We acquired the Glenshaw Glass plant out of receivership in 2005 during a period in which many glass producers had ceased production and/or filed bankruptcy. One of the primary reasons for the loss of these glass plants, and the manufacturing jobs they provided, was a failure to protect themselves against a dramatic rise in the price of natural gas.
I wish to stress that the rise in natural gas prices is not to blame; rather, it was the lack of protection against the risk of upward movement in certain costs (for example, raw materials, energy, freight, etc.). After all, markets change and prices drop and, ironically enough, a major factor in the natural gas price drop is excess supply relative to demand.
A glass container furnace requires a constant supply of natural gas and operates 24 hours per day, seven days a week, and year round. Between January 2007 and March 2011, our Glenshaw facility consumed approximately 20,000 mcf per month of natural gas, virtually all of which was used by the glass furnace. Demand for bottles was so strong that plans were underway to rebuild and restart a second furnace. Natural gas usage would have increased to 40,000 mcf per month, year round. More furnaces equate to more gas consumption and more manufacturing jobs, of course. At one point, four furnaces were in production in the Glenshaw plant, which can still be a possibility.
Reopening a glass plant creates an end user of large volumes of natural gas year round and offers a potential hedge against a price drop. (Generally speaking, when natural gas prices go down, glass companies become more profitable.)
In the case of our Glenshaw plant, the energy company is not required to make any capital investment unless, of course, it absolutely insists. Our goal is to partner with a natural gas producer to develop a model to create end users in this region, starting with our glass plant in Glenshaw.
WILLIAM A. KELMAN
Kelman Bottles LLC