NGA Conference Puts Spotlight on COVID-19 Impacts on the Glass Industry

Tim Zuerlein, director of supply chain for advanced interlayers at Eastman Chemical Co., provided insights on how the COVID-19 pandemic has impacted glass manufacturing during the session, “The New Normal – Manufacturing.”

It was a conference with a whole new look and the cause of that new look was also its unwelcome star. The COVID-19 pandemic was a major focus on the first day of the virtual (online) National Glass Association (NGA) Glass Conference, which provided several different perspectives on how the disease has impacted the glass industry.

World of Glass

To start, Bernard Jean Savaëte, president of BJS.Differences, presented, “World of Glass,” explaining that the health and economic crisis has made forecasting difficult.

“I expect an increase in unemployment and a decrease in consumption and investment,” he said, adding that recovery could be slow.

He predicted, based on data from the International Monetary Fund, that countries with advanced economies likely won’t reach their 2019 level of GDP again until 2022.

“In the U.S., GDP should recover to its pre-pandemic levels by mid-2022,” he said.

Savaëte pointed out that the U.S. Congressional Budget Office is predicting the unemployment rate in Q4 2030 will be 4.4% compared to 3.5% in February 2020.

“The pandemic will scar the U.S. labor market for the next decade, the agency says,” he explained. “In the European Union, the unemployment rate is forecasted to rise from 6.7% in 2019 to 9% in 2020 and then fall to around 8% in 2021.”

Savaëte also gave an overview of how the pandemic has impacted flat glass operations. He said that most of Europe’s 48 flat glass melting installations had to be placed in costly hot holds and tens of thousands of workers experienced temporary unemployment.

On the supplier side, Savaëte said many suppliers will be impacted by a decrease of capital expenditures. He expects a difficult time for several suppliers into late 2020 and in 2021.

“COVID-19 is accelerating decisions and sharpening existing difficulties,” he said, adding that the crisis likely will eliminate several fabricators from the market.

Savaëte then answered audience questions. One attendee asked what is driving stable glass prices in the U.S. compared to Europe during the pandemic. He explained that in the past 15 years the U.S. has reduced its number of float lines while Europe has increased its capacity by building lines in Eastern Europe where production costs are cheaper, and not closing lines in Western Europe, leading to an excess in capacity.

The New Normal: Manufacturing

In the session, “The New Normal – Manufacturing,” Tim Zuerlein, director of supply chain for advanced interlayers at Eastman Chemical Co., and Marcus Bancroft, sales manager at Vesuvius, provided insights on how the COVID-19 pandemic has impacted glass manufacturing.

“The crisis has created disruption of the global supply chain,” said Zuerlein.

He explained that companies have learned lessons from previous economic downturns, which have improved chances of recovery. Three areas have shown better resiliency:

  • Better control over internal process: improved efficiency and less waste;
  • Greater ability to absorb declining sales: liquidity and agility; and
  • Better relationships with customers and suppliers: trust and transparency.

“Due to the rapid spread of COVID-19, additional preventative measures have been necessary. We must protect employees against the risks of the virus by thinking critically of material flows and people’s movements onsite,” he said. “We’re also reducing distractions wherever possible to ensure continuity of supply.”

His company has focused on restricting the number of people onsite, keeping different services and teams separate and implementing social distancing and hygienic measures. Zuerlein also emphasized the importance of limiting site visitors and requiring approvals for all visitors. Anyone who can work from home has continued to do so and the company has used Zoom and Skype meetings.

Bancroft said it’s critical to secure the supply chain by working with trusted partners to understand the challenges and constraints while preparing for disruption.

“Make sure you have the supplies you need to keep your factory running. It’s not easy to get things in a hurry anymore,” he said. “…You wouldn’t set off on a journey in a car without a spare tire. It’s common sense that you’re going to save a lot of money in the long run if you invest in spare parts now. If these items aren’t perishable, stock up. You don’t want to be in a situation where you’re out of production for days or weeks for want of something. Look at your operation and see what are the important things that, if broken, will cost the most in terms of downtime and getting a technician in.”

Zuerlein added that everyone is being pressured right now to watch working capital and minimize inventories, but warned that could be taken to an extreme.

“Having inventory necessary for your operations is important rather than relying on desperate measures. It’s really in your best interest to maintain inventories and to not take drastic reductions in critical operations.,” he said.

Zuerlein also said that transparency and trust are absolutely paramount, pointing out that it does no one any good if a company overstates the products it requires.

“Customers have tried hording and asking us to produce twice what’s required. We need your best estimate so we can remain aligned and minimize our costs and maintain our supply to customers,” he said.

The virtual NGA Glass Conference continues through Thursday, July 30. Stay tuned to USGNN™ for our continued coverage of the event.

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