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You Bet Your Glass: April 2015

Brace yourselves


March 23, 2015
By Frank Fulton

Topics

If you are an architectural glass and aluminum glazing contractor, a
fabricator of glass products or a manufacturer of aluminum architectural
metal products, it’s looking like you are in for one wild ride in 2015.

If you are an architectural glass and aluminum glazing contractor, a fabricator of glass products or a manufacturer of aluminum architectural metal products, it’s looking like you are in for one wild ride in 2015.

I am predicting that the supply of glass you need for your projects could cause you significant grief as we get into the year. I expect you will face much longer lead times than usual, could experience late deliveries, may actually have a problem getting certain types of glass you need at all, and can expect the price of glass to increase significantly. On the aluminum side of things, shortages are not anticipated, but fluctuating and rising prices will cause you many a sleepless night.What is the cause of this anxiety being put upon you? You can blame the upturn in the American economy for a start, coupled with the tailspin of the Canadian dollar relative to the U.S. greenback, but there are a lot of extenuating circumstances that play a significant role as well.

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On the commercial and architectural construction side, it seems the market is doing its best to make up for lost time over the past six years. Many of my colleagues who work within the architectural community have stated that they are seeing activity at levels not seen in many years. Another colleague with an Ontario curtainwall manufacturing and installation company stated that there are so many projects going on in the northeastern United States that they have a full time presence there just trying to keep up with the demand.

With the economic downturn in 2008 a number of float glass plants were simply shut down due to reduced demand plus being in need of major overhauls. The number of facilities in 2008 stood at 45. Today there are only 36 float lines in operation, with none of those in Canada. PPG sold its Mount Zion, Ill. facility to Fuyao Glass America in the fall of 2014. Until that time, this facility produced glass for the residential and commercial construction markets, but is being converted to manufacture automotive glass only. There are currently no new float glass facilities being contemplated. According to Stephen Weidner, vice-president of architectural glass sales at Pilkington North America, “I do agree that the glass supply-demand in North America is the tightest it has been in quite some time. North American float capacity was reduced immediately following the 2008 global financial crisis by several North American float manufacturers to address overcapacity and excess costs relative to demand. Since that time, North American float demand has experienced slow and steady year-on-year demand increases as the economy heals from the crisis (demand increases in automotive, residential and commercial sectors). Without new float capacity coming on line, the North American float industry is now at the point where this demand has now just about absorbed the excess capacity left from the 2008 financial crisis leaving us with a relatively tight glass environment. ‘Tight’ in the sense that Pilkington, and I suspect other floats as well, can be out of certain SKUs at any particular time, obviously not out of all flat glass inventory.”

Mr. Weidner went on to state that “In addition, the ability of the float industry to transport glass has also been affected by the shortage of drivers in the trucking industry. This issue has had a material impact on the float industry’s ability to ship/deliver glass on a timely basis.” The Canadian Trucking Human Resources Council states that “Canada’s trucking sector will need to find as many as 319,000 new employees over the next ten years to keep the wheels moving.”

On the aluminum supply side, Morgan Stanley stated that aluminum demand increased six per cent in 2014 and predicts a 7.4 per cent increase in demand in 2015.

Considering that the demand for glass will exceed supply, demand for aluminum is up, the continuing devaluation of our Canadian dollar and the shortage of trucks available to get you your product, Economics 101 tells you a big bump in price can be expected. Forward planning and locking in your costs is what it’s going to take to get through a very turbulent year.


Frank Fulton is president of Fultech Fenestration Consulting. He has been in the industry for 30 years and can be reached via email at fultech.fc@gmail.com


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