The UK building industry faces the threat of glass price rises in 2007 after private warnings by Europe“s major manufacturers that they are withdrawing capacity and introducing supply quotas.
The pr…
The UK building industry faces the threat of glass price rises in 2007 after private warnings by Europe“s major manufacturers that they are withdrawing capacity and introducing supply quotas. The price of float glass is set to go up by as much as 15% per quarter during 2007, while speciality glass is likely to jump by 30% during the year, according to briefings by manufacturers. Tom Lamb, managing director of Charles Henshaw in Edinburgh, one of the largest suppliers to developments all over the UK, warned contractors, consultants and project backers: “All the major European glass producers have made a decision to reduce their production capacity for float glass”. “At the same time they have significantly increased their prices over the last few months with further increases planned this year … we are advised that basic float glass prices may rise 15% per quarter”. Mr. Lamb warns that the volatility is undermining fixed-price tenders on all contracts, while sealed glass manufacturers “will now receive limited glass quotas from the major producers which will create a basic glass shortage”. Against a background of robust growth in commercial developments in all the UK“s major cities, including prestige projects for the London Olympics, there would now be “serious supply implications that may well prejudice the ability to meet project programmes”. David Roythorne, head of corporate affairs for Pilkington, told Scottish newspaper The Herald: “We are coming off a historic low in pricing. As demand tightens, prices are going to go up. Any suggestion that there is a concerted effort to close plant to keep prices up is without foundation”. He said the tanks used to make float glass had a limited life, so capacity always had to be renewed, but reinvestment across the industry tended to be deferred when prices were low. Mr. Roythorne added: “For any supplier like us this sort of situation is double-edged, because we never like to be in a situation where we are not able to supply all our customers”. Mr. Lamb told The Herald: “The construction market is incredibly buoyant just now in all the cities, including in Scotland. “We are now seeing a level of activity in commercial building that we haven“t seen for five years. Yet at a time when there is huge demand for glass throughout Europe, the glass manufacturers have decided to close five major producing facilities for maintenance. This will have huge inflationary results – there is already a massive overspend on the Olympics and this factor is going to add multi-millions on top of that now”. Henshaw, a 103-year-old company now owned by MPI Group, has a turnover of GBP 17 million and employs 110 in Edinburgh. Nippon Sheet Glass is said by analysts to be struggling in Japan because of difficulty passing on material and fuel costs to its customers, but it is likely to report a 56% jump in profits in 2007 thanks to healthy earnings from the high growth markets served by its UK subsidiary Pilkington.