Flat glass prices flatter than ever

Average flat glass prices moved lower during each one of the final four years of the past decade. But the inflation environment for this important building component turned much less benign during the past two years. Average flat glass prices moved up 2.1% over the course of 2001, on the heels of 3.1% inflation the year before.

But price pressures have eased dramatically as we've moved through 2002. In fact, the price index for flat glass peaked during August 2001, and this August's average price was actually 0.8% lower than during the same month of 2001. In contrast, inflation across the broad spectrum of construction products and materials has averaged a positive 1.4% so far this year, after declining by nearly a full percentage point during 2001.

Most of the costs of doing business for glass manufacturers — raw materials, labor, energy, transportation, etc. — have increased only slightly during the past year, while productivity improvements, combined with global competition, have forced U.S. glass manufacturers to hold the line on prices.

Consequently, we're forecasting that flat glass prices will deflate slightly through the end of this year. However, glass manufacturers should be in a somewhat better competitive position to raise prices a bit next year although at a rate (1.7% or so) less than during the 2000-2001 period.

Unless, of course, energy prices spike sharply higher on anticipated or actual hostilities in the Middle East or elsewhere.