Worldwide fiber production comes up short

Feb. 1, 1997

Worldwide fiber production comes up short


The worldwide fiber-shortage dilemma is the same from Japan to the United States. Simply put, not enough optical fiber is being produced. Despite the fact that fiber makers throughout the world are operating their plants at full capacity, they are running short of exploding demand.

In Japan, the supply of optical fiber has trailed markedly behind production forecasts, with some countries increasing new orders 10 times over last year`s levels. Japanese customers such as Nippon Telegraph & Telephone Corp. have priority on the nation`s optical-fiber output. This puts a damper on customers` needs outside the country. Japanese manufacturers are aiming at increasing production, but these efforts will not get off the ground until spring, at the earliest, and some Japanese experts say that the shortages in supply will continue until the next decade.

In the United States, some fiber-industry experts say that despite the shortages, customers who really need fiber are finding ways to get it. To illustrate the point, the entire 1997 cable production of Siecor Corp., Hickory, NC, is already contracted. The company is jointly owned by Corning and Siemens AG and is the largest assembler of fiber-optic cable.

Siecor opened a new $30 million cable plant in Winston-Salem, NC, that employs about 225 people. The company plans to spend about $20 million to double the size of its southeast Hickory, NC, specialty cable plant, adding 100 jobs. This expansion will help Siecor add to its sales of about $1 billion annually.

And at the world`s largest producer of optical fiber, Corning Inc., Corning, NY, Cliff Hund, director of worldwide marketing, confirms that his fiber-manufacturing facilities are operating around the clock, seven days a week. Hund is responsible for Corning`s product line management and strategic planning of the telecommunications products division`s fiber business.

Additionally, Corning is in the midst of a $250 million plant expansion of its Wil mington, NC, fiber-making facility, and simultaneously is building a second fiber-manufacturing plant in nearby Concord, NC. This plant will come onstream in 1999.

This second Corning plant in North Carolina represents an investment of several hundred million dollars, Hund says. During the next four years, Corning expects to more than double its fiber-making capacity.

In the meantime, Hund explains, "We are adding new technology, bricks, and mortar for new facilities, and working with our international partners to cope with the shortage problem. The worldwide information highway is being paved with fiber," he declares.

"Despite the fact that consumers may not be getting all the fiber they need when they want it, there is an `ebb and flow` in the market that is not widely recognized," he observes. "This means that there may be a surplus at times."

The second-largest optical-fiber maker, Lucent Technologies, in Norcross, GA, saw demand exceed fiber supply by about 10% in the past year. This leaves the supply about 1.25 million miles short of the amount buyers need. According to Jim Carboy, acting president of Lucent`s Network Cables System in Norcross, "Our production was up 30% for this past year, and we could have increased it 10% to 15% more, if we had had the materials. We expect to complete a six-year $250 million to $300 million expansion in our fiber-making facilities in 1997 and are planning a `Phase 2 expansion` on top of this."

He emphasizes that Lucent is meeting its commitments to customers. "It`s obvious that if we are expecting growth of 20% annually, we are going to have to further expand our facilities." He notes that farming out multimode fiber manufacturing to smaller companies has freed up facilities for singlemode fiber production.

Other positive measures to cope with the fiber-shortage problem are being taken by Alcatel, a subsidiary of Paris-based Alcatel Alsthom, in Hickory, NC. The company is spending $50 million to add a research center and to enlarge its optical fiber and fiber-optic cable plants in Claremont, NC.

Market outlook

Despite fiber shortages, the market is booming, in the opinion of several market analysts (see Lightwave, July 1995, page 1). Steve Montgomery, vice president and chief operating officer of ElectroniCast Corp. in San Mateo, CA, sees North American production of fiber-optic cable rising impressively over the next decade from $2.67 billion in 1995 to $10.8 billion in 2005.

In 1996, the global fiber market amounted to 16.25 million miles. This is a global fiber market of about $6 billion, with about one-third of the sales in North America, according to Kessler Marketing Intelligence Corp., an international fiber-optics market research firm in Newport, RI.

Industry analysts and telecommunications companies concur that new forms of competition unleashed by the Telecommunications Reform Act of 1996 ensure that fiber demand will remain strong. Montgomery of ElectroniCast observes there are now roughly 25 to 30 major competitors in the newly defined North American communication services market, including telephone companies, interexchange carriers, major wireless networks, cable-TV multiple- system operators and competitive access providers. He expects an acceleration of the trend toward mergers, partnerships, and joint ventures.

For example, SpecTran Corp., Sturbridge, MA, and General Cable Corp., Highland Heights, KY, have formed a joint-venture company to develop, manufacture, and market fiber-optic cable. The new entity, which will initially build on the products, assets, and facilities of Applied Photonics Devices (APD), previously a wholly-owned SpecTran subsidiary, will be called General Photonics. SpecTran and General Cable each will hold a 50% ownership interest in the new company.

General Photonics, to be based in Dayville, CT, plans to make the full range of fiber-optic cable products previously sold under the APD name, as well as introduce new products for the premises fiber-optic cable market.

SpecTran has fared well from the inability of the corporate fiber giants, such as Corning and Lucent Technologies, to meet demand. For example, Corning has agreed to subcontract $17 million in optical-fiber business to SpecTran over three years. Lucent Technologies also followed Corning`s deal with another $35 million pact with SpecTran. q

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