PPG Resumes Operations – Analyst Blog

PPG Industries (PPG) has recently restarted its furnace at the facility in Shelby, North Carolina. The North Carolina facility is under PPG’s fiber glass business. The company states that the restart would support market demand, specifically in automotive, wind energy, and oil and gas pipe applications.

PPG is a producer of flat glass in North America and a global producer of continuous-strand fiber glass. The Glass segment comprises the performance glazing and fiber glass businesses. PPG’s major markets are commercial and residential construction and the wind energy, energy infrastructure, transportation and electronics industries. Most glass products are sold directly to manufacturing companies.

The company competes with four major producers of flat glass − Asahi Glass Company, Cardinal Glass Industries, Guardian Industries and NSG Pilkington. In fiber glass, PPG’s five major rivals throughout the world are Owens Corning-Vetrotex, Jushi Group, Johns Manville Corporation, CPIC Fiberglass and AGY.

Restarting the furnace would boost its current annual capacity by about 17,000 metric tons of fiber glass, states PPG. An additional 34 employees will support the restart, some of whom were recalled from layoffs.

Earlier, PPG had signed an agreement with PVS Technology, a manufacturer of iron salts including ferric chloride, to build a facility to manufacture iron salts at PPG’s chlor-alkali and derivatives plant at Natrium near New Martinville, West Virgina. PPG expects the plant to begin operations later this year with a capacity of 50,000 tons of iron salts annually. Iron salts are principally used to treat drinking water and waste water.

The global recession has adversely affected many of PPG’s end use markets. The company has responded with aggressive restructuring and cost reduction actions while increasing its focus on cash flow. Earnings are recovering and a strong cash position provides it with the financial flexibility to support earnings growth. Demand improvements are likely to be led by an expected spike in automotive production in 2010. We maintain our Neutral recommendation on PPG.