Viridian is owned by building materials giant CSR, which announced today that Viridian's float and laminating glass factory in Ingleburn in south-west Sydney will close in July. Most of the work will be transferred to the company's Dandenong factory in Victoria, supplemented by some imports. CSR also announced that Viridian's two factories in Wetherill Park and Erskine Park, New South Wales, will merge by January 2014. At the same time, says CSR,Viridian is improving the quality of its products, its delivery times and its flexibility in responding to orders.
CSR blames the closure and merger on two factors. First, the high Australian dollar has meant that Viridian has suffered from stiff price competition internationally, especially by China. Indeed, Viridian will stop making glass-panel sliding doors locally, instead outsourcing them to China. Secondly, 40 per cent of Viridian's sales come from the hard-hit commercial construction sector of the building industry, which is expected to recover more slowly than predicted. (The residential sector appears to be improving - albeit modestly - in New South Wales, Western Australia and Queensland.)The moves are expected to cost around $34 million and to boost annual earnings by $27 million from 2015. An estimated 150 jobs will be lost.
Dominant industry player
Viridian Glass is one of three companies that, between them, generate two-thirds of the revenue in the $3.23 billion Australian glass industry (the other two are Amcor and Owens-Illinois Australia). Viridian manufactures flat
and rolled glass for the Australia and New Zealand markets and offers bulk processing services (e.g. cutting, laminating, toughening and
mirroring) to glass distributors and to manufacturers of windows, shower
screens, furniture and solar panels.
Building materials giant CSR bought
Viridian at the height of the building cycle in 2007 for $865 million. However,
CSR subsequently wrote-down Viridian's value to $214 million, because of the combination of the high dollar, cheaper imports and the decline in the construction industry. The acquisition still makes sense, because many of Viridian's products - especially its plate glass - align with other products in the construction-oriented CSR group.
SOURCES
1. CSR News release (11 March 2013) 'Restructure of Viridian glass operations and trading update.'
www.csr.com.au/Investor-Centre-and-News/News-Releases/Pages/Restructure-of-Viridian-glass-operations-and-trading-update.aspx
2. Ibis World (nd) 'Glass and glass product
manufacturing in Australia: Market research report.' http://www.ibisworld.com.au/industry/default.aspx?indid=206
3. Wen, P. (3 August 2011) 'Cracks appear in a besieged
glass industry.' Sydney Morning Herald.
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