While U.S. inflation rates have been dropping since March 2024, to a low of 2.4% in September, that same month saw an increase in prices for the glass industry. The Producer Price Index for September 2024, the latest data available at press time, showed a 4.5% increase from the beginning of the year, and a 2.9% increase from August. The posted PPI also represents a 7.3% increase year-over-year. Part of this increase was due to rising prices from major float manufacturers in August.
Industry leaders question impact of increase for an already-soft economy
Several glass industry leaders question the timing of this increase, given the economic context.
“The timing is not good, because the economy is going the opposite direction. It wasn't as strong as it was a few years ago,” says Bill Daubmann, president, MY Shower Door and D3 Glass.
“Obviously, some parts of the country are encountering softer conditions, so seeing this [increase in raw material costs] threw many for a loop. The timing, indeed, was unexpected,” says Max Perilstein, founder of Sole Source Consultants, in an August blog post.
“[The] increases surprised us since demand has been soft and there’s been no reduction in supply, nor shortage of the key materials that make glass,” says Andrew Russo, vice president of business development, Glass and Metal Craft.
Results could include project delays, imported glass and down-chain increases
As a consequence of higher costs for raw materials, industry leaders worried about the potential for downstream suppliers to pass on costs.
“What can be absorbed, and what can be passed on? Cash flow pressure was already mounting, and this will add to it," says Perilstein. He recommends businesses use this time to vet supply chains. “With all of these economic factors working against us, you need to make sure that [the companies] you are dealing with will have the wherewithal to be there in the long run,” he says.
Daubmann feels the increases will likely affect small businesses most. “It really affects [small businesses], because they have a hard time increasing their prices; they're just paying it, and that just comes off of their bottom line,” he says.
Russo feels that passing on costs may be difficult for some. “Companies like ours have invested in the latest equipment with a high amount of automation so there is little efficiency yet to gain, which means the increases have to be passed on and/or taken from our bottom line,” he says. “Similarly, glazing contractors and general contractors are in the same boat—they cannot pass increases on in this environment.”
Russo says increased raw material costs could continue trends of project delays and the value-engineering of glass, which were already happening before August. “Ultimately, price increases like this drive the influx of foreign glass, which hurts our U.S.-based industry,” he says.
Daubmann also attributes delayed building to the upcoming elections. “I think there's many, many people just waiting on this election to see what's going to happen with the economy, to see if interest rates come down,” he says. “The builders aren't building what they did.”
