinforced tempered glass to laminated glass, which offers better fire protection and lower risk of injury. In automotive markets, demand for security and safety glass will be driven by increased use of laminated safety glass in side and rear windows and sunroofs. This will offer vehicle occupants greater protection from ejection in rollover accidents, as well as better protection from carjacking and "smash and grab" robberies.
Increasingly, the individual properties exhibited by advanced flat glass products (improved solar control, safety, security, ease of cleaning, etc.) are melding, resulting in such products as security glass with low-e or other solar control features; and self-cleaning solar control glass. As the lines between traditional and product groupings continue to blur, demand for these new multifunctional advanced glass products is expected to expand.
However, as in other industry segments, U.S. flat glass manufacturers will face increasing competition from China over the next several years. According to the Chinese Ceramic Society, more than 30 glass production lines equipped with advanced float glass technology, which creates a smoother and better quality of flat glass, are currently under construction across the country, most of which are expected to be operational later this year and in 2005.
In 2003, the Chinese glass industry produced 252 million weight-boxes of flat glass (one box weighs about 110 lbs), which was 11.1% more than in 2002. The industry also saw its sales revenues jump to 22.4% to hit 21.22 billion yuan (US$2.63 billion), which was accompanied by a 10 to 12% rise in price and a total profit of 1.35 billion yuan (US$163.24 million). Of the total sales revenues and profits, non-state-owned firms, including foreign-funded ventures and private groups, account for 60% and over 91%, respectively.2
To meet the increasing demand for LCD glass, Corning is adding capacity; however, the expansions are occurring in plants outside of the U.S. The company's board of directors recently approved a capital expenditure plan of $750 million to further expand Corning's LCD glass substrates manufacturing capacity in in Taichung, Taiwan; prepare for a second phase of expansion at the Taichung facility, which would begin in 2005; and fund an expansion of the company's Shizuoka, Japan LCD glass facility. Ongoing capacity expansions are also underway at Samsung Corning Precision Glass Co., Ltd., Corning's equity affiliate in South Korea.
While the market for LCDs is growing, demand for cathode ray tubes (CRTs) is shrinking. In August, Techneglas closed its Columbus, Ohio, plant, which manufactured television CRTs. About 300 workers were laid off as a result. It was unclear whether this production would be shifted to another region or dropped altogether.
Three years after the downturn in the telecommunications indutry, the market for optical fiber also continues to struggle. Corning reported that the overall optical fiber market continues to have depressed pricing, few premium fiber network builds and general oversupply.
Fiberglass insulation, however, continues to see robust demand. According to The Freedonia Group, the market is seeing a more intensive use of fiberglass insulation per new housing unit, driven by an increasing desire for energy efficiency and sound transmission reduction.3 Despite growing concern over the pace of development, as well as rising interest rates, U.S. housing construction over the next 10 years is likely to exceed that of the last 10,4 which could boost fiberglass insulation demand for some time to come.
Editor's note: The foregoing information (except where noted) was compiled from publicly available information in annual reports and news releases, as well as from personal interviews.