During glasstec 2024, a press officer had the chance to speak to Enrico Ceriani, Vice President AGC Architectural Glass Europe & Americas, about the flat glass business in Europe.
PO: How would you describe the current flat glass business in Europe?
Enrico: Demand has slowed down due to external factors such as geopolitical events, hyperinflation of the past quarters and high interest rates, which are factors affecting consumer confidence, resulting in reduced investments in buildings (both new and renovated), furnishings and appliances, as well as in new cars.
PO: Could you focus on the Architectural market?
Enrico: These negative factors started influencing architectural glass demand during 2023. According to the Glass For Europe statistics, in 2023 European demand reduced by 1,000,000 tonnes versus the historical average.
When we look at the Glass for Europe statistics for the first semester of 2024, shipments were stable, but at a level close to the first year of Covid. Moreover, it seems that demand in the second semester is suffering more than the previous period, so for the flat glass industry 2024 has been extremely challenging.
PO: In this challenging business context, what about AGC performances?
Enrico: Our diversified business model covers both upstream and downstream segments of the value chain, as well as Automotive, Industrial & Solar, Fire Resistant Glazing and Specialities, which coupled with our extensive product range, customer base and regional diversity helps the company to safely sail through turbulent market conditions, such as we are experiencing. For sure, we are happy not being in a less diverse and commodity-driven company nowadays.
That being said, it is clear that today’s level of profitability is far from what it should be and it is not reflecting the huge investments which are consistently required in our industry.
PO: Could you elaborate a bit more on that last point?
Enrico: Recently, I was making a macro-data comparison for the period between 2019 to 2024. I have taken the year 2019 as reference point because it was the year before the pandemic, geopolitical events, the energy crisis and other external factors. What I could clearly see, is that the European flat glass industry has not been able to cover the hyperinflation we experienced in the last few years.
In other words, overall costs have increased at a faster rate than revenues. Meaning our industry is currently failing to generate profit along the full value chain: from the glassmakers to the glass processors and distributors. All this, despite the supply, has been constantly aligned to the shifting demand.
This somehow inexplicable behaviour of our industry is seriously endangering the financial viability of our companies. Personally, I truly believe that fighting for reestablishing a decent level of profitability should be a must for everyone cross the value chain.
PO: How do you see the European architectural glass market evolution?
Enrico: I am optimistic. High-performance glass plays a key role for the achievement of the challenging EU targets in terms of CO2 reductions. The implementation of the EPBD directive is a game changer that will lead to increased demand for high-performance glass in the European market, driven by ambitious objectives in terms of energy consumption for both existing and new buildings.
PO: You are introducing the Sustainability topic.
Enrico: Indeed. Already some years ago, AGC has adopted and started to implement a comprehensive agenda on the decarbonisation of our operations and products. During glasstec, our Vice President Marc Foguenne, who is in charge of Sustainability, delivered an inspiring and pragmatic speech about the strategy of AGC, including the innovative hybrid melting technology we designed in joint-development with Saint-Gobain. The newly designed line, located in the Czech Republic, will be started in January 2025.
Product-wise, we launched our low carbon glass range two years ago and we have observed an increasing interest and growing demand of customers for these products.
Nevertheless, I cannot deny that the CO2 reduction goals fixed by the EU Green Deal, require huge investments. I sincerely hope that the European authorities will commit to support and accompany the flat glass industry into this exciting and mandatory journey towards net zero carbon emissions.
PO: A last question – what if I asked you to conclude this interview with some bullet points?
Enrico: Well, first of all, I would like to thank you for this opportunity to virtually meet with such a large audience of readers/followers who represents well our diverse panel of stakeholders.
As for my bullet points:
- Flat glass is a cyclical business. Today we are operating in the low segment of the curve.
- However, high-performance glass is a key contributor to the achievement of CO2 reduction in Europe. Therefore, I look towards the future with realistic optimism. Also, the expected interest rate reduction should boost the construction industry in Europe.
- Sustainability is a must have for future generations and we are fully committed to achieving those goals in a financially viable way. In this regard, the strong support of European policymakers is imperative.
- The European architectural flat glass industry should rethink its business model from a volume-driven to a profit-driven approach. I have observed that other industrial sectors have been able to defend their profitability when squeezed between dropping demand and rising costs.
All players within the flat glass value-chain should actively and continuously contribute to the valorisation of hard earned know-how, supported by the significant investments required for continued product development, leading to a positive impact on our corporate and European flat glass industry sustainability goals.