Primaries, fabricators announce glass price increases amidst rising costs

By Jenni Chase, Glass Magazine
July 31, 2012
COMMERCIAL, RETAIL, FABRICATION : BUSINESS

Citing increased raw material, labor, transportation and utility costs, NSG Group-Pilkington North America, PPG Industries Inc. and Guardian Industries Corp. have announced they will implement price increases ranging from 3 percent to 15 percent next month.

Oldcastle BuildingEnvelope and Viracon also will raise prices, effective this August. (Scroll to the end of this article for price increases by product and company.)

“[This is a] bold move on the part of the glass manufacturers,” says Dick Macurak, president of contract glazier D-M Products Inc. “I am particularly surprised at the size of increase that has occurred. I do not recall that past glass increases have approached this percentage.”

The price hikes follow NSG Group’s July 6 announcement that it would reduce float glass production capacity in North America to match customer demand. One of two float lines at the Group's plant in Laurinburg, N.C., will be idled in a process that is expected to be completed between August and September. NSG officials said the line would recommence production “when market conditions permit.”

The NSG Group reported operating profit fell 34 percent in its worldwide Building Products business in FY2012 compared to the previous year. Revenue for the business was down 4 percent, according to the Group’s FY2012 Annual Consolidated Financial Results.

PPG Industries also saw income fall for its glass segment, reporting a 44 percent decline for the first six months of 2012 versus the prior-year period. Glass net sales for the six-month period were basically in line with 2011, at $529 million versus $532 million, according to a July 19 release.

NSG and PPG weren’t alone. At press time, Saint-Gobain officials reported operating income for its flat glass segment plunged 79.3 percent in the first half of 2012 compared to the prior-year period, with flat glass sales retreating 6.5 percent. The manufacturer expects a “measured rise in its sales prices” throughout the coming year, according to a July 26 release.

Saint-Gobain also will roll out new “cost-cutting measures,” particularly in its flat glass segment. Officials said the measures would primarily focus on its European operations.

Asahi Glass Co. announced in July that net sales and operating income for FY2012 would be below expectations, with operating income down 28.6 percent from its original forecast. The company shut down a K1 furnace at its AGC Glass Company North America facility in Kingsport, Tenn., earlier this year. 

The trickle-down effect
How will these price increases affect glass companies farther down the supply chain?

Large fabricators like Viracon and Oldcastle BuildingEnvelope are implementing increases of their own, according to letters sent to customers this July. “While we work hard to achieve continuous productivity improvements at Viracon, an increase of this magnitude cannot be fully absorbed,” said Garret Henson, vice president of sales, Viracon, in a July 20 letter.

Contract glaziers say price hikes will hurt on projects that are already out for bid, where they can’t pass along increased costs. Going forward, however, the effects will be minimal, says Greg Burkhart, owner, Key Glass. “The cost increase should have no effect at all,” he says.

“I believe [there will be] little impact, as all in the glass industry are equally affected,” Macurak agrees. “We will notify those customers with whom we are currently providing long-range budget pricing, so there will be an awareness of increasing glass costs as projects move forward in design.”

At the retail level, “if our cost goes up, then our hourly rate will go up too,” says Douglas Dotson, vice president of Operations, Glass Doctor, which has more than 280 locations in the United States and Canada.

“At Glass Doctor, we don’t price our product based on what the shop down the street charges,” he says. “Each year, our franchise consultants work with each franchisee to create a budget based on history, benchmarks and current cost. This budget then calculates the hourly rate that that shop needs to charge to achieve their personal and business goals. We love the business, but we are in it for a profit,” Dotson says.

Smaller retailers might be harder hit, however. “The market is so competitive right now that we are already having to lower prices to match and win jobs with our contractors, more so than even in previous years,” says Lori Ann Benish, office manager for Enclosures Unlimited Glass Co., a family owned and operated retailer that specializes in shower enclosures. “Such a considerable price increase in these times can mean the difference between budgeting for the job or not doing the job all together, especially in the retail [market]. Frameless shower enclosures ... are a luxury to most people, not a requirement. So, keeping them affordable and not overly expensive is the difference between steady work for us or a possible slowdown.”

“Even in the homeowner sector, due to competition with the Internet and overseas providers, we believe that small glass shops, like ourselves, will have to take on the cost most of the time,” Benish continues. “Being smarter with purchasing and overhead will have to be the way to recoup cost.”

Dotson agrees that success ultimately will depend on smart business practices. “The glass industry, like many industries, is changing back to a ‘service first’ model,” he says. “If you are not out-servicing and out-marketing your competitor, then you are going to lose market share and be hurt by cost increases and declining sales. The vendors will need to realize this too. In the flat glass market, there are a lot of small local distributors, but if they decrease service and increase prices while the big box distributors hold prices static, they will lose market share.”

Says Benish: “It is a tough call for manufacturers to make. Costs are costs … The glass industry will need to step carefully into this new price change and be creative to keep business flowing and cover costs at the same time. The current state of the industry in two words would be ‘buckle down.’”

Price increases: What to expect
Mark Seeton, director, Sales and Marketing, PPG Flat Glass, stated in a July 10 letter that PPG Industries Inc. would implement price increases in the following product categories, effective Aug. 6, 2012:

  • 5 percent increase for Sungate 500
  • 7 percent increase for Starphire ultra-clear glass
  • 9 percent increase for clear glass, Atlantica, Azuria, Caribia, Graylite II, and Pacifica glasses; all Vistacool coated glasses; and all Solarcool coated glasses
  • 12 percent increase for Solarbronze, Solargray, Solarblue and Solexia glasses
  • $0.12/square foot increase for Solarban 60 and Solarban 60VT on 6 mm clear glass

In conjunction with the July 10 announcement, PPG stated in a letter dated July 26 that it would raise prices by 6 percent on the following coated products for thicknesses less than 6 millimeters, effective August 6:

  • Solarban 60 and Solarban 60VT
  • Solarban 65 and Solarban 65VT
  • Solarban 70XL and Solarban 70XLVT
  • Sungate 400 and Sungate 400 VT
  • SunClean, including Solarban 60/60VT or Solarban 70XL/70XLVT

In a July 13 letter to customers, Bill Widmann, vice president, North American Sales & Marketing, Guardian Industries, said the company would implement the following price increases, effective August 1, 2012:

  • 15 percent on all tempered products
  • 11 percent on all clear, tinted, and textured glass products
  • 11 percent on Ultra White low-iron and electronics-grade glass products
  • 9 percent on all SunGuard, ClimaGuard and DiamondGuard coated and SatinDeco acid-etched products
  • 7.5 percent on all mirror and laminated products

NSG Group-Pilkington North America announced the following price increases, effective August 6, 2012, via a July 18 letter from Stephen Weidner, regional director, sales and marketing, Architectural Glass:

  • Clear float products
     -9 percent increase on 2.2 mm through 12 mm thicknesses
    -7 percent increase on 15 mm and 19 mm thicknesses
  • Grey, bronze and blue-green tinted float products
    -12 percent increase on 3 mm through 8 mm thicknesses
    -9 percent increase on 10 mm through 12 mm thicknesses
  • 9 percent increase for Pilkington Arctic Blue, EverGreen, and SuperGrey tinted float products
  • 11 percent increase for all textured products
  • 7 percent increase for all Pilkington Optiwhite low-iron products
  • 5 percent increase for Pilkington Energy Advantage low-E and clear Solar-E products
  • 6 percent increase for Pilkington Eclipse Advantage low-E and tinted Solar-E products
  • 3 percent increase for Pilkington Mirropane transparent mirror
  • 15 percent increase for all tempered products

In a July 20 letter to customers, Viracon's Garret Henson announced that the company would increase prices by approximately 9 percent on all quote requests received on or after August 1, 2012.

Oldcastle BuildingEnvelope COO Jim Avanzini said in a July 24 letter that it would increase its selling price by 10 percent on all products and services (fabrication, crating, etc.), effective August 6, 2012.