Next for the Chinese Glass Industry?
What's next for the Chinese glass industry? That was the question asked and
answered by Jim Gresehover of Guardian Industries who spoke about
the state of the float glass industry in China on Monday morning
during Glass Week 2006.
Gresehover first attempted to define the size of the market. He
asked the group to consider the relative numbers of float plants
throughout the world:
Region Number of Float Plants
|Asia (exclusive of China)
He also detailed some of the rapid growth in float glass plants
||Number of Float Plants in China
The Jiangsu Company itself has 20 float plants in China. "Figure
the average output is 500 tons of glass a day for a plant in China,"
said Gresehover, "this means Jiangsu is making around 100,000
tons of glass a day." He added the company named Qinhuangu
has a 900-ton per day capacity.
Gresehover said that the monetary threshold for building a float
plant is also much lower than in the United States. "You can
get a float plant up and running in China for about $20 million,"
said Gresehover, of the cost which is generally believed to be approximately
one-fifth of what it costs in United States. He also categorized
the type of glass being made in China along quality lines. He estimates:
Glass Quality Approximate Percentage
|Low and Medium
|High (from foreign manufacturers)
Gresehover then attempted to answer the question he asked at the
beginning of the session: Where is the Chinese glass industry going?
"We expect the expansion to slow and some consolidation to
occur. We also expect to see some true change in the industry there,"
said Gresehover. "Smaller companies that got into the business
now want to get out, they are not making any money," he said.
Gresehover cited as example the Chinese investment firm of Hony
Capital which recently completed a consolidation of three companies:
China Glass, Beifang and Haibowan. "Although they are a catalyst
for consolidation, it remains to be seen what the effects of it
will be," he opined. Consolidation has already occurred in
the automotive glass, laminated glass and glass processing equipment
Gresehover also said that the Chinese company Farun recently was
a catalyst for price change. It changed its pricing significantly
and caused a lot of price reduction.
And there are now signs of project delay and cancellation of projects,
which shows caution by outside investors, according to Gresehover.
Additionally, many companies are undergoing a crisis of identity.
"They are trying to figure out what type of company they should
be. They are trying to find their niche," he said.
But, Gresehover added, there are also some signs of resistance
to consolidation, including the fact that the industry does put
scores of people to work who otherwise would be on welfare. Also,
there has been some market growth and many companies in the industry
are profitable. Nine float plants bring in $4 million a year in
"Everyone of those guys [in upper management at Chinese float
plants] drives a Mercedes and can get reservations at any restaurant
and that's a sign of profit there," he said.
Photo Caption: Guardian's Jim Gresehover briefs the attendees
at Glass Week 2007 on the colossal growth in float glass plants
in China during the past few years. Photo courtesy of Brian Pitman.