Europe’s energy crisis threatens glass production

As Moscow reduces natural-gas exports to Europe in its face-off with the West over Ukraine, European governments have made contingency plans to encourage conservation and ration gas among energy-intensive industries should supplies run short. Glass production has become a key vulnerability. It requires melting sand, soda ash and limestone, and in Europe the energy to create the needed temperatures has largely come from Russian gas.

Glass is so ubiquitous—from windows, car windshields, computer and smartphone screens to bottles that hold medicine, soft drinks and liquor—that some business executives and industry analysts fear a serious shortage could result in another supply-chain disruption like those set off by the pandemic, post-lockdown demand and the war in Ukraine.

Russia’s “shutting off gas for Germany would cause a new parts-shortage crisis," Silja Pieh, head of strategy at luxury car maker Audi AG, said recently, citing glass as a prime example.

The European Commission, the European Union’s executive, included glass manufacturing in July on its list of industries to be given priority if gas is rationed this winter. Companies in industries that rely heavily on glass have been stockpiling, sometimes at high cost.

German car giant Volkswagen AG, whose brands include Audi and Porsche, said it is increasing its inventory of components that use glass, such as windows and windshields, and tapping suppliers outside Europe not affected by the gas crisis.

The European beer industry is also feeling the pressure. Some bottle suppliers, including at least two that operated in Ukraine, were forced to close plants and limit production. Others have begun to increase prices.

With its cost of glass up by as much as 90%, German beer maker Brauerei C. & A. Veltins may have to raise prices next year, said spokesman Ulrich Biene. The company, which normally has bottles delivered as needed throughout the year, bought an entire year’s supply at once, he said—50 million bottles—and rented additional storage space.

In the U.K., doorstep delivery service Milk & More is attempting to extend the average lifespan of its glass bottles to about 30 deliveries from 25, Chief Executive Patrick Müller said. The company is adding coating to containers, lubricant to factory machinery, and scanners that pinpoint when bottles are damaged.

Milk & More’s goal is to buy 500,000 fewer milk bottles a year, a reduction of about 14%. “For me, the No. 1 priority of the industry is to offset costs," Mr. Müller said.

For glassmakers, the pressure of gas-supply uncertainty is compounded by the fact that they can’t shut down quickly.

“You can’t just turn the machines off," says Bertrand Cazes, secretary-general of the Glass Alliance, a lobby group. The hot, liquid glass would cool and harden, breaking the equipment.

On the Venetian island of Murano, a glassmaking hub since the 13th century, glassblowers have cut production of large sculptures, vases and chandeliers as gas prices have risen as much as 900% in the past year, said Luciano Gambaro, president of the Consorzio Promovetro Murano, a trade group.

The costs pose a new threat to a Murano glassmaking tradition that already has been contracting for more than a decade, said Gianluca Seguso, co-owner and president of manufacturer Seguso Vetri d’Arte. The company has begun periodically shutting down its factory for six weeks at a time, planned stoppages that allow the ovens to slowly cool and then gradually reheat.

To make up for lost production, he said, the 15 or so artisans crafting lamps, goblets and the like now work 10% or 20% more on days when the ovens are operating.

“Any change comes with pain," said Mr. Seguso.

Before the gas shortage, some glassmakers were making plans to shift to green hydrogen or electricity from renewable sources to reduce their carbon emissions. But those long-term plans won’t mitigate the present crisis.

Some glassmakers are shifting from gas to oil or diesel. Since Russia invaded Ukraine this spring, O-I Glass Inc., a Perrysburg, Ohio-based maker of bottles and jars that operates 34 factories in the EU, has converted furnaces accounting for about 20% of its total European production capacity to run on oil.

“We expect to have up to 50% by year-end, and that is going to provide a very good protection for us to be able to have enough capacity to run without a problem to serve our demand," Chief Executive Andres Alberto Lopez told investors on a conference call earlier this month.

Saint-Gobain SA, which makes glass and other materials for the auto and construction industries, said earlier this year that factories in Germany, Poland and the Czech Republic are curbing energy use and giving priority to glass over other products in the event of further cuts to gas supplies.

Some larger manufacturers are also considering transferring part of their production to regions where gas prices are lower. Schott AG, a big German specialty glassmaker, is investing €40 million, equivalent to $39.9 million, in a new plant in Turkey.

“The expansion makes it possible to ensure the long-term production of pharmaceutical glass for the German and European pharmaceutical industry," said Schott CEO Frank Heinricht. At the same time, Schott says it is stockpiling propane as an alternative to natural gas and building an underground propane-storage facility for its German plants.