Volume 51, Issue 1 - January 2016

STANDING STRONG

North American Companies Support Local Growth and Development


by Ellen Rogers

When furniture production moved offshore decades ago, mirror manufacturing went along for the ride. It didn’t come back.

Unlike architectural glass and other glazing products, mirror is a high-volume, commodity product. Companies produce large quantities and they produce it fast: make it, ship it, stock it. That protocol doesn’t work when it comes to the custom world of architectural glazing. Glass manufacturers and fabricators aren’t closing North American plants and then opening new ones in lower-cost countries. But offshore competition is still a challenge when it comes to products such as glass, curtainwall, hardware and even machinery. It’s been a struggle at times, but North American companies continue to be competitive and have not backed down. Quality, service, communication and relationships go a long way. It’s not always easy and they don’t always win, but they don’t give up.

Solid Ground


When it comes to glass production and fabrication in North America, many companies are dedicated to supporting the domestic economy. The parent company of AGC Glass Co. North America may be in Japan, but its North American operations are in Alpharetta, Ga. More than 95 percent of the products sold domestically are manufactured in the U.S.—including its raw materials. Serge Martin, AGC Glass vice president, marketing and strategic planning, says its products are manufactured to meet the specific design requirements for this region from the standpoint of energy codes and aesthetics.

“It is important to manufacture all that we can domestically, which gives us the ability to service the needs of our customers throughout North America with shorter leads times, and just-in-time inventory levels for AGC and for our customers,” says Martin. “And, because we have the ability to source most all of our raw materials within the USA, it makes for more cost-effective production and material management.”  

He continues, “Ordering float glass from long distances does not support just-in-time methodology. Also, by making the glass here, you can be sure you comply with environmental regulations in terms of making the products; other countries may not have the same level of standards or quality. Plus, glass is heavy and shipping around the globe is expensive. Given the nature of the material and because the cost of moving glass is very high, you’re usually more competitive making it locally.” He adds that for many projects glass must be tailored to specific North American sizes, characteristics and performances that respond to the codes.

Kelly Schuller, president of Viracon in Owatonna, Minn., says his company is focused on being a high-quality source for North American architectural glass products. Its supply chain strategy follows that goal.



Governmental Guidance

The Federal Trade Commission’s (FTC) “Made in USA” Act was designed to give the agency “the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.” The act requires that in order for a product to be labeled or advertised as “Made in USA,” it must be “all or virtually all” made in the U.S.
“‘All or virtually all’ means that all significant parts and processing that go into the product must be of U.S. origin,” writes the FTC. “That is, the product should contain no—or negligible— foreign content.”

According to the report, the product’s final assembly or processing also must take place in the U.S. “The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product,” writes the FTC. “In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing.”

The act applies to any U.S. origin claim that appears on products and labeling, advertising and other promotional materials, along with electronic marketing, according to the FTC, noting that claims can also be expressed or implied. This could include, for example, using U.S. symbols, such as the flag or references to location of a company’s headquarters.

Additionally, FTC notes that it is important manufacturers not imply that a whole product line is of U.S. origin if only part of it meets the guidelines.

The FTC also addresses the manufacturing process—and how far back manufacturers should look before making such claims.

“To determine the percentage of U.S. content, manufacturers and marketers should look back far enough in the manufacturing process to be reasonably sure that any significant foreign content has been included in their assessment of foreign costs,” writes the commission.

When it comes to raw materials, the FTC looks at “how much of the product’s cost the raw materials make up and how far removed they are from the finished product.”

FTC also notes that the act also addresses qualified claims (i.e. “a product is of 60 percent U.S. content.”

“A qualified ‘Made in USA’ claim describes the extent, amount or type of a product’s domestic content or processing; it indicates that the product isn’t entirely of domestic origin,” writes FTC.

Companies should stick to qualified “Made in USA” claims “when a product includes U.S. content or processing but doesn’t meet the criteria for making an unqualified Made in USA claim,” according to FTC.

“We don’t have a specific made-in-America goal, but a very high percentage [of our supplied materials] is sourced in the U.S.,” Schuller says. “If there’s a component we feel allows us to be more successful, we will source it from the best vendor domestically or internationally.” As an example, he says they use a spacer product supplied by a partner in Europe.

“Glass, however, is not economical to transport over a long distance, so we do buy that entirely in North America.”

Northern Exposure

While there are no longer any float plants in Canada, fabricators there are still supporting the North American industry. Carey Mobius, president and CEO of Garibaldi Glass, a fabricator based in Burnaby, British Columbia, says most of their supplies come from the U.S.

“The raw product [glass] you can source in Canada is limited. We don’t go offshore, we rarely go to Europe and it’s not effective to go to Mexico. So the U.S. is far and away our source for glass,” says Mobius. “I don’t think the savings [from buying offshore] are what they are perceived. There are limited size capabilities; there are many sources and few good ones that can match the quality of North America, and you never have the consistency of knowing where the glass is really coming from. Lead times, quality, etc. don’t really stack up.”

Mobius points to several concerns with global competition building here.

“Let’s say two years after [completion] there was some damage and then [owners] couldn’t get replacement glass. In terms of support, technical back-up, warranty, etc., is that there [from offshore suppliers] for after the sale? We have to survive in our own backyard. Getting it from North America yields consistency, and you know where the factories are and can see what’s going on. Architectural glass is becoming more technical and complex, and it takes a lot of innovation to stay on top of the requirements,” he adds. “To go offshore, you’re buying a product, not a solution.”

Also in Canada, Architectural Glass North America (AGNORA) is located in Collingwood, Ontario and serves a unique fabricated glass niche: over-sized/specialty glass products. While AGNORA works with many North American suppliers, according to Kevin Nash, who works in sales and marketing, there’s at least one item it has to buy from Europe—big glass. And there are two key considerations when it comes to sourcing glass, he says: money and time.

“If the quality is acceptable [then you could] buy from China … but it takes time, which comes back to customer service,” says Nash. “If you’re looking at all aspects in perfect alignment, then yes, it’s a challenge to compete globally in the oversize market. So we differentiate domestically through superior customer service.”

He continues, “People want things made easier for them, not harder. They want answers, not questions. How quickly you respond [matters]. [Success] is not always measured by what happens when things are right, but more often when things go wrong. When glass arrives and it’s broken, how well do we stand up to that and make it right? We do a lot of storefronts, and retail is a different animal—there’s a ribbon cutting, and that date is not moving.”

Awake at Night

North American companies have had concerns with imported glazing products from countries such as China for a while. There, the product can be made quickly and at lower costs. The quality wasn’t always on par with North America, but that’s improved over the years. Also, given the growing Chinese economy, it’s not as cheap to make something there as it once was. So, how much of a concern is China today?

“Some progress has been made and the players are changing … it’s true their market is growing,” says Martin.

“Their manufacturing costs are creeping up. Combine that with the stronger middle class, and over time we’ll see less competitive pressure. Transportation costs have never been cheap and are still increasing. That does not favor China, either. Yes, the market is still competitive … but I don’t see it as a threat in the long term.”

Alice Dickerson, marketing communications manager with AGC, adds there are also challenges in that the cost of doing business is higher in the U.S. “We also have different levels of manufacturing standards. Our focus is quality,” she says, “and continual innovation of new products. We’re always looking for better, more efficient ways to manufacture our products and service our customers. There may be times, though, we’re competing against China when they don’t have the same quality standards.”

Schuller says his company has seen offshore competition for several decades, and it’s still a concern.

“In recent months there’s been a little extra boost for offshore fabricators in terms of currency exchange rates favorably helping them compete with U.S. dollar pricing,” says Schuller, “but exchange rates are cyclical and therefore it’s not a major factor in the long-run for us.”

Speaking of improving quality in offshore products, Schuller says “I don’t think there has been enough change to result in a significantly different competitive dynamic.”

He adds, “Price is an important factor, but it’s nowhere near the only thing being considered when project executives are awarding [work]. Risk and schedule are right up there on large projects, and going offshore introduces significant complexities. Even a small delay can eat up the expected savings on glass.”

For Mobius, the challenge is two-pronged. “Their quality in some cases is on the rise because of better equipment, but the cost to produce and ship has gone up. The offset is they have built better capabilities and better quality. So it’s a bit of a trade-off.”

But competition has driven his company to become better at manufacturing.

“We do pretty much everything in house to control lead times and speed. In some ways they may still be cheaper, but the bridge has closed dramatically,” says Mobius. “Where they still have a general advantage is repetitive, high-volume product.”

Staying Ahead

So, what’s it take for a company to stay competitive in an increasingly global marketplace? The answers are simple.

“Domestic manufacturers are challenged when faced with competition from offshore manufacturers that can lure buyers with low pricing, but ultimately not offer that buyer products that meet the standards or customer specific requirements that we have in the U.S. The buyer may not realize that until it is too late,” says Martin, who adds that AGC is fully aware and in compliance with the industry standards, energy code and other regulatory requirements in the U.S.  “In addition, we don’t view business as transactional, but rather as an opportunity to create long-term strategic partnerships with our customers.”

From the Top Down

Fire-rated glazing products are code-driven, life-safety materials. SAFTI First produces fire-rated glass and framing that it says is 100-percent made in the U.S. Diana San Diego, vice president of marketing, says the made-in-America mentality is one that comes from the top down.

“Bill O’Keeffe, the owner of the company, believes in manufacturing here in the U.S. He believes in our American resources and ingenuity to compete,” says San Diego. “So when it comes to why we want this, it’s a value near and dear to our owner’s heart.”

Tim Nass, vice president of national sales, adds, “Many people associated with commercial construction view European products as being more innovative or advanced than their domestic counterparts. Bill O’Keeffe has always believed in the American dream and ingenuity. He has worked diligently to create a company that manufactures high-quality, technologically savvy, code-compliant products. Dealing with North American suppliers ensures that you will have an excellent product in a timely manner and at a fair price. It also supports American manufacturing jobs, which are becoming all too rare in this economy.”

Fire-rated glass may be a niche product, but the market is not without competitive challenges.

“Competition has become fierce regardless of where the product originates,” says Nass. “Offshore companies present the same challenges as domestic. Everyone is jockeying for an inside position and looking to leverage their strengths. Many times it is simply the perception that imports are superior to American-made products, which is not the case.” 

Comings and Goings

A Closer Look at U.S. Glass Imports and Exports


The U.S. Department of Commerce’s International Trade Administration released its 2015 Top Markets Report Building Products and Sustainable Construction in July 2015. According to the analysis, “global construction growth and the trend toward more sustainable construction (‘green building’) create strong opportunities for U.S. building product exporters. Across international markets, the recognized impact of the built environment on resource usage, environmental conditions, energy and water consumption and emissions links higher performance in buildings to important national priorities. U.S. manufacturers are well positioned with product offerings that can deliver the energy and water efficiency, indoor air quality, and resource conservation benefits that are key goals of green building.” The charts and graphs in this section offer a look at some of the key markets and predictions for glass.

U.S. Glass Exports

•Currently exporting to 165 markets

•World glass import market (non-U.S.): $11.3 billion

•World import market growth: 3.41% CAGR 2010-2013

•Growth of U.S. exports: 3.75% CAGR 2010-2013


Key Market
Access Challenges


•Tariffs

•Regulations

•Standards and
conformity assessment

•Access to market intelligence,
trade promotion opportunity
information, information on
trade finance


U.S. Building Product Exports to Canada (2013)

•Canada Import
Market Size for Glass:
$411,370,039

•U.S. Share of Import
Market: 88.31%

•U.S. Rank as Source
of Imports: #1



Mexico


Mexico’s import market for glass shrank at nearly a
10 percent CAGR during 2010-2013.

China and India

Imports from China and
India posted the only
notable growth at
47 percent and
505 percent,
respectively.

United States

U.S. imports claim an
81 percent share of the import market, and posted decreases of 7.5 percent over 2010-2013.

U.S. Building Product Exports to China (2013)
China Import Market Size for Glass (2013) U.S. Share of Import Market U.S. Rank as Source of Imports
$2,535,659,928 21.8% #3



2017 Top 20 Export Market Rankings for Glass


(Ranked in order of value of projected annual exports, highest to lowest)

1. Hong Kong
2. Canada
3. Mexico
4. Japan
5. Brazil
6. Colombia
7. Ecuador
8. Germany
9. Turkey
10. Qatar
11. Argentina
12. Singapore
13. South Africa
14. India
15. Poland
16. Switzerland
17. Egypt
18. Latvia
19. Jamaica
20. Kuwait


Heavy Metal

Aluminum Extruders and Manufacturers Weigh in on Going Global


Glass is an important building product, but aluminum materials, such as curtainwall and storefront, also play a big part. While North America has faced its share of import challenges over the past few years, these companies remain focused on producing in and servicing the local industry.

C.R. Laurence – U.S. Aluminum (CRL) in Los Angeles has a 30-plus year history as a made-in-the-USA company. According to Lloyd Talbert, president, there are nine brands in the CRL family, and each has a component manufactured in North America. For example, he says with the company’s U.S. Aluminum brand everything is 100-percent manufactured in the U.S., including components and the vast majority of raw materials.

Keymark Corp., based in Fonda, N.Y., manufactures aluminum extrusions for a variety of fenestration products, including commercial windows, storefront and curtainwall. According to Brent Slaton, national sales coordinator, having a product made in North America is important for a number of reasons.

“We’re supporting the local economy, the U.S. citizens,” he says. “The greatest benefit for customers is flexibility, responsiveness, complete on-time delivery, getting a quick answer—all are extremely critical in today’s business environment.”

According to Steve Schohan, marketing and communications manager, YKK AP America (which has a Japanese parent company), also makes all of its products in the USA at its commercial manufacturing facilities in Dublin, Ga., and Coppell, Texas. It also has a residential facility located in Macon, Ga.
“Local manufacturing is critical to success,” says Schohan. “Our regional approach enables us to adapt business operations—from product development to marketing—to the cultural climate of the countries where it does business. On the local level, YKK AP works closely with communities to make the most of what each has to offer.”

Increasing Awareness

Suppliers say they’ve also seen an increasing interest in products made locally. Schohan says government projects mandate that products are made in the USA and that all of his company’s products meet the provisions of the Buy American Act and the American Recovery & Reinvestment Act. The Buy American Act, he explains, requires the U.S. government to prefer U.S.-made products in its purchases.

“For contracts above $2,500, the Act requires that the end product is manufactured domestically and that U.S. components constitute the majority of end product cost,” he says, adding that the act relies on self-certification and that his company is responsible for ensuring that its products are domestic end products.

The ability to meet customer needs and expectations is also important.

“By understanding the industry and the needs of customers, we believe that trumps price,” says Talbert, explaining they have manufacturing facilities located across the country. This, Talbert says, gives them the ability to offer customized products with short lead times.

Under Pressure

Some companies have also felt pressures from increasing offshore imports. The North American aluminum extrusion industry, for example, was successful in these efforts when the Department of Commerce imposed antidumping and countervailing duties on imports of aluminum extrusions, including complete curtainwall units, from China.

Slaton says the tariffs and import duties have supported the growth of the aluminum industry in North America. But that’s not to say imports are no longer a concern.

“There will always be a concern. This is a global market, and we must remain focused,” he says.

“I think today’s companies are focused on supporting the economy and the crucial aspect of … taking care of their own backyard. Everyone sees and understands the value and knows it’s not all about price. Many have found if they’re sourcing overseas, it wasn’t worth it from the price-quality aspect. I think a lot have returned to the U.S. [suppliers].”

Strategic Thinking

So, what are companies doing to stay competitive? Talbert says CRL’s strategy involves innovation.

“What comes in from overseas isn’t that innovative. So we stay close to the market to understand what they need and anticipate trends so we’re competing on something that’s more than price,” he says. “We’ve avoided the do-it-yourself and retail markets because we want a strong industry for professional contract glaziers. We need a strong vibrant glazing industry to prevail in that battle for the wall. If you’re not providing good service, you’re doing long-term harm to the industry.”


Production with a Purpose


Machinery and Equipment Suppliers Stay Focused on Home


When it comes to machinery, producers in Germany and Italy probably come to mind first. But there are North America-based companies serving the glass and metal industry. One of those companies is Glazier’s Center based in Canisteo, N.Y., which manufactures equipment and machinery for storefront and curtainwall. Bill Cole, president, says everything they do, from software to the machinery, is made in the U.S.

“We used to outsource a little, and the problem that came up was with time zones,” he says of working with suppliers in Europe. Plus, he says there are different operational philosophies in the way European companies operate compared to those in North America.

“In Europe, they’ll hire a CNC person who will learn it, excel at it, and [stay with the company]. In the U.S., we hire someone and they’re often gone in six to 12 months. We have a greater turnover. So we had a problem in that no one could learn fast enough and retain what they learn to make it worth it. So that’s when we got into making the software ourselves.”

As for the machinery, he says they needed something dedicated to the
industry.

“We decided to build a machine that was easy to learn, easy to use, and all it does is curtainwall and storefront,” says Cole. “We wanted a high-quality machine that we could service quickly and would meet the glazing industry needs.”

Casso-Solar Technologies in Nanuet, N.Y., also is a U.S. machinery
manufacturer.

“Everything is sourced and built in the U.S.,” says Doug Canfield, owner. “It has to be, because if we tried to source out of the country, it would take way too long for our customers’ needs. We use components that are readily available so there’s very little proprietary parts, etc. That means customers don’t necessarily have to come back to us for parts; they could buy what they need themselves.”

He continues, “Where we differentiate ourselves is that our lines are custom. There is a lot of batch vacuum equipment that you can buy cheaper in China or Europe. But being U.S.-based benefits customers tremendously … it’s a collaborative effort to produce the equipment we do, and that’s why we’re made in the U.S. It’s our goal to come up with a reliable robust system that’s easy to maintain and will last a long time.”

So, what are the benefits of a U.S.-made machine? That’s an easy answer for Cole: support.

“If there is a problem with a machine, we can have another part there by the next day,” says Cole. “We stock in three locations. Compared to [a European machine] where if you break something you’re probably four to 12 weeks out.”

Over the past few decades, a number of machinery companies have voiced concerns over intellectual property rights. Cole can relate, and explains how a Chinese company reproduced and sold models of its machines in China. “But they couldn’t produce the software. It’s not just the machine these days. The software is so important, probably more so than the machine, and if you don’t have good software, the machine is no good.”
Canfield says they, too, have had concerns over intellectual property. He says there was a case once where they received many repeat orders from a Chinese company that built copies for its own use.

“I didn’t necessarily see any copies on the market, but think they were trying to copy what we’d done,” he says, adding that more competition for them comes from Europe rather than China, which is still somewhat behind.

In order to stay competitive, Canfield says they are committed to customer service and support.

“I think the major thing is our ability to work with customers and give them direction and advice,” he says.

And by having products made here, they can provide that service quickly.

“When they need something done, we’re on the plane the next day. We can do technical support over the phone, but we also have the ability to help them directly,” he says.

Chemetall U.S. is another company with ties to the glass industry. The company produces surface treatment products for a variety of markets, including interleaving powder and coolants for the glass industry.

Bret Penrod, market manager, glass, says the company, which is German and owned by the American chemical company Albermarle, got into the glass industry about 60 years ago as Aachener Chemische Werke (ACW). Three years ago it built a major chemical plant in Michigan to manufacture metal surface treatment products, which is when it decided to start producing chemicals for the glass industry in North America.

He says while there are other companies around the world producing products used for the same glass applications, they aren’t “always as concerned about quality. [Ours may be] a little more expensive, but if you lose glass to scratching, staining, edge burning, poor cut quality and you cannot achieve high output or yields, it will be cost effective in the end. So the extra quality and technology adds a lot of value to the glass manufacturing and fabrication processes.”

He continues, “In the U.S., … there’s a lot of intelligent people out there running glass lines, and they know if there’s poor product quality they won’t get throughput/quality, and that’s not acceptable to them.”


STANDING STRONG

Relationships are also important.

“We’ve been working with some of the same customers for a number of years,” says Dickerson. “When customers can count on you and trust you, that makes a difference. At the end of the day, price is important, but people do business with those they can count on.”

“We strive to provide high service levels and to exceed expectations,” says Schuller. “… that’s the single most important thing we do to make project executives feel good about buying from us. During early stages of project discussion, we share perspective regarding the complexities of offshore sourcing. We may lose a project here and there, but we focus on being a great supplier of fabricated glass over the long term, and that’s where we mainly put our energy.”

When it comes to the benefits that a domestic supplier can bring to a project, Schuller says Viracon emphasizes the simplification that takes places in the supply chain. “We like to encourage project teams to think through what happens when something doesn’t go right—the schedule is adjusted or maybe there’s broken glass that needs to be replaced. Glass typically is on a critical path in the building; the building needs to be enclosed. We ask, what’s the impact of a one-week or one-month delay to the rest of the project team and encourage them to think through that risk.”

Mobius agrees there are many benefits to working with local suppliers, such as speed to market and a consistent product.

“I think the quality has greater consistency in colors, and the products are more trusted. There are stringent guidelines, standards and regulations involved, and the liability remains in North America,” says Mobius. “If you’re buying from overseas, do you have that support after the job is done and sealed?”

“I just see personally, it’s not always price,” says Nash. He says things like how fast you return an email or a phone call, how well you correspond and avoiding surprises—good or bad—are important. “There’s always room in the market for great customer service and good ideas. As an example, about a month ago we found an easier, better, safer way to hang tarps on trucks trailers. It’s not sexy, but it’s a good idea put into practice. See where the bar is and then see how high you can raise it.”

More to Come

No one can say for certain how the global market will change in the coming years. But there has been a shift in where the interest lies.

Mobius says architects are demanding North American. “Previously, glaziers could go offshore when they couldn’t get the price here. But architects and engineers are voicing loudly to remain here. I just saw that on a project where the spec was first written to go offshore, but it was the architect and engineer who came back and said we don’t want to do that. It was a huge win.”

Others agree there’s been a drive to support the North American economy.

“There’s always parts of the country or certain businesses where they just care about price, but more often than not people say ‘I live here … and this is where I am and my business is and I want to support our economy,’ ” says Dickerson.



the author
Ellen Rogers is the editor of USGlass magazine. Follow her on Twitter @USGlass and like USGlass on Facebook to receive updates.




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