Market Assessment of Chile

9. Windows

Market Opportunity

Chile's construction growth and high potential for improved building efficiency make it a good medium- to long-term market for manufacturers of energy-efficient windows. Opportunities for the US window industry are in the export of low-emissivity glass to Chilean industry and in the establishment of a joint venture to produce low-e coated windows locally.

Market Conditions

The window industry in Chile is competitive and innovative. There are four manufacturers in the market: Vidropar, Vidrios Lirquen, Vidrio Libertad and Vidriería La Argentina or VASA (a joint venture between an Argentinean company and Pilkington of the UK).

To date, all glass for window manufacture has been imported. A new Chilean float glass factory is scheduled to begin production at the end of 1995. The plant will be 51 percent owned by Pilkington/VASA and 49 percent owned by Vidrios Lirquen. It will not produce low-emissivity (low-e) coated glass. Chilean industry will continue to import low-e glass, mostly from the US.

The demand for windows is growing by 7 percent per year.⁴⁹ Most windows are aluminum-framed and single-paned without glazing. Around 20 to 30 percent of windows have a reflective coating. Manufacturers currently sell very few low-e windows in Chile. Most purchasers of low-e windows are foreign companies with international building specifications, such as McDonald's.

Over the next 3 to 5 years, US manufacturers can increase sales of low-e glass or partner with a Chilean window manufacturer to manufacture low-e windows in Chile. Demand for these windows is being driven by growth in the construction of new commercial buildings and high electricity costs. Also, the Chilean government is considering various policies to encourage more efficient building design such as energy performance building codes and incentives for energy-efficient building construction.

VidroPar has aggressively marketed double-paned, gas-filled windows for both noise and thermal insulation properties. The company is licensing technology from Germany to produce these high performance windows. The company also sells wood-framed windows targeted to the upscale market. They see their future in advanced products such as low-e, gas-filled windows. VidroPar currently imports Southwall low-e glass for use in its advanced windows. However, the company is interested in a joint venture to produce low-e glass in Chile. VidroPar approached Southwall to discuss establishing a manufacturing facility but found that the production system for low-e glass would require changes to VidroPar's current production process.⁵⁰ This opportunity still exists if VidroPar's production process can be successfully adapted.

Energy Efficiency and the Chilean Window Industry

Poor window design is responsible for severe energy losses in the building sector. The National Energy Commission and the Ministry of Housing are considering expanding a successful energy efficiency incentive program for home builders that was implemented in the Chilean municipality of La Florida. The original program provided incentives to builders to incorporate thermal insulation. An expanded program would include efficient windows. There are several municipalities in Chile working on incentive programs of their own.

Two major barriers to the sale of energy-efficient windows are their price (they cost 30 to 40 percent more than standard windows) and the lack of consumer awareness regarding the return on investment from energy-efficient windows.

Manufacturers of high performance windows are seeking innovative marketing options such as interactive software programs for architects, building owners and window distributors. These marketing products would help to address the lack of awareness in the market about window performance and energy savings.

Notes:

⁴⁹ Personal communication, Raimundo Alcalde, VidroPar, December 1994.
⁵⁰ Ibid.