The industrial world is currently experiencing unprecedented shortages. Metals, plastics, glass, building materials… The list is long. While companies are barely recovering from the health crisis, these new upheavals are undermining France’s economic recovery.
Flowlity: What is the current situation in the glass industry and how do you explain it?
Olivier Douard: There is a shortage that is affecting the entire building supply chain and has caused a fairly significant increase in raw material prices since the first lockdown. As a representative of the UDIVP, I will focus more on glass.
This increase started with covid and can be explained on the one hand by a lack of supply compared with demand. In March 2020, several float glass plants were on stop. At the same time, demand has remained high and even increased. Even if these float glass plants have now restarted, it is important to remember that the heating time is very long and initial production will be for calibration. Start-up requires several weeks, weeks without production.
During this time, demand continues and supply cannot keep up. Therefore, production sites are behind schedule.
For laminated glass, events have also affected the supply of interlayer film. So, we have had supply problems at the same time as a rise in raw material prices.
Is this a general shortage?
I couldn’t say anything about Europe or the rest of the world, but it’s a national shortage in France, that’s for sure. I haven’t had any recent discussions with my foreign counterparts, but it’s very likely that other countries are affected.
We can see today that most producers are adopting the logic of national priority, so it would not be surprising if other markets were affected as well.
What is the impact for companies? And how can they address this?
We have had many meetings with producers, unions and fitters. There have been proposals for product substitution, but these do not meet the required standards.
If we take the example of laminated glazing, which is a safety product, we cannot easily substitute it because we have specifications that we have to comply with.
Companies also face challenges in terms of lead time. There are increasing delays and we are working to educate the government to avoid any delay penalties for these companies.
How can companies get through this? What are they missing?
What companies lack, of course, are the materials. But they also need greater understanding from customers, especially public ones, of the reality that companies are facing. We need to avoid penalties to protect the fabric of our economy.
We need to get back to normal, especially with regard to the crucial matter of lead times. We hope that things will return to normal in the coming months.
Why is it that supply is not keeping up with demand despite the recovery in production rates?
It is possible that some companies are playing it safe and over-stocking, but above all, the time it takes to start up the furnaces has created a time lag between the resumption of production and the first deliveries.
We were expecting a slower market because of the health crisis, but this has not happened at all.
The market is demanding because it has evolved, and the economic fabric has evolved. Some companies have closed, others have been bought, others have taken advantage of the confinement to start their work …
All this means that our members are not complaining about demand, and we should be happy about that.
Many sectors facing the same difficulties are asking for more synchronization. What about yours?
Nobody knew how the market was going to evolve. We expected a longer crisis and the recovery is finally here, which was unexpected and hard to anticipate. No one could have said a year ago that demand would be so high. That’s why some glass suppliers stopped production altogether.
There was a lack of foresight and visibility, but let’s remember that the event was absolutely unexpected.
I think the issue is certainly the same for other raw material manufacturers.