Energy surcharges imposed by float glass manufacturers hit a record high in mid-March, and further spikes are expected. These charges will have to be passed down through the supply chain, Cornwall Glass Manufacturing has warned.
In the space of a week, the energy surcharge on one lorry load of glass from one manufacturer went from £350 to £6,500. All float glass manufacturers have increased their energy surcharges in response to rising energy costs and the further cost pressures brought about the war in Ukraine.
Cornwall Glass Manufacturing had been absorbing as much of the price volatility as it could, which it was able to do thanks to the size of its supply, its processing and margin structure, and its own fixed energy costs. But the latest round of surcharge increases has sent a shock through the industry, the business claimed, causing processors, window fabricators and installers to respond accordingly, so that they are not left paying the full price.
“We buy 40- to 20-tonne lorry loads of glass per month,” said Mark Mitchell, Cornwall Glass’ group chair. “If we were to buy it all from that one manufacturer, we would be paying £260,000 in extra energy surcharges – per month! This is on top of the significant price increases expected at the start of April.
“We’ve been as flexible as we can, but those costs have got to be passed on. Many people are holding off to see what everyone else is doing, but these price increases have sent shockwaves through the industry, and it is important we make the very difficult – but ultimately right – decision to be transparent and proactive.
“Fortunately, because we are a large independent glass processor, we can be flexible with who we buy from, to ensure that our customers always get the best deal. But we simply can’t delay this decision any longer.
“One glass manufacturer recently announced that they will be implementing energy surcharge increases just five days after announcing them. If you don’t react quickly to this kind of news, then you could see all your margin slip through your fingers.”
Cornwall Glass Manufacturing buys glass from Saint-Gobain Glass, Pilkington, AGC, Guardian Glass, and other suppliers from across the globe. This ensures that it can make buying decisions based on the current market price for glass, as well as for the technical specifications required for certain product ranges.
“Many glass processors only buy from one glass manufacturer, which ties them into their energy surcharge model,” Mark added. “All manufacturers have a different mechanism for working out their surcharges, so the increases aren’t uniform across the board.
“We have decided to calculate an average cost increase based on the surcharges we receive from all glass manufacturers. This way, we may take a hit from time to time, but our customers will always get the best deal possible.”
Cornwall Glass Manufacturing – which sits alongside glass merchanting business Mackenzie Glass and retail-focused Cornwall Glass and Glazing – offers a diverse range of options in IGUs and single glass, with three manufacturing facilities in St Austell, Highbridge and Plymouth. The latter provides the foundation for the manufacture of super-sized units in a wide range of solar control, acoustic and Low E monolithic and laminated glass options. The company also has heat soaking and jumbo cutting facilities, and has invested in enhanced CNC and waterjet capabilities.
