AGC Restructures, Plans to Focus on Auto Glass and Solar Cell Operations

Asahi Glass Co. Ltd. (AGC) has announced that it will stop operations on three float glass production lines and two architectural coating lines from April to December of this year, and will sell the glass fabrication business. Asahi Glass will concentrate its management resources on glass for solar cells, sales of which are expected to grow rapidly, as well as raw glass for automotive use and value-added building products, according to a press release issued by the Tokyo-based company.

In the flat glass business in North America, Asahi Glass has been working on a profitability—improving project since 2006 including an overhaul of management and shut down of the Cinnaminson Plant of subsidiary AGC Flat Glass North America Inc. (AFNA). However, company officials say the continued decline in the housing market in North America has created a serious oversupply situation.

The company plans now to focus on the solar cell market, which it expects to grow by 40 percent annually on a global basis, automotive glass and value-added building products.

It has also decided to stop operations of float glass at the Victorville Plant, the St. Augustine Plant and Line No. 1 at Greenland Plant of AFNA, hoping to improve the supply-demand balance of glass and raise the utilization rate of other production facilities. By these measures, Asahi Glass will decrease its glass production capacity in North America by about 40 percent.

As for architectural sputter coating lines, which have an excessive output capacity compared with the size of the market, Asahi Glass has decided to stop operations at the Victorville Plant and Hampton Plant of AFNA and concentrate production of its full commercial and residential product range at the Abingdon plant. Moreover, it has decided to sell the glass fabrication business to focus on core glass production and coating technologies.

With this new structure, AFNA officials say the company will be better able to focus resources and management attention on product innovation and improving cost and quality to better serve customers' needs.

As a result of this restructuring program, Asahi Glass expects to incur an extraordinary loss of 13.5 billion yen in the second quarter of fiscal year 2008. However, there will be no change in the outlook for the fiscal year 2008, since the loss has already been factored in.

According to the press release, approximately 800 AGC employees will be affected by the changes.

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