Soaring production costs are putting pressure on the glass industry

Despite the strong recovery of the industry, the rise in raw material and energy costs is almost unbearable for those industries that consume more energy, especially when their profit margins are already very tight. Although Europe is not the only region affected, its glass bottle industry has been particularly affected, as confirmed by Premier beauty news in a separate interview with managers of some companies.

The enthusiasm brought by the recovery of beauty product consumption masks the tension in the industry. In recent months, production costs around the world have soared, but they have only decreased slightly in 2020, which is due to the rise in the prices of energy, raw materials and shipping, as well as the difficulty in obtaining some raw materials or expensive raw material prices.

The glass industry with very high energy demand has been seriously hit. SimoneBaratta, director of business perfume and beauty Department of Italy glass manufacturer BormioliLuigi, believes that production costs have increased considerably compared with the beginning of 2021, mainly due to the explosion of natural gas and energy costs. He worries that this growth will continue in 2022. This has never been seen since the oil crisis in October 1974!

“Everything has increased! Of course, energy costs, as well as all the components necessary for production: raw materials, pallets, cardboard, transportation, and so on.”

A sharp rise in output

For the high-quality glass industry, this cost increase occurs against the background of a sharp increase in output. “Novel coronavirus pneumonia,” said ThomasRiou, chief executive of Verescence, “we see that all kinds of economic activities are increasing and will return to the level before the outbreak of new crown pneumonia. However, we think we should be cautious, the market has been depressed for two years, but at this stage, it has not yet been stabilized.”

In response to the increase in demand, pochet group restarted the stoves closed during the pandemic and hired and trained some personnel. “We are not sure that this high level of demand will be maintained in the long term,” said é ric Lafargue, sales director of pochetdu courval group

Therefore, the question is to know which part of these costs will be absorbed by the profit margins of different participants in the industry, and whether some of them will be passed on to the sales price. Glass manufacturers interviewed by premium beauty news agreed that the increase in production was not enough to make up for the rise in production costs, and the industry was at risk. Therefore, most of them confirmed that they had begun negotiations with customers to adjust the sales price of their products.

Profit margins are being swallowed up

“Today, our profits have been seriously eroded. Glass manufacturers lost a lot of money during the crisis. We think we will be able to recover due to the recovery of sales during the recovery. We do see a recovery, but not profitability,” he stressed.

Rudolf Wurm, sales director of Heinz glas, a German glass manufacturer, said that the industry had now entered a “complex situation in which our profit margin had been seriously reduced”.