Appearance of an up-to-date glass factory of BAMO in Solnechnogorsk, Moscow, Russia, will lead to changing of the balance of forces on this market. Small glass producers will have to leave the market….
Appearance of an up-to-date glass factory of BAMO in Solnechnogorsk, Moscow, Russia, will lead to changing of the balance of forces on this market. Small glass producers will have to leave the market. Seventeen large and small factories produce glass in Russia. Several large companies sell standardized or differentiated products, and the share of each of these companies in the overall sales is so big that changing of quantity of the products offered by one company will lead to changing of the market price. Access to such market is very difficult for other companies. Until recently, it was the Borsk glass factory (belongs to the European corporation Glaverbel), Saratovsteklo and Salavatsteklo that dictated conditions to the market. All these factories are fitted out with modern imported and Russian technological production lines. At present, the Borsk glass factory produces 24.5 million sq. m. of polished glass of the 39.3 million sq. m. of national production (62%), 51% of glass packs, 83% of hardened glass and 93% of triplex. Saratovsteklo produces 45% of window glass. The Borsk glass factory exports up to 20% of its products to Finland, Greece, UK, Japan and other countries. To strengthen its position in Russia Glaverbel is also building a powerful plant in Klin (Moscow Region). Such division of market among several manufacturers enables several leaders to hold high prices. Despite the growth in production, prices remain stable. High-quality glass sheets, which old plants could not produce, started enjoying a growing demand. Potential competitors frequently tried to blow the market up from the inside. However, all these attempts encountered a powerful resistance of the market leaders. The construction holding BAMO made the next and most successful attempt and offered the most modern technologies and Western approach in manufacture of architectural glass. BAMO was initially established for trade in window and facade constructions. Over eight years of its existence, BAMO grew from a small company selling one or two windows a day into a large industrial construction holding. Murad Muradyan, Chair of the Board of Directors of BAMO, explains, “Industrial processing of glass remained the only unmastered link of the technological chain until recently. Now, after opening of BAMO-Float-Glass plant, I think this will be our strongest link. All production lines were manufactured and assembled by the leading European companies Von Ardenne and Tamglass.” In circumstances of serious shortage of quality glass the offer of BAMO will meet the demand, at least partially. The design capacity of the factory in Solnechnogorsk is 18 million sq. m. of glass a year. According to production of float glass it is inferior only to the Borsk factory (27 million sq. m.). However, in the future it plans to take the first place according to supplies to construction market in Russia. Due to a high profitability of the project it will pay back in two years. The new factory into operation will seriously influence the market of finished products. According to VEKA, in 1999, Russia mounted about 13.8 million sq. m. of windows, including 23% of aluminium windows, 47.6% of wooden windows and 29.4% of polyvinyl chloride windows. Until recently, the share of imported parts in production of polyvinyl chloride windows amounted at least to 70%. With regard to production of window fittings, foreign companies practically occupied the local market. The share of imports on the market of glass sheets never fell below 50%. According to analysts of Glaverbel, demand for glass in Russia grows by 7% a year. The needs of the Moscow Region are estimated at 32 million sq. m. of glass. At present there are two main kinds of glass on the market differing according to different manufacturing methods. These are technical construction glass and polished glass. The technical construction glass is used in traditional building of houses as well as in construction of greenhouses, hot beds and so on. Polished or float glass is used in plastic window systems, in production of mirrors and automotive glass. The share of construction glass amounts to 60% and the share of float glass to about 40%. Glass manufacturers and representatives of construction companies speak about a permanent growth in demand for modern glass. According to the Borsk glass factory, Russia produces about 48 million sq. m. of float glass a year. Such manufacturers as Pilkington Glass and Glaverbel also import their products.