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issue: January 2005 APPLIANCE Magazine

Materials Forecast 2005
Glass Surcharges


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by David Simpson, Contributing Editor

A major North America producer of specialty coated glass (TEC glass), Pilkington is also a European producer of low-iron float glass (Optiwhite), which is used in the white goods industry. The material provides the glass to processors globally, which in turn manufacture finished goods for inclusion in appliance applications.

From the perspective of David Morris, senior manager of Business Development at Pilkington North America (Toledo, OH, U.S.), his company has ample production capacity for TEC glass and expects no shortages. However, demand for low-iron remains strong and may cause spot outages, but no long-term shortages.

“Under the current environment of high energy costs, there are anticipated increases for glass products both at the float manufacturers and finished goods level,” he says. “Trucking and ocean transportation costs have been moving upward because of strong demand and higher fuel expenditures. These higher costs are directly causing increased production and transportation costs and have resulted in the implementation of energy surcharges and overall price increases. In addition, significantly higher natural gas and electricity rates have continued to impact manufacturing.”

Mark Delp, executive vice president at Gemtron Corporation (Sweetwater, TN, U.S.) observes that lead times in 2004 crept out during peak demand seasons, although availability was not a serious issue. “The industry put forth two increases this year: one in June of 7 percent and another of 5 percent in September. Energy surcharges, tied to the natural gas index, have risen throughout the year as well; as of late 2004, they were at $700 a truckload.”

For 2005, Mr. Delp believes prices will continue to rise if demand remains strong. “Current industry glass capacity utilization is reported at 95 percent, and is forecast to be the same for 2005,” he notes. “Glass demand is driven primarily by residential construction, automobile production, and non-residential construction. As interest rates continue to rise, we are watching to see if and when it negatively affects housing starts. We expect slightly less demand on the residential side; however, due to furnace rebuilds and repairs, capacity utilization should be about the same (95 percent).”

In glass-ceramics, Chuck McClinch, director of Sales and Marketing at Schott HomeTech North America (Louisville, KY, U.S.), has seen strong growth of 13 percent in North America. “Further, we saw demand increase as 2004 progressed. Some OEMs have gotten substantially more competitive in the smoothtop range market, and consumers are no longer faced with a dramatic price difference between coil ranges and smoothtops,” Mr. McClinch notes.

“We expect to see at least as much growth in 2005,” he continues. “We see weakening in economic factors toward the second half, but feel the transition from coil to smoothtop will more than offset the slight economic effects.”

Materials Forecast 2005

Suppliers mentioned in this article:
Pilkington
SCHOTT Gemtron
Schott Home Tech North America
 

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