Sales Higher for Flat Glass and Containers; Other Glass Segments Mixed
A slowdown in the European economy caused unit prices to decline in that region, while sales in Asia were brisk as a result of steady demand for use in buildings. Demand also rose considerably for automotive glass in Asia, particularly in China and Thailand. In Japan, sales of glass for crime prevention grew sharply, while sales were also higher for compact cars and high-value-added products, such as infrared ray cutting glass.
A report from The Freedonia Group projects that world demand for flat glass will grow 3.9% per year to more than 44.1 billion square feet in 2006, slightly outpacing real (i.e., inflation-adjusted) gains in the global economy.1 Production of flat glass is forecast to increase 4.4% per year to 41.7 million metric tons in 2006, of which about 28 million metric tons will be high-quality float glass. The remainder will consist of low-quality float glass, as well as sheet and rolled glass. Assuming an industry-wide utilization rate of 85%, Freedonia estimates that the global industry will require 20-25 new high-quality float lines averaging 500 metric tons per day to meet future demand through the end of 2006.
Freedonia also predicts that the market value of fabricated glass (encompassing basic glass, as well as all value-added products, such as laminated, insulating and mirrored glass) will increase 5.2% per year to $48 billion over the same period. Above-average gains are forecast for architectural glass based on a solid outlook for the global construction industry and a greater use of value-added glazing products, both in new structures and during major renovation and refurbishment activities. Chief among these materials are double-glazed insulating glass units (IGUs), which often incorporate low-emissivity coatings, in place of single glazings.
The motor vehicle market is expected to post gains of 4.2% per year to more than $10 billion in 2006. In addition to a moderately strong outlook for global motor vehicle production, a positive trend for glass suppliers will be the continuing popularity of larger vehicles, such as sport utilities and minivans, which use more glass per unit than conventional sedans.
The emergence of new "smart" glass products, such as self-cleaning glass and light-control products, might also help boost demand for flat glass. Technologies such as the SPD-Smart light control film from Research Frontiers are becoming increasingly popular. The suspended particle device (SPD) technology allows consumers to instantly and precisely control how clear or dark glass is, and electrically adjust light transmission by either turning a knob or having the device automatically adjust itself by means of a photocell or other sensing or control device. A variety of SPD-Smart products are already commercially available, including aircraft, architectural, marine, automotive and appliance window products. In June 2003, Saint-Gobain Glass France SA, a subsidiary of Compagnie de Saint-Gobain was granted a worldwide (except Korea) non-exclusive license by RFI to make various SPD-Smart glass products. Similar technologies, such as electrochromic windows and liquid-crystal glass, are also beginning to come on the market.
Glass Containers
Total U.S. shipments of container glass were up slightly (0.4%) in 2002. While shipments of glass containers for soft drinks, beer, liquor and ready-to-drink alcoholic coolers and cocktails were all higher (up 6.2% overall), shipments for food, wine and other uses (including chemical, cosmetic, health, household, industrial, medicinal and toiletry products) were lower. In food applications alone, shipments were down 14.3% compared to 2001.A recent report from The Freedonia Group indicates that glass containers will continue to hold their own in the U.S. beverage sector through 2007, as glass takes an increasing amount of market share from metal cans in the premium beer market and growing "malternatives" subsegment.2 However, they will experience little overall growth, since plastic containers will continue to be the container of choice for most other beverages. Freedonia forecasts that glass beverage containers will grow only 1.1% per year over the next five years, while plastic containers will grow 4.9% per year (see Table 1).
The prospects for growth on the international front, however, appear much better. According to Owens-Illinois Inc., one of the world¿s largest glass container manufacturers, demographic and economic trends in certain developing regions of the world, including parts of South America, Eastern and Central Europe and the Asia Pacific region, will lead to increases in demand for glass containers over time. Key contributors to long-term growth include the rise of branded, pre-packaged foods and beverages, conversions of refillable containers to recyclable one-way glass bottles, and the growth of selected regional wine industries - especially in Australia and Italy.
The company is also experiencing growth in the U.S. through its partnerships with beer producers. In February 2003, Owens-Illinois announced plans to construct a new state-of-the-art plant to be the primary supplier to the Anheuser-Busch brewery in Fort Collins, Colo. The plant will be located in Northeast Colorado or Southeast Wyoming, at a site to be determined, and is expected to be operational in 2005.
These trends are having a negative impact on U.S. jobs in this sector. In the end of 2002 and beginning of 2003, Lancaster Colony consolidated its glass manufacturing operations at the Indiana Glass Co. plant in Dunkirk, Ind., into its Sapulpa, Okla., facility, resulting in a loss of 240 jobs. The company said that the move was necessary to save costs in an increasingly challenging consumer glassware market. The lower demand for electronic glassware forced fiber-optics maker Corning Inc. to announce in early 2003 that it would shut down a plant in State College, Pa., at a loss of 1000 jobs. The plant, operated jointly by Corning Asahi Video Products and the U.S. subsidiary of Japan¿s Asahi Glass Co., makes cathode ray tube (CRT) glass used in conventional televisions in North America.
Other Glass
According to a recent report from Business Communications Co. (BCC), flat panel displays (FPDs) will continue to overtake CRTs in applications such as portable computers, handheld electronic devices, desktop computers and televisions.3 Flat panel displays accounted for 54.6% of the total display materials in 2002 and are projected to account for 57.2% of materials in 2003. Their value is projected to grow at an average annual growth rate (AAGR) of 16.5% and account for 73.2% of all display materials by 2008.
