Knauf Insulation has announced plans to both accelerate and expand its investment in additional glasswool capacity in the UK at both its St. Helens, Merseyside, and Cwmbran, South Wales, factories. The announcement is in response to the Competition Commission’s decision to prohibit their acquisition of Scottish based Superglass Insulation. In its investigations into the proposed acquisition, the Competition Commission indicated that there may be a substantial lessening of competition. The ruling, made despite Knauf Insulation’s offer of price remedies, has caused the company to implement a faster, but higher capital cost alternative. Knauf Insulation believes the proposed acquisition would have brought substantial customer benefits from the introduction of its modern manufacturing and packaging technology and is therefore considering its position in relation to the findings.
Knauf Insulation is acutely aware that the current shortage of capacity in the market is deeply damaging to both its customers and the glass mineral wool industry generally and, notwithstanding the Competition Commission's findings, has implemented an alternative investment plan. There is a clear emphasis on speed of implementation – albeit in a manner that will incur a higher capital cost than would have previously been the case.
Knauf Insulation has placed orders for the construction of an additional 30,000 tonnes per annum of glass mineral wool capacity from its St. Helens, Merseyside, plant. This will double output from the plant from October 2005, in time for what is traditionally the strongest selling season. The investment will alter the balance between supply and demand in the UK market and will enable the St. Helens factory to become a substantially lower cost plant.
In addition, Knauf Insulation placed orders to expand the Cwmbran, South Wales, factory by a further 30,000 tonnes per annum to come on stream in early 2007, and to coincide with a scheduled rebuild of the furnace. Knauf Insulation believes the resultant 90,000 tonnes per annum output will make the Cwmbran factory the lowest cost plant in Western Europe.
The investment at St. Helens and Cwmbran incorporates radical new compression technology imported from Knauf Insulation in the USA enabling substantially higher levels of compression which will again significantly improve the load factors on vehicles, benefiting both Knauf Insulation and its customers in reduced logistics, distribution and warehousing costs. This forms the next step in Knauf Insulation’s strategy to continually introduce innovation in packaging, handling and storage of its glasswool products, the first step of which was the Supakube introduced earlier this year.
Commenting on the new Knauf Insulation strategy, Tony Robson, Knauf Insulation’s CEO, said, “Our investments are not without risk but are based on expected long-term market growth and a customer preference for mineral wool insulation in most applications. We have been assessing many options for overcoming the shortage of glass mineral wool insulation and we will ensure our customers benefit from additional capacity and Knauf technology even sooner than originally expected.”
For further information, please contact Chris Reeves on 07721 624098. Information about Knauf Insulation’s products can be found at www.knaufinsulation.co.uk.
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