Glass reinforcement manufacturers predicted record sales a year ago, and they were right. However, actual sales of glass fibers shattered their predictions, making supplies tight, and causing difficulties and some shortages of specific grades.
Manufacturers of fiber-reinforced products - whether they use thermoset or thermoplastic resins - had difficulty in the last months of 1994 and early in 1995 getting supplies of reinforcements, as the strong sales caused glass manufacturers to raise prices 20-40 percent and institute sales control programs.
Glass producers said they expect the tightness in the market to continue through the first half of 1995, then to ease somewhat as new and expanded capacities are put into production.
Owens-Corning Fiberglas Corp. of Toledo, Ohio, has announced major new expansions to capacity, and industry sources said PPG Industries Inc. of Pittsburgh is expected to announce production expansions in February.
In moves that added complications to the tight markets, Owens-Corning Fiberglas extensively realigned its organization early in 1994, causing some confusion as new managers settled into new positions, and later changed its product mix, causing additional difficulties for some of its established customers.
Actual shipments of glass reinforcements in the United States alone increased 16 percent in 1994, far surpassing the 10-12 percent sales gain predicted a year ago, according to Catherine Gillis, manager for market research and planning for Vetrotex CertainTeed Corp. of Valley Forge, Pa.
Glass makers sold 1.03 billion pounds of glass fiber reinforcements in 1994, compared with 885 million pounds in 1993.
This year, because of expected slowdowns in the economy induced by higher interest rates, Gillis is predicting a more conservative, 5-6 percent increase in sales of glass fibers. Gillis' predictions are in terms of pounds of glass shipped, not the sales values of the glass.
``Since the end of the recession in 1991, total FRP shipments have increased by nearly 50 percent, and new records are being set annually,'' Gillis said in a statement that accompanied her predictions for the shipments of glass reinforcement fibers for 1995.
Records are being set because more glass-fiber-reinforced products are being used to replace other materials in the automotive and construction industries, and because of the resurgence of the marine industry, according to Rich Alexander, PPG Industries' marketing director for reinforcements.
Alexander noted that the reinforcements for nylon resins used to make engine intake manifolds for the auto industry are one of the largest - and newest - applications for glass fibers.
Similar new applications and increased applications for sheet molding compound in the auto industry - multiplied by nearly 15.3 million light vehicles sold in 1994 - drove the demand for glass, Alexander said.
The strength of the auto and marine markets took Owens-Corning by surprise, and was one factor in confusion that rolled through the industry over his company's realignment, Maurice Lundrigan, Owens-Corning Fiberglas vice president for composites for North America, said Jan. 13 in an interview at his Toledo office.
Lundrigan and Efthimios Vidalis, president for composites for Owens-Corning Fiberglas, acknowledged that rumors their company was exiting thermoset markets contributed to confusion fostered by fiber shortages while they were managing their company's sales and product realignments.
``Because of the scarcities in the market, some people have misjudged our intentions,'' Vidalis said.
The realignments included the closing of sales offices across the country and a managerial reorganization that had 96 percent of the company's employees reporting to new managers.
Accompanying those moves, Owens-Corning Fiberglas streamlined its product line to cut production costs and eliminate redundant manufacturing operations. That move greatly affected Owens-Corning's Anderson, S.C., site, where the company previously used four processes to make chopped-strand reinforcing glass, Vidalis said.
``Chopped-strand is one of the most price-sensitive markets, and we streamlined our process to run the lowest-cost process. ``In eliminating the proliferation of processes, we now are able to produce more material with fewer people,'' Vidalis said, noting that 200 of the Anderson facility's 800 positions will be eliminated as a result of the efficiency moves.
Despite the rationalization of chopped-strand production, Vidalis said Owens-Corning will exit only one segment - corrugated panels - of the many markets for chopped-strand, and will continue to make a broad range of products.
As for the rumors that Owens-Corning is exiting the markets for reinforcements for thermoset products in favor of markets for reinforcements for thermoplastic products, Lundrigan pointed out that thermoset markets contribute 75 percent of his company's sales of reinforcements.
Lundrigan said demand for reinforcements for thermoplastics is growing at a faster rate than reinforcements for thermosets, but he noted that sales to thermoplastics markets represented 10-12 percent of his company's sales 10 years ago, and may grow to 30 percent of sales in the next five years.
``The reality of our business is that we are a supplier and leader. There is a lot of money, muscle and capital on the thermoplastic side of this business, but there are very efficient thermoset processes out there that compete well,'' Lundrigan said.
``We are in business to be a broad-based producer to the thermoset and the thermoplastics business,'' Vidalis added.
To back up that statement, Vidalis said Owens-Corning Fiberglas spent $100 million in 1994, and will spend $100 million in 1995 and $100 million in 1996 to increase its production capacity by 6 percent per year worldwide.
``Our agenda is broad-based and comprehensive. We are not backing away from this business,'' Vidalis said.
Besides the increased production efficiency at Anderson, Vidalis noted that Owens-Corning is returning its Jackson, Tenn., facility to production. That plant was idled in 1986.
Further, this year Owens-Corning is planning:
To increase production of continuous filament and mat products at its Battice, Belgium, facility.
To rebuild, during the summer, one of two furnaces at its Amarillo, Texas, facility to increase the output of glass fibers by 15 percent in the second half of 1995.
To add a third furnace at its Rio Claro, Brazil, facility to increase production capacity there by 30 percent.
To start the second furnace at its L'Adoise, France, facility to increase capacity by 40 percent.
To complete an ongoing expansion of its Wrexham, Wales, facility that will increase capacity by 25 percent.
