various facets of the ceramic industry each enjoy individual successes and
opportunities, and face their own challenges.
roof of the Stillwell Ave.
subway station in New York City,
N.Y., is home to the world’s
largest building-integrated solar plant with thin-film modules. Photo courtesy
of SCHOTT AG.
The ceramic industry is
exceptionally broad and far-reaching, impacting nearly every facet of our
lives. The industry is traditionally categorized into five main
sectors-advanced ceramics, whitewares, refractories, glass and brick/structural
clay-many of which also have their own internal segments. All of these facets
of the ceramic industry enjoy individual successes and opportunities, and face
their own challenges. Following are some recent trends, highlights and
forecasts for each sector.
BULL’s armor provides needed protection against explosively formed penetrators
(EFPs) and conventional improvised explosive device (IED) attacks. Photo
courtesy of Ceradyne, Inc.
The advanced ceramics sector is arguably the
most robust segment of the ceramic industry. According to a recent report from
Enceram, the market for engineering ceramics (defined in the report as
structural, environmental and process applications) reached $2.7 billion in
Europe and $1.9 billion in the U.S. in 2006.1
report from The Freedonia Group projects that demand in the U.S. will increase
7.0% per year to over $12 billion by 2010.2
growth include applications in armor, automotive (diesel particulate exhaust
filters and composite brakes), medical (joint replacement and dental products),
electronic sensors and wear parts. Fuel cell applications are also expected to
have a positive impact. For example, according to Innovative Research and
Products, the market for micro fuel cells is expected to reach $112 million by
2011, rising at an incredible 55.7% annual average growth rate from $12 million
Ceradyne, Inc., one of the segment’s most active participants, reported record
sales for 2006 of $662.9 million, which was an 80% increase from $368.3 million
in 2005. The company continues to receive massive orders from the U.S. military
for its ceramic body armor, and in June 2007, its Vehicle Armor Systems
division, in conjunction with Ideal Innovations, Inc., introduced the
, a new high-threat vehicle. According to Marc
King, vice president of Armor Operations for Ceradyne, the BULL was designed
for close urban terrain and can withstand the most lethal improvised explosive
device (IED) threats.
In addition, the U.S. Army Tank Automotive Command (TACOM) accepted Ceradyne’s
alternative lightweight armor materials for evaluation by its Long Term Armor
Strategy team. “This is the culmination of an 18-month run-up of development,
testing and data collection necessary to meet the Army’s stringent performance
requirements and start a process that will, we believe, clearly demonstrate
that Ceradyne’s advanced armor materials can perform on a par with metal armor
solutions, and at a significant savings in weight,” said King. “Following what
is expected to be the successful conclusion of a comprehensive test and
evaluation program, Ceradyne’s advanced armoring materials will be made
available to OEM truck manufacturers on a pre-approved basis whereby they can
be incorporated into existing production and future vehicle cab designs.”
Saint-Gobain Ceramics has also reacted to high demand in the armor arena. In
April 2007, the company announced that it will expand production capacity at
its plant in Niagara Falls,
N.Y., to meet increased demand
for ceramic body armor. To accommodate the increased production, the plant will
undergo a multi-million-dollar expansion project, which is expected to be
completed by the end of the first quarter of 2008.
Acquisitions and diversification continue to advance Ceradyne’s growth. In
June, the company announced the opening ceremonies for its newly built
98,000-square-foot factory in Tianjin,
will produce high-purity ceramic crucibles for the forming of large polysilicon
ingots for use in the manufacture of photovoltaic (PV) silicon solar cells. In
addition, Ceradyne acquired Minco, Inc. in July for $27.5 million in cash. A
key provider to Ceradyne’s Thermo Materials division, Minco’s powders will be
used extensively at the new plant in China.
In September, the company announced that it had completed its
acquisition of EaglePicher Boron LLC (EP Boron), for $69.6 million in cash, to
support its activities in the nuclear and semiconductor markets. “I am very pleased
with this latest Ceradyne acquisition, which meets our diversification
objectives and provides us with a strategic opportunity that supports our
continued expansion into both the nuclear waste containment and semiconductor
arenas,” said Joel P. Moskowitz, Ceradyne’s chairman and chief executive
also continued to take advantage of favorable market conditions, announcing the
opening of its Specialty
in July. The multi-million-dollar center provides a comprehensive resource for
advanced ceramic material development. In addition, the company is expanding
overseas with a new technical ceramics manufacturing facility in South Korea.
(See “Center of Excellence” in this month's features for
CoorsTek also announced its acquisition early this year of Gaiser Tool Co., a
precision tooling manufacturer. CoorsTek retained the Gaiser brand while
infusing technical and material innovations to further enhance the company’s
market position, and expected to expand its micro-component capabilities for a
variety of markets as a result of the acquisition.
The advanced ceramics sector continues to benefit from increasing use in
automotive applications. In September, Corning Inc. announced that it had
introduced a new ceramic substrate for light-duty gasoline and diesel-powered
vehicles. With its ultra-thin walls, the new substrate enables reduced fuel
consumption and increased engine power through low exhaust system backpressure.
Corning reported 2006 total sales of $5.17 billion, and its Environmental
Technologies segment (including ceramic technologies and solutions for
emissions and pollution control in mobile and stationary products) accounted
for 12% of that figure.
Corning also announced that it will embark on a
$300 million facility improvement plan for its Sullivan Park Research and
Development campus near Corning,
N.Y. The plan includes the
significant renovation of an existing research and development building, as
well as the construction of a new facility. Results are expected to include
increased operational efficiency, flexibility, space utilization and energy
efficiency. All phases of the project are expected to be completed by 2013,
with expenditures phased over the course of the six-year period.
The continued emphasis on renewable energy sources is providing many
opportunities for advanced ceramics. In April, Kyocera Corp. announced that it
would expand its annual solar module manufacturing capacity to 500 megawatts
(MW) by the end of March 2011-more than double its current annual capacity of
240 MW-in response to global demand. The company has secured supply contracts
with silicon producers to ensure the steady increase in production
The new raw material contracts will allow Kyocera to expand capacity throughout
its quadripartite global manufacturing network for solar modules, which
includes plants in Yohkaichi and Ise, Japan; Tijuana, Mexico; Kadan, Czech
Republic; and Tianjin, China. Kyocera will invest an estimated 30 billion yen
(about $250 million) in plants and equipment throughout this network during the
course of the expansion effort.
In August, SCHOTT Solar, a 100% subsidiary of the SCHOTT group, and WACKER
Chemie AG announced their plan to set up two joint ventures to produce and
market silicon wafers for solar applications. Over the next several years, the
two partners will invest a total of €370 million (~ $509 million) in facilities in
Jena (Thuringia) and Alzenau (Bavaria). The joint venture, called SCHOTT
WACKER Solar GmbH, was scheduled to start operations in 2007 and will produce
multi-crystalline silicon ingots and wafers. Solar wafer production capacity is
set to expand in stages, reaching about one gigawatt/year by 2012. The second
joint venture, called WACKER SCHOTT Solar GmbH, will handle sales to other
solar cell producers to capitalize on growth opportunities and related scale
In addition, SCHOTT Solar announced in September that it plans to build a new
PV manufacturing facility that will increase its domestic PV production by more
than 60 MW. In addition to producing solar PV modules, the new facility, which
is scheduled to go online in 2009, will be designed to produce receivers for
concentrated solar power (CSP) plants. This will provide SCHOTT with the
ability to begin producing solar receivers at the facility if the market
develops as the company anticipates.
In October, Ferro Corp. announced that it would begin construction in the
fourth quarter of 2007 on a 16,500-square-meter (177,604-square-foot) facility
in Suzhou, China,
for the production of aluminum pastes for the Southeast
Asia solar cell manufacturing market. The new site is expected to
begin production in the third quarter of 2008 and will include expansion
capacity to accommodate the expected growth of Ferro Electronic Material
Systems’ business positions in China
and Asia for products such as silver pastes,
surface technology products, multi-layer materials, electronic glass and
precious metal powders.
surface of GranitiFiandre’s Luminar material is
covered by a continuous series of concentric circular engravings,
resulting in a bright, reflective surface. The effect is created in part
through a special treatment that is applied to the technical porcelain
stoneware. Photo courtesy of GranitiFiandre.
According to the Tile Council of North
America (TCNA), the U.S.
ceramic tile industry continued to grow in 2006. A record 3.36 billion square
feet of tile was consumed, an increase of 3% over 2005. Domestically produced
tile increased as well, with 692 million square feet produced vs. 667 million
square feet in 2005 (a 3.7% increase).
Although overall consumption set a new record, the increase in 2006 was
slightly less than the 3.8% seen in 2005 due to the slowdown in the new housing
market and decline in overall floor covering sales. The strong remodeling and
commercial markets continued to bolster tile sales overall, however. Remodeling
also especially impacts the tile industry, since the two rooms most frequently
remodeled are kitchens and bathrooms.
The top five sources for imports included Italy,
661 million square feet (a 4.1% decrease from the previous year); Mexico, 452 million square feet (+ 10.6%); Brazil, 430 million square feet (- 4.8%); China, 346 million square feet (- 53.9%); and Spain, 346
million square feet (- 5.0%). Although imports still make up a large portion of
the marketplace, it is encouraging that domestic production and shipments
continue to grow.
The Freedonia Group projects that U.S. demand for hard surface flooring will
advance 3.9% per year to 11.9 billion square feet in 2011 (valued at $13.5
Hard surface flooring is expected to continue
to gain market share from carpets and rugs, and demand will be driven by the
growing consumer preference for high-end products such as wood, laminates and
Mohawk Industries, Inc., parent company of Dal-Tile, Inc. reported net
earnings of $455.8 million for 2006, which was an 18% increase from the
previous year. Following the company’s release of fourth quarter 2006 sales
results, in which the Dal-Tile segment grew 4%, Jeffrey S. Lorberbaum, Mohawk’s
chairman and CEO said, “Dal-Tile is following industry trends with residential
sales slowing and commercial sales growing. We are reducing expenses,
increasing productivity, and focusing on the commercial and redecorating
channels. Our plant expansions were completed and will enhance our position.”
Dal-Tile’s third quarter 2007 earnings were flat in comparison to last
year’s third quarter. “We believe we are out-performing the industry and have
benefited from our significant position in the commercial channel,” said
Lorberbaum. “We are repositioning some of our sales efforts to the commercial
and multifamily channels from the residential channels. Dal-Tile introduced higher
value products from our new production lines, new exterior stone products, and
new merchandising and warranties for our ceramic accessories.”
GranitiFiandre’s total revenues increased by 13% for 2006 despite energy cost
increases of upwards of 22.8%, as well as the negative contribution from U.S.
subsidiary StonePeak Ceramics, which was in full startup mode for the first
half of the year. For the first half of 2007, GranitiFiandre’s sales increased
by 20.9% vs. the same period a year ago. While the company’s sales in the
Italian market were similar to last year, sales in other European countries
increased by 22.5% and in the rest of the world by 60.6%.
The company attributes its growth in the first half of the year to the positive
results obtained by StonePeak and Porcelaingres, its subsidiary in Germany. The
growth in brand sales in the U.S.
was 89.3%, with total sales in the first half of €24.5 million (~ $35.3
million). “With these fundamentals, we are extremely confident of reaching and
bettering the growth objectives of the 2007 budget and the 2008-2009 Business
Plan, which forecasts growth in sales of 44% in three years,” said Graziano
Verdi, chairman and chief executive officer of GranitiFiandre.
Sanitaryware manufacturers also benefit from the increasing renovation trend
for bathrooms, though the residential housing slump in the U.S. is having
a negative affect. In February, American Standard Companies Inc. announced that
it would separate its three businesses to focus on its air conditioning brand.
Accordingly, American Standard announced in July that it would sell its
and Kitchen products business to funds advised by Bain Capital Partners, LLC
for $1.755 billion in cash.
Unique shapes can capture a holiday mood and enhance
any dining experience. Photo courtesy of Oneida Ltd.
Upon completion of the sale, which was expected in the fourth
quarter of this year, Bain Capital will acquire all of American Standard’s Bath and Kitchen
business. The sector posted 2006 sales of $2.4 billion and includes 26,000
employees and 54 production facilities in 23 countries worldwide. “This is a
major milestone in our plan to separate American Standard into three focused,
better understood companies,” said Fred Poses, American Standard chairman and
CEO. “We believe that Bain Capital’s all-cash offer provides excellent value
for our shareowners. Bath
and Kitchen is a global market leader, with size, global reach and
organizational talent. It has a rich history and a great future for its
customers, employees and new owners.”
“We look forward to supporting the management team and dedicated
employees in realizing the company’s full potential through continued
operational improvements, further enhancing and leveraging its strong family of
brands, and accelerating growth,” said Walid Sarkis, a London-based managing
director at Bain Capital.
The Bath and Kitchen business posted second quarter 2007 sales of $660.5
million, a 6.4% increase from the previous year’s second quarter, driven by the
introduction of innovative products and new commercial contracts. However, as
part of its ongoing initiatives to rebuild Bath
and Kitchen’s profitability, American Standard announced plans to discontinue
production at its ceramic plant in Excelsior,
in the elimination of about 140 jobs. The closure will cost about $17 million
($12 million after taxes) and, once completed, is expected to generate annual
savings of about $10 million starting in 2008.
Villeroy & Boch, though still focusing on the European market, is
continuing to pursue a strategy of globalization. The company recently
purchased three sanitaryware factories in Mexico,
and foresees high growth potential in China,
India and the United Arab Emirates.
The company’s foreign business has risen to 71% of total sales over the past 10
years. Villeroy & Boch’s Bath
and Wellness Division increased sales by 13.6% in 2006.
dinnerware segment of the whitewares industry has struggled for years primarily
as a result of the consumer trend toward more casual lifestyles, among other
challenges. However, manufacturers are beginning to see improved results.
For its fiscal year ended March 31, 2007, Waterford Wedgwood plc
recorded a loss of €17.1 million (~ $24.6
million) in comparison to a €130.8 million (~ $188.5
million) loss in the prior year. The company focused on three steps to improve
profitability: “right-size” the Group, improve margins, and contemporize its
brands through innovative product development and new relationships with
designers and trend leaders.
The Group’s Waterford Crystal division
achieved positive earnings for the first time in three years. Having arrested
the sales decline of recent years, Waterford
is continuing to update its product range. Initiatives already launched and
reportedly selling well include Robert Mondavi by Waterford, Marc Jacobs, the Ballet Collection
of contemporary crystal and china, and the Marquis Vintage Garden Collection.
Waterford Wedgwood’s Ceramics Group more than halved its operating loss
and achieved positive earnings at the EBITDA level for the first time in three
years. Wedgwood, Royal Doulton and Rosenthal have implemented new product
initiatives, including Barbara Barry at Wedgwood and the Gordon Ramsay and Sir
Terence Conran ranges for Royal Doulton, as well as Rosenthal’s A La Carte
collection of contemporary crystal and porcelain tableware. A Martha Stewart by
Wedgwood collection is also in development.
In March, Oneida Global Foodservice announced a global marketing and licensing
agreement with Waterford Wedgwood. The alliance is expected to provide the
worldwide hospitality industry with access to a best-in-class luxury brand
portfolio, including Waterford Crystal and Wedgwood fine dinnerware, and to a
design partnership that will offer highly tailored fine dining solutions.
As part of its focus on major growth opportunities, Oneida plans to leverage
its market expertise and integrated global supply chain to bring the Wedgwood
and Waterford brands to the highest-end hotels, restaurants and cruise line
operators in the Americas, Middle East-Africa and Asia Pacific regions. It will
also be responsible for developing new opportunities for Waterford
in Europe. In addition, Oneida and Waterford Wedgwood established a
design collaboration to create new, elegant dining options and capitalize on trends
in the culinary sector.
is building new Solar CrucibleTM plants to meet
increasing demand. Photo courtesy of Cookson Group plc.
According to the International Iron and Steel
Institute (IISI), 2006 saw a particularly strong 8.5% worldwide increase in
The projection for 2007 is a 5.9% increase, and 2008 should see an
additional increase of 6.1%-all great news for the refractories industry. Steel
demand growth in Africa, Asia and South America was particularly strong, while North America should see a positive trend for 2008
following an inventory draw-down in 2007.
The IISI further reports that China remains the single largest
market and strongest growth area for steel. Steel use in China is
forecast to increase by 13% in 2007 and 10% in 2008, encompassing 35% of the
world total. According to the IISI, steel consumption in China was 442.7 million metric tons (mmt) in 2006,
a far cry from Japan (116.2
mmt), the U.S. (98.6 mmt), Russia (70.8 mmt) and South Korea (48.5
Other industries have an impact on the refractories segment as well. For
example, RHI Refractories announced at the end of 2006 that it would expand its
capacity in China
due to expected sales volume increases in industries such as cement, lime,
nonferrous metals and glass. The company is extending its original plant in Dalian by adding a
production line for 35,000 tonnes of fired magnesia bricks. The total capital
expenditure is budgeted at €12 million (~ $17 million); the extension
measures were scheduled to be completed by the end of 2007.
RHI, its objective is to increase its current revenue of approximately €1.3 billion (~ $1.8 billion) to €2.0 billion (~ $2.8 billion) by the year 2010 through organic
growth and acquisitions. In February, the company announced that it had
completed its acquisition of Monofrax Inc. from Vesuvius Crucible Co. RHI
established RHI Monofrax Ltd. as a new legal entity for the acquisition of the
Monofrax is a producer of fused-cast refractory products, which are used
primarily in the glass industry. In 2005, Monofrax reported annual revenue of
$45 million in the U.S.,
Asia Pacific and Europe. According to RHI, the
integration of the Monofrax business into its worldwide sales network
significantly strengthened its position as a full-line supplier of fused cast
refractories specialties, while providing it with another technologically,
logistically and economically optimal production site for high-grade refractory
products, especially for the specialty glass market in North
Crucible’s Thermal Ceramics division has seen improved sales growth driven by
positive market conditions in the U.S.,
Middle East and Asia. Photo courtesy of Morgan
Morgan Crucible’s Insulating Ceramics segment
(including the Thermal Ceramics and Molten Metal Systems [formerly known as
Crucibles] divisions), achieved a 13.8% increase in sales for 2006. Underlying
operating profit increased 29.8% through a combination of top line growth and
cost reduction programs. Within the Thermal Ceramics division, improved sales
growth was driven by continued positive market conditions in the U.S., Middle East and Asia.
The division has been successful in counteracting increasing costs for energy
and raw materials through operational improvements and price increases.
the Insulating Ceramics segment in the first half of 2007 were up by 9.6%,
while underlying operating profit increased 38.2%. In terms of project-based
sales for the Thermal Ceramics business unit, the first half of the year was
very strong compared to 2006. The main impetus came from European businesses,
where the drivers included a series of major
orders for aluminum, petrochemical, and iron and steel projects for delivery
into the Middle East, India
and other Asian markets. New products launched during the last three years now
account for 20% of the segment’s European fiber sales.
Resco Products, Inc. is also growing through acquisitions. In December 2006, it
announced that it had acquired the assets of New Castle Refractories Co.,
including the plants located in New Castle, Pa., Newell, W.V., and Massillon, Ohio.
“The acquisition of New Castle Refractories will expand Resco’s product
offerings and result in complementary and synergistic benefits to Resco and its
customers,” said William K. Brown, Resco’s president and CEO.
In June of this year, Resco announced that it had acquired Shenango Advanced
Ceramics, LLC, New Castle, Pa. “The acquisition of Shenango Advanced Ceramics
will complement the current product offerings from Resco’s New Castle
Refractories operations,” said Brown.
Increasing costs have also affected Resco, however. According to the company,
its costs for alumina and magnesia-based raw materials have increased 25-55%,
and ocean and domestic transportation costs have increased as well. The company
also continues to be impacted by high and fluctuating natural gas and
electrical pricing, which has remained unpredictable since the hurricane season
In addition to increasing its pricing, Resco continues to pursue
innovative ways to control or reduce the impact of cost escalations. For
example, in June the company announced that it had completed several major
upgrades at its Greensboro,
N.C., plant, including the
addition of state-of-the-art drying equipment, an expansion of the roller
hearth kiln and the installation of two new shuttle kilns.
Trading profit for Cookson’s Ceramics division increased 22% for 2006, driven
by revenue growth in the high-margin flow control and fused silica product
lines. The company updated its strategic plan in November 2006, and goals
include the expansion of higher-margin specialty products, which make up
two-thirds of the division’s revenue, through a focus on emerging markets and
improved efficiencies. According to Cookson, its profitability in linings (primarily
monolithics and the construction and installation business) lags behind
competitors and provides another opportunity for improvement.
For the first half of 2007, underlying revenue for Cookson’s Ceramics
division grew 14%. The company is benefiting from the steel industry’s
conversion to enclosed continuous casting technology in China, Russia
and the Ukraine,
as the process reportedly requires Cookson’s flow control products. Production
capacities are being expanded for a variety of product lines and regions,
including new slide-gate and linings facilities in Mexico
and new glass roller and Solar CrucibleTM
plants in China and Poland.
Cookson announced the closure of the Vesuvius plant in Buffalo, N.Y.,
as part of its program of restructuring in maturing markets. A phased run-down
of activity is planned through 2008 with final closure by year end. The
facility, which manufactures isostatically pressed foundry crucibles, has
relatively high labor costs. Production will be relocated to Vesuvius’ existing
facility in Monterrey, Mexico.
Glass is an important market for refractories manufacturers. Photo courtesy
of RHI Refractories.
Applications for advanced glasses are
continuing to provide the best opportunities for growth in the glass sector.
Asahi Glass Co., Ltd. announced in October that it will increase its production
capacity of glass substrates for thin film transistor-liquid crystal displays
(TFT-LCD). Spending about 30 billion yen (~ $255 million), Asahi will establish
a production furnace with a 5 million square meter per year capacity and a
polishing line for the substrates at its Takasago Plant.
The production furnace is expected to start mass production in Autumn
2008, and the polishing line is forecasted to start up in 2009. According to
Asahi, demand for TFT liquid crystal panels is strong for television sets and
personal computers, and is expected to rise at an annual rate of 20% on a unit
Corning Inc. is also seeing increased demand for LCD applications. The
company’s Display Technologies segment, which manufactures glass substrates for
active matrix LCDs, accounted for 41% of Corning’s
total sales of $5.17 billion in 2006. Third quarter 2007 sales for the segment
were $705 million, at 16% sequential increase and a 39% increase over the third
quarter of 2006.
also focus on emerging technologies to drive growth. For example, the company
is in early-stage development for a silicon-on-glass technology that is focused
on enabling display glass to be transformed into an “engineered substrate” for
advanced electronic applications.
“Reorganization” could be the buzz-word for the flat glass industry. Following
its acquisition of Pilkington in June 2006, NSG Group announced in January that
it had approved a new top-level organizational structure for the enlarged
group. An integrated Flat Glass Business was in effect by April and consists of
a global Building Products Business Line and a global Automotive Business Line.
In June, NSG announced that it had entered into a sale agreement with
CSR Limited for all of the Group’s Flat Glass operations in Australia and New
Zealand, known as Pilkington (Australia) Limited and Pilkington (New Zealand)
Limited. In the announcement of the sale, NSG announced that it believed the
transaction offered better value to the company’s shareholders than would be
realized by retaining the operations within the company.
NSG announced in October that it will adopt the Pilkington brand for its
global Flat Glass business. “In the new NSG Group, Flat Glass now accounts for
around 85% of our global operations, with manufacturing in 27 countries worldwide
and sales in over 130,” said NSG Chairman Yozo Izuhara. “We aim to present a
single face to all our customers in both Building Products and Automotive, and
that means adopting a single global brand for all our markets in those
glass solutions for Antwerp’s
new Law Courts. Photo courtesy of AGC Flat Glass Europe (formerly Glaverbel).
In September, Glaverbel announced that it had
changed its name to AGC Flat Glass Europe to align the branding of Glaverbel’s
operations with that of the AGC group globally. The rebranding of Glaverbel is
part of a global brand unification that unites all AGC companies under a single
brand and logo. “We’re immensely proud to present ourselves as part of the
family of the global glass leader,” said Jean-Francois Heris, president and CEO
of AGC Flat Glass Europe. “A single brand identity will allow us to raise our
profile across the world.”
Also in September, PPG Industries announced that it had signed an agreement
with Platinum Equity of Beverly Hills, Calif., under which the company would
divest its automotive original equipment manufacture (OEM) glass and automotive
replacement glass (ARG) and services businesses. The total sales price for the
businesses being divested is approximately $500 million before minority
interest. Under the terms of the agreement, an affiliate of Platinum Equity
would acquire the businesses’ assets. Completion of the transaction was
expected in the fourth quarter, subject to customary closing conditions.
“This transaction is a significant milestone in PPG’s continued
transformation to focus on coatings and specialty products, and it will significantly
reduce PPG’s exposure to the U.S. automotive market,” said Charles E. Bunch,
chairman and chief executive officer. “This sale will also provide us with more
resources to pursue profitable growth in coatings, aerospace, optical products
and opportunities in Asia.” Bunch added that
the divestiture puts the auto glass businesses in a better position to compete
by providing a strong platform from which to maximize profitable growth.
According to the U.S. Department of Commerce, shipments of glass containers
decreased by 1.4% in 2006, while production increased by 1.6%. The majority of
glass containers were produced for beer (59.0%). The rest of the production was
for food (16.2%), beverages (8.8%), wine (5.4%), ready-to-drink alcoholic
coolers and cocktails (3.2%), and liquor (3.1%). The “other” category
(including containers for chemical, cosmetic, health, household, industrial,
medicinal and toiletry products) accounted for 4.3% of 2006 production. For
January through May 2007, total glass container shipments rose 1.2%, while
production decreased 0.6%.
According to a report released by The Freedonia Group, U.S. food container
demand will rise modestly (3.3%) to $23.5 billion in
Unfortunately, the glass container segment is
expected to continue to lose ground to plastic containers, as well as bags and
pouches. Glass prospects could benefit from a premium and high-purity image,
which are key advantages with increasingly popular organic and/or natural
Beverage container demand in China is forecast to increase 8.9% per year
to more than 181 billion units in 2010.8
containers account for the largest share of packaged beverages in volume terms,
benefiting from the large amount of beer produced in China (nearly all of which
is packaged in glass bottles). The use of returnable glass bottles in the beer
market limits unit demand, however.
the Saint-Gobain Group announced that, following a search for strategic
partners for Saint-Gobain Desjonquères, its specialty bottles business, it
would sell 100% of Saint-Gobain Desjonquères and its subsidiaries to two
investment funds, Sagard and Cognetas. Under the agreement, the Saint-Gobain
Group agreed to reinvest a 20% stake in the business.
A manufacturer of glass bottles for the perfume, cosmetics and pharmaceutical
industries, the specialty bottles business of Saint-Gobain Desjonquères and its
subsidiaries delivered consolidated sales of €607 million (~ $821
million) in 2006 and operating profit of €50 million (~ $68 million). According to
Saint-Gobain, the sale was part of its ongoing business development strategy.
The Freedonia Group forecasts that U.S. glass fiber demand will expand 2.3%
annually to 8.1 billion pounds in 2011.9
The best growth
is anticipated for glass wool fiber, with overall demand constrained by slow
textile glass fiber advances as nanomaterials displace glass fibers in
reinforced plastics. Textile glass fiber prices will continue to be squeezed by
the impact of lower-priced imports from countries in Asia, particularly China.
In December 2006, PPG Industries and Devold AMT AS signed a letter of intent to
form a 50-50 joint venture to manufacture glass-fiber reinforcement fabrics for
the North American wind energy turbine market. Multiaxial and unidirectional
fabrics are major components in windmill blades, and they are also used in the
manufacture of a variety of marine, construction and consumer products.
The new company, called PPG-Devold, leverages PPG’s infrastructure and position
in the U.S.
market and Devold’s investment in stitched reinforcement technology and
customer relationships. The joint venture includes construction of stitched
reinforcement fiber glass production lines at PPG’s wholly owned fiber glass
plant in Shelby, N.C.
with all-natural clay, Boral® Pavers are available in colors
ranging from deep brown and burgundy to light tan and grey. Photo courtesy of
Boral Bricks Inc.
The continued decline of the U.S. housing
industry is providing multiple challenges for the brick industry. Housing
starts fell 2.6% in August to a seasonally adjusted annual rate of 1.331
million units, according to figures released by the U.S. Commerce Department.
Starts were down 19.1% from a year earlier, falling to the lowest level in 12
years. Starts of new single-family homes were down 7.1% for the month to a
seasonally adjusted annual rate of 988,000 units. The August pace for single-family
construction was 27.1% below a year earlier.
“The housing market is still contracting, but action by the Federal
Reserve to cut the federal funds and discount rate calmed the financial markets
and sent a message to American consumers that our central bank intends to
ensure that the economy continues to move ahead,” said David Seiders, chief
economist for the National Association of Home Builders (NAHB). “This will help
to support housing, especially if the Fed takes further action in the months
ahead. We expect starts and permits to bottom-out by mid-2008 before a
systematic recovery process gets underway.”
According to The Freedonia Group, demand for U.S. brick and block products is
expected to increase 4.1% annually to $7 billion in 2010.10
Unfortunately, the bulk of that growth will be concentrated in concrete
products. Consumption of clay brick is forecast to drop to 10.2 billion units
in 2010. Common brick, which accounts for the majority of total brick demand,
will bear the brunt of the decline. However, specialty clay brick products,
such as glazed brick, landscaping brick and other low-volume brick products,
will fare better, showing positive growth through 2010.
In response to the U.S. housing slump, Boral Bricks Inc. announced in January
that it was transferring production from two plants (Augusta Plant #013 and
Macon Plant #050) to other facilities to streamline manufacturing and
distribution. The company planned to continue to focus on green initiatives to
develop processes and technologies that are increasingly environmentally
Brick announced a 6% decline in net sales for 2006 as a result of lower
shipments in both its clay brick and concrete products business segments.
According to Brampton,
its brick shipments were affected primarily by a slowdown in residential
construction activity. Similarly, Brampton’s
net sales for the first half of 2007 were $46 million, compared to $53 million
in the first six months of 2006. The company cited unfavorable weather conditions
and the decrease in U.S.
home construction for the decline. On a positive note, Brampton
is in the process of building a new facility in Indiana, which is expected to be operational
in early 2008. (CI
’s May 2008 Brick & Clay Record
supplement will feature
additional details regarding the new plant.)
In contrast, overseas brick manufacturers have more cause for optimism. In
June, Imerys announced that it will invest €100 million (~ $133
million) by the end of 2011 in its clay brick production assets. The company
plans to increase rectified brick capacity at its Gironde-sur-Dropt and La
Boissière du Doré locations, and to construct two new plants in Southeastern
and Northern France. The capacity extensions
and the new unit in the South of France are expected to come on-stream
gradually in 2008 and 2009, while the Northern project should be operational by
2011. According to Imerys, the expansion is essential to meet high growth in
the French brick market, which is likely to increase by 5% over the next five
Wienerberger saw its group revenues for 2006 increase by 14%. Higher demand in
Europe, among other factors, enabled the company to overcome negative effects
such as a severe winter at the beginning of the year, higher costs for plant
startups and inventory reduction, the new residential construction slump in the
and higher energy prices. Similarly, its group revenues for the first half of
2007 were up by 21%, due again to strong European construction activity, as
well as favorable weather at the beginning of the year. “I expect Wienerberger
will report strong earnings growth for the full year because of the excellent
results recorded during the first two quarters, and our optimistic outlook for
the second half,” said Wolfgang Reithofer, chief executive officer.
Acquisitions are an important factor in Wienerberger’s growth
strategy. General Shale Brick, Wienerberger’s North American subsidiary,
acquired Arriscraft International in June. The acquisition of the Cambridge,
Ontario-based brick, stone and marble producer marked General Shale’s first
acquisition of a manufacturing entity outside of the U.S., and Weinerberger’s entry in
the Canadian market. Weinerberger anticipates that it will benefit from
synergies through the use of the direct sales network in the U.S. and the potential for new
Also in June, Wienerberger continued its expansion strategy with the
acquisition of Korevar, reportedly the third largest clay paver producer in the
“[With this acquisition], we will organically grow our brick and roof tile
business over the coming years,” said Heimo Scheuch, Wienerberger managing
board member with responsibility for Northwest Europe.
“The clay pavers segment nearly doubled in volume from 185 to 330 million units
between 2000 and 2006, and we expect further growth over the mid-term. With
this product we intend to concentrate not only on the market for public
infrastructure projects, but, in particular, on private construction.”
In August, Wienerberger completed its
acquisition of Baggeridge Brick PLC. “With its experienced management team and
employees, its potential for synergies and its major raw material reserves,
Baggeridge will assist with achieving sustainable growth and enhance our
position,” said Riethof. “The combined operation will become the third largest
brickmaker in Great Britain,
which is the largest facing brick market in Europe.”
In October, Wienerberger announced that it will continue its expansion strategy
with additional investments in hollow brick production. Plans call for the
enlargement of the Zonnebeke and Egem sites, as well as the renewal of the
outdated Rumst site. The total investments are estimated at roughly €54 million (~ $77 million).
In addition to the capacity increases, the
company will focus on the implementation of environmental technologies in line
with the 2010+ emission goals set by the European Community. All three Belgian
plants will be provided with state-of-the-art scrubber technologies to reduce
emissions during the production process. In addition, the plant in Rumst will
introduce raw material from recycled brick into the production cycle on a large
scale to reduce the use of primary raw materials and energy.
Editor’s note: The foregoing information (except where noted) was
compiled from publicly available information in news releases and annual