NSG Group and the Flat Industry 2011 NSG Group and the Flat Glass Industry 2011

Legal Notice This document is intended as a briefing on the glass industry and the position within it of the NSG Group’s businesses. The content of the publication is for general information only, and may contain non-audited figures. Every care has been taken in the preparation of this document, but Co Ltd., accepts no liability for any inaccuracies or omissions in it. Nippon Sheet Glass Co Ltd. makes no representations or warranties about the information provided within the document and any decisions based on information contained in it are the sole responsibility of the user. No information contained in this document constitutes or shall be deemed to constitute an invitation to invest or otherwise deal in shares in Nippon Sheet Glass Co Ltd.

© 2011 Nippon Sheet Glass Co., Ltd.

2 NSG Group and the Flat Glass Industry 2011 Introduction Industry & Market structure Glass industry growth NSG Group Overview Manufacturing 3 NSG Group NSG and Group the Flat Glass Industry 2011 Glass manufacture NSG Group and associates' float lines Introductory Introductory note and definitions Executive summary Global flat glass industry and market structure 08 flat glass for market world Total 08 to market Routes 09 Industry economics 10 and Global shares market players 11 glass float/sheet markets World 16 markets Automotive Glass – a growth industry 23 Global demand flat glass for 28 in Growth Building Products 30 in Growth Automotive NSG Group – a glass industry leader 37 overview Corporate 38 Business profile 42 Building Products overview 49 Automotive 55overview Sustainability 58 63 04 05 Contents Introductory Note and Definitions

The objective of this publication is to provide The brand mark background information on the world’s flat glass industry and, as an industry leader, the position within it of the NSG Group.

In June 2006, Nippon Sheet Glass Co., Ltd acquired Pilkington plc through NSG UK Enterprises Limited; a wholly-owned subsidiary. All of the operations of the former Pilkington plc are now fully integrated An important element of the acquisition of into the NSG Group. Pilkington plc by NSG in 2006 was the retention of the Pilkington brand in the NSG Group’s Building Where the operations of the whole Group are Products and Automotive businesses. referred to collectively, the terms ‘NSG Group’ or ‘the Group’ are used. The Group’s flat glass The Pilkington name promotes many of the Group’s businesses comprise Building Products businesses world-leading products and is used in some of the in Europe, , North America, South America, names of Group subsidiary companies. and South East Asia, which are managed on a regional basis, and the Group’s Automotive business, which is managed globally.

It should be borne in mind that the flat glass businesses of the NSG Group account for just under 90 percent of the NSG Group’s business by sales and that the Group also has a third business line, Specialty Glass, accounting for around 11 percent of Group sales, which is not covered by this publication.

Consequently, any figures referring to ‘Pilkington’ or ‘NSG Group flat glass’ sales and operating income are lower than those for the NSG Group as a whole. The strategic direction of the NSG Group itself is covered in Part Three of this publication.

The operating currency of the NSG Group is the Japanese yen. However, for ease of reference, some figures are expressed in euro and any figures relating to financial performance are therefore approximate. This publication should be read in conjunction with the NSG Group Annual Report 2011, covering the fiscal year ended 31 March 2011.

This document is also available to download in pdf format from the NSG Group website at www.nsg.com.

4 NSG Group and the Flat Glass Industry 2011 Introduction 5 This NSG Group NSG and Group the Flat Glass Industry 2011 72 million, which of in was 35 the percent main two Europe, Europe, China and North America, account together high of 75 quality percent float demand. over for production in vehicle light 2010 was Automotive Europe and North Western of markets America. Build in a Japan further contributed 12 percent. global of 47 for These percent three regions account production and vehicle light are also the domiciles of and manufacturers are vehicle most the of world’s new development. for vehicle the centers Following the NSG, acquisition Pilkington of by just Following less than the of 90 combined is entity percent with concerned flat glass, higher significantly at less AGC than than the nearest competitor, 50 percent. Over the Over long term, demand for is at almost per growing 5 annum. percent is growth fuelled the by demand building for glass glass, which and in automotive turn is by driven economic growth. the Over last 20 float demand years, has growth outpaced real GDP the growth. Over past 10 years, around float demand GDP by has growth exceeded points. three percentage to The flat world glass is market to recover expected almost 60 million tonnes in 2011, including 2 million tonnes rolled of glass, from the 2009 recession-hit 52 of million level tonnes. The pace capacity of addition outside China has new lines with on eleven recently, moderated stream in 2010 but only in three expected 2011. are increasingly seeking Architects to bring natural the buildings of into interior factors environmental This maximizing has daylight. by natural been through the use achieved larger of areas glazed in and façades and glazed roofs, through entirely where façades, the glass is a structural component the of building. • • • • • • • • • Glass – a growth industry The global flat glass for market in 2010 was 56 million tonnes, metric approximately a at value the representing primary manufacture around of euro 23 billion level and euro 53 billion at secondary of processing. the level This has market historically been in growing volume a to 5 terms at year. 4 percent percent Of global total demand market in 2010, it is that 33 estimated million high tonnes for was quality float glass, 1 million glass sheet tonnes for and 2 million rolled tonnes glass. for The remaining 20 quality million demand tonnes lower reflects for mainly float, produced in China. In new 2010, float of into glass 40 went percent buildings and the same proportion into buildings. for refurbishment 3.7 million tonnes the of Approximately flat glass globally produced calendar for 2010 year was glass. automotive glass goes Automotive of around 80 percent Globally, OE new into for supplied manufacturers to vehicle and in vehicles 20 to the percent aftermarket. AGR 1.5 million tonnes flat of glass Approximately in calendar 2010 year consumed was in Technical Applications. The most these of notable is solar energy. Considering high quality float alone, the industry with companies four consolidated, is relatively a for majority global accounting of capacity. top four the world’s In terms the of capacity, companies are led the and by AGC Saint-Gobain. NSG comes by in at number three, followed Guardian Industries. share global, of high NSG quality Group’s float 13 capacity percent. is approximately Three glass and AGC groups, NSG Group, with partner together Saint-Gobain its strategic Glass, supplied the of Central around two-thirds glass used industry in during the automotive calendar to our 2010, year estimates. according Executive Executive summary The flat glass industry and global market structure • • • • • • • • • • • • Over the past 25 years, in developed regions such as Geographic positioning; Building Products Europe, Japan and North America, the growing need and Automotive for energy efficiency in buildings has transformed • Building Products has manufacturing operations in the markets for energy-saving glass and this is now 21 countries. Its largest operation is in Europe, with being echoed in developing regions. major interests in Japan, North and South America, • In Automotive, the basic driver of demand for China and South East Asia. suppliers to the OE industry is vehicle build. • Pilkington Automotive is one of the world’s largest Historically the global industry has exhibited steady suppliers of automotive glazing products. It growth; an average of around 2.5 percent per annum operates in three main sectors; supplying original over the last 13 years. equipment, aftermarket replacement glass and • However, the downturn which hit the industry in products for specialized transport. 2008 and 2009 on the back of the global economic • Its footprint, including fabrication plants, OE crisis was unprecedented both in terms of its spread satellite facilities and its AGR distribution network and its scale. Its severity reduced the historical encompasses Europe, Japan, North and South growth rate closer to 1%. The recovery now America, China, South East Asia and India. underway together with natural growth in developing markets is expected to restore the • The NSG Group is one of only four companies in the long-term average industry growth to 3% by 2015. flat glass industry that can claim to be true global players, the other three being AGC, Saint-Gobain NSG Group – a glass industry leader and Guardian. • The NSG Group, which operates under the • The integration of the Pilkington and NSG business Pilkington brand in Building Products and platforms has historically helped mitigate the Automotive, is one of the world’s largest effects of market cycles in the area of architectural manufacturers of glass and glazing products glass and has given the Group a superior presence in for the building and automotive markets. developing markets such as South America, China, • The Group has manufacturing operations in South East Asia and Russia. 29 countries on four continents and sales • The NSG Group’s manufacturing base includes float in around 130 countries. glass lines operating in Europe, Japan, the Americas, • In the fiscal year ended 31 March 2011, the Southeast Asia and China, with Automotive NSG Group reported sales of JPY 577,212 million operations covering all major markets worldwide. (approximately euro 5 billion). • The Group owns, or has interests in, 49 float lines, • Of the Group’s consolidated sales, 41 percent giving full coverage of the global market and were generated in Europe, 29 percent in Japan, providing the Group with advantages in terms of 14 percent in North America and 16 percent in the strategy, efficiency and effectiveness. rest of the world.

• Building Products and Automotive now account for around 90 percent of NSG Group sales.

6 NSG Group and the Flat Glass Industry 2011 Introduction Technical leadership Sustainability • The Pilkington brand is closely identified with • Glass has a unique contribution to make in promoting technical excellence, having been associated, over sustainability, reducing greenhouse gas emissions the past fifty years, with most major advances in and mitigating the effects of climate change. glass technology, including the invention of the • The ‘energy balance’ between manufacture of Float Process. high-performance glazing products and their use • The NSG Group is a global leader in manufacturing means that the energy used and CO2 emitted in excellence and innovation, notably in the areas of manufacture are quickly paid back through the glass melting, glass forming by the float process, lifetime of the products. The energy involved in online coating and complex shaping technology, glass-making should therefore be seen as an especially for automotive windshields and backlights. investment in future energy saving. Strategic Direction • Glass has a key role in attempts to find cheaper and more efficient ways of generating power from the • In January 2009, the Company announced sun. The Group’s products support the three restructuring initiatives designed to address the leading solar energy technologies; thin film and economic downturn and to improve profitability crystalline solar modules and concentrated solar going forward. These built on action already taken in power applications. response to sudden and rapid changes in the global economic environment. • The NSG Group is fully committed to sustainability. Its policies underline the unique contribution its • Announced in November 2010, the Group’s Strategic products can make to addressing climate change Management Plan covers the three-year period and the challenges the Group faces in improving its ending 31 March, 2014. The Plan focuses on two own energy usage and resource management. The main areas for growth: Group’s product range and R&D efforts are geared • Expansion into emerging economies. The Group’s to addressing the challenges of a low-carbon world. main targets are South America, Eastern Europe and China.

• Meeting increasing global demand for environmentally-friendly glass products, which help address climate change issues. These include low-e energy-saving and solar control glass and products for the growing solar energy sector.

NSG Group and the Flat Glass Industry 2011 7 1. Global flat glass industry and market structure 1.1. Total world market for flat glass for glass may deviate from GDP for a variety of reasons, for example due to government programs that The global market for flat glass A in 2010 was subsidize certain glass products. approximately 56 million metric tonnes (~5.5 billon sq m)B. At current price levels this represents a value Following manufacture, a portion of the high quality at the level of primary manufacture of around euro 23 float and rolled glass produced globally is further billion. This market has been growing in volume terms processed by laminating, toughening, coating and at 4 percent to 5 percent a year and recovered well in silvering, for use typically in insulating glass units or 2010, but short-term uncertainties remain in the light automotive glazing. When these processed products of global economic conditions. are also considered, the global market for flat glass had Of total global market demand in 2010, it is estimated a value of approximately euro 53 billion for 2010. that 33 million tonnes was for high quality float glass. Approximately 1 million tonnes constituted demand for The global flat glass market is worth around sheet glass and 2 million tonnes was for rolled glass. euro 23bn at the primary level and euro 53bn The remaining 20 million tonnes constituted demand at the level of secondary processing. for lower quality float, produced mainly in China.

Generally, flat glass demand growth is a function of A – Glass manufactured in flat sheets (float, sheet and rolled), economic activity levels. Long-term growth potential which may be further processed. Excludes bottles, containers, for flat glass can be estimated with reference to growth fiberglass, rods, and tubes of gross domestic product, or GDP. However, demand B – On average 1 tonne is approximately 125 sq m.

1.2. Routes to market The chart below illustrates the main routes to market In Building Products, glass can undergo two or more in the glass industry. In terms of volume of glass levels of processing before being installed in windows consumed, Building Products is by far the largest or used as a component in furniture or white goods. sector (~51 million tonnes) with ~3.7 million tonnes Within Automotive, glass is used in original going to Automotive. The Technical Applications equipment for vehicle manufacturers and in the segment is very small in volume terms, but significant manufacture of replacement parts for the growth is being driven by the use of glass in Solar aftermarket. Energy generation.

Routes to market Float Manufacturer

Automotive Building Products Special Apps. Solar

Semi-Knished Wholesalers O.E. Processing

IGU Mfrs.

Vehicle Furniture PV Module A.G.R. Frame Mfrs. Makers Manufacturers Makers

Dealers Retailers Glaziers/ Retailers Installers

Consumers

8 NSG Group and the Flat Glass Industry 2011 In terms of volume of glass consumed, building Global Automotive Glass Products Market by Sector products is by far the largest sector of the global Sector Volume market for flat glass, accounting for approximately Original Equipment (OE) 315 million m2 80% 51 million tonnes in calendar year 2010. Glass is an Aftermarket (AGR) 80 million m2 20% integral building material for most construction Total 395 million m2 100% projects. Also, we estimate refurbishment for buildings accounted for approximately 40 percent of Global Technical Applications Flat Glass Market by sector Industry & Market structure Market & Industry flat glass consumption worldwide for calendar year Sector Volume 2010. Building products include float and rolled glass Solar Energy 80 million m2 10% and other processed building glass products Other 350 million m2 90% (including toughened, coated and silvered glass) for TOTAL 425 million m2 100% exterior and interior applications. Estimates CY 2010

Approximately 3.7 million tonnes of the flat glass Within the OE glazing market, by far the largest produced globally for calendar year 2010 was segment is light vehicles, normally defined as those automotive glass, another key sector of the glass vehicles up to three and a half tons in weight. Light industry. Automotive glass products are generally vehicles include all cars, light trucks and the various categorized as either OE supplied to vehicle cross-over vehicle styles such as sport utility vehicles, manufacturers for new vehicles or as AGR products, and accounted for approximately 96 percent of global which are supplied to the aftermarket for retrofit automobile production in calendar year 2010. purposes, usually following damage. Globally, OE glass demand is estimated to be around four times Approximately 1.5 million tonnes of flat glass in that of the replacement market, though the calendar year 2010 was consumed in technical proportion varies from region to region. applications. The most notable of these is solar energy. There are three main types of solar energy Global Building Products Flat Glass Market by sector generation: crystalline silicon, thin film and solar Sector Volume concentrators. Each of these has demonstrated New Build 1,900 million m2 40% strong growth in the past several years, and although Refurbishment 1,900 million m2 40% the global recession has reduced growth rates in the Interior 900 million m2 20% last year, the market is expected to exhibit steady TOTAL 4,700 million m2 100% growth in the short term. In the medium-to-long term, growth rates may increase again, as the cost of solar Most glass is used in building, with a further energy generation begins to approach the lower costs of conventional energy. significant portion used in automotive applications and a small but growing amount in other specialist areas.

1.3. Industry economics output, as transition product is lost when float production changes from one specification to the A float plant is highly capital-intensive, typically next. In the most complex float composition changes, costing around euro 70 - 200 million, according to this can amount to as much as seven days’ lost size, location, quality and product complexity. Once production. However, such changeover losses can be operational, it is designed to operate continuously, minimized through coordinated production 365 days per year, throughout its campaign life of scheduling of regional float assets. between 10 and 15 years. Float lines are normally capable of several campaigns following major The float process is not labor-intensive. Energy and rebuild/upgrade programs. raw material costs are each as significant as factory labor in the overall delivered cost. Glass is relatively The economics of the continuous-flow float operation heavy and comparatively cheap, making distribution require a high capacity utilization rate before a plant costs significant; they typically represent around becomes profitable. Once that rate (around the 15 percent of total costs. 75 percent range) is passed, the inherent operational leverage of the asset base increases profitability In most cases, transport costs make it uneconomic for rapidly. Product diversity, in terms of both glass float glass to travel long distances by land. Typically, composition and thickness, can reduce nominal 200 km would be seen as the norm, and 600 km as

NSG Group and the Flat Glass Industry 2011 9 the economic limit, for most products, although this militate against this, particularly where model variants varies between markets. It is possible for float glass to are relatively low-volume in automotive industry be economically transported longer distances by sea terms. Where production runs are shorter, requiring provided additional road transportation is not frequent tooling changes, different automotive required at both ends. This tends to favor float lines shaping technologies will be employed. Therefore, an with local port access, unless a local market is automotive glass manufacturer requires an available for the line’s output. appropriate demand and asset mix for optimal operation. As with float, the scale of the major A float plant is designed to operate automotive glass processors requires them to leverage continuously, 365 days per year, throughout their regional facilities in this way. its campaign life, which is typically between Overall, automotive glazing production tends to be 10 and 15 years. more labor intensive than float manufacturing, and growth in value-added activities is increasing this Investment costs in Automotive, though somewhat requirement. lower than in Float, are nevertheless significant. Automotive glass can and does travel significant By way of example, investment in a typical European distances and, while vehicle manufacturers (VMs) are automotive glazing plant with capacity to fully glaze increasingly seeking local service from their suppliers, one million cars per year could cost between in the case of glazings this usually takes the form of a euro 40 million and euro 60 million, depending upon small satellite operation rather than a major the technology employed, the degree of automation processing plant. and its location. Annual revenue from such an investment would be approximately euro 50 million. Investment in a European automotive glazing Typically, automotive glass plants are at their most plant with capacity to fully glaze one million efficient with long production runs. However, bespoke cars per year could be expected to cost glazings for each aperture of every model tend to between euro 42 million and euro 63 million.

1.4. Global players and market shares Considering high quality float alone, the industry is The NSG Group has >13 percent of global relatively consolidated, with four companies high-quality glass capacity. accounting for a majority of global capacity. The NSG Group’s share accounts for approximately 13 percent Capacity share by company overall. In addition, there are three companies which Company Countrya Percentage of together supplied around three-quarters of the glass World Capacity used in the automotive industry during calendar year AGC Japan 15 2010, according to our estimates. Saint-Gobain France 14 Of the four companies manufacturing most of the NSG Group Japan 13b world’s glass, NSG Group and AGC are based in Japan, Guardian United States 12 Saint-Gobain is based in France and Guardian Industries Others 46 Corp, or Guardian, is based in the United States. a.The country in which the parent company is domiciled. b. Including affiliates. World high quality float capacities 2010 14 Portfolio comparison of the 12 major players 10 In terms of the capacity, the world’s top four companies 8 are led by the AGC and Saint-Gobain. NSG comes in at 6 number three, followed by Guardian Industries. Mn Tonnes

4

2 The NSG Group is the most focused glass

0 company, combined with wide geographic

AGC NSG PPG reach. Others Guardian Sisecam Saint-Gobain Taiwan Glass China Southern

10 NSG Group and the Flat Glass Industry 2011 The NSG Group and AGC have the greatest Following the acquisition of Pilkington by NSG, just geographic reach of these flat glass companies less than 90 percent of the combined entity is followed by Saint-Gobain. Guardian’s global coverage concerned with Flat Glass, significantly higher than in float glass is high, but its limited automotive the nearest rival, AGC at less than 50 percent. footprint leaves it in fourth place overall, followed by Saint-Gobain’s, flat glass focus is the lowest of Taiwan Glass and Sisecam. all five majors, at about 12 percent. Industry & Market structure Market & Industry 1.5. World float/sheet glass markets In the following analyses the world is segmented into China accounted for about one fifth of world glass eight regions as follows: demand, but now accounts for just over 50 percent.

Europe • Japan Regional float & sheet demand 2011 South East Asia • North America Former South Soviet Union America South America • China 5% 4% Rest of Japan Russia/Former Soviet Union • Rest of the world the World 5% 5% In this analysis rolled glass is excluded and, unless otherwise stated, market figures are calendar year South East Asia 2010, based on company estimates. 6% China 51% General overview North The global market for float/sheet glass (excluding America rolled) in 2010 was approximately 54 million tonnes. 7% This is dominated by Europe, China and North America, which together account for over 75 percent of Europe demand. 17% The significance of China as a market for glass has been increasing rapidly since the early 1990s as the Europe, China and North America together country has become more open to foreign investment account for over 70 percent of global and the economy has expanded. In the early 1990s demand for glass.

Europe European 2010 float/sheet capacity by company In this definition, Europe includes Turkey, but not Saint-Gobain Others 25% Russia, Ukraine and Belarus. 14% Europe, with a market size of nearly 9 million tonnes in 2010, is supplied by eight main manufacturers of Guardian float glass: Saint-Gobain, NSG Group, AGC, Guardian, 12% Sisecam, Euroglas, Sangalli and Interpane. Europe is a mature market with the highest proportion, among the eight regions, of value-added products, such as AGC coated and laminated glass, which are largely 19% produced by float glass manufacturers. Per capita Sisecam glass consumption was approximately 14 kg in 2010. 13%

Downstream processing, into insulation glazing units NSG for example, is generally done by smaller independent 17% players. Saint-Gobain, NSG Group and AGC participate Total installed capacity was approximately at this level of the market, but with lower market 12.3 million tonnes in 2010, of which only about presence than in primary manufacturing. 50,000 tonnes was sheet glass.

NSG Group and the Flat Glass Industry 2011 11 Europe float lines Europe is the most mature glass market and has the highest proportion of value-added As of August 2011, new float investments by Sisecam in Bulgaria and Sangalli in Italy had come on stream, products. adding to the region’s capacity. Government subsidies play an important role in encouraging solar generation, especially in Europe, with feed-in tariffs in countries such as Germany, Spain, Italy and Greece. Public spending restraints have recently put these incentives under pressure.

NSG (11) Guardian (8) Saint-Gobain (17) AGC (13) Sisecam (8) Sangalli (2) NSG/Saint-Gobain (1) Euroglas (4) AGC/Scheuten (1) Interpane (1) Interpane/Scheuten (1) GES (1) Okan-Cam (1)

Japan Total installed float capacity was over 1.2 million There are three major float glass manufacturers tonnes in 2010. serving Japan: NSG Group, AGC and Central Glass. Japanese float locations The overall market size for float glass was 1 million tonnes, and per capita glass consumption was around 8kg, in each case for 2010. NSG (4) AGC (3) Japanese 2010 float capacity by company Central (3)

AGC 40% Central 28% NSG (4) AGC (3) Central (3)

Three float glass manufacturers in Japan, with NSG an overall float market size of one million 28% tonnes.

12 NSG Group and the Flat Glass Industry 2011 ASEAN Total installed flat glass capacity was over 2.5 million tonnes in 2010, of which approximately 30,000 The ASEAN market described below refers to Brunei, tonnes was sheet glass. Indonesia, Cambodia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand and Vietnam. 21 float lines are installed in the ASEAN region. The ASEAN market size was just over 2.3 million tonnes in 2010. Over 20 float lines were operating in ASEAN float lines the region, which were owned primarily by four main structure Market & Industry glass manufacturers and several local concerns. Per NSG (4) Guardian (2) capita consumption during 2010 was around 4 kg. AGC (8) Viglacera (1) ASEAN 2010 float capacity by company Mulia (3) Others (3) Guardian 11% AGC 39% Other 16%

Multiglass 16%

NSG 18%

US/Canada At a primary level, the flat glass industry in US/Canada is a mature glass market with US/Canada has seven players. annual demand of around three million tonnes, equating to consumption of around 8.5 kg per US/Canada float lines capita in calendar year 2010. The industry at the primary level has seven significant players. Pittsburgh Glass Works is the latest to join the market after it acquired two of PPG’s float lines.

US/Canada 2010 float capacity by company Guardian 27% PPG 23%

Other PPG (7) 7% Guardian (8)

ass Works (2) NSG (6) Cardinal Cardinal (5) AGC 15% 12% AGC (4) NSG Zeledyne (1) 16% Pittsburgh Glass Works (2) Total installed float capacity was approximately 4.8 million tonnes of high quality float glass in 2010.

NSG Group and the Flat Glass Industry 2011 13 South America South American float lines

South America had a market size approaching NSG (4) 2.4 million tonnes in calendar year 2010, and an annual per capita glass consumption of around 6 kg. Saint-Gobain (2) There are three manufacturers of high quality float Guardian (3) glass: NSG Group, Saint-Gobain and Guardian. Six of the eight float lines in this region are joint venture operations between NSG Group and Saint- Gobain, of which four are managed by NSG Group.

South American float/sheet glass capacity by company Guardian 35% Saint-Gobain 23% Six lines are joint ventures between NSG and Saint-Gobain. The above key indicates the company with operational control.

Other 3% In South America, there are three manufacturers of high

NSG quality float glass: the 39% NSG Group, Saint-Gobain Total capacity was over 1.5 million tonnes for calendar year and Guardian. 2010, of which less than 40,000 tonnes was sheet glass.

China Further processing of flat glass, such as laminating China is the largest consumer of glass in the world, and coating, is still at low levels compared to Europe accounting for 51 percent of global demand in 2010. and North America. The quality of commercial developments has been improving, however, and in China is also the largest producer of glass and glass response to the need to cut carbon emissions, products, producing over 50 percent of the global building regulations are expected to rapidly increase output of flat glass in 2010. It has the greatest number the use of value added solar control and thermal of glass producing enterprises, and has the largest insulation glass in many parts of the country. number of float lines in the world. As of 2010, approximately 220 float lines were China 2010 float glass capacity by company believed to be installed, although only approximately Xinyi 50 of these float lines are equipped to produce Holdings Limited western quality float. 24% Nevertheless, the quality and output of Chinese Taiwan Glass Industry Corporation China Southern float glass is increasing. In terms of consumption 24% and output, the market has grown at more than Glass Holding 10 percent per annum during the period from Co., Ltd. 24% 2000 to 2010. Global economic conditions slowed China Yaohua both demand and capacity growth in 2008 and Glass Group 2009 but the growth has recovered well, with Corporation capacity increasing nearly 10 percent and 2% Fu Yao demand 11 percent in 2010. JSYP Group 2% Most Chinese manufacturers are small and 6% medium-sized enterprises that have begun Zhejiang Glass AVIC Sanxin SYP Saint-Gobain operations in recent years, which may present Co., Ltd 4% 4% Hanglass Nanjing challenges for them to realize economies of scale. 5% Co., Ltd. To this point, many of the domestic flat glass China Glass AGC Flat Glass 6% products are commodities, with price being the Holdings (Dalian) Co., Ltd. most critical consumer selection factor. 4% 4%

14 NSG Group and the Flat Glass Industry 2011 Total capacity, including lower quality float and sheet China accounts for more than 50 percent of glass, was around 33 million tonnes in 2010, of which global flat glass production. around 10 percent was sheet glass.

Chinese float lines of western design Saint-Gobain/Hanglas (3) NSG/SYP (1)

China Glass Holdings (2) structure Market & Industry AVIC Sanxin (2) Qinhuangdao (1) Zhejiang Glass (2) Taiwan Glass (11) Fu Yao (3) China Southern (8) Xinyi (12) SYP (2) AGC (2)

Around 220 float lines are installed in China, but only around 50 of these produce high quality float.

Former Soviet Union (FSU) The Former Soviet Union (FSU) market described below Former Soviet Union 2010 float/sheet glass refers to Russia, Ukraine, Belarus plus the former soviet capacity by company republics of Central Asia and the Caucasus. Other There were 22 flat glass manufacturing operations in 60% the FSU as of 2010, 16 float lines and six still using sheet technology. Most of these plants, including all of the sheet glass operations, produce glass which is generally of a lower quality than the modern float glass production found in Western Europe. The demand for both high quality float glass and value- AGC added glass products, such as products with energy- 24% saving features, continues to grow. The total market Guardian size in 2010 was approximately 2.6 million tonnes. 8% NSG 8% This demand has been mainly fueled by new build activity and residential refurbishment work. The Total installed flat glass capacity in the FSU was growing quality expectation in the Russian economy, 2.5 million tonnes in 2010, of which just over coupled with recent construction activity, provides 144,000 tonnes was sheet glass. considerable opportunity for float glass manufacturers, and competition in this market is expected to increase. There are currently 22 flat glass manufacturing However, current market conditions may affect operations in the FSU, 16 float lines and 6 still demands for new or existing construction in Russia. A reduction in such demand could reduce demand for using sheet technology. building glass products from previous levels.

NSG Group and the Flat Glass Industry 2011 15 Former Soviet Union float lines Long-term demand for both high quality float glass and value-added glass products continues to grow.

NSG (1) AGC (4) Guardian (1) Salavat (2) Gomel (2) Proletarii (2) Kyrgyzstan Uzbekistan Others (4)

Rest of the world The Rest of the World is defined to include West Asia, Furthermore, there is a greater proportion of sheet Africa and Oceania. and lower quality float capacity, which is expected to be gradually phased out and replaced by high quality This glass market is generally much less mature, float over the longer term. with annual per capita consumption at approximately 1.5 kg in 2010. In many parts of the world, glass markets are Recent new float investments have been announced still maturing and adopting value-added by Al-Obaikan in Saudi Arabia (started in Feb 2011) products. and MFG in Algeria due to start in 2012.

1.6 Automotive It is the light vehicle market that is evaluated in the subsequent OE analyses. Market overview In addition to light vehicles there are several niche There are two routes to market for automotive glass: vehicle segments; medium and heavy trucks, bus and a) Original Equipment (OE) supplied to Vehicle coaches, and off-road vehicles such as tractors, Manufacturers (VMs) for new vehicles. diggers etc., each with distinctive glazing b) Automotive Glass Replacement (AGR) product, requirements. supplied to the aftermarket for retrofit purposes, Effectively three global automotive glass usually following damage. manufacturers, together with a number of smaller Globally, OE glass demand is estimated to be around though in some cases regionally significant players, four times that of AGR, though the proportion will serve the world’s OE and replacement markets. vary from region to region. The largest of the three automotive glass groups is Within the OE glazing market, by far the largest Pilkington Automotive closely followed by AGC. segment is light vehicles, generally defined as those Saint-Gobain is the third global player. vehicles up to three and a half tonnes in weight. Light vehicles (LV), which include all cars, light trucks and Two routes to market for automotive glass; the various cross-over vehicle styles such as sports Original Equipment (OE) and Automotive Glass utility vehicles (SUVs) and people carriers, currently account for around 95 percent of global build. Replacement (AGR).

16 NSG Group and the Flat Glass Industry 2011 OE light vehicle market Around 65 percent of global demand Light vehicle production in 2010 was 72 million, of is supplied by the three global automotive which 35 percent was in the two main markets of glazing groups. Western Europe and North America. Build in Japan contributed a further 12 percent. Other regionally significant suppliers in 2010 were: Not only do these three regions account for 47 percent , the largest Chinese supplier and now growing of global LV production, but they are also the domiciles outside its home market; PGW (formerly PPG) with structure Market & Industry of most of the world’s VMs and as such are the centers operations primarily in North America; VVP, the for new vehicle development. glazing division of Mexican company Vitro; privately Glazing continues to play an important part in vehicle held Guardian Industries with operations in the US design, providing a combination of aesthetic, and Europe, and Zeledyne, the North America-based functional and structural properties. The VMs are former Ford Glass/Visteon business. increasingly looking to their glazing suppliers to play a In addition to the major manufacturers identified, key role in the vehicle development process. Few there is also a fairly short industry tail comprising automotive glass manufacturers have the combination smaller automotive glass manufacturers. Of these of technical capability and the appropriate geographic smaller players a few independent producers are presence to play this role to the full. more focused on specialist/niche OE supply. Others, often affiliated with flat glass manufacturers in Western Europe and NAFTA produced 35 developing markets, are more limited to local OE percent of the world’s light vehicles in 2010. supply. There are is also a handful of small automotive glass processors primarily serving the aftermarket. Regional light vehicle build The last few years have seen a reversal in the trend to customer consolidation, which by 2004 had the top Eastern Europe NAFTA six VMs and their affiliates comprise 80 percent of 8% 17% Western Europe the market. 18% South America Subsequent restructuring at GM and DaimlerChrysler 6% involved divesting their respective stakes in Fiat, , Subaru, , Mitsubishi and Hyundai. Then came Daimler’s sale of its stake in Chrysler and Ford’s Rest of Japan divestment of the Land Rover and Jaguar marques to World 12% 3% the Tata Group. The most recent changes in the wake of the global recession include Fiat’s purchase of Chrysler, Ford’s sale of Volvo Cars to Chinese VM Geely Rest of Asia 16% China and the significant downsizing of its stake in , 20% and GM’s divestment of Saab to Spyker. In 2010, the six largest VMs with their affiliates Reflecting the importance of both technical capability accounted for 57 percent of global production. The and geographic presence in serving the light vehicle principal brand memberships of the major VM market, around 65% of global demand is supplied groupings are listed overleaf. by the three global automotive glass groups, the NSG Group, AGC and Saint-Gobain with its strategic In 2010, the six largest VMs, with their partner Central. affiliates, accounted for 57 percent of global production.

NSG Group and the Flat Glass Industry 2011 17 Automotive customer groups

BMW Group Geely Group Renault/ Group BMW Mini Geely Volvo Cars Infiniti Dacia Rolls Royce Nissan Renault GM Group Samsung Daimler Group Buick Cadillac Mercedes Chevrolet GMC Suzuki Group Maybach Holden Opel Maruti-Suzuki Smart Vauxhall Suzuki

Fiat Group Group TATA Group Alfa Romeo Acura Honda Land Rover Jaguar Chrysler Dodge Tata Hyundai Group Ferrari Fiat Hyundai Kia Group Iveco Jeep Daihatsu Lexus Lancia Maserati Mitsubishi Group Scion Toyota Mitsubishi Ford Group VW Group Ford Lincoln Mazda Audi Bentley Mazda Fuji Heavy Group Bugatti Subaru PSA Group Lamborghini Citroën Peugeot Seat Skoda VW

Europe 2010 light vehicle production Western Europe – 13.2 million Even with the market turmoil of the past three years, the European OE market remains the largest Renault/Nissan 12% Daimler (26 percent of global production), and its customer 9% base is the most diverse of any region, with all of the PSA 15% Ford world’s major VMs having a production facility there. 9% In 2010, Western Europe accounted for almost 70 percent of the region’s total production, though Eastern European vehicle build, which includes the BMW major vehicle producing countries of Russia, Poland, 9% the Czech Republic and Turkey, continues to increase Other in significance. VW 9% 23% GM 8% Western Europe has a broad and well-balanced Fiat customer base as shown to the right, with successive 6% Tata 2% Japanese investment in recent years supplementing the existing presence of the traditional European VMs. Toyota 2% Volvo 3%

Other <1% Honda Porsche 1% <1%

18 NSG Group and the Flat Glass Industry 2011 The opening up of the Eastern European market since 2010 light vehicle production Eastern Europe – the 1990s has seen increased investment from 5.7 million Fiat Hyundai Western, Japanese and Korean VMs, following that of 13% 11% companies such as Fiat, GM, Renault and VW. VW Avto Vaz OE glazing supply in the Western European OE market 16% 10% is predominantly by the local operations of Saint-

Gobain, Pilkington Automotive and AGC. A few smaller structure Market & Industry manufacturers, including Guardian, Soliver and PSA Rioglass, together with a small amount of imports 9% from Fuyao, PGW and Sisecam, supply the remainder Other 10% of the Western European market (~14 percent). Local Ford independent glass processors are believed to have a Renault/Nissan 7% 17% GM larger share of certain Eastern European markets. 7%

The European OE market is not only the Toyota Suzuki 3% largest, but its customer base is also the most 2% diverse of any region, with all of the world’s major VMs having a production facility there.

Other 5%

North America 2010 light vehicle production NAFTA – 11.9 million

Even with significantly increased production in 2010 Ford Chrysler as its recovery path from recession continues, NAFTA 20% 13% remains in the world number three position with a Toyota vehicle build of 11.9 million units. Traditionally, this 12% market has been the domain of the 'Big Three' vehicle manufacturers, GM, Ford and Chrysler, though in recent years their share has been eroded by the operations of Asian and European VMs. In 2010, Honda Other the share of the ‘Big Three’ VM groups was down GM 11% 12% to 56 percent of the market. 23%

The OE glazing supply base in NAFTA is one of the Renault/Nissan most diverse of all regions. Three companies have Hyundai 9% market shares estimated in excess of 15 percent; 4% three more companies have shares in the range 6 to 14 percent, with all of the remaining suppliers having shares of less than 5 percent. VW BMW 4% 1% NAFTA comprises the third largest OE market Daimler Subaru 1% in the world, with 11.9 million units built Other 1% in 2010. <1%

PGW, AGC and Pilkington Automotive are the leading suppliers in NAFTA, with fourth, fifth and sixth spots taken by VVP of Mexico, the strategic partnership of Saint-Gobain’s Sekurit business and Central Glass’s Carlex subsidiary, and Zeledyne (formerly Ford Glass). Privately held Guardian, together with imports, accounted for the remainder of the market.

NSG Group and the Flat Glass Industry 2011 19 Japan In 2010, Japan remained the fifth largest automotive overseas led, at least in part, to the strategic market in the world; behind Europe, China, North partnerships and subsequent investments between America and the Rest of Asia, with light vehicle NSG Group and its now subsidiary Pilkington, and production of 8.9 million. Central with Saint-Gobain. Production in Japan remains the exclusive domain of 2010 light vehicle production Japan - 8.9 million the domestic VMs, with western VM involvement limited to equity stakes in the domestic producers. Toyota 43% This includes Renault’s 44 percent in Nissan and Ford’s now much reduced stake in Mazda. To date, only two of the Japanese VMs, Toyota and Honda, have remained independent of equity investments by Subaru US or European VMs. 6%

In Japan, as elsewhere in the world, Toyota is by far Renault/Nissan the largest of the Japanese VMs. 12% Mitsubishi Supply of OE glazings in Japan is in the hands of the 7% three domestic glass companies, AGC, NSG Group and Mazda Suzuki 10% Honda 11% Central Glass. AGC is believed to have just over half of 11% the market and the NSG Group around 30 percent, with Central Glass taking the remaining share, except for a small amount of imports. Japan is the fifth largest Automotive market in the world, with light vehicle production of The need for the domestic glass companies to serve the Japanese VMs as they expanded their operations 8.9 million.

China 2010 light vehicle production China – 14.7 million Consistent double-digit growth in recent years has seen China rise rapidly to be the second largest Changan Hyundai ‘regional’ market, behind Europe, and the largest in 9% 7% Toyota individual country terms, overtaking Japan and the US. VW 5% 13% Renault/Nissan In 2010, LV production in China grew by 32 percent, 5% totaling 14.7 million units. Chery 5% This recent phenomenal market development is on the back of inward investment by all of the major VMs, Honda 5% as well as organic growth by China’s own domestic Other vehicle manufacturers. The Chinese automotive GM 15% 29% FAW 4% industry universally benefited from the government’s stimuli of both the economy and industry, barely BYD 3% faltering as the rest of the world plummeted into recession before resuming growth at rates unheard Other Chinese VMs Other Non-Chinese of in other markets. 9% VMs 1% incl. BMW, Daimler, Fiat Mazda China is the second largest ‘regional’ market 2% Geely and the largest in individual country terms. 3% Suzuki 2% The leading glazing suppliers in China are; Fuyao, a Dongfeng Motor Brilliance-Jinbei 3% Chinese company with an established history of 2% Ford PSA 2% 3% serving overseas aftermarkets through exports, and Great Wall which latterly has begun to export OE products, AGC 2% through its now wholly-owned Chinese subsidiary, Saint-Gobain (Sekurit), SYPA, another domestic glazing supplier and Pilkington Automotive, through its three domestic operations.

20 NSG Group and the Flat Glass Industry 2011 Rest of Asia (excluding Japan and China) At 11.2 million vehicles in 2010, Asia, excluding Japan Before the acquisition, Pilkington had originally and China, remains the fourth largest regional market. focused on China, where today Pilkington Automotive In automotive market terms, the region is not has three operations. Latterly it has also invested in homogeneous, with several sub-market types India and the ongoing regional footprint is further being evident. enhanced by the other Pilkington Automotive

interests of the NSG Group mentioned above. Saint- structure Market & Industry First, there is South Korea, whose well established Gobain’s investments were initially targeted on India automotive industry still transcends other regions, and China, in partnership with local glass processors. both in the form of exports and through vehicle assembly transplant operations elsewhere within Saint-Gobain also has a presence in the Thai market, and outside the region. in partnership with a local company Toa. However, its most significant Asian position results from the stake Secondly, there is the fast growing and potentially in Hankuk, the South Korean market leader, taken in large market of India. Despite the recent major growth 1997 and now grown to majority share ownership. in vehicle production, vehicle ownership rates in India remain well below other developing markets. This 2010 light vehicle production Asia market potential attracted some early investors, most (excl. Japan & China) – 11.2 million notably Suzuki, and these early positions are now Toyota growing into a meaningful market presence. Latterly, 13% Suzuki many more European, Japanese and Korean VMs have 12% invested in India. The third group of Asian markets comprises the Hyundai 33% GM so-called ‘Tiger Economies’, which exhibited rapid 11% growth through the early/mid 1990s. Vehicle production in Thailand, Indonesia, the Philippines, Malaysia and Taiwan grew significantly, benefiting Other 20% particularly from inward investment by Japanese VMs. Renault/ Nissan 6% Other sub-markets in Asia include the small mature Australian market and the new developing markets Tata Honda 5% of Pakistan, Vietnam and Kazakhstan. Ford 3% 3% The Asian OE glazing supply base has its origins in local Others Mitsubishi independent glassmakers. Whilst some still remain, 2% 3% increasingly these local players are now partnered with the major international glass companies. Mazda 1% Mahindra & Mahindra 2% The Asian OE glazing supply base has its Proton Isuzu 2% Perodua 2% origins in local independent glassmakers, 2% increasingly now partnered with the major international glass companies.

AGC led the way as far back as the 1970s, when it began to establish partnerships with local glass companies or investors. Such strategic investments were made in Thailand, Indonesia, India, the Philippines, Malaysia, Taiwan, China and most recently South Korea. Latterly, AGC has increased its stakes in several of these companies, moving to majority ownership positions. To a lesser extent, the other two Japanese glass makers, the NSG Group and Central, both followed suit, with NSG investing in automotive glass affiliates in Malaysia, Taiwan and China, and Central having a Taiwanese joint venture.

NSG Group and the Flat Glass Industry 2011 21 South America 2010 light vehicle production South America – 4.2 million South America is the sixth largest vehicle-producing VW region in the world, with Brazil and Argentina 22% Fiat together accounting for around 93 percent of regional 21% volume. Brazil remains by far the most significant vehicle producing country in South America. Traditionally, the South American market has comprised mainly European VMs, though an Asian Ford 10% presence is being built, principally by Japanese VMs. Three VMs together, VW, GM and Fiat, make up Other 11% almost two thirds of the market. GM Renault/Nissan 22% 7% The NSG Group, through its Pilkington Automotive PSA operations in Brazil, Argentina and Chile, and Toyota 7% Saint-Gobain, through its Brazilian and Colombian 4% subsidiaries, together account for around 90 percent of South American glazing demand with the remaining supply coming from independent Honda domestic processors and from imports. 3% Others 2% South America is the world’s sixth largest Mitsubishi Hyundai 1% 1% vehicle-producing region. Brazil and Argentina account for around 93 percent of regional volume.

Rest of the world 2010 light vehicle production Rest of world – 2.2 million Iran, South Africa, Egypt and Morocco comprise PSA 25% the principal OE markets elsewhere in the world, accounting for just 2 percent of global volume. Iran Khodro The South African market is principally served by 11% Shatterprufe, the automotive glass subsidiary of Hyundai Renault/ domestic flat glass manufacturer, the PG Group. 30% Nissan 7%

Other 12% Toyota 6% VW GM 6% 3% BMW Daimler 2% 2% Mazda 2%

Zamyad Ford 2% 1% Chery Other 1% 2%

22 NSG Group and the Flat Glass Industry 2011 Glass industry growth 23

40% 30% 20% 10% 0% 2009

2010: +3.3% 2010:

2010: +9.1% 2010: 2007 2005

NSG Group NSG and Group the Flat Glass Industry 2011 2003 Over the Over last 20 float demand years, has growth outpaced real GDP the growth. Over past 10 years, around float demand GDP by has growth exceeded points. 2.5 percentage Despite further strong demand expected growth in 2011, utilization is to dip expected again due to further new capacity being on brought stream, especially in China. In the practice, industry may again choose to impose capacity reduction measures to support utilization. A further is point significant that each new float line that is added to the installed a base smaller represents installed of capacity percentage and is therefore likely to cause less a of disturbance to the supply demand balance. This the can by be illustrated chart additional of the showing following effect float capacity since the construction the of world’s second line in 1962.

Real GDP: +2.7% p.a. +2.7% GDP: Real

2001 1999

Calendar Year 1997

Glass Demand Growth: +5.1% p.a. +5.1% Growth: Demand Glass

1995 1993

No. of Woats % Capacity added by one line % Capacity added in year one line % % Capacity added by Woats No. of 1991 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 0

50

150 250 350 100 200 300 400 300 250 200 150 100 Index (1991 = 100) = (1991 Index Incremental Incremental capacity – global The world The flat world glass is market to reach expected almost 60 million tonnes in 2011, including 2 million tonnes rolled of glass, from the 2009 recession-hit 52 of million level tonnes. global float capacity utilization this has Until year, 90 ranged and between (virtually 95 the percent practical limit float of a plants). for network In 2008, global capacity utilization dropped end the this of lower range, towards significantly after a sharp demand of tightening due to the in 2009 and 2010 global Recovery was recession. supported particularly strong demand by growth in China and capacity reduction measures taken the by industry. Global float demand grows >5 percent p.a. In 2010 demand grows by >9 percent 2. Glass – a growth industry 2.1. Global demand for flat glass the Over long term, demand float glass for is growing per at >5 annum. percent This is growth fuelled the by demand building for glass, glass which and in automotive turn is driven economic growth. by A new float line added in 1970 represented more New float build program than 3 percent of global float capacity. A new line in 2011 represents less than 0.3 percent of global The following table shows lines that have come on installed capacity. Nevertheless, the impact of a new stream in 2010, and those planned to start-up in float line in certain territories can still be quite 2011. In addition, it is believed that more than 50 marked, at least in the short term, until the new float lines will have come on stream in China in 2011 capacity is fully absorbed by market growth. and 2012.

In 2011, a new float line represented less than New Float Build Program 0.3 percent of global installed capacity. Country Company Start Year Belarus Gomel 2010 Global glass industry summary Russia AGC 2010 Russia YugRos 2010 • Over the long term demand is growing Bulgaria Sisecam 2010 steadily in most regions Egypt Saint-Gobain/ • The global recession caused a serious Sisecam 2010 demand contraction in 2009 but global Egypt Sphinx Glass 2010 recovery was strong in 2010 and all of the India HNG Float Glass 2010 lost ground was recovered. This recovery Vietnam Chu Lai 2010 has been driven mainly by emerging Vietnam Trang an 2010 markets, whereas demand in developed Saudi Arabia Arabian United 2010 markets is still well below pre-recession Turkey Okan Cam 2010 levels Italy Sangalli 2011 • Growth of value-added glass has the effect Saudi Arabia Al-Obaikan 2011 of reducing float capacity as output is effectively lower • Global capacity utilization is expected to Regional analysis remain above 90 percent in the medium In the following analysis of regional glass markets the term world is segmented into seven regions as follows: • The pace of capacity addition outside China has moderated recently, with eleven new Europe • Japan • ASEAN lines on stream in 2010 but only three US/Canada • South America • China expected in 2011. Russia/Former Soviet Union

Analysis of demand and capacity utilization is on the basis of all sheet and float production.

24 NSG Group and the Flat Glass Industry 2011 Glass industry growth 25 110% 100% 90% 80% 70% 60% 50% 110% 100% 90% 80% 70% 60% 50% ation z Utili Utilization Demand Demand Calendar Year Calendar Year NSG Group NSG and Group the Flat Glass Industry 2011 Available Capacity Available Capacity 2002 2004 2006 2008 2010 2012 2002 2004 2006 2008 2010 2012

1.5 1.2 0.9 0.6 0.3 0.0

8 6 4 2

0

12 10 Tonnes Mn 14 Mn Tonnes Mn Japan capacity utilization Europe Europe capacity utilization In Japan, capacity reductions are to push expected utilization above 2010. 100% beyond Japan Demand in Japan has been flat essentially one million tonnes since at approximately demand 2000. The global drove recession 850 below thousand tonnes in 2009, but one to just million over this recovered tonnes in strong demand 2010, by driven and specialty in glass automotive sectors. capacity has been Available in decline throughout the decade been as lines have glass to produce or mothballed, converted specialist for applications. Nevertheless, the utilization below in fall demand drove in 80 2009. percent The major earthquake and tsunami in early 2011 impacted industry capacity little but temporarily effect had relatively on demand. lines The quickly were affected back brought on stream and continued will push utilization above demand recovery in 100 2011. percent Europe Europe is as defined as extending east far as, Russia, but Ukraine and excluding, the south it Belarus. includes To Turkey. Capacity utilization remained in the high range from 2000 90 to 2007, percent but the which recession hit in the second half of 2008 led in to a demand, contraction while new significant capacity came on stream. from projects begun new Further capacity, prior to the came recession, on stream in 2010 and 2011 but the industry has moved capacity through overall to reduce repairs and extended shut other downs. utilization is so, to Even fall expected in 90 below 2011. percent ASEAN Demand has been fairly volatile in the ASEAN ASEAN capacity utilization region throughout the decade. In recent years, growth in production of solar energy modules Available Capacity Demand Utilization has provided a significant boost to value-added 100% glass demand. This has pushed apparent 3.5 utilization above 80% but much of this glass is 90% supplied from outside the region. 3.0 80% Capacity additions in 2010 and 2011 have added downward pressure to the real utilization 70% of regional assets. 2.5 60% 2.0 50%

1.5 40% 30%

Mn Tonnes 1.0 20%

0.5 10%

0% 0.0 2002 2004 2006 2008 2010 2012

Calendar Year

US/Canada North America was the first region to fall North America capacity utilization victim to recession and demand has Available Capacity Demand Utilization contracted sharply since the peak of 2006. 100% 6 In North America, regional capacity 90% 80% utilization has fallen below 70 percent. 5 70% This is a similar demand picture to Europe 4 but the crucial difference has been the 60% corresponding reduction in capacity as lines 50% 3 have been taken out of action. Several 40% facilities also underwent lengthy repairs or 2 30% other forms of capacity reduction during Mn Tonnes 2009 and 2010. 20% Regional capacity utilization is believed to 1 10% have bottomed out in 2010 and a long-term 0% recovery is expected to begin in 2011. 0 2002 2004 2006 2008 2010 2012 Calendar Year

26 NSG Group and the Flat Glass Industry 2011 Glass industry growth 27 100% 95% 90% 85% 80% 75% 70% 65% 60% 180% 160% 140% 120% 110% 100% 80% 60% 40% 20% 0% Utilization Utilization Demand Demand Calendar Year Calendar Year NSG Group NSG and Group the Flat Glass Industry 2011 Available Capacity Available Capacity 2002 2004 2006 2008 2010 2012 2002 2004 2006 2008 2010 2012 5 0

40 35 30 25 20 15 10

3.0 2.0 1.0 0.0 China capacity utilization South America capacity utilization Mn Tonnes Mn Mn Tonnes Mn resumes. In China, utilization is to expected as stabilize strong demand growth Significant capacity Significant reduction measures taken were in 2009, along with the deferral new float start-ups, in several of response to the global but, recession, in reality, domestic albeit demand continued, growth it at pace. a This in lower resulted a strong increase in utilization and the addition of new capacity has pace in gathered 2010, when around 25 new lines to are expected come on stream. strong Further have demand is in growth expected 2011, which will utilization maintain at around 90 percent. China Since 2000, there has been a major float build in program China, and the number of float lines has increased to around 220. This in resulted in a utilization downturn to 2005 and between around 85 2008. percent South America South American glass demand has been since 2003. steadily growing This growth the by temporarily interrupted was in recession 2009, but normal rates growth resumed quickly in have 2010. Regional capacity utilization reached in around 150 2008 percent (the region is a importer net flat of glass), reducing in 2009 as new capacity came on stream in Brazil. It has since increased again to over as 150 demand percent continues to outpace capacity growth. Former Soviet Union Flat glass demand has grown robustly since Former Soviet Union capacity utilization the relative low point of 2000 up until 2008, with the market size more than doubling in Available Capacity Demand Utilization eight years. Market demand fell sharply in 3.5 140% 2009 but despite significant capacity additions in 2010, utilization is set to 3.0 120% remain above 100 percent in 2011. 2.5 100% 80% 2.0 60% 1.5 40% Mn Tonnes 1.0 20% 0.5 0% 0.0 2002 2004 2006 2008 2010 2012

Calendar Year

2.2. Growth in Building Products Growth in Building Products is fuelled by a number Value Growth – Building Products of drivers: Demand Growth drivers Construction Energy-saving Energy-saving legislation and building Glass is an integral building material for most (heating) regulations; reduction of energy loss construction projects. Virtually every new building from buildings, energy labeling of requires glass. Both new building projects and the windows. refurbishment of existing buildings call for large Energy-saving Energy-saving legislation, reduction quantities of glass products. (cooling) of air-conditioning load in buildings, preventing non-air-conditioned Architectural trends buildings from over-heating. Architects are increasingly seeking to bring natural Safety/ Increasing legislative requirement for environmental factors into the interior of buildings by security safety glass in certain applications. maximizing natural daylight. This has been achieved Requirement for transparency combined with security features. through the use of larger glazed areas in façades and roofs, and through entirely glazed façades where the Fire Requirement for good light transmission and protection compliance glass is a structural component of the building. with regulations on fire protection. In sunnier climates, the reliance on air conditioning, Acoustic Increasing noise levels caused by traffic, which would otherwise be increased by such larger aircraft, etc., progressively backed by glazed areas, is mitigated by the use of advanced legislation. solar control products which allow the sun’s light into Self-cleaning Reduction in use of detergents, safety the building while keeping much of its heat out. at heights, extension of product range and features to increase functionality in Refurbishment commercial and domestic applications. Refurbishment of buildings accounts for around Solar Energy Demand for renewable energy, 40 percent of consumption stimulated by government support and worldwide. In mature markets, windows in residential feed-in tariffs. buildings are replaced every ten to twenty years.

28 NSG Group and the Flat Glass Industry 2011 Glass industry growth 29 . Even before . before Even 2 NSG Group NSG and Group the Flat Glass Industry 2011 At a primary level, low-e glass earns revenues glass earns a revenues low-e primary At level, higher 40 than percent ordinary float glass. it came into force in it 1995, came the force of knowledge into glass in low-e of the penetration legislation drove insulating glass units Low-e to around 50 percent. glass has been now standard in many for Germany and years the has experience in been other repeated such countries as the UK. The trend is being repeated across the globe, increasing the dramatically demand glass. low-e for For the primary manufacturer, low-e glass typically low-e the For primary manufacturer, higher 40 than percent ordinary earns float revenues the glass, so this improves greatly substitution effect added. value Low-emissivity Low-emissivity glass and All northern and central European countries, indeed some southern (such countries as Italy), legislation requiring emissivity low glass have in legislation also countries new have buildings. Several glass in requiring all low-emissivity replacement windows. In the Energy Conservation the USA, International Code, which impacts on buildings energy for efficiency and specifically in glass, revised 2009 was and is due to change again in 2012. This by is complemented such as initiatives the US Green Building Code's (LEED). building system rating environmental In has China, already introduced the government the energy efficiency building to improve regulations new of buildings, which should help to significantly glass increase the in share an low-e of insulating glass 200 million unit over of m2. market In 2009, South a which new regulation introduced effectively Korea glass standard makes in low- new buildings. In Northern triple European countries, glazing or '2 + 1' double has window become the norm. In some the European countries, longer term plans central of triple include towards progress most governments glazing as norm, the as and regulatory zero low energy buildings become common. of An effect example the of market-transforming building is regulations the sharp increase in demand glass in in Germany low-emissivity for the 1990s from less than 2 25 million million to over m emissions have driven emissions have 2 European building regulations continue to be European building continue regulations the major and high for driver performance glass, added-value particularly in the area of energy efficiency. tougher legislation for energy saving glass. tougher energy legislation saving for Building insulating require now in regulations countries many glass units (double or triple glazing) as standard, with glass coated (low-e) low-emissivity energy-efficient necessary. often Energy Energy legislation As around half for buildings all of account energy become have they countries, consumed in developed the in prime terms legislation. of attention of focus In been reducing for set have example, for the targets EU, reducing green- 20 by percent, energy consumption house gas and emissions 20 producing by percent sources. energy of from renewable 20 percent The recast the of on EU Energy Performance Directive Buildings of imposes a raft obligations of on Member including to upgrade their the States, requirement building energy at for least regulations once every it years. all five Furthermore, requires new buildings across Europe to be built high to very energy 2020 by and standards efficiency zero') ('nearly all to existing buildings undergoing major renovation minimum meet requirements. energy performance to be Building continue the regulations major driver and high for glass, added-value performance particularly In in most the area energy of efficiency. been major there changes have countries to building creating energy efficiency, for regulations opportunities glass, added-value for and this is in to continue the future. anticipated In hot climates, In there is climates, hot an that increasing recognition on reliance air-conditioning can the be by mitigated glass. use solar energy Window advanced of control been established to have promote labeling systems glass energy saving to the a consumer and provide There is mechanism also financial for incentives. support for worldwide governmental growing including energy generation, solar renewable energy. Energy Energy efficiency the Over past 25 regions such in years, as developed Europe, Japan and North America, the need growing energy in efficiency for buildings the has transformed glass energy- saving for markets and this is being now echoed regions. in developing reducing CO for Targets Solar control glass Renewable energy Around the world, countries are increasingly turning The same energy efficiency drivers are also resulting their attention to air-conditioned buildings, in order in increased demand for photovoltaic and solar to reduce energy usage and CO2 emissions, thereby thermal energy panels, in which glass is an essential creating opportunities for solar control glass. These integral component. The EU Renewable Energy products have special coatings applied to their Directive sets a requirement for 20 percent of energy surface which reflect up to 75 percent of the solar across the EU to be produced from renewable sources heat while transmitting the majority of the visible by 2020. It also includes mandatory targets for each light. This allows a bright and cool environment to be EU Member State. maintained inside a building with reduced Feed-in tariffs in countries such as Germany, Spain, requirement for air-conditioning. Products such as Italy and Greece have made it economically attractive this can earn up to ten times the revenue per square to feed power into national grid systems. Authorities meter of basic float glass. Their use will increase as in Japan have indicated likely support for homeowner climate change results in increased ambient solar installations and US tax incentives are adding temperatures, thus imposing greater demands further impetus. on air-conditioning in buildings. The Energy Conservation Building Code in India has Safety - toughened, laminated and introduced specific requirements for high fire protection performance solar control glass. Although currently Growing awareness of safety has also driven building voluntary, it is widely adopted in major cities and will regulations for laminated, toughened and fire become mandatory for all new and refurbished protection glass, which further enriches the product buildings in 2013. Japan, Italy, Poland and parts of mix of the industry. Growth in use of laminated glass the USA have also addressed this issue in some way has also been driven by developments of improved within their regulations. sound insulation of some laminated products. Energy labeling Technical applications Window energy labeling systems, which evaluate the Glass is increasingly being used in a range of total energy performance of windows, have been applications which require a high degree of established in many regions, including the UK, functionality. Finland, Denmark, Australia and North America. One of these fast growing applications is Thin Film These allow the consumer to identify the best- Photovoltaic (PV) panels for Solar Energy, where performing products - stimulating the demand for coated glass is used as an integral active component energy- saving glass, and provide governments with a of the device. Other consumer applications, such as criterion which financial incentives can be linked. The touch screen devices, again use glass as an active introduction of a window energy rating system in integral component. Japan is anticipated in 2012. Although small today, in comparison with glass demand for mainstream building applications, these applications require glass of much higher value and have the potential to achieve significant scale.

2.3. Growth in Automotive restructurings over the last few years now see a Structural trends slightly differently constituted group of the six Various structural trends have affected the largest VMs accounting for 57 percent of global light automotive glazing industry in recent years, both vehicle build. from the customer and the supply side. The concentration of the customer base historically One such trend had been the consolidation in the has been mirrored on the supply side and automotive OE customer base; the vehicle manufacturers. glass is no exception. Here, acquisitions, strategic VM mergers and acquisitions, together with some partnerships and organic growth have resulted in the organic growth, saw the top six VM groups in 1992; three global glass supplier groupings, the NSG Group, (GM, Ford, Toyota, VW, Nissan and Chrysler) increase AGC and Saint-Gobain/Central, increasing their their combined global market share from 57 percent combined global market share from 49 percent to to 80 percent by 2004. However, industry an estimated 65 percent.

30 NSG Group and the Flat Glass Industry 2011 Glass industry growth 31 0.2% 0.0% -0.6% Overall: 0% Overall: Average Annual Growth ‘97 - ‘15 Annual Growth Average Japan NAFTA W.Europe NSG Group NSG and Group the Flat Glass Industry 2011

5 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

45 40 35 30 25 20 15 10 m vehicles m Light vehicle build Western 1997 to 2015, NAFTA, Europe & Japan developing Despite the higher the of growth newer, markets; the markets, three large developed and Japan, will a retain Europe, NAFTA Western industry importance fundamental to the automotive to come; years only not many for because their of but size, also because remain principal they centers all for the of new for major model VMs. development The impact the of economic crisis on these mature that the lost volumes so was markets during severe 2008 and 2009 are unlikely to be fully recovered within the next years. four importance developing of The increasing relative from the is markets chart evident below. automotive regions Asia of the (excluding developing Together, Japan), Eastern Europe, South America and the Rest of global of comprised the 22 vehicle World percent Increasingly, automotive glass suppliers are becoming automotive Increasingly, in the sequencing ‘just product involved of for in time’ assembly to line. the delivery In VM’s some cases this the supplier line. on working the involve VM’s even may Demands on the glazing are also manufacturers as becoming more intense, VMs seek to both update their and product ranges more frequently to shorten the time and taken bring to develop their new models this end, major suppliers to To market. are today a role playing in key the design working process, closely with the VM in the early stages of development. One aspect the of VMs’ and consolidation globalization is the additional purchasing pressure this on can the exert supply base, particularly in an where cost reductions are a priority. environment Whilst immune not from such the pressure, glazing suppliers, such as Pilkington, increasingly work with the constructively VMs to areas identify of to benefits providing ultimately savings, potential parties. both Vehicle Build Trend Average Annual Growth 3.2% Annual Growth Average 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 global reach capital investment in support and capital volume both of investment technical technical capabilities - shaping, design optics, developing technologies developing feasibility/simulation

80 60 40

100 • • • m vehicles m However the unprecedented downturn that hit downturn the the unprecedented However industry in 2008 – as 2009 to take so was severe global in experienced demand 2003, to down levels closer reducing the rate historical growth effectively that is underway now to 1 The percent. recovery markets, in with growth developing together natural long term to average is restore expected currently 2015. annual by industry to 3 growth percent Global light vehicle build – 1997 to 2015 OE Market The basic demand of supplier driver any for to the OE industry is build. vehicle As can be seen in the chart historically the industry has below, steady exhibited per 2.5 annum percent in the averaging growth, 13 to 2010. years Automotive glazing demand drivers A further industry trend, resulting from the VMs’ drive costs in to reduce their assembly is core operations, the suppliers by assumption activities of previously undertaken the by VM. Alternative consolidation trends can consolidation be as expected Alternative their of VMs through assets seek to leverage maximize partnerships, as as well opportunities taking strategic VMs markets. in will to lookdeveloping continue to their suppliers key to support into them as move they new markets. the by VMs on Increased requirements automotive those, such glazing as suppliers Pilkington favor able to offer: Automotive, production in 1997. By 2010 their share had risen to All of the developing markets will continue to be the 53 percent and is expected to increase to 57 percent source of the global industry’s growth. Though future by 2015. rates will reduce from the routine double-digit figures previously experienced in some markets, Global light vehicle build 1997 – 2015 the combined average growth across these markets is currently expected to exceed 7 percent per annum 100% over the five years to 2015. 90% 80% However, glazing demand driven by vehicle build 70% growth is only part of the automotive story. There are 60% three other drivers of the automotive glazing industry, 50% the first two of which directly impact the OE market, 40% both in terms of volume, and importantly, value. 30% The first of these additional drivers is the growth in 20% the amount of glass used per vehicle. Key to 10% understanding this trend is recognition of the change 0% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 in vehicle styling and features as a result of

RoW Rest of Asia technology advances and public opinion. Generally, larger vehicles for replacement models, taller S. America China W. Europe vehicles, new vehicle apertures and new market E. Europe Japan NAFTA segments have brought about an increase in the amount of glazing used. The global growth for the The annual average growth of these combined midsize vehicle segments has led to vehicle developing regions between 1997 and 2010 was manufacturers using more glass to generate a greater over 9 percent. As growth in China moderates going impression of light and space within smaller vehicles. forward, average annual growth in the developing Environmental considerations are also impacting markets through to 2015 is expected to reduce the amount of glazing in vehicles with reduced slightly to around 7 percent per annum. installation angles for windshields and backlights providing improved aerodynamics, but requiring Light vehicle build – 1997 to 2015 larger/taller parts. developing markets Over the last 35 years, glazing area on equivalent Average Annual Growth ‘97 - ‘15 Overall: 8.9% 60 models has increased in the order of 50 percent.

RoW 9.9% Average windshield glazed area has increased by over 50 S.America 4.2% 60 percent over the same period. With the use of large area rooflights increasing significantly year on year, it 40 E.Europe 6.2% is clear that glazing is being used as an exterior styling feature in addition to a tool to increase the feeling of 30 China 19.4% light and space within a vehicle.

20 Due to the constantly rising expectations of consumers and increased focus on environmental

10 Asia 6.8% responsibility throughout the major global markets, (excl China small SUVs, cross-over type vehicles and small/mid- & Japan) 0 sized cars are growing in popularity. A greater number of vehicle models with lower volumes per model 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 means that greater differentiation is happening. Increased flexibility is needed as the market evolves Of the developing regions, China has been the best and VMs are using styling as a vital selling tool. performer to date, exhibiting average growth of 24 percent per annum since 1997. Vehicle build in Glazing is critical to vehicle styling and offers stylists a both Eastern Europe and the Rest of Asia has also fantastic opportunity to influence the appearance of shown good growth averaging 7 percent per annum a vehicle and fundamentally, vehicle side glazing is since 1997. being used to develop clear design aspects for the side of passenger vehicles.

32 NSG Group and the Flat Glass Industry 2011 Glass industry growth 33 New features and by functions New features provided Designers see glazing as a crucial element vehicles. in designs to differentiate glass such as the and light ability to control heat levels. Crime and increase vandalism the need for side, laminated roof by provided security, and rear glazings. Larger and glass tinted areas require glazing solar to reduce coated gain and air- through conditioning load. control Acoustic laminated improves advanced comfort. driver vehicles more efficient towards The move new and new trains, creates drive opportunities higher for glass value products. Modular assembly is the moving supply from glass only requirements to fully including antenna systems integrated trim. and integral electronics systems arrays, reduction reduction glass to technologies is yet 2 NSG Group NSG and Group the Flat Glass Industry 2011 Value Growth – Growth Automotive Value Demand Style drivers Growth Innovation Security & Comfort Convenience Environment Integrated Systems By way of illustration, the the shows illustration, of By chart way overleaf the in growth between the relationship number of built vehicles in the main European since markets 1999 and the in growth the the of value glazing in those vehicles. be fully understood. Equally, the glazing simply installation may require Equally, the prior fitting locating of clips to the glass. Again, this activity ‘assembly’ is increasingly being undertaken the by glazing supplier. role in a responsibility plays As greater environmental are likely to requirements regulatory affairs, world push the a of value glazing vehicle up set significantly through the solar high of introduction performance glass reflective products, including control infra-red windscreens and solar high very performance absorbing glass compositions. regions How the of CO adopt world There There can be to from more four anything than 13 apertures glazed on vehicles, light current style and to fundamental the many overall a of appearance new vehicle. There There can be to from more four than anything 13 many apertures glazed on vehicles, light current style which of and are to fundamental the overall a of appearance a new vehicle’s In vehicle. particular, aspect a frontal plays huge role in terms styling of and the increasing use panoramic of and cielo windshields to bring feature is and a differentiating rooflights key back value the into glazing. Europe and North America leading are currently the with the side-glazings way laminated of adoption for This increases and security. comfort increased vehicle glass usage monolithic of through the replacement side glazings plies two by glass of in each aperture to significantly the and sales contributes of value side glazings. The second additional business of in driver growth glazing is the automotive increase in value-added the by leading being now suppliers delivered content to the OE industry. profit are for looking manufacturers at ways Vehicle through products and differentiation improvement that the and end features user finds in. value Value- in the features glazing added that a allow also covers design, water to improve manufacturer vehicle or management make assembly easier operations or quicker. include: would product features Value-added properties solar control acoustic control; advanced reducing solar heat gain; de-icing and de-misting cell TV, radio, for antennas capabilities; integrated rain and light integrated etc.; phone, navigation sensors wiper automatic for or activation; headlight improved for coatings and hydrophilic hydrophobic to name but some. visibility, activity includes the Value-added supply a of glazing solution than complete rather just a piece of finishing glass. use Such innovative systems technologies, including encapsulation, extrusion and functional aesthetic trims, which enhance the styling and in certain cases, vehicle’s aerodynamics, as as well adding functionality the and VM’s improving glazing productivity when glazing the Today, vehicle. are increasingly taking manufacturers responsibility the for design and assembly such of glazing complex estate, for tailgates modules, example, for integrated MPV and SUV including vehicles, the glass, crossover, hinges, struts, wiper and mechanisms. latching European light vehicle production versus glazing value – 1999 to 2016

160 Vehicle Production +50% 150 Glazing Value 140

130 +20% 120

110

100

90

80

1999 2001 2003 2005 2007 2009 2011 2013 2015

By 2008, vehicle growth and glazing value growth for example, glazing systems are likely to be of has been 13 percent and 41 percent respectively. greater importance, whilst Japan will lead on certain By 2016, equivalent growth numbers are estimated to kinds of integrated antennas. reach 20 percent and 50 percent. The rate of adoption A more detailed explanation of Automotive value-added of the different types of value added features will products and services can be found in section 3.4. however vary from region to region. In North America,

AGR market drivers Principal influences on replacement rates are: average The third area driving overall automotive glazing miles driven, speed, road surface conditions, climate, demand is the replacement (AGR) aftermarket market. disposable income, vehicle crime levels, national Here, market demand is determined by the number of legislation, repair/replacement ratio and insurance vehicles in use and a replacement rate, which in itself company policy. will vary from one geographic market to another, depending upon the combination of a range of factors. Glazing replacement tends to be greatest within the well-developed markets of Western Europe and North Global AGR demand – 1991 to 2010 America, often driven by annual vehicle Average growth 2.9% p.a. roadworthiness inspections, typically with rates in 180 the 6 to 8 percent range. By way of contrast, the replacement rate in Japan is lower, particularly for 170 windshields, due to the country's lower vehicle usage

160 as opposed to its relatively high vehicle ownership. Due to the relatively higher levels of accidental 150 breakage of windshields from objects thrown up by

140 vehicle wheels versus breakages of other glazings resulting from collisions or theft, aftermarket demand 130 is normally heavily biased towards laminated rather than toughened glass, typically a ratio of around 3:1. 120 This leads to a higher average value per piece of glass 110 than in the OE market.

100 Additionally, the styling/design influences and value-added features previously described as driving 90 glass business in the original equipment market, are 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 increasingly having a positive impact on the Long term growth in AGR volumes estimated aftermarket. As can be seen from the chart (left), at around 2.9 percent per annum. long term industry growth in AGR volumes alone is estimated at around 2.9 percent per annum.

34 NSG Group and the Flat Glass Industry 2011 Glass industry growth 35 NSG Group NSG and Group the Flat Glass Industry 2011 The global Bus and Coach is market to grow expected with at a significant rate, steady but moderate in strong growth by characterized regional variation Asia and South flat America with compared relatively in growth the such markets more mature as Europe. Large bus around and coach production represents annual of 15 truck percent but production volumes the alone build do the rates truly not represent the worth; glass of amount in a sector’s 12-meter long bus or coach is typically ten-times a that for increased with significantly truck. areas Glazed have styling trends; the area a of windscreen alone can six and square meters glass exceed now is being more areas the of into bus such incorporated as passenger seating to add above lights more roof clarity in the models. The style for drive market and driver of levels and improved differentiation means that passenger the comfort trend for more of adoption glazing value-added applications is in markets to continue expected the developed and rise rapidly within the emerging markets. Global off-road vehicles (glazed) ~ 1.5 million by agricultural sector is characterized The off-road three major John global Deere, Case players, New the In construction sector Holland contrast, and AGCO. is although still there more fragmented considerably are some large global such manufacturers as agricultural The JCB off-road and Komatsu. Caterpillar, than from faster the downturn sector recovered high by oil driven expected, prices and the resultant demand bio-fuel for commodities. The construction sector is strong in South America and Asia by driven such the for factors as hosting preparation Global of the Japan following reconstruction quake and events, China remain markets urbanization projects. Western the in by economic pressures constrained the US and demand the Longer-term will across Eurozone. all grow regions, but with particular strength in South America and Asia. The to further globalize pressure still exists in these OEMs major are shifting sectors. Western from their traditional bases to be closer to their customers. In addition, emerging are markets demanding higher quality and products, more which complex be may the fragmented, capability the of beyond smaller, domestic OEMs. Micro Micro cars Truck (greater than 3.5 (greater tonnes) Truck Bus and vehicles) Coach (including recreational Railway (including subway, light rail light and rail) heavy (including subway, Railway Marine (including small leisure craft to luxury Off-road (including agricultural and construction Off-road cruise liners) vehicles • • • • • • Global bus and coach build 2010 ~ 400,000 The bus and coach sector small has a relatively number chassis of and engine suppliers, such as Scania and MAN, Daimler, which are strongly linked to the assembly the of However, sector. the Truck and body coachwork building is more significantly There are a large regional few fragmented: assemblers such as and Evobus MAN in Europe and in Navistar North America, and a large number of smaller companies independent usually supplying local Some markets. the of larger European Bus, MAN and Volvo such manufacturers as Daimler, Scania Bus are starting to into expand operations and emerging through markets in JVs the long-term this is likely to bring about of more consolidation the market. These sectors are made up a of base consolidating of makers regional vehicle and assemblers and some are on major now a players global scale. The truck sector is the far and, by most consolidated all of the sectors, can be most closely with compared the OE customer base in terms its of global spread and VMs organization. are expanding through global particularly in JVs, China and Russia, but also by shifting from their traditional export production away European locations, closer to their Western global are becoming more Glazing markets. requirements as improved complex new design fleet incorporates features. and comfort driver safety visibility, production stalled was as replacement fleet Truck in response to the but delayed economic downturn, markets in experienced Western strong recovery very along with in momentum continued developing markets. China and South America in particular are in investment supported by increasing rapidly, the incentives, government infrastructure, legislation and ‘clean’ of the introduction increase in freight. Global truck build 2010 ~2.5 million Specialized Specialized Transport comprises market a number The Transport Specialized sectors: of Rail Micro cars The Railway sector comprises a small number of rail Most of the major vehicle manufacturers are transport and rail infrastructure manufacturers such extending their range to include vehicles from the as Alstom Transport, Bombardier, Siemens, Stadler electric micro car sector. In addition, the sector has and Kawasaki Heavy Industries. Railway demand is is attracted many new entrants to the automotive governed by national and municipal public transport business. Government incentives for cleaner cities policies and is project based. Higher fuel prices and are expected to promote high growth in this area in the trend for more environmentally responsible mass the coming years. Although the micro cars have a transport systems is likely to lead to steady growth small vehicle footprint, they typically incorporate in demand for rail transport in the long-term. large and complex glazing areas.

Marine The number of sectors in the Specialized Transport market and their relative lack of consolidation on the The Marine sector covers leisure boats from demand side have led to a preponderance of regional 5.5 meters up to luxury cruise liners. suppliers, with Pilkington Automotive being the only Leisure boats are manufactured by a small number of truly global supply option. regional manufacturers such as Bella Boats, Fiskars, Nimbus and Windy, who take complex tempered or laminated glass directly from glass manufacturers or via aluminum/stainless steel framers. The demand for leisure boats is sensitive to economic conditions and reduced consumer confidence. Future growth will be closely linked to rate of the economic recovery in each region. Luxury cruise liners are built by a small number of shipyards, based mainly in Europe. Although part of the marine sector, the glazing is more aligned to building products, typically comprising large glass panels and roofs and fire-resistant structures. Existing projects sustained the cruise liner market throughout the recession, but new orders were delayed as the companies owning and operating the ships waited to assess market conditions. Signs of market recovery can now be seen with European shipyards such as Fincantieri, STX Finland, Italian Fincantieri and Germanics Meyer Werft reporting new contracts. Traditionally, ship building capacity has been centered in Europe, but Korea is beginning to challenge this dominance. Japanese shipyard, Mitsubishi Heavy Industries, is also planning two giant luxury cruise projects.

36 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 37 NSG Group NSG and Group the Flat Glass Industry 2011 Employees 31 March At 2011, the NSG Group had around worldwide. working 29,340 employees permanent Management structure The Chairman the of NSG Group is Katsuji Fujimoto. managing responsible for the The and President CEO, The Chief is the of operations Craig Naylor. Group, Financial Officer is Mark Lyons. The Building worldwide Products business is with managed regional Clemens Building by Miller, Products managing Europe, Japan, for directors North America, South America, China and South East Asia. The Automotive worldwide business is managed on a global basis Mike by Fallon. The Specialty Glass business is managed by Yoshikawa. Keiji Building Products Building Products has in operations manufacturing 21 Its is countries. largest operation in Europe, but it also has in major Japan, interests North and South America, China and South East Asia. This business activity encompasses the NSG Group’s in float manufacturing and rolled glass, coating, toughening and the silvering, production other of building processed glass architectural products for and technical applications, including glass the for Solar growing Energy sector. Automotive largest is one the of Pilkington Automotive world’s glazing products. It suppliers operates automotive of in three main sectors; supplying original equipment, glass and replacement products for aftermarket transport. specialized including OE plants, fabrication satellite Its footprint, and facilities its distribution AGR network encompasses Europe, Japan, North and South America, China, South East Asia and India. 3. NSG Group - a glass industry leader The Pilkington in brand flat glass in Pilkington founded was as 1826 a partnership and in became It 1894. company a remained a private 1970 until when company its private shares were listed on the Pilkington plc Exchange. Stock London de-listed was from the in Exchange Stock London June 2006, the when by acquired was the company itself NSG established Group; in 1918. The NSG Group has major shares market in most product the of markets building and automotive with world, a broad geographic reach, enabling it to respond to customers whose particularly operations, in OE, the are increasingly global. case Automotive of In the financial ended year 31 March 2011, Building Group of sales 43 for and percent Products accounted Group of sales. 46 for In percent Building Automotive Products, the largest business is in Europe (accounting sales). the of 44 for business percent line’s The next largest business is in Japan, with 34 percent Building of Products sales, North America with Building of 9 Products sales percent and 13 percent in the rest the of world. In Europe is the also case the Automotive, of largest business, with sales, the of 47 business percent line’s North by America with Japan 21 followed percent, with and in 17 15 the percent percent rest of the world. The NSG Group, which operates The under which NSG the operates Group, Pilkington brand in is Building one Products and of Automotive, glass of largest manufacturers and glazing the world’s the products for markets, building and automotive with in operations manufacturing 29 on countries four and sales continents in around 130 countries. In the fiscal ended year 31 March 2011, the NSG Group sales 577,212 reported JPY of million (approximately sales, euro 5 billion). consolidated Of the Group’s in in Europe, 29 generated were percent 41 percent in North percent America Japan, in and 14 percent 16 the rest the of world. 3.1 overview Corporate 3.2 Business profile NSG Group global float manufacturing operations

Russia 1 1 Ramenskoye China 16 Sweden 1 1 Changshu 1 Halmstad 1 Changshu 1 Tianjin 3 Suqian 4 Weihai 2 Wuhai 1 Beijing 2 Xian 2 Dongtai UK 3 Poland 1 3 St Helens 1 Sandomierz

Germany 4 2 Gladbeck Japan 4 2 Weiherhammer 2 Chiba 2 Maizuru USA 6 2 Rossford Vietnam 2 1 Lathrop Italy 3 1 VFG (Bac Ninh) 1 Ottawa 1 San Salvo 1 VGI ( Ba Ria Vung Tau) 2 Laurinburg 1 Venice 1 San Salvo

Brazil 4 1 Ca çapava Chile 1 Malaysia 2 1 Barra Velha 1 Concepcion 2 MSG (Johor Bahru) 2 Jacarei

Operated by NSG Group 31

Argentina 1 Operated by Associates 18 1 Lavallol Total 49

Global reach Broad manufacturing base The NSG Group has a broad geographic reach. This The NSG Group’s manufacturing base includes float global presence enables the Group to take advantage glass lines operating in Europe, Japan, the Americas, of diversified sources of raw materials and to capitalize Southeast Asia and China, with Automotive on the advantages of the best local labor forces operations covering all major markets worldwide. available. It also enables the NSG Group to provide The Group owns, or has interests in, 49 float lines, excellent responsiveness in terms of product range, giving full coverage of the global market and quality and delivery times to its customers, who, in the providing the Group with advantages in terms of case of Automotive OE, have themselves become strategy, efficiency and effectiveness. During 2011, increasingly global. the Group announced the re-commissioning of a The NSG Group is one of only four companies in the flat number of lines mothballed during the economic glass industry that can claim to be true global players, downturn. Some of these have been converted to the other three being AGC , Saint-Gobain and Guardian. produce products for Solar Energy applications. The Group is either already established or is developing These include the VGI float line at My Xuan in operations in leading emerging markets, including southern Vietnam. In March 2011, the Group’s UK5 China and India. float line was restarted, following its conversion for the production of Solar Energy products. in May 2011, the Group announced plans to build two new value-added float lines in Vietnam to increase its production of specialist products to supply the growing Solar Energy and Touch Screen sectors. In addition, the NSG/SYP joint venture facility in Changshu, China (JSYP) will now be upgraded for the

38 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 39 for the for CSi Solar sector Energy Energy Advantage™ NSG Group NSG and Group the Flat Glass Industry 2011 Sunplus™ automotive glazing and also automotive in the Information field, and has under access license Technology to held third parties. by The patents Group has also been in and active licensing its of selective patents in the areas online of coating, technology, glazing) and rain encapsulation automotive (of glazing). sensors automotive (for Restructuring In January 2009, announced the restructuring Company designed to address initiatives the economic downturn These built going profitability forward. and to improve on action already taken in response to sudden and rapid changes in the global economic environment. the of to was objective protect program The overall the business in the short term and to re-establish from FY2011 growth onwards. profit as planned The completed was restructuring program during FY2010. the left Group 2,200 employees during FY2010, bringing the headcount total reduction to 6,700. and Pilkington K Glass™ solar control glass solar cars. for control Galaxsee™ advanced fire-resistant glass. fire-resistant advanced and products, products, with shipments structural structural glazing system. , clear solar control glass, preventing heat build-up , in clear buildings. glass, solar preventing control , vacuum , glazing, vacuum in energy high saving a performance thin very unit. dual-action self-cleaning glass. dual-action self-cleaning TEC™ range of range glass of Thin for Film Solar and Pilkington Sundym™ Planar™ Spacia™ Activ™ Pyrostop™ Solar E™ , clean air reducing emissions nitrogen for oxide process from glass furnaces. , switchable privacy glazing for internal , partitions. switchable glazing privacy internal for TEC™ 3R™ Pilkington Pilkington Pilkington Pilkington UMU™ The Pilkington Pilkington NSG Energy-saving products such as Energy-saving Pilkington bending making for processes car Advanced windshields in shapes complex to fine tolerances. Pilkington glazing. automotive Solar reflective Pilkington EZKOOL® • • • • • • • • • • • • Innovation the The past Pilkington brand been is over fifty having associated closely with identified technical excellence, the of with Notable including years Float Process. most the major in invention advances glass technology, the include: years over Pilkington and NSG innovations Intellectual capital The NSG Group is a global leader in manufacturing in notably the and areas glass of innovation, excellence melting, the glass online by float forming process, especially for and coating shaping complex technology, windshields and The backlights. automotive Group 10,692 JPY million in invested R&D in FY2011. 4,000 The NSG approximately Group or owns controls in applications, predominantly the and patent patents fields float of glass production and and processing manufacture of NSG of manufacture from Changshu to begin expected in January 2012. will bring These the online developments NSG Group's float lines coating producing solar energy products to (one eight in Japan, in two North America, in two Europe, in two and Vietnam one in China) and those to UFF dedicated production to (one two in Japan and one in global the maintaining Vietnam) Group's leadership position in segments. these fast-growing line in The Chile Lirquen venture in joint restarted was 2011, February a after being year put out action of by the Chile earthquake in 2010. Strategic Management Plan Strategic alliances/joint ventures The NSG Group has made good progress since the In addition to its substantial owned capacity, the NSG acquisition of Pilkington in 2006; moving from Group uses manufacturing and other joint ventures as integration and consolidation to geographic a key strategic tool, promoting market development, expansion and value-added growth. business growth and risk sharing. In common with The Group’s new Strategic Management Plan (SMP) is other major players in the industry, the Group has also intended to drive the next stage of the Group’s used technical alliances with other glassmakers in development. Announced in November 2010, the SMP order to promote and develop specific technologies covers FY2012 to FY2014. It sets out the main points and/or gain access to certain markets. of the Group’s strategy to achieve profitable growth There are many examples of glass manufacturers and realize the vision of the Company — ‘Making a sharing the risk of new float investments, either with difference to our world through glass technology’. other manufacturers or with financial partners in The announcement of the plan followed a major emerging markets, or in developed markets with strategic review, conducted in 2010, intended to secondary processors who wish to backward sharpen the Group’s operational focus and ensure integrate to secure float purchases. that full advantage is taken of the synergies offered The NSG Group is no exception to this trend and the by an international Group headquartered in Japan. strategy of entering new markets and/or expanding Early investment opportunities were identified in a existing operations in emerging markets has been number of key projects with 12 to 24-month prudent. Historically, there has been a preference for development timescales. The Group secured funding venture partners in countries it does not know well or for these through the Share Offering launched in where risk-sharing is important. August 2010. Growth strategies Funding from the share issuance is allowing the NSG Despite the downturn, the NSG Group is continuing Group to seize important investment opportunities in with the strategy of pursuing carefully selected the technologies that will build a sustainable future, opportunities for profitable growth in flat glass. leverage its competitive position and strengthen its Recent growth strategies have fallen into three broad balance sheet. categories. Examples of each are listed below. Strategic Management Plan objectives Business line strategic priorities for Building Products The aim is to create a thriving, innovative global and Automotive under the SMP are: enterprise, taking the Group to the next level in its Building Products development, by: • South America — float expansion. • Maximizing profitable growth while reducing net debt/earnings (EBITDA) ratio. • Solar Energy — expansion to support photovoltaics. • Ensuring highest standards of ethics, safety, environmental responsibility and sustainability in • China — low-e energy-saving glass expansion. all activities. • Fire Protection — investment in capacity in line • Being innovative in all areas of operations. with growing demand, to maintain leading global position. The Plan is regarded as a ‘dynamic’ document, on which the Group is updating stakeholders on a • Expansion of other value-added growth products. regular basis. • Build on technology base to expand technical Strategic Management Plan applications. financial targets Automotive The Strategic Management Plan includes clear • South America — toughening expansion. economic targets to be attained by the end of • Mexico — laminating growth. FY2014. • Eastern Europe — laminating and toughening • Attain 5 percent Compound Annual Growth Rate expansion. in sales • Expansion of AGR business, particularly in • Double operating profit (before amortization) fast-growing markets. as a minimum • Improve competitive position in North America, • Increase EBITDA by 50 percent, as a minimum China and Japan, in order to grow faster than the • Achieve low double-digit percentage return market. on equity.

40 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 41 , brand, Sundym ™ Select energiKare™ 70/35, offering a 70/35, solution offering to an Suncool™ NSG Group NSG and Group the Flat Glass Industry 2011 an advanced automotive glazing which drivers allows an automotive advanced and passengers and light how to determine heat the the cabin, in enters vehicle ultimate providing customisable glazing. Glass has an role important in to play the The the of Solar growing Energy sector. development NSG Group is placed well to supply all products for three power the of leading technologies, converting from the energy. sun clean into renewable Similar opportunities are anticipated Similar in opportunities Europe, for are anticipated an of EU-wide example, through the development In windows. for Energy Labeling China, system legislation is at an earlier stage, but the government building to has regulations already introduced the energy new of efficiency buildings. improve Building Products the Group’s the Over past year, business line has launched a number energy- of products across Europe. These efficient include Pilkington outstanding need energy to achieve ever-increasing within efficiency buildings without compromising heat gain Its total low very daylight. natural of levels and high extremely transmission light the maximize and a of aesthetics thermal or working comfort living environment. The in Group has growth the also sales seen excellent products launched the of in range energy-efficient of 2008 under the Pilkington home the the owners offering opportunity to improve their of efficiency up by windows to 90 percent. business was Automotive Earlier this the year Group’s first to with market Pilkington Geographic expansion Geographic in plant India first is Automotive at Vizag The Group’s in the south east and started production at the end 2008. of on The the is plant initially concentrating parts (AGR) export. for production Aftermarket of rolled China line started in A Taicang, new low-iron production in June 2008. Originally a 50:50 joint the NSG between Group and China venture Glass Holdings this (CGH), is wholly now and owned the by NSG Group. operated the of businesses aftermarket of The integration GIMA, a aftermarket leading supplier automotive of glazing, with in operations Hungary and Romania, has further enhanced Pilkington Automotive’s network. European AGR in plants Guilin, The Tianjin Pilkington Automotive and the into Changchun in China are integrated now global business line. Automotive These plants Group’s supply OE both and domestically AGR and export for Additional and growing. are placed well to continue is planned to increase capacity investment and product range. September 2011 September —Construction begins work on May 2011 May — new two of float lines Announcement April 2011 — Off-line coating April capacity coating 2011 expansion — Off-line February 2011 — Automotive Expansion 2011 in February — Automotive January 2011 — float Reopening VGI Vietnam of December 2010 — Automotive expansion December 2010 — Automotive November 2010 — planned of November Announcement new expansion of Automotive glazing capacity and expansion Automotive of capability in Poland. in Vietnam to produce in Solar to Vietnam produce Energy and touch screen products in UK South America line, dedicated line, to Solar dedicated Energy market. in Mexico float float line in North East Brazil • • • • • • • Buildings account for almost for the of Buildings 50 account percent countries. energy consumed in developed Governments are putting on increased focus Governments their legislation and energy policies to improve In North such America, as initiatives efficiency. the (LEED) building run system rating by environmental the US Green Building Council are helping to the glazing, added-value for market transform and this will continue. New products and value-chain growth The Group stands to from benefit the need growing to Its added products, value such as energy. conserve glass, glass solar and control low-e glass for the principal purpose have reducing of photovoltaics in energy consumption buildings and generating energy from the sun. region the of In in world every which the Group the energy is need a operates, to save political almost for of Buildings 50 account percent priority. the countries. energy consumed in developed Growth Growth of existing products in established markets in been Pilkington completed have Investments in plant Sandomierz, to Poland, provide Automotive’s additional capacity and capability the to manufacture VMs. range enhancing value of by products required Transport Specialized Pilkington Automotive’s business, supplying to buses, glazing trucks, systems trains and share market in ships, to grow a continues sector in which the Group is already a market world windshield A line new was fully leader. integrated Building at launched the is work in underway Italy. line at in Chmielów new Poland. automotive Group’s The Strategic Management Plan Management came The formally into Strategic on operation 1 April 2011. Since its launch in November 2010, the Group has made a number announcements of underpinning the Plan. on investments key 3.3 Building Products overview Building Products represented 43 percent of the radiation during the year, the glass chosen must be NSG Group’s revenue in FY2010/2011. Its operations able to protect the inside of the building to ensure are organized into six businesses; Europe, Japan, maximum comfort, minimize energy consumption, North America, South America, China and guarantee safety and, not least, provide the optical South East Asia. and aesthetic qualities that satisfy the designer. Float glass for the building market is either sold The NSG Group is continually innovating and without further processing or processed into products developing products that satisfy the full range of with additional properties. Pilkington-branded architectural requirements. Pilkington innovative products help control energy usage, protect against solar control products cover the whole range: fire, insulate against noise, provide safety and • From the highest performing, off-line coated, security, afford decoration and privacy, self-cleanse, solar control and low-emissivity products within are used to build all glass façades and include glass the Pilkington Suncool™ range for specialized applications. • Through on-line environmental control glasses Large-scale coating, laminating, and silvering that combine medium performance solar control processes are used to make these products. with low-emissivity such as Pilkington Eclipse Building Products has float glass manufacturing or Advantage™ and Pilkington Solar-E™ ranges processing operations in the following 21 countries; • To medium performance reflective glasses such United Kingdom, Germany, Japan, Malaysia, Vietnam, as Pilkington SunShade™, Pilkington Reflite™ China, Austria, France, Netherlands, Italy, Denmark, and high performance tints such as Pilkington Norway, Sweden, Finland, Czech Republic, Poland, Arctic Blue™ Russia, United States, Argentina, Chile and Brazil. • To low-performance, body-tinted glass in the Building Products’ main activities include: Pilkington Optifloat™ Tint range • Float manufacturing: 1.0 mm to 25 mm, clear, • And to solar control glass combined with the tinted, extra clear, on-line coated revolutionary, self-cleaning Pilkington Activ™. • Rolled manufacturing In addition to the above ranges, the Pilkington Solar • Semi-finished products: off-line coated, Control range can be used with many other Pilkington laminated, silvered solutions, to achieve benefits in safety, functionality and cost efficiency. • Processing: toughening, insulating glass units, merchanting, fire protection Thermal Insulation • Glazing systems: Pilkington Planar™ (frameless Advances in low-e glass technology have made glazing system) Pilkington Profilit™ windows an essential contributor to energy profiled glass conservation and comfort, minimizing heat loss and • Products for the Technical and Solar internal condensation. Energy sectors Low-e glass reflects energy back into a building, to Product range & brands achieve much lower heat loss than ordinary float glass. Different types of low-e glass allow different The Group's products are designed to create the ideal amounts of passive solar heat gain, which helps environment in which to live and work. Coated and reduce heating requirements and costs, especially in tinted products, and insulating glass units, help colder months. control the flow of energy into and out of buildings. The Pilkington low-emissivity range covers all levels Solar Control of requirements: Solar control is a key issue in terms of energy saving. • From on-line products such as Pilkington In hot conditions or for buildings with high internal K Glass™ and Pilkington Energy Advantage™ loads, solar control glass is used to minimize solar • To extremely low Ug-value off-line solutions in heat gain, by rejecting solar radiation, and help the Pilkington Optitherm™ range control glare. In more temperate conditions it can • Through to Pilkington Suncool™, Pilkington be used to balance solar control with high levels of Solar-E™ and Pilkington Eclipse Advantage™ natural light. The correct choice of glass can help which are primarily solar control products that to reduce the capital outlay, running costs and also offer low-emissivity properties. associated carbon emissions of a building Pilkington Spacia™ is the world’s first commercially- throughout the year. available vacuum glazing, offering the thermal Given the variety of building designs, climatic performance of conventional double glazing in conditions and the different levels of exposure to solar only the same thickness as single glass.

42 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 43 Optiphon™ offers the offers Optiphon™ is the ideal choice glass of in Optiphon™ NSG Group NSG and Group the Flat Glass Industry 2011 repeatability of performance. Today, Pilkington Today, performance. of repeatability glasses and are respected well used fire-resistant in building, various marine, and rail transport the applications all world. over is a high quality glass acoustic laminated that offers noise reduction without on compromising excellent or transmittance light The impact performance. can desired acoustic be performance achieved through combining thicknesses various glass of with a With a wide range product of PVB interlayer. Pilkington combinations, specific opportunity noise to achieve reduction requirements. Safety and Security and security safety of in the development Innovations opened design, of up glasses new have avenues from personal people allowing injury to be protected and in the most cases, extreme buildings to be attack, of without from forms various protected and light natural of visibility. levels compromising is applied The to glazing term “safety” used to reduce the or impact, shattering, risk by fracture, accident of in a fire. The is term “security” applied to glazing, is able to withstand which in addition to “safety”, attacks such as deliberate armed physical, or blast. Specialist glass this of type must be combined with glazing high and performance framing systems, the capable to the necessary resistance offering of loads that could be imposed. severe legislation has In been parallel, safety stringent stipulating the implemented critical areas where glazing must safety be installed to comply with practice. safe required The a Group has wide developed range of glasses sophisticated to these meet increasing people both of and demands protection property. for Noise Control With increasing traffic on the road, rail and in the air, noise insulation has become a issue. important very it No is that longer essential noise a reduction luxury, is in considered the specification the of glazing. With and medical comfort law, to employment regard noise insulation in building construction is necessity, to decrease stress- an and undisputed requirement illnesses. noise-related Pilkington noise situations where there is from road, rail excess or air traffic, example or for sources, other various or By factories nightclubs. using a special PVB Pilkington interlayer, (polyvinylbutyral) and Pilkington 2 (wired glass for (clear monolithic (clear multi-laminated (clear fully multi-laminated (clear laminated (clear laminated Pyrostop® has a low overall thickness has as a overall low the allow use even the of may Pyroshield™ Pyrodur® Pyrostop® Pyroclear® have been in tested more fire doors, have fire Spacia™ Spacia™ Pilkington Pilkington Pilkington Pilkington Pilkington Pilkington fire-resistant and safety glass and basic for safety integrity) fire-resistant and glass and integrity for safety fire-resistant heat radiation) reduced glass and insulating for safety fire-resistant and integrity insulation). integrity-only fire protection), integrity-only • • • • The range of transparent laminated products is laminated The range transparent of the global leader market in high performance glazing. The fire-resistant products are laminated interlayers, with intumescent special transparent which when exposed to up fire, foams a to form thick, insulating shield resilient, that absorbs the energy of the The blaze. products can be combined with other products from the additional Pilkington range to offer properties if required. The products in only not that protection range provide against flames and smoke, but also a high degree of against the protection heat a of all fire, by transfer and mechanisms (i.e. conduction, convection, Pilkington radiation). Pyrodur® than framing and any systems façade protection vertical, glass products, covering fire-resistant other and inclined horizontal situations. glazed As an example the of capability high the of level the range of tested system, interlayer intumescent includes high many performance approvals constructions used in buildings sensitive and areas such as schools, hospitals, and commercial retail buildings, and airports. The emphasis the of Pilkington intumescent technology is on fitness purpose, for reliability and Fire Fire Protection The of Pilkington brand has been at the forefront since when 1896, glass innovation fire-resistant wired glass. Pilkington first As introduced a leading glass and fire-resistant of a manufacturer pioneer in the NSG fire protection, the transparent for market Group particularly sets high and standards in level and visual performance of consistency quality. product lines four The and Group offers technologies people and to protect property against fire: Pilkington Pilkington well as well a good and acoustic is performance, ideal for use in replacement historic buildings, offering more windows in keeping with the original design. It is additional in for form also laminated available performance. safety Pilkington original frames if these are in good condition. Already in successful Japan, worldwide, sales are developing particularly within historic buildings. Pilkington Toughened Safety Glass is a glass that has Decoration been subjected to a heating and cooling treatment As well as offering functional benefits, glass is also whereby high compressive stresses are set up at the used to enhance the appearance of the environment. surfaces with balancing tensile stresses in the centre. The high compressive surface stresses give The Pilkington range of decorative glass turns it from the Pilkington Toughened Glass its increased a basic construction material into a means of adding strength (up to five times stronger than ordinary style and elegance. By incorporating decorative glass, glass of the same thickness). you can add privacy and meet any requirements, aesthetic or practical. Pilkington Optilam™ is a laminated glass, produced by combining two or more sheets of float glass with Pilkington Texture (Patterned) Glass offers privacy one or more PVB interlayers. The interlayers ensure and style throughout the home. the integrity of the glass by holding the broken pieces Pilkington Spandrel Glass is a toughened safety glass in place should any damage occur. In fact, glass mostly used in non-vision area of the façade. The fragments adhere strongly to the interlayer, while the extensive range of products that has been developed resistant cushioning effect dissipates the energy. for use as spandrel panel includes: Pilkington Spandrel Glass Enameled, Pilkington Spandrel Glass Self-Cleaning glass Silicon and Pilkington Spandrel Glass Coated. Pilkington Activ™ Clear is the world’s first dual-action Pilkington Optimirror™ is a range of high specification self-cleaning glass. Its unique coating uses the forces mirror products, produced using the latest of nature to help keep the glass clear of dirt, giving environmentally-friendly processes and materials. not only the practical benefit of less cleaning, but also The products are available on clear, (Pilkington clearer, better looking windows. Optimirror™), bronze (Pilkington Optimirror™ It works in two ways: first it uses daylight to break Bronze) and low-iron substrates (Pilkington down organic dirt and then it uses rain to wash any Optimirror™ OW), offering increased light reflection. loosened dirt away. Pilkington Activ™ Clear also dries Pilkington Optimirror™ Protect protects against off faster leaving the glass cleaner and with reduced possible injury resulting from breakage thanks to the streaks, which gives beautiful clear views and makes additional safety film backing that it contains. it ideal for various applications, from building façades Pilkington Optifloat™ Opal is an acid-etched glass to conservatory windows. which creates an attractive finish for windows, Products in the Pilkington Activ™ range are on-line partition walls, glass doors, furniture, shelving, wall coated; they can therefore be toughened, processed cladding and many more internal and external and handled using standard techniques. The applications. The glass provides all the diffused Pilkington Activ™ Solar Control range combines the natural light of a translucent glass, but with none of benefits of self-cleaning with varying degrees of solar the drawbacks. control performance to offer the ultimate range of solar control solutions for hard-to-reach places that Glass Systems are difficult to clean. Pilkington Planar™ is a structural glazing system, Pilkington Activ Suncool™ is a range of glass allowing architects immense flexibility in the products with a coating on both surfaces; it combines appearance of façades, whilst incorporating all of the self-cleaning, thermal insulation and the highest solar functionality required from windows in today’s control performance. Pilkington Activ™ Neutral buildings. Pilkington Planar™ can incorporate most (dual-coated solar control and self-cleaning glass) and Pilkington glass types - which includes the range of Pilkington Activ™ Blue (coated body-tinted solar solar control products, low-emissivity glass, screen control and self-cleaning glass) are perfect for use in printed glass and Pilkington Activ™ self-cleaning glass. conservatories and glass roof structures. Another popular product, Pilkington Profilit™ is a The Pilkington Activ™ products can be further range of alkali cast glasses in U-shape, produced using enhanced when combined with other Pilkington the machine rolling process. It is translucent, but not products to offer additional advantages such as transparent, with a patterned surface on the outside. thermal control, noise control or safety. This highly durable product allows light to enter buildings whilst presenting a translucent external appearance. A wide range of fitting options provides considerable flexibility. Pilkington Profilit™ is available in different colors, patterns and types of coating, offering different functions including thermal insulation, solar control, noise control or safety. The product can be single glazed or double glazed, either vertically or horizontally.

44 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 45 and Microwhite™ Optiwhite™ in its thin extremely is a range extra-clear of S, which developed was is a low-iron high performance, range range includes the standard and well Optiwhite™ makes it an ideal Crystalline choice for PV is a group products, of including a Optiwhite™ Optiwhite™ Sunplus™ NSG Group NSG and Group the Flat Glass Industry 2011 TEC™ Solar Energy solutions a for Solar alternative energy panels offer from small scale range energy of requirements, domestic applications to large scale solar power stations, from cloudy to sunny hot northern rooftops deserts. Glass is and an of element important integral these solar panels. wide The range high of NSG quality Group’s products are used in the three leading solar technologies solar electricity: energy aimed into at converting crystalline silicon photovoltaics thin film photovoltaics, applications. solar In power addition and concentrated glass the Group’s to the electricity, of generation products are also used in solar applications that water. hot generate NSG Conductive (Transparent range TCO of comprehensive to glass, suit Oxide) thin optimized of a coated variety haze technologies, with different films photovoltaic Each and the of conductivity levels. products within the at a range is particular targeted thin film technology and can to be meet optimized photovoltaic individual customer requirements. Pilkington glass designed to solar maximize energy collection high through very and light solar transmission. The high solar energy transmission Pilkington of Sunplus™ solar cells. photovoltaic Pilkington float glass with high very solar low-iron solar energy conversion improved for transmittance The products performance. are and consistent modules, solar suitable use for in photovoltaic thermal and collectors solar mirrors. The Pilkington Optiwhite™ Pilkington established low-iron Pilkington Pilkington specifically the for solar industry even and offers solar transmission. Pilkington greater is Pilkington (glass version thicknesses to down 1.0 mm). , is many suited well for is a coated is glass a developed coated and Pilkington is an extra-clear, low-iron is an extra-clear, Protect is a glass laminated is a monolithic glass with a is a glass Protect laminated are extremely thin, are extremely high-grade float has traditionally been used the for OptiView™ Optiwhite™ OptiView™ OptiView™ Microfloat™ Mirropane™ Microwhite™ float float glass; it is practically colorless, and the green cast to glasses other inherent is It present. not is ideal use for where glass edges therefore are visible or where a neutral color is desired. As its light transmission is much higher than clear float glass, it is and applications where for transparency perfect purity color of are desired. Pilkington Special Applications Glass unique Special for Applications provides used characteristics in building both and non-building applications: Pilkington on coating one which reflection low surface, reduces and visible more allows visible reflectance light light to pass through, when to clear compared float glass. Pilkington on with coatings outer both surfaces, reflection low Pilkington with anti-reflective coatings on coatings outer both surfaces, with anti-reflective and which visible interior exterior reduces light improved and to around 2 offer percent, reflectance durability and acoustic enhanced security, safety, protection it properties. Furthermore, provides and UVB) blocking by over from UV (UVA radiation UV of helping 99 transmittance, to reduce percent and a of interiors building. the of fading contents Pilkington applications and is also ideal use for in solar applications. concentrator Pilkington glass manufactured glass to precise standards. Pilkington manufactured Microfloat™ slides, mirrors, production microscope of cosmetic masks, photo LCD plates, chromatographic and technical glass, PC automotive screens display and composition version, PCs. tablet Its low-iron Pilkington Microwhite™ use for as clear mirror where a total vision one-way is and required specific conditions lighting can be Under specified achieved. conditions lighting it offers undetected means providing of an effective and high surveillance vision quality to one-way privacy. complete achieve Building Products businesses

Building Products Europe

Building Products Europe is the NSG Group’s largest single business. The main upstream production facilities are in theFloat UK, Germany, Sweden, Italy, Poland and Russia.Rolled

Europe – primaryLaminating production facilities Halmstad Coating St. Helens Silvering Float Gelsenkirchen Fire Protection Rolled Moscow JV Float Laminating Sandomierz Gladbeck Coating Weiherhammer Silvering

Fire Protection

JV Float Venice Schmelz

San Salvo

Building Products Europe is the NSG Group's Europe: Distribution of “Downstream” operations largest single business. Downstream branches The downstream part of the business includes glass processing and wholesaling operations, UK Netherlands serving the European market through a network 2 France of forty-seven branches across ten countries 2 (Austria, Czech Republic, Denmark, Finland, Austria 5 France, Netherlands, Norway, Poland, Sweden and Czech Republic the United Kingdom). The extensive range of Sweden 4 products and services includes merchanting, the Norway 16 manufacture of safety glass, and the complete Denmark Poland 6 range of Pilkington Insulight™ insulating glass 7 units. Special Products such as Pilkington Finland 1 Planar™ and Pilkington Plateau™ are also 1 produced by branches of the European 3 downstream business. The downstream business has developed over the last ten years into a significant contributor to European profits, through its culture of service to customers, and continuous improvement of productivity and safety for employees.

The European Downstream business serves the market through a network of 47 branches across 10 countries.

46 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 47 Chiba NSG Group NSG and Group the Flat Glass Industry 2011

Rolled Float Building Products South East by Asia is represented float two lines in one Vietnam, which of was commissioned in 2008, and float two lines in one Malaysia, which of is a line. (float/rolled) hybrid Japan - production facilities Float Rolled Laminating Coating Silvering/Spacia IGU Tempering In Maizuru, the Woat lines are In Maizuru, the Woat and automotive to dedicated special glass production – the world’s first – the world’s Spacia™ South East Asia - production facilities Building Products South East Asia commercialized vacuum glazing vacuum product. commercialized With six regional sales the offices, a business full offers range products of and services to its customers. Building Building Products Japan Building Products Japan has its main Upstream production site in Chiba float (two lines and one rolled line). mainly by The business, downstream represented insulating glass coating, units, laminated off-line glass, glass glass, tempered and fire protection glazing vacuum production, is spread around 20 Japan is also the sites across the country. different only location where the NSG Group manufactures Pilkington Building Products China China – production facilities The NSG Group has minority interests in two major glass manufacturing businesses in China – SYP (two float lines, one rolled line and extensive glass processing) and China Glass Holdings (13 float lines). SYP’s two Shanghai float lines were closed in December 2008 and one was replaced in nearby Changshu . In addition, NSG itself operates a float in Changshu, in a 50:50 JV with SYP. Advanced on-line coating was installed on the line in 2009, which is enabling it to respond to the rapidly growing, regulation-driven market for value-added low-e glass. This technology is now being upgraded for the manufacture of NSG TEC™ products, with shipments from Changshu expected to begin in January 2012. NSG/SYP Float NSG will have another 50:50 JV float line with NSG Rolled advanced on-line coating in operation in 2012, SYP Float located in Tianjin. CGH Float The Group operates a further rolled line which SYP Rolled produces low-iron cover plates for the Solar Energy sector. The line has anti-reflective coating capability to further enhance the performance of the glass.

Building Products North America North America - production facilities Building Products North America manufactures and distributes products for the architectural/ commercial market (exterior and interior), residential market, specialty glass market and fire-rated glass market for a diverse range of applications. The business has four float lines across the USA, in California (Lathrop), Illinois (Ottawa), and two in North Carolina (Laurinburg), three of which have on-line coating capability.

Ottawa Rossford Lathrop Laurinburg

In Rossford (Ohio) two Woats are dedicated to Automotive.

48 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 49

Float Rolled Jacarei Caçapava Barra Velha Barra Lavallol Cebrace (50% JV with Saint-Gobain) Cebrace (5th under construction) in Brazil 4 Floats NSG Group NSG and Group the Flat Glass Industry 2011 The Pilkington Automotive global business The line Pilkington Automotive was in formed the mid-1990s, in the of recognition increasing own globalization. industry’s automotive The and business managed is on fully now integrated a global basis, subsuming all the of Pilkington former worldwide. operations and NSG Automotive This enables the new of organization optimization global base asset NSG and Group’s its exploitation across its business synergies segments. available of As as well its major OE businesses within each region, also supplies replacement Pilkington Automotive glazings the into aftermarket. independent AGR extensive has developed Pilkington Automotive (121 wholesale throughout NAFTA networks and locations) and Eastern Europe (86 Western both service It facilities). also the in serves aftermarkets Japan, South America, China and South East Asia. South America - production facilities Lirquen NSG Group and operate together Saint-Gobain lines four in Brazil and the NSG Group operates one in and Argentina one in Chile. 3.4 Automotive overview business the of The NSG Automotive Group operates name under and the is Pilkington Automotive one largest suppliers automotive of the of world’s glazing products. In serving this Pilkingtonmarket, Automotive to network, a matched global account operates key requirements. organizational own the individual VM’s Pilkington led glazing Within industry, the automotive in the globalizing and management way its account a presenting single to the face customer. glass automotive operates Pilkington Automotive throughout facilities and plants fabrication satellite South America, China, Europe, Japan, NAFTA, and Malaysia India; 31 locations in in total countries. different 16 Through restructuring its of established and facilities the new of establishment ones in the developing fast to match continues Pilkingtonmarkets, Automotive its base asset to regional demand, in both terms and, volume of equally as technical important, capability and service. Building Building Products South America in South strategy America has The many for Group’s jointly-owned around operating concentrated years float with facilities a Saint-Gobain, relationship furthered in 2004 with the the of completion fourth Brazil. This line in Barra Velha, venture joint partnership is with to set continue the joint commissioning a of fifth in facility Brazil. There is only one float other glass in manufacturer South America, besides the NSG Group and Saint- Gobain, namely Guardian with one line in Venezuela and in two Brazil. NSG Group and Saint-Gobain lines four in operate Brazil and together NSG Group one in and operates Argentina one in Chile. The Group also has activities warehousing in Colombia, Ecuador, and Uruguay Peru. Bolivia, Paraguay, The South American region traditionally has a higher than the rate northern growth hemisphere although it economic instability is by in occasionally disrupted particular countries. Pilkington Automotive global presence

N.America: Europe: • Glass processing in US, Canada & Mexico • Glass processing in 7 countries • ~ 20% OE Share - market number 3 • OE market number 2 • >30% W.European share

Asia Pacic Region: • Glass processing in Japan, China & S.America: Malaysia & India • Glass processing in Brazil, Argentina & • No 2 in Japan ~ 30% OE share Chile • No 1 in Malaysia > 50% OE share • Mercosur market number 1, > 50% share • No 6 in China ~ 3% OE share

Pilkington Automotive’s markets trucks, trams and metro systems, locomotives, train , Original Equipment (OE) carriages, special cars and vans, recreational vehicles, The vast majority of Pilkington Automotive's OE tractors and combine harvesters, construction production is focused on the volume light vehicle vehicles as well as ships and pleasure craft (Pilkington industry, serving all of the world’s major VMs. Marine). Pilkington Automotive’s customers are Of all such vehicles built in the world last year, more recognized as world-leading manufacturers, with than one in three contained glazing manufactured by many operating on a global basis. Pilkington Automotive businesses. Additionally, Pilkington Automotive products Pilkington Automotive globally coordinates its approach to the specialist/niche vehicle makers and and services roof-system manufacturers. Pilkington Automotive makes a wide range of automotive glazings for new vehicles and for Aftermarket (AGR) replacement markets, offering full systems capability Pilkington Automotive aftermarket products can reach to customers, from initial design to final product. the end user by one of two main routes; the VMs’ own Pilkington Automotive products include solar control dealer networks or independent AGR distribution glass for passenger comfort, glass heating systems to chains, including Pilkington Automotive's own, control condensation and icing, security glazing, and supplying the retail fitter. glazing systems, including encapsulations, extrusions, Pilkington Automotive itself has well developed and components such as rain sensors, hinges and aftermarket distribution and wholesale networks clips, added after basic manufacturing. throughout Europe and North America with estimated The Group aims to provide a full range of glazing market shares around 20 percent. It is also well solutions on a global basis to its automotive customers, established in serving the aftermarkets in Japan, drawing heavily on its advanced technology, continuous South America and South East Asia. improvement and standardization activities. Specialized Transport Just as in buildings, glass today is an integral part of a Pilkington Automotive provides high quality glazing vehicle’s body and fulfils many functions. Design solutions and value-added products to the Original trends point to still greater usage of glass in the Equipment manufacturers of specialized transport future; tighter tolerances, yet deeper and more and utility vehicles. These include buses and coaches complex curves.

50 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 51 Sundym™ Select NSG Group NSG and Group the Flat Glass Industry 2011 Variable light Variable transmission most has launched the Pilkington Automotive world’s to the glazing product available automotive advanced mainstream market. Pilkington a range benefits: of offers The product drivers allows and passengers to decide much how and light heat the the cabin, in enters vehicle ultimate providing a Used customizable glazing as feature. a glazing, roof it the can need a also for mechanical remove blind and reducing increasing weight the thereby system, headroom. vehicle’s Glass shaping glazing affect design Numerous factors market and including cost performance, reduction, tighter design and complexity high quality, optical tolerances, these meet stringent To considerations. weight Pilkington requirements, market Automotive in and leading-edge invest glass to develop continues Changes in shaping and technology. fabricating thinner styling glazings and to the need lighter, for are pushing weight processes. manufacturing reduce an maintains extensive Pilkington Automotive to keep abreast of development process of program the design latest instance, new trends. For styling windshields the for into that extend requirements the of or roof vehicle, the wrap around into side the of demand vehicle, gravity both of extension significant sag and press bending technologies. Pilkington Sag and Advanced Press has developed Automotive Bending to secure its processes position as a supplier the of most products. advanced In support its of Pilkington processes, manufacturing new powerful is developing continually Automotive on-line inspection techniques, capable analyzing of aspect distortion, optical edge every curvature, quality as and the takes scratches component shape. real time will These for feedback provide systems to increase yields and control process so costs. reduce Design facilities glazings of The complexity has growing increased the simulation within the need shaping integrating for as is a recognized Pilkington Automotive processes. leader and in use the computer of development providing glazing advanced simulation technology, for customers with the best possible glazing solutions with their which styling to achieve intent. simulation centre computer Pilkington Automotive’s team predicts the properties optical a of particular shape windshield, of closely how the of any bending the shape will required processes and achieve and difficult how tolerances, manufacturing This virtual challenges reality be may overcome. approach both reduces product development tooling and costs manufacturing and dramatically the reduces design time and between manufacture. simulation techniques have Pilkington Automotive been empirically and tested excellent to shown give to actual and processes manufacturing correlation benchmarking continuous ensures ongoing improvements. has in wide-ranging experience Pilkington Automotive where Pilkington engineers design work integration, side side the by with optimum customers to achieve of design function for and Involvement manufacture. personnel at the earliest very Pilkington Automotive stage in the design the of helps vehicle the customer or manufacturing design potential identify problems, redesign at a stage. expensive later avoiding thereby It also ensures that glasses legislative meet and optics for enables requirements Pilkington benchmark to recommend styling Automotive products modifications leading to more cost-effective and (e.g. glazing other encapsulation and systems extrusion) design. between Data is transferred and its customers Pilkington Automotive the need and drawings for avoiding electronically, fixtures in physical the design new of glazings. The glass must manufacturer be very able to control in closely the the glass temperatures of pattern shape, throughout the shaping if process overall quality optical and are to stress be patterns consistently. achieved Utilizing its global R&D and global account structure, management Pilkington Automotive's of approach to the market-focused development products and services ensures that it the delivers glazing solutions its in customers a want, timely regions. to fashion the appropriate Glazing Systems respectively, reduce the heat entering through a The task of the glazing supplier does not end when vehicle’s glazed area by approximately 20 percent the glass is shaped. Pilkington Automotive is a world when compared to a car equipped with standard leader in the design and manufacture of a variety of tinted glass. Pilkington Automotive is also a market glazing systems, each designed to simplify the glazing leader in the development of dark tinted automotive installation process. As well as the efficiencies glazings, and today produces two such suites of provided at the vehicle assembly plant, these modular glasses, both of which provide significant benefits to solar control, privacy and overall vehicle styling. product solutions are also viewed by the VMs as a practical way of enhancing both a vehicle’s styling Due to vehicle safety legislation, requiring adequate and aerodynamics. light to provide clear driver vision, use of these dark tinted glazings is restricted to rear passenger Encapsulation, or molding, provides a modular glass compartments and to roof glazings. assembly with a multifunctional gasket around the rim of the glass, utilizing injection-molding technology. Pilkington Automotive is a market leader in the This gasket can provide many features from a single molding process, including an aesthetic finish to the development of dark tinted automotive glasses. glazing, water management, integrated attachment The Galaxsee™ glass suite is a major player in the pins or clips, and mounting brackets or hinges. privacy glazing segment. Originally developed for the Alternative sealing systems involve the use of a North American market, it now finds global robotic extrusion process to apply a seal or applications. This grey glass has a low light attachment mechanism to the periphery of the glass. transmission (13-26 percent depending on thickness Glazing systems also encompasses the ‘assembly’ selection) and an even lower transmitted energy value. activity where various hardware attachments, It reduces the transmitted heat to the interior of the designed to locate correctly the glass within the vehicle by approximately 65 percent in comparison to vehicle, are fixed to the glass, either mechanically or an optimized green glass used in the front of the by the use of adhesive technology. vehicle. It also prevents more than 95 percent of With decades of glazing systems experience behind ultraviolet radiation from entering the passenger it, Pilkington Automotive is a market leader in all of compartment. Consequently, this glass is increasingly these technologies, in terms of both product and the choice for ‘dark tail’ SUVs and MPVs, in addition to process development and global market share. being suitable for roof glazing applications. Solar control glazing Pilkington Sundym™ and the Legart range form a suite of neutral green privacy glasses that blends The last decade has seen significant improvements in with the green front door glass to allow both a design the design and application of solar control glazings in choice and an improvement to solar loading. vehicles. The major drivers are passenger comfort, minimizing the degrading effects of the sun’s radiation Pilkington Sundym™ glass has a light transmission on interior trims and fabrics, and improving fuel in the range 26-45 percent over a 3-5 mm glass consumption by lowering the load on the vehicle’s thickness range. In a vehicle equipped with Pilkington air-conditioning unit. Additionally, vehicle styling is Sundym™, the heat entering the rear of the vehicle impacted by the choice of solar control glazing, from is reduced by 45 percent when compared to that at dark tints in the rear of the vehicle, to the the front of the car. differentiated color of infrared reflective windshields. The market continues to adopt these glasses due to Solar radiation is partly reflected, partly transmitted the valuable combination of both physical and and partly absorbed by glazing, the degree of each aesthetic benefits. depending on the glazing fitted. Body-tinted glasses Reflective solar control can selectively absorb the sun’s energy, whilst Pilkington Automotive possesses the technology and glazings with specially designed coatings can be used capability to deliver a coated windshield product that to reflect solar radiation. reflects more than 30 percent of the sun’s energy Absorbing solar control (more than five times that of a standard glass). This Pilkington Automotive has long been a market leader particularly benefits the new generation of vehicles in body-tinted glass compositions. Optikool™, that are commonly designed with larger glass areas. EZKOOL® and UV Cut are green, optimized solar- Significantly, the Pilkington coating technique is absorbing glasses, providing significant improvement advantageous in the pursuit of improved vehicle to occupant comfort. The products, designed for the styling, as it can deliver highly complex shapes with European, North American and Japanese markets exceptional optical quality.

52 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 53 NSG Group NSG and Group the Flat Glass Industry 2011 have made it possible have to supply high quality 4 mm in sidelights laminated simple and geometry complex to tolerances. tight Besides its above, identified benefits intrinsic glazing laminated an also opportunity offers to glazings advanced with additional create features, such as or coatings wire de-misting, heating for or (e.g. colors, solar control, modified interlayers acoustic enhancement). The additional side cost laminated of glazings is opportunities the which by above can offset enable the the car and to customize vehicle manufacturer make and it desirable to the more attractive car buyer. designers vehicle expect the glazing to Today’s as want perform They more than merely a window. added functionality. Instrument display long Head been Up used have (HUD) Display systems the into in military to project information aircraft has field vision. of Pilkington Automotive pilot’s this adapted technology so successfully that it can be used in to the at a road vehicles cost acceptable in HUD Interest market. technology is continually as growing people more functionality demand ever in their vehicles. press bend advanced Pilkington Automotive’s the of art' optical absolute 'state windshields offer the for the to display HUD surfaces image systems on. properties the of full control surface The excellent press bend windshields aligned are perfectly to the to ensure that ‘ghost requirements tolerance tight images’ are seen not the by end users. to Facilities these manufacture types windshields of exist in Europe, North America and Asia. Integrated antennas Integrated demands With global of the ever-increasing can Automotive Pilkington systems, communication design and manufacture antenna fully integrated either on systems the glass or surface, inside the glazing construction. This approach the allows VM to which from traditional rod-based antennas, away move the styling only not and improves appeal aesthetic of the the vandalism. of but threat vehicle also removes The use on-glass of is antennas firmly established in electronic Japan, solutions, for a and pacesetter known is increasing now in Europe and North America. expertise exists Considerable inside Pilkington to this of take trend. growing advantage Automotive utilizing infra utilizing red infra Siglasol™ Personal security Personal Reduction in from theft cars improvement Solar control Reduction in noise extraneous than reduction in 95 Greater UV percent entering the vehicle the through the vehicle side glazings • • • • • Pilkington Automotive produces produces a windshield Pilkington Automotive more than product the of that reflects 30 percent energy (more than sun's times five that a of standard glass). Laminated sidelights have a similar construction have sidelights to Laminated windshields, laminated namely a plastic interlayer glass two sandwiched plies. between In order to meet door slam tests, plies both need to be semi-toughened additional to give strength to the glazing. Currently most products are 2.1/0.76/2.1 mm, 1.8/0.76/1.8 mm and 1.6/0.76/1.6 mm construction. The trend to lighter glazing 4 means weight mm that an make overall up is becoming critical on as are adopted lower laminates researchers Pilkington Automotive vehicles. segment Comfort Comfort Laminated sideglazings 25 the years, standard glazing over For constructions been glass laminated for have vehicles automotive for the windshield and toughened glass the for side and rear glazings. The trend to fit started sidelights in laminated Europe, but in adoption North America is strong and very now there is with also Japanese interest vehicle launching manufacturers models fitted with side side to laminated and The laminates. rear move a glazings turning represents advanced for point design vehicle opportunities and is more significant than the change volume from toughened to laminated windshields in 1970. has consumer research market confirmed Extensive in laminated that interested consumers are very and sidelights a to pay prepared premium to have them fitted to the The vehicle. consumer sees in benefits areas: two Security Pilkington Automotive also offers a also solar offers reflective Pilkington Automotive product, Pilkington reflecting film reflecting within the Reflective laminate. into been now integrated successfully glazings have This application is large area rooflights. the most in solar for a significant as control vehicle, the sun’s the of is radiation vehicle’s irrespective minimized, direction travel. of Water management Full service supply Pilkington Automotive’s Hotscreen™ product Driven by the industry’s need for increased design incorporates fine wires that are capable of de-icing a efficiency and reduced time to market, Pilkington frozen screen at -5°C inside two minutes. A recent Automotive has developed a world class, full service innovation allows the full area of the screen to be supply capability. For the majority of its OE customers, de-iced within this timescale. Further customer Pilkington Automotive provides design expertise benefits are achieved if this type of technology is which then leads to product sequencing and ‘just in employed where the wipers rest on the windshield. time’ delivery to the VM’s assembly line. Pilkington Automotive has also developed a full area AGR market offerings coated heated windshield that provides both de-ice and anti-mist properties. As power levels increase in Whilst all of the glazing products offered by Pilkington vehicles, this will provide an elegant way to Automotive are initially seen in the OE market, the electrically heat windshields that have an infrared benefit of increasingly complex glazing installations is reflective coating applied directly to the glass. This also felt in the aftermarket. In addition to supplying heating functionality is in addition to the benefits of replacement glazings to the aftermarket, Pilkington optimized solar control and high shape complexity Automotive also sells the tools and accessories used that are already achieved with Pilkington Automotive by windshield fitters, thereby supplying them with all coating technology. the equipment required for a re-glazing job. Pilkington Automotive has also developed a patented sensor that detects moisture on the windshield and automatically activates the windshield wipers. This rain sensor, attached to the interior of the windshield, detects moisture by using infrared light emitting diodes. This technology is licensed in the market place and is being increasingly adopted on new models. Another technology that improves driver visibility is a ‘hydrophobic’ coating, which is applied to the outside glass surface and significantly improves water droplet flow from the vision area. Hydrophobic products are used extensively in Japan, with significant adoption in Europe and market interest in North America.

54 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 55 2 savings in savings the 2020 year 2 Savings in Europe’, which in Savings Europe’, 2 emissions. But they also offer emissions. other But also they offer 2 NSG Group NSG and Group the Flat Glass Industry 2011 emissions and solar control glazing 2 advanced functionality, protecting against fire, protecting functionality, advanced and insulating against security, safety noise, offering properties. self-cleaning and even decoration privacy, Glass is in used most extensively buildings, for both and use; exterior interior as a for construction material, fittings. and interior for decoration for functionality, Around begun the to policy-makers world, realize have the important how quality buildings of is in to relation the quality quality and the of to the environment overall lives. people’s of Glass is in used most extensively buildings, for both and use; exterior interior as a for construction material, fittings. and interior for decoration for functionality, Around begun the to policy-makers world, realize have the important how quality buildings of is in to relation the quality quality and the of to the environment overall lives. people’s of activity and Policy addressing the legislative building including the glass sector, products that are used in buildings, products is increasing The worldwide. Group’s a play vital energy role and efficiency in improving reducing CO Energy efficiency in buildings region the of In in world every which the Group the energy is need operates, a to save political almost for Buildings 50 account percent priority. the of countries. energy consumed in developed are putting on increased focus Governments their legislation and energy policies to improve efficiency. CO In is regions where often the temperature ambient the hot, increasing tendency is uncomfortably to install air conditioning and that, course, of brings with it an energy and carbon burden. Glass Europe has for published a recently report, ‘Impact Solar of Control Glazing on Energy and CO 2020. by If air conditioning use in to Europe were usage of approach the in level North America, annual be would savings closer to 7 million tonnes. Sustainability in buildings quantifies the potential CO the quantifies potential through the glass installation solar of in control air-conditioned buildings. The study that shows installing glass air solar versus conditioning control under scenario produce would the growth current annual around of 1.1 savings million tonnes CO of 2 per year per in year 2 savings potential of potential savings 2 emissions from buildings, 2 emitted emitted in are quickly manufacture paid 2 emissions and low-e emissions from buildings, in the EU could be 2 2 replaced by low-e double glazing. low-e by replaced CO cut by 140 million tonnes if glazing cut 140 current was by which amount which to amount 765 million tonnes CO of replacing replacing ordinary single or double glazing with low-e glass. that It CO showed back through the lifetime of back the of through the products. The lifetime energy in be glass-making seen should as involved therefore in future energy saving. an investment The NSG Group is fully to sustainability. committed policies underline The the Group’s unique contribution its products can make change to addressing climate and the challenges the its in Group faces improving energy own usage The management. and resource product range and are geared R&D to efforts Group’s addressing the world. challenges a of low-carbon the EU, could be cut by 140 million could the be tonnes if EU, cut 140 the by current double glazing. low-e glazing by replaced was the 4.6 taking account Even million into tonnes CO of released the per by building year glass industry in its the to manufacture additional production processes glass obsolete of in glass the required, replacement old buildings and specification energy-efficient of glass in all new buildings result would in a huge benefit. net The European glazing trade association, Glass for Europe, which of the NSG Group published is a member, in 2005 a study the into CO CO Glass in buildings products can make an to contribution important the change. climate energy Improving combating buildings of efficiency brings too. benefits other and Buildings cheaper are more to comfortable run And from a the for social and owner of point occupier. national economies and energy security view, will when become energy-importing countries improve less on dependent supplies increasingly expensive from parts other the of world. 4. Sustainability Glass has a unique role in to play promoting reducing greenhouse gas emissions and sustainability, change. climate of mitigating The the ‘energy effects high-performance of manufacture balance’ between glazing products and their use means that the energy used and CO double glazing Buildings account for almost 50 percent of the Glass and solar energy energy consumed in developed countries. Glass has a key role in attempts to find cheaper and more efficient ways of generating power from the In North America, initiatives such as the sun. The Group’s products support the three leading solar energy technologies; thin film and crystalline environmental building rating system (LEED) run by solar modules and concentrated solar power the US Green Building Council are helping to applications. transform the market for added-value glazing, and Glass is an integral and important element of solar this will continue. modules, used to convert solar energy into electricity. Similar opportunities are anticipated in Europe, for Increasingly, electrically conductive glass is used in example, through the development of an EU-wide photovoltaic modules as the front contact of the solar Energy Labeling system for windows. In China, cell, to form a system which generates a direct legislation is at an earlier stage, but the government electrical current. Where the power feeds into a grid, has already introduced building regulations to it is first converted into alternating current. improve the energy efficiency of new buildings. The United States and the European Union in particular, are encouraging the production of Thermal insulation – renewable energy and in December 2008 the EU keeping heat in buildings published the Renewable Energy Directive. Carbon- trading schemes encourage CO2 reductions, adding In cold weather, low emissivity (low-e) products further impetus to the development of renewable reflect heat back into the building. Pilkington energy options. US government schemes designed to thermal insulation products combine unrivalled encourage ‘green’ industries are also expected to play thermal insulation with high light transmittance and an important part in establishing renewable lower reflectance for a more neutral appearance. technologies. The Group’s Pilkington Spacia™ product was Government subsidies are increasingly playing a role developed in Japan and was the world’s first vacuum in encouraging solar generation, with feed-in tariffs glazing commercially available, offering the thermal in countries such a Germany, Spain, Italy and Greece performance of conventional double glazing in the making it economic for solar generators to feed power same thickness as single glass. Sales for this product into the national grid systems. The authorities in Japan have indicated likely support for homeowner are developing worldwide, particularly for use in solar installations and US tax incentives are adding historic buildings. further impetus to these technologies. For the residential market, the Group has developed Even without such subsidies, many systems already products combining thermal insulation and passive make economic sense and costs are anticipated to fall solar gain, helping domestic window companies further as the technology matures with grid parity meet homeowner demand for more energy-efficient expected to be achieved over the next few years. windows. The NSG Group is well placed to supply all three of the In warm weather, Pilkington solar control products leading solar energy technologies. dramatically reduce or reflect the sun’s heat Thin film photovoltaic solar modules transmitted through the glass, while transmitting Technology characteristics: Produces power at low the majority of the light, minimizing the need for air cost per watt, but requires large surface areas for conditioning. Solar control is a key issue in terms of installations. Can be used in climates where the sun is energy saving. In hot conditions or for buildings with not very strong and may be obscured by cloud. high internal heat loads, solar control glass is used to minimize solar heat gain, by rejecting solar Glass type required: Transparent Conductive Oxide radiation and helping to control glare. Coating on float glass. The glass both lets light through and helps conduct the electricity produced. In temperate conditions, it can be used to balance solar control with high levels of natural light. The NSG Group products: NSG TEC™ is a high- correct choice of glass can help to reduce the capital performance, highly durable, electrically conductive outlay, running costs and associated carbon glass used in a wide range of markets including emissions of a building throughout the year. photovoltaics, where it is used to construct thin film PV modules. With the Group’s advanced technology, the coating properties can be ‘tuned’ to a wide variety of Thin Film PV technologies, including silicon and cadmium telluride based.

56 NSG Group and the Flat Glass Industry 2011 NSG Group Overview 57 emissions reduction 2 NSG Group NSG and Group the Flat Glass Industry 2011 output. 2 The Group’s advanced solar control glass solar can advanced control make a The Group’s to the contribution significant reduction air of conditioning usage reducing solar by heat gain. the of 30 heat loading percent on a Approximately comes through the interior windshield. car’s glazing vehicle products Pilkington Automotive’s absorbing by or solar advanced control provide energy from the the sun. reflecting infra-red The green and range optimized of solar privacy Group’s absorbing glasses can the a reduce heat entering up by to 65 vehicle percent. Ensuring passenger comfort and safety and The supplies Group develops only not glass but also that are glazing used systems to and mount seal the products in apertures. Pilkington vehicle is to decrease the constantly working Automotive with a view cost and to reduced content, component New technology example, areas, for integral weight. steps and seals, processing reduce the significantly needed glass to transform hardware of amount products to glazing products. Issues such as driver the Group’s visibility and overlay pedestrian safety the of in work of next generation the development glazing. automotive Glass and end-of-life vehicles Glass the of typically around 3 constitutes percent glass The automotive car. composition an of average industry in has the been not setting directly involved legislation, but the Group is Vehicle end-of-life of in on work the elimination involved harmful of actively in materials glass, ink, solder and components other glass products. used automotive for Solar control technology solar high-performance The between relationship glazing and CO control vehicle has long been It recognized. has been established the of the heat energy entering that vehicle control a direct will impact have on mobile air conditioning usage and will lead fuel and to reduced consumption CO With the Group’s developing glass-shaping developing With the Group’s technology it is possible now vehicle for the to reduce mass manufacturers glass of up Glass by to 25 in components percent. vehicles so more properties than offers simple transparency, when mass designing reduced for in vehicles the needs to be consideration to given components, acoustics, stiffness, sealing and and guiding systems solar control. is an is a makes it an output. 2 Sunplus™ Optiwhite™ Highly efficient, but Highly efficient, large area Typically, Sunplus™ Pilkington Pilkington Pilkington Pilkington Low-iron rolled glass plus Low-iron iron float glass. Low reduction reduction a major This focus. requires 2 glazing advances glazing in weight advances solar energy control, reduction and energy saving. As a glazing, leader world the in NSG automotive Group is these meeting challenges. It is developing technology and coating glass automotive absorbing infra-red advanced compositions to produce technology. reflecting infra-red and high-performance The Group further aims opportunities to provide for CO to reduce manufacturers vehicle Lightweight glazing There can 13 be individual over pieces glazing of on a vehicle all to vehicle, the which of overall contribute mass to significantly the and overall contribute the of and vehicle weight to fuel consumption. been heavily have developments The NSG Group’s glass and on focused the lightweight of introduction with the launch reduced glazing of technology, thickness and laminated toughened sidelights, Through continuous and backlights rooflights. glass-shaping in capability the Group’s developments windshield to enable constructions, the asymmetric is to the contributing future of Pilkington Automotive glazing products. automotive Glass in Vehicles industry The is global increasingly automotive addressing the sustainability agenda. The shift to electric and vehicles plug-in marks hybrids a new era, with CO high-performance, low-iron glass, designed to low-iron high-performance, solar maximize energy high collection through very and light solar transmission. The high solar energy transmission Pilkington of Concentrated solar Concentrated power applications characteristics: Technology the PV cells are also to make. best expensive So, used in applications where space is at a premium. Requires reasonably high solar some but radiation, can tolerate cloud cover. Glass type required: to ensure that coating, the maximum anti-reflective solar of amount hits radiation the PV cells. NSG Group products: solar ideal cells. crystalline choice for PV photovoltaic a Requires large area and mirror arrays. of lots in deserts. sunny sunshine. effective Particularly Glass type required: NSG Group products: and ultra-clear float glass with iron low content very its high solar makes energy transmittance it ideal as a solar mirrors used for base in substrate concentrated applications. power Crystalline photovoltaic solar modules characteristics: Technology Appendix 1 – Glass Manufacture

Flat glass manufacture

Glass is obtained by the fusion of several inorganic substances. The fused mass is cooled to ambient temperature at a rate fast enough to prevent crystallization, i.e., the molecules cannot arrange themselves into a crystalline pattern. The fast rate of cooling to prevent crystallization applies to transparent glasses. 1. Raw materials and costs of flat glass

• The mix of raw materials used in the production of Float Glass Raw Materials flat glass is known as the batch, which is mainly Recycled Glass composed of three components: silica sand, soda Sodium Sulfate 15% ash and dolomite/limestone. 1% Limestone • Recycled glass (cullet) is used in the fabrication of 4% flat glass and represents on average 15 percent of the materials used. Its addition helps reduce the energy required in the process. Dolomite Sand 13% 51% • Silica sand, soda ash, dolomite and dolomite/limestone represent together 99 percent of all raw materials used in the production of glass, Soda Ash excluding recycled glass. 16% The remaining ingredients aid the melting and refining (bubble removal) reactions and impart color Float Glass Nominal Costs and there is water addition during batch mixing to Other 8% prevent subsequent segregation. Raw Materials Transport 22% Silica sand is the main component of the batch, as it 11% constitutes about 62 percent of the batch weight excluding recycled glass. Soda ash is one of the most Depreciation 9% expensive raw materials used in glass manufacturing and represents about 16 percent of the batch weight but about 60 percent of the batch cost. In terms of costs, raw materials and energy are the single largest Energy Overheads 21% elements, followed by overheads and prime labor. 13% Prime Labor 16%

2. Basic manufacture There are three main flat glass manufacturing methods for producing the basic glass from which all processed glass products are made.

I Float I Sheet I Rolled Over 90 percent of the world’s Approximately two percent of The rolling process makes flat glass is made by the float the world’s flat glass is made by patterned, figured and wired process (see below). This is the the sheet process. This process glass products. Semi-molten way all of the world’s high predates, competes with and is glass is squeezed between metal quality, optically clear glass is gradually being replaced by float. rollers to produce a ribbon with made. The majority of the world’s sheet controlled thickness and surface production is in China with the pattern. remaining pockets in the less developed markets of Africa, Eastern Europe and Asia.

58 NSG Group and the Flat Glass Industry 2011 Manufacturing 59 Energy Energy Advantage™ are produced by this by process. are produced Small plate lift-o^ devices , Pilkington Activ™ K Glass™ NSG Group NSG and Group the Flat Glass Industry 2011 A float plant, which operates non-stop for A between non-stop for float which plant, operates 10-15 makes years, around 6000 kilometers glass of a in year thicknesses 0.4 of mm to 25 mm and in widths up to 3 meters. The has float process been licensed to more than 40 in manufacturers 30 countries. 380 Over float lines are in under operation, construction or planned with worldwide a combined output about of 1,000,000 tonnes glass of a week. The or NSG in, has Group 49 operates, interests float lines worldwide. Coated (On-line) Modified from properties the are produced basic glass Glass means coatings. can by surface of be coated on-line in the as float process the ribbon glass of is being in formed the float glass bath. The technology uses chemical deposition vapor to apply a thin on microscopically coating the glass at a about of 600ºC. temperature Pilkington and Pilkington Large plate lift-off devices Cross cutters Continuous ribbon of glass Raw material feed Cooling lehr bath Float Tinted are added Extra ingredients to the of materials raw glass at the melting products. stage tinted to produce Cobalt tints and oxide nickel ferrous glass tint grey; glass blue, - tint a while yellow iron generates ferric glass tint together both green. glass Tinted is used in buildings and to vehicles heat and transmission. light control 3.1 Modified basic manufacture There are three main modification of to forms the basic processes. manufacturing 3. The Float Process glass the industry heart At is the of the world’s float Sir by in glass - process invented and 1952 tinted coated - which clear, manufactures glass buildings, for and clear and glass tinted for The originally vehicles. process, able to make only 6mm thick glass, it makes now as thin as 0.4 mm and as thick as 25 mm. 1000ºC, is Molten glass, poured at approximately from a a continuously furnace onto bath shallow of molten tin. It floats on the tin, spreads out and a forms level the Thickness by speed surface. is at which controlled solidifying glass ribbon is from off the drawn bath. cooling) the annealing glass (controlled After emerges as a ‘fire’ polished product with virtually parallel surfaces. furnace Melting 4. Building Products processing 4.1 Semi-finished processing The following types of processing are high volume and predominantly performed by glass manufacturers.

Coating (off-line) Laminating Off-line processes use a vacuum coating technology Plies of glass are bonded or laminated together with a called sputtering. A ‘target’ material is bombarded to layer of polymer film in between. By using heat and produce atoms which are deposited on the glass. pressure, air bubbles are eliminated from the laminate so that it appears optically as a single sheet of glass. This process is used to make products such as Pilkington Optitherm™ S3 and Pilkington Mechanically, however, it is more robust: if the Suncool™. laminate is fractured, the broken glass fragments are held together and are less likely to cause injury. Laminated glass is used in safety and security applications.

4.2 Downstream processing The following types of processing are performed by glass manufacturers and also by other companies.

Multiple glazed units Shaping Multiple glazed units incorporate two (or more) panes, Glass can be bent into shape for some building separated by spacers to create a hermetically sealed applications. Between 500ºC and 600ºC the viscosity gap between each successive pane in the unit, e.g. - or syrupy nature - of glass falls by a factor of 10,000 Pilkington Insulight™. This gap can be filled with air, as it transforms from a brittle solid to a plastic which is subsequently desiccant-dried, low substance. The science of glass bending is to use this conductivity gases such as argon can be used instead plastic phase to produce shapes that are free from of air in the cavities or, in the case of the Group’s wrinkles and other optical defects. Spacia™ product, the layer of dry air is replaced by a Sag-bending is the most widely used process. The vacuum to achieve higher performance. glass is heated to the plastic phase and allowed to Heat treatment sag under its own weight to the required shape. Toughened glass, or tempered glass as it also known, Surface working is produced when float glass is heated to around Fine surface textures can be applied using sand 650ºC, then quenched with air jets so that the blasting and acid etching. surfaces are cooled quickly, and the inside core more slowly. At room temperature, the core continues to Silvering cool. The surfaces go into compression and the core Float glass is made into mirrors in a process which goes into tension. When the glass breaks, the core deposits a thin film of high purity silver on one releases tensile energy resulting in the formation of surface of the glass. A further thin film is then small, safer glass particles. Toughened glass is used in deposited to protect the silver from oxidation. safety glazing in buildings. Finally, a ceramic paint is applied. This is the process by which Pilkington Optimirror™ Plus is made.

60 NSG Group and the Flat Glass Industry 2011 Manufacturing 61 , to complete the , bonding to complete 2 NSG Group NSG and Group the Flat Glass Industry 2011 printing of shade of printing bands, logos on etc. the glass in a single but pass simple a for process features or two three pass demisting for process circuits, antennas and alarms. I of the of glass two plies. than rather glazing a systems simple Increasingly, piece glass of are being supplied to the vehicle Much manufacturers. this of activity value-added is undertaken once the glass has been or laminated tempered. Usually the glass plies are shaped as (curved) matched pairs around of through heating to a temperature 620ºC. As with tempering, the shape can be achieved or ‘sagging’ through press-bending for through gravity the shapes. more complex across the temperature heating to control Differential the of surface glass, and hence the degree of resultant bending, is also used shapes. more complex for The shaped glass pairs are then gradually cooled to room the PVB is laminate before sandwiched temperature them. between this the point At PVB is opaque and only becomes the of at completion lamination process. transparent air any of trapped in the the removal This involves glass sandwich through a mechanical or vacuum heating the of by squeezing followed process, under within a windshield an to 140ºC autoclave, 10 of pressure to 15 kg/cm On completion of these pre-process activities, On these of the completion pre-process glass to be proceeds shaped its and safety to receive properties. cutting out the from flat standard, glass template float rectangular ‘block automotive of sizes’ the edge-working shaped, but still flat, piece of a glass glass smoothed to provide edge drilling holes required any within the glass clean-room the is printing washing glass, before undertaken Lamination Lamination is glazing a where normally safety of form thin two glass a plies sandwich create around a Normally used a for (PVB) interlayer. polyvinylbutyral windshield, in the case vehicle’s breakage, of the glass emergency retaining is held in the place by interlayer, visibility the for driver. glazing Laminated is also increasingly being specified car for side windows. Automotive laminating Automotive toughening glass, or glass tempered as it Toughened is sometimes called, is most used frequently in the rear and side It vehicles. of windows is designed to be much in the case glass. stronger than However, non-safety a of small very breakage, it pieces rather into shatters than sharp significantly shards glass, of thereby reducing the risk injury. of This is made possible the which by toughening process the stresses into glass internal through a introduces high heating to very controlled of combination cooling. (>640°C) and differential temperatures, The is heating cycle also used to shape or the curve glass, either the allowing glass by heated to a to ‘sag’ or more for mould pre-defined shape under gravity, shapes, being complex by pressed to shape male by and moulds. female 5.2 Automotive glass shaping and strengthening There are basic two glass of forms applications, though shaping hybrid and automotive strengthening for been developed. more recently have processes I I I I 5.1 Pre-processing activities, a ahead number submitting of preparatory of the involves glass Pre-processing to heat treatment. include: They 5. Automotive Products processing glass styling, Because is each glazing unique piece automotive of is to part a an vehicle’s any of specific integral opening within individual any Hence three-dimensional shaping vehicle. the of glass, with together imparting its ahead this, of increased properties strength are glass and at the However, processing. safety heart automotive of must operations be certain pre-process undertaken. 5.3 Glazing Systems processes Glazing systems help to simplify the vehicle assembly process. Modular systems such as encapsulation and extrusion are designed to facilitate adhesive bonding of the glazing to the vehicle.

Encapsulation Extrusion Assembly

Encapsulation involves the An alternative glazing system is Fixing of certain glazings within a injection molding of a polymer provided by the robotic extrusion vehicle can also be achieved trim, shaped precisely to fit the of a polymer profile to the through the application of locator vehicle body, to the periphery of periphery of the glazing, with the clips to the glass. The attachment the glazing. It also provides the extruded profile or seal being of such clips, together with other opportunity to incorporate within precisely shaped to the vehicle. hardware, is most commonly the molding additional styling referred to as assembly. features, fixing mechanisms and even hinges for opening windows in minivans and estate cars.

62 NSG Group and the Flat Glass Industry 2011 Manufacturing 63 NSG Group NSG and Group the Flat Glass Industry 2011 UK6 1992 GL2 WH2 1976 1991 M1FV1F 1998 1986 JB2F 1997 6F3 1966 75F2 1980 Location United Kingdom HillCowley Greengate LineGermany CH2GladbeckGL1 Completed UK5 Comment 1972 Weiherhammer 1974 1981 WH1Italy San SalvoFlovetro 1979 Venice Sweden SS1HalmstadFinland FV1Lahti VE1 1974 Poland SK1 1979SandomierzRussia 1987 Moscow 1976 (50%) - Managed Saint-Gobain by Flovetro PS1Japan L1Maizuru 1995 Chiba RM1 1987Malaysia M5F 2006Johor Bahru in Mothballed 2009 1965 Vietnam V3F JV Managed NSG by Group Hanoi JB1FHo Chi Minh 1971 USA 1993 Rossford VGI VFG Lathrop IllinoisOttawa, 6F1 2008 Laurinburg 1999 5F1Argentina 10F1 1970 Lavallol 75F1 1970 1964 1973 VV3 1989 (51%) - Managed NSG by Group VASA NSG Group and associates’ global float operations Appendix Appendix 2 – Float Operations NSG Group and associates’ global float operations - continued Location Line Completed Comment Brazil Jacarei C1 1982 Cebrace (50%) - Managed by Saint-Gobain C3 1996 Cebrace (50%) - Managed by Saint-Gobain Caçapava C2 1989 Cebrace (50%) - Managed by NSG Group Barra Velha C4 2004 Cebrace (50%) - Managed by NSG Group Chile Concepción LQ1 1996 Vidrios Lirquen (26%) - Managed by NSG Group China Changshu CS1 2006 SYP-Pilkington 50:50 JV - Managed by NSG Group CS3 2009 Tianjin-SYP (10%) via SYP - Managed by SYP Tianjin T-SYP 1997 Tianjin-SYP (10%) via SYP - Managed by SYP Suqian CGH 1994 China Glass Holdings (29.9%) CGH 2002 China Glass Holdings (29.9% Currently on extended cold repair CGH 2005 China Glass Holdings (29.9% Weihai WE1 1995 China Glass Holdings (29.9% WE2 2000 China Glass Holdings (29.9% WE3 2003 China Glass Holdings (29.9% WE4 2004 China Glass Holdings (29.9% Wuhai WU1 1988 China Glass Holdings (29.9% WU2 2001 China Glass Holdings (29.9% Xian XI1 2005 China Glass Holdings (29.9% XI2 2007 China Glass Holdings (29.9% Dongtai DG1 2009 China Glass Holdings (15%) DG2 2010 China Glass Holdings (15%) Beijing CG1 2001 China Glass Holdings (29.9%). Closed in 2005 CG2 1989 China Glass Holdings (29.9%). Closed in 2008

As at 06/2011

64 NSG Group and the Flat Glass Industry 2011 NSG Group and the Flat Glass Industry 2011 65 Nippon Sheet Glass Co., Ltd. Sumitomo Fudosan Mita Twin Building West Wing, 5-27, Mita 3-chome, Minato-ku, Tokyo 108-6321 Japan Email: www.nsggroup.net/contact www.nsg.com