Does New Rocky Mountain Glass Plant Mark a Turnaround for the U.S. Glass Industry?

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Owens-Illinois Incorporated (NYSE:OI)(Toledo, Ohio) has announced its intentions to build a new glass bottle manufacturing plant in the Rocky Mountain region. The new plant which will be built in the Fort Collins, Colorado or Cheyenne, Wyoming area will supply up to one billion bottles a year to Anheuser Busch's Fort Collins brewery. The Fort Collins brewery has a capacity of 6.4 million barrels per year of beer. That corresponds to approximately 2.12 billion 12-ounce containers of beer per year.

The announcement of a new U.S. glass container plant is very significant to the U.S. glass container manufacturing industry and the glass manufacturing industry as a whole, because it will be the first new glass bottle plant to be build in North America in quite some time. The U.S. glass container industry has experienced over a decade of consolidation and downsizing, as it has struggled with tough market competition from metal and plastic containers.

"According to our records, the industry closed 21 glass container manufacturing plants in the last decade. Most of these closed during the 1990's," stated Joseph Govreau, Manager of Metals and Minerals for Industrialinfo.com. Mr. Govreau went on to state, "Currently there are about 53 operating glass container plants in the U.S. The last new plant to start up was Longhorn Glass in 2000, which rebuilt and restarted the old Anchor Glass plant in Houston Texas, two years ago, to supply Anheuser Busch's Houston brewery."

Currently there are three other glass plants, which could start construction this year, but they are all float glass plants, being planned by AFG Industries (Kingsport, Tennessee), Cardinal Glass Industries, Incorporated (Eden Prairie, Minnesota), and Pilkington PLC (Saint Helens, England). These three projects and the Rocky Mountain project represent about $330 million in capital expenditures.

Click on the image at right to view the 5-Year Capital Spending Analysis

Industrialinfo.com has tracked 93 glass manufacturing projects over the past five years totalling over $2.5 billion in capital expenditures, as part of its North American Industrial Database. About 60% of those projects are related to glass furnace rebuilds. Glass furnaces have limited campaign lives and must be rebuilt every five to twelve years at significant capital cost to glass plant owners.

Float glass manufacturing and technology is totally different from glass container production downstream of the glass melting furnace. Float glass is primarily used in architectural glass windows, and automotive glass windshields. AFG is planning a flat glass manufacturing plant in Virginia. Cardinal should start construction of a $100 million plant in Oklahoma by the spring of 2003. Pilkington has been evaluating replacing one of its existing plants in the central U.S.

If all goes according to plans, Owens-Illinois should make a site selection for the new plant by April of 2003, which means preliminary construction activities such as earthwork could start this summer. Owens-Illinois hopes to have this plant operational by early 2005.

Owens-Illinois operates nineteen glass plants in the U.S. Click on the image at right for more details.