A perfect storm of escalating energy costs and market instability as we move into the latter half of 2022 and into 2023 will put many glass companies under the most intense pressure for a generation, a leading glass company has warned.
The 2021 Glass Company of the Year Cornwall Group said rising energy prices in 2023 will eclipse 2022 levels, putting greater pressure on glass companies to partner with stable suppliers and to pass on costs to customers. It is an issue not helped by glass manufacturers putting customers on allocation in response to wider pressures as we head into the second half of 2022.
“In recent weeks, a combination of production and quality issues from some of the major glass manufacturers, combined with their needs in some cases to support their European branches due to conflicts in Eastern Europe, have created a renewed and real issues of supply,” Cornwall Group’s Chair Mark Mitchell said. “This has led to tighter allocations and many customers suffering once again from real shortages.
“This is likely to continue throughout 2022 and beyond. Price increases during this summer and early autumn may well see prices rise by 25% to 30% in many cases.
“A horrid recipe and tangle of rising interest rates, scary inflation figures, product shortages, double digit price increases, national strikes, and serious squeezes in both labour recruitment and retention are all leading to a second half of 2022 looking increasingly tricky and bumpy for many within our industry and the wider world.”
Cornwall Group had already started preparing for 2023, when many fixed energy prices are expected to come up for renewal. Companies have spent the last 6-18 months hedging or fixing prices, in a bid to take the sting out of the tail, or offer some stability in the supply chain. But next year Cornwall Group expects the market to be put under greater strain when those deals come to an end and prices are increased across the board.
“Covid loans will need to be paid off, the cost of borrowing will inevitably increase, and we will likely see some associated insolvencies, which will create holes in companies’ balance sheets,” Mark said.
“We have had 45 years of weathering storms. And we’ll approach the coming years in a similar fashion. For example, over the last three years we’ve had to duck and dive to get the right products to our customers at the right price, at the right time, and we will continue to do so. We know we are not perfect, but we are definitely a safe pair of hands.
“2023 will be when all the issues of the previous three years will come home to roost. But the Cornwall Group is in a very strong position to cope with these challenges, especially since we restructured the business in 2019 to focus on our core strengths.”