Today, like the weather, everyone talks about China. But while
there's nothing you can do about the weather, the same is not
true for China. At least that was the message from a presentation
at last week's Glass Build America by Garth Hedley, a market analyst
for glass with the International Finance Corp. which is part of
the World Bank.
In a session on the economic importance of flat glass production
in China and other emerging markets, he assessed the impact of
globalization on the U.S. market.
He pointed out that the cost of building a float plant in China
is 40 to 50 percent what it would be in the U.S. because the engineering
knowledge is available at such a lower cost.
He also explained that while China produces, by weight, 33 percent
of world flat glass volume, it has only 10 percent of world value,
which means that what is being produced has little value added.
It represents a large opportunity for Chinese manufacturers in
the domestic market but is a threat to the world producers because
that value-added production could then be exported, he stated.
Chinese importers of automotive glass have already been sued for
illegal dumping. PPG Industries, Safelite Glass Corp. and Viracon
prevailed before the U.S. International Trade Commission in their
challenge against imported units coming into the country.
According to government statistics Hedley presented, 80 percent
of float glass produced in the U.S. is fabricated and becomes
value added. This means there is a huge gap (70 percent) between
production in the two countries.
He also pointed out that because shipments of U.S. companies
have grown at a slower rate than consumption, there is more glass
being imported. He included Mexico as an emerging market that
exports to the U.S.
The question you have to ask is why, when the product is bulky,
there is just-in-time delivery, customization, and other factors
that would seem to be against import, are customers in the U.S.
increasingly buying from China, Hedley said. He used insulating
glass as an example but imports of this fabricated product from
China are very small. Whereas when he used rearview mirrors for
cars, imports are very high.
He said that trends show float glass will be less impacted by
Chinese imports because of the bulkiness of shipping such low-value
product while the same will not be true for value-added products.
He said there is more concern for U.S. exporters than importers
because exports are declining and there needs to be a better understanding
of why this is happening.
Innovation is the key in this situation, he told his audience.
A company has to be innovative and new products have to be brought
out that take time to replicate to give domestic fabricators an
His final word: Analyze the reasons why the decisions made on
imports by the buyers of foreign products are being made.