1. Global Glass Market Overview
txho/enx119/01211 doc 1 enx119.ppt
txho/enx119/01211 doc 1 enx119.ppt
9/11/2018 3:55 AM
CONFIDENTIAL
Global Glass Market Overview
ENRON
December 11, 2000
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2. GLOBAL FLAT GLASS MARKET OVERVIEW
txho/enx119/01211 doc 1 enx119.ppt
txho/enx119/01211 doc 1 enx119.ppt
GLOBAL FLAT GLASS MARKET OVERVIEW
Annotation
Global glass market
100% = $11.5 billion
Flat glass cost structures
Percent
Aircraft and other
Other
Shipping
Energy
Auto OEM
Profit margin
Auto
rep
SG&A
Packaging
Raw materials
Labor
Flat glass
(construction)
140 of 171 glass tanks are in Asia/Pacific, Western Europe, and North America
Margins can be higher for cost advantaged manufacturers or other value-added products
5 players control 75% of the world flat glass market (Pilkington – UK; Asahi – Japan; St. Gobain – France; PPG – U.S.; Guardian – U.S.) but other players are important in certain regions
GDP is the most reliable indicator of flat glass demand for any region (U.S. market correlation – R2 = .83), thus industry is very cyclical
Markets tend to be regional because of high shipping and packaging costs; flat glass is rarely shipped more than 500 miles
Flat glass PPI shows that prices are not very volatile
Source: Analyst reports; U.S. Department of Commerce; Hoover’s

3. FLAT GLASS MANUFACTURING PROCESS
txho/enx119/01211 doc 1 enx119.ppt
txho/enx119/01211 doc 1 enx119.ppt
FLAT GLASS MANUFACTURING PROCESS
Raw material feed
Furnace
Float bath
Molding
Coating/ cooling
Finishing
65% sand
20% soda ash
15% limestone and other additives
Mixture is melted at 1,600° C
Impurities are removed
Uniform consistency is achieved
If glass is to be shaped (e.g., automotive glass), it is done at 600° C
Any chemicals coatings are applied
Glass is coated in a 200° C furnace
Glass is cut to specifications and prepared for shipping
Economics of flat glass production
High capital requirements ($100 million-110 million for 1 float tank) and long lead time for plants to be constructed
Very high production start-up costs (because of heat needed at all stages of production) requires plants to be operated continuously
Production can be slowed but utilization below 70% is not economical while greater than 90% is desired
Continuous operation and long lead time for capacity addition lead to stable supply
Cyclical demand combined with stable supply leads to some margin volatility
Producers try to counter this through innovative, value-added products
Large buyers (e.g., U.S. automakers) exert buying power (Ford produces some of it own glass)
Source: Analyst reports; U.S. Department of Commerce

4. 20 YEAR PPI FOR GLASS Monthly PPI
txho/enx119/01211 doc 1 enx119.ppt
txho/enx119/01211 doc 1 enx119.ppt
20 YEAR PPI FOR GLASS
Monthly PPI
The relatively stable prices are likely a result of limited charges in the manufacturing process. Pilkington developed the current process in the late 1970s
1/80
1/82
1/84
1/86
1/88
1/90
1/92
1/94
1/96
1/98
1/00
Source: Boardview; Bureau of Labor Statistics

5. TOTAL RETURN TO SHAREHOLDERS FOR SELECTED PLAYERS
txho/enx119/01211 doc 1 enx119.ppt
txho/enx119/01211 doc 1 enx119.ppt
TOTAL RETURN TO SHAREHOLDERS FOR SELECTED PLAYERS
Annual TRS performance
Percent
Market cap
$ Billions
1 year
3 years
5 years
PPG
7.30
Apogee Enterprises
.14
Pilkington
1.50
Asahi Glass
11.30
St. Gobain
0.40
Source: Bloomberg; Compustat