Volume 42, Issue 8 - August 2007

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NSG’s Tomoaki Abe Talks to USGlass magazine

USGlass recently conducted an exclusive interview with Tomoaki Abe, vice chairman of Nippon Sheet Glass (NSG), the Japanese glass manufacturer that is also the parent company of Pilkington, to get his view on the global glass market. 

USG: What is your view of the global float glass market?
TA: There is a great deal of opportunity for the growth of the float glass market around the world. In the advanced industrial countries such as Europe, Japan and the United States, there is a huge demand for value-added products for comfort and energy savings. So, many innovative products are needed. The population in these areas is not growing, but the value of the opportunities is.

On the other hand, when we look at emerging countries such as Brazil, India, China and Russia, there is a huge demand. The capability to supply glass is running out day-by-day because of the huge population in the emerging countries, especially China and India. These people were not able to use glass in the past because the standard of living was too low, but that has improved [greatly]. Glass is necessary for everyday use in homes, as well as businesses. In Brazil, for example, there is a huge opportunity for the growth of glass usage—although not the high-quality glass needed in advanced countries.

The average growth of global glass sales should be 1 or 2 percent above gross domestic product (GPD) and it is actually more like 3 or 4 percent every year. That’s a huge amount.

USG:  If I understand you correctly, would you say globally it is a two-tract industry?
TA: Yes.

USG: And does one tract benefit from the other tract or are they separate?
TA: They are not separate. The advanced countries are already saturated in terms of population but [not in] the value of the product required. Emerging countries are growing and will eventually catch up to the advanced countries.

USG: You’ve cited far-flung examples—China and Brazil. Your company operates all around the globe. What do you think of branding by the primary glass manufacturers? 
TA: There are many discussions going on now, so I can’t say what the conclusion will be. All I can say right now is that branding is important but not as important as it is for consumer products. For a TV or a refrigerator, branding is very important, but glass is not there yet. If you look at the automotive or the building industry, the consumer doesn’t know whose glass it is and it’s not important. 

In construction, if there is an unknown brand and a known brand, of course, whoever is buying the glass will choose the known brand, if the product is of the same quality.

USG: Does your company do anything in particular in terms of its brand?
TA: That is a difficult question. All I can say now is that Pilkington is a very well-known brand in most of the world. So there is no need to change. NSG brand also is known in certain geographical regions such as Japan and Southeast Asia. At this point we see no urgent need for a change. But when we look at the future, there is no complete answer I can give you at this moment.

USG: Do you think there is going to be more consolidation in the global flat glass manufacturing industry?
TA: I think so, yes. My view for consolidation of the industry is that it should start in China [as there are] so many companies and many different technologies. China is growing and in the past consumers have not required a sophisticated product. But if the market is growing gradually and there are so many segmented small manufacturers, they cannot supply more sophisticated products. All they can do is consolidate. This industry is a very capital intensive one. Building a new float plant costs hundreds of millions. And research and development requires substantial technical expertise and money. And our customers are very demanding. As I have mentioned, many factors, such as energy efficiency, keep coming, and who can meet with their requirements? Of course there is a limit. Next to China in terms of a geographic area that needs change is South America. There are many players there—big, small and medium. I would hope there will be some consolidation in the near term. But I have no idea yet. In North America and Europe already there has been much consolidation. 

USG: Rather than looking to further acquisition, your company is focusing on internal maximization of effort, correct?
TA: Yes. We have to prove to the shareholders that these acquisitions, such as Pilkington, are right by achieving a huge amount of synergy. We have to show that we are doing well. And we are confident that we can do that. 

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