NSG Group/media/NSG/Site Content... · America, China, South East Asia and India. • The NSG Group is one of only four companies in the flat glass industry that can claim to be true

NSG Groupand the Flat Glass

Industry 2011

Legal NoticeThis document is intended as a briefing on the glass industry and theposition within it of the NSG Group’s businesses. The content of thepublication is for general information only, and may contain non-audited figures. Every care has been taken in the preparation ofthis document, but Nippon Sheet Glass Co Ltd., accepts no liability forany inaccuracies or omissions in it. Nippon Sheet Glass Co Ltd. makesno representations or warranties about the information providedwithin the document and any decisions based on informationcontained in it are the sole responsibility of the user. No informationcontained in this document constitutes or shall be deemed to constitute an invitation to invest or otherwise deal in shares inNippon Sheet Glass Co Ltd.

© 2011 Nippon Sheet Glass Co., Ltd.

NSG Group and the Flat Glass Industry 2011 2

NSG Group and the Flat Glass Industry 2011

Manufacturing

NSG

Group O

verviewG

lass industry growth

3

Global flat glass industry and market structure

08 Total world market for flat glass

08 Routes to market

09 Industry economics

10 Global players and market shares

11 World float/sheet glass markets

16 Automotive markets

Glass – a growth industry

23 Global demand for flat glass

28 Growth in Building Products

30 Growth in Automotive

NSG Group – a glass industry leader

37 Corporate overview

38 Business profile

42 Building Products overview

49 Automotive overview

55 Sustainability

04 Introductory note and definitions

05 Executive summary

58 Glass manufacture

63 NSG Group and associates' float lines

Contents

NSG Group and the Flat Glass Industry 2011

Industry & M

arket structureIntroduction

The objective of this publication is to providebackground information on the world’s flat glassindustry and, as an industry leader, the positionwithin it of the NSG Group.

In June 2006, Nippon Sheet Glass Co., Ltd acquiredPilkington plc through NSG UK Enterprises Limited; a wholly-owned subsidiary. All of the operations ofthe former Pilkington plc are now fully integratedinto the NSG Group.

Where the operations of the whole Group arereferred to collectively, the terms ‘NSG Group’ or ‘the Group’ are used. The Group’s flat glassbusinesses comprise Building Products businesses in Europe, Japan, North America, South America,China and South East Asia, which are managed on aregional basis, and the Group’s Automotive business,which is managed globally.

It should be borne in mind that the flat glassbusinesses of the NSG Group account for just under90 percent of the NSG Group’s business by sales andthat the Group also has a third business line,Specialty Glass, accounting for around 11 percent ofGroup sales, which is not covered by this publication.

Consequently, any figures referring to ‘Pilkington’ or‘NSG Group flat glass’ sales and operating income arelower than those for the NSG Group as a whole. Thestrategic direction of the NSG Group itself is coveredin Part Three of this publication.

The operating currency of the NSG Group is theJapanese yen. However, for ease of reference, somefigures are expressed in euro and any figures relatingto financial performance are therefore approximate.This publication should be read in conjunction withthe NSG Group Annual Report 2011, covering thefiscal year ended 31 March 2011.

This document is also available to download in pdfformat from the NSG Group website at www.nsg.com.

The Pilkington brand mark

An important element of the acquisition of Pilkington plc by NSG in 2006 was the retention ofthe Pilkington brand in the NSG Group’s BuildingProducts and Automotive businesses.

The Pilkington name promotes many of the Group’sworld-leading products and is used in some of thenames of Group subsidiary companies.

Introductory Note and Definitions


Introduction


The flat glass industry and global marketstructure • The global market for flat glass in 2010 was

approximately 56 million metric tonnes,representing a value at the primary manufacturelevel of around euro 23 billion and euro 53 billion atthe level of secondary processing.

• This market has historically been growing in volumeterms at 4 percent to 5 percent a year.

• Of total global market demand in 2010, it isestimated that 33 million tonnes was for highquality float glass, 1 million tonnes for sheet glassand 2 million tonnes for rolled glass. The remaining20 million tonnes reflects demand for lower qualityfloat, produced mainly in China.

• In 2010, 40 percent of float glass went into newbuildings and the same proportion intorefurbishment for buildings.

• Approximately 3.7 million tonnes of the flat glassproduced globally for calendar year 2010 wasautomotive glass.

• Globally, around 80 percent of Automotive glass goesinto OE supplied to vehicle manufacturers for newvehicles and 20 percent in to the AGR aftermarket.

• Approximately 1.5 million tonnes of flat glass incalendar year 2010 was consumed in TechnicalApplications. The most notable of these is solar energy.

• Considering high quality float alone, the industry is relatively consolidated, with four companiesaccounting for a majority of global capacity.

• In terms of the capacity, the world’s top fourcompanies are led by the AGC and Saint-Gobain. NSG comes in at number three, followed by Guardian Industries.

• NSG Group’s share of global, high quality floatcapacity is approximately 13 percent.

• Three glass groups, NSG Group, AGC and Saint-Gobain together with its strategic partnerCentral Glass, supplied around two-thirds of theglass used in the automotive industry duringcalendar year 2010, according to our estimates.

• Following the acquisition of Pilkington by NSG, justless than 90 percent of the combined entity isconcerned with flat glass, significantly higher than the nearest competitor, AGC at less than 50 percent.

• Europe, China and North America, together accountfor over 75 percent of high quality float demand.

• Automotive light vehicle production in 2010 was72 million, of which 35 percent was in the two main

markets of Western Europe and North America. Build in Japan contributed a further 12 percent.

• These three regions account for 47 percent of globallight vehicle production and are also the domiciles ofmost of the world’s vehicle manufacturers and arethe centers for new vehicle development.

Glass – a growth industry• Over the long term, demand for float glass is

growing at almost 5 percent per annum. Thisgrowth is fuelled by the demand for building glassand automotive glass, which in turn is driven byeconomic growth.

• Over the last 20 years, float demand growth hasoutpaced real GDP growth. Over the past 10 years,float demand has exceeded GDP growth by aroundthree percentage points.

• The world flat glass market is expected to recover toalmost 60 million tonnes in 2011, including 2 milliontonnes of rolled glass, from the recession-hit 2009level of 52 million tonnes.

• The pace of capacity addition outside China hasmoderated recently, with eleven new lines onstream in 2010 but only three expected in 2011.

• Architects are increasingly seeking to bring naturalenvironmental factors into the interior of buildingsby maximizing natural daylight. This has beenachieved through the use of larger glazed areas infaçades and roofs, and through entirely glazedfaçades, where the glass is a structural componentof the building.

Executive summary

6 NSG Group and the Flat Glass Industry 2011

• Over the past 25 years, in developed regions such asEurope, Japan and North America, the growing needfor energy efficiency in buildings has transformedthe markets for energy-saving glass and this is nowbeing echoed in developing regions.

• In Automotive, the basic driver of demand forsuppliers to the OE industry is vehicle build.Historically the global industry has exhibited steadygrowth; an average of around 2.5 percent per annumover the last 13 years.

• However, the downturn which hit the industry in2008 and 2009 on the back of the global economiccrisis was unprecedented both in terms of its spreadand its scale. Its severity reduced the historicalgrowth rate closer to 1%. The recovery nowunderway together with natural growth indeveloping markets is expected to restore the long-term average industry growth to 3% by 2015.

NSG Group – a glass industry leader • The NSG Group, which operates under the

Pilkington brand in Building Products andAutomotive, is one of the world’s largestmanufacturers of glass and glazing products for the building and automotive markets.

• The Group has manufacturing operations in 29 countries on four continents and sales in around 130 countries.

• In the fiscal year ended 31 March 2011, the NSG Group reported sales of JPY 577,212 million(approximately euro 5 billion).

• Of the Group’s consolidated sales, 41 percent were generated in Europe, 29 percent in Japan, 14 percent in North America and 16 percent in therest of the world.

• Building Products and Automotive now account foraround 90 percent of NSG Group sales.

Geographic positioning; Building Productsand Automotive• Building Products has manufacturing operations in

21 countries. Its largest operation is in Europe, withmajor interests in Japan, North and South America,China and South East Asia.

• Pilkington Automotive is one of the world’s largestsuppliers of automotive glazing products. Itoperates in three main sectors; supplying originalequipment, aftermarket replacement glass andproducts for specialized transport.

• Its footprint, including fabrication plants, OEsatellite facilities and its AGR distribution networkencompasses Europe, Japan, North and SouthAmerica, China, South East Asia and India.

• The NSG Group is one of only four companies in theflat glass industry that can claim to be true globalplayers, the other three being AGC, Saint-Gobainand Guardian.

• The integration of the Pilkington and NSG businessplatforms has historically helped mitigate theeffects of market cycles in the area of architecturalglass and has given the Group a superior presence indeveloping markets such as South America, China,South East Asia and Russia.

• The NSG Group’s manufacturing base includes floatglass lines operating in Europe, Japan, the Americas,Southeast Asia and China, with Automotiveoperations covering all major markets worldwide.

• The Group owns, or has interests in, 49 float lines,giving full coverage of the global market andproviding the Group with advantages in terms ofstrategy, efficiency and effectiveness.


Introduction

Technical leadership• The Pilkington brand is closely identified with

technical excellence, having been associated, overthe past fifty years, with most major advances inglass technology, including the invention of theFloat Process.

• The NSG Group is a global leader in manufacturingexcellence and innovation, notably in the areas ofglass melting, glass forming by the float process,online coating and complex shaping technology,especially for automotive windshields and backlights.

Strategic Direction• In January 2009, the Company announced

restructuring initiatives designed to address theeconomic downturn and to improve profitabilitygoing forward. These built on action already taken inresponse to sudden and rapid changes in the globaleconomic environment.

• Announced in November 2010, the Group’s StrategicManagement Plan covers the three-year periodending 31 March, 2014. The Plan focuses on twomain areas for growth:

• Expansion into emerging economies. The Group’smain targets are South America, Eastern Europe and China.

• Meeting increasing global demand forenvironmentally-friendly glass products, which helpaddress climate change issues. These include low-eenergy-saving and solar control glass and productsfor the growing solar energy sector.

Sustainability• Glass has a unique contribution to make in promoting

sustainability, reducing greenhouse gas emissionsand mitigating the effects of climate change.

• The ‘energy balance’ between manufacture of high-performance glazing products and their usemeans that the energy used and CO2 emitted inmanufacture are quickly paid back through thelifetime of the products. The energy involved inglass-making should therefore be seen as aninvestment in future energy saving.

• Glass has a key role in attempts to find cheaper andmore efficient ways of generating power from thesun. The Group’s products support the threeleading solar energy technologies; thin film andcrystalline solar modules and concentrated solarpower applications.

• The NSG Group is fully committed to sustainability.Its policies underline the unique contribution itsproducts can make to addressing climate change and the challenges the Group faces in improving itsown energy usage and resource management. TheGroup’s product range and R&D efforts are geared to addressing the challenges of a low-carbon world.


Automotive

O.E.Semi-Knished

Processing

A.G.R.

IGU Mfrs.

VehicleMfrs. Frame

Makers

Consumers

Retailers

Wholesalers

FurnitureMakers

Dealers RetailersGlaziers/Installers

Special Apps. Solar

PV ModuleManufacturers

Building Products

Float Manufacturer

1.1. Total world market for flat glassThe global market for flat glassA in 2010 wasapproximately 56 million metric tonnes (~5.5 billon sq m)B. At current price levels this represents a valueat the level of primary manufacture of around euro 23billion. This market has been growing in volume termsat 4 percent to 5 percent a year and recovered well in2010, but short-term uncertainties remain in the lightof global economic conditions.

Of total global market demand in 2010, it is estimatedthat 33 million tonnes was for high quality float glass.Approximately 1 million tonnes constituted demand forsheet glass and 2 million tonnes was for rolled glass.The remaining 20 million tonnes constituted demandfor lower quality float, produced mainly in China.

Generally, flat glass demand growth is a function ofeconomic activity levels. Long-term growth potentialfor flat glass can be estimated with reference to growthof gross domestic product, or GDP. However, demand

for glass may deviate from GDP for a variety of reasons,for example due to government programs thatsubsidize certain glass products.

Following manufacture, a portion of the high qualityfloat and rolled glass produced globally is furtherprocessed by laminating, toughening, coating andsilvering, for use typically in insulating glass units orautomotive glazing. When these processed productsare also considered, the global market for flat glass hada value of approximately euro 53 billion for 2010.

The global flat glass market is worth aroundeuro 23bn at the primary level and euro 53bnat the level of secondary processing.

A – Glass manufactured in flat sheets (float, sheet and rolled),which may be further processed. Excludes bottles, containers,fiberglass, rods, and tubes

B – On average 1 tonne is approximately 125 sq m.

1.2. Routes to marketThe chart below illustrates the main routes to marketin the glass industry. In terms of volume of glassconsumed, Building Products is by far the largestsector (~51 million tonnes) with ~3.7 million tonnesgoing to Automotive. The Technical Applicationssegment is very small in volume terms, but significantgrowth is being driven by the use of glass in SolarEnergy generation.

In Building Products, glass can undergo two or morelevels of processing before being installed in windowsor used as a component in furniture or white goods.Within Automotive, glass is used in originalequipment for vehicle manufacturers and in themanufacture of replacement parts for theaftermarket.

1. Global flat glass industry and market structure

Routes to market


Industry & M

arket structure

1.3. Industry economicsA float plant is highly capital-intensive, typicallycosting around euro 70 - 200 million, according tosize, location, quality and product complexity. Onceoperational, it is designed to operate continuously,365 days per year, throughout its campaign life ofbetween 10 and 15 years. Float lines are normallycapable of several campaigns following majorrebuild/upgrade programs.

The economics of the continuous-flow float operationrequire a high capacity utilization rate before a plantbecomes profitable. Once that rate (around the 75 percent range) is passed, the inherent operationalleverage of the asset base increases profitabilityrapidly. Product diversity, in terms of both glasscomposition and thickness, can reduce nominal

output, as transition product is lost when floatproduction changes from one specification to thenext. In the most complex float composition changes,this can amount to as much as seven days’ lostproduction. However, such changeover losses can beminimized through coordinated productionscheduling of regional float assets.

The float process is not labor-intensive. Energy andraw material costs are each as significant as factorylabor in the overall delivered cost. Glass is relativelyheavy and comparatively cheap, making distributioncosts significant; they typically represent around 15 percent of total costs.

In most cases, transport costs make it uneconomic forfloat glass to travel long distances by land. Typically,200 km would be seen as the norm, and 600 km as

SectorNew Build Refurbishment Interior TOTAL

Volume1,900 million m2

1,900 million m2

900 million m2

4,700 million m2

Global Building Products Flat Glass Market by sector

40%40%20%100%

Global Technical Applications Flat Glass Market by sectorSectorSolar Energy Other TOTALEstimates CY 2010

Volume80 million m2

350 million m2

425 million m2

10%90%100%

Global Automotive Glass Products Market by SectorSectorOriginal Equipment (OE) Aftermarket (AGR) Total

Volume315 million m2

80 million m2

395 million m2

80%20%100%

In terms of volume of glass consumed, buildingproducts is by far the largest sector of the globalmarket for flat glass, accounting for approximately 51 million tonnes in calendar year 2010. Glass is anintegral building material for most constructionprojects. Also, we estimate refurbishment forbuildings accounted for approximately 40 percent offlat glass consumption worldwide for calendar year2010. Building products include float and rolled glassand other processed building glass products(including toughened, coated and silvered glass) forexterior and interior applications.

Approximately 3.7 million tonnes of the flat glassproduced globally for calendar year 2010 wasautomotive glass, another key sector of the glassindustry. Automotive glass products are generallycategorized as either OE supplied to vehiclemanufacturers for new vehicles or as AGR products,which are supplied to the aftermarket for retrofitpurposes, usually following damage. Globally, OEglass demand is estimated to be around four timesthat of the replacement market, though theproportion varies from region to region.

Most glass is used in building, with a furthersignificant portion used in automotiveapplications and a small but growing amountin other specialist areas.

Within the OE glazing market, by far the largestsegment is light vehicles, normally defined as thosevehicles up to three and a half tons in weight. Lightvehicles include all cars, light trucks and the variouscross-over vehicle styles such as sport utility vehicles,and accounted for approximately 96 percent of globalautomobile production in calendar year 2010.

Approximately 1.5 million tonnes of flat glass incalendar year 2010 was consumed in technicalapplications. The most notable of these is solarenergy. There are three main types of solar energygeneration: crystalline silicon, thin film and solarconcentrators. Each of these has demonstratedstrong growth in the past several years, and althoughthe global recession has reduced growth rates in thelast year, the market is expected to exhibit steadygrowth in the short term. In the medium-to-long term,growth rates may increase again, as the cost of solarenergy generation begins to approach the lower costsof conventional energy.


the economic limit, for most products, although thisvaries between markets. It is possible for float glass tobe economically transported longer distances by seaprovided additional road transportation is notrequired at both ends. This tends to favor float lineswith local port access, unless a local market isavailable for the line’s output.

A float plant is designed to operatecontinuously, 365 days per year, throughoutits campaign life, which is typically between10 and 15 years.

Investment costs in Automotive, though somewhatlower than in Float, are nevertheless significant. By way of example, investment in a typical Europeanautomotive glazing plant with capacity to fully glazeone million cars per year could cost between euro 40 million and euro 60 million, depending uponthe technology employed, the degree of automationand its location. Annual revenue from such aninvestment would be approximately euro 50 million.

Typically, automotive glass plants are at their mostefficient with long production runs. However, bespokeglazings for each aperture of every model tend to

militate against this, particularly where model variantsare relatively low-volume in automotive industryterms. Where production runs are shorter, requiringfrequent tooling changes, different automotiveshaping technologies will be employed. Therefore, anautomotive glass manufacturer requires anappropriate demand and asset mix for optimaloperation. As with float, the scale of the majorautomotive glass processors requires them to leveragetheir regional facilities in this way.

Overall, automotive glazing production tends to bemore labor intensive than float manufacturing, andgrowth in value-added activities is increasing thisrequirement.

Automotive glass can and does travel significantdistances and, while vehicle manufacturers (VMs) areincreasingly seeking local service from their suppliers,in the case of glazings this usually takes the form of asmall satellite operation rather than a majorprocessing plant.

Investment in a European automotive glazingplant with capacity to fully glaze one millioncars per year could be expected to costbetween euro 42 million and euro 63 million.

1.4. Global players and market sharesConsidering high quality float alone, the industry isrelatively consolidated, with four companies accounting for a majority of global capacity. The NSGGroup’s share accounts for approximately 13 percentoverall. In addition, there are three companies whichtogether supplied around three-quarters of the glassused in the automotive industry during calendar year2010, according to our estimates.

Of the four companies manufacturing most of the world’s glass, NSG Group and AGC are based in Japan, Saint-Gobain is based in France and Guardian IndustriesCorp, or Guardian, is based in the United States.

World high quality float capacities 2010

The NSG Group has >13 percent of global high-quality glass capacity.

Capacity share by company

Portfolio comparison of the major playersIn terms of the capacity, the world’s top four companiesare led by the AGC and Saint-Gobain. NSG comes in atnumber three, followed by Guardian Industries.

The NSG Group is the most focused glasscompany, combined with wide geographicreach.

0

2

4

6

8

10

12

14

Mn

Tonn

es

AGC

Saint-Gobain

NSG

Guardian

Taiwan Glass

Sisecam

China SouthernPPG

Others

Company Countrya Percentage of World Capacity

AGC Japan 15Saint-Gobain France 14NSG Group Japan 13b

Guardian United States 12Others 46

a.The country in which the parent company is domiciled.b. Including affiliates.


Industry & M

arket structure

South America

4%

FormerSoviet Union

5%Japan

5%Rest of

the World5%

South East Asia

6%

North America

7%

Europe17%

China51%

The NSG Group and AGC have the greatestgeographic reach of these flat glass companiesfollowed by Saint-Gobain. Guardian’s global coveragein float glass is high, but its limited automotivefootprint leaves it in fourth place overall, followed byTaiwan Glass and Sisecam.

Following the acquisition of Pilkington by NSG, justless than 90 percent of the combined entity isconcerned with Flat Glass, significantly higher thanthe nearest rival, AGC at less than 50 percent. Saint-Gobain’s, flat glass focus is the lowest of all five majors, at about 12 percent.

In the following analyses the world is segmented intoeight regions as follows:

In this analysis rolled glass is excluded and, unlessotherwise stated, market figures are calendar year2010, based on company estimates.

General overviewThe global market for float/sheet glass (excludingrolled) in 2010 was approximately 54 million tonnes.This is dominated by Europe, China and North America,which together account for over 75 percent ofdemand.

The significance of China as a market for glass hasbeen increasing rapidly since the early 1990s as thecountry has become more open to foreign investmentand the economy has expanded. In the early 1990s

China accounted for about one fifth of world glassdemand, but now accounts for just over 50 percent.

Regional float & sheet demand 2011

Europe, China and North America togetheraccount for over 70 percent of globaldemand for glass.

Europe • JapanSouth East Asia • North America

South America • ChinaRussia/Former Soviet Union • Rest of the world

EuropeIn this definition, Europe includes Turkey, but notRussia, Ukraine and Belarus.

Europe, with a market size of nearly 9 million tonnesin 2010, is supplied by eight main manufacturers offloat glass: Saint-Gobain, NSG Group, AGC, Guardian,Sisecam, Euroglas, Sangalli and Interpane. Europe is amature market with the highest proportion, amongthe eight regions, of value-added products, such ascoated and laminated glass, which are largelyproduced by float glass manufacturers. Per capitaglass consumption was approximately 14 kg in 2010.

Downstream processing, into insulation glazing unitsfor example, is generally done by smaller independentplayers. Saint-Gobain, NSG Group and AGC participateat this level of the market, but with lower marketpresence than in primary manufacturing.

European 2010 float/sheet capacity by company

Total installed capacity was approximately 12.3 million tonnes in 2010, of which only about50,000 tonnes was sheet glass.

Saint-Gobain25%

AGC19%

NSG17%

Sisecam13%

Guardian12%

Others14%

1.5. World float/sheet glass markets


NSG (4)

AGC (3)

Central (3)

JapanThere are three major float glass manufacturersserving Japan: NSG Group, AGC and Central Glass. The overall market size for float glass was 1 milliontonnes, and per capita glass consumption was around8kg, in each case for 2010.

Japanese 2010 float capacity by company

Total installed float capacity was over 1.2 milliontonnes in 2010.

Japanese float locations

Three float glass manufacturers in Japan, withan overall float market size of one milliontonnes.

AGC40%

Central28%

NSG28%

NSG (4)

AGC (3)

Central (3)

Europe is the most mature glass market andhas the highest proportion of value-addedproducts.

Europe float lines

As of August 2011, new float investments by Sisecamin Bulgaria and Sangalli in Italy had come on stream,adding to the region’s capacity.

Government subsidies play an important role inencouraging solar generation, especially in Europe,with feed-in tariffs in countries such as Germany,Spain, Italy and Greece. Public spending restraintshave recently put these incentives under pressure.

NSG (11)Guardian (8)

Okan-Cam (1)

Saint-Gobain (17)AGC (13)Sisecam (8)Sangalli (2)NSG/Saint-Gobain (1)Euroglas (4)AGC/Scheuten (1)

Interpane (1)Interpane/Scheuten (1)GES (1)


Industry & M

arket structure

AGC39%

Multiglass16%

Other16%

Guardian11%

NSG18%

ASEANThe ASEAN market described below refers to Brunei,Indonesia, Cambodia, Laos, Myanmar, Malaysia,Philippines, Singapore, Thailand and Vietnam.

The ASEAN market size was just over 2.3 milliontonnes in 2010. Over 20 float lines were operating inthe region, which were owned primarily by four mainglass manufacturers and several local concerns. Percapita consumption during 2010 was around 4 kg.

ASEAN 2010 float capacity by company

Total installed flat glass capacity was over 2.5 milliontonnes in 2010, of which approximately 30,000tonnes was sheet glass.

21 float lines are installed in the ASEAN region.

ASEAN float lines

ass Works (2)

PPG (7)Guardian (8)NSG (6)Cardinal (5)AGC (4)ZeledynePittsburgh Glass Works (2)

(1)

At a primary level, the flat glass industry inUS/Canada has seven players.

US/Canada float lines

US/CanadaUS/Canada is a mature glass market withannual demand of around three million tonnes,equating to consumption of around 8.5 kg percapita in calendar year 2010.

The industry at the primary level has sevensignificant players. Pittsburgh Glass Works isthe latest to join the market after it acquiredtwo of PPG’s float lines.

US/Canada 2010 float capacity by company

Total installed float capacity wasapproximately 4.8 million tonnes of highquality float glass in 2010.

AGC12%

PPG23%

Cardinal15%

Other7%

Guardian27%

NSG16%

NSG (4)

AGC (8)

Mulia (3)

Guardian (2)

Viglacera (1)

Others (3)


ChinaChina is the largest consumer of glass in the world,accounting for 51 percent of global demand in 2010. China is also the largest producer of glass and glassproducts, producing over 50 percent of the globaloutput of flat glass in 2010. It has the greatest numberof glass producing enterprises, and has the largestnumber of float glass production lines in the world.As of 2010, approximately 220 float lines werebelieved to be installed, although only approximately50 of these float lines are equipped to producewestern quality float. Nevertheless, the quality and output of Chinesefloat glass is increasing. In terms of consumptionand output, the market has grown at more than 10 percent per annum during the period from2000 to 2010. Global economic conditions slowedboth demand and capacity growth in 2008 and2009 but the growth has recovered well, withcapacity increasing nearly 10 percent and demand 11 percent in 2010.Most Chinese manufacturers are small andmedium-sized enterprises that have begunoperations in recent years, which may presentchallenges for them to realize economies of scale.To this point, many of the domestic flat glassproducts are commodities, with price being themost critical consumer selection factor.

Further processing of flat glass, such as laminatingand coating, is still at low levels compared to Europeand North America. The quality of commercialdevelopments has been improving, however, and inresponse to the need to cut carbon emissions,building regulations are expected to rapidly increasethe use of value added solar control and thermalinsulation glass in many parts of the country.

China 2010 float glass capacity by company

Saint-Gobain23%

Guardian35%

Other3%

NSG39%

China SouthernGlass Holding

Co., Ltd.24%

Taiwan GlassIndustry Corporation

24%

Fu YaoGroup

6%Zhejiang Glass

Co., Ltd5%

SYP4%

AVIC Sanxin4%

AGC Flat Glass(Dalian) Co., Ltd.

4%

Saint-GobainHanglass Nanjing

Co., Ltd.6%

JSYP2%

China Yaohua Glass Group Corporation

2%

Xinyi Holdings Limited

24%

China Glass Holdings

4%

South AmericaSouth America had a market size approaching 2.4 million tonnes in calendar year 2010, and anannual per capita glass consumption of around 6 kg.

There are three manufacturers of high quality floatglass: NSG Group, Saint-Gobain and Guardian.

Six of the eight float lines in this region are jointventure operations between NSG Group and Saint-Gobain, of which four are managed by NSG Group.

South American float/sheet glass capacity by company

Total capacity was over 1.5 million tonnes for calendar year2010, of which less than 40,000 tonnes was sheet glass.

South American float lines

In South America, there arethree manufacturers of highquality float glass: the NSG Group, Saint-Gobain and Guardian.

Six lines are joint ventures between NSG and Saint-Gobain.

The above key indicates thecompany with operational control.

NSG (4)

Saint-Gobain (2)

Guardian (3)


Industry & M

arket structure

Fu Yao (3)Taiwan Glass (11)

China Southern (8)

Xinyi (12)

SYP (2)

AGC (2)

Saint-Gobain/Hanglas (3)

NSG/SYP (1)

China Glass Holdings (2)

AVIC Sanxin (2)

Qinhuangdao (1)

Zhejiang Glass (2)

Total capacity, including lower quality float and sheetglass, was around 33 million tonnes in 2010, of whicharound 10 percent was sheet glass.

Chinese float lines of western design

Former Soviet Union (FSU)The Former Soviet Union (FSU) market described belowrefers to Russia, Ukraine, Belarus plus the former sovietrepublics of Central Asia and the Caucasus.

There were 22 flat glass manufacturing operations inthe FSU as of 2010, 16 float lines and six still usingsheet technology. Most of these plants, including all ofthe sheet glass operations, produce glass which isgenerally of a lower quality than the modern float glassproduction found in Western Europe.

The demand for both high quality float glass and value-added glass products, such as products with energy-saving features, continues to grow. The total marketsize in 2010 was approximately 2.6 million tonnes.

This demand has been mainly fueled by new buildactivity and residential refurbishment work. Thegrowing quality expectation in the Russian economy,coupled with recent construction activity, providesconsiderable opportunity for float glass manufacturers,and competition in this market is expected to increase.However, current market conditions may affectdemands for new or existing construction in Russia. A reduction in such demand could reduce demand forbuilding glass products from previous levels.

Former Soviet Union 2010 float/sheet glasscapacity by company

Total installed flat glass capacity in the FSU was 2.5 million tonnes in 2010, of which just over 144,000 tonnes was sheet glass.

There are currently 22 flat glass manufacturingoperations in the FSU, 16 float lines and 6 stillusing sheet technology.

Around 220 float lines are installed in China,but only around 50 of these produce high quality float.

AGC24%

Other60%

Guardian8% NSG

8%

China accounts for more than 50 percent ofglobal flat glass production.


1.6 AutomotiveMarket overviewThere are two routes to market for automotive glass:

a) Original Equipment (OE) supplied to VehicleManufacturers (VMs) for new vehicles.

b) Automotive Glass Replacement (AGR) product,supplied to the aftermarket for retrofit purposes,usually following damage.

Globally, OE glass demand is estimated to be aroundfour times that of AGR, though the proportion willvary from region to region.

Within the OE glazing market, by far the largestsegment is light vehicles, generally defined as thosevehicles up to three and a half tonnes in weight. Lightvehicles (LV), which include all cars, light trucks andthe various cross-over vehicle styles such as sportsutility vehicles (SUVs) and people carriers, currentlyaccount for around 95 percent of global build.

It is the light vehicle market that is evaluated in thesubsequent OE analyses.

In addition to light vehicles there are several nichevehicle segments; medium and heavy trucks, bus andcoaches, and off-road vehicles such as tractors,diggers etc., each with distinctive glazingrequirements.

Effectively three global automotive glassmanufacturers, together with a number of smallerthough in some cases regionally significant players,serve the world’s OE and replacement markets.

The largest of the three automotive glass groups isPilkington Automotive closely followed by AGC. Saint-Gobain is the third global player.

Two routes to market for automotive glass;Original Equipment (OE) and Automotive GlassReplacement (AGR).

UzbekistanKyrgyzstan

NSG (1)

AGC (4)

Guardian (1)

Salavat (2)

Gomel (2)

Proletarii (2)

Others (4)

Long-term demand for both high quality floatglass and value-added glass productscontinues to grow.

Former Soviet Union float lines

Rest of the worldThe Rest of the World is defined to include West Asia,Africa and Oceania.

This glass market is generally much less mature, with annual per capita consumption at approximately1.5 kg in 2010.

Recent new float investments have been announcedby Al-Obaikan in Saudi Arabia (started in Feb 2011)and MFG in Algeria due to start in 2012.

Furthermore, there is a greater proportion of sheetand lower quality float capacity, which is expected tobe gradually phased out and replaced by high qualityfloat over the longer term.

In many parts of the world, glass markets arestill maturing and adopting value-addedproducts.


Industry & M

arket structure

OE light vehicle marketLight vehicle production in 2010 was 72 million, ofwhich 35 percent was in the two main markets ofWestern Europe and North America. Build in Japancontributed a further 12 percent.

Not only do these three regions account for 47 percentof global LV production, but they are also the domicilesof most of the world’s VMs and as such are the centersfor new vehicle development.

Glazing continues to play an important part in vehicledesign, providing a combination of aesthetic,functional and structural properties. The VMs areincreasingly looking to their glazing suppliers to play akey role in the vehicle development process. Fewautomotive glass manufacturers have the combinationof technical capability and the appropriate geographicpresence to play this role to the full.

Western Europe and NAFTA produced 35percent of the world’s light vehicles in 2010.

Regional light vehicle build

Reflecting the importance of both technical capabilityand geographic presence in serving the light vehiclemarket, around 65% of global demand is supplied by the three global automotive glass groups, the NSG Group, AGC and Saint-Gobain with its strategicpartner Central.

Around 65 percent of global demand is supplied by the three global automotiveglazing groups.

Other regionally significant suppliers in 2010 were:Fuyao, the largest Chinese supplier and now growingoutside its home market; PGW (formerly PPG) withoperations primarily in North America; VVP, theglazing division of Mexican company Vitro; privatelyheld Guardian Industries with operations in the USand Europe, and Zeledyne, the North America-basedformer Ford Glass/Visteon business.

In addition to the major manufacturers identified,there is also a fairly short industry tail comprisingsmaller automotive glass manufacturers. Of thesesmaller players a few independent producers aremore focused on specialist/niche OE supply. Others,often affiliated with flat glass manufacturers indeveloping markets, are more limited to local OEsupply. There are is also a handful of small automotiveglass processors primarily serving the aftermarket.

The last few years have seen a reversal in the trend tocustomer consolidation, which by 2004 had the topsix VMs and their affiliates comprise 80 percent of the market.

Subsequent restructuring at GM and DaimlerChryslerinvolved divesting their respective stakes in Fiat,Suzuki, Subaru, Isuzu, Mitsubishi and Hyundai. Thencame Daimler’s sale of its stake in Chrysler and Ford’sdivestment of the Land Rover and Jaguar marques tothe Tata Group. The most recent changes in the wakeof the global recession include Fiat’s purchase ofChrysler, Ford’s sale of Volvo Cars to Chinese VM Geelyand the significant downsizing of its stake in Mazda,and GM’s divestment of Saab to Spyker.

In 2010, the six largest VMs with their affiliatesaccounted for 57 percent of global production. Theprincipal brand memberships of the major VMgroupings are listed overleaf.

In 2010, the six largest VMs, with theiraffiliates, accounted for 57 percent of global production.

NAFTA17%

South America

6%

Japan12%

China20%

Rest of Asia16%

Rest of World

3%

Western Europe18%

Eastern Europe8%


Europe Even with the market turmoil of the past three years,the European OE market remains the largest (26 percent of global production), and its customerbase is the most diverse of any region, with all of theworld’s major VMs having a production facility there.

In 2010, Western Europe accounted for almost 70 percent of the region’s total production, thoughEastern European vehicle build, which includes themajor vehicle producing countries of Russia, Poland,the Czech Republic and Turkey, continues to increasein significance.

Western Europe has a broad and well-balancedcustomer base as shown to the right, with successiveJapanese investment in recent years supplementingthe existing presence of the traditional European VMs.

2010 light vehicle production Western Europe – 13.2 million

Automotive customer groups

BMW GroupBMW Mini

Rolls Royce

Daimler GroupMercedesMaybach

Smart

Fiat GroupAlfa Romeo

Chrysler DodgeFerrari FiatIveco Jeep

Lancia Maserati

Ford GroupFord Lincoln

Fuji Heavy GroupSubaru

Geely GroupGeely Volvo Cars

GM GroupBuick Cadillac

Chevrolet GMCHolden Opel

Vauxhall

Honda GroupAcura Honda

Hyundai GroupHyundai Kia

Mitsubishi GroupMitsubishi

MazdaMazda

PSA GroupCitroën Peugeot

Renault/Nissan GroupInfiniti Dacia

Nissan RenaultSamsung

Suzuki GroupMaruti-Suzuki

Suzuki

TATA GroupLand Rover Jaguar

Tata

Toyota GroupDaihatsu Lexus

Scion Toyota

VW GroupAudi Bentley

BugattiLamborghini

Seat SkodaVW

Other 9%VW

23%

Toyota2% Volvo

3%

Tata 2%

Porsche<1%

Honda1%

Other<1%

Renault/Nissan12%

Ford9%

BMW9%

Daimler9%

GM8%Fiat

6%

PSA15%


Industry & M

arket structure

The opening up of the Eastern European market sincethe 1990s has seen increased investment fromWestern, Japanese and Korean VMs, following that ofcompanies such as Fiat, GM, Renault and VW.

OE glazing supply in the Western European OE marketis predominantly by the local operations of Saint-Gobain, Pilkington Automotive and AGC. A few smallermanufacturers, including Guardian, Soliver andRioglass, together with a small amount of importsfrom Fuyao, PGW and Sisecam, supply the remainderof the Western European market (~14 percent). Localindependent glass processors are believed to have alarger share of certain Eastern European markets.

The European OE market is not only thelargest, but its customer base is also the mostdiverse of any region, with all of the world’smajor VMs having a production facility there.

2010 light vehicle production Eastern Europe –5.7 million

North America Even with significantly increased production in 2010as its recovery path from recession continues, NAFTAremains in the world number three position with avehicle build of 11.9 million units. Traditionally, thismarket has been the domain of the 'Big Three' vehiclemanufacturers, GM, Ford and Chrysler, though inrecent years their share has been eroded by theoperations of Asian and European VMs. In 2010, the share of the ‘Big Three’ VM groups was down to 56 percent of the market.

The OE glazing supply base in NAFTA is one of themost diverse of all regions. Three companies havemarket shares estimated in excess of 15 percent;three more companies have shares in the range 6 to14 percent, with all of the remaining suppliers havingshares of less than 5 percent.

NAFTA comprises the third largest OE marketin the world, with 11.9 million units built in 2010.

2010 light vehicle production NAFTA – 11.9 million

PGW, AGC and Pilkington Automotive are the leadingsuppliers in NAFTA, with fourth, fifth and sixth spots taken by VVP of Mexico, the strategic partnership ofSaint-Gobain’s Sekurit business and Central Glass’sCarlex subsidiary, and Zeledyne (formerly Ford Glass).Privately held Guardian, together with imports,accounted for the remainder of the market.

Other 10%

VW16%

Toyota3%

Suzuki2%

Other5%

Renault/Nissan17%

Ford7%

Hyundai11%

GM7%

Avto Vaz10%

Fiat13%

PSA9%

Other 12%

GM23%

VW4%

Hyundai4%

BMW1%

Daimler1%Subaru

1%Other<1%

Renault/Nissan9%

Ford20%

Honda11%

Toyota12%

Chrysler13%


Japan In 2010, Japan remained the fifth largest automotivemarket in the world; behind Europe, China, NorthAmerica and the Rest of Asia, with light vehicleproduction of 8.9 million.

Production in Japan remains the exclusive domain ofthe domestic VMs, with western VM involvementlimited to equity stakes in the domestic producers.This includes Renault’s 44 percent in Nissan andFord’s now much reduced stake in Mazda. To date,only two of the Japanese VMs, Toyota and Honda,have remained independent of equity investments byUS or European VMs.

In Japan, as elsewhere in the world, Toyota is by farthe largest of the Japanese VMs.

Supply of OE glazings in Japan is in the hands of thethree domestic glass companies, AGC, NSG Group andCentral Glass. AGC is believed to have just over half ofthe market and the NSG Group around 30 percent,with Central Glass taking the remaining share, exceptfor a small amount of imports.

The need for the domestic glass companies to servethe Japanese VMs as they expanded their operations

overseas led, at least in part, to the strategicpartnerships and subsequent investments betweenNSG Group and its now subsidiary Pilkington, andCentral with Saint-Gobain.

2010 light vehicle production Japan - 8.9 million

Japan is the fifth largest Automotive market inthe world, with light vehicle production of 8.9 million.

China Consistent double-digit growth in recent years hasseen China rise rapidly to be the second largest‘regional’ market, behind Europe, and the largest inindividual country terms, overtaking Japan and the US.In 2010, LV production in China grew by 32 percent,totaling 14.7 million units.This recent phenomenal market development is onthe back of inward investment by all of the major VMs,as well as organic growth by China’s own domesticvehicle manufacturers. The Chinese automotiveindustry universally benefited from the government’sstimuli of both the economy and industry, barelyfaltering as the rest of the world plummeted intorecession before resuming growth at rates unheard of in other markets.

China is the second largest ‘regional’ marketand the largest in individual country terms.

The leading glazing suppliers in China are; Fuyao, aChinese company with an established history ofserving overseas aftermarkets through exports, andwhich latterly has begun to export OE products, AGCthrough its now wholly-owned Chinese subsidiary,Saint-Gobain (Sekurit), SYPA, another domesticglazing supplier and Pilkington Automotive, throughits three domestic operations.

2010 light vehicle production China – 14.7 million

Other 29%

VW13% Renault/Nissan

5%

Hyundai7%

Changan9%

GM15%

Toyota5%

Honda 5%

Chery 5%

Ford2%

Brilliance-Jinbei2%

Great Wall2%

Dongfeng Motor3%

PSA3%

BYD 3%

FAW 4%

Geely3%

Suzuki2%

Mazda2%

Other Chinese VMs9%

Other Non-Chinese VMs 1%

incl. BMW, Daimler, Fiat

Toyota43%

Suzuki11%

Renault/Nissan12%

Honda11%

Mazda10%

Subaru6%

Mitsubishi7%


Industry & M

arket structure

Rest of Asia (excluding Japan and China) At 11.2 million vehicles in 2010, Asia, excluding Japanand China, remains the fourth largest regional market.In automotive market terms, the region is nothomogeneous, with several sub-market types being evident.

First, there is South Korea, whose well establishedautomotive industry still transcends other regions,both in the form of exports and through vehicleassembly transplant operations elsewhere within and outside the region.

Secondly, there is the fast growing and potentiallylarge market of India. Despite the recent major growthin vehicle production, vehicle ownership rates in Indiaremain well below other developing markets. Thismarket potential attracted some early investors, mostnotably Suzuki, and these early positions are nowgrowing into a meaningful market presence. Latterly,many more European, Japanese and Korean VMs haveinvested in India.

The third group of Asian markets comprises the so-called ‘Tiger Economies’, which exhibited rapidgrowth through the early/mid 1990s. Vehicleproduction in Thailand, Indonesia, the Philippines,Malaysia and Taiwan grew significantly, benefitingparticularly from inward investment by Japanese VMs.

Other sub-markets in Asia include the small matureAustralian market and the new developing markets of Pakistan, Vietnam and Kazakhstan.

The Asian OE glazing supply base has its origins in localindependent glassmakers. Whilst some still remain,increasingly these local players are now partneredwith the major international glass companies.

The Asian OE glazing supply base has itsorigins in local independent glassmakers,increasingly now partnered with the majorinternational glass companies.

AGC led the way as far back as the 1970s, when itbegan to establish partnerships with local glasscompanies or investors. Such strategic investmentswere made in Thailand, Indonesia, India, thePhilippines, Malaysia, Taiwan, China and mostrecently South Korea. Latterly, AGC has increased itsstakes in several of these companies, moving tomajority ownership positions. To a lesser extent, theother two Japanese glass makers, the NSG Group andCentral, both followed suit, with NSG investing inautomotive glass affiliates in Malaysia, Taiwan andChina, and Central having a Taiwanese joint venture.

Before the acquisition, Pilkington had originallyfocused on China, where today Pilkington Automotivehas three operations. Latterly it has also invested inIndia and the ongoing regional footprint is furtherenhanced by the other Pilkington Automotiveinterests of the NSG Group mentioned above. Saint-Gobain’s investments were initially targeted on Indiaand China, in partnership with local glass processors.

Saint-Gobain also has a presence in the Thai market,in partnership with a local company Toa. However, itsmost significant Asian position results from the stakein Hankuk, the South Korean market leader, taken in 1997 and now grown to majority share ownership.

2010 light vehicle production Asia (excl. Japan & China) – 11.2 million

Other 20%

Hyundai33%

Ford3%

Isuzu2%

Others2%

Mazda1%

Proton2% Perodua

2%

Mitsubishi3%

Suzuki12%

GM11%

Renault/Nissan 6%

Tata5%

Toyota13%

Mahindra & Mahindra2%

Honda3%


Rest of the world Iran, South Africa, Egypt and Morocco comprise the principal OE markets elsewhere in the world,accounting for just 2 percent of global volume.

The South African market is principally served byShatterprufe, the automotive glass subsidiary of domestic flat glass manufacturer, the PG Group.

2010 light vehicle production Rest of world – 2.2 million

South America South America is the sixth largest vehicle-producingregion in the world, with Brazil and Argentinatogether accounting for around 93 percent of regionalvolume. Brazil remains by far the most significantvehicle producing country in South America.

Traditionally, the South American market hascomprised mainly European VMs, though an Asianpresence is being built, principally by Japanese VMs.Three VMs together, VW, GM and Fiat, make upalmost two thirds of the market.

The NSG Group, through its Pilkington Automotiveoperations in Brazil, Argentina and Chile, and Saint-Gobain, through its Brazilian and Colombiansubsidiaries, together account for around 90 percent of South American glazing demand with theremaining supply coming from independentdomestic processors and from imports.

2010 light vehicle production South America –4.2 million

South America is the world’s sixth largestvehicle-producing region. Brazil andArgentina account for around 93 percent of regional volume.

Other 11%

VW22%

Others2%

Mitsubishi1%

Hyundai1%

Renault/Nissan7%

Ford10%

Honda3%

GM22%

PSA7%

Fiat21%

Toyota4%

Other 12%

VW6%

Toyota6%

PSA25%

Other2%

Renault/Nissan

7%

Ford 1%

Chery1%

BMW2%

Zamyad2%

Mazda2%

GM3%

Hyundai30%

Iran Khodro11%

Daimler2%

Glass industry grow

th


2.1. Global demand for flat glassOver the long term, demand for float glass is growingat >5 percent per annum. This growth is fuelled by the demand for buildingglass and automotive glass, which in turn is driven by economic growth.

Over the last 20 years, float demand growth hasoutpaced real GDP growth. Over the past 10 years,float demand has exceeded GDP growth by around2.5 percentage points.

The world flat glass market is expected to reachalmost 60 million tonnes in 2011, including 2 milliontonnes of rolled glass, from the recession-hit 2009level of 52 million tonnes.Until this year, global float capacity utilization hasranged between 90 and 95 percent (virtually thepractical limit for a network of float plants).

In 2008, global capacity utilization droppedsignificantly towards the lower end of this range,after a sharp tightening of demand due to theglobal recession. Recovery in 2009 and 2010 wassupported particularly by strong demand growthin China and capacity reduction measures taken by the industry.

Despite further strong demand growth expectedin 2011, utilization is expected to dip again due tofurther new capacity being brought on stream,especially in China. In practice, the industry mayagain choose to impose capacity reductionmeasures to support utilization. A furthersignificant point is that each new float line that isadded to the installed base represents a smallerpercentage of installed capacity and is thereforelikely to cause less of a disturbance to the supplydemand balance. This can be illustrated by thefollowing chart showing the effect of additionalfloat capacity since the construction of the world’ssecond line in 1962.

Global float demand grows >5 percent p.a. In 2010 demand grows by >9 percent

Incremental capacity – global

2. Glass – a growth industry

100

150

200

250

300

Inde

x (1

991

= 10

0)

19911993

19951997

19992001

20032005

20072009

Calendar Year

Glass Demand Growth: +5.1% p.a.

2010: +9.1%

2010: +3.3%

Real GDP: +2.7% p.a.

0

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

100

50

150

200

250

300

350

400

0%

10%

20%

30%

40%No. of Woats % Capacity added by one line % Capacity added in year


A new float line added in 1970 represented morethan 3 percent of global float capacity. A new line in2011 represents less than 0.3 percent of globalinstalled capacity. Nevertheless, the impact of a newfloat line in certain territories can still be quitemarked, at least in the short term, until the newcapacity is fully absorbed by market growth.

In 2011, a new float line represented less than0.3 percent of global installed capacity.

New float build programThe following table shows lines that have come onstream in 2010, and those planned to start-up in2011. In addition, it is believed that more than 50float lines will have come on stream in China in 2011and 2012.

New Float Build Program

Regional analysisIn the following analysis of regional glass markets theworld is segmented into seven regions as follows:

Analysis of demand and capacity utilization is on thebasis of all sheet and float production.

• Over the long term demand is growingsteadily in most regions

• The global recession caused a seriousdemand contraction in 2009 but globalrecovery was strong in 2010 and all of thelost ground was recovered. This recoveryhas been driven mainly by emergingmarkets, whereas demand in developedmarkets is still well below pre-recessionlevels

• Growth of value-added glass has the effectof reducing float capacity as output iseffectively lower

• Global capacity utilization is expected toremain above 90 percent in the mediumterm

• The pace of capacity addition outside Chinahas moderated recently, with eleven newlines on stream in 2010 but only threeexpected in 2011.

Global glass industry summary

Country Company Start YearBelarus Gomel 2010Russia AGC 2010Russia YugRos 2010Bulgaria Sisecam 2010Egypt Saint-Gobain/

Sisecam 2010Egypt Sphinx Glass 2010India HNG Float Glass 2010Vietnam Chu Lai 2010Vietnam Trang an 2010Saudi Arabia Arabian United 2010Turkey Okan Cam 2010Italy Sangalli 2011Saudi Arabia Al-Obaikan 2011

Europe • Japan • ASEANUS/Canada • South America • China

Russia/Former Soviet Union

Glass industry grow

th


EuropeEurope is defined as extending as far eastas, but excluding, Russia, Ukraine andBelarus. To the south it includes Turkey.

Capacity utilization remained in the high 90 percent range from 2000 to 2007, butthe recession which hit in the second half of2008 led to a contraction in demand, whilesignificant new capacity came on stream.Further new capacity, from projects begunprior to the recession, came on stream in2010 and 2011 but the industry has movedto reduce overall capacity throughextended repairs and other shut downs.Even so, utilization is expected to fall below 90 percent in 2011.

Europe capacity utilization

JapanDemand in Japan has been essentially flat at approximately one million tonnes since2000. The global recession drove demandbelow 850 thousand tonnes in 2009, butthis recovered to just over one milliontonnes in 2010, driven by strong demandin automotive and specialty glass sectors.

Available capacity has been in declinethroughout the decade as lines have beenmothballed, or converted to produce glassfor specialist applications. Nevertheless,the fall in demand drove utilization below80 percent in 2009.

The major earthquake and tsunami in early2011 impacted industry capacitytemporarily but had relatively little effecton demand. The affected lines were quicklybrought back on stream and continueddemand recovery will push utilization above100 percent in 2011.

In Japan, capacity reductions areexpected to push utilization above100% beyond 2010.

Japan capacity utilization

0

2

4

6

8

10

12

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year

Available Capacity Demand

14

50%

60%

70%

80%

90%

100%

110%

Utilization

0.0

0.3

0.6

0.9

1.2

1.5

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year

Available Capacity Demand Utilization

50%

60%

70%

80%

90%

100%

110%


ASEANDemand has been fairly volatile in the ASEANregion throughout the decade. In recent years,growth in production of solar energy moduleshas provided a significant boost to value-addedglass demand. This has pushed apparentutilization above 80% but much of this glass issupplied from outside the region. Capacity additions in 2010 and 2011 haveadded downward pressure to the real utilizationof regional assets.

ASEAN capacity utilization

Utilization

50%

40%

30%

20%

10%

0%

60%

70%

80%

90%

100%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year


3.5

US/CanadaNorth America was the first region to fallvictim to recession and demand hascontracted sharply since the peak of 2006.

In North America, regional capacityutilization has fallen below 70 percent.

This is a similar demand picture to Europebut the crucial difference has been thecorresponding reduction in capacity as lineshave been taken out of action. Severalfacilities also underwent lengthy repairs orother forms of capacity reduction during2009 and 2010.

Regional capacity utilization is believed tohave bottomed out in 2010 and a long-termrecovery is expected to begin in 2011.

North America capacity utilization

0

1

2

3

4

5

6

Mn

Tonn

es

2002 2004 2006 2008 2010 2012Calendar Year


50%

40%

30%

20%

10%

0%

60%

70%

80%

90%

100%Utilization

Glass industry grow

th


South AmericaSouth American glass demand has beensteadily growing since 2003. This growthwas interrupted temporarily by therecession in 2009, but normal growth rateshave resumed quickly in 2010.

Regional capacity utilization reachedaround 150 percent in 2008 (the region is anet importer of flat glass), reducing in 2009as new capacity came on stream in Brazil. It has since increased again to over 150 percent as demand continues to outpace capacity growth.

South America capacity utilization

0.0

1.0

2.0

3.0

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year


40%20%0%

60%80%

110%120%140%160%180%

100%

ChinaSince 2000, there has been a major floatbuild program in China, and the number offloat lines has increased to around 220. This resulted in a downturn in utilization toaround 85 percent between 2005 and 2008.

In China, utilization is expected tostabilize as strong demand growthresumes.

Significant capacity reduction measureswere taken in 2009, along with the deferralof several new float start-ups, in responseto the global recession, but, in reality,domestic demand growth continued, albeitit at a lower pace. This resulted in a strongincrease in utilization and the addition ofnew capacity has gathered pace in 2010,when around 25 new lines are expected tohave come on stream. Further strongdemand growth is expected in 2011, which will maintain utilization at around 90 percent.

China capacity utilization

0

5

10

15

20

25

30

35

40

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year


85%

80%

75%

70%

65%

60%

90%

95%

100%Utilization


2.2. Growth in Building ProductsGrowth in Building Products is fuelled by a number of drivers:

ConstructionGlass is an integral building material for mostconstruction projects. Virtually every new buildingrequires glass. Both new building projects and therefurbishment of existing buildings call for largequantities of glass products.

Architectural trendsArchitects are increasingly seeking to bring naturalenvironmental factors into the interior of buildings bymaximizing natural daylight. This has been achievedthrough the use of larger glazed areas in façades androofs, and through entirely glazed façades where theglass is a structural component of the building.

In sunnier climates, the reliance on air conditioning,which would otherwise be increased by such largerglazed areas, is mitigated by the use of advancedsolar control products which allow the sun’s light intothe building while keeping much of its heat out.

RefurbishmentRefurbishment of buildings accounts for around 40 percent of architectural glass consumptionworldwide. In mature markets, windows in residentialbuildings are replaced every ten to twenty years.

Former Soviet UnionFlat glass demand has grown robustly sincethe relative low point of 2000 up until 2008,with the market size more than doubling ineight years. Market demand fell sharply in2009 but despite significant capacityadditions in 2010, utilization is set to remain above 100 percent in 2011.

Former Soviet Union capacity utilization

40%

20%

0%

60%

80%

120%

140%

100%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Mn

Tonn

es

2002 2004 2006 2008 2010 2012

Calendar Year


Value Growth – Building ProductsDemand Growth driversEnergy-saving(heating)

Energy-saving(cooling)

Safety/security

Fire

Acoustic

Self-cleaning

Solar Energy

Energy-saving legislation and buildingregulations; reduction of energy lossfrom buildings, energy labeling ofwindows.Energy-saving legislation, reduction of air-conditioning load in buildings,preventing non-air-conditionedbuildings from over-heating.Increasing legislative requirement forsafety glass in certain applications.Requirement for transparencycombined with security features.Requirement for good lighttransmission and protection compliancewith regulations on fire protection.Increasing noise levels caused by traffic,aircraft, etc., progressively backed bylegislation.Reduction in use of detergents, safetyat heights, extension of product rangeand features to increase functionality incommercial and domestic applications.Demand for renewable energy,stimulated by government support andfeed-in tariffs.

Glass industry grow

th


Energy efficiencyOver the past 25 years, in developed regions such asEurope, Japan and North America, the growing needfor energy efficiency in buildings has transformed themarkets for energy- saving glass and this is now beingechoed in developing regions.

Targets for reducing CO2 emissions have driventougher legislation for energy saving glass. Buildingregulations in many countries now require insulatingglass units (double or triple glazing) as standard, withenergy-efficient low-emissivity (low-e) coated glassoften necessary.

European building regulations continue to be the major driver for high performance andadded-value glass, particularly in the area ofenergy efficiency.

In hot climates, there is an increasing recognition thatreliance on air-conditioning can be mitigated by theuse of advanced solar control glass. Window energylabeling systems have been established to promoteenergy saving glass to the consumer and provide amechanism for financial incentives. There is alsogrowing governmental support worldwide forrenewable energy generation, including solar energy.

Energy legislationAs buildings account for around half of all energyconsumed in developed countries, they have becomethe prime focus of attention in terms of legislation. Inthe EU, for example, targets have been set for reducingenergy consumption by 20 percent, reducing green-house gas emissions by 20 percent and producing 20 percent of energy from renewable sources.

The recast of the EU Directive on Energy Performanceof Buildings imposes a raft of obligations on MemberStates, including the requirement to upgrade theirbuilding regulations for energy at least once everyfive years. Furthermore, it requires all new buildingsacross Europe to be built to very high energyefficiency standards ('nearly zero') by 2020 and allexisting buildings undergoing major renovation tomeet minimum energy performance requirements.

Building regulations continue to be the major driverfor high performance and added-value glass,particularly in the area of energy efficiency. In mostcountries there have been major changes to buildingregulations for energy efficiency, creatingopportunities for added-value glass, and this isanticipated to continue in the future.

Low-emissivity glassAll central and northern European countries, andindeed some southern countries (such as Italy), have legislation requiring low emissivity glass in new buildings. Several countries also have legislationrequiring low-emissivity glass in all replacementwindows.

In the USA, the International Energy ConservationCode, which impacts on energy efficiency for buildingsand specifically glass, was revised in 2009 and is dueto change again in 2012. This is complemented byinitiatives such as the US Green Building Code'senvironmental building rating system (LEED).

In China, the government has already introducedbuilding regulations to improve the energy efficiencyof new buildings, which should help to significantlyincrease the share of low-e glass in an insulating glassunit market of over 200 million m2. In 2009, SouthKorea introduced a new regulation which effectivelymakes low- glass standard in new buildings.

In Northern European countries, triple glazing or '2 + 1' double window has become the norm. In somecentral European countries, the longer term plans ofmost governments include progress towards tripleglazing as the regulatory norm, as zero and lowenergy buildings become common.

An example of the market-transforming effect ofbuilding regulations is the sharp increase in demandfor low-emissivity glass in Germany in the 1990s fromless than 2 million to over 25 million m2. Even before it came into force in 1995, knowledge of thelegislation drove the penetration of low-e glass ininsulating glass units to around 50 percent. Low-eglass has now been standard in Germany for manyyears and the experience has been repeated in othercountries such as the UK. The trend is being repeatedacross the globe, dramatically increasing the demandfor low-e glass.

At a primary level, low-e glass earns revenues 40 percent higher than ordinary float glass.

For the primary manufacturer, low-e glass typicallyearns revenues 40 percent higher than ordinary floatglass, so this substitution effect greatly improves thevalue added.


Solar control glassAround the world, countries are increasingly turningtheir attention to air-conditioned buildings, in orderto reduce energy usage and CO2 emissions, therebycreating opportunities for solar control glass. Theseproducts have special coatings applied to theirsurface which reflect up to 75 percent of the solarheat while transmitting the majority of the visiblelight. This allows a bright and cool environment to bemaintained inside a building with reducedrequirement for air-conditioning. Products such asthis can earn up to ten times the revenue per squaremeter of basic float glass. Their use will increase asclimate change results in increased ambienttemperatures, thus imposing greater demands on air-conditioning in buildings.

The Energy Conservation Building Code in India hasintroduced specific requirements for highperformance solar control glass. Although currentlyvoluntary, it is widely adopted in major cities and willbecome mandatory for all new and refurbishedbuildings in 2013. Japan, Italy, Poland and parts of the USA have also addressed this issue in some waywithin their regulations.

Energy labelingWindow energy labeling systems, which evaluate thetotal energy performance of windows, have beenestablished in many regions, including the UK,Finland, Denmark, Australia and North America.These allow the consumer to identify the best-performing products - stimulating the demand forenergy- saving glass, and provide governments with acriterion which financial incentives can be linked. Theintroduction of a window energy rating system inJapan is anticipated in 2012.

Renewable energyThe same energy efficiency drivers are also resultingin increased demand for photovoltaic and solarthermal energy panels, in which glass is an essentialintegral component. The EU Renewable EnergyDirective sets a requirement for 20 percent of energyacross the EU to be produced from renewable sourcesby 2020. It also includes mandatory targets for eachEU Member State.

Feed-in tariffs in countries such as Germany, Spain,Italy and Greece have made it economically attractiveto feed power into national grid systems. Authoritiesin Japan have indicated likely support for homeownersolar installations and US tax incentives are addingfurther impetus.

Safety - toughened, laminated and fire protectionGrowing awareness of safety has also driven buildingregulations for laminated, toughened and fireprotection glass, which further enriches the productmix of the industry. Growth in use of laminated glasshas also been driven by developments of improvedsound insulation of some laminated products.

Technical applicationsGlass is increasingly being used in a range ofapplications which require a high degree offunctionality.

One of these fast growing applications is Thin FilmPhotovoltaic (PV) panels for Solar Energy, wherecoated glass is used as an integral active componentof the device. Other consumer applications, such astouch screen devices, again use glass as an activeintegral component.

Although small today, in comparison with glassdemand for mainstream building applications, theseapplications require glass of much higher value andhave the potential to achieve significant scale.

2.3. Growth in Automotive Structural trendsVarious structural trends have affected theautomotive glazing industry in recent years, bothfrom the customer and the supply side.

One such trend had been the consolidation in the OE customer base; the vehicle manufacturers. VM mergers and acquisitions, together with someorganic growth, saw the top six VM groups in 1992;(GM, Ford, Toyota, VW, Nissan and Chrysler) increasetheir combined global market share from 57 percentto 80 percent by 2004. However, industry

restructurings over the last few years now see aslightly differently constituted group of the sixlargest VMs accounting for 57 percent of global lightvehicle build.

The concentration of the customer base historicallyhas been mirrored on the supply side and automotiveglass is no exception. Here, acquisitions, strategicpartnerships and organic growth have resulted in thethree global glass supplier groupings, the NSG Group,AGC and Saint-Gobain/Central, increasing theircombined global market share from 49 percent to an estimated 65 percent.

Glass industry grow

th


Alternative consolidation trends can be expected asVMs seek to maximize leverage of their assets throughpartnerships, as well as taking strategic opportunitiesin developing markets. VMs will continue to look totheir key suppliers to support them as they move intonew markets.

Increased requirements by the VMs on automotiveglazing suppliers favor those, such as PilkingtonAutomotive, able to offer:

• technical capabilities - shaping, optics, designfeasibility/simulation

• global reach

• capital investment in support of both volume anddeveloping technologies

A further industry trend, resulting from the VMs’ driveto reduce costs in their core assembly operations, isthe assumption by suppliers of activities previouslyundertaken by the VM.

Increasingly, automotive glass suppliers are becominginvolved in the sequencing of product for ‘just in time’delivery to the VM’s assembly line. In some cases thismay even involve the supplier working on the VM’s line.

Demands on the glazing manufacturers are alsobecoming more intense, as VMs seek both to updatetheir product ranges more frequently and to shortenthe time taken to develop and bring their new modelsto market. To this end, major suppliers are todayplaying a key role in the design process, workingclosely with the VM in the early stages ofdevelopment.

One aspect of the VMs’ consolidation andglobalization is the additional purchasing pressurethis can exert on the supply base, particularly in anenvironment where cost reductions are a priority.Whilst not immune from such pressure, the glazingsuppliers, such as Pilkington, increasingly workconstructively with the VMs to identify areas ofpotential savings, ultimately providing benefits toboth parties.

Automotive glazing demand driversOE MarketThe basic driver of demand for any supplier to the OEindustry is vehicle build. As can be seen in the chartbelow, historically the industry has exhibited steadygrowth, averaging 2.5 percent per annum in the 13 years to 2010.

Global light vehicle build – 1997 to 2015

However the unprecedented downturn that hit theindustry in 2008 – 2009 was so severe as to takeglobal demand down to levels experienced in 2003,effectively reducing the historical growth rate closerto 1 percent. The recovery that is now underwaytogether with natural growth in developing markets,is currently expected to restore long term averageannual industry growth to 3 percent by 2015.

Light vehicle build 1997 to 2015, NAFTA, WesternEurope & Japan

Despite the higher growth of the newer, developingmarkets, the three large developed markets;Western Europe, NAFTA and Japan, will retain afundamental importance to the automotive industryfor many years to come; not only because of theirsize, but also because they remain principal centersfor new model development for all of the major VMs.The impact of the economic crisis on these maturemarkets was so severe that the volumes lost during2008 and 2009 are unlikely to be fully recoveredwithin the next four years.The increasing relative importance of developingautomotive markets is evident from the chart below.Together, the developing regions of Asia (excludingJapan), Eastern Europe, South America and the Rest ofthe World comprised 22 percent of global vehicle

40

60

80

100

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Average Annual Growth 3.2%

Vehicle Build Trend

m v

ehic

les

0

5

10

15

20

25

30

35

40

45

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Average Annual Growth ‘97 - ‘15 Overall: 0%

Japan

W.Europe

NAFTA

0.2%

0.0%

-0.6%

m ve

hicl

es


production in 1997. By 2010 their share had risen to53 percent and is expected to increase to 57 percentby 2015.

Global light vehicle build 1997 – 2015

The annual average growth of these combineddeveloping regions between 1997 and 2010 was over 9 percent. As growth in China moderates goingforward, average annual growth in the developingmarkets through to 2015 is expected to reduceslightly to around 7 percent per annum.

Light vehicle build – 1997 to 2015 developing markets

Of the developing regions, China has been the bestperformer to date, exhibiting average growth of 24 percent per annum since 1997. Vehicle build inboth Eastern Europe and the Rest of Asia has alsoshown good growth averaging 7 percent per annumsince 1997.

All of the developing markets will continue to be thesource of the global industry’s growth. Though futurerates will reduce from the routine double-digit figures previously experienced in some markets, the combined average growth across these markets is currently expected to exceed 7 percent per annumover the five years to 2015.

However, glazing demand driven by vehicle buildgrowth is only part of the automotive story. There arethree other drivers of the automotive glazing industry,the first two of which directly impact the OE market,both in terms of volume, and importantly, value.

The first of these additional drivers is the growth inthe amount of glass used per vehicle. Key tounderstanding this trend is recognition of the changein vehicle styling and features as a result oftechnology advances and public opinion. Generally,larger vehicles for replacement models, tallervehicles, new vehicle apertures and new marketsegments have brought about an increase in theamount of glazing used. The global growth for themidsize vehicle segments has led to vehiclemanufacturers using more glass to generate a greaterimpression of light and space within smaller vehicles.

Environmental considerations are also impacting the amount of glazing in vehicles with reducedinstallation angles for windshields and backlightsproviding improved aerodynamics, but requiringlarger/taller parts.

Over the last 35 years, glazing area on equivalentmodels has increased in the order of 50 percent.Average windshield glazed area has increased by over60 percent over the same period. With the use of largearea rooflights increasing significantly year on year, itis clear that glazing is being used as an exterior stylingfeature in addition to a tool to increase the feeling oflight and space within a vehicle.

Due to the constantly rising expectations ofconsumers and increased focus on environmentalresponsibility throughout the major global markets,small SUVs, cross-over type vehicles and small/mid-sized cars are growing in popularity. A greater numberof vehicle models with lower volumes per modelmeans that greater differentiation is happening.Increased flexibility is needed as the market evolvesand VMs are using styling as a vital selling tool.

Glazing is critical to vehicle styling and offers stylists afantastic opportunity to influence the appearance ofa vehicle and fundamentally, vehicle side glazing isbeing used to develop clear design aspects for theside of passenger vehicles.

RoW

S. America

E. Europe

Rest of Asia

China

Japan

W. Europe

NAFTA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Average Annual Growth ‘97 - ‘15 Overall: 8.9%

RoW 9.9%

S.America 4.2%

E.Europe 6.2%

China 19.4%

Asia 6.8%(excl China

& Japan)0

10

20

30

40

50

60

19971999

20012003

20052007

20092011

20132015

Glass industry grow

th


There can be anything from four to more than13 glazed apertures on current light vehicles,many fundamental to the overall style andappearance of a new vehicle.

There can be anything from four to more than 13 glazed apertures on current light vehicles, many of which are fundamental to the overall style andappearance of a new vehicle. In particular, a vehicle’sfrontal aspect plays a huge role in terms of styling andthe increasing use of panoramic and cielo windshieldsand rooflights is a key differentiating feature to bringvalue back into the glazing.

Europe and North America are currently leading theway with the adoption of laminated side-glazings forincreased vehicle comfort and security. This increasesglass usage through the replacement of monolithicside glazings by two plies of glass in each apertureand contributes significantly to the sales value of side glazings.

The second additional driver of business growth inautomotive glazing is the increase in value-addedcontent now being delivered by the leading suppliers to the OE industry.

Vehicle manufacturers are looking at ways for profitimprovement and differentiation through productsand features that the end user finds value in. Value-added also covers features in the glazing that allow avehicle manufacturer to improve design, watermanagement or make assembly operations easier orquicker.

Value-added product features would include:advanced acoustic control; solar control propertiesreducing solar heat gain; de-icing and de-mistingcapabilities; integrated antennas for radio, TV, cellphone, navigation etc.; integrated rain and lightsensors for automatic wiper or headlight activation;hydrophobic and hydrophilic coatings for improvedvisibility, to name but some.

Value-added activity includes the supply of acomplete glazing solution rather than just a piece ofglass. Such systems use innovative finishingtechnologies, including encapsulation, extrusion andaesthetic functional trims, which enhance thevehicle’s styling and in certain cases, aerodynamics,as well as adding functionality and improving the VM’sproductivity when glazing the vehicle. Today, glazingmanufacturers are increasingly taking responsibilityfor the design and assembly of such complex glazingmodules, for example, integrated tailgates for estate,crossover, MPV and SUV vehicles, including the glass,hinges, struts, wiper and latching mechanisms.

Equally, the glazing installation may simply requirethe prior fitting of locating clips to the glass. Again,this ‘assembly’ activity is increasingly beingundertaken by the glazing supplier.

As environmental responsibility plays a greater role inworld affairs, regulatory requirements are likely topush the value of a vehicle glazing set up significantlythrough the introduction of high performance solarcontrol glass products, including infra-red reflectivewindscreens and very high performance solarabsorbing glass compositions. How regions of theworld adopt CO2 reduction glass technologies is yet tobe fully understood.

By way of illustration, the chart overleaf shows therelationship between the growth in the number ofvehicles built in the main European markets since1999 and the growth in the value of the glazing inthose vehicles.

Value Growth – AutomotiveDemand Growth driversStyle

Innovation

Security

Comfort &Convenience

Environment

IntegratedSystems

Designers see glazing as a crucial elementin designs to differentiate vehicles.New features and functions provided by

glass such as the ability to control light andheat levels.Crime and vandalism increase the need forsecurity, provided by laminated side, roofand rear glazings.Larger glass areas require tinted andcoated glazing to reduce solar gain and air-conditioning load. Acoustic control throughadvanced laminated glasses improvesdriver comfort.The move towards more efficient vehiclesand new drive trains, creates newopportunities for higher value glassproducts.Modular assembly is moving the supplyrequirements from glass only to fullyintegrated systems including antennaarrays, electronics systems and integral trim.


European light vehicle production versus glazing value – 1999 to 2016

By 2008, vehicle growth and glazing value growth has been 13 percent and 41 percent respectively. By 2016, equivalent growth numbers are estimated toreach 20 percent and 50 percent. The rate of adoptionof the different types of value added features willhowever vary from region to region. In North America,

for example, glazing systems are likely to be ofgreater importance, whilst Japan will lead on certainkinds of integrated antennas.

A more detailed explanation of Automotive value-addedproducts and services can be found in section 3.4.

AGR market driversThe third area driving overall automotive glazingdemand is the replacement (AGR) aftermarket market.Here, market demand is determined by the number ofvehicles in use and a replacement rate, which in itselfwill vary from one geographic market to another,depending upon the combination of a range of factors.

Global AGR demand – 1991 to 2010

Long term growth in AGR volumes estimatedat around 2.9 percent per annum.

Principal influences on replacement rates are: averagemiles driven, speed, road surface conditions, climate,disposable income, vehicle crime levels, nationallegislation, repair/replacement ratio and insurancecompany policy.

Glazing replacement tends to be greatest within the well-developed markets of Western Europe and NorthAmerica, often driven by annual vehicleroadworthiness inspections, typically with rates inthe 6 to 8 percent range. By way of contrast, thereplacement rate in Japan is lower, particularly forwindshields, due to the country's lower vehicle usageas opposed to its relatively high vehicle ownership.

Due to the relatively higher levels of accidentalbreakage of windshields from objects thrown up byvehicle wheels versus breakages of other glazingsresulting from collisions or theft, aftermarket demandis normally heavily biased towards laminated ratherthan toughened glass, typically a ratio of around 3:1.This leads to a higher average value per piece of glassthan in the OE market.

Additionally, the styling/design influences and value-added features previously described as drivingglass business in the original equipment market, areincreasingly having a positive impact on theaftermarket. As can be seen from the chart (left),long term industry growth in AGR volumes alone isestimated at around 2.9 percent per annum.

80

90

100

110

120

130

140

150

160

19992001

20032005

20072009

20112013

2015

Vehicle Production

Glazing Value

90

100

110

120

130

140

150

160

170

180

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Average growth 2.9% p.a.

+50%

+20%

Glass industry grow

th


Specialized TransportThe Specialized Transport market comprises a numberof sectors:

• Truck (greater than 3.5 tonnes)• Bus and Coach (including recreational vehicles)• Off-road (including agricultural and construction

vehicles• Railway (including subway, light rail and heavy rail)• Marine (including small leisure craft to luxury

cruise liners) • Micro cars

These sectors are made up of a consolidating base ofregional vehicle makers and assemblers and some arenow major players on a global scale.

Global truck build 2010 ~2.5 million

The truck sector is by far the most consolidated and,of all the sectors, can be most closely compared withthe OE customer base in terms of its global spread and organization. VMs are expanding through globalJVs, particularly in China and Russia, but also byshifting their export production away from traditionalWestern European locations, closer to their globalmarkets. Glazing requirements are becoming morecomplex as new fleet design incorporates improvedvisibility, safety and driver comfort features.

Truck production stalled as fleet replacement wasdelayed in response to the economic downturn, butvery strong recovery experienced in Western marketsalong with continued momentum in developingmarkets. China and South America in particular areincreasing rapidly, supported by investment ininfrastructure, government incentives, theintroduction of ‘clean’ legislation and the increase in freight.

Global bus and coach build 2010 ~ 400,000

The bus and coach sector has a relatively smallnumber of chassis and engine suppliers, such asDaimler, Scania and MAN, which are strongly linked tothe Truck sector. However, the assembly of thecoachwork and body building is significantly morefragmented: There are a few large regionalassemblers such as Evobus and MAN in Europe andNavistar in North America, and a large number ofsmaller independent companies usually supplyinglocal markets. Some of the larger Europeanmanufacturers such as Daimler, Volvo Bus, MAN andScania Bus are starting to expand operations intoemerging markets through JVs and in the long-termthis is likely to bring about more consolidation of the market.

The global Bus and Coach market is expected to growat a steady but moderate rate, with significantregional variation characterized by strong growth inAsia and South America compared with relatively flatgrowth in the more mature markets such as Europe.

Large bus and coach production represents around 15 percent of annual truck production volumes butthe build rates alone do not truly represent thesector’s worth; the amount of glass in a 12-meterlong bus or coach is typically ten-times that for atruck. Glazed areas have increased significantly withstyling trends; the area of a windscreen alone cannow exceed six square meters and glass is beingincorporated into more areas of the bus such as roof lights above passenger seating to add moreclarity in the models. The market drive for styledifferentiation and improved levels of driver andpassenger comfort means that the trend foradoption of more value-added glazing applications is expected to continue in the developed marketsand rise rapidly within the emerging markets.

Global off-road vehicles (glazed) ~ 1.5 million

The off-road agricultural sector is characterized bythree major global players, John Deere, Case NewHolland and AGCO. In contrast, the construction sectoris still considerably more fragmented although thereare some large global manufacturers such asCaterpillar, JCB and Komatsu. The off-road agriculturalsector recovered from the downturn faster thanexpected, driven by high oil prices and the resultantdemand for bio-fuel commodities. The constructionsector is strong in South America and Asia driven byfactors such as preparation for the hosting of Globalevents, reconstruction following the Japan quake andChina urbanization projects. Western markets remainconstrained by the economic pressures in the US andthe Eurozone. Longer-term demand will grow across allregions, but with particular strength in South Americaand Asia.

The pressure to globalize further still exists in thesemajor sectors. Western OEMs are shifting from theirtraditional bases to be closer to their customers. Inaddition, emerging markets are demanding higherquality and more complex products, which may bebeyond the capability of the smaller, fragmented,domestic OEMs.


Rail

The Railway sector comprises a small number of railtransport and rail infrastructure manufacturers suchas Alstom Transport, Bombardier, Siemens, Stadlerand Kawasaki Heavy Industries. Railway demand isgoverned by national and municipal public transportpolicies and is project based. Higher fuel prices andthe trend for more environmentally responsible masstransport systems is likely to lead to steady growth in demand for rail transport in the long-term.

Marine

The Marine sector covers leisure boats from 5.5 meters up to luxury cruise liners.

Leisure boats are manufactured by a small number ofregional manufacturers such as Bella Boats, Fiskars,Nimbus and Windy, who take complex tempered orlaminated glass directly from glass manufacturers orvia aluminum/stainless steel framers. The demand forleisure boats is sensitive to economic conditions andreduced consumer confidence. Future growth will be closely linked to rate of the economic recovery in each region.

Luxury cruise liners are built by a small number ofshipyards, based mainly in Europe. Although part ofthe marine sector, the glazing is more aligned tobuilding products, typically comprising large glasspanels and roofs and fire-resistant structures.Existing projects sustained the cruise liner marketthroughout the recession, but new orders weredelayed as the companies owning and operating theships waited to assess market conditions. Signs ofmarket recovery can now be seen with Europeanshipyards such as Fincantieri, STX Finland, ItalianFincantieri and Germanics Meyer Werft reporting newcontracts. Traditionally, ship building capacity hasbeen centered in Europe, but Korea is beginning tochallenge this dominance. Japanese shipyard,Mitsubishi Heavy Industries, is also planning two giantluxury cruise projects.

Micro cars

Most of the major vehicle manufacturers areextending their range to include vehicles from theelectric micro car sector. In addition, the sector has is attracted many new entrants to the automotivebusiness. Government incentives for cleaner cities are expected to promote high growth in this area inthe coming years. Although the micro cars have asmall vehicle footprint, they typically incorporatelarge and complex glazing areas.

The number of sectors in the Specialized Transportmarket and their relative lack of consolidation on thedemand side have led to a preponderance of regionalsuppliers, with Pilkington Automotive being the onlytruly global supply option.

NSG

Group O

verview


3.1 Corporate overviewThe NSG Group, which operates under the Pilkingtonbrand in Building Products and Automotive, is one ofthe world’s largest manufacturers of glass and glazingproducts for the building and automotive markets,with manufacturing operations in 29 countries on fourcontinents and sales in around 130 countries.

In the fiscal year ended 31 March 2011, the NSG Groupreported sales of JPY 577,212 million (approximatelyeuro 5 billion). Of the Group’s consolidated sales, 41 percent were generated in Europe, 29 percent inJapan, 14 percent in North America and 16 percent inthe rest of the world.

The Pilkington brand in flat glassPilkington was founded in 1826 as a partnership andbecame a private company in 1894. It remained aprivate company until 1970 when its shares werelisted on the London Stock Exchange. Pilkington plcwas de-listed from the London Stock Exchange inJune 2006, when the company was acquired by theNSG Group; itself established in 1918.

The NSG Group has major market shares in mostbuilding and automotive product markets of theworld, with a broad geographic reach, enabling it torespond to customers whose operations, particularlyin the case of Automotive OE, are increasingly global.

In the financial year ended 31 March 2011, BuildingProducts accounted for 43 percent of Group sales andAutomotive for 46 percent of Group sales. In BuildingProducts, the largest business is in Europe (accountingfor 44 percent of the business line’s sales).

The next largest business is in Japan, with 34 percentof Building Products sales, North America with 9 percent of Building Products sales and 13 percent in the rest of the world.

In the case of Automotive, Europe is also the largestbusiness, with 47 percent of the business line’s sales,followed by North America with 21 percent, Japanwith 17 percent and 15 percent in the rest of the world.

Building ProductsBuilding Products has manufacturing operations in 21 countries. Its largest operation is in Europe, butit also has major interests in Japan, North and South America, China and South East Asia.

This business encompasses the NSG Group’s activityin manufacturing float and rolled glass, coating,toughening and silvering, the production of otherprocessed building glass products for architecturaland technical applications, including glass for thegrowing Solar Energy sector.

Automotive Pilkington Automotive is one of the world’s largestsuppliers of automotive glazing products. It operatesin three main sectors; supplying original equipment,aftermarket replacement glass and products forspecialized transport.

Its footprint, including fabrication plants, OE satellitefacilities and its AGR distribution networkencompasses Europe, Japan, North and South America, China, South East Asia and India.

EmployeesAt 31 March 2011, the NSG Group had around 29,340 permanent employees working worldwide.

Management structureThe Chairman of the NSG Group is Katsuji Fujimoto.The President and CEO, responsible for managing theoperations of the Group, is Craig Naylor. The ChiefFinancial Officer is Mark Lyons.

The worldwide Building Products business ismanaged by Clemens Miller, with regional BuildingProducts managing directors for Europe, Japan, North America, South America, China and South East Asia. The worldwide Automotive business is managed on a global basis by Mike Fallon.The Specialty Glass business is managed by Keiji Yoshikawa.

3. NSG Group - a glass industry leader


NSG Group global float manufacturing operations

Global reachThe NSG Group has a broad geographic reach. Thisglobal presence enables the Group to take advantageof diversified sources of raw materials and to capitalizeon the advantages of the best local labor forcesavailable. It also enables the NSG Group to provideexcellent responsiveness in terms of product range,quality and delivery times to its customers, who, in thecase of Automotive OE, have themselves becomeincreasingly global.

The NSG Group is one of only four companies in the flatglass industry that can claim to be true global players,the other three being AGC , Saint-Gobain and Guardian.The Group is either already established or is developingoperations in leading emerging markets, includingChina and India.

Broad manufacturing baseThe NSG Group’s manufacturing base includes floatglass lines operating in Europe, Japan, the Americas,Southeast Asia and China, with Automotiveoperations covering all major markets worldwide.

The Group owns, or has interests in, 49 float lines,giving full coverage of the global market andproviding the Group with advantages in terms ofstrategy, efficiency and effectiveness. During 2011,the Group announced the re-commissioning of anumber of lines mothballed during the economicdownturn. Some of these have been converted toproduce products for Solar Energy applications.These include the VGI float line at My Xuan insouthern Vietnam. In March 2011, the Group’s UK5float line was restarted, following its conversion forthe production of Solar Energy products.

in May 2011, the Group announced plans to build twonew value-added float lines in Vietnam to increase itsproduction of specialist products to supply thegrowing Solar Energy and Touch Screen sectors. Inaddition, the NSG/SYP joint venture facility inChangshu, China (JSYP) will now be upgraded for the

3.2 Business profile

UK 33 St Helens

Germany 42 Gladbeck

2 Weiherhammer

Russia 11 Ramenskoye

Poland 11 Sandomierz

Italy 31 San Salvo

1 Venice

1 San Salvo

China 16

1 Changshu1 Tianjin3 Suqian4 Weihai2 Wuhai1 Beijing

2 Xian2 Dongtai

Japan 42 Chiba

2 Maizuru

Vietnam 21 VFG ( Bac Ninh)

1 VGI ( Ba Ria Vung Tau)

Malaysia 2

2 MSG (Johor Bahru)

USA 62 Rossford1 Lathrop1 Ottawa

2 Laurinburg

Chile 11 Concepcion

Brazil 41 Ca çapava

1 Barra Velha

2 Jacarei

Argentina 11 Lavallol

1 ChangshuSweden 11 Halmstad

Operated by NSG Group 31

Operated by Associates 18

Total 49

NSG

Group O

verview


manufacture of NSG TEC™ products, with shipmentsfrom Changshu expected to begin in January 2012.These developments will bring the NSG Group's onlinecoating float lines producing solar energy products toeight (one in Japan, two in North America, two inEurope, two in Vietnam and one in China) and thosededicated to UFF production to two (one in Japan andone in Vietnam) maintaining the Group's globalleadership position in these fast-growing segments.

The Lirquen joint venture line in Chile was restarted inFebruary 2011, a year after being put out of action bythe Chile earthquake in 2010.

Intellectual capitalThe NSG Group is a global leader in manufacturingexcellence and innovation, notably in the areas of glassmelting, glass forming by the float process, onlinecoating and complex shaping technology, especially forautomotive windshields and backlights. The Groupinvested JPY 10,692 million in R&D in FY2011.

The NSG Group owns or controls approximately 4,000patents and patent applications, predominantly in thefields of float glass production and processing and

automotive glazing and also in the InformationTechnology field, and has access under license topatents held by third parties. The Group has also beenactive in selective licensing of its patents andtechnology, in the areas of online coating,encapsulation (of automotive glazing) and rainsensors (for automotive glazing).

RestructuringIn January 2009, the Company announced restructuringinitiatives designed to address the economic downturnand to improve profitability going forward. These builton action already taken in response to sudden andrapid changes in the global economic environment. The overall objective of the program was to protect the business in the short term and to re-establish profit growth from FY2011 onwards.

The restructuring program was completed as plannedduring FY2010. 2,200 employees left the Groupduring FY2010, bringing the total headcountreduction to 6,700.

InnovationThe Pilkington brand is closely identified with technical excellence, having been associated over the past fiftyyears with most major advances in glass technology, including the invention of the Float Process. NotablePilkington and NSG innovations over the years include:

• Energy-saving products such as Pilkington K Glass™ and Pilkington Energy Advantage™

• Advanced bending processes for making car windshields in complex shapes to fine tolerances.

• Pilkington Pyrostop™ advanced fire-resistant glass.

• EZKOOL®, Sundym™ and Galaxsee™ solar control glass for cars.

• Solar reflective automotive glazing.

• Pilkington Solar E™, clear solar control glass, preventing heat build-up in buildings.

• Pilkington Planar™ structural glazing system.

• Pilkington Spacia™, vacuum glazing, high performance energy saving in a very thin unit.

• UMU™, switchable privacy glazing for internal partitions.

• The 3R™ clean air process for reducing nitrogen oxide emissions from glass furnaces.

• Pilkington Activ™ dual-action self-cleaning glass.

• NSG TEC™ range of glass for Thin Film Solar and Pilkington Sunplus™ for the CSi Solar sector


Strategic Management Plan The NSG Group has made good progress since theacquisition of Pilkington in 2006; moving fromintegration and consolidation to geographicexpansion and value-added growth. The Group’s new Strategic Management Plan (SMP) isintended to drive the next stage of the Group’sdevelopment. Announced in November 2010, the SMPcovers FY2012 to FY2014. It sets out the main pointsof the Group’s strategy to achieve profitable growthand realize the vision of the Company — ‘Making adifference to our world through glass technology’.The announcement of the plan followed a majorstrategic review, conducted in 2010, intended tosharpen the Group’s operational focus and ensurethat full advantage is taken of the synergies offeredby an international Group headquartered in Japan. Early investment opportunities were identified in anumber of key projects with 12 to 24-monthdevelopment timescales. The Group secured fundingfor these through the Share Offering launched inAugust 2010.Funding from the share issuance is allowing the NSGGroup to seize important investment opportunities inthe technologies that will build a sustainable future,leverage its competitive position and strengthen itsbalance sheet.

Strategic Management Plan objectivesThe aim is to create a thriving, innovative globalenterprise, taking the Group to the next level in itsdevelopment, by:

• Maximizing profitable growth while reducing netdebt/earnings (EBITDA) ratio.

• Ensuring highest standards of ethics, safety,environmental responsibility and sustainability inall activities.

• Being innovative in all areas of operations.The Plan is regarded as a ‘dynamic’ document, onwhich the Group is updating stakeholders on a regular basis.

Strategic Management Plan financial targetsThe Strategic Management Plan includes cleareconomic targets to be attained by the end ofFY2014.

• Attain 5 percent Compound Annual Growth Rate in sales

• Double operating profit (before amortization) as a minimum

• Increase EBITDA by 50 percent, as a minimum• Achieve low double-digit percentage return

on equity.

Strategic alliances/joint venturesIn addition to its substantial owned capacity, the NSGGroup uses manufacturing and other joint ventures asa key strategic tool, promoting market development,business growth and risk sharing. In common withother major players in the industry, the Group has alsoused technical alliances with other glassmakers inorder to promote and develop specific technologiesand/or gain access to certain markets.There are many examples of glass manufacturerssharing the risk of new float investments, either withother manufacturers or with financial partners inemerging markets, or in developed markets withsecondary processors who wish to backwardintegrate to secure float purchases. The NSG Group is no exception to this trend and thestrategy of entering new markets and/or expandingexisting operations in emerging markets has beenprudent. Historically, there has been a preference forventure partners in countries it does not know well orwhere risk-sharing is important.

Growth strategiesDespite the downturn, the NSG Group is continuingwith the strategy of pursuing carefully selectedopportunities for profitable growth in flat glass.Recent growth strategies have fallen into three broadcategories. Examples of each are listed below.Business line strategic priorities for Building Productsand Automotive under the SMP are:

Building Products

• South America — float expansion.• Solar Energy — expansion to support

photovoltaics.• China — low-e energy-saving glass expansion.• Fire Protection — investment in capacity in line

with growing demand, to maintain leading globalposition.

• Expansion of other value-added growth products.• Build on technology base to expand technical

applications.

Automotive

• South America — toughening expansion.• Mexico — laminating growth.• Eastern Europe — laminating and toughening

expansion.• Expansion of AGR business, particularly in

fast-growing markets.• Improve competitive position in North America,

China and Japan, in order to grow faster than themarket.

NSG

Group O

verview


The Strategic Management Plan formally came intooperation on 1 April 2011. Since its launch in November2010, the Group has made a number of announcementson key investments underpinning the Plan.

• November 2010 — Announcement of planned newfloat line in North East Brazil

• December 2010 — Automotive expansionin Mexico

• January 2011 — Reopening of Vietnam VGI floatline, dedicated to Solar Energy market.

• February 2011 — Automotive Expansion in South America

• April 2011 — Off-line coating capacity expansion in UK

• May 2011 — Announcement of two new float linesin Vietnam to produce Solar Energy and touchscreen products

• September 2011 —Construction work begins onexpansion of Automotive glazing capacity andcapability in Poland.

Growth of existing products inestablished marketsInvestments have been completed in PilkingtonAutomotive’s plant in Sandomierz, Poland, to provideadditional capacity and capability to manufacture therange of value enhancing products required by VMs.Pilkington Automotive’s Specialized Transportbusiness, supplying glazing systems to buses, trucks,trains and ships, continues to grow market share in asector in which the Group is already a world marketleader. A new fully integrated windshield line waslaunched in Italy. Building work is underway at theGroup’s new automotive line at Chmielów in Poland.

New products and value-chain growthThe Group stands to benefit from the growing need toconserve energy. Its added value products, such aslow-e glass, solar control glass and glass forphotovoltaics have the principal purpose of reducingenergy consumption in buildings and generatingenergy from the sun.In every region of the world in which the Groupoperates, the need to save energy is a politicalpriority. Buildings account for almost 50 percent ofthe energy consumed in developed countries.

Buildings account for almost 50 percent of theenergy consumed in developed countries.

Governments are putting increased focus onlegislation and policies to improve their energyefficiency. In North America, initiatives such as theenvironmental building rating system (LEED) run bythe US Green Building Council are helping totransform the market for added-value glazing, andthis will continue.

Similar opportunities are anticipated in Europe, forexample, through the development of an EU-wideEnergy Labeling system for windows. In China,legislation is at an earlier stage, but the governmenthas already introduced building regulations toimprove the energy efficiency of new buildings.Over the past year, the Group’s Building Productsbusiness line has launched a number of energy-efficient products across Europe. These includePilkington Suncool™ 70/35, offering a solution to anever-increasing need to achieve outstanding energyefficiency within buildings without compromisinglevels of natural daylight. Its very low total heat gainand extremely high light transmission maximize thethermal comfort and aesthetics of a working or livingenvironment.The Group has also seen excellent growth in the salesof the range of energy-efficient products launched in2008 under the Pilkington energiKare™ brand,offering home owners the opportunity to improve theefficiency of their windows by up to 90 percent.Earlier this year the Group’s Automotive business wasfirst to market with Pilkington Sundym ™ Select, an advanced automotive glazing which allows driversand passengers to determine how light and heatenters the vehicle cabin, providing the ultimate incustomisable glazing.Glass has an important role to play in thedevelopment of the growing Solar Energy sector. TheNSG Group is well placed to supply products for allthree of the leading technologies, converting powerfrom the sun into clean renewable energy.

Geographic expansionThe Group’s first Automotive plant in India is at Vizagin the south east and started production at the end of 2008. The plant is initially concentrating on theproduction of Aftermarket (AGR) parts for export.A new low-iron rolled line in Taicang, China startedproduction in June 2008. Originally a 50:50 jointventure between the NSG Group and China GlassHoldings (CGH), this is now wholly owned andoperated by the NSG Group. The integration of the aftermarket businesses ofGIMA, a leading supplier of automotive aftermarketglazing, with operations in Hungary and Romania, has further enhanced Pilkington Automotive’sEuropean AGR network.The Pilkington Automotive plants in Guilin, Tianjin and Changchun in China are now integrated into theGroup’s Automotive global business line. These plantssupply both OE and AGR domestically and for exportand are well placed to continue growing. Additionalinvestment is planned to increase capacity andproduct range.


3.3 Building Products overviewBuilding Products represented 43 percent of the NSG Group’s revenue in FY2010/2011. Its operationsare organized into six businesses; Europe, Japan,North America, South America, China and South East Asia.Float glass for the building market is either soldwithout further processing or processed into productswith additional properties. Pilkington-brandedproducts help control energy usage, protect againstfire, insulate against noise, provide safety andsecurity, afford decoration and privacy, self-cleanse,are used to build all glass façades and include glassfor specialized applications. Large-scale coating, laminating, and silveringprocesses are used to make these products. Building Products has float glass manufacturing orprocessing operations in the following 21 countries;United Kingdom, Germany, Japan, Malaysia, Vietnam,China, Austria, France, Netherlands, Italy, Denmark,Norway, Sweden, Finland, Czech Republic, Poland,Russia, United States, Argentina, Chile and Brazil.Building Products’ main activities include:

• Float manufacturing: 1.0 mm to 25 mm, clear,tinted, extra clear, on-line coated

• Rolled manufacturing• Semi-finished products: off-line coated,

laminated, silvered• Processing: toughening, insulating glass units,

merchanting, fire protection• Glazing systems: Pilkington Planar™ (frameless

glazing system) Pilkington Profilit™profiled glass

• Products for the Technical and Solar Energy sectors

Product range & brandsThe Group's products are designed to create the idealenvironment in which to live and work. Coated andtinted products, and insulating glass units, helpcontrol the flow of energy into and out of buildings.

Solar ControlSolar control is a key issue in terms of energy saving.In hot conditions or for buildings with high internalloads, solar control glass is used to minimize solarheat gain, by rejecting solar radiation, and helpcontrol glare. In more temperate conditions it can be used to balance solar control with high levels ofnatural light. The correct choice of glass can help to reduce the capital outlay, running costs andassociated carbon emissions of a building throughout the year.Given the variety of building designs, climaticconditions and the different levels of exposure to solar

radiation during the year, the glass chosen must beable to protect the inside of the building to ensuremaximum comfort, minimize energy consumption,guarantee safety and, not least, provide the opticaland aesthetic qualities that satisfy the designer. The NSG Group is continually innovating anddeveloping products that satisfy the full range ofarchitectural requirements. Pilkington innovativesolar control products cover the whole range:

• From the highest performing, off-line coated,solar control and low-emissivity products withinthe Pilkington Suncool™ range

• Through on-line environmental control glassesthat combine medium performance solar controlwith low-emissivity such as Pilkington EclipseAdvantage™ and Pilkington Solar-E™ ranges

• To medium performance reflective glasses such as Pilkington SunShade™, Pilkington Reflite™and high performance tints such as PilkingtonArctic Blue™

• To low-performance, body-tinted glass in thePilkington Optifloat™ Tint range

• And to solar control glass combined with therevolutionary, self-cleaning Pilkington Activ™.

In addition to the above ranges, the Pilkington SolarControl range can be used with many other Pilkingtonsolutions, to achieve benefits in safety, functionalityand cost efficiency.

Thermal InsulationAdvances in low-e glass technology have madewindows an essential contributor to energyconservation and comfort, minimizing heat loss andinternal condensation.Low-e glass reflects energy back into a building, toachieve much lower heat loss than ordinary floatglass. Different types of low-e glass allow differentamounts of passive solar heat gain, which helpsreduce heating requirements and costs, especially incolder months.The Pilkington low-emissivity range covers all levelsof requirements:

• From on-line products such as Pilkington K Glass™ and Pilkington Energy Advantage™

• To extremely low Ug-value off-line solutions inthe Pilkington Optitherm™ range

• Through to Pilkington Suncool™, PilkingtonSolar-E™ and Pilkington Eclipse Advantage™which are primarily solar control products thatalso offer low-emissivity properties.

Pilkington Spacia™ is the world’s first commercially-available vacuum glazing, offering the thermalperformance of conventional double glazing in only the same thickness as single glass.

NSG

Group O

verview


Pilkington Spacia™ has a low overall thickness aswell as a good acoustic performance, and is ideal foruse in historic buildings, offering replacementwindows more in keeping with the original design. It is also available in laminated form for additionalsafety performance.Pilkington Spacia™ may even allow the use of theoriginal frames if these are in good condition. Alreadysuccessful in Japan, sales are developing worldwide,particularly within historic buildings.

Fire ProtectionThe Pilkington brand has been at the forefront of fire-resistant glass innovation since 1896, whenPilkington first introduced wired glass. As a leadingmanufacturer of fire-resistant glass and a pioneer inthe market for transparent fire protection, the NSGGroup sets particularly high standards in level andconsistency of performance and visual quality. The Group offers four product lines and technologiesto protect people and property against fire:

• Pilkington Pyroshield™ 2 (wired glass forintegrity-only fire protection),

• Pilkington Pyroclear® (clear monolithic fire-resistant and safety glass for basic integrity)

• Pilkington Pyrodur® (clear laminated fire-resistant and safety glass for integrity andreduced heat radiation)

• Pilkington Pyrostop® (clear multi-laminated fullyinsulating fire-resistant and safety glass forintegrity and insulation).

The range of transparent laminated products is the global market leader in high performance fire-resistant glazing. The products are laminatedwith special transparent intumescent interlayers,which when exposed to fire, foams up to form a thick,resilient, insulating shield that absorbs the energy ofthe blaze. The products can be combined with otherproducts from the Pilkington range to offer additionalproperties if required. The products in that range provide not only protectionagainst flames and smoke, but also a high degree ofprotection against the heat of a fire, by all transfermechanisms (i.e. conduction, convection, andradiation). Pilkington Pyrostop® and PilkingtonPyrodur® have been tested in more fire doors, fireprotection framing and façade systems than anyother fire-resistant glass products, covering vertical,horizontal and inclined glazed situations. As an example of the high level capability of theintumescent interlayer system, the tested range ofapprovals includes many high performanceconstructions used in sensitive buildings and areassuch as schools, hospitals, commercial and retailbuildings, and airports. The emphasis of the Pilkington intumescenttechnology is on fitness for purpose, reliability and

repeatability of performance. Today, Pilkington fire-resistant glasses are well respected and used invarious building, marine, and rail transportapplications all over the world.

Noise ControlWith increasing traffic on the road, rail and in the air,noise insulation has become a very important issue.No longer a luxury, it is essential that noise reductionis considered in the specification of the glazing. Withregard to employment law, comfort and medicalnecessity, noise insulation in building construction isan undisputed requirement to decrease stress- andnoise-related illnesses. Pilkington Optiphon™ is the ideal choice of glass insituations where there is excess noise from road, railor air traffic, or various other sources, for examplefactories or nightclubs. By using a special PVB(polyvinylbutyral) interlayer, Pilkington Optiphon™is a high quality acoustic laminated glass that offersexcellent noise reduction without compromising onlight transmittance or impact performance. Thedesired acoustic performance can be achievedthrough combining various thicknesses of glass with aPVB interlayer. With a wide range of productcombinations, Pilkington Optiphon™ offers theopportunity to achieve specific noise reductionrequirements.

Safety and SecurityInnovations in the development of safety and securityglasses have opened up new avenues of design,allowing people to be protected from personal injuryand in the most extreme cases, buildings to beprotected from various forms of attack, withoutcompromising levels of natural light and visibility.The term “safety” is applied to glazing used to reducethe risk of accident by impact, fracture, shattering, orin a fire. The term “security” is applied to glazing,which in addition to “safety”, is able to withstanddeliberate attacks such as physical, armed or blast.Specialist glass of this type must be combined withhigh performance glazing and framing systems,capable of offering the necessary resistance to thesevere loads that could be imposed.In parallel, stringent safety legislation has beenimplemented stipulating the critical areas wheresafety glazing must be installed to comply withrequired safe practice. The Group has developed a wide range ofsophisticated glasses to meet these increasingdemands for protection of both people and property.


Pilkington Toughened Safety Glass is a glass that hasbeen subjected to a heating and cooling treatmentwhereby high compressive stresses are set up at thesurfaces with balancing tensile stresses in thecentre. The high compressive surface stresses givethe Pilkington Toughened Glass its increasedstrength (up to five times stronger than ordinaryglass of the same thickness). Pilkington Optilam™ is a laminated glass, producedby combining two or more sheets of float glass withone or more PVB interlayers. The interlayers ensurethe integrity of the glass by holding the broken piecesin place should any damage occur. In fact, glassfragments adhere strongly to the interlayer, while theresistant cushioning effect dissipates the energy.

Self-Cleaning glassPilkington Activ™ Clear is the world’s first dual-actionself-cleaning glass. Its unique coating uses the forcesof nature to help keep the glass clear of dirt, givingnot only the practical benefit of less cleaning, but alsoclearer, better looking windows. It works in two ways: first it uses daylight to breakdown organic dirt and then it uses rain to wash anyloosened dirt away. Pilkington Activ™ Clear also driesoff faster leaving the glass cleaner and with reducedstreaks, which gives beautiful clear views and makesit ideal for various applications, from building façadesto conservatory windows. Products in the Pilkington Activ™ range are on-linecoated; they can therefore be toughened, processedand handled using standard techniques. ThePilkington Activ™ Solar Control range combines thebenefits of self-cleaning with varying degrees of solarcontrol performance to offer the ultimate range ofsolar control solutions for hard-to-reach places thatare difficult to clean.Pilkington Activ Suncool™ is a range of glassproducts with a coating on both surfaces; it combinesself-cleaning, thermal insulation and the highest solarcontrol performance. Pilkington Activ™ Neutral(dual-coated solar control and self-cleaning glass) andPilkington Activ™ Blue (coated body-tinted solarcontrol and self-cleaning glass) are perfect for use inconservatories and glass roof structures.The Pilkington Activ™ products can be furtherenhanced when combined with other Pilkingtonproducts to offer additional advantages such asthermal control, noise control or safety.

DecorationAs well as offering functional benefits, glass is alsoused to enhance the appearance of the environment.The Pilkington range of decorative glass turns it froma basic construction material into a means of addingstyle and elegance. By incorporating decorative glass,you can add privacy and meet any requirements,aesthetic or practical.Pilkington Texture (Patterned) Glass offers privacyand style throughout the home. Pilkington Spandrel Glass is a toughened safety glassmostly used in non-vision area of the façade. Theextensive range of products that has been developedfor use as spandrel panel includes: PilkingtonSpandrel Glass Enameled, Pilkington Spandrel GlassSilicon and Pilkington Spandrel Glass Coated.Pilkington Optimirror™ is a range of high specificationmirror products, produced using the latestenvironmentally-friendly processes and materials.The products are available on clear, (PilkingtonOptimirror™), bronze (Pilkington Optimirror™Bronze) and low-iron substrates (PilkingtonOptimirror™ OW), offering increased light reflection.Pilkington Optimirror™ Protect protects againstpossible injury resulting from breakage thanks to theadditional safety film backing that it contains.Pilkington Optifloat™ Opal is an acid-etched glasswhich creates an attractive finish for windows,partition walls, glass doors, furniture, shelving, wallcladding and many more internal and externalapplications. The glass provides all the diffusednatural light of a translucent glass, but with none ofthe drawbacks.

Glass SystemsPilkington Planar™ is a structural glazing system,allowing architects immense flexibility in theappearance of façades, whilst incorporating all of thefunctionality required from windows in today’sbuildings. Pilkington Planar™ can incorporate mostPilkington glass types - which includes the range ofsolar control products, low-emissivity glass, screenprinted glass and Pilkington Activ™ self-cleaning glass.Another popular product, Pilkington Profilit™ is arange of alkali cast glasses in U-shape, produced usingthe machine rolling process. It is translucent, but nottransparent, with a patterned surface on the outside.This highly durable product allows light to enterbuildings whilst presenting a translucent externalappearance. A wide range of fitting options providesconsiderable flexibility.Pilkington Profilit™ is available in different colors,patterns and types of coating, offering differentfunctions including thermal insulation, solar control,noise control or safety. The product can be singleglazed or double glazed, either vertically or horizontally.

NSG

Group O

verview


Special ApplicationsGlass for Special Applications provides uniquecharacteristics used in both building and non-building applications:Pilkington Optiwhite™ is an extra-clear, low-ironfloat glass; it is practically colorless, and the greencast inherent to other glasses is not present. It istherefore ideal for use where glass edges are visibleor where a neutral color is desired. As its lighttransmission is much higher than clear float glass, it is perfect for applications where transparency andpurity of color are desired. Pilkington OptiView™ is a monolithic glass with alow reflection coating on one surface, which reducesvisible light reflectance and allows more visible lightto pass through, when compared to clear float glass.Pilkington OptiView™ Protect is a laminated glasswith low reflection coatings on both outer surfaces,Pilkington OptiView™ Protect is a laminated glasswith anti-reflective coatings on both outer surfaces,which reduces interior and exterior visible lightreflectance to around 2 percent, and offer improvedsafety, enhanced security, durability and acousticproperties. Furthermore, it provides protection from UV radiation (UVA and UVB) by blocking over 99 percent of UV transmittance, helping to reducefading of the contents and interiors of a building.Pilkington Microfloat™ and PilkingtonMicrowhite™ are extremely thin, high-grade floatglass manufactured to precise standards. PilkingtonMicrofloat™ has traditionally been used for theproduction of microscope slides, cosmetic mirrors,chromatographic plates, LCD photo masks,automotive and technical glass, PC display screensand tablet PCs. Its low-iron composition version,Pilkington Microwhite™, is well suited for manyapplications and is also ideal for use in solarconcentrator applications.Pilkington Mirropane™ is a coated glass developedfor use as a one-way mirror where total clear vision isrequired and specific lighting conditions can beachieved. Under specified lighting conditions it offersan effective means of providing undetectedsurveillance and high quality one-way vision toachieve complete privacy.

Solar EnergySolar energy panels offer alternative solutions for arange of energy requirements, from small scaledomestic applications to large scale solar powerstations, from cloudy northern rooftops to hot sunnydeserts. Glass is an integral and important element ofthese solar panels. The NSG Group’s wide range of high quality productsare used in the three leading solar technologiesaimed at converting solar energy into electricity: thin film photovoltaics, crystalline silicon photovoltaicsand concentrated solar power applications. In additionto the generation of electricity, the Group’s glassproducts are also used in solar applications thatgenerate hot water. NSG TEC™ is a group of products, including acomprehensive range of TCO (Transparent ConductiveOxide) coated glass, optimized to suit a variety of thinfilms photovoltaic technologies, with different hazeand conductivity levels. Each of the products withinthe range is targeted at a particular thin filmphotovoltaic technology and can be optimized to meetindividual customer requirements.Pilkington Sunplus™ is a high performance, low-ironglass designed to maximize solar energy collectionthrough very high light and solar transmission. The high solar energy transmission of PilkingtonSunplus™ makes it an ideal choice for Crystalline PVphotovoltaic solar cells.Pilkington Optiwhite™ is a range of extra-clear low-iron float glass with very high solartransmittance for improved solar energy conversionand consistent performance. The products aresuitable for use in photovoltaic modules, solarthermal collectors and solar mirrors. The PilkingtonOptiwhite™ range includes the standard and wellestablished low-iron Pilkington Optiwhite™ andPilkington Optiwhite™ S, which was developedspecifically for the solar industry and offers evengreater solar transmission. Pilkington Microwhite™is Pilkington Optiwhite™ in its extremely thinversion (glass thicknesses down to 1.0 mm).


Building Products businessesBuilding Products Europe

Building Products Europe is the NSG Group’s largestsingle business. The main upstream productionfacilities are in the UK, Germany, Sweden, Italy, Poland and Russia.

Europe – primary production facilities

Building Products Europe is the NSG Group'slargest single business.

The downstream part of the business includesglass processing and wholesaling operations,serving the European market through a networkof forty-seven branches across ten countries(Austria, Czech Republic, Denmark, Finland,France, Netherlands, Norway, Poland, Sweden andthe United Kingdom). The extensive range ofproducts and services includes merchanting, themanufacture of safety glass, and the completerange of Pilkington Insulight™ insulating glassunits. Special Products such as PilkingtonPlanar™ and Pilkington Plateau™ are alsoproduced by branches of the Europeandownstream business.

The downstream business has developed over thelast ten years into a significant contributor toEuropean profits, through its culture of service tocustomers, and continuous improvement ofproductivity and safety for employees.

Europe: Distribution of “Downstream” operations

Downstream branches

UKNetherlandsFranceAustriaCzech RepublicSwedenNorwayDenmarkPolandFinland

Halmstad

Gelsenkirchen

Schmelz

Float

JV Float Sandomierz

Weiherhammer

Moscow

San Salvo

Venice

Rolled

Laminating

Coating

Silvering

Fire Protection

St. Helens

Gladbeck

Float

JV Float

Rolled

Laminating

Coating

Silvering

Fire Protection

25

16

1

4

76

3

1

2

The European Downstream business serves the marketthrough a network of 47 branches across 10 countries.

NSG

Group O

verview


Building Products JapanBuilding Products Japan has its main Upstreamproduction site in Chiba (two float lines and onerolled line).

The downstream business, represented mainly byoff-line coating, insulating glass units, laminatedglass, tempered glass, fire protection glass andvacuum glazing production, is spread around 20different sites across the country. Japan is also theonly location where the NSG Group manufacturesPilkington Spacia™ – the world’s firstcommercialized vacuum glazing product.

With six regional sales offices, thebusiness offers a full range of productsand services to its customers.

Japan - production facilities

Building Products South East Asia

South East Asia - production facilities Building Products South East Asia is represented bytwo float lines in Vietnam, one of which wascommissioned in 2008, and two float lines inMalaysia, one of which is a hybrid (float/rolled) line.

Chiba

Tokyo

Osaka

In Maizuru, the Woat lines are dedicated to automotive andspecial glass production

IGU

Tempering

Float

Rolled

Laminating

Coating

Silvering/Spacia

Float

Rolled


Building Products ChinaThe NSG Group has minority interests in two majorglass manufacturing businesses in China – SYP (two float lines, one rolled line and extensive glassprocessing) and China Glass Holdings (13 float lines).

SYP’s two Shanghai float lines were closed inDecember 2008 and one was replaced in nearbyChangshu .

In addition, NSG itself operates a float in Changshu, in a 50:50 JV with SYP. Advanced on-line coating wasinstalled on the line in 2009, which is enabling it torespond to the rapidly growing, regulation-drivenmarket for value-added low-e glass.

This technology is now being upgraded for themanufacture of NSG TEC™ products, with shipmentsfrom Changshu expected to begin in January 2012.

NSG will have another 50:50 JV float line withadvanced on-line coating in operation in 2012,located in Tianjin.

The Group operates a further rolled line whichproduces low-iron cover plates for the Solar Energysector. The line has anti-reflective coating capabilityto further enhance the performance of the glass.

China – production facilities

Building Products North America Building Products North America manufactures anddistributes products for the architectural/ commercialmarket (exterior and interior), residential market,specialty glass market and fire-rated glass market fora diverse range of applications.

The business has four float lines across theUSA, in California (Lathrop), Illinois(Ottawa), and two in North Carolina(Laurinburg), three of which have on-line coating capability.

North America - production facilities

In Rossford (Ohio) two Woats arededicated to Automotive.

LathropOttawa Rossford

Laurinburg

NSG/SYP Float NSG RolledSYP Float CGH FloatSYP Rolled

NSG

Group O

verview


Building Products South AmericaThe Group’s strategy in South America has for manyyears concentrated around operating jointly-ownedfloat facilities with Saint-Gobain, a relationshipfurthered in 2004 with the completion of the fourthjoint venture line in Barra Velha, Brazil. Thispartnership is set to continue with the jointcommissioning of a fifth facility in Brazil.

There is only one other float glass manufacturer inSouth America, besides the NSG Group and Saint-Gobain, namely Guardian with one line in Venezuelaand two in Brazil. NSG Group and Saint-Gobaintogether operate four lines in Brazil and NSG Groupoperates one in Argentina and one in Chile. The Groupalso has warehousing activities in Colombia, Ecuador,Bolivia, Paraguay, Uruguay and Peru.

The South American region traditionally has a highergrowth rate than the northern hemisphere althoughit is occasionally disrupted by economic instability inparticular countries.

NSG Group and Saint-Gobain together operatefour lines in Brazil and the NSG Group operatesone in Argentina and one in Chile.

South America - production facilities

3.4 Automotive overviewThe Automotive business of the NSG Group operatesunder the Pilkington Automotive name and is one of the world’s largest suppliers of automotive glazing products.

In serving this market, Pilkington Automotiveoperates a global key account network, matched tothe individual VM’s own organizational requirements.Within the automotive glazing industry, Pilkington ledthe way in globalizing its account management andpresenting a single face to the customer.

Pilkington Automotive operates automotive glassfabrication plants and satellite facilities throughoutEurope, Japan, NAFTA, South America, China, Malaysia and India; 31 locations in total in 16 different countries.

Through restructuring of its established facilities andthe establishment of new ones in the fast developingmarkets, Pilkington Automotive continues to match its asset base to regional demand, both in terms of volume and, equally as important, technicalcapability and service.

The Pilkington Automotive global business line wasformed in the mid-1990s, in recognition of theautomotive industry’s own increasing globalization.The business is now fully integrated and managed ona global basis, subsuming all of the former Pilkingtonand NSG Automotive operations worldwide.

This new organization enables optimization of the NSG Group’s global asset base and its exploitation of available synergies across its business segments.

As well as its major OE businesses within each region,Pilkington Automotive also supplies replacementglazings into the independent aftermarket. Pilkington Automotive has developed extensive AGRnetworks throughout NAFTA (121 wholesalelocations) and both Western and Eastern Europe (86service facilities). It also serves the aftermarkets inJapan, South America, China and South East Asia.

Cebrace (50% JV with Saint-Gobain)4 Floats in Brazil (5th under construction)

FloatRolled

Jacarei

Caçapava

Lavallol

LirquenBarra Velha


Pilkington Automotive global presence

Pilkington Automotive’s markets

Original Equipment (OE)The vast majority of Pilkington Automotive's OEproduction is focused on the volume light vehicleindustry, serving all of the world’s major VMs.Of all such vehicles built in the world last year, morethan one in three contained glazing manufactured byPilkington Automotive businesses. Additionally,Pilkington Automotive globally coordinates itsapproach to the specialist/niche vehicle makers androof-system manufacturers.

Aftermarket (AGR)Pilkington Automotive aftermarket products can reachthe end user by one of two main routes; the VMs’ owndealer networks or independent AGR distributionchains, including Pilkington Automotive's own,supplying the retail fitter.Pilkington Automotive itself has well developedaftermarket distribution and wholesale networksthroughout Europe and North America with estimatedmarket shares around 20 percent. It is also wellestablished in serving the aftermarkets in Japan,South America and South East Asia.

Specialized TransportPilkington Automotive provides high quality glazingsolutions and value-added products to the OriginalEquipment manufacturers of specialized transportand utility vehicles. These include buses and coaches

trucks, trams and metro systems, locomotives, train ,carriages, special cars and vans, recreational vehicles,tractors and combine harvesters, constructionvehicles as well as ships and pleasure craft (PilkingtonMarine). Pilkington Automotive’s customers arerecognized as world-leading manufacturers, withmany operating on a global basis.

Pilkington Automotive products and servicesPilkington Automotive makes a wide range ofautomotive glazings for new vehicles and forreplacement markets, offering full systems capabilityto customers, from initial design to final product.Pilkington Automotive products include solar controlglass for passenger comfort, glass heating systems tocontrol condensation and icing, security glazing, andglazing systems, including encapsulations, extrusions,and components such as rain sensors, hinges andclips, added after basic manufacturing.The Group aims to provide a full range of glazingsolutions on a global basis to its automotive customers,drawing heavily on its advanced technology, continuousimprovement and standardization activities.Just as in buildings, glass today is an integral part of avehicle’s body and fulfils many functions. Designtrends point to still greater usage of glass in thefuture; tighter tolerances, yet deeper and morecomplex curves.

Asia PaciLc Region:• Glass processing in Japan, China &

Malaysia & India• No 2 in Japan ~ 30% OE share• No 1 in Malaysia > 50% OE share • No 6 in China ~ 3% OE share

S.America:• Glass processing in Brazil, Argentina &

Chile• Mercosur market number 1, > 50% share

N.America:• Glass processing in US, Canada & Mexico

~ 20% OE Share - market number 3•

Europe:• Glass processing in 7 countries

OE market number 2>30% W.European share

••

NSG

Group O

verview


The glass manufacturer must be able to control veryclosely the pattern of temperatures in the glassthroughout the shaping process if overall shape, optical quality and stress patterns are to be achieved consistently. Utilizing its global R&D and global accountmanagement structure, Pilkington Automotive'smarket-focused approach to the development ofproducts and services ensures that it delivers theglazing solutions its customers want, in a timelyfashion to the appropriate regions.

Design facilitiesThe growing complexity of glazings has increased theneed for integrating simulation within the shapingprocesses. Pilkington Automotive is recognized as aleader in the development and use of computersimulation for advanced glazing technology, providingcustomers with the best possible glazing solutionswith which to achieve their styling intent. Pilkington Automotive’s computer simulation centreteam predicts the optical properties of a particularshape of windshield, how closely any of the bendingprocesses will achieve the required shape andtolerances, and how difficult manufacturingchallenges may be overcome. This virtual realityproduct development approach reduces bothtooling and manufacturing costs and dramaticallyreduces the time between design and manufacture.Pilkington Automotive simulation techniques havebeen empirically tested and shown to give excellentcorrelation to actual manufacturing processes andcontinuous benchmarking ensures ongoingimprovements.Pilkington Automotive has wide-ranging experience indesign integration, where Pilkington engineers workside by side with customers to achieve the optimumdesign for function and manufacture. Involvement ofPilkington Automotive personnel at the very earlieststage in the design of the vehicle helps the customeridentify potential manufacturing or design problems,thereby avoiding expensive redesign at a later stage.It also ensures that glasses meet legislativerequirements for optics and enables PilkingtonAutomotive to recommend benchmark stylingmodifications leading to more cost-effective productsand other glazing systems (e.g. encapsulation andextrusion) design. Data is transferred betweenPilkington Automotive and its customerselectronically, avoiding the need for drawings andphysical fixtures in the design of new glazings.

Glass shapingNumerous market factors affect glazing design andperformance, including cost reduction, tightertolerances, high optical quality, design complexity andweight considerations. To meet these stringentmarket requirements, Pilkington Automotivecontinues to develop and invest in leading-edge glassshaping and fabricating technology. Changes instyling and the need for lighter, thinner glazings toreduce weight are pushing manufacturing processes.Pilkington Automotive maintains an extensiveprogram of process development to keep abreast ofthe latest design trends. For instance, new stylingrequirements for windshields that extend into theroof of the vehicle, or wrap around into the side of thevehicle, demand significant extension of both gravitysag and press bending technologies. PilkingtonAutomotive has developed Advanced Sag and PressBending processes to secure its position as a supplier of the most advanced products.In support of its manufacturing processes, PilkingtonAutomotive is continually developing powerful newon-line inspection techniques, capable of analyzingevery aspect curvature, optical distortion, edgequality and scratches as the component takes shape.These systems will provide real time feedback forprocess control to increase yields and so reduce costs.

Variable light transmissionPilkington Automotive has launched the world’s mostadvanced automotive glazing product available to themainstream market. Pilkington Sundym™ Selectoffers a range of benefits: The product allows driversand passengers to decide how much light and heatenters the vehicle cabin, providing the ultimate in acustomizable glazing feature. Used as a roof glazing,it can also remove the need for a mechanical blindsystem, thereby reducing weight and increasing thevehicle’s headroom.


Glazing SystemsThe task of the glazing supplier does not end whenthe glass is shaped. Pilkington Automotive is a worldleader in the design and manufacture of a variety ofglazing systems, each designed to simplify the glazinginstallation process. As well as the efficienciesprovided at the vehicle assembly plant, these modularproduct solutions are also viewed by the VMs as apractical way of enhancing both a vehicle’s styling and aerodynamics.Encapsulation, or molding, provides a modular glassassembly with a multifunctional gasket around the rimof the glass, utilizing injection-molding technology.This gasket can provide many features from a singlemolding process, including an aesthetic finish to theglazing, water management, integrated attachmentpins or clips, and mounting brackets or hinges.Alternative sealing systems involve the use of arobotic extrusion process to apply a seal orattachment mechanism to the periphery of the glass.Glazing systems also encompasses the ‘assembly’activity where various hardware attachments,designed to locate correctly the glass within thevehicle, are fixed to the glass, either mechanically orby the use of adhesive technology.With decades of glazing systems experience behind

it, Pilkington Automotive is a market leader in all ofthese technologies, in terms of both product andprocess development and global market share.

Solar control glazingThe last decade has seen significant improvements inthe design and application of solar control glazings invehicles. The major drivers are passenger comfort,minimizing the degrading effects of the sun’s radiationon interior trims and fabrics, and improving fuelconsumption by lowering the load on the vehicle’s air-conditioning unit. Additionally, vehicle styling isimpacted by the choice of solar control glazing, fromdark tints in the rear of the vehicle, to thedifferentiated color of infrared reflective windshields.Solar radiation is partly reflected, partly transmittedand partly absorbed by glazing, the degree of eachdepending on the glazing fitted. Body-tinted glassescan selectively absorb the sun’s energy, whilstglazings with specially designed coatings can be usedto reflect solar radiation.

Absorbing solar controlPilkington Automotive has long been a market leaderin body-tinted glass compositions. Optikool™,EZKOOL® and UV Cut are green, optimized solar-absorbing glasses, providing significant improvementto occupant comfort. The products, designed for theEuropean, North American and Japanese markets

respectively, reduce the heat entering through avehicle’s glazed area by approximately 20 percentwhen compared to a car equipped with standardtinted glass. Pilkington Automotive is also a marketleader in the development of dark tinted automotiveglazings, and today produces two such suites ofglasses, both of which provide significant benefits tosolar control, privacy and overall vehicle styling. Due to vehicle safety legislation, requiring adequatelight to provide clear driver vision, use of these darktinted glazings is restricted to rear passengercompartments and to roof glazings.

Pilkington Automotive is a market leader in thedevelopment of dark tinted automotive glasses.

The Galaxsee™ glass suite is a major player in the privacy glazing segment. Originally developed for the North American market, it now finds globalapplications. This grey glass has a low lighttransmission (13-26 percent depending on thicknessselection) and an even lower transmitted energy value.It reduces the transmitted heat to the interior of thevehicle by approximately 65 percent in comparison toan optimized green glass used in the front of thevehicle. It also prevents more than 95 percent ofultraviolet radiation from entering the passengercompartment. Consequently, this glass is increasinglythe choice for ‘dark tail’ SUVs and MPVs, in addition tobeing suitable for roof glazing applications. Pilkington Sundym™ and the Legart range form asuite of neutral green privacy glasses that blendswith the green front door glass to allow both a designchoice and an improvement to solar loading. Pilkington Sundym™ glass has a light transmissionin the range 26-45 percent over a 3-5 mm glassthickness range. In a vehicle equipped with PilkingtonSundym™, the heat entering the rear of the vehicleis reduced by 45 percent when compared to that atthe front of the car.The market continues to adopt these glasses due to the valuable combination of both physical and aesthetic benefits.

Reflective solar controlPilkington Automotive possesses the technology andcapability to deliver a coated windshield product thatreflects more than 30 percent of the sun’s energy(more than five times that of a standard glass). Thisparticularly benefits the new generation of vehiclesthat are commonly designed with larger glass areas. Significantly, the Pilkington coating technique isadvantageous in the pursuit of improved vehiclestyling, as it can deliver highly complex shapes withexceptional optical quality.

NSG

Group O

verview


Pilkington Automotive produces a windshieldproduct that reflects more than 30 percent of thesun's energy (more than five times that of astandard glass).

Pilkington Automotive also offers a solar reflectiveproduct, Pilkington Siglasol™ utilizing infra redreflecting film within the laminate. Reflectiveglazings have now been successfully integrated intolarge area rooflights. This application is the mostsignificant for solar control in a vehicle, as the sun’sradiation is minimized, irrespective of the vehicle’sdirection of travel.

Laminated sideglazingsFor over 25 years, the standard glazing constructionsfor automotive vehicles have been laminated glass forthe windshield and toughened glass for the side andrear glazings. The trend to fit laminated sidelights started in Europe,but adoption in North America is now very strong andthere is also interest with Japanese vehiclemanufacturers launching models fitted with sidelaminates. The move to laminated side and rearglazings represents a turning point for advancedvehicle design opportunities and is more significantthan the volume change from toughened to laminatedwindshields in 1970.Extensive consumer market research has confirmedthat consumers are very interested in laminatedsidelights and prepared to pay a premium to havethem fitted to the vehicle. The consumer seesbenefits in two areas:

Security

• Personal security • Reduction in theft from cars

Comfort

• Solar control improvement• Reduction in extraneous noise• Greater than 95 percent reduction in UV entering

the vehicle through the side glazings

Laminated sidelights have a similar construction tolaminated windshields, namely a plastic interlayersandwiched between two glass plies. In order to meetdoor slam tests, both plies need to be semi-toughenedto give additional strength to the glazing. Currentlymost products are 2.1/0.76/2.1 mm, 1.8/0.76/1.8 mmand 1.6/0.76/1.6 mm construction. The trend to lighterweight glazing means that an overall 4 mm make up isbecoming critical as laminates are adopted on lowersegment vehicles. Pilkington Automotive researchers

have made it possible to supply high quality 4 mmlaminated sidelights in simple and complex geometryto tight tolerances.Besides its intrinsic benefits identified above,laminated glazing also offers an opportunity tocreate advanced glazings with additional features,such as coatings or wire heating for de-misting, ormodified interlayers (e.g. solar control, colors,acoustic enhancement).The additional cost of laminated side glazings isoffset by the above opportunities which can enablethe car manufacturer to customize the vehicle andmake it more attractive and desirable to the car buyer.Today’s vehicle designers expect the glazing toperform as more than merely a window. They wantadded functionality.

Integrated antennasWith the ever-increasing demands of globalcommunication systems, Pilkington Automotive candesign and manufacture fully integrated antennasystems either on the glass surface, or inside theglazing construction. This approach allows the VM tomove away from traditional rod-based antennas, whichnot only improves the styling and aesthetic appeal ofthe vehicle but also removes the threat of vandalism.The use of on-glass antennas is firmly established inJapan, a known pacesetter for electronic solutions, andis now increasing in Europe and North America.Considerable expertise exists inside PilkingtonAutomotive to take advantage of this growing trend.

Instrument displayHead Up Display (HUD) systems have long been usedin military aircraft to project information into thepilot’s field of vision. Pilkington Automotive hassuccessfully adapted this technology so that it can beused in road vehicles at a cost acceptable to themarket. Interest in HUD technology is continuallygrowing as people demand ever more functionality in their vehicles. Pilkington Automotive’s advanced press bendwindshields offer absolute 'state of the art' opticalsurfaces for the HUD systems to display the image on.The excellent full surface control properties of thepress bend windshields are perfectly aligned to thetight tolerance requirements to ensure that ‘ghostimages’ are not seen by the end users. Facilities tomanufacture these types of windshields exist inEurope, North America and Asia.


Water managementPilkington Automotive’s Hotscreen™ productincorporates fine wires that are capable of de-icing afrozen screen at -5°C inside two minutes. A recentinnovation allows the full area of the screen to be de-iced within this timescale. Further customerbenefits are achieved if this type of technology isemployed where the wipers rest on the windshield.Pilkington Automotive has also developed a full areacoated heated windshield that provides both de-iceand anti-mist properties. As power levels increase invehicles, this will provide an elegant way toelectrically heat windshields that have an infraredreflective coating applied directly to the glass. Thisheating functionality is in addition to the benefits ofoptimized solar control and high shape complexitythat are already achieved with Pilkington Automotivecoating technology.Pilkington Automotive has also developed a patentedsensor that detects moisture on the windshield andautomatically activates the windshield wipers. Thisrain sensor, attached to the interior of the windshield,detects moisture by using infrared light emittingdiodes. This technology is licensed in the market placeand is being increasingly adopted on new models.Another technology that improves driver visibility is a‘hydrophobic’ coating, which is applied to the outsideglass surface and significantly improves water dropletflow from the vision area. Hydrophobic products areused extensively in Japan, with significant adoption inEurope and market interest in North America.

Full service supplyDriven by the industry’s need for increased designefficiency and reduced time to market, PilkingtonAutomotive has developed a world class, full servicesupply capability. For the majority of its OE customers,Pilkington Automotive provides design expertisewhich then leads to product sequencing and ‘just intime’ delivery to the VM’s assembly line.

AGR market offeringsWhilst all of the glazing products offered by PilkingtonAutomotive are initially seen in the OE market, thebenefit of increasingly complex glazing installations isalso felt in the aftermarket. In addition to supplyingreplacement glazings to the aftermarket, PilkingtonAutomotive also sells the tools and accessories usedby windshield fitters, thereby supplying them with allthe equipment required for a re-glazing job.

NSG

Group O

verview


Glass has a unique role to play in promotingsustainability, reducing greenhouse gas emissions andmitigating the effects of climate change. The ‘energybalance’ between manufacture of high-performanceglazing products and their use means that the energyused and CO2 emitted in manufacture are quickly paidback through the lifetime of the products. The energyinvolved in glass-making should therefore be seen asan investment in future energy saving.

The NSG Group is fully committed to sustainability.The Group’s policies underline the unique contributionits products can make to addressing climate changeand the challenges the Group faces in improving itsown energy usage and resource management. TheGroup’s product range and R&D efforts are geared toaddressing the challenges of a low-carbon world.

Glass in buildingsproducts can make an important contribution tocombating climate change. Improving the energyefficiency of buildings brings other benefits too.Buildings are more comfortable and cheaper to runfor the owner and occupier. And from a social point ofview, national economies and energy security willimprove when energy-importing countries becomeless dependent on increasingly expensive suppliesfrom other parts of the world.

CO2 emissions and low-e double glazingThe European glazing trade association, Glass forEurope, of which the NSG Group is a member, publishedin 2005 a study into the CO2 savings potential ofreplacing ordinary single or double glazing with low-eglass. It showed that CO2 emissions from buildings,which amount to 765 million tonnes of CO2 per year inthe EU, could be cut by 140 million tonnes if the currentglazing was replaced by low-e double glazing.

CO2 emissions from buildings, in the EU could becut by 140 million tonnes if current glazing wasreplaced by low-e double glazing.

Even taking into account the 4.6 million tonnes of CO2

released per year by the building glass industry in itsproduction processes to manufacture the additionalglass required, the replacement of obsolete glass inold buildings and specification of energy-efficientglass in all new buildings would result in a huge net benefit.

CO2 emissions and solar control glazingIn regions where the ambient temperature is oftenuncomfortably hot, the increasing tendency is to installair conditioning and that, of course, brings with it anenergy and carbon burden. Glass for Europe hasrecently published a report, ‘Impact of Solar ControlGlazing on Energy and CO2 Savings in Europe’, whichquantifies the potential CO2 savings in the year 2020through the installation of solar control glass in air-conditioned buildings. The study shows thatinstalling solar control glass versus air conditioningunder the current growth scenario would produceannual savings of around 1.1 million tonnes of CO2

by 2020. If air conditioning use in Europe were toapproach the level of usage in North America, annual savings would be closer to 7 million tonnes.

Sustainability in buildingsGlass is used extensively in most buildings, both forexterior and interior use; as a construction material, forfunctionality, for decoration and for interior fittings.Around the world, policy-makers have begun to realizehow important the quality of buildings is in relation tothe quality of the environment and to the overall qualityof people’s lives.

Policy and legislative activity addressing the buildingsector, including the glass products that are used inbuildings, is increasing worldwide. The Group’s productsplay a vital role in improving energy efficiency andreducing CO2 emissions. But they also offer otheradvanced functionality, protecting against fire,insulating against noise, offering safety and security,privacy, decoration and even self-cleaning properties.

Glass is used extensively in most buildings, both forexterior and interior use; as a construction material, forfunctionality, for decoration and for interior fittings.Around the world, policy-makers have begun to realizehow important the quality of buildings is in relation tothe quality of the environment and to the overall qualityof people’s lives.

Energy efficiency in buildingsIn every region of the world in which the Groupoperates, the need to save energy is a politicalpriority. Buildings account for almost 50 percent of the energy consumed in developed countries.Governments are putting increased focus onlegislation and policies to improve their energyefficiency.

4. Sustainability


Buildings account for almost 50 percent of theenergy consumed in developed countries.

In North America, initiatives such as theenvironmental building rating system (LEED) run bythe US Green Building Council are helping totransform the market for added-value glazing, andthis will continue.

Similar opportunities are anticipated in Europe, forexample, through the development of an EU-wideEnergy Labeling system for windows. In China,legislation is at an earlier stage, but the governmenthas already introduced building regulations toimprove the energy efficiency of new buildings.

Thermal insulation – keeping heat in buildingsIn cold weather, low emissivity (low-e) productsreflect heat back into the building. Pilkingtonthermal insulation products combine unrivalledthermal insulation with high light transmittance andlower reflectance for a more neutral appearance.The Group’s Pilkington Spacia™ product wasdeveloped in Japan and was the world’s first vacuumglazing commercially available, offering the thermalperformance of conventional double glazing in thesame thickness as single glass. Sales for this productare developing worldwide, particularly for use inhistoric buildings.

For the residential market, the Group has developedproducts combining thermal insulation and passivesolar gain, helping domestic window companiesmeet homeowner demand for more energy-efficientwindows.

In warm weather, Pilkington solar control productsdramatically reduce or reflect the sun’s heattransmitted through the glass, while transmittingthe majority of the light, minimizing the need for airconditioning. Solar control is a key issue in terms ofenergy saving. In hot conditions or for buildings withhigh internal heat loads, solar control glass is usedto minimize solar heat gain, by rejecting solarradiation and helping to control glare.

In temperate conditions, it can be used to balancesolar control with high levels of natural light. Thecorrect choice of glass can help to reduce the capitaloutlay, running costs and associated carbonemissions of a building throughout the year.

Glass and solar energyGlass has a key role in attempts to find cheaper andmore efficient ways of generating power from thesun. The Group’s products support the three leadingsolar energy technologies; thin film and crystallinesolar modules and concentrated solar powerapplications.Glass is an integral and important element of solarmodules, used to convert solar energy into electricity.Increasingly, electrically conductive glass is used inphotovoltaic modules as the front contact of the solarcell, to form a system which generates a directelectrical current. Where the power feeds into a grid,it is first converted into alternating current. The United States and the European Union inparticular, are encouraging the production ofrenewable energy and in December 2008 the EUpublished the Renewable Energy Directive. Carbon-trading schemes encourage CO2 reductions, addingfurther impetus to the development of renewableenergy options. US government schemes designed toencourage ‘green’ industries are also expected to playan important part in establishing renewabletechnologies.Government subsidies are increasingly playing a rolein encouraging solar generation, with feed-in tariffsin countries such a Germany, Spain, Italy and Greecemaking it economic for solar generators to feed powerinto the national grid systems. The authorities inJapan have indicated likely support for homeownersolar installations and US tax incentives are addingfurther impetus to these technologies.Even without such subsidies, many systems alreadymake economic sense and costs are anticipated to fallfurther as the technology matures with grid parityexpected to be achieved over the next few years.The NSG Group is well placed to supply all three of theleading solar energy technologies.

Thin film photovoltaic solar modules Technology characteristics: Produces power at lowcost per watt, but requires large surface areas forinstallations. Can be used in climates where the sun isnot very strong and may be obscured by cloud.

Glass type required: Transparent Conductive OxideCoating on float glass. The glass both lets lightthrough and helps conduct the electricity produced.

NSG Group products: NSG TEC™ is a high-performance, highly durable, electrically conductiveglass used in a wide range of markets includingphotovoltaics, where it is used to construct thin filmPV modules. With the Group’s advanced technology,the coating properties can be ‘tuned’ to a wide varietyof Thin Film PV technologies, including silicon andcadmium telluride based.

NSG

Group O

verview


Crystalline photovoltaic solar modules Technology characteristics: Highly efficient, butthe PV cells are also expensive to make. So, best usedin applications where space is at a premium. Requiresreasonably high solar radiation, but can tolerate somecloud cover. Glass type required: Low-iron rolled glass plus anti-reflective coating, to ensure that the maximumamount of solar radiation hits the PV cells.NSG Group products: Pilkington Sunplus™ is ahigh-performance, low-iron glass, designed tomaximize solar energy collection through very highlight and solar transmission. The high solar energytransmission of Pilkington Sunplus™ makes it anideal choice for crystalline PV photovoltaic solar cells.

Concentrated solar power applicationsTechnology characteristics: Typically, large areamirror arrays. Requires a large area and lots ofsunshine. Particularly effective in sunny deserts.Glass type required: Low iron float glass.NSG Group products: Pilkington Optiwhite™ is anultra-clear float glass with very low iron content andits high solar energy transmittance makes it ideal as abase substrate for mirrors used in concentrated solarpower applications.

Glass in VehiclesThe global automotive industry is increasinglyaddressing the sustainability agenda. The shift toelectric vehicles and plug-in hybrids marks a new era,with CO2 reduction a major focus. This requiresglazing advances in solar energy control, weightreduction and energy saving. As a world leader in automotive glazing, the NSG Groupis meeting these challenges. It is developingautomotive coating technology and glasscompositions to produce advanced infra-red absorbingand high-performance infra-red reflecting technology.The Group aims to provide further opportunities forvehicle manufacturers to reduce CO2 output.

Lightweight glazingThere can be over 13 individual pieces of glazing on avehicle, all of which contribute to the overall vehiclemass and contribute significantly to the overallweight of the vehicle and to fuel consumption. The NSG Group’s developments have been heavilyfocused on the introduction of lightweight glass andglazing technology, with the launch of reducedthickness laminated and toughened sidelights,backlights and rooflights. Through continuousdevelopments in the Group’s glass-shaping capabilityto enable asymmetric windshield constructions, thePilkington Automotive is contributing to the future ofautomotive glazing products.

With the Group’s developing glass-shapingtechnology it is now possible for vehiclemanufacturers to reduce the mass of glasscomponents by up to 25 percent. Glass in vehiclesoffers more properties than simple transparency, sowhen designing vehicles for reduced mass in thecomponents, consideration needs to be given toacoustics, stiffness, sealing and guiding systems andsolar control.

Solar control technologyThe relationship between high-performance solarcontrol glazing and vehicle CO2 emissions reductionhas long been recognized. It has been establishedthat control of the heat energy entering the vehiclewill have a direct impact on mobile air conditioningusage and will lead to reduced fuel consumption andCO2 output. The Group’s advanced solar control glass can make asignificant contribution to the reduction of airconditioning usage by reducing solar heat gain.Approximately 30 percent of the heat loading on acar’s interior comes through the windshield. Pilkington Automotive’s vehicle glazing productsprovide advanced solar control by absorbing orreflecting the infra-red energy from the sun. TheGroup’s range of optimized green and privacy solarabsorbing glasses can reduce the heat entering avehicle by up to 65 percent.

Ensuring passenger comfort and safetyThe Group develops and supplies not only glass butalso glazing systems that are used to mount and sealthe products in vehicle apertures. PilkingtonAutomotive is working constantly to decrease thecomponent content, with a view to reduced cost andweight. New technology areas, for example, integralseals, significantly reduce processing steps and theamount of hardware needed to transform glassproducts to glazing products. Issues such as drivervisibility and pedestrian safety overlay the Group’swork in the development of the next generation ofautomotive glazing.

Glass and end-of-life vehiclesGlass typically constitutes around 3 percent of thecomposition of an average car. The automotive glassindustry has not been directly involved in the settingof end-of-life Vehicle legislation, but the Group isactively involved in work on the elimination of harmfulmaterials in glass, ink, solder and other componentsused for automotive glass products.


Appendix 1 – Glass ManufactureFlat glass manufacture

Glass is obtained by the fusion of several inorganic substances. The fused mass is cooled to ambient temperatureat a rate fast enough to prevent crystallization, i.e., the molecules cannot arrange themselves into a crystallinepattern. The fast rate of cooling to prevent crystallization applies to transparent glasses.

1. Raw materials and costs of flat glass

• The mix of raw materials used in the production offlat glass is known as the batch, which is mainlycomposed of three components: silica sand, sodaash and dolomite/limestone.

• Recycled glass (cullet) is used in the fabrication offlat glass and represents on average 15 percent ofthe materials used. Its addition helps reduce theenergy required in the process.

• Silica sand, soda ash, dolomite anddolomite/limestone represent together 99 percentof all raw materials used in the production of glass,excluding recycled glass.

The remaining ingredients aid the melting andrefining (bubble removal) reactions and impart colorand there is water addition during batch mixing toprevent subsequent segregation.

Silica sand is the main component of the batch, as itconstitutes about 62 percent of the batch weightexcluding recycled glass. Soda ash is one of the mostexpensive raw materials used in glass manufacturingand represents about 16 percent of the batch weightbut about 60 percent of the batch cost. In terms ofcosts, raw materials and energy are the single largestelements, followed by overheads and prime labor.

Float Glass Raw Materials

Float Glass Nominal Costs

2. Basic manufactureThere are three main flat glass manufacturing methods for producing the basic glass from which all processedglass products are made.

� FloatOver 90 percent of the world’sflat glass is made by the floatprocess (see below). This is theway all of the world’s highquality, optically clear glass ismade.

� Sheet Approximately two percent ofthe world’s flat glass is made bythe sheet process. This processpredates, competes with and isgradually being replaced by float.The majority of the world’s sheetproduction is in China with theremaining pockets in the lessdeveloped markets of Africa,Eastern Europe and Asia.

� Rolled The rolling process makespatterned, figured and wiredglass products. Semi-moltenglass is squeezed between metalrollers to produce a ribbon withcontrolled thickness and surfacepattern.

Recycled Glass15%

Sand51%

Soda Ash16%

Dolomite13%

Limestone4%

Sodium Sulfate1%

Other8% Raw Materials

22%

Energy21%

Prime Labor16%

Overheads13%

Depreciation9%

Transport11%

Manufacturing


Meltingfurnace

Floatbath

Raw materialfeed

Coolinglehr

Continuousribbon ofglass

Crosscutters

Large platelift-offdevices

Small platelift-o^ devices

3. The Float ProcessAt the heart of the world’s glass industry is the floatglass process - invented by Sir Alastair Pilkington in1952 - which manufactures clear, tinted and coatedglass for buildings, and clear and tinted glass forvehicles. The process, originally able to make only6mm thick glass, now makes it as thin as 0.4 mm andas thick as 25 mm.

Molten glass, at approximately 1000ºC, is pouredcontinuously from a furnace onto a shallow bath ofmolten tin.

It floats on the tin, spreads out and forms a levelsurface. Thickness is controlled by the speed at whichsolidifying glass ribbon is drawn off from the bath.

After annealing (controlled cooling) the glassemerges as a ‘fire’ polished product with virtuallyparallel surfaces.

A float plant, which operates non-stop for between10-15 years, makes around 6000 kilometers of glass ayear in thicknesses of 0.4 mm to 25 mm and in widthsup to 3 meters. The float process has been licensed to more than 40manufacturers in 30 countries. Over 380 float lines are in operation, underconstruction or planned worldwide with a combinedoutput of about 1,000,000 tonnes of glass a week. The NSG Group operates, or has interests in, 49 floatlines worldwide.

3.1 Modified basic manufactureThere are three main forms of modification to thebasic manufacturing processes.

TintedExtra ingredients are added to the raw materials ofglass at the melting stage to produce tinted products.Cobalt and nickel tint glass grey; ferrous oxide tintsglass blue, while ferric iron generates a yellow tint -both together tint glass green.

Tinted glass is used in buildings and vehicles tocontrol heat and light transmission.

Coated (On-line)Modified properties are produced from the basic glassby means of surface coatings. Glass can be coated on-line in the float process as the ribbon of glass isbeing formed in the float glass bath.

The technology uses chemical vapor deposition toapply a microscopically thin coating on the glass at atemperature of about 600ºC.

Pilkington K Glass™, Pilkington Energy Advantage™and Pilkington Activ™ are produced by this process.


4. Building Products processing4.1 Semi-finished processingThe following types of processing are high volume and predominantly performed by glass manufacturers.

Coating (off-line)Off-line processes use a vacuum coating technologycalled sputtering. A ‘target’ material is bombarded toproduce atoms which are deposited on the glass.

This process is used to make products such asPilkington Optitherm™ S3 and PilkingtonSuncool™.

LaminatingPlies of glass are bonded or laminated together with alayer of polymer film in between. By using heat andpressure, air bubbles are eliminated from the laminateso that it appears optically as a single sheet of glass.

Mechanically, however, it is more robust: if thelaminate is fractured, the broken glass fragments areheld together and are less likely to cause injury.

Laminated glass is used in safety and securityapplications.

4.2 Downstream processingThe following types of processing are performed by glass manufacturers and also by other companies.

Multiple glazed unitsMultiple glazed units incorporate two (or more) panes,separated by spacers to create a hermetically sealedgap between each successive pane in the unit, e.g.Pilkington Insulight™. This gap can be filled with air,which is subsequently desiccant-dried, lowconductivity gases such as argon can be used insteadof air in the cavities or, in the case of the Group’sSpacia™ product, the layer of dry air is replaced by avacuum to achieve higher performance.

Heat treatmentToughened glass, or tempered glass as it also known,is produced when float glass is heated to around650ºC, then quenched with air jets so that thesurfaces are cooled quickly, and the inside core moreslowly. At room temperature, the core continues tocool. The surfaces go into compression and the coregoes into tension. When the glass breaks, the corereleases tensile energy resulting in the formation ofsmall, safer glass particles. Toughened glass is used insafety glazing in buildings.

ShapingGlass can be bent into shape for some buildingapplications. Between 500ºC and 600ºC the viscosity- or syrupy nature - of glass falls by a factor of 10,000as it transforms from a brittle solid to a plasticsubstance. The science of glass bending is to use thisplastic phase to produce shapes that are free fromwrinkles and other optical defects.

Sag-bending is the most widely used process. Theglass is heated to the plastic phase and allowed to sag under its own weight to the required shape.

Surface workingFine surface textures can be applied using sandblasting and acid etching.

SilveringFloat glass is made into mirrors in a process whichdeposits a thin film of high purity silver on onesurface of the glass. A further thin film is thendeposited to protect the silver from oxidation. Finally, a ceramic paint is applied.

This is the process by which Pilkington Optimirror™Plus is made.

Manufacturing


5.1 Pre-processingPre-processing involves a number of preparatory activities, ahead of submitting the glass to heat treatment.

They include:� cutting out the flat glass template from standard,

rectangular ‘block sizes’ of automotive float� edge-working the shaped, but still flat, piece of

glass to provide a smoothed glass edge� drilling any required holes within the glass� washing the glass, before clean-room printing is

undertaken

� printing of shade bands, logos etc. on the glass in asingle pass process for simple features but a two orthree pass process for demisting circuits, antennasand alarms.

On completion of these pre-process activities, theglass proceeds to be shaped and to receive its safetyproperties.

5.2 Automotive glass shaping and strengtheningThere are two basic forms of glass shaping and strengthening for automotive applications, though hybridprocesses have more recently been developed.

Automotive tougheningToughened glass, or tempered glass as it is sometimescalled, is most frequently used in the rear and sidewindows of vehicles. It is designed to be muchstronger than non-safety glass. However, in the caseof a breakage, it shatters into very small pieces ratherthan sharp shards of glass, thereby significantlyreducing the risk of injury.

This is made possible by the toughening process whichintroduces internal stresses into the glass through acombination of controlled heating to very hightemperatures, (>640°C) and differential cooling.

The heating cycle is also used to shape or curve theglass, either by allowing the heated glass to ‘sag’ to apre-defined mould shape under gravity, or for morecomplex shapes, by being pressed to shape by maleand female moulds.

Automotive laminatingLamination is a form of safety glazing where normallytwo thin glass plies create a sandwich around apolyvinylbutyral (PVB) interlayer. Normally used for avehicle’s windshield, in the case of breakage, the glassis held in place by the interlayer, retaining emergencyvisibility for the driver.

Laminated glazing is also increasingly being specifiedfor car side windows.

Usually the glass plies are shaped (curved) as matchedpairs through heating to a temperature of around620ºC. As with tempering, the shape can be achievedthrough gravity ‘sagging’ or through press-bending forthe more complex shapes.

Differential heating to control temperature across thesurface of the glass, and hence the resultant degree ofbending, is also used for more complex shapes. Theshaped glass pairs are then gradually cooled to roomtemperature before the PVB laminate is sandwichedbetween them.

At this point the PVB is opaque and only becomestransparent at completion of the lamination process.

This involves the removal of any air trapped in the glass sandwich through a mechanical or vacuumsqueezing process, followed by heating of thewindshield to 140ºC within an autoclave, under apressure of 10 to 15 kg/cm2, to complete the bonding of the two glass plies.

Increasingly, glazing systems rather than a simple piece of glass are being supplied to the vehiclemanufacturers. Much of this value-added activity isundertaken once the glass has been laminated ortempered.

5. Automotive Products processing

Because glazing is an integral part of any vehicle’s styling, each piece of automotive glass is unique to a specificopening within any individual vehicle. Hence three-dimensional shaping of the glass, together with imparting itsincreased strength and safety properties are at the heart of automotive glass processing. However, ahead of this,certain pre-process operations must be undertaken.


5.3 Glazing Systems processesGlazing systems help to simplify the vehicle assembly process. Modular systems such as encapsulation andextrusion are designed to facilitate adhesive bonding of the glazing to the vehicle.

Encapsulation

Encapsulation involves theinjection molding of a polymertrim, shaped precisely to fit thevehicle body, to the periphery ofthe glazing. It also provides theopportunity to incorporate withinthe molding additional stylingfeatures, fixing mechanisms andeven hinges for opening windowsin minivans and estate cars.

Extrusion

An alternative glazing system isprovided by the robotic extrusionof a polymer profile to theperiphery of the glazing, with theextruded profile or seal beingprecisely shaped to the vehicle.

Assembly

Fixing of certain glazings within avehicle can also be achievedthrough the application of locatorclips to the glass. The attachmentof such clips, together with otherhardware, is most commonlyreferred to as assembly.

Manufacturing


NSG Group and associates’ global float operations

Location Line Completed CommentUnited KingdomCowley Hill CH2 1972Greengate UK5 1981

UK6 1992GermanyGladbeck GL1 1974

GL2 1976Weiherhammer WH1 1979

WH2 1991ItalySan Salvo SS1 1974Flovetro FV1 1979 Flovetro (50%) - Managed by Saint-GobainVenice VE1 1987SwedenHalmstad SK1 1976FinlandLahti L1 1987 Mothballed in 2009PolandSandomierz PS1 1995RussiaMoscow RM1 2006 JV Managed by NSG GroupJapanMaizuru M5F 1965

M1F 1998Chiba V3F 1971

V1F 1986MalaysiaJohor Bahru JB1F 1993

JB2F 1997VietnamHanoi VFG 1999Ho Chi Minh VGI 2008USARossford 6F1 1970

6F3 1966Lathrop 10F1 1964Ottawa, Illinois 5F1 1970Laurinburg 75F1 1973

75F2 1980ArgentinaLavallol VV3 1989 VASA (51%) - Managed by NSG Group

Appendix 2 – Float Operations


NSG Group and associates’ global float operations - continued

Location Line Completed CommentBrazilJacarei C1 1982 Cebrace (50%) - Managed by Saint-Gobain

C3 1996 Cebrace (50%) - Managed by Saint-GobainCaçapava C2 1989 Cebrace (50%) - Managed by NSG GroupBarra Velha C4 2004 Cebrace (50%) - Managed by NSG GroupChileConcepción LQ1 1996 Vidrios Lirquen (26%) - Managed by NSG GroupChinaChangshu CS1 2006 SYP-Pilkington 50:50 JV - Managed by NSG Group

CS3 2009 Tianjin-SYP (10%) via SYP - Managed by SYP Tianjin T-SYP 1997 Tianjin-SYP (10%) via SYP - Managed by SYP Suqian CGH 1994 China Glass Holdings (29.9%)

CGH 2002 China Glass Holdings (29.9%Currently on extended cold repair

CGH 2005 China Glass Holdings (29.9%Weihai WE1 1995 China Glass Holdings (29.9%

WE2 2000 China Glass Holdings (29.9% WE3 2003 China Glass Holdings (29.9% WE4 2004 China Glass Holdings (29.9%

Wuhai WU1 1988 China Glass Holdings (29.9% WU2 2001 China Glass Holdings (29.9%

Xian XI1 2005 China Glass Holdings (29.9%XI2 2007 China Glass Holdings (29.9%

Dongtai DG1 2009 China Glass Holdings (15%) DG2 2010 China Glass Holdings (15%)

Beijing CG1 2001 China Glass Holdings (29.9%). Closed in 2005CG2 1989 China Glass Holdings (29.9%). Closed in 2008

As at 06/2011


Nippon Sheet Glass Co., Ltd.Sumitomo Fudosan Mita Twin BuildingWest Wing, 5-27, Mita 3-chome,Minato-ku, Tokyo 108-6321 JapanEmail: www.nsggroup.net/contact

www.nsg.com

Documents

NSG Group/media/NSG/Site Content... · America, China, South East Asia and India. • The NSG Group is one of only four companies in the flat glass industry that can claim to be true