Thirteen Bottles

By Lyle Hill

When I was in my junior year of high school my father, Lyle Alvin, bought a used car for me so I could drive my brother and myself to school and back. The car was a rusty, dented up 1953 green Chevy coupe. My friends quickly named it the “green wienie” and when we could get it started, I drove it everywhere. I don’t think it ever made a trip of more than 10 miles, but I was happy to have it. My dad had paid $50 for it and thought it was a good investment. I was responsible only for putting gas in it, keeping it reasonably clean and not getting in a wreck.

Historical Perspective

At this time in history, in my part of the country, a gallon of gas cost 25.9 cents. I remember this vividly because 25.9 cents was the equivalent of 13 bottles. Let me explain. Before aluminum cans and plastic containers were common, soft drinks came in glass bottles. When you purchased those bottles of whatever beverage you were inclined to drink, a deposit of 2 cents per glass bottle was required. You see, glass bottles were cleaned and reused by the bottlers in those days … the ultimate recycling program. My brother
and I would visit parks and ball diamonds in the area regularly to retrieve the bottles thrown into the trash receptacles. We would take the bottles to a local grocery store and they would give us the deposit refund with no questions asked. As I recall, our record was 78 bottles after a Fourth of July weekend. This got us six gallons of gas!

Our industry was shocked recently … this is being written on June 21, 2022 … when one of the world’s largest primary glass manufacturers announced a 40% price increase on most of their glass products. Within just a few days, other suppliers followed suit with similar increases. To add insult to injury, many of them also raised their energy surcharge rates. One surcharge rate notice I received was 17%. Some suppliers also stated that the energy surcharges would be recalculated going forward on a monthly basis. Deb Levy, the publisher of this fine periodical, posted a blog on this topic after the news was announced and within days it already had more than 6,300 views and generated many comments and discussions. It is indeed a very hot topic and it is causing disruption at every level.

I entered the glass industry in the fall of 1970. A postage stamp sold for 6 cents. A gallon of gas was 36 cents (18 bottles, although bottle deposits were becoming rare by 1970), a gallon of whole milk was $1.32 and a pound of good ground beef would set you back about 98 cents.

For those of you who are as old as I am … and there must be at least three of you … I encourage you to go back and see what you were paying for a square foot of plate glass back then. I know that depending on how you purchased glass in those days (at what level and quantity) your prices would vary, but if you can find your records or talk with someone from that era, you will quickly see that today’s prices are approximately double, for the most part, and maybe triple at the very worse (again, depending on how much you buy and at what level within the industry you are in).

A Closer Look

With this in mind, let’s do a quick comparison:
• 1970 postage stamp was 6 cents … now 60 cents (as of 7/10/22); up nearly 1,000%.
• 1970 gallon of gas was 36 cents … now $4.98 (national average); up 1,380%.
• 1970 gallon of milk was $1.32 … now $4.33 (local average); up 325%
• 1970 pound of ground beef was 98 cents … now $4.49 (local average); up 450%
• 1970 gallon of gas was 36 cents and in October of 2021 was $3.39 Up 940%.

This last comparison was for those who might say that today’s gas prices are an anomaly and it’s not fair to use them for any analytical purpose.

My point is that glass prices are still, from an historical perspective, not out of line. In fact, they actually seem reasonable if you chart them over the past five decades. Certainly technology and efficiency improvements have helped keep prices down and the industry should be applauded for this.

The problem I have, however, is with the way the glass industry manages itself. I have long thought that the industry sells its products and services too cheaply when compared to other industries and trades. We have been a bargain for far too long. Additionally, why in the world would suppliers hold back for long periods of time and then one day drop a 40% increase on its customers? They operate like the government. They go on forever without an increase and then double or triple their prices. Take a look at the history of the cost of a postage stamp if you doubt this.

I had a very interesting conversation this morning with a longtime glass industry friend for whom I have tremendous respect. He is perhaps the best operator in the industry today. He told me a story about one of his longest and largest customers. My friend had not increased his prices to his customers for an extended period, but when his glass supplier raised his prices by 10%, he felt he had no choice. So he sent a nice letter to his customer announcing that he was going to have to raise his prices by 10% because his supplier had raised their prices. His longtime customer, who was using the glass product he was buying as part of an assembly that he manufactured and sold, went ballistic. In fact, he refused to pay the increase and told my friend he would now have to look elsewhere for his
glass needs. Perhaps thinking it was time to look overseas. His exact statement to my friend was: “why didn’t you raise my prices gradually? Maybe a small increase every year which we probably could have passed along without a problem. I can’t hit my customers with a 10% increase. They’ll think I’m crazy.”

As I have written on several occasions, I have long thought the industry was hiding some of its true price increase behind the energy surcharge nonsense. Now, the energy surcharge is very real but the idea of a 40-50% energy surcharge looks absurd. So my question is, why does anyone whack their customers with a 40% price increase while also raising their energy surcharges and say to their loyal customers … this price is in effect on everything shipped after a couple of weeks regardless of how long your order has been in place? The simple answer is that if they all do it at the same time, the customers, at least in the short run, can’t do anything about it. Do they need and deserve a price increase? Of course. Are they going about it with some intelligence and consideration for their customers? You decide.

I used to teach graduate business school marketing classes and I’m starting to worry that one of my worst fears has come to pass. The bean counters have taken over the marketing departments in our industry. I warned about this many years ago. Oh and by the way, in case you’re wondering, at today’s prices, a gallon of gas would cost you 249 bottles, if you can find them.

Lyle R. Hill is president of Glass.com®, an information portal and job generation company for the glass industry. Hill has more than 50 years’ experience in the glass and metal industry and can be reached at lhill@glass.com.

To view the laid-in version of this article in our digital edition, CLICK HERE.