A worrying new report from Plimsoll, a global research and analysis business, has published a new report which says that there is significant trouble ahead for UK glass production.

This warning comes on the back of sustained problems with glass supply in the UK, and a backdrop of supply chain problems that have affected every facet of the UK fenestration sector.

Profit margins battered

The report summary, available on the Plimsoll website, paints a very difficult picture for the UK flat glass sector.

These are the key areas of the summary that matter:

Leading figures in the glass market are warning that high energy prices could see many UK manufacturers shut down. David Dalton of the British Glass Manufacturers Association said some companies were days away from halting production.

While UK consumers are, temporarily at least, insulated from soaring energy prices, glass businesses are not, and the energy-intensive nature of making glass leaves the UK market ill-equipped to absorb rocketing energy costs. A job crisis could be looming for regions of the UK with sizeable glass-making industries as new research from Plimsoll shows how little scope there is to continue profitable production in the face of cost inflation on such an unprecedented scale.

The new Plimsoll Analysis has vetted the financial health and outlook of the UK’s 256 leading glass companies. Based on the latest data, this interactive analysis of the UK market shows:

  • 105 companies were rated as Danger or Caution – almost half of the market

  • Profit margins are down to just 1.8% in the latest year from 5.4% the year before

  • Sales per employee is down to just £92,000 – there is little room for wage growth

  • Growth in the market is recovering from the pandemic but is still down 3.5%

  • 88 companies have seen their debt position deteriorate in the latest year

And they go on to say:

If costs outweigh the revenue generated the UK’s glass-making companies are right to be drawing up plans to cease production. The economic case for the production of glass in the UK is being sorely tested by a perfect storm of shortages and cost increases.

This summary, no matter how you look at it, presents us with something that looks like it is going to be very difficult and imminent. Although one point I would gently disagree on is with UK consumers being insulated from soaring energy prices. We know that manufacturers have had to pay more in energy costs as well as more for their raw materials. We know that fabricators and suppliers in this sector have been passing on costs to installers, who in turn have been passing those on to homeowners. Also, the price cap on what consumers pay for their energy has risen earlier this month and is due to rise again in April, if not before.

Plimsoll also makes note that profit margins have dropped dramatically from over 5% to under 2%. That is a precarious position for companies to be in and may go some way to assuage installers that not all manufacturers are attempting to profiteer from the current supply chain problems.

We face a scenario in the coming months where we could see a number of glass companies being forced to close. This would be a bitter blow to the sector as these closures would be caused not by lack of demand, but by supply chain constraints and rising costs that are largely out of their own control.

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