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Market Intelligence Report 2013

Glass Market Intelligence Report Report 1 2013


Part of Ispy publishing Industry Survey, Market Intelligence and Forecasts Series

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Market Intelligence Report 2013

Contents
This report analyses the nature and scope of the market structure for the regional glass industry in terms of the value for products & services in this sector. It also investigates the potential exhibitor base for this sector, the key factors driving change, the key trends in event expenditure and perceptions, the main players and influencers by sector. The report also gives recommendations how to orientate long term strategies, identify key immediate tactical opportunities. Future reports give, where possible, year on year trends. Foreword ................................................................................................................................................................................................... 3 Fast Facts.................................................................................................................................................................................................. 6 What is Glass? .......................................................................................................................................................................................... 7 Main Types of Glass .................................................................................................................................................................................. 7 Main glass sectors ..................................................................................................................................................................................... 9 Applications ............................................................................................................................................................................................. 10 Solar-energy glass products .................................................................................................................................................................... 10 Other Glass Applications ......................................................................................................................................................................... 11 Flat Glass for Automotive and Transports ............................................................................................................................................... 12 Characteristics of Automotive and Transport Glass ................................................................................................................................ 13 Common challenges ................................................................................................................................................................................ 15 The MENA Market ................................................................................................................................................................................... 17 Arabian Business Etiquette ..................................................................................................................................................................... 21

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Market Intelligence Report 2013

Foreword
Most building components are designed to do their job and never be seen. Plumbing, wiring, steel reinforcement and even concrete itself is usually buried beneath layers of plaster, rendering, carpet and tiles, and is only seen again when the building is refitted or torn down. But theres another major component that most people see every day and that they never give a second thought to. Without glass, however, modern high-rise living simply wouldnt be possible; stunning vistas from height would only exist in nature and wed all be living and working in rather dark, uninviting buildings that offered little natural light. Glass has transformed the way in which the world builds and lives. Without glass, skyscrapers would be imposing, bricked in monoliths. Glass has made it possible to achieve the impossible. Huge glass curtainwalled facades dominate every major city skyline around the world, monuments to architectural excellence and huge advancements in engineering and manufacturing capabilities during the latter half of the 20th century. Glass has not only made it possible to reach unimaginable heights, but it has given us the chance to enjoy the view while were there. With so much construction going on the in the GCC, glass is also big business in the region. In the UAE alone, Glass LLC the corporate arm of Dubai Investments PJSC runs four wholly owned subsidiaries that represent a combined capital of AED400m and investments of AED1.1bn. Each company, Emirates Float Glass, Emirates Glass, Lumiglass Industries and the Saudi American Glass Company, supply to the construction industry, and each report positive growth throughout 2010, which has surpassed expectations. Ambitious investments in the range of AED 2 billion are planned for the next four to five years under the aegis of Glass LLC to realise the envisioned growth. Emirates Float Glass, another subsidiary of Dubai Investments PJSC, recently opened its new, state-ofthe-art $200m 320,000m2 factory in Abu Dhabi. The plant was built with technological assistance from USbased PPG Industries, and produces 190,000 tons of glass for construction and the automotive industry annually, exporting products to more than 35 countries throughout the GCC, South America, Europe, Australia, Far East Asia and Africa. The second plant will double EFGs output to 1200 tons per day, making the company the regions largest single-location float glass manufacturing facility. Glass demand is very much related to per capita growth; when populations grow they need houses and they need glass. The spending will go up and down, but there is a big difference between the normal trend and the market. The Middle East has the manpower, sand, and companies operating in the UAE find it is easy to operate and export to anywhere in the world. Market trends In a visual comparison of a new building to one that was constructed say, 15 to 20 years ago there are some obvious differences. In terms of glass facades, the older buildings generally have a reflective glass exterior, while the more recent structures tend to have clear glass. The trend in glass now is for extremely high light transmission. Around four to five years ago the reflective box disappeared and for the last two years most projects are neutral buildings with clear glass. One of the main reasons for this change is the development of more advanced coatings. Ten years ago reflective glass was the only way to reduce light transmittance. That ratio is switching with nanotechnology. The only difficulty associated with high light transmission in the Middle East is glare control; when the sun hits, it is too bright for occupants. Architects are combating this issue by adding architectural features for shading so the transparency and high light transmission glass can be used without detrimental effect on the indoor environment. This technique started 20 years ago, but it has taken a while because the coatings were not up to par to keep the heat down and protect properly. Meeting the local environmental conditions is one of the primary factors that must be considered when selecting the glass coating for a project. Every area of the world has its own peculiarities; in the Middle East they are fighting a sun that has 850W/m of power and around 700lux in terms of light, which is a very white light. You cant use the same coatings as you would in say Paris or Berlin, where there is a more yellow light. And although the same fundamental issues of heat and light gain exist worldwide, how they must be tackled depends on local conditions. ispy publishing limited Page - 3 -

Market Intelligence Report 2013

There are two main coatings in demand in the UAE but the main one will always remain reflective, high msvd coatings. The next is multi-functional low-e (low-emissivity) coatings; these are good for residences where you dont want the building to look like a mirror. The Middle East region is currently poised for growth in the construction and infrastructure sectors. Many senior managers and industry influencers all predict that these sectors will experience profitable development both in the short term and long term. There will be some boom markets, like Qatar (2013 onwards, due to the World Cup 2022), Iraq and Egypt (after the political situation stabilizes), but even in other markets like Oman, UAE, Kuwait and KSA, it is seen that good possibilities for the next few years.

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Fast Facts
The global glass industry generates about $75 billion in annual revenue. Top exporters include Belgium, China, France, Germany, Japan, and the US. The UAE's glass industry is bracing for an unprecedented growth as the country's construction industry to witness a compounded annual growth rate of around 20% from 2010 to 2013, with approximately 1,300 projects worth over $418bn currently under construction across the UAE. A recent study by MEED Projects, has reported that several construction and infrastructure projects have been awarded to six of the GCC countries which include: US$119 billion to Saudi Arabia; US$75 billion to UAE; US$26 billion to Qatar; US$30 billion to Oman, US$25 billion to Kuwait; and US$10 billion to Bahrain. NanoMarkets estimates that the total global market for smart mirror technologies will be approximately $1 billion in 2013, and that this market will grow to a value of just of $3.4 billion ($US) by the end of the decade. World demand for flat glass is forecast to rise 7.1 percent per year through 2016 to 9.2 billion square meters. In a continuation of the trend seen overall the last couple of decades. Gains in the dominant building construction market will be driven by a significant acceleration in building construction activity. The global market value of fabricated flat glass is forecast to reach $90 billion in 2016. The Asia/Pacific region, which accounted for 60 percent of global flat glass demand (on a square meter basis) in 2011, will continue to post the fastest gains through 2016. Gains in China, the regions dominant national market, will slow in comparison to the pace of the 2006-2011 period, but remain well above the world average. Demand in Japan will improve significantly, based on recovering domestic building construction and motor vehicle markets. Fabricated flat glass demand will benefit from rapid growth in sales of energy efficient products such as solar control, insulation, and low-E glass. The solar energy market, which was hurt by recent global economic weaknesses, will take off briskly once again. It should be noted, however, that demand for flat glass used in solar energy applications totalled just around 120 million square meters in 2011, so this is a niche market. The global market for flat glass in 2009 was approximately 52 million tonnes, representing a value at the level of primary manufacture of around euro 22 billion. This market has historically been growing in volume terms at 4 percent to 5 percent a year. Abu Dhabi has announced a planned $90bn five-year spending spree on housing, schools, infrastructure and leisure projects, making the capital the latest Gulf monarchy to unveil big new spending since the Arab spring uprisings. The $90bn spending plan is aimed at the citizens who are a small minority of the population, and has echoes of the $130bn investment programme launched in Saudi Arabia in 2011. Approximately 1,300 projects worth over $418 billion currently under construction across the UAE. Another 300 projects worth $143 billion are in the design, planning or bidding stages, with Qatar having a burgeoning construction sector bolstered by its hosting of the 2022 World Cup, said GGF MENA, the regional arm for the UK-based Glass and Glazing Federation. The construction market in the region is picking up pace once again, driving the demand for high quality glass. The trend is particularly evident in Turkey. The Middle East container glass sector has three major consuming markets: the beverage sector, which accounts for around 56% of total tonnage of glass packaging containers; the food sector, which makes up around 29%; and the perfumery, pharmaceuticals and technical product containers (flacconage) sector, which accounts for 15% or so of total tonnage. The current global glass industry is led by Nippon Sheet glass (NSG)/Pilkington (Japan/United Kingdom), Saint-Gobain (France), Guardian Industries Corp. (US), and Asahi Glass Co., Ltd. These companies use the commercialized float glass method, where sheets of glass are produced or floated on molten metals such as tin and lead. Float glass is usually soda-lime glass. Value-added and specialty glass manufacturers include optical product and lens manufacturer Carl Zeiss (Germany) and its subsidiary Schott AG (Germany). Europe, China and North America account for 75 percent of the global demand for glass. Of these, Europe is the most mature market followed by Japan and North America. Maturity of a market is indicated by a higher demand for value-added glass, stringent regulations for glass usage, and more than 40 percent of glass being used for refurbishment projects. Mature markets also see a higher per capita consumption of glass than less mature ones. Most Asian markets are still low in maturity. The global glass packaging market will reach a value of $36.8bn in 2013, but its growth will be limited in the next 10 years as it loses out to competition from plastics. The global market for LCD glass substrates is projected to cross 467.2 million square meters by the year 2017, primarily driven by rising penetration of LCD TVs and the growing demand for large size displays.

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Market Intelligence Report 2013

The Global Glass Market: A Macro Perspective


Glass has been in society in its most basic form since circa 4000BC and was used mainly to produce weapons and jewellery, and by 1500BC glass vessels were used in cooking and drinking. Glass has been developed for thousands of years and production methods have evolved considerably since its induction. A key factor that sparked a large increase in the mass production of glass was the development of the Solvay Process in the 1860s, which significantly reduced the cost of sodium oxide, a major input into the glass production process. Two important developments in the 20th century were automation, with the introduction of full mechanisation of bottle manufacture around 1920, and the introduction of the float process in 1952 for flat glass. Other major advancements in glass production have resulted from: Continuous large-scale production; Longer furnace lifetimes (typically 12-15 years, but in some cases (flat glass) even longer); Improved thermal efficiency; New production techniques (such as Just-In Time); Significant product innovation. Improvements in the production process have led to a typical furnace output of 300 tonnes per day of molten glass but in some sub-sectors, such as flat glass, this figure is even higher: 500 tonnes per day is typical but some recent projects have hit 1000 tonnes per day. In the EU25, approximately 35mt of final product glass in various forms were produced in 2006 according to CPIV (Comit Permanent des Industries du Verre) estimations. Whilst production levels have increased, manufacturers have also strived to further improve efficiency in what is an energy-intensive process, fuelled by the need to operate furnaces at over 1600oC. Improvements in furnace efficiency have had a significant impact on the amount of energy required to melt a tonne of glass. The recycling of glass has been a major factor since it uses 25% less energy than making glass from virgin raw material. Whilst this performance may sound impressive, glass producers have been put under further pressure from Governments to improve their efficiency due to increased environmental concerns by society. A feature of glass is its versatility and that its specification such as its strength, weight, colour and appearance can be changed to suit demand. What is Glass? Glass is a solid-like and transparent material that is used in numerous applications in our daily lives. Glass is made from natural and abundant raw materials (sand, soda ash and limestone) that are melted at very high temperature to form a new material: glass. At high temperature glass is structurally similar to liquids, however at ambient temperature it behaves like solids. As a result, glass can be poured, blown, press and moulded. Glass manufacturing has an age-old tradition which dates back to around 3500 BC when glass is believed to have been first artificially produced in Egypt and Mesopotamia to be used as jewellery and later as vessels. Since then processes have constantly evolved from craftsmanship to todays high-tech industrial processes and the number of glass types and applications have multiplied. Glass has shaped Europes cultural heritage, regions, industries, living conditions, technological deployments, etc. like no other substance. Simply think of glass masterpieces such as Bohemian crystal, the Murano Island of Italy, the Mirros Gallery of Versailles palace or stained glass in Cathedrals. Glass is all around us nowadays and continues to offer cutting edge solutions, either in itself or used in combination with other materials for high-tech applications; a trend which is very likely to continue in the future. Main Types of Glass Today, flat glass comes in many highly specialised forms intended for different products and applications. Flat glass produced by way of the float process is often further processed (see below) to give it certain qualities or specificities. In this way, the industry can meet the various requirements and needs of the construction, automotive and solar-energy industries :

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Toughened glass Laminated glass Coated glass Mirrored glass Patterned glass Extra-Clear glass

Annealed Glass Annealed glass is the basic flat glass product that is the first result of the float process. It is the common glass that tends to break into large, jagged shards. It is used in some end products -- often in doubleglazed windows, for example. It is also the starting material that is turned into more advanced products through further processing such as laminating, toughening, coating, etc. Toughened Glass Toughened glass is treated to be far more resistant to breakage than simple annealed glass, and to break in a more predictable way when it does break, thus providing a major safety advantage in almost all of its applications. Toughened glass is made from annealed glass treated with a thermal tempering process. A sheet of annealed glass is heated to above its "annealing point" of 600 C; its surfaces are then rapidly cooled while the inner portion of the glass remains hotter. The different cooling rates between the surface and the inside of the glass produces different physical properties, resulting in compressive stresses in the surface balanced by tensile stresses in the body of the glass. These counteracting stresses give toughened glass its increased mechanical resistance to breakage, and are also, when it does break, what cause it to produce regular, small, typically square fragments rather than long, dangerous shards that are far more likely to lead to injuries. Toughened glass also has an increased resistance to breakage as a result of stresses caused by different temperatures within a pane. Toughened glass has extremely broad application in products both for buildings and for automobiles and transport, as well as other areas. Car windshields and windows, glass portions of building faades, glass sliding doors and partitions in houses and offices, glass furniture such as table tops, and many other products typically use toughened glass. Products made from toughened glass often also incorporate other technologies, especially in the building and automotive and transport sectors. Laminated Glass Laminated glass is made of two or more layers of glass with one or more "interlayers" of polymeric material bonded between the glass layers. Laminated glass is produced using one of two methods: 1. Poly Vinyl Butyral (PVB) laminated glass is produced using heat and pressure to sandwich a thin layer of PVB between layers of glass. On occasion, other polymers such as Ethyl Vinyl Acetate (EVA) or Polyurethane (PU) are used. This is the most common method. 2. For special applications, Cast in Place (CIP) laminated glass is made by pouring a resin into the space between two sheets of glass that are held parallel and very close to each other. Laminated glass offers many advantages. Safety and security are the best-known of these -- rather than shattering on impact, laminated glass is held together by the interlayer, reducing the safety hazard associated with shattered glass fragments, as well as, to some degree, the security risks associated with easy penetration. But the interlayer also provides a way to apply several other technologies and benefits, such as colouring, sound dampening, resistance to fire, ultraviolet filtering, and other technologies that can be embedded in or with the interlayer. Laminated glass is used extensively in building and housing products and in the automotive and transport industries. Most building faades and most car windscreens, for example, are made with laminated glass, usually with other technologies also incorporated. Coated Surface coatings can be applied to glass to modify its appearance and give it many of the advanced characteristics and functions available in today's flat glass products, such as low maintenance, special reflection/transmission/absorption properties, scratch resistance, corrosion resistance, etc. Coatings are usually applied by controlled exposure of the glass surface to vapours, which bind to the glass forming a permanent coating. The coating process can be applied while the glass is still in the float line with the glass still warm, producing what is known as "hard-coated" glass. Alternatively, in the "off-line" or "vacuum" coating process, the vapour is applied to the cold glass surface in a vacuum vessel. ispy publishing limited Page - 8 -

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Mirrored Glass To produce mirrored glass, a metal coating is applied to one side of the glass. The coating is generally made of silver, aluminium, gold or chrome. For simple mirrored glass, a fully reflective metal coating is applied and then sealed with a protective layer. To produce "one-way" mirrors, a much thinner metal coating is used, with no additional sealing or otherwise opaque layer. Mirrored glass is gaining a more prominent place in architecture, for important functional reasons as well as for the aesthetic effect. Patterned Patterned glass is flat glass whose surfaces display a regular pattern. The most common method for producing patterned glass is to pass heated glass (usually just after it exits the furnace where it is made) between rollers whose surfaces contain the negative relief of the desired pattern(s). Patterned glass is mostly used in internal decoration and internal architecture. Today, it is typically used for functional reasons, where light but not transparency is desired, and the patterns are accordingly subtle. However, it has also at times been fashionable as a design feature in itself, in such cases often displaying more prominent patterns. Extra-Clear glass Extra-clear glass is not the result of processing of annealed glass but instead a specific type of melted glass. Extra-clear glass differs from other types of glass by its basic raw material composition. In particular, this glass is made with a very low iron-content in order to minimize its sun reflection properties. It therefore lets as much light as possible through the glass. It is most particularly of use for solar-energy applications where it is important that the glass cover lets light through to reach the thermal tubes or photovoltaic cells. Anti-reflective properties can be further increased by applying a special coating on the low-iron glass. It can also be used in windows or facades as it offers excellent clarity, which allows occupants to appreciate true colours and to enjoy unimpaired views. Glass-making Glass industries are characterised by a multitude of production processes depending on the final product manufactured and its end-applications. However, all these manufacturing processes have a common origin: glass first needs to be melted! Glass melting requires raw materials which are of two kinds: different types of sand and recycled glass. These raw materials are mixed together, charged in a furnace where there are melted at around 1500C to form molten glass. The molten glass is then taken out of the furnace to be shaped and cooled down afterwards. For many applications the glass obtained may be further processed to have specific properties such as increased mechanic strength and higher resistance to breakage. The exact composition of glass may vary to meet specific applications requirements but the most commonly use type of glass, soda-lime glass, is made of silica sand, soda ash, limestone, dolomite and glass cullets (recycled glass). Additional materials such as iron oxide or cobalt can be added to the mix to give a green or blue colour to the glass. Main glass sectors The glass industries comprise five sectors covering different glass products, applications and markets. Container glass Container glass is the largest sector of the EU glass industries and accounts for some 60% of the total EU glass production. The container glass industry provides a wide range of glass packaging products for food and beverages as well flacons for perfumery, cosmetics and pharmacy to a world-wide customer base. With its 160 manufacturing plants distributed all over Europe it is an important contributor to Europes real economy and provides direct employment to about 50,000 people, while creating a large number of job opportunities along the total supply chain. Building, automotive, solar-energy glass (flat glass) The flat glass sector is the second largest sector of the European glass industries and represents about 30% of the total EU glass production. The main markets for flat glass are the building (windows and facades) and automotive industries (windscreens, side and rear-side glazing, backlights and sunroofs). Flat glass is also used in solar-energy applications (photovoltaic and solar thermal panels) as well as in urban and domestic furniture, appliances, mirrors and greenhouses. ispy publishing limited Page - 9 -

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Float plants are the biggest glass manufacturing sites with production capacities of up to 850 tonnes of melted glass per day. Continuous-filament glass fibre The production of continuous filament glass fibre (CFCG) is one of the smallest sectors of the glass industry in terms of tonnage although the products have a relatively high value to mass ratio. Continuous filament glass fibre is mainly used for the production of composite materials as weightlightening reinforcement component. Continuous filament glass fibre applications are known as fibrereinforced polymers or glass-reinforced plastics. The sector covers applications ranging from the automotive and transportation sector (such as aircrafts) to wind energy, agriculture, construction, communication, electrical and electronic as well as sport and leisure. In tonnage, CFCG represents more than 80% of all reinforcement fibres used in composite worldwide. Domestic glass This sector comprises the manufacturing of glass tableware, cookware and decorative items such as drinking glasses, bowls, plates, cookware, vases and ornaments. Special glass These products have a high added-value linked to their intense technological content. This sector regroups a large range of products such as lighting glass, glass tubes, laboratory glassware, glass ceramics, heatresistant glass, optical and ophthalmic glass, extra thin glass for the electronics industry (e.g. LCD panels, photovoltaics) and radiation protection glasses. Applications Glass is an unlimited and innovative material that has plenty of applications. It is an essential component of numerous products that we use every day, most often without noticing it. It is clear that modern life would not be possible without glass. Glass is used in the following non-exhaustive list of products:

Packaging (jars for food, bottles for drinks, flacon for cosmetics and pharmaceuticals) Tableware (drinking glasses, plate, cups, bowls) Housing and buildings (windows, facades, conservatory, insulation, reinforcement structures) Interior design and furnitures (mirrors, partitions, balustrades, tables, shelves, lighting) Appliances and Electronics (oven doors, cook top, TV, computer screens, smart-phones) Automotive and transport (windscreens, backlights, light weight but reinforced structural components of cars, aircrafts, ships, etc.) Medical technology, biotechnology, life science engineering, optical glass Radiation protection from X-Rays (radiology) and gamma-rays (nuclear) Fibre optic cables (phones, TV, computer: to carry information) Renewable energy (solar-energy glass, windturbines)

Solar-energy glass products Flat glass is an integral component of many solar energy technologies, including solar thermal collectors, photovoltaic modules and Concentrated Solar Power plants. Although the solar energy market for flat glass is relatively small in volume compared to the building and automotive markets, it is fast expending due to the increasing demand for renewable energy. It is also a market of high added-value glass products and a strong driver for innovations. Glass in solar energy applications plays an active role in ensuring efficient and effective solar energy conversion. Glass is designed to optimise solar energy conversion while providing long term protection against external conditions. Extra clear glass, with low iron oxide content is typically used in solar applications. Either float or patterned, low iron glass may be coated with an anti-reflecting coating to further increase performance. Glass may also be toughened to increase strength and durability. Coatings on glass can also play a functional role in solar energy conversion. For example, transparent conductive coating can be used as an electrical contact in some photovoltaic technologies allowing the light through to the photovoltaic material while conducting the general electricity out of the modules. ispy publishing limited Page - 10 -

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Glass in Solar Thermal Application Solar thermal collectors are intended to collect heat - as opposed to photovoltaic panels which convert sunlight into electrical power. The collected solar heat can be used to supply hot water or heat exchangers, for domestic or industrial applications. There are various kinds of solar thermal collectors but most require a flat glass cover, or glazing, which serves not only to protect the panel while letting the sunlight through but also to prevent cooling of the panel from exposure to cold air. Glass in Photovoltaic Applications Photovoltaic technologies are used to convert solar energy directly into electricity. There are many different technologies available to suit various requirements, from domestic systems to utility scale. Photovoltaic panels come in various shapes and colours offering flexibility for design integration and building integrated applications (BIPV). The most common photovoltaic technology is based on crystalline silicon solar cells. In this application glass acts as a protective outer layer, while transmitting the solar light to the photovoltaic cells interconnected underneath. Other photovoltaic technologies include thin film photovoltaics where solar cells are deposited as a sequence of thin films on glass. In these technologies, transparent conductive coated glass can be used as the front glass upon which the films are grown. The conductive coating not only allows light through to the photoactive films, but also conducts the generated electricity out of the modules. Glass and mirrors in Concentrated Solar Power Systems Concentrated Solar Power (CSP) systems are used to produce electricity from the sun at utility scale. These systems are mainly used in regions with high levels of solar irradiance. CSP systems use lenses or mirrors to concentrate a large amount of sunlight onto a central receiver, thereby producing electricity either by concentrating the sunlight onto a high performance photovoltaic cell or by heating a transfer fluid to supply heat to a conventional thermodynamic power plant. For CSP systems, extra clear glass and mirrored glass are used to redirect accurately the maximum amounts of light towards the focal point. Other Glass Applications Flat glass is used in many other applications than the main building, transport and solar-energy ones described previously. These applications are very visible in every-day life and illustrate how glass is a vector of comfort, style, well-being, security and safety. Thin Glass Thin glass has numerous applications, typically specialized and in moderate volumes, often technical. It is used for example in microscope slides, which are usually 1 mm thick, and for the corresponding cover glasses that are only a fraction of a millimetre thick. Float glass processes can produce extra-thin glass down to 0.4 mm. Thin glass is used to perform specific functions in a wide array of equipment and appliances, various kinds of mirrors such as electrochromic mirrors and cosmetic mirrors, touchscreens and filters, glass masters and data storage glass discs, displays, and telecom equipment. Appliances Flat glass is used extensively for household appliances, office equipment, and similar applications. Oven doors are made of tempered glass and engineered to resist very high temperatures. Stove-tops and control panels are made from drilled, silk-screen printed and tempered glass in order to provide high thermal and mechanical safety as well as to create an aesthetic look. Fridges are equipped with silkscreened, tempered, edged and clipped glass for their shelves, so as to be capable of resisting shocks as well as being spill-proof. Washing and dryer machines and dishwashers equally have tempered glass for their drums and panels. Anti-reflective glass is used to reduce the glare that reflects off televisions, computer screens, glass cases and other electronic displays. Photocopiers, scanners, and fax machines all use highly transparent glass sheets to support document imaging. Furniture Glass offers unique aesthetic possibilities to furniture designers, and is very durable and low-maintenance, as it is not harmed by moisture and is highly resistant to wear and scratching. Almost every piece of furniture in a house can be made from, or incorporating, glass: coffee tables, dining tables, book cases and shelves, TV units, media storage, office furniture, lightning, aquaria, and other accessories. Glass furniture is particularly ideal where the available light needs to be maximised, because it reflects and transmits light rather than absorbing it. It also adds a bright, vibrant effect, thereby increasing the light in a room subjectively as well as in real terms. Greenhouses Glass is used for the roof, and often also for the walls, of greenhouses. The glass in greenhouses functions as a selective transmitter of solar energy. The effect it has is to trap energy within the ispy publishing limited Page - 11 -

Market Intelligence Report 2013

greenhouse, warming plants, air, soil, water and other things inside the greenhouse. As infrared frequencies are blocked by glass, this thermal energy generated by plants is also conserved within the greenhouse, adding to the warming effect. Urban furniture Glass is more prominent in the urban landscape than one might think: bus and tram stop shelters, phone booths, advertising stands, kiosks, street lighting, traffic lights, and shelter over walkways all include large glass components. Glass is easy to clean and highly resistant to different weather conditions; damaged parts are easily replaceable and the glass can be engineered to be vandalism-resistant. Radiation protection There are three radiation protection principles: time, distance and shielding. Glass is a good provider of shielding against some types of radiation. X-ray facilities often use leaded glass screens to protect the operators, and radiation-protection glass is also used in PET-scan (positron emission tomography) apparatuses. There is also special nuclear radiation protection glass, which is used to make viewing windows in nuclear power installations. Within the nuclear sector, glass takes the form of large blocks used for radiation shielding windows, with individual blocks sometimes weighing over 4 tonnes. Lead and nonlead containing glasses can be stabilised against radiation-induced browning through the addition of cerium oxide. Flat Glass for Automotive and Transports Flat glass is an integral part of most automotive vehicles and is essential to Europe's transport industry. Flat glass is used to make windscreens, backlights, windows and sun roofs for a wide range of automobile and transport applications from cars to cruise ships and buses. At around fifteen to twenty percent of total flat glass production in volume, automotive glass is the second-largest area of application of float glass products (after the construction sector). The challenges faces in these other modes of transport are very similar to those of cars, as glass needs to provide optimum visibility, whilst presenting a high level of durability, acoustic and thermal comfort as well as strength. Glass in Lorries Glass is used for the cabin in lorries to protect the driver against bad weather conditions. For this reason, heated windscreens and water repellent coatings have been developed for side windows, providing for an improved driver vision during bad weather externalities, such as rain, ice, fog and mud. Another important feature of the glass used in lorries is that it protects drivers against fatal accidents and is an integral part of a lorry's safety system. Laminated glass is used not only for the windscreen, but increasingly also for side windows. It is more resistant to shock and prevents the body from being ejected and the cabin from being penetrated in the case of an accident. Glass also contributes significantly to the comfort of the cabin. Considering the size of the glazed surface of a truck, it is vital that the glass is engineered to withstand some of the solar radiation that heats up the inside of the vehicle. The glass - windscreen and sun roofs - can be tinted or applied with a thin transparent coating to absorb sun rays and to reduce UV transmission. The comfort of the cabin can also be enhanced by insulating glazing, consisting of two layers of glass separated by air or gas, thereby keeping the cold out. Moreover, glazing can be integrated with other functions, for the benefit of the modern transport industry. By means of example, antennae can be integrated into the glass in order to manage data communication and mobile information. Buses and Coaches The amount of glass in a bus or coach is on average ten times that of a lorry. Glass trends in bus design are also evolving, with increasing surface areas and more complex shapes of glazing. For example, the size of a windscreen on a bus sometimes exceeds five square metres. Glass technology is improving in order to maintain a high level of comfort and safety for the bus driver and passengers. Laminated glass is used for windscreens as well as for side windows and protects against the shattering of glass in case of an accident. Laminated glass can also be equipped with invisible heating filaments in the interlayer film, which improves visibility for the driver. Comfort is an important issue in buses, considering the large surface of the glazing. The windscreen is therefore laminated and the side windows tempered in order to reduce the temperature of the air and the components inside the bus, and to improve the efficiency of the air-conditioning. Acoustic comfort is also an important aspect, as it limits the driver's tiredness and provides for better travelling conditions for the passengers. New types of interlayers in laminated windows have therefore been developed to protect against noise more efficiently than standard films.

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Market Intelligence Report 2013

Glass is a significant aesthetic feature of buses and coaches. New aspects of bus and coach design include complex shapes of glazing, glass roofs, and flush glazing, which is a classical window with an opening where a sheet of glass slides on the main window. Furthermore, glass can play an important role in decreasing the weight of buses and coaches. Some new vehicle regulations, such as those requiring low-emission engines and seat-belts, have increased the weight of vehicles. By developing side windows that are laminated from 3millimetre-sheets instead of the classical 4-mm or 5-mm sheets, the weight of a bus can be reduced by as much as 100 kg. Agricultural and Forestry Machinery Glass is used in several vehicles in the off-road sector, including construction equipment cabins and agricultural machinery such as tractors and combine harvesters. Most of the cabin's glazing can be equipped with laminated glass in order to create a safe workplace, especially in the case of construction equipment and forestry machinery. Solar control glass can also be engineered especially for vehicles of low speeds, including in particular agricultural tractors that spend long hours in fields with full exposure to the sun, which is considerable and can be damaging to the health of the occupants. Ships and Boats Glass on boats has different applications depending on the type of boat in question. The armoured windows that are used on navy vessels are similar to the windows on military vehicles, while the glass on commercial and cruise ships is not very different from the glass used on cars. Glass on boats therefore needs to satisfy a wide range of performance criteria, especially as international standards governing marine safety become increasingly demanding. The design of glass is continuously adapting to the changing speed and design of boats. For example, high speed vessels need to be equipped with highly resistant but still very light glazing. One way of saving weight on a boat is to bond the windows directly to the structure of the boat, thus eliminating the need for a frame. Other important specifications for marine windows include: resistance to high pressure; thermal and solar protection; defrosting and demisting; and ballistic protection. Moreover, glazing on vessels often needs to protect the on-board instrumentation from interference by electro-magnetic radiation from radars and high frequency transmitters. Acoustic protection is also a necessity for many marine windows, for example windows that are next to the flight deck on aircraft carriers. For sensitive areas of a ship, fireproof windows are often a safety requirement, for example the windows in front of the lifeboats. Aircraft Glass is used in various types of aircrafts where glass strength is of particular importance: commercial planes, regional commuter planes, helicopters and military aircrafts. Especially for cockpit windows, but also cabin windows, glass is reinforced to a very high strength by making its surfaces permanently compressed. This is achieved through one of two glass-strengthening processes: thermal tempering or chemical reinforcement. With thermal tempering, the surface compression -- and hence the reinforcement - is limited, whereas chemical reinforcement creates a very strong glass with a high optical quality. Windshields on planes are equipped with heating systems, usually made by conductive coatings or wiregrids, in order to withstand fog and ice. In planes, specially engineered glass also protects against the static electric charging that can occur during flights, through the means of a conductive coating that drains the static charges. Glass technology applied to aircraft also includes protection against solar radiation, electro-magnetic radar beams, and, thanks to increased durability, the particularly damaging effects of birdstrikes against the windscreen. For helicopters, special weight-reducing yet durable bird-proof glass is used. Trains Trains, high-speed trains, subways and other train categories use laminated glass and wired laminated glass to improve passengers' safety and comfort. Laminated glass used for high-speed trains has extra impact-resistant strength. This specialised laminated glass is produced with transparent and elastic PVB (polyvinyl buteral) membranes sandwiched between two pieces of glass, which are laminated under high temperature and pressure. Wired laminated glass includes conductive wires or thread between the glass layers, which generate heat when given an electric charge, helping to remove fog and frost on the windshields. Characteristics of Automotive and Transport Glass Europe's glazing manufacturers are constantly striving to deliver products that provide the best possible technological solutions to meet automobile manufacturers' and end-users needs from a comfort, safety and security perspective, whilst at the same time helping the industry to meet its climate commitments. Safety and Security Glass plays an important role in the car's ability to offer safety and security to its passengers. The automobile industry is making increasing use of laminated glass, which is a "sandwich" of two glass ispy publishing limited Page - 13 -

Market Intelligence Report 2013

sheets with a thin but tough plastic layer in between. The layers are bonded to each other under controlled heat and pressure. If the glass suffers an impact, the glass layers may fragment but, depending on the force of the impact, the plastic interlayer will hold. This is a safety advantage for the driver and passengers in case of an accident, keeping them inside the vehicle and absorbing some of the energy of the impact. Moreover, after an impact the resulting glass fragments tend to remain attached to the plastic interlayer, reducing the hazards of sharp projectiles during an accident. And the fact that windows made of laminated glass will tend to remain in their frame greatly improves the performance of the side airbags, providing the necessary support during inflation. Laminated glass also offers a considerable security advantage making it much more difficult to break into the car (on average, it takes 10 times as long to penetrate a car window made of laminated glass than one made of toughened glass). A different kind of passenger-safety factor is provided by UV (ultraviolet) filter glass, which blocks harmful UV rays to protect skin and eyes (as well as the materials of the car's interior). UV filter glass blocks 95% of harmful UV rays from entering the vehicle, keeping the driver and passengers safe and greatly extending the life of upholstery and fabrics. UV filter technology can be incorporated into laminated glass for optimal safety and security. Visibility and Visual Comfort Good visibility conditions are key to driving safety, and visual comfort (for example, light reflections and glare) is part of visibility. The driver's field of vision is influenced by the light the windscreen allows into the cabin. Indeed, bright sunlight causes glare, rain smears the windscreen, condensation clouds the view, and ice build-up blocks out almost everything. Today's vehicle glazing technologies can deal with all of these. Antireflective Glass Reflections on the inside of the windscreen can be disturbing to the visual comfort and concentration of the driver. This is compounded by current design trends that lean towards lighter dashboards that are more strongly reflected in the windscreen. Anti-reflective glass, which is treated with a special coating, can reduce these reflections by up to 40% at a reflective angle of 60 degrees, and also helps reduce glare. Hydrophobic Glass Hydrophobic glass is coated with a polymeric layer that repels water, causing rain or other water to run off the glass without leaving droplets and also greatly improving the effectiveness of windshield wipers in completely clearing water from the windscreen. This leads to significant increases in visibility under wet conditions. Heatable Glass In heatable glass, invisible wires or an invisible metallic coating - in each case embedded into the interlayer of the laminated windscreen - respond to an electrical charge by raising the temperature of the glass, in cold weather speeding the removal of any condensation or ice and then of course preventing any further condensation or ice build-up. Thermal Comfort Today's increased use of glass in cars means that, without the right technologies, more solar energy will penetrate the interior of the car, causing high temperatures. For example, when the outside temperatures is 27C, without anti-heat technologies, a car interior can heat up to 58C in few minutes. Combating this solely by way of air-conditioning alone would be an environmentally unfriendly approach, leading as it would to higher fuel consumption and CO2 emissions. In recent years, the industry has developed solar control glazing. This type of glass is specially engineered to reduce vehicle cabin by up to 7 or 8C temperature, and reduce heat penetration in vehicles exposed to solar radiation by over 25%. In this way, a significant amount of energy is saved from powering airconditioning units while passengers' comfort is safeguarded. Solar control glazing Solar control glazing has a coating that allows it to reduce the transmission of solar heat from the external environment while still permitting the optimal light transmission essential to ideal driving conditions. This type of glazing can reduce by over 25% the heat penetration in vehicles exposed to solar radiation, thus reducing the need for the use of fuel-hungry cooling systems. Dark-tinted glazing and switchable glazing also have solar control properties which can reduce the amount of solar heat entering the vehicle's cabin. Acoustic Comfort Acoustic laminated glass technologies have been developed to combat levels of noise penetration in vehicles, which can have an effect on people's health, causing disturbance and stress if an occupant is exposed over a prolonged period. Noise mainly comes from the sound of the car's engine, air and other environmental factors (e.g. other cars, roadworks, etc.). When using specific acoustic laminated glass, ispy publishing limited Page - 14 -

Market Intelligence Report 2013

improvement of the order of 3-5dB1 can be reached, which is quite noticeable to the ear. Lower noise levels mean that the driver will become less tired, and make communication inside the vehicles more comfortable, thus contributing to overall safety. Acoustic glazing Acoustic glazing consists of two or more sheets of glass, bonded together with one or more acoustic interlayers. The interlayers act as a noise-dampening core, weakening the sound as it travels through the glass. Acoustic laminated glass also benefits from all the safety and security properties of standard laminated glass. Moreover, acoustic windscreens reduce the need for heavier glazing, which allows car manufacturers to reduce vehicle weight. Style and Taste A car is, for many people, a reflection of their desired image or style, expressing an element of who they are and what they enjoy. And the car's glass is an important visual component of this. Some people prefer the privacy of darkly tinted glass (or the "VIP image" that goes with it), others like more light and openness. Light and aerodynamic design requires glazed surfaces of increasingly complex geometries, which can be real manufacturing challenges to ensure durability and perfect vision. Manufacturers are therefore continuously developing advanced glass shaping techniques which allow for the bending and shaping of the glass to offer car makers the freedom to achieve their design and style concepts. According to the specific design characteristics of the brand and the expectations of clients, glass manufacturers also offer a range of different colours (e.g. green glass, dark tinted, etc.) which contribute to the car's colour harmony and make the car model unique: Dark tinted glass keeps the interior cool by absorbing solar energy and at the same time offers privacy for passengers in the back of the car (dark tinted glass is not permitted for the driver and forward-passenger windows, nor of course for the windscreen). Dark tinted glass is available in several colours and each colour in several shades from lighter to very dark. Switchable glazing, which responds to varying electrical conditions with correspondingly different colour properties, allows for the creation of a "customised" interior ambience. Via a simple dial, a driver or passengers can control the amount of light entering the vehicle - blocking anywhere from 4% to 40%. Heat from sunlight can be reduced by anywhere from 2 to 20%. One can select a lighter tint on cloudy days, then darken it when the sun reappears, or simply change the lighting to suit one's mood or create an appearance appropriate for the occasion. Common challenges Each glass sector has its own specificity and manufacturing process, but the process of glass melting is common to all glass sectors. This physical process involves raw materials, energy and cutting-edge manufacturing installations. It imposes on glass industries sound environmental management systems and heavy investments to remain competitive in the worldwide market place. Innovation is crucial for glass industries Glass industries are investing significant resources in intensive R&D programmes to develop new ways to use glass, to make available new products, to enhance recyclability and effective recycling, but also to improve the energy efficiency of manufacturing sites and therefore further improve the environmental performance of glass products throughout their life-cycles. These sustained efforts are helping the glass industries to stay ahead of technological innovation, ensuring the worldwide competitiveness of glass products manufactured in the EU, and to satisfy the demand of European customers in terms of quality, performance, design and environmental-friendly materials. In this way, European-based companies strive to strengthen the position of glass as a material of the future. Maintaining a lead in R&D requires many solid EU policies. One of which is anti counterfeiting policy for the protection of design rights. In the glass industry, producers like those in the domestic glass sector for instance must be able to defend their stylish design and creations that provide them an edge against cheaper products coming from third countries. Investments in process innovations are essential to get over the current technical limitations to further reducing energy consumption. Public funding should support the industrys R&D efforts in energy reduction. As such innovation will not only benefit the glass industries but all energy-using industries and will help ensure the smooth transition to a low-carbon economy. Maintaining a competitive edge against outside EU production European glass industries are proud of the environmental gains that have been achieved. But the increasingly fierce international competition from outside the EU makes it tough to absorb the higher ispy publishing limited Page - 15 -

Market Intelligence Report 2013

production costs over our extra EU competitors. Investments in state of the art environmental systems enable our industry to comply with some of the worlds toughest environmental regulations but which, on the downside, unfortunately entail extra costs that are reflected in the increasing production costs. For example, purchasing of CO2 allowances in the framework of the European Union Emission Trading System (EU ETS) increases production costs and raises competitiveness issues which expose the European glass industries to significant risks of carbon leakage. The European glass industries won a small concession: industries will receive free allowances under the EU ETS if their CO2 emissions are in the region of the top 5% - that is the benchmark. Past that benchmark all industries will have to pay for every tonne of CO2 emitted for the period 2013-2020. Under its current format, the system fails to provide enough protection against carbon leakage and this reality already translates into a redirection of investments from the EU to neighbouring countries in different glass sectors. As an illustration of this competitiveness challenge, trade actions are on-going for certain glass products. For instance the European Union imposed definitive anti-dumping duties on imports of certain glass fibres from China in 2011. The decision confirmed that the EU industry continues to suffer as a result of Chinese dumping practices. Using energy in the most efficient way Glass manufacturing is a high-temperature, energy-using activity which constitutes a constant economic and environmental challenge for the glass industries to keep energy use to a minimum. It provides a natural incentive towards finding the best innovative energy efficient manufacturing processes as energy accounts for a significant share of production costs. As a result, glass industries have an excellent track record in reducing energy needs and associated CO2. For instance, over the last decades, the energy intensity of glass manufacturing was reduced by 77% [1] and CO2 emissions by 50% even as production rose. This was thanks to process innovation and the systematic use of the best available techniques. As recognized by the European Economic and Social Committee [2], the glass industries have reached existing physical limits in the state of current knowledge and best available technologies are wide-spread. Extensive research programmes are currently being financed by glass manufacturers to get to a new break-through and overcome current technological barriers to reducing energy consumption. Promoting recycling, ensuring access to raw materials and managing chemicals in the most responsible manner Glass making requires raw materials. The most important raw materials used in glass making are sand and recycled glass. The recycling of glass is already a reality in the glass industries although there are variances in the way glass sectors use recycled materials. Exchange of best practices and experiences on recycling are therefore key for glass industries to increase even further the recycling rates of our products. Access to raw materials is also a common challenge of glass industries when rare earths and / materials for which access is a source of fierce international competition, are used. Precisely because glass industries use very little quantities of such materials, securing supply of these can sometimes be very challenging. Lastly, all glass manufacturers meet the EUs strict regulatory framework on chemicals and their use, the REACH regulation. Under this regulation, glass is exempt: so long that glass does not contain any hazardous substance above the concentration limits and that these substances are not available. Glass, as a UVCB substance, is thus exempt from registration. CPIV, the ancestor of Glass Alliance Europe, developed a full dossier with all glass industries to clarify how the REACH regulation should be applied to glass products.

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Market Intelligence Report 2013

The MENA Market


The glass industry in the Arabian Gulf is presently in progress of the most rapid development. The vigorous development of building industry greatly stimulates the demands for flat and high added-value glass products in Arabian regions, which is more obviously in UAE and Saudi. In recent years, the UAE and nearby regions have undergone an unprecedented growth in the real estate and automobile industries, which causes a continuous growth of demands for glass products with high performance, environmental friendliness and good quality. In order to meet the demands, UAE and most countries in this region (excluding Saudi Arabia) have to import a large amount of glass from other countries recently, and the local glass enterprises also gain extensive and rapid development at the same time. Fitch Ratings expects the construction sector in the Middle East and North Africa (MENA) region will continue to be supported by government spending in Saudi Arabia, Qatar and Abu Dhabi in 2013. These markets have undertaken massive infrastructure spending plans backed by government and government entities. The Dubai construction market will remain fragile in the medium-term. A forecasted $4.3 trillion is to be spent on construction in the MENA region in the next 10 years, the Environmental Infrastructure Forum (EIF) said in a recent statement, adding that $750 billion has been allocated in Saudi Arabia for infrastructure, transport, social reform and mass housing, as well as a further $500 billion in energy, logistics and education. The key factors in assessing the construction outlook at the country level are government fiscal flexibility and the extent of historical infrastructure spending. "In Saudi Arabia and Qatar, infrastructure spending continues to be strong but with lower margins. During the construction boom, MENA region contractor margins have remained higher than international peers. However, with the recently increasing competition, contractors have started to go for lower margins and Fitch expects this to remain the case over the next few years. A decline in project tenders across Europe, the Middle East and Africa will increase competitive pressures. Contracting is inherently about managing project risk and completing on budget. Balancing this risk and reward conundrum in an increasingly thin margin business will be a key challenge for management in 2013. With Saudi Arabias urban-industrial expansion plans well underway, an urgent need exists to integrate low-emission, climate-resilient strategies if the Kingdom is to achieve its goals of sustainable development. As glass is a inherent part of the construction industry it will be of interest to the sector that a total of $4.3trillion is forecast to be spent on construction in the MENA region over the next decade, representing growth of 80% to 2020 with particular emphasis will be placed on social and affordable housing to meet the needs of the growing indigenous populations. Within the region, growth in construction will be driven by population increases, economic growth, the desire for diversification and, in some cases, preparations for global sporting events, particularly the 2022 World Cup in Qatar. Qatar is the fastest-growing construction market covered by the report. Important facilitators of construction growth in the region are expected to include changes to mortgage laws in Saudi Arabia, driving residential construction, and more private participation in infrastructure investment across the region. The MENA region is likely to continue to be a major source of growth in the global construction market. Demographic factors, economic growth and regional governments' pursuit of more balanced economies will all be powerful stimuli of construction demand. GCC Completions Building projects worth more than $68.7bn were completed in the GCC last year, according to a new report. The report was commissioned from Ventures Middle East . The amount, although lower than estimated, shows that the region's construction sector grew by 48% when compared to 2011 when $46.5bn of projects were completed. Moreover, the market is forecast to grow by a further 19% in 2013 with the value of completed projects set to reach $81.6bn. It also stated that the value of new projects set to start on site is likely to climb by a third to $64.5bn in 2013, up from $48.4bn in 2012.

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Market Intelligence Report 2013

The sharpest increases in new projects are likely to be in the hospitality, education and medical sectors. The number of hospitality construction projects is set to grow by 27% to $27bn, while educational projects will increase by 69% to $8.8bn and medical projects by 79% to $5.9bn. Residential and commercial property markets are set to grow by 4.4% and 13% respectively - to $30.7bn and $13.8bn respectively. The value of the interior contracting and fit-out market in 2012 was $7.86bn 0 a 56% increase on 2011. The UAE was the the nation with the largest interiors spend ($2.83bn), followed by Saudi Arabia ($2.6bn) and Qatar ($1.49bn). The UAE The UAE's construction industry is expected to show sustainable growth in the next few years, according to a recent Dubai Chamber of Commerce and Industry study. This follows the slowdown during the global financial crisis in 2008 and the current recovery in GCC economies. In its analysis of recent trends, the study links the importance of the UAE construction industry to the domestic economy. As one of the most rapidly-growing economies in the Middle East, the UAE has experienced enormous investment in the construction industry from public and private enterprises during the past few years. As a percentage of the UAE's GDP, the construction industry contributed 10.6% in 2008 and 10.3% in 2011. For 2015 and 2021, it is expected to contribute 11.1% and 11.5% respectively. According to the International Monetary Fund (IMF), the population of the UAE is expected to reach six million by 2015 from 5.4 million in 2010. The increase in the expatriate population, which accounts for more than 80% of the total figure, constitutes the main growth driver for increasing demand for residential and commercial property. In addition, the IMF predicts real GDP growth to reach 4.4% in 2015 from 3.3% in 2011, signifying a revival of the overall economy, which augurs well for the construction industry. In 2011, the UAE recorded the region's highest construction-project value, amounting to $319.1bn, accounting for 51.1% of the total value of the top 100 projects in the GCC. The UAE was followed by Saudi Arabia at $218.9bn (accounting 35% of the total construction project value). Additionally, Qatar accounted for 8.9% of the total construction project value, followed by Oman and Kuwait, accounting for 3.2% and 1.8% of the top 100 projects respectively. In its quest to become an international investment hub, the UAE has pushed forward major construction projects in the infrastructure and residential/non-residential sectors. These include the $7.8bn expansion of Dubai International Airport, and the $6.8bn Abu Dhabi International Airport redevelopment project. According to Business Monitor International (BMI), the UAE's construction industry comprised 38% of projects in energy and utilities, 31% in construction, 29% in transport and 2% in social infrastructure. BMI added that favourable government policies, such as permitting non-UAE/GCC national freeholds and leaseholds in designated areas of the UAE, will attract increased Foreign Direct Investment (FDI) in construction. Abu Dhabi's Urban Planning Council has also engaged multi-unit building developers to allocate 20% of residential gross floor area to middle income population groups. This is expected to increase housing supply for the middle- and low-income population groups. The UAE federal government extended the visas of real-estate investors from six months to three years, offering a significant boost for new investment in the construction industry. In 2011, the UAE residential construction industry showed limited signs of recovery, struggling to reach its pre-crisis levels, while putting on hold a number of significant big projects across the country. However, from the beginning of 2012, the residential construction industry revealed some signs of stability, particularly in Dubai, driven mainly by the repercussions of the regional Arab Spring, reinforcing the UAE's reputation as a safe haven in the MENA region. In the short term, the outlook for the UAE's construction residential industry may be affected due to the prevalent oversupply of residential units in the market. However, in the long term, it will gain momentum based on the optimism of a rising population and a more stable economic growth path. The UAE's commercial office construction sector has historically witnessed robust growth, leading to an oversupply of commercial office units.

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Market Intelligence Report 2013

In turn, this oversupply led to high vacancy rates, finally resulting in a moderate decline in UAE property prices. The study indicated that rental yields in the short term will continue to be under pressure due to declining rentals and high vacancy rates. However, the commercial construction industry will continue to benefit from the premium on rental yield as compared to US and EU markets attracting significant FDI in the long term. In the near future, favourable government policies of the GCC countries, particularly that of the UAE, are projected to attract more overseas companies to the country's construction sector. This trend is expected to continue over 2013 as a stream of new construction and infrastructure contracts and ongoing projects will further boost UAE's construction industry growth, concluded the study. MENA The main output of the MENA glass and mirror industry is food and beverage glass, glassware, building, and automotive glass. The glass product that is of direct interest to CSP is float glass as, given appropriate quality, it can be transformed into flat mirrors and bent into parabolic mirrors. Float glass currently produced in MENA countries is used for building, and automotive and household mirrors. Float glass production capacities were scarce until recent years but are currently increasing in Algeria and Egypt and the wider MENA region. The four float glass producers of CTF MENA countries are the Egyptian Glass Company, Sphinx Glass, Saint-Gobain and Cevital. Note that there are no float glass producers in Tunisia, Morocco and Jordan. In these countries, high energy price combined with low local demand for float glass are strong drawbacks for installing production units. As an example, the local demand in Tunisia is around 25 percent of the production of a profitable float glass plant (for which the minimum output can be estimated at approximately 150,000 tons/year). Production of float glass in CTF MENA countries has been generally very low (around 2 tons/1,000 persons, compared to over 7 tons / 1,000 persons in Saudi Arabia for example). Despite this historically low production level, Egypt and Algeria are currently experiencing a serious ramp up in float glass production which is catalyzed by the fact that they are natural gas producers. Egypts production capacity of float glass was around 160,000 tons per year in 2003, which is at least 40,000 tons short of domestic demand. Egypt had weak export performance across most flat glass products, which was partly due to the shortage of domestic production capacity in basic float glass. Yet, two to three plants of around 200,000 tons/year were under construction in 2010 according to the Egyptian Chamber of Building Materials industries. This adds to the two current float glass production lines with a capacity of around 150,000200,000 tons each. As a consequence, while all CTF MENA countries are net importers of float glass, recent investments in production lines will make Egypt and Algeria net exporters of float glass. The production of the Egyptian and Algerian glass industry will help meet the increasing local demand while developing exports. Further data on import and export figures and the level of specialization of the glass sector in the CTF MENA countries is provided in the annexes. Large-scale modern glass manufacturing facilities require either developed domestic markets with large customer bases for their products or access to export markets. For a developing economy, such as Egypt and Algeria, the glass sector is developing to match growing demand from industrial sectors that are significant users of glass, such as: food processing, automotive, pharmaceuticals, electric lighting, and construction. The sector is also export-oriented to supply customers in regional and international markets. In terms of employment, approximately 2,000 people are currently employed by the float glass production industry in Egypt and Algeria. In these markets, despite favorable conditions (local availability of natural gas, materials quality), the emergence of significant float glass production projects has been a lengthy process, partly due to the fact that these projects are very capital-intensive (US$180-200 million) of investment for a float glass plant of 600 tons/day, integrating a high level of automation). Demand for float glass in Morocco, Tunisia, and Jordan is expected to increase in the next years. This rise of domestic demand might still reach levels required to justify a local float glass production capacity, unless there is a clear business case for exports. However, it must be stressed that most of the MENA capacities listed above are producing glass with iron content that would not yet be compliant with CSP requirement. Green glass is less expensive than white glass, but green glass mirrors are 5 percent less efficient than white glass. Cost savings would hence need ispy publishing limited Page - 19 -

Market Intelligence Report 2013

to be about 6 percent for green glass to be cost efficient (because optical effects have a slightly overproportional effect on performance), which would be about 33/m. Since this represents the cost for the entire mirror, including bending, silvering, and additional coatings, the EPC would not take the option of using green glass mirrors. Industry outlook The development of the MENA glass production and transformation industry faces several barriers: Limited R&D activity: links between research centres and industry are weak and need to be strengthened through collaborative research and/or clustering approaches. Shortage of trained personnel: there is a lack of suitably trained engineers and technicians to operate the existing production lines. For higher quality products, engineering and technological know-how need to be transferred (through knowledge transfer agreements, partnerships, etc.). The MENA float glass and mirror industry does not integrate the full value chain. For instance, float glass line equipment is coming from other countries (Europe or Asia mostly). In a number of countries, activities cover only the downstream items; this is typically the case of countries that import float glass in order to transform it locally into mirrors, tainted glass, etc. (Jordan, Morocco and Tunisia).

However, Algeria and Egypt present favourable conditions: Natural gas available locally Virtually all input materials required to produce glass are available domestically. High quality sand and also high quality limestone are available. Float glass with very low iron content and high solar energy transmittance is available, which is paramount for the production of ultra- clear float glass which is needed for CSP applications. Strategic location on the crossroads of three regional markets: Europe, Middle East and Africa. Financial strength of players in the MENA market place due to joint ventures and backing by local private equity (Citadel Group for example). Using close strategic partnerships with the main international players allows for example to produce under license high performance glass. The well understood opportunity to develop their glass industry (especially float glass), which is proving to be successful.

Glass industry players in MENA could be interested in CSP if the size of the demand is sufficient. According to the stakeholders interviewed, float glass plant implementation is profitable only if its capacity is at least 150,000 tons per year. The size of the regional CSP market has to reach a threshold volume to justify the installation of CSP mirror manufacturing plants, although the size of the export potential is also critical. As an indication, it is estimated that the minimal output for CSP mirror plants would correspond approximately to a years supply of the equivalent of 400 MW of solar capacity for flat mirrors and 250 MW for parabolic mirrors. Such annual volumes will not be generated by any of the MENA countries in the short to medium term. These aspects are currently under analysis by industry players to establish their investment priorities. In any case, local manufacturing facilities in this sector will not be limited to supplying a national market but will aim at serving a wider regional (MENA) and possibly worldwide CSP market. The technological gap between conventional float glass produced by MENA players and quality requirements for CSP mirrors remains significant; options to foster technology transfer and to train the local workforce will need to be investigated, possibly in the framework of donor-funded technical assistance. Despite the lack of float glass production in the other CTF MENA countries (Jordan, Tunisia and Morocco), local industries could position themselves on glass transformation activities in order to manufacture high quality mirrors. For example, SIALA (Tunisia) and Dr Greiche (Egypt) would be ready to consider adjusting their new production capacities to enable CSP mirror production provided a market with a sufficient size. However, they would need technical assistance to identify specifically what adjustment would be needed (coating techniques for example) and the associated costs. In addition, new entrants seeking to position themselves on CSP-related opportunities in the glass sectors will face the following entry barriers: Despite low prices, access to gas needed by float glass plants faces some limitations. In some cases, natural gas produced in Egypt is dedicated in priority to exports rather than to Egyptian industries. CTF MENA countries will compete for outside investments in this field and will seek to maintain their first-mover advantage. Competition is emerging at regional level either to take new positions (e.g., EUA, Saudi Arabia) or to maintain the competitiveness of existing CSP mirror production facilities (e.g., Saint-Gobain Solar in Portugal, Guardian Industries in Israel). Page - 20 -

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Market Intelligence Report 2013

Arabian Business Etiquette


Knowing the proper business etiquette of your potential client or partner's country is the key to success of your business transaction. Within the Arab world, practicing the proper Arabian business etiquette is paramount, as these countries value order, rules and tradition. By following their respected and time-honored business etiquette traditions, you will effectively demonstrate your own intellect and class, proving to your Arabian business partners that you are worthy and deserving of their attention, respect and business. The Role of Arabic Culture in Proper Arabian Business Etiquette Taking time to understand the religion, politics and social structure of the Arabic world is the first step to understanding the basis of the proper business etiquette of this region:

Islam: This is the primary religion practiced throughout the Arab world, heavily influencing day-to-day
social customs, as well as proper Arabian business etiquette. Drinking alcohol and eating pork/shellfish/birds are forbidden by Islamic custom. While consuming caffeine and nicotine are also discouraged, neither is absolutely forbidden. These precise restrictions demonstrate the way in which the Arab world privileges compliance, order, rules and structure. Islamic rule of law: This refers to a system of government (rather than a set of religious practices), and dictates the political, social and economic atmospheres of Arab countries. Everything, from the way women dress to the rules for marriage to punishment for crimes, is outlined according to the Islamic rule of law (also referred to as Sharia). While more specific aspects of the Islamic commercial law may affect your business transactions (particularly if you are trying to market a new product in this region), the general themes defining this political system are conservatism, masculinity, compliance and tradition. Punishments are strict for rule breakers, so following the rules (rather than bucking the system) is the way to gain honour and respect in the Arab world. Social classes: The Arab world follows a strict caste system that prevents mobility between classes. It is really difficult to progress from the poorer lower class to the wealthy upper class. When translated to the world of business etiquette, the strict social structure indicates that power, authority and structure itself are highly valued in business transactions.

Values Respected in Arab Countries The following values not only define many aspects of Arab countries, but they can also help you gain respect within them:

Consistency (rather than change) Loyalty Predictability (rather than risk) Respect for authority

Business Meeting Etiquette From your initial greeting to your final exit, here are some general Arabic business etiquette tips that will help you demonstrate to your potential new partners that you have cultural understanding and awareness:

Greetings: Rather than "hello" or "good morning," greet your Arab partner by saying "Assalamo
Alaikum," which translates to "May peace be upon you and may God's blessings be with you." This is the traditional Islamic greeting exchanged in Arab countries. Planning: Since Islamic principles and culture value structure and order, make sure that you have a well-defined plan for your business meeting. If possible, write up an agenda that you can distribute to your Arab business partner. Creating, sticking to and announcing your plan will demonstrate not only your organization and business savvy but also your knowledge of and respect for Arabic business etiquette. Translations: In addition to having Arabic interpreters at your business meeting, you will also want an Arabic translation for each document you will use during your meeting. Having an accurate Arabic translation for each document will facilitate communication with your business partners, and show that you are willing to go the extra mile for them. What to Avoid: Given the Islamic dietary restrictions, avoid ordering or serving meat, pork, fish or fowl to your Arabian business partners. If you are choosing a restaurant for a business meeting, be sure there are plenty of vegetarian options available.

Similarly, refrain from smoking cigarettes, drinking alcohol and consuming caffeine during your meeting. All of these practices are also frowned upon in Islamic culture and, therefore, go against proper Arabic business meeting etiquette.

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Other Business Etiquette Tips Specific to Different Arab Countries Aside from the above aspects of Arabian business etiquette, some countries in this region have their own unique nuances. Here is an outline of proper business etiquette specific to particular Arab countries:

Bahrain: Smiling and direct eye contact are essential parts of proper business etiquette in Bahrain.
Similarly, because friendly social interactions are valued in this Arabic country, don't be surprised if your Bahrain partner gives and expects a kiss on the cheek upon greeting you! Read more about Bahrain business etiquette. Kuwait: Kuwaitis prefer to do business with people they know, so don't be surprised if you need to conduct multiple business meetings before your transaction is finished. Since Kuwaitis frown upon impatience, showing you are compliant and willing to interact socially prior to launching into business is a fundamental part of Kuwaiti business etiquette. Learn about travelling to Kuwait. Oman: Business meetings are formal affairs to which attendees must wear suits and ties. While English is primarily spoken at Oman business meetings, proper etiquette demands that foreigners use a few key Arabic phrases out of respect for your business partners. In addition, those conducting business meetings in Oman also value punctuality and put a heavy reliance on business cards so be sure to bring plenty if you are conducting business in this country! In addition, do not forget to have your business cards and other important business documents translated into Arabic. Qatar: It is offensive and improper business etiquette to ask members of the opposite sex to meet alone with you in a closed room. If necessary, make sure that both genders are present at any Qatar meeting you conduct. Saudi Arabia: If conducting business in Saudi Arabia, non-Saudis must obtain official government permission before entering and exiting the country. Once in the country, Westerners are subject to Saudi Islamic law, which bans alcohol, drugs, porn and pork. Unfortunately, some Westerners are unaware of this fact and, consequently, are imprisoned in Saudi Arabia while intending to do business. UAE (including Dubai): The lobbies of large hotels are the preferred venue for business meetings in the UAE, as these rooms limit distraction and give attendants easy access to refreshments. Similarly, having Arabic translations of any documents used during a business meeting is considered to be part of proper Arabic business etiquette. Yemen: Business meetings are lavish, sumptuous affairs called qat. For qat, attendees are expected to bring tobacco and coals for smoking. Smoking will commence with the start of any meeting, and pipes are constantly passed among attendees. It is customary to only take the pipe with your right hand, and it is considered rude to keep the pipe for too long.

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Market Intelligence Report 2013

Published: November 2013 ispy publishing limited Albert House 42 Seymour Road Bolton BL1 8PT T: +44 (0) 1204 590323 F: +44 (0) 1204 590321

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