AGC to restructure

April 22, 2008
COMMERCIAL, RETAIL, AUTO
AGC Flat Glass North America of Alpharetta, Ga., will close three factories and a production line—a float glass and coating plant in Victorville, Calif., a coating facility in Hampton, Iowa, a float glass plant in St. Augustin, Quebec, and a production line at its Greenland, Tenn., manufacturing plant—in the next six months, according to a company release April 16. About 800 employees will be affected by this corporate restructuring, and the company’s North American business will shrink 40 percent.

The plants in Kingsport, Tenn., Richmond, Ky., Spring Hill, Kan., Abingdon, Va., and Jerry Run, W.Va., will be unaffected by the restructuring.

“These are difficult decisions, and they in no way reflect the skills and capabilities of AGC’s outstanding employees …,” said Brad Kitterman, president and CEO, in the release. “These decisions were made to minimize the impact of ongoing market trends, by eliminating glass overcapacity and non-core product segments.”

The decline in the housing market in North America, where residential glass occupies a greater share, has created a serious oversupply, according to a Bloomberg report April 17.

AGC also plans to sell off its fabrication business by the end of the year, according to the release. This segment includes more than 30 locations across North America. AGC’s corporate services unit in Kingsport will be reduced and reconfigured, and its North American Research and Development capabilities will be consolidated in Greenland, Tenn., and Abingdon, Va., eliminating the Petaluma, Calif., R&D facility, according to the release.

“This [fabrication] business unit falls outside our new strategic goals, which include focusing on glass production and coating technologies, not finishing operations,” Kitterman said in the release.

Officials at Asahi Glass of Japan, AGC’s parent company, said the company is scaling back production of construction glass to focus on glass used in solar cells and cars in an effort to end five years of losses at North American operations, according to the Bloomberg report. Higher prices of soda ash, natural gas and higher shipping charges increase the company's raw material and fuel costs in North America. A float glass plant in the U.S. will be used to make solar cells, and the Japanese company will eliminate 22 percent of 4,000 jobs in North America related to flat glass, according to the same report.

Asahi Glass will take a $133 million charge in the fiscal second quarter ending June 30 for the changes, according to the Bloomberg report.

—By Sahely Mukerji