Tecnoglass continues to push innovatory boundaries in the glass industry
In addition to incorporating energy-efficient solutions, it is
imperative that new builds are secure and safe for their future inhabitants.
From the devastating wildfires across Greece to the recent flooding in Japan,
the extreme weather events of the past year have served as a reminder of the
importance of secure, reliable housing. Innovative products such as
impact-resistant windows for hurricane-prone areas and low-emissivity (low-e)
glass offer crucial protection in at-risk areas, and are increasingly
considered an essential element of new builds in such locations. World
Finance spoke with Santiago Giraldo, CFO of Tecnoglass, about these
promising developments within the industry.
Which trends are currently driving growth in the glass products
market?
The construction glass market is currently growing at an impressive rate – it
was valued at $83bn in 2016 and it is expected to reach $110.9bn by 2021. The
principal factors driving this growth are the demands for energy-efficient
buildings and increasing environmental regulations, which are both stimulating
significant advances in the industry. Interestingly, the Americas accounted for
19.9 percent of this growth, exhibiting a boom in residential construction
projects, hotels and commercial building projects. In the US, we are also
noticing increased demand for impact-resistant building materials in hurricane-prone
costal states, in addition to new regulations concerning building structures in
high-exposure regions.
Energy-efficient windows are also a major trend
at the moment, as they reduce energy needs in buildings while increasing the
natural light and visibility of homes and offices. At Tecnoglass, we have
focused on investing in research and development (R&D) in order to respond
positively to these evolving trends. Our hurricane-resistant glass has earned
the company the prestigious Miami-Dade Notice of Acceptance, while our
innovative low-e coatings are helping clients to cut energy costs by limiting
heat transmission.
How are sustainability concerns shaking up the
glass industry, and why are these trends important to consider?
As sustainability becomes an increasingly
pressing concern for our industry, companies are investing heavily in R&D
so as to meet both evolving consumer demands and environmental-focused legal
requirements. Today, companies simply must have defined sustainability initiatives
if they wish to remain relevant within the industry. From reducing CO2
emissions to cutting waste material, sustainability efforts are now at the very
heart of the construction market.
New technologies and high-security solutions such as low-e glass
and fire-resistant windows have begun to reshape the glass industry as we know
it. After years of investment in such technologies, Tecnoglass has emerged as a
leading manufacturer of high-security glass products, and is forging ahead with
innovative sustainable solutions for both commercial and residential buildings.
Each year we evaluate our progress in these crucial areas, setting new goals
while considering the economic, social and environmental impact of our work. In
a demonstration of our commitment to this cause, we have recently joined the
UN’s Global Compact programme, which ranks as the world’s largest corporate
sustainability initiative. In terms of renewable energy, meanwhile, we have
introduced an on-grid photovoltaic system at our production plant. As we
inevitably consume a large amount of energy in our operations at Tecnoglass,
this solar panel system will revolutionise our energy usage, and is set to
reduce our CO2 emissions by 34.3 tonnes over 25 years.
Where is Tecnoglass currently active, and what is the situation in
those markets?
Tecnoglass is currently active in the Americas and the Caribbean – with the
intention of penetrating the European market. The US and Colombia account for
the majority of our present revenues, representing 76 percent and 20 percent of
total sales respectively. Tecnoglass’ US activity is largely based in Florida,
where we have a dominant presence and about half our backlog.
The US construction market has shown a remarkable recovery since
the 2008 economic crisis. As such, the sector now boasts a healthy growth and
is expected to expand by about five percent per annum over the next five years.
In Colombia, meanwhile, an improved macroeconomic environment has allowed us to
capitalise on construction demand in our home market. Following a four
consecutive years downcycle of slowdowns in growth, the Colombian economy has
now entered a period of recovery, creating a promising environment for the
construction industry given ample pent-up demand.
Which new markets will the company look to enter, and what
opportunities do they offer?
We see a great opportunity for further penetration into the lucrative $25bn US
market, seeking to build on the crucial foothold we have made in Florida. Over
the past two years, we have embarked on an ambitious expansion plan, launching
projects into the Northeast, Texas, and the West Coast, and will continue to
pursue further diversification into 2019 and beyond. Given our efficient access
to the western US through the Panama Canal, this region represents a promising
new market for Tecnoglass as well as expanding into other foreign markets.
Given this successful penetration and our expansion into the residential
market, we expect to see our US sales continue to grow during the remainder of
2018.
These efforts to diversify into new markets will help us mitigate
the effect of construction cyclicality in a specific country or region, given
that construction cycles vary across markets.
How do construction cycles influence the glass industry?
Demand for architectural glass tends to be cyclical, largely driven by
residential and commercial construction activity. Being able to diversify our
activity not only from a geographical point of view, but also from an asset
type perspective by penetrating the residential market will greatly help us
mitigate downcycles. Over the course of its 30-year history, Tecnoglass has
proven to be remarkably resilient to cyclical economic downturns. Thanks to our
established presence in diversified markets in different regions of Latin
America and the US, the company has managed to successfully reduce its cyclical
risk. For instance, the company grew its revenues by almost three times from
2007, prior to the mortgage crisis, to 2013 after emerging from it.
What milestones has Tecnoglass achieved so far in its history?
Tecnoglass represents a Case Study by growing from an artisanal business into
the only Colombian company listed in the Nasdaq stock exchange and one of the
main players in the architectural glass space in a market as demanding as the
US. Being listed on Nasdaq has significantly increased our exposure and
reputation within the US and Latin America as whole. This has driven Tecnoglass
to invest in new technology to meet the demands of new clients and tendencies
to be at the forefront of the industry. In 2016, Tecnoglass shares also started
trading on the Colombian stock exchange, Bolsa de Valores de Colombia, and
later in the year we acquired the Florida-based distribution company ESWindows,
in a move that demonstrated our commitment to the US market. Following this,
2017 was a crucial year for the company with the acquisition of GM&P, a
glazing company focused on engineering and installation, which further allowed
us to penetrate the US market and become a fully vertically integrated company
toward the client. We are looking to new frontiers by opening offices in South
America and Europe in order to further expand our presence.
How did the acquisition of GM&P play into your strategy?
Based in Florida but boasting a strong presence in Texas, the West Coast and
the south-east, GM&P was Tecnoglass’ largest client prior to the
acquisition. Given its established position in the US market, the deal enabled
Tecnoglass to expand into previously unpenetrated regions beyond Florida. What’s
more, GM&P’s extensive network of customers provides Tecnoglass with a
wealth of new opportunities.
After one year of operations, we can happily conclude that this
acquisition has far exceeded our initial expectations. The deal has provided
enhanced vertical integration and streamlined distribution coordination,
allowing Tecnoglass to become a real one-stop shop for customers.
How is Tecnoglass’ business strategy designed to cope with the
challenges currently facing the industry?
One of the major challenges facing the glass industry is the rise in aluminium
prices prompted by US-imposed tariffs on various metals. However, given that
Colombia accounts for just 0.1 percent of US aluminium imports, Tecnoglass and
other Colombian manufacturers are hopeful to eventually be exempted from these
tariffs. We are keeping an eye on how this situation plays out, but in the
meantime, sales are up for the entire sector and all players within the
industry are taking advantage thanks to the strength of the overall economy.
For Tecnoglass, another challenge is maintaining sustainable
growth in an increasingly competitive market. We hope to sustain our
competitive advantage through consistent investment in R&D, innovative new
products and increased geographic diversification. We are focused on continuous
improvement across all aspects of our business, and we believe that our
vertically integrated operations position us for continued success in the years
to come.
We are constantly updating our business strategy and streamlining
initiatives to achieve our vision – to be a worldwide leader of high-quality
architectural products and innovative solutions for a sustainable future.
Supported by a team of highly trained and motivated employees, Tecnoglass is
well on its way to achieving this ambition.
Fuente: www.worldfinance.com
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