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
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
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 advantage.
His final word: Analyze the reasons why the decisions made on imports
by the buyers of foreign products are being made.
No reproduction, in print, electronic or any form without the expressed written permission of
Key Communications Inc. 540-720-5584.