GlassTech: a window into foreign exchange with Godi
GlassTech Recycling Ltd is the only Welsh-owned glass recycler in Wales, but its unique process means its output is in demand all over the world.
Glass is the perfect material for recycling. While plastic can only be recycled two or three times before losing quality, glass can be recycled literally millions of times. It is practically infinite. At a time of rising concern about the environmental impact of landfill, GlassTech uses yesterday’s waste for tomorrow’s future.
The company was launched in June 2011, with a business model based on collecting waste glass – mostly from local authorities – to be recycled. Even impure or contaminated glass can be processed to be used as insulation or in construction. But GlassTech has developed a unique, bespoke process to remove contaminants, so the glass is of a quality that can be re-melted into new glassware.
Consequently, business is booming. And this dynamic and growing business is based in a custom-built plant in the Swansea docks, perfectly situated to export to the world.
New glass is in high demand, and GlassTech exports to EU countries like Portugal, Spain, Italy and the Netherlands. But it has also begun to export beyond Europe, with enquiries from as far afield as Dubai, Chile, India and China. All this is great news, but exporting also means dealing with business-scale foreign exchange, and the higher the volumes, the greater the risks. If the value of the pound should rise, or the other currency fall, between the price being agreed and the goods delivered, GlassTech could take a major hit, with potentially frightening implications for the fledgling company.
Managing Director Karen John knew this was not something to take lightly. “I know all there is to know about glass,” she says, “but foreign exchange is a different matter. Completely alien to me.” There was no way she was willing to gamble the future of GlassTech on an uncertain foreign exchange market. “I would never take on the FX Market – ever,” Karen says.
Like other British exporters, GlassTech actually benefitted from the fall in the value of the pound after the Brexit vote, but that was also a reminder of the potentially negative impact of other unexpected fluctuations. That’s why Karen sought expert help.
Naturally enough, Karen’s first port of call for help with foreign exchange issues was GlassTech’s bank. As she says, “People just assume their bank will offer them the best rate”. But she soon realised that’s not necessarily the case, and that “the bank was not as forthcoming as it might have been!”
She approached Godi, then trading as OSTCFX, for a ‘second opinion’ and was delighted to find they could offer much better rates. And this was no sweetheart deal to get GlassTech’s business. Karen soon realised it was Godi’s expertise in foreign exchange that made them different, because they were also able to help her understand which products and strategies would be most beneficial for her business.
Unlike a bank, which deals with one transaction at a time, Godi consider clients’ long-term interests. Karen will sometimes get a call from Brett, her account manager at Godi, to provide her with an update on what’s happening in the markets so she can think strategically and align her plans accordingly. Indeed, the fact that she can get hold of Brett easily is another advantage Godi has over the bank. She describes their customer service as second to none.
Working with Godi has also been an educational experience for Karen, because they take the time to explain how foreign exchange works, to share their expertise. Looking back, Karen says, “I dread to think what decisions I would have made without them!”
Now, when Karen is exporting her product, she knows she can call Brett for advice about how to ‘lock in’ the cost of shipping in the most cost effective way, and then proceed with complete peace of mind. It’s a relationship that works brilliantly – and profitably, because Godi’s expertise makes them competitive when it comes to the bottom line. Time after time, Karen says, it’s Godi who offer the best service and rates.
A SPARKLING FUTURE
Now GlassTech is planning to expand by duplicating its unique recycling line in areas where glass is still going to landfill. Karen is looking for sites in North Wales so that GlassTech can service the whole of Wales, but her ambitions do not end there. Now that the business is exporting globally, the possibilities are endless, and Karen hopes at some stage to set up an American arm. Happily, Godi is also part of a worldwide group, so the relationship looks set to continue.
THE EXPERT VIEW
“Like all exporters, GlassTech faces a degree of foreign exchange exposure in the window between taking an order from abroad, manufacturing the goods and actually shipping them. That’s why a robust foreign exchange strategy is advisable to hedge against the risk of fluctuation. For example, we advised Karen to use a time-option forward, which secures the current exchange rate for a future date, but with the flexibility to draw down any value up to the settlement date. That gave her the ability to budget with certainty.” – Brett Thomas – Head of Dealing