Europe and the world are facing a major health crisis linked to the COVID-19 virus epidemic. Trade around the world is almost to a standstill. The whole sector is struggling to ensure the safety of employees and preserve production capacity. The world of glass must also realise that its survival is at stake.
A cyclical market, down since 2019
The glass market is cyclical. Since 2019, the decline in the construction market in Europe and the drop in automobile production in Germany have put the glass market under pressure. Flat glass factories have closed some float glass plants to contain overcapacity and the consolidation of the processing sector has been stronger. The crisis has therefore hit a market weakened by a downward trend.
A sudden halt to trade
The management of the health crisis very quickly led to the closure of borders and the shutdown of automobile factories. Containment policies followed by restrictions in Italy (probably soon in other countries) on non-essential industrial sites drastically reduced demand for glass and processed products.
One carrier told us that its inloaders already loaded at the factory and in the process of being delivered were being recalled because the receiving sites were denying them access.
We don't have the official figures, but the estimate based on parked trucks is that the glass transport market has collapsed by more than 85%!
Management of industrial floats during containment
As glass melting is a continuous production process, the float furnaces cannot be "shut down" instantly without risking damage to their structures. To stop production, the inlets and outlets of the furnace are stopped, and the furnace is simply kept at a temperature that keeps the glass inside molten. In this way, we can wait a few weeks.
This process, which is similar to a "hibernation" of the float, makes it possible to limit energy and labour costs without reducing them to zero; the closure of so-called non-essential industrial installations such as floats is therefore not possible without destroying the tool.
Resumption and its consequences
According to Bertrand Cazes, Secretary General of Glass For Europe, the trade association bringing together the major glassmakers and glass processors, Europe should consider that an economic crisis will accompany the health crisis and that the impact of the COVID19 virus epidemic on the flat glass sector will be colossal.
With the closure of all European assembly plants of car manufacturers, the automotive glass market is expected to be close to zero for several months, implying temporary closures in almost all automotive glass processing plants.
In the building sector, the slowdown and cessation of activity in the construction and window industry has led to plant closures in glass processing and the assembly of insulated glass units. The ability of processors and small and medium-sized glassmakers to survive the complete cessation of activity during the period of containment is highly uncertain. The bankruptcy rate of these companies will be very high.
Overcapacity in flat glass melting is likely to be unsustainable for several months, which should keep glass prices very low and deplete their already fragile cash flow in 2019.
The situation is therefore very serious. The whole sector must mobilise to obtain the financial support necessary for its survival.
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