Disruption and pressure on the supply chain shows no sign of easing, so what does that mean for glass processors and IGU manufacturers?
If you think we’re done with price increases and disruption think again”, says Mark Herbert, joint Managing Director, Mackenzie Glass. “There’s too much pressure on supply and while I do believe things are moving forward, and in the right direction, we have some way to go before any return to normality.”
The analysis by the head of the Bristol-based glass merchanting business is based on a number of factors.
First, he argues demand continues to outstrip supply. “There are too many factors which still make it very difficult for float glass manufacturers to get product out of the door”, he says.
This includes the cold maintenance programmes pre-committed to by Guardian and Saint Gobain for this spring and summer, which have compounded COVID disruption.
“Cold maintenance programmes run for 12-20 weeks. They both started in early summer but as we understand it, Guardian’s programme of repair is more expansive and while Saint Gobain will start running product this summer, we believe Guardian’s float glass line won’t be back up until early autumn.
“That means that we’ll continue to see specific pressures on product availability. 4mm float, soft coats – they’re the bread-and-butter products of our industry and there aren’t enough to go round.
“Pilkington hasn’t encountered those same challenges in the sense that it hasn’t lost capacity to maintenance but there is pressure on availability in certain product areas, for example mirror, because lines are focussed on core product, so there’s range depletion.”
Mark adds that with demand globally at a record high, and with shipping containers hitting the $17,000 dollar mark from $3,000 pre-COVID, there is no quick fix from the import markets.
He points out that this is already impacting on supply of toughened glass with tougheners switching to three-day weeks over the summer, because of material shortages.
“Toughening is a volume game. You’re consuming thousands and thousands of square meters of glass a day. You make money through volume. If you aren’t doing it you still have costs”, Mark says.
“We aren’t a volume toughener, but we do have a toughening capability in Group. A furnace will easily consume £1,000 a day in energy – but even to sit idle it’s still going to cost you £500 plus.
“So, volume tougheners are being squeezed, and I believe that this may shake out some capacity from the market going forward.”
Mackenzie holds more than 200 products in stock. This includes a wide range of laminates including standard stock sheets of 3.2mX2.5m in 4.4mm to 14.8mm laminates, plus over-sized 4,500mX3,210mmm 8.8,10.8, 11.5 and 13.5mm laminates, which it added to to its range in response to demand from commercial suppliers last year.
Its mirror range is even broader including more than 25 different products, ranging from standard 3mm to 6mm silvered; Safety-backed products; greys, bronzes, pinks, golds, champagne, black tints; Italian Antique and LED options.
It has also only passed on two price increases to its customers in the last 9-months, absorbing the hit within its own operating costs.
“Our allocations have been holding-up. We are, however, under pressure like everybody else. We’ve also seen a number of price increases, only passing on two of them to our customers because we appreciate the importance of stability to them.
“We expect to see more increases before the year’s out simply because of the pressure of demand and the increased costs that the supply chain is incurring. Shipping containers, labour and energy costs are going up and that is sooner or later going to be passed down.
“This has been compounded by the COVID infection rate over the summer and almost more significantly, the ‘pingdemic’.
“It pushes up costs of supply.”
This he argues, means allocations should be expected to remain with the sector until Spring 2022 at the earliest. “I want to believe it’s going to get better sooner”, says Mark, “I think if you look at the evidence, it’s hard to see that happening this year, or in the early part of next.
“Allocations will be with us for a little while yet.”
For more information email info@mackenzieglass.co.uk or log on at www.mackenzieglass.co.uk.
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