North American Glass Manufacturers Arrive in 2004 with Increased Capital Spending Activity

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). For many North American glass manufacturers, 2003 marked a turnaround year for capital project development. In fact, when compared to the previous five-year period, 2003 was the most active, as far as the number of projects generated by glass companies. In 2003, Industrialinfo.com reported on 98 capital and maintenance projects at glass manufacturing plants in North America (U.S., Canada, & Mexico) totaling over $1.3 billion in TIV (Total Investment Value). This is quite an increase over the previous five-year (1998-2002) period, which had averaged only 28 projects a year. Projects include glass melting furnace rebuilds, plant expansions, and a surprising number of grassroot plant developments.

Right now, there are over 300 operational North American (Canada, Mexico, and U.S.) glass melting and finishing operations, including glass container, flat glass, specialty glass, and fiberglass production.

Click on the image at right to view the North American Glass Projects by State Graph.

Over the past decade, North American glass manufacturers concentrated on industry consolidation, acquisitions, and plant operational rationalization to increase market share and stay profitable in an increasingly competitive market. This is especially true for the glass container sector, which has lost considerable market share to plastic and aluminum applications.

Capital project development, except for glass melting furnace campaign maintenance, remained low during the five-year period between 1998-2002, but picked up significantly in 2003. New glass bottle manufacturing capacity had almost been unheard of in the past five years as a slew of plant closures dominated the headlines. With the exception of Anheuser-Busch's (NYSE:BUD)(Saint Louis, Missouri) new Longhorn Glass manufacturing plant (2001) in Houston, Texas, which was actually replacement for previously shutdown Anchor Glass Container Corporation (Tampa, Florida) capacity, there really wasn't much activity during that period, until 2003.

In 2003, a slew of glass plant projects led by an announcement from Owens-Illinois Incorporated (NYSE:OI)(Toledo, Ohio) that it would build a new glass container plant in the Rocky Mountain region, began to signal a change in glass plant capital spending in the U.S. For details see archived IIR Industry Alert: Does New Rocky Mountain Glass Plant Mark a Turnaround for the U.S. and the North American Glass Industry?

The market for flat glass products, including those with automotive and architectural end uses has faired better than the container market, in recent years. In 2003, several companies announced plans to build new plants, including Cardinal Glass, Owens-Illinois, and Guardian Industries. Guardian Industries Corporation (Auburn Hills, Michigan) is planning close to $250 million in capital expenditures, including the construction of a new float glass plant in Mexico (PEC 65000454) and major expansions in California, Iowa, and South Carolina.

There has been a noticeable turnaround in glass plant project activity for the better. We expect to continue to see some glass plant closures, as companies continue to rationalize capacity; however, if glass plant capital spending activity is any indication of where the industry is heading in 2004, things are looking up.

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