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Glass producers’ hopes shatter as building activity slows down
Firms making glass for the construction sector are struggling with a growing inventory as a result of slowing construction activity.
The Vietnam Glass Association, or Vieglass, said at the end of last month that two of its members, Truong Phong and Cam Pha companies, had to shut down and declare bankruptcy.
Vietnam Float Glass Company based in northern Bac Ninh Province, one of the largest glass makers in the country, recently stopped production. Its Deputy General Director, Nguyen Hoang Tung, said inventory worth VND1 trillion (US$56.2 million) had piled up by March.
Le Minh Tuan, general secretary of Vieglass, said the total annual output of the industry is 70 million square meters but stockpiles are half that.
Unlike other businesses, glass manufacturers cannot easily scale down production when there is a decline in demand, Tuan said. Once started, glass furnaces cannot be shut down without being damaged, sometimes so badly that they need replacing.
Many companies have, however, decided to cut production by more than half.
“The fate of the industry is rocky and no manufacturer is able to find a way out,” said Tuan.
Glass makers said the government’s 4 percent interest subsidy program is not enough to help them sustain production in these hard times.
Besides the growing stockpiles, they said they also have to cope with rising fuel costs and cheap imports.
According to Vieglass, the 35 percent import tariff imposed on fuel oil used to heat glass furnaces adds to costs.
The industry also finds it hard to compete with Chinese exporters, whose prices are 30 percent lower.
Do Thi Thu of Viglacera Dap Cau Sheet Glass Company told Vietnam News Agency in March that despite cutting prices many times, her company cannot cope with the flood of cheap glass entering the market.
Manufacturing growth dropped in the first four months to 3.3 percent from 16.4 percent in the same period last year, Reuters reported, citing figures from the General Statistics Office. Exports in the period declined 0.1 percent to $18.64 billion.
Many other industries share the construction-glass sector’s plight.
According to the Ministry of Industry and Trade, the timber inventory has surged to 600,000 cubic meters as furniture companies have not received any export orders for the period after April.
Steel consumption fell 30 percent year-on-year in the first quarter. Vietnamese steelmakers are sitting on around 220,000 tons of finished products and 390,000 tons of steel billet, the industry association said.
thanhnien, TBKTSG
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