Ardagh vs Quinn: Battle for UK Glass Market

Ardagh Glass this week bought out the UK glass business of Rexam, the third largest glass maker, and yesterday filed a new legal action in the High Court to prevent Quinn from starting up a new €364m state-of-the-art glass plant in Cheshire.

The battle has been so acrimonious that the UK’s deputy prime minister has stepped into the fray between the two Irish companies over whether the Cheshire plant can receive planning permission.

The bottling and filling plant has already been built and has a capacity of 1.2 billion glass containers a year. The UK glass market currently has a demand of about seven billion glass bottles a year.

Ardagh is the top producer in the UK’s glass sector, with a market share of about 36 per cent before the buyout of Rexam’s glass business in Yorkshire for £50m (€73m) in cash. Ardagh, which trades under the Rockware brand in the UK, said it would merge the Rockware and Rexam businesses.

I-O’s United Glass is the second largest player in the market with an estimated share in the “high 20 per cent range” according to one observer. Rexam held the number three spot before the sale of its plant. Quinn Glass, started operations in 1998 to service customers in Ireland and the UK.

In the latest legal action Rockware has asked the High Court for a judicial review of the Cheshire city council’s decision to grant Quinn an environmental licence, even though the plant does not have planning permission. The council wants the 500 jobs the plant will create.

Rockware’s financial controller, Keith Swindell, said the company would pursue the action because Cheshire city council and Quinn are attempting to circumvent the environmental laws. One of the furnaces at the plant has already been started up in a test run.

“The plant was built without planning permission,” he told FoodProductionDaily.com.

Ouinn had originally received planning permission from the city council to operate two oxyfuel furnaces and eight glass making lines. The company later changed its plans to put in place two larger gas fuelled furnaces and 13 machine lines, a 60 per cent increase in size.

The council gave permission for the changes without an environmental impact assessment and Rockware filed a successful legal action in the High Court to block the decision.

The council allowed Quinn to continue building, leading the UK’s deputy prime minister, John Prescott, to take the matter out of the city council’s hands. A decision on whether the plant will receive planning permission rests in his hands.

Recently Chester granted an environmental license to operate the plant, where one furnace has already been put into operation as part of testing process. Rockware’s application for judicial review of the decision will attempt to annul the licence.

A spokesman for Quinn said the new plant would bring needed competition to the UK glass business, where most of the plants are aging and under invested, he claimed.

“Our plant is the most modern in the world,” he said. “We can fill bottles on site. It is a step up for the UK market where there is a need for upscaling and a need for investment. I just hope Rockware will get on with their businesses now they have made a purchase instead of attempting to attack ours.”

Rockware has purchased a plant that is about 40 to 50 years old and which had a low operating profit of £3m (€2.4m) on sales of £101m (€80.3m).

“Instead of investing in a new plant they bought an old one with very little margin of profit,” he said. “I don’t know how they are going to get the money back.”

Rockware says it is going to merge its existing glass business with the Rexall business in a bid to achieve savings. Rockware spokesperson Sharon Crayton countered that the company was making new investment into its business.

Over the past year the company has spent £25 million on upgrading its furnaces and on a new recycling plant, which recently opened.

“We will maintain the appropriate investment level in this business for our customers,” she said. “It is going to be a very competitive market with the increase in capacity.”

The £7.5 million recycling plant, operated by Rockware's partner company Berryman Glass, is designed to improve the quality of collected glass before it is melted for container production. The plant has the capacity to process about 225,000 tonnes of glass a year.

Ardagh, which demerged from South Wharf in 2003 after closing its manufacturing operations, is controlled by investor Paul Coulson. The company was taken over last month by Coulson and other investors through Caona, a special-purpose company.

Quinn is privately backed by Irish billionaire Sean Quinn and his family, who have numerous other businesses throughout Europe.

In getting out of the UK glass business, Rexam, the world’s top beverage can maker, said it would continue to focus on developing its existing glass container business in northern continental Europe, where it has an established market position, and in the developing markets of eastern Europe.