Asian Ceramics - AC17-3 Edition

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AC17-3

SEE US AT:

KERAM IKA JAKAR TA, INDON ESIA

IN FOCUS:

• Vietnam heavy clay • Turkish sanitaryware • The end of TPP • Zibo in focus Plus news, views, analysis and much more!

A NEW sortING coNcEpt HAs LANDED

Up to 30% sHortEr thanks to the circular structure

EcoNoMY

optIMIZAtIoN oF spAcE

DUrABILItY

FLEXIBILItY

Easy access from every

The circular shape al-

Elimination of belts and

Functions independently

single point simplifies

lows it to be fed from

other moving parts in-

of format and thickness,

maintenance needs.

any direction and makes

creases the working life

thus minimising format

it suitable for any instal-

of the machine.

changeover times.

lation area.

The circular structure of the EkoSort, up to 30% shorter than traditional systems, optimises use of available layouts and thus ensures efficient, waste-free utilisation of space. www.nuovasima.com

News

Contents: AC 17-3 News

Features

4 Inside Asia

24 Sanitaryware from Turkey

1,000: BMR hits a major milestone.

6 Welcome

Sri Lanka turns to China.

8 Across The Continent

Openings, closures and industry moves from across Asia.

16 International News Our eye on the international arena.

21 Material Matters Raw materials news and views.

22 Comment & Analysis Pakistan opens its doors.

Yogender Malik looks at how Turkey’s booming sanitaryware industry is poised to take advantage of the growing demand from across the Middle East and eastern Europe.

32 Heavy clay industries of Vietnam

Jahir Ahmed examines how a resurgence in building material consumption augurs well for Vietnam’s brick and roof tile manufacturers.

40 Zibo tiles: an industry under pressure In the last of a raft of measures issued by the Zibo authorities, the tile industry of the region is staring at an enforced reduction of some 60% in its tile capacity. How can these be brought about? AC finds out.

52 The end of TPP

In a series of tweets and sweeping presidential decrees, Donald J. Trump has disbanded what many expected to be one of the cornerstones of future trade within Asia Pacific – notably, the Trans-Pacific-Partnership deal, or TPP. AC looks at how Vietnam could be the most affected.

54 MLCC: cost effective strategies

AC looks at how capacitor makers across the continent are looking to maximize their market opportunity as consumption continues to grow.

24

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AC 17-3

Anaylsis 56 Talking Shop

AC reveals on-going research into the replacement of the firing aspect of ceramics manufacture with high pressure production techniques and asks if such a process can ultimately become commercially viable.

58 Insight

Analysis and insight into USA.

60 The Hunter And The Hunted

William continues to surf on his tide of optimism for 2017 and questions if outsourcing can be reversed as the developed economies turn back to manufacturing.

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Inside Asia 1,000: BMR HITS A MAJOR MILESTONE One thousand: this is the number of squaring machines that BMR has produced and installed for its customers from 1990 up until the start of 2017. The Scandiano-based company, leader in end-of-line technologies for the production of ceramic tiles for over forty years, today celebrates an important achievement that is a tangible sign of the professionalism and commitment of its employees, backed by a substantial and continuous investment in Research and Development.

One has to go back to 1990 for the first BMR squaringchamfering machines with the Syncrobelt® system designed specifically for porcelain stoneware. In 2008, advances in technology lead to the development of SQUADRA, the result of the complete restyling of the already successful squaring machine that marks the start of era for slabs and large size tiles.

Two years later, BMR makes a green-oriented technological breakthrough with Squadra Dry, the award winning, environmentally friendly, 9-motor dry squaring machine. TOP Squadra Dry, the new and powerful 12-motor squaring machine that is also capable of dry-rectifying porcelain stoneware, was presented at Tecnargilla 2014, the international stage for important innovations.

It is precisely this technology that crosses the finishing line with the thousandth squaring machine produced. Top Squadra Dry, Installed at Casalgrande Padana’s production facility, is the dry squaring machine that as well as being used for monoporosa and semi-stoneware is also used for porcelain stoneware. As with monoporosa, the principle for dry rectifying porcelain stoneware is grinding. The machine operates with special tools and 12 calibrating units compared to the 9 units of the Squadra Dry machine. Top Squadra Dry offers significant advantages both in terms of improved efficiency and in terms of environmental impact as Paolo Spallanzani, Production Manager at Casalgrande Padana confirms: “Thanks to BMR technology we have achieved several objectives. By completely eliminating water consumption, the process has become much more efficient. This is also due to the reduced wear of the mechanical parts of the machine and easier waste treatment, without the need to use ad hoc chemical / physical processes.

It naturally follows that significant savings are made by not having to install water handling equipment for the machine”.

Welcome

China has indicated that up to 2,500 companies looking to invest abroad could invest in Sri Lanka if the island can create an enabling environment, according to Central Bank Governor Indrajit Coomaraswamy.

"They have said they can bring somewhere between 2,000 and 2,500 companies if we are able to absorb it," Coomaraswamy told a meeting of Sri Lanka Ceramics Council recently.

"This is because their costs are going up in South China and they are shifting capital, and we are one of the countries they are willing to use as a base."

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AC17-3

EDITORIAL SE E US AT:

K E RAM IKA

JAK AR TA, IND ON ES IA

IN FOCUS:

• Vietnam heavy clay • Turkish sanit aryware • The end of TPP • Zibo in focus Plus news, views, analy sis and much more!

Coomaraswamy said Hambantota in the south of the island could be a city of 300,000 to 400,000 population city in the next 5-10 years, benefiting people in the Moneragala and Uva areas, which are among the least developed in the region as well as the Southern Province itself.

China had wanted 15,000 acres to set up industrial zones in Hambantota, and it wants to take control of a port and airport in the area built with Chinese debt that the government is unable to service.

Sri Lanka has been chosen as a location to build on China's 'One Belt One Road' initiative. Sri Lanka is located on a so-called ancient East-West Maritime Silk Route.

Sri Lanka had good government-to-government relations with capital surplus countries in the East like China, Japan, Korea and Singapore, which could be used to draw foreign direct investment, he said.

"What is different about these countries compared to some other Western countries is that in those countries if the government decides that it wants to assist a country, it is able get its companies to come and invest," Coomaraswamy said.

CONTACT DETAILS

IT IS ABLE GET ITS COMPANIES TO COME AND INVEST

Sri Lanka cannot 'sit back' and expects the investments, but had to create an enabling environment by improving customs procedures, logistics and land, he said.

The government was also on the path to trim its budget deficit to 3.0 percent of gross domestic product by 2020, which will allow the economy to be stable.

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Sri Lanka's economy had become de-stablised due to excess demand generated by the budget, and fixing the budget was key to economy stability, low inflation and competitive exchange rates, Coomaraswamy said.

China Professor Wen Lu and Wen Xin Email: 18980921123@163.com Tel: +86 28 8701 9077 Fax: +86 28 8701 9077

Whether or not Sri Lanka becomes an “off-shore” ceramics haven for South Asia remains to be seen of course, and certainly will be impacted by the viability of raw materials. However, with India putting up barriers, perhaps this is the time for Sri Lanka to shine?

Bangladesh Jahir Ahmed jahir@asianceramics.com

Happy reading!

India Yogender Singh Malik yogender@asianceramics.com Sri Lanka Rohan Gunasekera rohan@asianceramics.com

Andy Skillen Publishing Director

HEAD OFFICE Bowhead Media Ltd, 57 Oaks Avenue, Worcester Park, Surrey, KT4 8XE United Kingdom

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AC 17-3

Asian Ceramics (ISSN: 1476-1467), is published by Bowhead Media Ltd, registered in the UK no: 6127651

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Ambiente upturn for tableware makers • RAK feels the pain, but focuses on acquisition • Rak Porcelain invests in Mexico unveils tile import duties • Litokol takes Estima stake • Morbi growth continues to inspire others • VitrA-E • ICF & Welko sings Master Tile contract • Pressure mounts as gas stays high • Thach Ban group sees granito tile BANGLADESH

Ambiente upturn for tableware makers Bangladeshi ceramic products were in great demand from buyers of China, India and Brazil at the Frankfurt Ambiente fair, local exporters said.

Chinese buyers, in particular, are exploring the sourcing opportunities from Bangladesh following the former's rising cost pushed by high wages there and shifting to high-tech industries, they noted.

Seven local ceramic exporting companies are showcasing their products at Ambiente 2017, which began from February 10.

China, Indonesia, Egypt and Turkey are also displaying their latest innovation.

Some 12 local companies showcased their products under the umbrella of the state-owned Export Promotion Bureau (EPB) and Bangladesh Ambassador to Germany Imtiaz Ahmed visited the stalls on Friday.

Messe Frankfurt, one of the largest trade fair companies

in the world, has organised the event. Some 137,000 buyers from 143 countries took part in the 2016 trade fair for consumer goods.

"Though China produces ceramic products, Chinese and Indian buyers are making queries about our products in the fair," Moynul Islam, vice chairman of Monno Group of Industries, told the FE on the sideline of the fair.

Bangladesh is reliable in terms of products delivery, quality and price, which help attract buyers from different markets, Mr Islam said.

For exports-led led growth, exporters have to come to a global platform that helps brand the country with a positive image, develop quality of products and level the field of competition, said Mohammed Humayun Kabir, chief executive of Shinepukur Ceramics Ltd, at the Frankfurt fair.

Ambiente is one of platforms

where buyers from across the globe come and local makers get the opportunity to develop their business networking, he noted.

The company accounts for about 40 per cent of the country's total ceramic exports, he said, adding buyers from Scandinavian countries and Germany were exploring the import opportunities from Bangladesh.

More than 12 buyers from Brazil, Iran, Lebanon, India, Turkey and Norway are in discussion in placing orders, said Abedin Nowshad, chief operating officer of Paragon Ceramic Industries Ltd. The company, which has been attending Ambiente for the last six years, is expecting to bag orders worth Tk 1.0 million from the fair, he added.

Buyers from Argentina and Brazil are in talks with Protik Ceramics Ltd, but they are yet to conclude pricing negotiation,

said its director Gazi Md Humayun Kabir.

The annual exports of Farr Ceramics Ltd are Tk 10 million and it receives 60 to 70 per cent of its total shipment orders from Ambiente, said its director Imtiaz Uddin.

"This year, we expect to receive double export orders from the fair as response had been very good in the last two days," he noted.

Despite having the potential to raise its export volume, ceramic makers are yet to grab the opportunity due to obstacles like shortage of gas, high bank interest rate and high import duty on basic raw materials, said exporters.

The country fetched $37.69 million in the last fiscal year from ceramic exports, which stood at $22.94 million during the JulyJanuary period of current fiscal year of 2016-17, according to the EPB data.

UAE

RAK feels the pain, but focuses on acquisition RAK Ceramics expects to complete an acquisition in India this year as it focuses on its core markets to shore up income hit by "exceptional challenges" in 2016.

The company expects to close a deal to acquire an unnamed ceramics manufacturer in India in the second quarter as it ramps up its sales efforts there and in the UAE, Bangladesh and Europe to help offset the soft business environment in Saudi Arabia.

Recently, the tile and ceramic ware manufacturer reported it had swung to a loss in 2016 as a result of slower construction activity in Saudi Arabia, demonetisation in India and provisions and write-offs of

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Dh185 million.

"It is still a good performance in this environment," said Abdullah Massaad, the RAK Ceramics group chief executive. "We are optimistic for this year based on divestments of our noncore businesses, focus on core markets and acquisitions."

Sales in Saudi Arabia dropped by 41 per cent last year amid low oil prices, lack of liquidity in the market during the second half and a slowdown in imports, Mr Massaad said.

About 48 per cent of last year’s provisions and writeoffs was "the impact of lower market prices for ceramic tiles sold in the [Arabian Gulf], as a result of the build-up of excess inventory at the local producer level", RAK Ceramics

said in a statement to the ADX, where it is listed.

Its net loss attributable to owners of the company was Dh4.9m compared to a profit of Dh281.3m in 2015.

The group’s total revenues dropped by 9.3 per cent last year to Dh2.79 billion from Dh3.07bn a year earlier. Fourth-quarter revenues were Dh650m, up from Dh645.7m in the third quarter.

The decision by India’s government in November to remove the largest banknotes from circulation as part of its crackdown on "black money" led to a sales drop of 25 per cent for RAK Ceramics.

"The scale and speed of government spending in Saudi Arabia, the UK vote to leave the

European Union, the drive by the Modi government in India to remove larger bills from circulation are all significant in the arc of history and have impacted the company unfavourably to various degrees," the company said.

The Ras Al Khaimah-based company consolidated its Germany, UK, Italy and Australia businesses last year. At the same time it increased its tiles capacity in Bangladesh by 42 per cent and sanitary ware capacity in the UAE by 20 per cent.

Earlier this year, it sold its majority share in the electromechanical and plumbing company Electro RAK, which is based in the UAE, for Dh45m.

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the new “green” line by Sama • Roca aims to become top sanware player • Eczacıbası continues expansion • Brick report aims to change industry views e factory open BANGLADESH

Rak Porcelain invests in the new “green” line

by Sama The new “green” pressure casting machine line by Sama has won over Rak Porcelain. They’ve chosen the new PCM 200 GREEN/D for its manufacturing plant in Bangladesh. An international leader in the manufacture of high-end tableware for the hotel, healthcare and retail industries, Rak Porcelain – part of the Rak Ceramics multinational group – immediately grasped the advantages of this new series.

Alongside the acknowledged productivity, quality and flexibility of this revolutionary technology, the PCM 200 GREEN/D offers outstanding energy performance, with benefits ranging from up

to 50% lower electricity consumption to the nearelimination of plant cooling water consumption.

The core advantage of the PCM technology developed by the Sacmi Group (the world-leading tableware plant engineering provider) lies in being able to manufacture high-class tableware at productivity and efficiency levels that are particularly high with complex items (oval or irregularly shaped products made in multi-cavity moulds). More specifically, the new PCM 200 GREEN/D – which can run up to 30 cycles/hour with 4 moulds – stands out on account of a design that reduces energy

consumption by optimising the hydraulic circuit.

That latter, in fact, has been equipped with an energysaving accumulator that– depending on production cycles – allows energy savings of up to 50%, while the hydraulic pump start&stop system (which, in practice, only operates as and when needed) reduces both plant consumption and noise levels, thus ensuring a safer, healthier workplace.

Optimisation of energy performance also means, as a direct result of lower electricity consumption, the almost total elimination of any need for cooling water (in the hottest parts of the machine a heat

exchanger has been installed for safety purposes) while other design features ensure maximum system efficiency at variable speeds, giving advantages in terms of both output and flexibility.

Lastly, the high degree of automation – a distinctive feature of all PCM series machines – together with advanced control software capable of saving dozens of production ‘recipes’ for different article types, helps workers simplify their tasks and maximise results. Hence, then, this latest order for one of the industry’s pivotal players, strengthening Sama’s role as a global, high-end tableware partner.

INDIA

Roca aims to become top sanware player The new “green” pressure casting machine line by Sama has won over Rak Porcelain. They’ve chosen the new PCM 200 GREEN/D for its manufacturing plant in Bangladesh. An international leader in the manufacture of high-end tableware for the hotel, healthcare and retail industries, Rak Porcelain – part of the Rak Ceramics multinational group – immediately grasped the advantages of this new series.

Alongside the acknowledged productivity, quality and flexibility of this revolutionary technology, the PCM 200 GREEN/D offers outstanding energy performance, with benefits ranging from up to 50% lower electricity consumption to the near-elimination of plant cooling water consumption.

www.asianceramics.com

The core advantage of the PCM technology developed by the Sacmi Group (the world-leading tableware plant engineering provider) lies in being able to manufacture highclass tableware at productivity and efficiency levels that are particularly high with complex items (oval or irregularly shaped products made in multi-cavity moulds). More specifically, the new PCM 200 GREEN/D – which can run up to 30 cycles/ hour with 4 moulds – stands out on account of a design that reduces energy consumption by optimising the hydraulic circuit.

That latter, in fact, has been equipped with an energy-saving accumulator that– depending on production cycles – allows energy savings of up to 50%, while the hydraulic pump

start&stop system (which, in practice, only operates as and when needed) reduces both plant consumption and noise levels, thus ensuring a safer, healthier workplace.

Optimisation of energy performance also means, as a direct result of lower electricity consumption, the almost total elimination of any need for cooling water (in the hottest parts of the machine a heat exchanger has been installed for safety purposes) while other design features ensure maximum system efficiency at variable speeds, giving advantages in terms of both output and flexibility.

Lastly, the high degree of automation – a distinctive feature of all PCM series machines – together with advanced control

software capable of saving dozens of production ‘recipes’ for different article types, helps workers simplify their tasks and maximise results.

Hence, then, this latest order for one of the industry’s pivotal players, strengthening Sama’s role as a global, high-end tableware partner.

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AC 17-3

asian ceramics

9

News

CHINA

RUSSIA

Mexico unveils tile import duties The Mexican Ministry of Economic Affairs announced and published the final determination about Mexican anti-dumping duties on Chinese wall tiles and floor tiles(with the ITGIE Tax No. 6907.90.01\6907.9 0.02\6907.90.99\6908.90.02\690 8.90.03 and any other importing tax no.). The final result was: 1. There is no anti-dumping duties for those Chinese companies which signed the pricing commitment and accepted the commitment to export related kinds of products to Mexico with the FOB price no less than $ 6.72/sq.m and CIF price is no less than$8.40/sq.m.

2. For those companies which haven’t accepted and signed the price commitment, the antidumping duties are different in the chart.

Company

Duties% ($/sqm)

Company

Duties% ($/sqm)

Bode Fine Building

8.3

Lihua Ceramic

11.73

Dongxin Economy

10.53

Nafuna Ceramic

8.92

Gaoming Yaju

11.49

Overland Ceramics

6.63

Guangdong Kito Ceramics

9.32

Pioneer Ceramic

10.04

Heyuan

9.35

Romantic Ceramics

12.13

Huashengchang Ceramic

5.75

Shengya Ceramic

8.94

Jiefeng Decoration

12.42

Shiwan Eagle

8.49

Jingdezhen Kito Ceramics

10.3

Winto Ceramics

2.9

Jinyi Ceramic

7.37

Yekalon

11.51

Junjing Industrial

8.7

Zibo Jiahui

9.55

Others

12.42

INDIA

Morbi growth continues to inspire others India’s ceramic capital Morbi has not stopped surprising insiders and outsiders due to its year on year growth despite the obstacles.

However, it is not a hidden fact that Indian construction sector is not in best of the health, despite a steady growth registered by country’s economy in last two years.

Demonetization of Indian currency in last November too had an adverse impact on Indian construction industry and indirectly on ceramic tile and sanitary ware consumption in the country, yet ceramic tile production in Morbi is not deterred by these factors.

Morbi is world’s second largest ceramic manufacturing cluster ( after China’s Foshan) with a total installed capacity of 2.8 million square meters ( both wall and floor tiles) per day. The cluster comprises of 610 active units in total with investment of INR 150 million

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to INR 1.5 billion in each unit. Provising employment to 350,000 people directly and about a million people indirectly, the cluster is second largest excise duty payer in the state ( after Surat, the diamond hub of the country).

In addition to domestic market, Morbi has emerged as a top destination of ceramic tile exports from the country.

Export growth of ceramic tiles from the cluster has registered unbelievable growth rates of 80 % ( 2014), 70 % ( 2015) and 30 % ( 2016) in last three years.

It has been entitled as ‘ Town of Export Excellence ( TEE)’ by Indian Commerce Ministry. The cluster is one of the six TEE’s in the country, where the exports exceed INR 1000 crores in an year.

In 2016, exports of ceramic tiles from Morbi accounted for INR 4200 crores. This figure is expected to touch INR 7000 crores in the current years.

NEWS IN BRIEF A total of three digital printers from the Creadigit range are now in operation at the Jeddah facility owned by Arabian Ceramics Manufacturing, a Saudi company led by Sheikh Khaled Ahmed Bagedo.

Alongside the two Creadigit E printers already used for unfired tiles in sizes up to 600x600 mm, a Creadigit XXL with 8 colour bars for decorating unfired tiles in sizes up to 1279 mm has now been installed. The key characteristics of the Creadigit system include high-definition printing (400 DPI native), its advanced technological content and simplicity of use and intuitive interface. Constant technical support during installation and start-up of the new machine will be provided by specialist staff from the System Saudi Arabia branch with the support of colleagues from the Italian headquarters.

Litokol takes Estima stake Litokol, the historic Italian manufacturer of adhesives, sealants and materials for building and interior decoration, has acquired a 21% stake in Estima Keramika, Russia’s largest ceramic tile manufacturer based in Noginsk, 50 km from Moscow. The operation was finalised in December last year.

The Russian market has long been a strategic and commercial target for Litokol and its owner Luciano Cottafavi, as evidenced by the opening of the Litokol Russia factory in an industrial area adjacent to the Estima facility in 2002. Moreover, Litokol already collaborates with Estima in a number of areas and distributes its products through Estima’s numerous branches across Russia. This investment is therefore of strategic importance for Litokol, which alongside its interest in the adhesives and sealants sector can now also boast a major partnership in the ceramic industry.

With a presence in 100 countries worldwide, Litokol operates directly with commercial companies or production facilities in Russia, Ukraine, Armenia and China.

Estima Keramika has been operating since 2001 and has a turnover of more than 80 million euros and a production capacity of around 15 million sq.m/year. It has 1,500 employees working at the two facilities in Noginsk and Samara, the headquarters in Moscow, the 9 sales branches and the 14 showrooms open to the public in a number of Russian cities.

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News

TURKEY

VitrA-Eczacıbaşı continues expansion With 15 manufacturing plants in 4 countries – Turkey, Germany, France and Russia - the multinational Eczacıbaşı Group leads the ceramic sanitaryware industry with an annual output currently in the order of 5 million pieces per year, with good growth prospects on all the main European, Russian and Middle Eastern markets. Their winning strategy has seen Sacmi operate as their key technological partner for many years, providing solutions based on innovation, efficiency and personalisation.

Atalay Gümrah, executive vice-president of the Turkish multinational’s Building Products Division, which markets its high-

end products in 75 countries worldwide via its core brand VitrA and other brands such as Engers Keramik, Villeroy & Boch Fliesen and Burgbad, explains: "Historically”, said Mr. Gumrah, in a recent interview with prestigious magazine Asian Ceramics, “the Sacmi Group has shown itself to be a sound, valuable partner, reliable and above all capable of responding to the customer’s needs, always providing the most suitable technology. That’s why we’ve developed many projects together, and will continue to do so in all our business areas."

Throughout its long history of growth in the whiteware sector,

Eczacıbaşı has received a huge helping hand from the robotized glazing systems and, above all, the sanitaryware pressure casting systems designed

by Sacmi, highly automated integrated production cells that allow every single stage of complex product manufacture to be controlled successfully thanks to innovative pre-drying, de-moulding and handling systems. In other words, the best technology on the market, developed by Sacmi alongside the customer, in a mutual exchange – observes vicePresident Gumrah - of skills, know-how and cutting-edge responses to specific problems.

Determined to expand its business on both emerging markets (in parallel with the growth of the middle class) and in continental Europe, Eczacıbaşı is firmly focused on quality, design and sustainability: qualities guaranteed by the cuttingedge technology of Sacmi solutions and the Whiteware Division’s decades of knowhow and experience, allowing Eczacıbaşı to respond promptly to market dynamics that often differ according to product, geographical area and target.

In a word, "accountability", the ability to take responsibility with customers and, step by step, share it.

SOUTH ASIA

Brick report aims to change industry views A new report, launched at a high level regional policy event in Nepal in January, will for the first time highlight the challenges of South Asia’s brick making industry by looking at human labour, working animal welfare, and the environment together. Until now this industry has been largely invisible to policy makers, and the few organisations that have been working to address the issues have primarily done so in isolation. Bucking this trend, Brooke – Action for Working Horses and Donkeys, The Donkey Sanctuary, and the International Labour Organisation have come together to raise the visibility of the brick kilns in the region, and to start tackling the harmful and often illegal practices that affect millions of people and the working conditions of hundreds of thousands of animals every day.

‘Brick by Brick: Unveiling the full picture of South Asia’s brick kiln industry and building the blocks for change’, calls for greater attention and crosssectoral action on the brick making sector. The report will be officially launched at the event, organised by The

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South Asia Initiative to End Violence Against Children (SAIEVAC) and hosted by the Government of Nepal.

The traditional brick making industry is the backbone of urban development throughout South Asia. It employs between 4.4 and 5.2 million people and over 500,000 working animals but the work is extremely hazardous, and generates highly pollutant emissions.

Traditional brick kilns also impact on the health of people, animals and the environment.

Up to 68% of brick kiln workers in South Asia are estimated to be trapped in bonded or forced labour, and it is not uncommon to see children as young as five or six involved in the work, some of whom are sent to the kilns unaccompanied by their families. Women are also heavily involved in brick making, exposing them to severe health risks in particular when pregnant. Workers’ dire working conditions and illegal practices in the kilns are made worse by the lack of knowledge about labourers’ rights, extreme poverty and a weak policy and legal

environment.

Donkeys, mules and horses transport bricks within the kilns and to locations for use in the construction industry, and provide their owners and handlers with an income.

Despite being a key link in the brick making value chain, they are mostly invisible in existing initiatives and policy.

In the brick kilns animals don’t have access to nutritious food or clean water and suffer wounds from overloading, overworking, beating, inadequate harnessing and general poor care.

Delphine Valette, Head of Advocacy & Public Affairs for Brooke, and co-author of the report said: “We are putting emphasis on how complex South Asia’s brick kiln industry is, and examining the crucial links between human, animal and the environment sectors. We hope the report will encourage collaboration between people who have the power to act, and start off key conversations that can lead to changing the face of the brick kiln industry.”

Mike Baker, CEO at The Donkey Sanctuary, said: “It is an incredibly valuable and

important breakthrough to be able to directly link the welfare of working animals, including donkeys, with humanitarian and environmental causes.

The evidence and experience gained from this collaborative report will help to influence the future of the brick kiln industry and make a positive and sustainable difference to those who are currently working every day in such difficult conditions.

“The Brick By Brick report will be a key tool in our work to raise the profile of these issues on an international level.”

According to Richard Howard, ILO Nepal Director, “the report highlights the numerous challenges of ensuring decent work for all workers in the brick kiln industry, particularly in respect to forced labour and child labour. Despite these challenges, there are opportunities to improve routine monitoring and inspection of the industry and support workers to organize and negotiate for better working conditions and the elimination of child and forced labour. The SAIEVAC meeting was an important step in this direction.”

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News

INDONESIA

PAKISTAN

Pressure mounts as gas stays high The Indonesian ceramic industry will remain under pressure in 2017 due to low demand from the property sector and the high gas price.

Therefore, there are reports that various ceramic producers have (temporarily) closed their factories and are now active as traders only. Elisa Sinaga, Chairman of the Indonesian Ceramic Industry Association (ASAKI), urges the government to lower gas prices immediately in order to support the nation's ceramic industry. Gas prices account for between 30 40 percent of Indonesian ceramic producers' total production costs.

Production costs in Indonesia's ceramic industry are high, implying output is less competitive compared to ceramic products in neighboring countries. High costs are primarily caused by the high price of gas.

Whereas Singaporean ceramic producers pay USD $3 per mmbtu, Thai manufacturers pay USD $3 per mmbtu, and Indian manufacturers pay USD $5 per mmbtu, Indonesia's ceramic producers have to pay an average USD $9.1 per mmbtu for the ceramic production

process.

In the government's third economic policy package (released on 7 October 2015) the Energy and Mineral Resources Ministry of Indonesia issued a regulation that lowers gas prices (for specific industries) "by a maximum of USD $2 per 1 mmbtu if gas prices are higher than USD $6 per mmbtu". This incentive is available to Indonesia's fertilizer, petrochemical, stainless steel, ceramic, glass, oleo-chemical and glove industries. However, only the fertilizer, steel and petrochemical industries can now enjoy cheap gas, while other industries are still waiting.

Indonesia's ceramic sales at the start of 2017 were below expectation as the nation's property sector remains bleak.

Strangely, ceramic imports into Indonesia grew 27 percent in 2016, while domestic ceramic sales declined. This points at weak competitiveness of Indonesian-made ceramic.

Sinaga expects domestic ceramic sales to remain stagnant in the first half of 2017 unless the property sector of Indonesia suddenly gets a boost or the government lowers the gas price.

ICF & Welko sings Master Tile contract A contract between I.C.F. & Welko and Master Tile Pakistan was signed in early January for the supply of a complete plant with a capacity of 24,000 sq.m/day, which will be used to produce various kinds of tiles (porcelain, glazed stoneware and monoporosa) in sizes up to 800x800 cm.

Master Tile, owned by Dr. Sheikh Mahmood Iqbal, is today Pakistan’s largest ceramic tile manufacturer. The facility in Gujranwala, Punjab, has a production capacity of 50,000 sq.m/day. The new line is due to begin production towards the end of 2017 and will strengthen the company’s leadership position in terms of both quality and output and will make it more competitive in international markets.

The main characteristic of the plant designed and built by I.C.F. & Welko is its versatility. It will be able to produce porcelain tiles, glazed stoneware floor tiles and monoporosa tiles depending on market demand. It will also be fully automated – from raw materials weighing through to palletisation of packaged boxes – in keeping with the standards of the most advanced Italian technology.

Depending on the required ceramic body, the raw materials are sent to a pair of continuous mills after weighing. Two 6,000,000 kcal/h spray dryers (running on natural gas or coal) will supply the basic spray-dried body, while a third 2,000,000 kcal/h spray dryer will produce the coloured spray-dried body for double filling. The pressing department will be equipped with three WK2 6300 presses with a pressing force of more than 6,000 tons, while drying will be performed in two fivechannel horizontal dryers. The glazing lines will be equipped with 8-colour-bar digital screen printing machines. From the unfired product storage area, the material will be sent to the WFR2 “Special Edition” twinchannel kiln equipped with highly sophisticated combustion and cooling control devices already adopted by I.C.F. & Welko for firing porcelain panels more than 4 metres in length.

The order will also include the fired product storage line, the finishing department with a polishing line and a series of squaring machines, and the endof-line plant consisting of sorting lines with electronic surface control and palletisers.

VIETNAM

Thach Ban group sees granito tile factory open The Thach Ban Group Joint Stock Company held a ceremony in the northern province of Bac Giang on February 15 to inaugurate its new granite ceramic tile factory and celebrate 58 years since its establishment.

The factory was built on an area of nearly 20 hectares in Yen Dung district’s Nham Son commune at a total cost of approximately VND1 trillion (US$44 million).

It is currently capable of manufacturing 8 million square metres of granite ceramic tiles per year, a five-fold increase

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against the capacity of its previous factory, located in Hanoi. According to the development roadmap, its capacity will amount to 16 million square metres by 2020.

The Thach Ban Bac Giang factory applies newly imported Italian technology in sync with digital printing technology to manufacture vivid product lines with subtle designs, long lifespan and diversified models.

Despite higher production costs than the coal gasification technology (a kind of fuel polluting the environment and

flammable while in use), the new technology is invested in

by Thach Ban with the goal of sustainable development and green production (manufacturing products friendly to the environment and labourers).

In addition to the ambition of dominating the booming domestic market about the demand for building materials, ceramic tile products manufactured at the Thach Ban Bac Giang factory also look to potential export markets, such as the Republic of Korea, Chinese Taipei,

Malaysia, Australia, the Middle East and the United States.

During its 58 years of construction and development, Thach Ban Group JSC has developed from a manual brick production site previously into a prestigious group specialised in manufacturing and trading building materials in Vietnam.

The company has taken the lead in acquiring, applying and creating advanced production technologies, contributing to renovating the brick production industry in Vietnam.

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News

International News Landmark enjoys a positive start United States

E

ight months ago, Landmark Ceramics opened its North American headquarters with an ambitious plan to produce high- quality porcelain tile 24 hours a day.

Things have gone so beautifully — bellissimo, as President Federico Curioni of the Italian-owned company might say — the Mt. Pleasant site will add a third shift before the end of summer 2017 possibly as early as May. Interviews for positions have been ongoing at the 96-acre, $100-million facility near the Maury County Regional Airport.

"We are quite satisfied," Curioni told local media last month. "The Italian families that have moved here to open and operate the plant are quite happy. We are pleased with the demand for our product made here despite intense competition across the United States.

"It is confirmation of our decision to come here. Columbia is a nice place. Mt. Pleasant is a nice place, and we are happy with the quality of workers we have found."

Landmark is part of familyowned Gruppo Concorde, which was founded in 1968 and has an international reputation as one of the world's top tile makers.

Curioni has been with the company since 2003.

"We are proceeding at just the right speed in terms of production and quality to get the results we

were expecting," Curioni said. "It has been a great team effort. I am only the quarterback, to use a sports expression, but the rest of the team is producing as we expected.

"We studied where to expand in North America since 2012," he added. "We had time to research the best place to be. We had time to build a state-of-the art tile manufacturing facility. So with the benefit of four years, we pretty much knew what to expect. Of course, it is exciting to be almost full speed, which would mean operating three shifts, 24 hours of production."

Landmark Ceramics employs 130, including administration and sales staff, and will add around 40 more with the third shift.

"Within one year of opening, we will have the third shift," Curioni said.

The plant started producing tile on site June 30 after sending many employees to Italy for training.

"For sure, there is demand for the product," Curioni said. "When we started, we started with the idea of keep production even with out ability to have great customer service and stay in balance with sales."

The plant produces many different types of tile. With technology, it can make dozens of different styles. And with the accent on quality, the hiring team at Landmark wants workers who will stay with the company long term.

Morgan to sell Electro-Ceramics United Kingdom

M

organ Advanced Materials is to sell its UK Electro-Ceramics business, which has an operation near Wrexham, in a deal worth £47m.

UK Electro-Ceramics produces piezo and dielectric ceramic products used in industrial, electronics, medical and defence applications. The company, which is part of the technical ceramics global business unit of Morgan, generated an operating profit of £6.2m on

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turnover of £22.7m in the year ended 31 December 2016.

The business, which has sites in Ruabon in North Wales and Southampton, has been sold to CeramTec UK Ltd, a fully-owned subsidiary of CeramTec GmbH. The transaction is structured as a sale of the business, assets and goodwill for a sum of £47m on a cash-free, debt-free basis.

Morgan said the disposal was in line with its strategy to simplify its portfolio and focus on global

"Most of the people we hired have stayed with us," Curioni said. "The turnover is more than acceptable for the key positions.

"I am more and more convinced that money is not the only thing people want in a job. You could be in South Africa, or Russia or Australia, and I have found employees want a good working environment. This company has an important social role in helping families grow and find happiness in their jobs."

The high cost of opening the plant has not been a short term concern of Luca Mussini, owner of Gruppo Concorde.

"The difference in a familyowned company and a company owned by the market is that we don't care about the payback right away," Curioni said. "You have to invest with a very very longterm horizon, and that is what we are doing."

There we no surprises in the first eight months of operations, either from a production or regulatory standpoint, Curioni said. Local public officials and the Mt. Pleasant and Columbia communities have embraced the company and its workers, he said.

"We have a state-of-the-art facility in a stable democracy," he said. "To invest in the U.S. market is always a good investment. It was a very good decision for us to come here."

Demand increases for high-end

ceramic tile with the economy, Curioni said, but the Landmark works with distributors and national dealers in selling large volumes of its products.

"We are able to reach the largest and biggest supplier when you make the product here," Curioni said. "There's only so much you can do from Italy. The United States is just such a vast market.

Clearly, you have to coordinate the territory in the right way."

Europe is the No. 1 market for Gruppo Concodre. The U.S. market has emerged as No. 2, ahead of Russia, where the company has another production facility, and India.

"There's a chance the United States can become our No. 1 market in the future," he said.

In the meantime, the $100 million investment reflects an open-ended commitment to Mt. Pleasant and southern Middle Tennessee.

"We have never laid off an employee in any of our plants in Italy or Russia," Curioni said. "We have a forever commitment in this business. There have been bad and good economies since I joined the company in 2003.

But we have never had to let an employee go because of a bad economy.

"Things are going great," he added. "It's just the beginning of the possibilities.

technology businesses of scale.

Chief executive Pete Raby said: "This divestment supports our aim of simplifying Morgan to focus on technology businesses of scale, allowing us to better service global markets and to drive the most value from our core activities.

"UK Electro-Ceramics is a specialist business with excellent customer relationships.

This transaction will build its scale and combine its expertise with that of CeramTec, creating a stronger and more resilient platform for the future."

Henri Steinmetz, chief executive

of CeramTec, said: "We are excited by the prospect of bringing together the significant expertise and knowledge in piezo and dielectric ceramics which complement each other perfectly.

"This transaction opens the door to many new opportunities and possibilities for CeramTec: new markets, new application areas, and new developments.

"The significant demand for sensors and measurement technology as well as control and monitoring systems provides the best opportunities for a successful future."

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International News

Electro-porcelain sector requires investment Ghana

W

hen Ghanaian Abu Yaya wondered why his country imports all of its electroporcelain – a small but crucial component for electrical power transmission – it led to a collaboration with Cambridge materials scientist Kevin Knowles that might one day result in Ghana being able to reduce its frequent blackouts.

In Ghana, 'Dumsor' is a part of life. An annoyance, a risk, an impediment to be sure, but a part of life all the same.

The half-joking, half-serious term, which roughly translates to 'off-and-on', refers to the frequent blackouts in the country. Entire neighbourhoods go dark in an instant. The patchwork electrical grid can leave one side of a street in darkness and the other fully lit.

So widespread are the blackouts that John Mahama, until recently the country's President, was often referred to as 'Mr Dumsor'

by Ghanaians.

Like many countries in subSaharan Africa, Ghana doesn't produce enough power to meet demand. Its power supply has been erratic since the early 2000s, when water levels in the Akosombo Dam, the country's main hydroelectric dam, dropped to dangerously low levels, and they have yet to recover fully. Although Ghana has one of the highest rates of access to electricity in Africa, in 2015 the country still experienced blackouts on 159 days.

"Ghana's not so different from the UK, really – both countries have an electrical grid that's under enormous strain," says Dr Kevin Knowles of Cambridge's Department of Materials Science and Metallurgy. "The difference is we'd be up in arms if the lights went out all the time, whereas in Ghana it's just a fact of life. But there are things that researchers in Ghana are doing to help improve the electrical infrastructure."

One such researcher is Dr Abu Yaya, Head of the Department of Materials Science and Engineering at the University of Ghana. Yaya has been working with Knowles with the aim of developing a

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home-grown industry back in Ghana to make a small but crucial component for power transmission: electroporcelain.

For electricity to get from the places where it is generated, such as the Akosombo Dam, to homes and businesses, it needs a wellestablished electrical grid made up of pylons, substations and transmission lines. Whereas highvoltage power lines are insulated by the surrounding air, a physical insulator is required at the point where the power lines are supported by utility poles or transmission towers, or where power lines enter buildings. These insulators prevent the loss of current and concentrate its flow, as well as help prevent electric shock.

Most insulators for high-voltage power transmission are made from glass or porcelain. Knowles describes the electroporcelain manufacturing industry as "mature".

In fact, in the UK it's been around since the 1860s – a reason perhaps why the insulators can look curiously old-fashioned and incongruous, like small white ceramic bowls or brown spiral candlesticks perched on the arms of pylons.

However, despite the prevalence of raw materials to make electroporcelain in Ghana, electroporcelain ceramics are imported from other countries at great expense.

It's a frustrating situation says Yaya, who has now developed a method of making electrical insulators out of the materials available in Ghana. His aim is to scale up the process for commercial use in the country, and possibly to other sub-Saharan countries as well. The process is economical because all it needs is the raw materials, water and a furnace.

Yaya grew up in the slums in Nima, a suburb of Accra in Ghana. After completing his undergraduate studies in his home country, he received funding from the European Union to complete his Master's degree in materials science at the University of Aveiro, Portugal, and the University of Aalborg, Denmark, and his PhD at

the University of Nantes, France, after which he returned home to take up a post at the University of Ghana.

It was when he returned to Ghana that Yaya first became interested in developing electroporcelain, after a discussion with a retired lab technician who had a stockpile of clays and feldspar, but wasn't sure what to do with it. "I figured out the clays and feldspar could be used to make electroporcelain, and at the same time I realised that Ghana imports all of its electroporcelain from Asian countries," he says. "So I asked myself why can't we make these products – and that is how I ended up in Cambridge."

In 2015, Yaya won a six-month CAPREx fellowship at Cambridge to work with Knowles, an expert in materials for use in challenging engineering environments. Most of Knowles' research focuses on how small changes to the microstructure of materials can improve their mechanical, electronic or optical properties for use in components such as connecting rods, fan blades, glass and fuel cells.

"In electroporcelain, the raw materials are clay, feldspar and silica," explains Knowles.

"When these raw materials are mixed together in the right proportions and fired together, at a temperature such as 1,200°C, an electrical insulator is produced.

What happens during firing is that the feldspar melts and this helps to bind the particles together inducing further chemical reactions and reducing porosity. The result is a dense product that can be given a surface glaze to enable it to pass national safety standards tests for porcelain insulators."

Yaya adds: "Normally, imported electroporcelains are made to suit the original country's specifications, and are not made specifically for Ghana or other African countries, where the climatic conditions could vary.

By producing these products in Ghana using local raw materials, they are subjected to our own environmental conditions.

They would be sent to the Ghana

Standards Authority for further testing to ensure that failure does not occur rapidly when the electroporcelains are in use."

As well as working closely with Knowles, Yaya has also spent time working with UK-based company Almath Crucibles to optimise his process. His aim from the outset was to develop a manufacturing process for electroporcelain that would meet international standards so it can be sold to Ghana's electricity company.

It's a crucial time for Ghana, which has committed itself to universal electricity access by 2020. Making sure the electricity supply is widely available and reliable will aid the growth of industries and the economic development of the country. It will also support the demand for power by an increasing population.

"If we are able to manufacture insulators in Ghana then they will be far more affordable than imported insulators, and we stand a better chance of expanding our electrical infrastructure to improve capacity," explains Yaya. Meanwhile, foreign investors are beginning to take notice of Ghana's richness in materials: in August 2016, a Chinese-owned company opened the first phase of a US$60m factory in the Free Zone in Eshiem in Ghana to manufacture floor tiles and other ceramic products to supply domestic and international ceramics markets.

Yaya continues to collaborate with Knowles, as well as with other researchers in Europe. He is currently in the process of patenting his technique through a University of Ghana Technology Transfer Grant, and is now looking for potential commercial partners to help him bring the technology from a laboratory to an industrial scale.

"Dumsor is an irritation at times but it also shows the power crisis we must overcome," he says. "We need to be sure that limitations in generating and distributing electricity do not become a development challenge for the country.

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News

Raw Material News BAN ON SANDS REMAINS IN PLACE Tanzania // Zircon President John Magufuli has reiterated the ban on the exportation of mineral sands, and has directed the minister of Energy and Minerals, Prof Sospeter Muhongo, to ensure the ban is enforced.

President Magufuli said this during the recent launch of Goodwill Ceramic Limited, a tiles plant based in Mkuranga, as he began his four-day tour of Lindi, Mtwara and Coast regions.

The President said Tanzania had been losing a lot of revenue by exporting mineral sands. He added that it was high time investors constructed processing plants in the country to purify mineral sands.

"It is only Tanzania, which airlifts the valuable sands abroad. I am directing the minister of Energy and Minerals to ensure the sands aren't airlifted, but should

be purified in the country," said Dr Magufuli, when he was inaugurating the $50 million tiles plant.

He added that: "We have a lot of debts, which, had we managed our resources well, we might have settled. I hereby impose a ban on the exportation of mineral sands."

This is not the first time that President Magufuli imposes a ban on the exportation of mineral sands. In August, when he was addressing a rally in Kahama he did the same.

Efforts to reach the Commissioner of Minerals, Mr Ally Samaje, for comment on whether the first ban was implemented, proved futile as he didn't answer the call.

ILUKA RECORDS 2016 LOSS AS PRICES FALL Australia // Zircon Iluka Resources swung to a loss in 2016, with its bottom line weighed down by writedowns as well as weaker production and prices for the mineral sands it produces.

The mining company consequently scrapped its final dividend and said it is reserving cash for growth projects.

The company reported an annual net loss of $224.0 million, compared with a $53.5 million profit in 2015. It recorded a non-cash impairment charge of $201 million, linked to idled equipment, exploration assets and mine reserves.

Unlike rivals in industries such as iron ore, Iluka was quick to rein in production in recent years as prices for its commodities slumped. Its production of mineral sands was down 13 per cent last year, while sales were down 25 per cent on-year.

The company has been grappling with a deep, multiyear downturn in mineral sands markets that’s only now starting to show signs of a fragile recovery, Iluka

www.asianceramics.com

said. Prices for mineral-sand zircon, which is a key product of Iluka and is used by the ceramics industry to make household products such as bathroom tiles and kitchenware, slumped by 18 per cent in 2016.

Iluka is the world’s largest producer of zircon and is also a major supplier of rutile and synthetic rutile, used to create the pigments that give products like paint a bright white colour. A pullback in other commodity prices also hit earnings. The company said it received lower income from an iron-ore royalty stream it receives from a BHP Billiton mine in Western Australia’s Pilbara region.

“Clearly, the results recorded today are unsatisfactory,” said managing director Tom O’Leary.

Iluka said it is focused in 2017 on advancing new projects that could help lift group production and lower total costs, and integrating the Sierra Leone-based Sierra Rutile business it bought in December.

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News Anaylsis

News

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Pakistan: a new China frontier?

T

he China-Pakistan Economic Corridor (CPEC) — a $54 billion portfolio of energy and infrastructure projects — promises to usher in a new era of economic development and growth for Pakistan. However, this could only be possible if Pakistan’s industry reaps benefits from this enhanced connectivity, creating new jobs and boosting exports. Industrial cooperation therefore forms the crux of CPEC and any promised growth in domestic economy hinges on it.

Ironically, industrial cooperation is one area where Pakistan seems least prepared. While policymakers are overly optimistic on CPEC and its potential benefits, local manufacturers, chambers and industry associations appear to be seriously concerned about their future.

The textile industry, for instance, fears the glut of textile goods from Xinjiang to create serious competition in future. The local industry already had to rely on expensive raw material imports in the wake of recent cotton crisis and any increased demand for raw material from neighboring China is going to further raise prices and limit availability. Similarly, other industries feel that they are going to be eaten up by largescale Chinese enterprises with significant economies of scale.

On environmental front, experts fear that an open-gate policy towards China may bring in dirty industries to Pakistan, resulting in environmental degradation.

While some of these concerns may be well founded, these industries need to realise that openness and globalisation has its own perils and sooner or later they would have to be competitive to withstand any such global threats. But for the government, it is also equally important to think through its own priorities and further the national agenda through a well-articulated industrial policy.

China has developed a long-term plan, encapsulating how it views CPEC. The plan, which seems quite broad and has a positive undertone, is an enabling document merely laying out the general principles of industrial cooperation. If approved

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without specific details, however, this plan is likely to give significant space to China to pursue its interests.

A closer look at this long-term plan reveals two clear emerging priorities for the Chinese industry — using Pakistan as the source for cheaper raw material and deepening Chinese access to Pakistan’s burgeoning middle class turning into an attractive consumer market.

China is planning to simulate textile-led growth in the underdeveloped province of Xinjiang, where billions of dollars have already been pumped in. Pakistan can very well be a source of raw material for the textile and garments industry cluster in Kashgar Economic Zone. Not only the CPEC plan makes a mention of it but also emphasises the need for Pakistan to focus on producing top grade cotton yarn to enrich cotton textiles varieties.

China has also asked Pakistan for multiple concessions in this regard, such as reduction of border import taxes by half as well as cancellation of export restrictions for products produced in Kashgar and exported via Khunjerab. In return, China is expected to relax import and export restrictions on Pakistani commodities entering the Kashgar Economic Zone.

This would essentially result in seamless flow of cotton crop and yarn into Kashgar, turning into finished goods entering Pakistan destined for international markets.

Construction and real estate sector is another area where Pakistan’s cement and construction material can be used. Accordingly, the CPEC plan includes replacing outdated equipment in cement plants in Pakistan, while also focusing on enhancing Pakistan’s marble and granite exports feeding into China’s construction boom.

To target Pakistani consumers, China is looking to scale up its investment in household appliances sector and under CPEC, a household appliance industrial park is already being planned with Chinese investment near Lahore to produce refrigerators, washing machines, air conditioners, TVs and other small appliances for the Pakistani market. Similarly, China

is looking for increasing its exports of finished construction goods such as ceramic tiles to Pakistan, where Chinese tiles already claim more than 50% market share.

These priorities are well aligned with China’s own national interests and are part and parcel of its industrial policy. For Pakistani side, however, there is a need to develop a clear understanding of these Chinese priorities amongst policymakers and to form a view on how to safeguard interests of local industries. For instance, if Pakistan makes timely investments in increasing cotton productivity and starts producing enough cotton to cater for local industry as well as for Kashgar textile cluster, the threat for local industry can very well be turned into an opportunity.

Similarly, if local industries are prepared to get into joint ventures with Chinese enterprises, this can result in technology transfer and broadening of industrial base.

There is also a need to look at Pakistan’s own industrial clusters and assess how they can benefit

by CPEC through potentially accessing Chinese markets and beyond. This should then lead to Pakistan negotiating for preferential access to Chinese consumer markets, as granted to the ASEAN countries. Furthermore, for any industries relocating to Pakistan, there should be an effective environmental safeguards regime in place.

Going forward, the government should adopt a three-pronged strategy for industrial cooperation, focusing on expansion and upgrading of existing industries; deepening the industrial base aiming at creating better forward and backward linkages; and industrial diversification, nurturing new industries leading towards sophistication of export base.

Furthermore, any investment incentives given by Pakistan should prioritise the movement of high value addition and innovative industries and employment to Pakistan, rather than blanket incentives. All of this should then form part of a green industrial policy, promising a sustainable future for Pakistan.

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AL-Jawdah Company For Plastic Pipes and Fittings

Al-Jawdah Company for Plastic Pipes and Fittings, The Company was founded in 1994 and is engaged in the production of plastic pipes of the (PVC) and (C-PVC) and (UPVC) and (PP-R)This addition to the production of links all kinds of plastic in all sizes and different. thickness are used in various elds such as extensions of water lines with high and lowpressure and sewage extensions to the Saudi Arabian Standards for Standards, Metrology and international standards

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AL-Jawdah Electric Water Heater Company

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One of Abdul Rahman, a group of companies and Abdul Karem Saleh Omran Trade and Industry, Begun commercial production of the plant in early 1999, The factory is located in Riyadh Second Industrial City and a production capacity of up to (400,000) electricwater heater annually. The factory produces electric water heaters sizes (30, 50, 100, 200, 250, 300 liters) multiples different colors and models,including horizontal and vertical fashioned style and ground style central and style.

AL-Jawdah Porcelain & Ceramic Company

Al-Jawdah Porcelain and Ceramic Company is the new establish by Al-Jawdah Group of Companies near to our existing complex in 2nd Industrial City, Riyadh, Kingdom of Saudi Arabia.The Company is under construction and installment of the machines are in progress with ITALIAN company machines which are include SACHI, SYSTEM CERAMICS, CIMES, TECHNO FERRARI, MARPAK,BMR and FRACCAROLLI/CAMI with latest technology.

Plant equipped with special SACHMI Hydraulic Press PH 3200 and PH 6500 and attractive KILN for the production of Procelain Tiles with the capacity 13.0 Millionsquare meters per annum. The complete building of 9,200 square meter area built for the future expansion to double the Plant capacity. Plant expected in operation in 2nd Quarter of 2017 with full support of Ministryof Kingdom of Saudi Arabia with supply of natural gas and electricity, The investment done by AL-OMRAN GROUP Mr. Abdul Rahman S.Omranand Mr. Abdul Karem S. Al-Omran to fulll the Saudi Arabian Market demand of Ceramic and Porcelain Tiles.

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Analysis: Sanitaryware

Turkish sani overseas markets prove key

Yogender Malik looks at how Turkey’s booming sanitaryware industry is poised to take advantage of the growing demand from across the Middle East and eastern Europe.

T

urkey is largest ceramic sanitary ware producing country in the eastern Europe, western Asia region, with a total installed capacity of 23 million pieces of sanitary wares at the end of 2016. In the same year, the country produced 19.8 million pieces of sanitary ware and exported 7.97 million pieces throughout the globe. In value terms, the exports of sanitary ware amounted to USD 198 million. Germany, England, Israel, Italy, USA and France are the main export destinations for sanitary ware producers.

The ceramics sanitary ware industry is one of Turkey’s most competitive sectors. The industry expanded its output threefold between the 1995 -2015 period as a result of investments in technology, research and development and increases in capacity. Despite, the current overcapacity in the country’s sanitary ware production, at least three producers are under different stages of capacity expansion/ modernization exercise.

Availability and abundance of raw material resources for

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sanitary ware production , investment in the state of the art technology, high design quality and the innovative approach by a number of its established producers has made the country as one of the most reputed ceramic sanitary ware producing nation in the world. Inheriting a rich tradition, Turkish ceramic sanitary ware producers have combined the multi cultural and multicoloured historical riches of Anatolia with modern designs.

Output alone is not the only reason that makes Turkey’s sanitary ware industry significant in global market. While answering growing global demand of sanitary ware products, a number of cutting-edge Turkish sanitary ware factories allow Turkish producers to produce sophisticated designs and maintain extremely high standards of sanitary wares.

About 30 large and mid size producers are operational in the Turkish sanitary ware sector. Eczacıbaşı (VITRA) and Creavit, which are among the leading firms of the sector, are also among the largest ceramic sanitary ware producers in the world.

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Analysis: Sanitaryware

itaryware Eczacıbaşı, with its 5.2 million pieces per annum capacity is the largest integrated ceramic sanitary ware production plant in the world.

Focus on exports

Faced with a limited domestic market Turkish sanitary ware producers have emerged as one of the largest exporters of sanitary ware products in Europe and the Middle East region.

Regular capacity expansions by existing players and new set ups in sanitary ware segment has made exports as a mode of survival for country’s huge sanitary ware industry. According to the Turkish Statistical Institute (TUIK), Turkish ceramic sanitary ware products are sold in 95 nations across the globe.

In 2015, Turkey exported 7.97 million pieces of sanitary wares to various destinations. Exports accounted 40 % of country’s total production of sanitary ware in the year. Europe accounted for 61 % of the exports in the same year. Turkey’s main ceramic sanitary ware export markets are, in order, Germany, UK, France, Italy and USA. According to Turkish Statistical Institute in 2015, Germany accounted for 14 % of total sanitary ware exports from Turkey, followed by UK at 12 % of total volume.

France and Italy at 8 % each and USA at 5 % of the total exports volume are other leading ceramic sanitary ware importing nations from the country.

Ever-growing production capacity by Turkish producers, investments in modern technology and emphasis on high quality has enabled Turkish producers to gain a huge share in midupper and luxury segments of sanitary ware exports market.

With several new investments towards capacity expansion in the segment, Turkish producers are expected to raise their share in global sanitary ware export market by a few % points in next three to four year period.

A marked observation in country’s exports markets is increasing share of exports to the Middle East and North African countries. Though, Europe still accounts for more than half of total sanitary ware exports, but, in recent years the percentage growth of exports in the Middle East and North African region has outpaced the exports growth to European countries by a wide margin. While, in earlier years, most of the exports to Middle East and North African markets were economy and midupper models of sanitary wares, but in last few years demand of premium and luxury products has increased at a very healthy rates, prompting a number of Turkish producers to establish representative offices and distributors in these countries.

Overseas ambition

Limited domestic market, entry of new sanitary ware producers and regular capacity additions by existing sanitary ware producers have made established sanitary ware names in Turkish sanitary ware industry to enter foreign markets in different forms.

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A couple of years back, Vitra’s parent company, Eczacıbası Building Products Division has invested in a new sanitary ware manufacturing capacity outside Turkey, in line with its overseas growth strategy. The company officially inaugurated its new Russian sanitary ware production plant in May 2014. Coming up with an investment of € 21 million, the plant is located in Serpukhov, some 100 km from Moscow. Though, Russia is not new for Eczacıbası . The company already had a ceramic tiles manufacturing plant.

With the establishment of the sanitary ware plant, The number of Eczacıbası Building Products Division plants (manufacturing ceramic tiles, sanitary ware, fittings, bathroom furniture and bathtubs) has reached 16: six of these are based in Turkey, six in Germany, two each in France and Russia. In addition to Germany, France and Russia, the company has entered stargetic alliances with a number of companies in various countries.

Raw material advantages

Turkey is endowed with the ample resources of raw materials needed for ceramic production. This has given Turkish sanitary ware producers a key advantage over other sanitary ware producing nations in Europe and the Middle East region.

The clay reserves of Turkey, especially for ceramic production are estimated to be nearly 200 million tons. Approximately 90% of these 200 million tons of clay reserve is included in SileIstanbul region, which is in proximity of most of the sanitary ware producing units. Kaolin, another key input for sanitary ware industry is also available in the country in vast amounts.

The reserves of Kaolin in Turkey are estimated to be nearly 89 million tons. Feldspar reserves in Turkey are estimated to be 330 million tons (visible & potential). Important feldspar reserves are located in Aydın/Çine and Mugla/Milas the southwest of Turkey.

Most of the sanitary ware producers have their own raw material preparation facilities within their organisations and satisfy almost all of their raw material requirements through internal routes, giving them an opportunity to control input costs and quality.

Emphasis on design

In the face of increased competition from low cost and medium quality Chinese and the Middle Eastern sanitary ware producers, Turkish sanitary ware producers have put a lot of emphasis on new and innovative designs in sanitary ware production to offer product differentiation in domestic and export markets.

Country’s leading sanitary ware producer, VitrA collaborates with internationally renowned designers and design houses to develop highly innovative and original sanitary ware products .

Prominent names cooperating with VitrA’s in-house team of 50 designers include Ross Lovegrove, Christophe Pillet, Matteo Thun, Defne Koz, NOA, Pilots Design and Pentagon.

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25

Analysis: Sanitaryware

VitrA

Turkey’s largest ceramic sanitary ware producer, VitrA is part of the Eczacıbaşı Group, one of Turkey’s most prominent industrial groups. Founded in 1942 as Eczacıbaşı Sanitaryware, the VitrA brand was born in 1966 and is Turkey’s most prominent and known sanitary ware manufacturer . “Eczacıbaşı”, in Turkish, means “chief pharmacist”, an honorary title and surname that was given to the father of the Group’s founder in recognition of his continual efforts to improve the health of his community.

The company operates 16 production facilities in Turkey, Germany, France and Russia. VitrA produces 5.5 million pieces of sanitaryware which are distributed to over 75 countries on five continents, in addition to complementary bathroom furniture, baths, brassware and bathroom accessories.

Company’s manufacturing facility is located at Bilecik. 5.5 million pieces of ceramic sanitary ware, 3 million faucets, 2.5 million bathroom accessories and 20.1 million square meters of tiles are produced here yearly. Established in 1977 but completely overhauled in 1995, this mega complex is one of the world’s top sanitary ware production facilities in capacity, technology and quality.

International sales are the central component of VitrA sanitary ware’s long-term growth strategy. Exporting more than 50 percent of its production to some 75 countries around the world, VitrA sanitary ware is a leading exporter in many European markets, including Germany and the UK. VitrA is also raising its standing in other highly competitive markets, like France, Italy, Russia, Middle East, Gulf Region and North Africa.

Kale Group

Producing under the brand name Kalevit, Kale Group is among top five largest sanitary ware producers in Turkey. Known as Kalevit Saniter Seramik Sanayi A.S. , the company was founded in 1993 by the Kale Group to serve the growing sanitary ware market in the country. Kalevit Sanitary ware has an installed capacity of 1.6 million pieces of sanitary wares per year.

In 1999, Kale Group signed a partnership agreement with Spanish major Roca Group. But in 2009, Kale Group bought Roca’s stake in the partnership. In the parting agreement, Kale Group put restrictions on Roca to sell its products in Turkey.

However, Kale doesn’t have such restrictions in Spanish market.

Laying its foundation with Canakkale Ceramic Factories Corporation in 1957, Kale Group is considered one of the pioneers of formation of the ceramics industry in Turkey. It has grown over the course of time with investments in machinery Leading sanitaryware export destinations (2016, Kg)

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Sanitaryware production and exports in Turkey 2011

2012

2013

2014

2015

Installed Capacity (m. pieces)

18.77

20.36

22.12

24.33

24.70

Actual production (m. pieces)

16.92

18.57

19.01

20.43

19.84

Actual production (tons) 104,267 114,396 117,101 126,322 122,210 Exports (m. pieces) Exports (Tons) Exports (value, in US$m.)

6.78

7.03

7.54

8.01

7.97

41,763

43,303

46,444

49,339

49,093

173.289 186.893 203.237 221.842 198.112

and equipment manufacturing, defense, chemistry, electrical appliances, energy, IT, transportation, tourism and food industries.

Kale Group comprises of 17 companies, and is regarded as one of the most important industrial enterprises of Turkey with over 5,000 employees. The company has an installed capacity to produce 66 million square meters of ceramic tiles ( 32 million sqm of floor tiles, 27.5 million sqm of wall tiles and 6.5 million sqm of granite ceramic tiles). It is Europe's 3rd and the world's 12th largest ceramics manufacturer.

Creavit

Creavit is one of the largest ceramic sanitary ware producers in Turkey. With two production bases of sanitary wares in Zonguldak, the company has an installed capacity of 2.5 million pieces. The company claims to export 40% of its production capacity through its strong partners in Europe, Asia, Africa, America and Australia.

With timely investments in state of the art technology Creavit has strengthened its place in sector as one of the most significant brands with its ever increasing growth figures. Currently, the company is in the process of expanding its capacity to 4 million pieces, which will become operational in the second half of the year. Creavit has invested 25 million USD for this expansion.

The company will be able to expand product range for different products with this expansion.

Last year, the company invested in a new kiln with a daily capacity to produce 2800 pieces of sanitary ware per day.

According to the company, “ This strategic investment will allow Leading sanitaryware import sources (2016, Kg)

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Analysis: Sanitaryware

us to improve positioning on the Turkish sanitaryware scene and move closer to achieving the goal of strengthening our presence in Europe and the Middle Eastern sanitary ware market.”

Realizing that the production alone is not sufficient to achieve the desired success, Creavit has invested in creating designs which appeal to different segments of the country. The company has achieved various award winning designs through working with successful national and foreign sanitary ware designers.

Akgun Group

Akgun Group, a major construction material producer in the company operates three sanitary ware factories with a total installed capacity of 1.44 million pieces of sanitary wares per year.

In addition to sanitary ware, Akgun Group produces ceramic tiles, clay bricks and construction chemicals.

Company’s first facility, Akgun Vitrifye started its operations in Adapazari in 1996. Akgun Vitrifiye with its Dura Bagno brand, is one of the leading manufacturers in sanitary ware sector with about 540,000 pieces per year production capacity. Akgün Vitrifye exports 30% of its total production to over 20 countries.

The company has plans to expand its production capacity to 1.8 million pieces in near future with new investments.

Company’s second sanitary ware factory, Sakarya Sanitary ware was commissioned in 2008 at Sakarya with an installed production capacity of about 500,000 pieces per year.

Akgun’s third production facility, Eskişehir Sanitary ware factory was commissioned in 2010 at Eskişehir. Covering an area of 20,000 square meters with 8,000 square meters of production area, the company has a production capacity of about 400,000 pieces of sanitary wares per year.

According to the company, “Our quest is to create complete, satisfying bathroom environments. This means transforming often overlooked spaces into something more than a necessity of modern life. It’s about creating an enjoyable experience by changing our perception of and thus our interaction with the bathroom.”

To realise this ambition, the company employs a large inhouse design studio and collaborates with a world-class array of acclaimed industrial designers.

These talented individuals not only improve bathroom aesthetics, but functionality as well.

Tarun Seramik

Located at Ordu, Tarun Seramik is a mid scale sanitary ware producer in Turkey. The company has an installed capacity to produce 500,000 pieces of sanitary wares per annum.

Olgun Çakmak, a key executive from Turan Seramik says, “ We started with a small capacity of 5000 pieces of sanitary ware per month in 1990. With new investments in manufacturing facilities, we have achieved a total installed capacity of 500,000 pieces per annum from our Ordu based manufacturing facilities, which are spread over an area of about 25 acres.”

He further says, “ We focus on domestic Turkish market and Middle East region. Currently we produce 60 different types of sanitary ware models. Our last major investment of 500 thousand Euros in 2011 has enabled to acquire best in the class technology to produce luxury and economy class products.”

Seramiksan

Seramiksan, the ceramics company which has long been among the top five Turkish tile manufacturers, started up a brand new

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VitrA

Location- Bilecik Installed Capacity- 5.5 million pieces per annum Markets- Domestic and Export Markets Others- Largest ceramic sanitary ware ptoducer in Turkey, VitrA is a subsidiary of the Eczacıbaşı Group, one of Turkey’s most prominent industrial groups.

Founded in 1942 as Eczacıbaşı Sanitaryware, VitrA has emerged as one of the best known sanitary ware producers in Turkey and Europe. Over 50% of VitrA’s total output is sold outside of Turkey. The company operates production facilities in Turkey, Germany, France and Russia, VitrA produces over 5.5 million pieces of sanitary ware which are distributed to over 75 countries on five continents.

Kalevit

Location- Semedeli Installed Capacity- 1.8 million pieces per annum Markets- Domestic and Exports Markets Others- A subsidiary of one of the largest global ceramic producers, Kale Group, Kalevit is a leading sanitary ware producer in Turkey. Founded in 1957, Kale Group is Europe’s 3rd and the world’s 12th largest ceramics manufacturer. The company supplies products to customers in over 100 countries worldwide.

Kalevit Saniter Seramik Sanayi A.S. manufactures and markets ceramic sanitary wares in Turkey and internationally. It offers on- and in-vanity basins, corner basins, bottom and back vent toilets, urinals, soap dishes, toilet roll holders, sponge holders, vanity shelves, and other accessories. The company was founded in 1999 and is based in Istanbul, Turkey. Kalevit Roca Saniter Seramik Sanayi A.S. was formerly a subsidiary of Compañía Roca Radiadores, S.A.

Creavit

Location- Zonguldak Installed Capacity- 2.5 million pieces per annum Markets- Domestic and Export markets.

Others- Currently undergoing a major expansion exercise, Creavit is one of the five largest ceramic sanitary ware producers in Turkey. With two production bases of sanitary wares in Zonguldak, the company has an installed capacity of 2.5 million pieces. The company claims to export 40% of its production capacity through its partners in Europe, Asia, Africa, America and Australia.

The Canakcilar Company Group, parent company of Creavit, was established in 1960’s. Today, with their 60.000m2 factory ( closed area) spread over 100,000m2, they are one of Turkey's leading manufacturing companies.

Gural Vit

Location- Kuthaya Installed Capacity- 2.3 million pieces per annum Markets- Domestic and export markets Others- Subsidiary of Gural Group, one of the largest construction materials and ceramic tile producers in Turkey, Gural Vit was established in 1995 as a sanitary ware producer in the country.

With a current installed capacity of 2.3 million pieces of sanitary wares from its state of the art plant based in Kuthaya, a region known for its ceramic manufacturing heritage, the company has created a name for itself on the back of quality products.

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Analysis: Sanitaryware

sanitary ware plant in late 2013 with a production capacity of approx. 2.500 pieces per day of medium-high range quality.

Located in Turgutlu, near Izmir, the plant is one of the most technologically advanced plants in the country.

According to the company, “ Ours is one of the most technologically advanced ceramic sanitary ware production plant in the country. From a technical / system point of view, the machines have been arranged according to a layout which was very carefully and precisely designed by the company in order to obtain the most linear, but at the same time flexible, production flow possible.”

Idevit Seramik

Ideal Seramik (Idevit) operates in Turkey under the Idevit brand, manufacturing and selling ceramic sanitary ware for Turkish and export markets. The company exports its products to more than 50 countries in four continents around the world.

Established in 1993, the company carried out major expansion and modernization exercise in 2008. The company installed pressurized casting system to improve the quality of finished products at its Istanbul based plant.

Gural Vit

Formed in 1995, Gural Vit has emerged as one of the leading sanitary ware producers in the country. The company has an installed capacity of 2.3 million pieces, including a range of complete five piece sets, as well as many individual items which include, symmetrical and asymmetrical basins, squat pans, under-counter basins, urinal bowls, low-level pans, a variety of wall basins, and the very modern range of circular, round and square bowls.

The company focuses on the mid- end segment of sanitary ware.

According to Ismet Gural of Gural Vit, “Sanitary ware business sector in the country has undergone several critical phases in recent years.

Despite strong winds during times of crisis, we succesfully managed to overcome everything thanks to our caution and risk management abilities which were displayed. Those obstacles has rather made us stronger.”

ECE Banyo

Established in the year 1992 as Cenesizler Seramik Sanayi ve Ticaret A.S, today continues its business under the name of ECE Banyo Gerecleri San. Ve Tic. A.S. Located in Çorum Industrial Park on a 84000 square meters open ( Imports from China (no. pieces)

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Idevit Seramik

Location- Istanbul Installed Capacity- 250,000 pieces per annum Markets- Domestic and Export markets Others- A subsidiary of Duravit sanitary ware, Idevit Seramik is a mid sized sanitary ware producer based in Istanbul. One of the company’s eleven global manufacturing site, Idevit Seramik caters to both the Turkish and export markets.

Initially starting the sanitary ware production in 1993, the company carried out a major modernization exercise in 2008 to enable it to serve the upper- mid segment of Turkish and export markets.

Sarıbaşlar Seramik

Location- Çerkezkoy Velikoy Installed Capacity- 750,000 pieces of sanitary ware per annum Markets- Domestic and Export markets Others- Sarıbaşlar Seramik started manufacturing activities in our plant established in 1993 in Istanbul, with a production capacity of 300.000 pieces a year. In early 2006, the company moved to a new premises equipped with state-of-the-art technology, located in Çerkezkoy Velikoy Industrial Zone, with an open area of 20.000 m2 and covered area of 6.500 m2, with an annual production capacity of 300,000 pieces of sanitary wares.

Sarıbaşlar Seramik made an investment in an additional plant in 2008, providing a 25% capacity increase, as well as a further investment for establishment of a new factory in 2010, having a covered area of 12.000 m2, with a capacity of 750,000 pieces of sanitary wares a year.

25.000 square meters of enclosed area), the company has an annual production capacity of 1. 5 million pieces of ceramic sanitary wares.

Ege Vitrifiye

Ege Vitrifiye established in Kemalpasa, İzmir in 1994 as one of the most state-of-the-art facilities in the world in terms of its plant and technology used. Improving the production capacity of the factory that has been installed on an area of 59,000 m2 of which 41,600 m2 is closed area, from 650,000 pcs to 1,400,000 pcs/year by investing in order to keep the production in full capacity. 86% of the production is performed benefiting from the High Pressure Casting Technique which is the utmost technology, considering the manufacturing technology in vitrified products.

Total sanitaryware exports (no. pieces)

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Analysis: Sanitaryware

Major ceramic sanitary ware producers in Turkey Company

Location

No. of Plants

Installed Capacity

Bilecik

1

5.5

Kale Group

Semedeli

2

1.8 million

Creavit

Zonguldak

2

2.5 million

3

1.44 million pieces

Eczacibasi Vitra

Akgun Group Duravit Turkey

Istanbul

1

250,000

Searmiksan

Turgutlu

1

800,000

Eskisehir Organized Industry Area

1

400,000

Ordu

1

500,000

Kayseri

2

3 million

Viba Seramik

Eskisehir Industrial Zone

1

500,000

Idevit Seramik

Tuzla

1

700,000

Bozvit-Bozuyuk Vitrifiye San. Ve Tic. A.Ĺž

Bilecik

2

800,000

Gural Vit

Kuthaya

2

2.3 million

Izmir

1

900,000

Cerkezkoy Velikoy Industrial Zone

1

750,000

Bocchi

Kocaeli

1

400,000

Dogvit Seramik

Maltepe

1

400,000

Corum Industrial Park, Corum

1

1.5 million pieces

Eskisehir Seramik ( Lapino)

Eskisehir

1

400,000

Sanovit

Eskisehir

1

350,000

Alvit Elit Mobilya Seramik (Sanvit) Turan Seramik Turkuaz Seramik

Ege Vitrifiye Inc Saribaslar Seramik

ECE Banyo

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Bartin

AC 17-3

asian ceramics

31

Analysis: Heavy clay

Vietnam heavy building a brighter tomorrow

Jahir Ahmed examines how a resurgence in building material consumption augurs well for Vietnam’s brick and roof tile manufacturers…

T

he rebound of consumption of the building materials has improved the Vietnamese heavy clay markets following government’s efforts to improve housing in the country.

As a result, other building ceramics are also going to enjoy accelerated growth, according to the Vietnam Building Ceramic Association (VIBCA) and the Vietnam Association for Building Materials (VABM).

Last year, 2016, was a dynamic year for Vietnam’s real estate market, said Nguyen Manh Ha, Deputy Chairman of the Vietnam National Real Estate Association (VNREA).

He told the “Prospects for the Real Estate Market in 2017 - Impact of Policy” conference held in Hanoi in late last December that the country’s real estate market saw steady development in all segments during the year, with particularly strong growth in the high-end and luxury segments.

Meanwhile, the Ministry of Construction has asked the provincial and city committees to develop and improve facilities for manufacturing and supplies of heavy clay products, ceramic tiles, sanitary wares, pavers, roofing tiles and other related building materials by 2020. The government has also directed all concerned to perform well in managing investment projects producing ceramic materials, building bricks and ceramic construction and paving products in the provinces.

The government is going to support and meet the increasing demand in the real estate markets. Due to higher demand for properties, Nam Ha Noi Urban Development, a subsidiary of Vingroup, said in the fourth quarter of 2016, it delivered high-end apartments at Park Hill project in Times City urban area and earned VND9 trillion. Not only providing high-end apartments, luxury villas and expensive resorts, Vingroup has recently announced it will also provide apartments at reasonable costs when kicking off the VinCity project. The apartments of the projects would be priced from VND700 million only.

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Currently, for heavy clay products and other ceramic wares, there exists new investments and expansion investments aimed at increasing the total capacity of heavy clay products and ceramic tiles. Development investment priorities were given for producing heavy clay cotto and granite tiles to raise capacity by about 25 percent, which is equivalent to about 140 million sq metres a year, accounting for about 10 percent of cotto tiles, equivalent to approximately 50 million sq metres per year, and heavy clay brick accounting for about 65 percent of ceramic equivalent of 350 million sq metres per year.

The government has also plans for restructuring of production facilities for heavy clay and ceramic tiles of reasonable sizes, the choice of modern technology and equipment, production area and materials.

To cope with the government policy in building and construction sectors, the government has priority for manufacturing unburnt bricks throughout the county. There are currently 25 unburned brick manufacturing plants throughout the country which can put out 2 million cubic meters a year, but the demand is just 500,000600,000 cubic meters, requiring additional supports to improve consumption. The market price is reportedly now at VND1,1001,300 per brick.

However, with the current production capacity, the total number of burnt bricks to be churned out in 10 years may reach 330 billion.

In order to have this output, 500 million cubic meters of clay will be needed, equal to 25,000 hectares of fields.

Expanding demand

Total new launches of apartments in the two major cities reached more than 70,000 units in 2016, with more than 67,000 sold; a significant improvement over the last few years. In line with positive sentiment in both demand and supply, prices remained on the uptrend across all the markets.

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Analysis: Heavy clay

y clay markets

“In 2017 it is likely that the momentum will continue and the residential market will move into a more sustainable mode, with the expansion of lower-end segments and improvements in owneroccupier demand versus investor demand,” said Stephen Wyatt, General Director of JLL Vietnam. “Prices will grow further, he said.”

Its report said that GDP growth in 2016 was lower than in 2015 and the government’s annual target, but given the negative impact of harsh climatic conditions, environmental disasters, and volatile geopolitics throughout the year, the result was considered positive.

Strong increases in FDI, retail sales, and the number of international tourists, coupled with improvements in the manufacturing and service sectors, resulted in a healthier shift in the country’s economic structure.

For 2017, both the government’s annual target and the World Bank’s forecast are more positive than actual 2016 results and are based on expectations regarding the continued growth in manufacturing and services, together with the recovery in agriculture, forestry and fisheries and a promising outlook for the international economic situation.

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Supply advantages

Vietnam aims at providing houses to every citizen of the country by the next decade. In an effort, the Vietnamese Prime Minister has directed the related government machinery to accelerate the development of affordable housing for the low income segments of people.

The move aims at basically develop the affordable housing, set out in the national housing development strategy until 2020, with a vision to 2030.

The Prime Minister asked the chairpersons of the municipal and provincial People’s Committees to create favorable conditions, concerning land and administrative procedures, in order to call on property developers, businesses using a large number of laborers and the people to invest in developing affordable housing, particularly accommodations for employees at industrial zones, economic zones and industrial clusters in the locality.

In an effort to enhance the quality of affordable housing, the government has directed the Ministry of Construction to issue additional standards and criteria on affordable housing, research the

AC 17-3

asian ceramics

33

Analysis: Heavy clay

IN THE NEXT DECADE THE COUNTRY WILL NEED ABOUT 41-43 BILLION BRICKS A YEAR application of scientific and technical advances and new materials to reduce housing costs, and develop the suitable housing product structure. It will ensure the essential technical and social infrastructure in terms of transport, healthcare, education and culture of affordable housing construction projects in urban areas and at industrial zones; and propose measures and resources to radically deal with the issue of anti-flood houses for needy households in the central region.

However, the production of bricks in the region is now in the process of switching to a new standard by replacing old traditional kiln firing systems and accessing to energy efficient and environment friendly brick kilns, supported by the governments and the technology transfers through UN agencies including UNDP and other international aid agencies.

Among others, the East Asia Division of Swiss Agency for Development and Cooperation (SDC) is working Vietnam for improvement of brick works and setting up environment friendly brick kilns, such as, economic improved Vertical Shaft Brick Kiln (VSBK), SDC told Asian Ceramics. It has found the prospect positive, according to a report it sent to Asian Ceramics.

A significant quantity of productions are being upgraded to the high quality ceramic grade, opening up opportunities for new investment in plant and machinery. Clay bricks continue to remain profit making and beating the rival cement concrete products, according to the Vietnam building material association.

Unburnt bricks

In recent years, there surfaced the deadly competitor concrete products, which are substitute to the clay blocks and bricks. A significant growth of the markets are gradually being grabbed by the cement concrete blocks and bricks, and to a some extent by others.

Although, from engineering point of view the clay product is superior to that of cement concrete, the later is economic, lighter, easy to use and better paintable.

The new investors are now finding the alternative products more profitable in some of the markets. In another development, a great part of the exterior and interior walls of the high rise commercial buildings and shopping malls are being switched to safety glass for better access to natural light, insulation and beauty. However, burnt clay bricks are still most viable building materials and profit making.

In current situation of huge expansion of cement concrete and adobe building blocks and bricks in the major market of Vietnam, the

34

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Vietnamese government is highly cautious about fast reduction of clay bricks, considering possible impact on it in the event of increased land-soil use or sudden fall in demand of clay bricks during recession and fierce competition from the unburnt bricks and blocks.

While increasing the use of unburnt alternatives, the government suggests use of only energy-saving and environment friendly clay bricks, and gradual elimination of polluting firewood-fed traditional brick kilns. However, in the Vietnam markets, the heavy clay products are continuously beating the unburnt building materials in a fierce competition, where investment in production of unburnt items is less profitable compared to clay items, which have more acceptance to the consumers in price and quality, In present building boom, the Construction Ministry has estimated that Vietnam would need 42 billion bricks for construction works in five years by 2020. The government has decided that the building material industry will gradually shift to ‘clean production’ only. In that category, concrete and adobe bricks and blocks are energy-saving and environment friendly, as well as clean and green to the government.

The government favours unburnt products, referring mainly to concrete and adobe building materials, as those have additional features, being light-weight, heat insulated, fireproof, compressible, easy to use, and allow reduction of construction time, save materials and investment costs, sources in the industry said.

VABM said the government wants the unburnt building materials to account for 40 percent of total building material output by 2020 against the current 20 percent.

Demand drivers

The Construction Ministry has estimated that Vietnam would need 42 billion bricks for construction works by 2020. Unburnt building materials are light, heat insulated, fireproof, compressible, easy to use, and allow reduction of construction time and save materials and investment costs.

However, with the current production capacity, the total number of burnt bricks to be churned out in 10 years may reach 330 billion.

In order to have this output, 500 million cubic meters of clay will be needed, equal to 25,000 hectares of fields.

The demand for high quality heavy clay materials is steadily growing in Vietname for quality housing development and investment by the foreign developers in the recent years.

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Analysis: Heavy clay

Singapore-based CapitaLand and Vietnam’s Khang Dien House Trading and Investment Joint Stock Company have recently signed an exclusive cooperation agreement with UniHomes and Seareal in Ho Chi Minh City over sales distribution for the Kris Vue project.

Kris Vue is the seventh housing project of CapitaLand in Vietnam, designed in the style of hotel apartments for young families. Located in District 2, Ho Chi Minh City, the project inherits the convenience from the developing infrastructure system in the district, such as the Long Thanh-Dau Giay Highway and Thu Thien Urban Area.

Vietnam is one of CapitaLand’s key markets in Asia, backed by a well-developed economy, rapid urbanization, and young population.

CapitaLand is committed to long-term investment in real estate in the country. The group now has a presence in five major cities: Ho Chi Minh City, Hanoi, Hai Phong, Da Nang and Binh Duong, investing in residential apartments and serviced apartments. To date it has provided more than 7,850 high quality apartments in seven projects in Ho Chi Minh City and Hanoi.

The kiln burnt production will consume 40 million tons of coal and will produce 148 million tons of toxic gas.

When the real estate market froze, a series of burnt brick workshops had to shut down or run at half of the designed capacity.

As the market has warmed up, the burnt brick price has escalated in recent months. In HCM City and Ba Ria–Vung Tau province, the price has surged by 30-50 percent.

The recovery of market has prompted investors to resume burnt brick factories, which do not require high investments, and have prices competitive with unburnt products.

Analysts have warned that the real estate market recovery, plus the increased demand for building materials, may lead to the ‘unfired brick factory boom’, which will once again raise worries about the danger to the environment.

Nevertheless, heavy clay markets in Vietnam continue to grow beating non-baked products. “Despite its environmental advantages, and government backing, non-baked bricks have yet to gain an expected market share in Viet Nam,” said Tran Van Huynh, chairman of the VABM. "Non-baked bricks account for around 8.5 per cent in Vietnam, compared to non-baked bricks’ majority market share in the developed economies," Huynh added.

While investors can easily build burnt brick factories because of the low investment rate, they have to think carefully when deciding to build an unburnt brick factory because of the high investment capital and unstable profit.

A report showed that there are 23 factories in the country which make unburnt building materials. The total output of the factories just accounts for 17-18 percent of total building materials used. Tran Van Huynh from the VABM, said that unburnt bricks were used by the modern construction industry.

Meanwhile, the production of unburnt bricks is experiencing slower growth, according to the industry sources. The suggest the government’s decision to push ahead the production of unburnt building materials to 40 percent of total building material output by 2020 may not be possible if the manufacturers are not given enough incentives in various forms including attractive prices that can beat the kiln burnt bricks.

The higher-end urban areas have to use 100 percent of unburnt materials from 2013, while the required proportion is 50 percent for other areas. After 2015, unburnt materials are being used for 100 percent of construction works.

However, in 2014, unburnt materials were used for only 179 construction works in HCM City. Some contractors hesitated to

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Viglacera Corporation

Established in 1974.

Location: Hanoi, Vietnam.

Products: Heavy clay products, and ceramic and granite tiles.

Production capacity: Viglacera is the the leading manufacturer of heavy clay ceramics and bricks in Vietnam. Its nine brick and terracotta companies with 15 factories meet the demand of the upper-end markets.

Markets: Domestic and export markets. Heavy clays products have established markets all over Asia and other continents.

Trademark/brand: As a trade mark or brand, Viglacera is known worldwide as a major heavy clay products, ceramic tile and sanitaryware producer of Asia.

Others: Viglacera companies are former state owned companies, and now stock market listed under Viglacera. Viglacera also produces glass products and others.

Ha Long Ceramic Co

Status: State owned Location: Ha Khau Precinct, Ha Long city, Quang Ninh, Vietnam Products: Heavy clay products, ceramic tiles, using Vietnam’s best clay from Gieng Day quarry founded by the French over a century ago.

Markets: Domestic and export markets.

Building Materials Corporation No.1 (FICO) Location: Ho Chi Minh City (Factories of the subsidiaries are located in different places). Vietnam.

Products: Heavy clay products including roofing tiles, pavers, refractory bricks, bricks and others. Also manufactures ceramic sanitary wares, ceramic and porcelain tiles, Markets: Domestic and expirt markets. FICO products are exported to many countries, including, USA, France, Russia, Australia, Korea, Singapore, Taiwan and Japan.

Others: FICO is a state-owned company, belonging to the Ministry of Construction, and owner of many ceramic manufacturers, including, Donai (bricks and roofing tiles).

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19/07/16 10:50

Analysis: Heavy clay

use unburnt materials because these materials required new methods and instruments for the execution.

The Vietnamese government in April 2010 had decided that unbaked materials would make up 40 percent of the building material outputs by 2020. The decision also requires buildings of above nine stories to use lightweight concrete bricks equivalent to at least 30 percent of the total amount of materials needed.

Since 2011, several baked brick kilns in HCMC have been forced to halt operations.

The Ministry of Construction forecasts that in the next decade the country will need about 41-43 billion bricks a year. This would require some 57-60 million cubic metres of clay and 5.3-5.6 million tonnes of coal.

Clay brick’s competitiveness continues to exist after such a long time of restriction. State-owned clay brick factories under Viglacera are now major competitors to non-baked products.

Vietnam has many large heavy clay brick manufacturers, such as, Nhi Hiep Brick Tile Joint Stock Co (NHC), Viglacera Ba Hien Joint Stock Co (BHV), Viglacera Dong Anh Joint Stock Co (DAC), Viglacera Dong Trieu Joint Stock Co (DTC), Ha Long No.1 Viglacera Joint Stock Co (HLY), Viglacera Tu Son Ceramic Joint Stock Co (VTS) and Thach Ban JSC. Their clay bricks and other clay products are used all over the country.

Major heavy clay product manufacturer Thach Ban has recently invested heavily in clay bricks and clay tiles production and upgrading. It has added press machine 4000-tons double loading machine, horizontal dryer, new technology in manufacturing red bricks. Red bricks are produced by hill soil instead of farming land. The new technology is friendly with environment and it prevented brick-makers from encroaching farm lands. Thach Ban Group will develop red bricks factories using this new technology throughout the country, the company said.

Dong Nai Brick and Tile Corporation

Location: Four factories in Dien Bien Phu Street-District 1, Ho Chi Minh City; Bien Hoa City (two factories), Dong Nai; and TanUyen District, Binh Duong, Vietnam.

Annual production capacity: 115 million pieces of ceramic and heavy clay products and 14,000 tons of refractory bricks.

Products: Heavy clay and ceramic products, heavy clay bricks, terracotta floor and wall tiles, decorated wall tiles, glazed and unglazed roof tiles, pavers, and refractory bricks, and ceramic floor and wall tiles..

Markets: Domestic and export markets.

Others: Ceramic Tile Joint Stock Company in Dong Nai TUILDONAI formerly Dong Nai Tile Factory.

Vietnamese Ceramics JSC

Location: Trangan, Dongtrieu, Quangninh, Vietnam Products: Heavy clay and ceramic tiles, specially, standard quality terracotta tiles, which include terracotta floor tiles, terracotta wall tiles, terracotta step-nose tiles, ‘terracade’ façade and panel tiles and terracotta roof tiles.

Markets: Domestic and export markets. Export destinations include Southeast Asian countries, China, Middle East, Australia NZ, among others.

Hue Restoration Pottery Enterprise

Location: Hue City, Hue, Vietnam Products: Heavy clay and ceramic specialty tiles.

Reputed for application in the restoration of ancient buildings by providing special kind of tiles like Luu Ly tiles.

Markets: Domestic and export markets

Property issues

The property market picked up in number of units launched and sold since last year, according to JLL’s Stephen Wyatt. Last year, there were 40,000 units launched across all segments in Ho Chi Minh City, an increase of 62 per cent year-on-year, and 35,000 units sold across all segments, up 45.5 per cent. In Hanoi, approximately 36,700 units were launched across all segments, an increase of 30 per cent year-on-year, and 33,600 units sold across all segments, 19 per cent higher.

New supply and sales in the condominium for sale market continued to be strong, with major developments by Vingroup, Son Kim Land, Novaland, Keppel, and Capitaland in Ho Chi Minh City, according to Ms Nguyen Hoai An, Director of Research, Consulting and Asset Management Services at CBRE Vietnam.

Hanoi, meanwhile, saw ground broken at new sites in prime locations such as Lieu Giai and Giang Vo Streets in the mid-town area and Tran Duy Hung Street in the west.

According to UNDP, economic growth and rapid urbanization have led to significant growth in the construction and building materials market in Vietnam. The building sector is projected to grow at about eight percent a year in the next ten years, with the increasing demand for building bricks.

However, fired clay bricks still account for over 80 percent on the local market. Thousands of traditional brick kilns nationwide are burning coal and taking soil from agriculture land to produce these bricks, causing adverse environmental impacts.

UNDP’s promotion of non-fired brick production and utilization

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Analysis: Heavy clay

in Vietnam project has been in place to help increase the production, sale and utilization of non-fired bricks.

This will displace the use of fossil fuel and good quality soil for brick making, thus helping reduce the greenhouse gas emission of at least 383,000 tons of carbon dioxide after five years of implementation.

The project is expected to remove barriers from production and the use of non-fired bricks and support the implementation of the Non-Fired Bricks Development Program, which was approved by the Prime Minister in 2010. The goal of this program is to increase the market share of non-fired bricks to 25 percent in 2015 and 40 percent in 2020.

Viglacera: a regional giant Viglacera Corporation’s subsidiary heavy clay products manufacturing companies, producing building blocks, teracotta bricks and roofing tiles. The plants include: • Viglacera HaLong Joint Stock Company • Viglacera Halong 1 Joint Stock Company • Viglacera Dongtrieu Joint Stock Company • Viglacera BaHien Joint Stock Company • Viglacera TuSon Joint Stock Company • Dong Anh Ceramic Joint Stock Company • Viglacera Huu Hung JVC • Viglacera TuLiem Joint Stock Company • Viglacera HopThinh Joint Stock Company

Goda Cuong Thinh JSC

Dr. Jochen Nippel, CEO

Location: Hang Non, Hanoi, Vietnam Products: Clay bricks and tiles Annual production capacity: 30 million pieces per year Markets: Domestic and export markets. In addition to manufacturing clay bricks, Goda has developed a process that produces bricks and tiles from glass

Thach Ban JSC

Location: Hanoi, Vietnam Products: Clay bricks, clay tiles, pavers and roofing tiles.

Markets: Domestic and export markets.

Others: Heavy clay, porcelain and ceramic manufacturer Thach Ban JSC’s clay bricks and clay tiles manufacturing units include Thachban Brick and Tile joint stock company, TBSC7. Thachban Brick and Tile joint stock company No.28, Thachban Luong Son JSC9, and Thachban Blue Brick and Tile JSC

Nam Hiep Hoa Co Ltd

Location: Binh Thanh Dist., Ho Chi Minh, Vietnam Products: Clay bricks, tiles, terracotta, earthenwares Markets: Domestic and export markets

TOKO Vietnam Co Ltd

Location: Tan Quang, Van Lam, Hung Yen, Vietnam Products: Heavy clay products and ceramic tiles.

Markets: Domestic and export markets

Creating Solutions “We belong to the oldest and most renowned builders of plants and machinery for the heavy clay industry – many brickworks all over the world trust in us. Innovation built on tradition is what distinguishes these machines and plants then as it does today. Many developments and inventions that are now state-of-the-art in this business line originated state in our design department. These include highly complex industrial robots for modern brickworks, comprehensive and integrated automation solutions and innovative measures and technologies for environmental protection.

For further information about KELLER send me a mail to jochen.nippel@keller.de.” jo

Trungdo Joint Stock Company

Location: Bac Vinh Industrial Zone, Nghe An, Vietnam Products: Ceramic roofing tiles.

Markets: Domestic and export markets.

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AC 17-3

asian ceramics

39

Analysis: Zibo

Swinging th pressures mount as Zibo cuts capacity

In the last of a raft of measures issued by the Zibo authorities, the tile industry of the region is staring at an enforced reduction of some 60% in its tile capacity. How can these be brought about? AC finds out…

I

t was in 2016 that Zibo really began to accelerate the modernization of its tile industry. This was as much environmental as anything else as the authorities instigated measures that were far above those required on a national level in terms of standards. It was felt at the time that such development would enable the government to put in place a wider model of manufacturing reform.

Policies throughout the year came thick and fast, with efforts concentrated on encouraging the more powerful enterprises to withdraw from the city and settle in industrial parks; closing more than 10 enterprises for 6 months that had failed standards through random environmental sampling, and banning night-time crushing and firing activity.

Since September of last year, Zibo has successively issued what translates as the “Precise Transformation and Adjustment Work Program of Ceramic tile Industry in Zibo” programme; “Financial Policies for Precise Transformation and Adjustment of Ceramic tile Industry” programme and “Implementation Scheme for Precise Transformation and Adjustment of Ceramic tile Industry in Zichuan District” programme, all of which are aimed at further accelerating the upgrading process of the region’s ceramic tile industry.

Capacity slashed?

In the “Precise Transformation and Adjustment Work Program of Ceramic tile Industry in Zibo” issued on 19th September, the document clearly stated that 500 million square meters per year of the ceramic tile production capacity needed to be removed, with the aim of only 200 million square meters per year of the capacity ultimately being left. This was the second time the Zibo government had attempted such a radical reduction, but it was widely felt that if the industry was to survive and prosper, then there was to be little alternative.

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The impetus for such dramatic measures came about as the authorities accepted that Zibo’s industry was undergoing the most difficult times it had encountered for more than three decades.

Of course many industry insiders perceived the axing of 300m. sq metres of capacity to be harsh and excessive, adding that the government was not giving sufficient time for companies to adapt and upgrade. Indeed, there was a wider feeling, particularly in Foshan, that the Zibo government was far too “one size fits all” in its approach.

Urgency required?

Zibo, as the second largest ceramic tile production region in China, has a number of outstanding ceramic tile enterprises but has also gathered a large number of low-end manufacturers as well.

For example, one company boss in Zibo said that in his village there is a dilapidated village-owned enterprise, which, in for nearly 30 years, has miraculously survived though controlling production costs to the extreme, missing every environmental and worker standard and simply piling finished product in the open air.

More interestingly this run-down ceramics enterprise was once jokingly referred to as a “market barometer of the good or bad”. That is to say that there is not a warehouse for products production and during the peak season, the ceramic tiles will be taken away by trucks and sold out as soon as they came off the production line. Therefore, if the locals could see piles of tiles building up in the village, then clearly the market was not in a positive state!

This is just one example and there are many backward capacities like this in Zibo. According to enterprises and suppliers, even the local government itself could not tell how many of these small-scale enterprises there are. As an estimate, currently there are more than 200 ceramic enterprises and 300 production lines in Zibo, with an average of less than 1.5 production lines for each enterprise. As such, industrial concentration and economy of scale is very low.

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Analysis: Zibo

he axe All change…

However, since the government began in 2016 to intensify its efforts to transform and upgrade the ceramic tile industry at the beginning of this year, these smaller enterprises have begun to have a much harder time.

With the issuing of “Implementation Scheme for Precise Transformation and Adjustment of Ceramic tile Industry in Zichuan District” on November 17th, 2016, many enterprises in Zibo lost the ability to upgrade locally, as the new scheme presents clear requirements that enterprises should apply and sign a letter of commitment, as well as pay for the deposit of transformation and upgrading. This is not cheap. Enterprises need to pay for a deposit of RMB15 million, RMB18 million and RMB20 million, respectively, according to one, two or three or more production lines.

Given this situation, many enterprise owners clearly know that there is no chance of survival if the deposit is not paid. The result could be huge. By the end of 2017, two thirds of enterprises in Zibo will be required to shift production regions (taking the problem elsewhere…) or exit the industry completely.

Miao Bin, the standing vice president of China Building Ceramics & Sanitaryware Association, recalled that before 1978, China was in the stage of planned economy; from 1978 to 1985, it was in the early stage from planned economy to market economy transition, during which township enterprises began sprouting. In this context, China Building Ceramics & Sanitaryware Association was established in Zibo of Shandong Province in 1986. Due to Zibo’s profound ceramic history and stronger industrial base than those in other regions, the Zibo ceramic tile industry had significant influence throughout the country at that time. In the early 1980s, Zibo had already had several large ceramic tile enterprises and a better industry chain, with such advantage lasting until the 1990s.

The status quo is that most of Zibo enterprises have no brand, which is an embarrassing development problem that Zibo enterprises have realised in recent years. Although the companies experienced rapid development for more than 30 years and the Zibo production region gained its own position in the industry, there have been some widespread problems for the most enterprises. These include low

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capacity, obsolete production equipment, low capacity, high unit energy consumption and low value-added products. Given such a sluggish market context, most Zibo enterprises face an awkward dilemma of "suppression of the Foshan brand and shock from surrounding production regions with lower price".

Song Cheng (a pseudonym), the owner of a local ceramic enterprise in Zibo, experienced the ups and downs of Zibo ceramic tile for nearly 20 years. As far as he can see, 2017 will be the critical moment for Zibo ceramic tiles to eliminate backward production capacity at present, transforming and upgrading.

Capacity control

Zibo ceramic tile capacity has accounted for 23% of the national total capacity at its peak. This growth has been rapid. As far back as 2009, when the industry began to realise its shortcomings but failed to act, it was growing uncontrollably. At that time there were more than 270 companies and 508 production lines.

At that time, the ceramic tile capacity in Zibo accounted for 23% of total annual capacity in China. However, as Zibo ceramic tile enterprises were large in number but weak in strength, innovation and management, they have generally not been that well received on the international stage or indeed in the wider domestic market.

This millstone of large capacity but relatively low quality production essentially put the brakes on the required upgrades that were needed, and started the reform process as a result.

In 2009 Zibo Government first put forward a target of industrial regulation and scientific development for the local ceramic tile industry, and then issued “Guidance for Restructuring and Revitalization of Zibo Ceramic tile Industry”, which indicated that within three years, a number of backward capacities would be shut down to keep the ceramic tile industrial scale from 1.2 billion square meters per year in 2009 to 700 million square meters per year. After that, Zibo Government clearly requested in December 2010 and August 2011 that by the end of 2011, the backward capacity of 500 million square meters per year shall be surely shut down.

After several years’ efforts, the goal of Zibo’s first-round production cuts plan had been achieved. According to the survey of two rounds

AC 17-3

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41

Analysis: Zibo

of "Long March of Ceramic Industry-Field Survey for National Ceramic tiles Capacity and Production Region Development" jointly organized

by Ceramic Info Weekly and China Building Ceramics & Sanitaryware Association in 2011 and in 2014 respectively, the annual ceramic tile capacity in Zibo production region was 1.2 billion square meters in July, 2011, while it had been successfully reduced to 700 million square meters by the end of 2014.

It was embarrassing that, according to the data released by Zibo Municipal Office of State Administration of Taxation in 2014, the total tax revenue of Zibo was RMB25.647 billion, while the total tax amount of 170 ceramic tile enterprises was RMB387 million, accounting for 1.5%. At the same time, comprehensive energy consumption of ceramic tile was very high, with huge land and other resource consumption as well.

Environment: the final pressure

Now under the pressure of environmental protection, safety production, energy saving and emission reduction and other new tasks and requirements, it is urgently needed for Zibo production region to achieve the survival of the fittest by accelerating the transformation and upgrading of enterprises, through which to realize the goal of healthy, high quality and sustainable development of ceramic tile industry.

On 31st December, 2015, the Zibo Government issued “Suggestion on Accelerating the Transformation and Upgrading of Ceramic tile Enterprises in Southern Region of Main Urban Area” to speed up the pace of transformation and upgrading. This has subsequently been followed by the raft of measures already covered in late 2016.

That said, the decision the government proposed to cut capacity of 500 million per year again in the second round and ultimately retain 200 million per year, has been difficult for many industrial insiders to understand, including Song Cheng. For example, how did the government come to a figure of 200m. sq metres in the first place?

Added to that, other people in the industry questioned “whether the capacity of 200m. sq metres per year can actually meet the future development needs of the entire production region”. What is more, the radical slashing of 60% of remaining capacity will ultimately cause even greater, wider issues amongst the customer base and also the very many support industries that serve these companies.

Tang Yundi (a pseudonym), a senior executive in the Zibo ceramic tiles industry, believes that the real core of supply-side reform shall be to rely on market. The energy efficiency eliminated of supply-side reform shall be digested with economic leverage or law of market economy, rather than administrative regulation.

Constant confusion

By mid-November 2016, the “Implementation Scheme for Precise Transformation and Adjustment of Ceramic tile Industry in Zichuan District” programme was officially released, with a clear request that enterprises shall apply for and sign a letter of commitment as well as pay the deposit according to the number production lines in operation as previously mentioned. Although this scheme clearly marked the determination of Zibo ceramic tile industry transformation scheme, enterprises were still confused about its future development.

"The content of the file changes too fast," most enterprises in Zibo said. Indeed, many said that even if the money is paid, they still worry that industrial policy will be adjusted next year and the goalposts will move once again.

According some insiders, most enterprises feel uncomfortable.

Notices are mostly issued in a written form, and in some cases in oral form. What is more, in some cases, some written notices are not even stamped with official seals. In a period of time, a notice issued in the

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COST RISES WILL ADD AT LEAST RMB5 PER SQ METRE TO PRODUCTION PRICES, BUT WILL NEED TO BE ABSORBED morning may be changed in the afternoon, and later the company does not know which one it should be following. Clearly the system is also open to widespread abuse.

"The contents of some notices are not very specific, so the enterprises end up needing to refine it by themselves. For example, at the beginning of 2016, due to the construction of desulphurization and de-nitrification facilities without detailed plans or standards issued by central government, many enterprises did not pass the acceptance after the construction had been completed. This forced them to tear down the facilities and call for new tenders", said one company.

Many tile company owners believe that the reason for the above situation was that the communication channels between the enterprises and government have been blocked, resulting in poor communication. This has been exacerbated as companies have not wanted to put their heads above the parapet and be the first one to point out such a problem for fear of being hit even harder by extra regulation.

Tang Yundi revealed that the industrial transformation and upgrading needs a more ordered process and should be allowed to take time. It cannot happen overnight. In addition, the government should formulate rules and standards that actually suit clear industrial development rather than just be as reactive. Companies need stable industrial policies so that they will have time to develop high valueadded products and build brand. However, the urgent requirement and over-exertion from the government has caused companies to lose confidence. In such circumstances it is not surprising to learn that innovation and investment have fallen to record low levels.

In fact, since June of this year, the pace of product innovation of Zibo enterprises significantly has slowed down, as well as construction and renovation of most exhibition halls, or even being at a standstill.

Cost pressures mount

When you consider that the industrial situation has been slow in the last few years, it is not surprising to learn that most enterprises are facing enormous pressure. Therefore, for many enterprises, the most important thing for this year is to survive.

This appears to be the mantra of most in Zibo right now.

Recently, there are many cases that employees come to the

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Analysis: Zibo

companies and ask for salary increases in Zibo. However, Due to the poor sales at present, most ceramic tiles are being stacked in warehouses, with the cash flow being changed into products rather than worker’s benefits. In terms of cost, the coal price has also soared; freight has increased in varying degrees, and other raw materials have also risen in price. All of this has led to a situation where companies are making little or no profit.

Moreover, during the beginning of this year, the majority of production lines in Zibo production region were in a state of start and stop. “Enterprises open or closed in this year suffer big losses.

Few make a profit." Song Cheng said.

At the same time, Zibo enterprises, since last year, have been forced to increase investments in environmental protection facilities, factory capacity and appearance, as well as paying increased the increased costs associated in the subsequent operation of these additional facilities.

It is apparent that this year, each Zibo enterprise will need to increase investment by at least RMB5-6 million in environmental protection facilities, with some having to look at more than RMB10 million. In addition, the increased operating costs are not insignificant. An owner of one Zibo enterprise told AC that after preliminary calculation, its increased environmental protection operating cost, the rise in raw material and other costs mean an additional RMB5 per sq metre in cost – at least. However, due to intense market competition, the price of ceramic tiles is unable to rise so that the ceramic enterprise has to absorb these increases itself.

In the view of many insiders, even if the government did not enforce its programmes, these cost rises will naturally drive many smaller players to the wall and eliminate them from the market.

However, despite this likely outlook, the government continues to show zealotry in its approach to winnowing capacity, turning the screw and increasing the pressure on manufacturers across the region. Right now, enterprises that want to upgrade locally are required to pay a huge deposit before they are even eligible to step over the threshold. For most enterprises, even if the money is paid, they will still have a hard life in future. Many companies that determine to develop in the ceramic tile industry are now realizing that to have a future, they will need to make their investments outside the city.

In addition, some Zibo tile companies have gradually diverged. In some cases, owners have taken the opportunity to sell enterprise to the contractor, some enterprises have chosen to relocate to construct a new factory or rent production lines, and even some enterprises have made it clear that they want to withdraw from the tile business. According to sources, currently a great many Zibo enterprises have established factories and rent production lines in Guangdong, He’nan, Shanxi and other provinces. However, this model has also led to some concerns in the industry leading to worries over how companies from one Province with a particular way of marketing, branding and management are going to adapt to working in a new climate and region.

The aftershocks…

As of today, since the beginning of 2017, some enterprises in Zibo production region have stopped the kiln in an effort to transform from coal to gas firing. This is in response to the edict from the government made it clear in the “Precise Transformation and Adjustment Work Program of Ceramic tile Industry in Zibo” that enterprises who wish to upgrade locally must produce with natural

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gas by 2018.

In the current situation, Song Cheng expresses his concern about Zibo enterprises using natural gas solely and believes that this will result in unfair competition between the Zibo production region and the surrounding areas. “Elsewhere, they are still going to be using cheaper coal rather than the gas we will be forced to use in Zibo” he said “ and this will mean an unfair, enforced disadvantage in comparison to surrounding regions” adding that this could further drive the industry into a nosedive.

"In a period of time, Zibo enterprises may have enough space to deal with cost growth only after they further improve the added value of products. For those enterprises with weak marketing, there is so much pressure,” said Song Cheng.

In Tang Yundi’s view, currently the Zibo production region is going through a very painful period of transformation and upgrading.

This view is consistent with “Implementation Scheme for Precise Transformation and Adjustment of Ceramic tile Industry in Zichuan District（2016-2017）”issued on 17th November by the government of Zichuan District, which clearly encourages to create a number of leading enterprises with strong economic strength, significant brand advantage, huge development potential, independent intellectual property rights and core competitiveness through strong consociation, mergers and reorganization, driving the transformation and upgrading of ceramic tile industry in the district.

Tang Yundi believed that the key of the healthy development of an industry should be stable industrial development policy. "In the future, Zibo enterprises shall learn to communicate with the government, and enterprises in the production region also shall develop with collaboration."

Tang Yundi also admitted that in the current situation, nothing is more important than each company being completely aware of its own shortcomings. The question is, though, can Zibo enterprises better target their transformation and upgrades and finish the job?. Firstly, there is no core competitiveness in Zibo production region at present; secondly, no core products can be introduced into the market; thirdly, Zibo is inferior to Foshan in terms of technical advantages; and last, but not least most innovation in Zibo is just about updating, not true innovation.

In addition, due to the small scale, most enterprises do not have enough money to support their research teams. In Zibo, enterprises with the output value of over RMB1 billion are few, let alone financial strength to invest in research and development; last but not the least, because of no core competitiveness, enterprises have weak risk resistance capacity.

It is understood that in 2008-2009, Zibo ceramic tile industry reached a historical peak. At that time, there were nearly 270 enterprises and 508 production lines in Zibo production region, with 300,000 people directly or indirectly being engaged in ceramic tile industry, in which, the front-line workers directly engaged in production were up to 100,000, with at least 7,000 to 8,000 workers in frit, glazes, accessories and other upstream supporting industries.

Today even though the number of ceramic production lines is significantly reduced, compared with that in 2008, there are also a great many workers directly or indirectly engaged in the production of ceramics. With the transfer of the majority of enterprises or withdrawal from the industry, the transfer and placement of industrial workers originally engaged in ceramic production and some employees in the supporting enterprise will become an urgent problem to be solved by the local government.

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Analysis: Zibo Major manufacturers: Zibo Company

Tile line & capacity

Total capacity

Year established

Zibo Xuanpeng Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 6,000m2/d; 1 microcrystalline tile line: 6,000m2/d

12,000m2/d

2002

Zibo Jiasite Ceramics Co., Ltd.

1 rustic tile line: 10,000m2/d

10,000m2/d

2001

Zibo Wanda Building Ceramics Co., Ltd.

2 interior wall tile lines: 10,000m2/d

10,000m2/d

1995

Zibo Tianjia Building Ceramics Co., Ltd.

2 interior wall tile lines: 15,000m2/d

15,000m2/d

2001

Zibo Kingsway Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 18,000m2/d

18,000m2/d

2002

Zibo Huayue Building Ceramics Co., Ltd.

1 rustic tile line: 12,000m2/d

12,000m2/d

2002

Dongyue Sigemi Ceramics Co., Ltd.

2 fully polished glazed tile lines: 21,000m2/d

21,000m2/d

2002

Zibo Hengyue Ceramics Co., Ltd.

1 fully polished glazed tile line: 11,000m2/d; 1 microcrystalline tile line: 9,000m2/d

20,000m2/d

2002

Zibo Songyue Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 16,000m2/d

16,000m2/d

2002

Zibo Xinyue Ceramics Co., Ltd.

2 interior wall tile lines: 17,000m2/d

17,000m2/d

1995

Zibo Junlang Building Ceramics Co., Ltd.

2 interior wall tile lines: 10,000m2/d

10,000m2/d

1998

Zibo Luoyi Building Ceramics Co., Ltd.

1 interior wall tile line: 11,000m2/d

11,000m2/d

1998

Zibo Zhilian Building Ceramics Co., Ltd.

1 fully polished glazed tile line: 7,000m2/d; 1 microcrystalline tile line: 5,000m2/d

12,000m2/d

2006

Zibo Luzhong Building Ceramics Co., Ltd.

2 interior wall tile lines: 12,000m2/d

12,000m2/d

1998

Zibo Fengdu Building Ceramics Co., Ltd.

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2004

Zibo Jinghua Building Ceramics Co., Ltd.

1 polished tile line: 11,000m2/d

11,000m2/d

2007

Zibo Tianchuang Ceramics Co., Ltd.

2 interior wall tile lines: 28,000m2/d

28,000m2/d

2004

Zibo Chengdong Ceramics Factory

2 fully polished glazed tile lines: 15,000m2/d; 4 interior wall tile lines: 41,000m2/d; 2 microcrystalline tile lines: 11,000m2/d

67,000m2/d

1993

Zibo Changhe Building Ceramics Co., Ltd.

2 interior wall tile lines: 25,000m2/d

25,000m2/d

2002

Zibo Weidi Building Ceramics Co., Ltd.

1 polished tile line: 7,000m2/d

7,000m2/d

1995

Zibo Jiayue Ceramics Co., Ltd.

2 other tile lines: 38,000m2/d

38,000m2/d

2006

Zibo Wantong Building Ceramics Co., Ltd.

2 interior wall tile lines: 13,000m2/d

13,000m2/d

1990

Zibo Taimingge Ceramics Co., Ltd.

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2005

Zibo Buguang Building Ceramics Factory

1 wall skirting tile line: 16,000m2/d

16,000m2/d

2004

Zibo Jingqili Building Ceramics Co., Ltd.

1 fully polished glazed tile line: 7,500m2/d; 1 microcrystalline tile line: 6,500m2/d

14,000m2/d

2007

Zibo Jutai Ceramics Co., Ltd.

1 interior wall tile line: 12,000m2/d

12,000m2/d

2003

Zibo Tianzhirun Building Ceramics Co., Ltd.

1 interior wall tile line: 12,000m2/d

12,000m2/d

2001

Zhangdian Fengquan Building Ceramics Factory

2 interior wall tile lines: 12,000m2/d

12,000m2/d

1994

Zibo Junle Ceramics Co., Ltd.

1 polished tile line: 8,000m2/d

8,000m2/d

2003

Zibo Mingjia Ceramics Co., Ltd.

2 interior wall tile lines: 27,000m2/d

27,000m2/d

Zibo Huaruinuo Ceramics Co., Ltd.

1 interior wall tile line: 12,000m2/d

12,000m2/d

1986

Zibo Xinjingjie Ceramics Co., Ltd.

2 interior wall tile lines: 27,000m2/d

27,000m2/d

2006

Zibo Kunli Ceramics Co., Ltd.

2 interior wall tile lines: 12,000m2/d

12,000m2/d

2002

Zibo Zhuoyue Building Ceramics Co., Ltd.

1 plaza tile line: 8,000m2/d

8,000m2/d

2002

Zibo Datang Ceramics Co., Ltd.

1 fully polished glazed tile line: 9,000m2/d; 1 microcrystalline tile line: 8,000m2/d

17,000m2/d

2005

Zibo Qiangqiang Building Ceramics Co., Ltd.

1 interior walll tile line: 16,000m2/d; 1 fully polished glazed tile line: 12,000m2/d;

28,000m2/d

2008

Zibo Ruixin Building Materials Co., Ltd.

2 other tile lines: 11,000m2/d

11,000m2/d

1999

Zibo Rongjia Ceramics Co., Ltd.

2 interior wall tile lines: 10,000m2/d

10,000m2/d

2008

Zibo Haojunzhe Ceramics Co., Ltd.

1 rustic tile line: 15,000m2/d

15,000m2/d

2002

Zibo Jiuao Building Ceramics Co., Ltd.

1 exterior wall tile line: 12,000m2/d

12,000m2/d

2006

www.asianceramics.com

AC 17-3

asian ceramics

45

Analysis: Zibo Company

Tile line & capacity

Total capacity

Year established

Zibo Dongcheng Building Ceramics Co., Ltd. Shibo Building Materials Factory

2 other tile lines: 9,000m2/d

9,000m2/d

2000

1 other tile line: 12,000m2/d

12,000m2/d

1999

Zibo Kaiyuan Building Ceramics Co., Ltd.

2 microcrystalline tile lines: 15,000m2/d; 1 polished crystal tile line: 4,000m2/d

19,000m2/d

2003

Zibo Yuanhang Building Ceramics Co., Ltd.

1 rustic tile line: 11,000m2/d

11,000m2/d

2003

Sheci Decorative Materials Co., Ltd.

1 polished crystal tile line: 2,000m2/d

2,000m2/d

2013

Boshan Aosen Building Ceramics Co., Ltd.

1 interior wall tile line: 11,000m2/d

11,000m2/d

2001

Zibo Fuli Building Ceramics Co., Ltd.

1 interior wall tile line: 1,300m2/d

1,300m2/d

1985

Zibo Chiyu Building Ceramics Co., Ltd.

3 other tile lines: 25,000m2/d

25,000m2/d

2001

Zibo Hualiansheng Building Ceramics Co., Ltd.

3 interior wall tile lines: 21,000m2/d

21,000m2/d

2003

Foshan Pudi Building Ceramics Co., Ltd.

1 crystal tile line: 11,000m2/d

11,000m2/d

1998

Zibo Guoyuan Ceramics Co., Ltd.

1 rustic tile line: 10,000m2/d; 1 endurable tile line: 10,000m2/d

20,000m2/d

2003

Shandong Yadi Building Ceramics Co., Ltd.

2 interior wall tile lines: 25,000m2/d; 1 rustic tile line: 8,000m2/d

33,000m2/d

2003

Shandong Zhongyue Ceramics Co., Ltd.

1 fully polished glazed tile line: 10,000m2/d; 1 microcrystalline tile line: 6,000m2/d

16,000m2/d

2004

Zibo Dongde Building Ceramics Co., Ltd.

1 polished tile line: 8,000m2/d; 1 interior wall tile line: 11,000m2/d

19,000m2/d

1999

Zibo Fanina Ceramics Co., Ltd.

2 polished tile lines: 14,000m2/d

14,000m2/d

2005

Zibo Shuaida Ceramics Co., Ltd.

1 interior wall tile line: 7,000m2/d

7,000m2/d

2002

Zibo Zichuan Shuangying Building Ceramics Factory

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2002

Zibo Shuangsheng Ceramics Co., Ltd.

1 roof tile line: 120,000pcs/d

120,000pcs/d

2002

Zibo Honggang Ceramics Co., Ltd.

2 interior wall tile lines: 16,000m2/d

16,000m2/d

2003

Shandong Guorun Ceramics Co., Ltd.

2 fully polished glazed tile lines: 20,000m2/d; 2 microcrystalline tile lines: 10,000m2/d

30,000m2/d

2002

Zibo Lion King Ceramics Co., Ltd.

3 fully polished glazed tile lines: 29,000m2/d

29,000m2/d

2003

Shandong Tongyi Ceramics Co., Ltd.

1 fully polished glazed tile line: 8,000m2/d; 3 rustic tile lines: 24,000m2/d

32,000m2/d

2003

Zibo Qiangsaite Ceramics Co., Ltd.

3 rustic tile lines: 23,000m2/d

23,000m2/d

1999

Shandong Asia Ceramics Co., Ltd.

3 interior wall tile lines: 16,000m2/d; 2 microcrystalline tile lines: 20,000m2/d

36,000m2/d

2002

Zibo Yinglue Ceramics Co., Ltd.

1 polished tile line: 8,000m2/d

8,000m2/d

1988

Zibo Golden Key Ceramics Co., Ltd.

1 rustic tile line: 10,000m2/d

10,000m2/d

1993

Zibo Baluoke Ceramics Co., Ltd.

1 interior wall tile line: 11,000m2/d

11,000m2/d

2001

Zibo Akadia Pearl Ceramics Co., Ltd.

1 porcelain panel lines: 3,500m2/d; 1 rustic tile line: 7,000m2/d

10,500m2/d

2002

Zibo Jinhan Ceramics Co., Ltd.

1 rustic tile line: 9,000m2/d

9,000m2/d

2003

Zibo Minghao Ceramics Co., Ltd.

2 rustic tile lines: 22,000m2/d; 3 small floor tile lines: 12,000m2/d

34,000m2/d

2007

Shandong Liangjian Ceramics Co., Ltd.

2 rustic tile lines: 20,000m2/d

20,000m2/d

2007

Zibo Jugang Ceramics Co., Ltd.

1 fully polished glazed tile line: 10,000m2/d

10,000m2/d

2008

Zibo Jinka Ceramics Co., Ltd.

2 rustic tile lines: 18,000m2/d

18,000m2/d

2003

Zibo Huaqi Building Ceramics Co., Ltd.

1 polished tile line: 13,000m2/d

13,000m2/d

2000

Zibo Yeteng Building Ceramics Co., Ltd.

1 wall skirting tile line: 13,000m2/d

13,000m2/d

2004

Zichuan Yangzhai Wanyou Building Ceramics Factory

1 interior wall tile line: 10,000m2/d

10,000m2/d

2002

Zibo Jinyuan Building Ceramics Co., Ltd.

1 wall skirting tile line: 10,000m2/d

10,000m2/d

2002

Guopeng Ceramics Co.,Ltd.

2 fully polished glazed tile lines: 19,000m2/d

19,000m2/d

2008

Zibo Zichuan Senda Building Materials Factory

1 interior wall tile line: 8,000m2/d

8,000m2/d

2001

46

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Analysis: Zibo Company

Tile line & capacity

Total capacity

Year established

Zibo Yingdemao Ceramics Co., Ltd.

2 endurable tile lines: 13,000m2/d

13,000m2/d

2004

Zibo Yuxiang Building Ceramics Co., Ltd.

1 crystal tile line: 13,000m2/d

13,000m2/d

2003

Zibo Oujia Ceramics Co., Ltd.

2 microcrystalline tile lines: 5,000m2/d; 1 fully polished glazed tile line: 7,000m2/d;

12,000m2/d

2004

Zibo Huade Building Ceramics Co., Ltd.

2 other tile lines: 13,000m2/d

13,000m2/d

2007

Golden Dunhuang Mural Art Co.

1 mural tile line: 4,000m2/d; 1 other tile line: 6,000m2/d

10,000m2/d

2008

Zibo Ousike Ceramics Co., Ltd.

1 polished crystal tile line: 1,000m2/d

1,000m2/d

2001

Zibo Haoyi Ceramics Co., Ltd.

1 exterior wall tile line: 8,000m2/d

8,000m2/d

2002

Zibo Ronghetai Ceramics Co., Ltd.

2 small floor tile lines: 20,000m2/d; 1 interior wall tile line: 10,000m2/d

30,000m2/d

2007

Zibo Dahai Building Ceramics Co., Ltd.

2 crystal tile lines: 16,000m2/d

16,000m2/d

2004

Zibo Chuanfeng Ceramics Co., Ltd.

2 rustic tile lines: 15,000m2/d

15,000m2/d

1991

Zibo Zhonghe Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 19,000m2/d

19,000m2/d

2004

Zibo Xinglong Building Ceramics Co., Ltd.

1 polished tile line: 8,000m2/d; 1 interior wall tile line: 6,000m2/d

14,000m2/d

1994

Zibo Zichuan Yaoxin Building Ceramics Factory

1 interior wall tile line: 7,000m2/d

7,000m2/d

2000

Zibo Luocheng Building Ceramics Co., Ltd.

1 other tile line: 4,000m2/d

4,000m2/d

1995

Zibo Jinyi Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 20,000m2/d; 2 interior wall tile lines: 20,000m2/d

40,000m2/d

2004

Zichuan Panlong Building Materials Factory

1 interior wall tile line: 11,000m2/d

11,000m2/d

1998

Zibo Hongfeng Building Ceramics Co., Ltd.

1 fully polished glazed tile line: 9,000m2/d; 1 interior wall tile line: 6,000m2/d

15,000m2/d

1999

Zibo Luoyi Building Ceramics Co., Ltd.

1 interior wall tile line: 11,000m2/d

11,000m2/d

2006

Zibo Luguan Building Ceramics Factory

3 plaza tile lines: 10,000m2/d

10,000m2/d

2001

Zichuan Fagang Building Materials Factory

1 exterior wall tile line: 8,000m2/d

8,000m2/d

1998

Zibo Fuzelin Ceramics Co., Ltd.

2 rustic tile lines: 10,000m2/d

10,000m2/d

2006

Zibo Cailong Building Ceramics Co., Ltd.

1 wall skirting tile line: 9,000m2/d

9,000m2/d

2007

Zichuan Shuangyue Building Ceramics Factory

1 interior wall tile line: 9,000m2/d

9,000m2/d

2006

Zibo Zhenfa Building Materials Factroy

1 interior wall tile line: 7,000m2/d

7,000m2/d

2003

Zibo Tongling Ceramics Co., Ltd.

1 interior wall tile line: 9,000m2/d; 1 small floor tile line: 6,000m2/d

15,000m2/d

2005

Zibo Dingyuan Building Ceramics Factory

1 interior wall tile line: 9,000m2/d

9,000m2/d

2007

Zibo Meiquan Building Ceramics Co., Ltd.

2 small floor tile lines: 30,000m2/d

30,000m2/d

2003

Zibo Fulaite Building Ceramics Co., Ltd.

6 interior wall tile lines: 95,000m2/d

95,000m2/d

2003

Zibo Haomen Building Ceramics Co., Ltd.

1 small floor tile line: 12,000m2/d

12,000m2/d

1987

Zibo Tianlong Building Ceramics Co., Ltd.

1 small floor tile line: 10,000m2/d

10,000m2/d

1986

Zibo Hengye Ceramics Co., Ltd.

1 western roof tile line: 100,000pcs/d

100,000pcs/d

2006

Zibo Dahua Ceramics Co., Ltd.

3 rustic tile lines: 24,000m2/d

24,000m2/d

2002

Zibo Qianlong Glazed Roof Tile Co., Ltd.

3 other tile lines: 24,000m2/d

24,000m2/d

2003

Zibo Kelisite Ceramics Co., Ltd.

1 tile body line: 20,000m2/d; 1 other tile line: 5,000m2/d

25,000m2/d

2002

Zibo Jingying Building Ceramics Co., Ltd.

2 polished tile lines: 16,000m2/d

16,000m2/d

2003

Zibo Luhong Woersen Ceramics Co., Ltd.

1 interior wall tile line: 8,000m2/d

8,000m2/d

2001

Zibo Weiersi Ceramics Co., Ltd.

2 other tile lines: 13,000m2/d

13,000m2/d

2008

Zibo Gaodi Ceramics Co., Ltd.

2 polished tile lines: 20,000m2/d

20,000m2/d

2007

Zibo Zichuan Xinguan Ceramics Co., Ltd.

1 other tile line: 11,000m2/d

11,000m2/d

2000

www.asianceramics.com

AC 17-3

asian ceramics

47

Analysis: Zibo

Company

Tile line & capacity

Total capacity

Year established

Zibo Zichuan Senji Building Ceramics Co., Ltd.

1 interior wall tile line: 10,000m2/d

10,000m2/d

1998

Zibo Ailijia Ceramics Co., Ltd.

2 endurable tile lines: 20,000m2/d

20,000m2/d

2002

Foshan Weineng Ceramics Co., Ltd.

2 polished tile lines: 21,000m2/d; 1 fully polished glazed tile line: 8,000m2/d

29,000m2/d

2005

Zichuan Saiyue Trade Co., Ltd.

1 rustic tile line: 8,000m2/d

8,000m2/d

1994

Zibo Kaiyue Building Ceramics Co., Ltd.

1 interior wall tile line: 16,000m2/d

16,000m2/d

2004

Shandong Dongpeng Ceramics Co., Ltd.

2 interior wall tile lines: 34,000m2/d

34,000m2/d

2007

Zibo Huipeng Industrial & Trading Co., Ltd.

1 small floor tile line: 10,000m2/d

10,000m2/d

2008

Zibo Jinshiwang Ceramics Co., Ltd.

2 rustic tile lines: 14,000m2/d

14,000m2/d

2002

Zibo Shunyuan Ceramics Co., Ltd.

2 fully polished glazed tile lines: 17,000m2/d

17,000m2/d

2006

Zibo Jinshun Ceramics Co., Ltd.

2 fully polished glazed tile lines: 17,000m2/d

17,000m2/d

2011

Zibo Lusai Ceramics Co., Ltd.

1 rustic tile line: 10,000m2/d

10,000m2/d

2004

Zibo Xinbo Ceramics Co., Ltd.

1 fully polished glazed tile line: 10,000m2/d; 2 interior wall tile lines: 10,000m2/d; 1 rustic tile line: 5,000m2/d

25,000m2/d

2000

Zibo Shiwang Ceramics Co., Ltd.

1 fully polished glazed tile line: 10,000m2/d; 1 microcrystalline tile line: 7,000m2/d; 1 polished tile line: 11,000m2/d

28,000m2/d

2002

Shandong Tianzhao Ceramics Co., Ltd.

1 plaza tile line: 10,000m2/d; 1 acid-proof tile line: 1,000m2/d

11,000m2/d

1991

Zibo Zichuan Jinliang Building Ceramics Co., Ltd.

2 polished tile lines: 20,000m2/d

20,000m2/d

2003

Zibo Haoliang Building Ceramics Co., Ltd.

1 polished tile line: 10,000m2/d

10,000m2/d

2006

Zibo Guoliang Building Ceramics Co., Ltd.

2 polished tile lines: 10,000m2/d

10,000m2/d

2002

Zibo Zichuan Zhengyuan Ceramics Co., Ltd.

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2003

Zibo Yongda Ceramics Co., Ltd.

2 fully polished glazed tile lines: 13,000m2/d

13,000m2/d

2003

Zibo Boguan Ceramics Co., Ltd.

2 chain roof tile lines: 150,000pcs/d

150,000pcs/d

2006

Zibo Guoao Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 20,000m2/d

20,000m2/d

2000

Zibo Zichuan Changying Ceramics Factory

1 wall skirting tile line: 3,000m2/d

3,000m2/d

2006

Shandong Tengyue Ceramics Co., Ltd.

1 interior wall tile line: 10,000m2/d

10,000m2/d

2003

Zibo Shunchang Ceramics Co., Ltd.

1 fully polished glazed tile line: 8,000m2/d; 1 rustic tile line: 5,000m2/d; 1 microcrystalline tile line: 8,000m2/d

21,000m2/d

2006

Zibo Tengying Ceramics Co., Ltd.

2 exterior wall tile lines: 16,000m2/d

16,000m2/d

2007

Zibo Zichuan Huaao Building Materials Factory

2 wall tile lines: 15,000m2/d

15,000m2/d

1993

Zichuan Chenguang Building Materials Factory

1 wall skirting tile line: 8,000m2/d

8,000m2/d

1997

Zibo Kelier Building Ceramics Co., Ltd.

1 interior wall tile line: 10,000m2/d

10,000m2/d

2003

Zibo Zichuan Zhongsheng Ceramics Co., Ltd.

1 fully polished glazed tile line: 8,000m2/d; 1 microcrystalline tile line: 6,000m2/d

14,000m2/d

2003

Zibo Lifeng Building Ceramics Co., Ltd.

2 rustic tile lines: 17,000m2/d

17,000m2/d

2001

Zibo Qihui Building Ceramics Co., Ltd.

1 polished tile line: 7,000m2/d

7,000m2/d

2007

Zibo Fengxia Ceramics Co., Ltd.

2 fully polished glazed tile lines: 23,000m2/d

23,000m2/d

2005

Shandong Xincheng Building Ceramics Co., Ltd.

2 exterior wall tile lines: 17,000m2/d

17,000m2/d

1998

Zibo Longde Ceramics Co., Ltd.

2 rustic tile lines: 17,000m2/d

17,000m2/d

2002

Zibo Xinze Ceramics Co., Ltd.

2 fully polished glazed tile lines: 14,000m2/d

14,000m2/d

2006

Zibo Biyu Building Ceramics Co., Ltd.

2 fully polished glazed tile lines: 12,000m2/d

12,000m2/d

1998

Zibo Zichuan Jinyuan Building Ceramics Factory

1 wall skirting tile line: 5,000m2/d

5,000m2/d

2000

48

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Analysis: Zibo

Company

Tile line & capacity

Total capacity

Year established

Zibo Zichuan Bangtai Building Ceramics Factory

1 wall skirting tile line: 8,000m2/d

8,000m2/d

2002

Zibo Bowei Ceramics Co., Ltd.

1 red body tile line: 10,000m2/d

10,000m2/d

2002

Zibo Weida Building Ceramics Co., Ltd.

1 polished tile line: 17,000m2/d

17,000m2/d

2003

Zibo Yuanfeng Ceramics Co., Ltd.

2 fully polished glazed tile lines: 20,000m2/d

20,000m2/d

2005

Zibo Baoze Ceramics Co., Ltd.

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2005

Shandong Hefeng Ceramics Co., Ltd.

2 fully polished glazed tile lines: 22,000m2/d

22,000m2/d

2007

Zibo Hongtu Building Ceramics Co., Ltd.

1 interior wall tile line: 9,000m2/d

9,000m2/d

1994

Zibo Guoyu Ceramics Co., Ltd.

2 rustic tile lines: 15,000m2/d

15,000m2/d

2003

Zibo Beifang Ceramics Co., Ltd.

2 rustic tile lines: 16,000m2/d

16,000m2/d

2002

Zibo Aofeng Building Ceramics Co., Ltd.

1 small floor tile line: 9,000m2/d

9,000m2/d

2003

Zibo Jinnuo Ceramics Co., Ltd.

2 polished tile lines: 16,000m2/d

16,000m2/d

2004

Zibo Kejia Ceramics Co., Ltd.

2 interior wall tile lines: 19,000m2/d

19,000m2/d

2002

Zibo Runtian Ceramics Co., Ltd.

2 exterior wall tile lines: 20,000m2/d

20,000m2/d

2003

Zibo Xilaideng Ceramics Co., Ltd.

2 polished tile lines: 14,000m2/d

14,000m2/d

2007

Zibo Zichuan Jinyong Building Ceramics Factory

1 wall skirting tile line: 7,000m2/d

7,000m2/d

2002

Zibo Gelunkai Ceramics Co., Ltd.

1 interior wall tile line: 14,500m2/d

14,500m2/d

2009

Zibo Hongfa Building Ceramics Co., Ltd.

2 wall skirting tile lines: 21,600m2/d

21,600m2/d

1993

Zibo Shengci Ceramics Co., Ltd.

1 wall skirting tile line: 12,000m2/d

12,000m2/d

Zibo Jinghao Ceramics Co., Ltd.

2 fully polished glazed tile lines: 20,000m2/d

20,000m2/d

2005

Zibo Huabang Ceramics Co., Ltd.

1 fully polished glazed tile line: 7,000m2/d

7,000m2/d

2007

Zibo Xinguang Building Ceramics Factory

1 wall skirting tile line: 8,000m2/d

8,000m2/d

2002

Zibo Luyue Building Ceramics Co., Ltd.

1 mural tile line: 8,000m2/d

8,000m2/d

Zibo Xumei Building Ceramics Co., Ltd.

2 interior wall tile lines: 11,800m2/d

11,800m2/d

2000

Zichuan Yulin Building Ceramics Factory

1 wall skirting tile line: 8,000m2/d

8,000m2/d

2007

Zibo Mingdi Building Ceramics Co., Ltd.

2 wall skirting tile lines: 16,000m2/d

16,000m2/d

2001

Zichuan Jinlin Building Ceramics Factory

1 wall skirting tile line: 8,600m2/d

8,600m2/d

1992

Zibo Xinkongjian Ceramics Co., Ltd.

1 matt tile line: 5,000m2/d; 3 rustic tile lines: 30,000m2/d

35,000m2/d

1998

Zibo Xindongyuan Ceramics Co., Ltd.

1 matt tile line: 12,000m2/d

12,000m2/d

2003

Zibo Huaqi Ceramics Co., Ltd.

2 small floor tile lines: 14,000m2/d

14,000m2/d

2002

Zibo Jincai Building Ceramics Factory

1 interior wall tile line: 9,500m2/d

9,500m2/d

2006

Zibo Guanfeng Ceramics Co., Ltd.

2 polished tile lines: 14,000m2/d

14,000m2/d

2007

Zibo Yitai Ceramics Co., Ltd.

1 polished tile line: 8,000m2/d

8,000m2/d

2008

Zibo Xinzhonglian Ceramics Co., Ltd.

1 rustic tile line: 5,000m2/d

5,000m2/d

2011

Shandong Gengci Group Co., Ltd.

2 polished tile lines: 30,000m2/d

30,000m2/d

2006

Shandong Yuxi Ceramics Co., Ltd.

2 fully polished glazed tile lines: 18,000m2/d

18,000m2/d

2005

Shandong Mikailiang Ceramics Co., Ltd.

2 fully polished glazed tile lines: 19,000m2/d

19,000m2/d

2002

Shandong Qidu Ceramics Co., Ltd.

2 fully polished glazed tile lines: 22,000m2/d

22,000m2/d

2007

Shandong Oujilide Ceramics Co., Ltd.

2 rustic tile lines: 15,000m2/d

15,000m2/d

2002

Zibo Xuanpeng Ceramics Co., Ltd.

1 fully polished glazed tile line: 6,000m2/d; 1 rustic tile line: 6,000m2/d

12,000m2/d

2004

Zibo Wanyue Ceramics Co., Ltd.

1 rustic tile line: 13,000m2/d

13,000m2/d

2008

Zibo Huadi Ceramics Co., Ltd.

1 fully polished glazed tile line: 7,000m2/d; 1 microcrystalline tile line: 8,000m2/d

15,000m2/d

2006

Zibo Longhao Ceramics Co., Ltd.

2 interior wall tile lines: 20,000m2/d

20,000m2/d

2000

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SPECIAL REPORT

FEELING THE HEAT? can Vietnam adapt to the lost of TPP

In a series of tweets and sweeping presidential decrees, Donald J. Trump has disbanded what many expected to be one of the cornerstones of future trade within Asia Pacific – notably, the Trans-Pacific-Partnership deal, or TPP. AC looks at how Vietnam could be the most affected…

The collapse of the Trans-Pacific Partnership (TPP) trade pact is a “material” loss to the export-driven Vietnamese and Malaysian economies, says Moody’s Investors Service.

However, the rating agency said the effects of the TPP’s demise on the two countries’ sovereign credit quality might not be as large as earlier projected. This is because investment made in anticipation of the TPP is unlikely to be reversed and will continue to bolster growth potential in years to come.

Moody’s cited research by the Peterson Institute for International Economics (PIIE), which ranked Vietnam and Malaysia as countries among the 12 TPP signatories expected to see a sizeable pick-up in growth.

The two countries would have benefited from the opening up of trade with the United States, and relatively large long-term foreign direct investment inflows.

The research found that the Vietnamese economy – as measured by real income in 2015 US dollars – would be 8.1 per cent larger in 2030 compared to a baseline without the TPP, while Malaysia’s would be 7.6 per cent bigger.

In addition, the end of the TPP could slow the reform momentum the deal had fuelled.

Moody’s conclusions are contained in its just-released report “Sovereigns - Asia Pacific: US Exit from Trans-Pacific Partnership Represents Lost Opportunity for Asia”.

Moody’s notes that the TPP deal went far beyond existing free trade agreements (FTAs) by setting standards in areas including intellectual property rights, government procurement, environmental and labor conditions, and corruption prevention, in addition to reducing or eliminating tariffs and non-tariff barriers.

The deal also would have further increased access to trade - even where agreements already existed - applied to some hitherto protected markets, such as Japan’s (A1 stable) agricultural products.

The significance of the deal is also testified by its scope and size - with the TPP signatory economies accounting for about 40 per cent of global GDP. While a number of TPP signatory countries are working on other trade deals such as the Regional Comprehensive Economic Partnership (RCEP) - with the exception of the Free Trade Area of the Asia-Pacific (FTAAP) agreement - the potential benefits from

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these trade deals would be smaller than those of the TPP, as they would cover a smaller share of global trade, overlap with existing arrangements and be narrower in scope.The latest report by the Ministry of Industry and Trade (MOIT) about the import/export in 2016 showed that the US and the EU were Vietnam’s two biggest export markets despite big difficulties.

A major consumer

The US spent $38.1 billion to buy Vietnam’s goods, while it only exported $8.7 billion worth of products to Vietnam. This means that the US saw the deficit of $29 billion in trade with Vietnam.

It has been said said the excess of imports over exports in trade with the US has been seen for many years and is not a surprise.

Vietnam mostly exports farm produce, seafood, footwear and textile and garments thanks to the cheap labor force. It imports from the US computers, electronics, machines and animal feed, but in small quantities.

In general, developing countries import more than export because they need to import machines and modern technologies from developed countries, including the US. But the situation in Vietnam is the opposite.

“We don’t import products from the US because US products are always expensive,” he said. “Vietnam has been relying heavily on cheap Chinese technologies.”

The MOIT report also showed that China remains the largest market with which Vietnam has a trade deficit. The value reached $28 billion in 2016.

Pham Tat Thang, a senior researcher from MOIT, confirmed that Vietnam usually exports to the US, Japan and the EU more than imports from the markets Meanwhile, in trade with Asia, Vietnam usually imports more than exports, especially from China.

“We still cannot import modern source technologies from the countries (Japan, the EU and the US) to improve strength of production,” he said.

Vietnam hopes that once the TPP (Trans Pacific Partnership) agreement comes true, it would be able to import high technologies from the countries which would help develop Vietnam’s support industries.

However, it is still unclear about the fate of TPP. The newly elected

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US President Trump many times repeated that the US would withdraw from TPP. Thang commented that he can see both good and bad news in the trade surplus with the US. “The good thing is that we can export products to the US, a very choosy market,” he said, adding that in 2016, many kinds of farm produce and fruits obtained rights to export to the US.

Japan: a new partner?

Vu Cuong, deputy head of East Asia division of the Asia Pacific Market Department under the MoIT, said a series of visits made by leaders of the two countries in early 2017 reflected the two sides’ resolve to boost ties.

Japanese Prime Minister Shinzo Abe visited Vietnam in midJanuary and Japanese Emperor is expected to travel to Vietnam in mid-February, while Vietnamese leaders also had plans to visit Japan in March.

Besides good diplomatic relationship, trade experts urged the business community to seize opportunities brought about by the Vietnam-Japan Economic Partnership Agreement (VJEPA).

Cuong underlined the tax reduction roadmap stipulated in the VJEPA, under which import tax will be cut to 2.8 percent in 2018 and at least 86 percent of agri-forestry-seafood products and 97 percent of Vietnamese industrial products will enjoy preferential tax rates in the Japanese market.

Meanwhile, average taxes on Japan’s goods imported into Vietnam will be reduced to seven percent in 2018.

Within 10 years, the two countries will complete the roadmap for tax reduction to form a bilateral free trade zone in which 94.53 percent of Vietnam’s export turnover and 87.6 percent of Japan’s will be exempted from import tax.

However, according to Le An Hai, deputy head of the MoIT’s Asia Pacific Market Department, Vietnamese enterprises have taken advantage of just 40 percent of opportunities offered by the VJEPA. Hai advised enterprises to invest in quality of goods and boost promotion activities to tap the Japanese market.

Nguyen Trung Dung, Vietnam’s commercial counsellor in Japan, said the structure of Vietnamese and Japanese goods are complementary and not competitive against each other.

Japan mainly imports seafood, garments, footwear, and processed food while Vietnam imports machineries, equipment, technology and materials for production from Japan.

According to data from the Ministry of Industry and Trade (MoIT), Vietnam’s export to Japan in the first 11 months of 2016 was 13.3 billion USD, up 3.1 percent on a yearly basis, making Japan Vietnam’s second largest export market behind the United States.

“The bad thing is that we still cannot import source technologies from the US,” he said.

China: an unintended opportunity?

“Passing the TPP (Trans-Pacific Partnership) is as important to me as another aircraft carrier,” said former U.S. defense secretary Ashton Carter two years ago, as the negotiations on the huge new free trade organization were nearing completion.

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Given that the United States already has twice as many aircraft carriers as all the rest of the world put together, that comment could be taken several ways, but Carter actually did mean that the TPP was strategically important in his eyes. As it was for expresident Barack Obama, who saw the TPP as America’s main tool for containing China’s growing influence in Asia.

China, deliberately excluded from the 12-member club, saw it that way too. The official Xinhua news agency regularly referred to the TPP as “the economic arm of the Obama administration’s geopolitical strategy to make sure that Washington rules supreme in the region.”

But the Obama administration is gone, and Donald Trump has just cut off that arm. “A great thing for the American worker, we just did,” Trump said after signing a document withdrawing US support for the TPP. In fact, quitting the TPP is unlikely to do American workers much good economically, but it may not do them much harm either.

Most analyses have concluded that the deal wouldn’t have had much effect either way on U.S. wages and jobs — but leaving the TPP will certainly have a big impact on U.S. power and influence in the world.

Xinhua was right: for Obama, the TPP was always more about the strategic rivalry with China than it was about economics. It still is, but Donald Trump’s electoral strategy has obliged him to declare war on free trade.

The voters that Trump targeted most heavily were working-class Americans who felt betrayed and abandoned as the well-paying jobs in manufacturing disappeared. However, there was no point in telling them that automation was destroying their jobs (which it is), because he could not plausibly promise to stop automation.

But if he claimed that the real problem was free trade, which allowed the Chinese and Mexicans and other sneaky foreigners to steal American jobs … well, he could certainly promise to stop that. He would build walls, cancel free-trade deals, even launch trade wars. It all sounded pretty credible, if you didn’t know that the vast majority of the lost jobs were really being stolen by robots.

So once he was in office, Trump was obliged to “unsign” the TPP deal, even though its main purpose, from Washington’s point of view, had been to perpetuate American economic and strategic dominance in Asia and freeze China out. In the eyes of Trump’s supporters (and maybe even in his own), he was slaying a dragon.

The biggest cost to the United States is the fact that America’s defection from the TPP doesn’t automatically kill the notion of an Asian free-trade bloc. Australia is already talking about keeping the TPP going without the United States, but the likelier outcome is that the Asian members start trying to link up with China, Indonesia and even India in China’s proposed Regional Comprehensive Economic Partnership.

In that case, the United States could end up excluded from a free-trading bloc that includes half of the world economy. The dominant economy in that bloc would be China’s, so the main practical effect of Trump’s action would be to give a major boost to China’s power and influence in the world.

AC 17-3

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SPECIAL REPORT

CAPACITOR TACTICS making the most of the MLCC market

AC looks at how capacitor makers across the continent are looking to maximize their market opportunity as consumption continues to grow.

The global capacitor industry, which for the purposes of this article just talks about ceramic capacitors of all types and configurations, accounted for approximately $20 billion US dollars in global revenues for FY 2016 with almost two trillion pieces shipped. Here, we summarize methods by which capacitor manufacturers have increased profitability in each capacitor dielectric over the past few years and discuss broad categories that can be applied to the entire components industry.

In the worldwide capacitor industry, fixed costs represent about 20% of the costs to produce, while variable costs, those that fluctuate, represent a full 80% of the costs to produce; with vendors focusing on variable costs as the area to improve throughput of manufacturing.

Variable costs include raw material costs, labor costs, variable overhead costs and variable manufacturing costs. Raw material costs represent the largest single cost factor in the production of capacitors regardless of dielectric, so the reader will notice that many historical methods for cost savings and increased profitability are related to management and manipulation of the costs associated with buying and processing raw materials.

Best practice

Ceramic capacitors, are electrostatic components, and are produced in multiple configurations including surface mount, axial and radial leaded designs. Ceramic capacitors, especially the ubiquitous multilayered ceramic chip capacitor (MLCC) represents the largest capacitor by type consumed worldwide in FY 2016 in terms of both value and volume. All other capacitor markets are considered niche when compared to ceramic capacitors. Here is a summary of methods by which ceramic capacitor manufacturers have reduced their respective cost structures and increased profitability over the years.

In house production

In ceramic capacitors, one method of cost-savings is for the manufacturer of the capacitor to produce composition type formulations in-house instead of sourcing them from the merchant market. Ceramic formulations include X7R, X5R, Y5V and COG type materials, as well as a variety of specialty formulations that can be manipulated for ceramic capacitors that would be used in specialty applications, such as high temperature, high voltage and high frequency circuits.

Barium titanate

Another method, practiced by Murata for example, is to have the in-house capability to precipitate advanced forms of barium titanate; such as those created by the chemical oxalate process. The added profitability comes from the fact that the company does not have to pay premiums to merchant market vendors of advanced barium titanate. Not many ceramic capacitor companies (or merchant market

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vendors) have this capability; but as Murata has noted to me, not only does it save money, but it allows advances in “green-sheet” thickness and processing that would not be available by sourcing advanced barium titanate from the merchant market.

Displacing precious metals

Another method of traditional cost savings has been to use lower cost nickel electrodes and copper termination powders instead of palladium electrodes and silver termination powders in any instance where there are a high number of internal layers to the multi-layered ceramic chip capacitor (i.e. in X5R, Y5V and high layer count X7R type ceramic capacitors). This trend has been ongoing (on an industrial scale) since 1993, but more recently we see nickel electrodes displacing palladium based electrodes in specialty markets such as automotive under-the-hood; defense, medical and oil and gas end-use segments, where previously customers had resisted such displacement because of the lack of lifetime performance data.

However, base metal electrodes have been employed in real world MLCC applications for more than 20 years now, and this is prompting customers to finally consider alternative base metals in the interests of cost savings.

Kiln choice

Another method of saving money is in the use of massive tunnel kilns to fire large volumes of ceramic capacitors all at once instead of using smaller batch kilns. Primary vendors note that this process is largely successful when firing “high runners” or those capacitors that are consumed in large volumes. However, smaller batch kilns are still used, especially when the application is a specialty sub-set endmarket that requires only a small number of pieces.

Economy of scale

Due to high volume associated with ceramic capacitor production, massive economies of scale can lower raw material purchases from the merchant market because of the vendor’s ability to buy in bulk.

Specialisation

A well-balanced portfolio, one that allows the manufacturer to enter value-added and application specific ceramic capacitor markets where margins are high- to balance out lower margins in the masscommercial markets, where margins are lower, is another strategy employed by vendors to increase overall company profitability.

Low cost regional production:

Another method of cost-savings employed by global manufacturers of ceramic capacitors includes the intentional production of large volumes of ceramic chip capacitors in low cost production regions of the world (Philippines, Thailand and China are good regional low cost production bases for MLCC). Because the equipment to

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SPECIAL REPORT

produce MLCC for example, is highly automated, a difference can be made in the overhead, variable labor and subsequent electricity costs associated with production. In FY 2017 it is expected that Japanese vendors will employ this tactic, and transfer production away from Japan to other Asian countries (i.e. Thailand, Singapore, Philippines, and Korea) in an attempt to avoid losses as the yen strengthens to the US dollar.

Summary

Capacitor manufacturers traditionally have employed a variety of methods to lower costs and increase profitability. The primary method has been to vertically integrate raw material processing into the capacitor supply chain and make them captive instead of paying premiums to the merchant market. Some vendors also believe that captive control over raw materials also leads to greater breakthroughs in technology.

Specific areas where vendors have improved profitability due to greater control over raw material usage and supply include: • Producing advanced barium titanate and formulations in-house • Displacing precious metals with lower cost base metals • Etching and forming aluminum foils • Metallization of thin plastic films • In-house captive production of tantalum powder and wire In addition to placing controls over variable raw material costs, capacitor vendors also address other variable costs associated with the following criteria – • Moving mass production to low-cost regions of the world • Creating massive economies of scale to obtain lower raw material costs through bulk purchases For ceramics, using tunnel instead of batch kilns for parts that are consumed in large numbers

Advertiser feature

The success of the high speed dry squaring machine “Speed Dry” by Ancora: 50 machines in just one year Ancora, two years ago, revolutionised the market for end of line machines with its innovative Speed Dry squaring machine for dry machining all types of ceramic material, with truly groundbreaking performance and productivity.

Hitherto, the potential of dry grinding was limited by the availability of tools for low hardness ceramic only (white body and double-fired ceramic); however Ancora was able to extend its application to porcelain tile, increasing productivity with this material far beyond the capacity of conventional wet squaring solutions.

Dry machining has numerous cost and productivity advantages, including system service life and maintenance, energy consumption and wear of diamond tools. These characteristics, combined with Ancora’s renowned service, have made the Speed Dry an enormous success, with 50 machines commissioned over the last year. And the new machine has enjoyed this popularity not just among Italian manufacturers, but also in the major foreign markets: Europe, America and Asia.

Ancora’s Speed Dry squaring line also boasts very high production speed, for both classic tile sizes and modern large panels up to 1600x3200mm.

Its innovative patented system removes thick layers of material with enormous efficiency, so that it can handle up to 30 m of material per minute - even for porcelain tile. This is due to its use of high speed mandrels fitted with a highly effective cooling system and exclusive tools with compressed air cleaning.

Ancora’s business has boomed in 2016, with more than 70% of sales in exports. This growth is due to several factors: the commercial success of its new products (especially the Speed Dry squaring machine); its many sales of finishing machines for ceramic

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panels, which are themselves growing in popularity; and its increased market penetration in synergy with SITI B&T Group.

Ancora

Ancora, founded at Sassuolo in 1969, is a leader in the design and manufacture of complete ceramic finishing lines. Ancora technologies for polishing, lapping, cutting (including water jet cutting), grinding and protective treatments for ceramics – starting with large panels – are now in use in 40 countries worldwide, with a total of around 1,000 installed lines. In the last three years, the company has invested over 5 million euro in R&D, and has registered numerous patents as a result.

In February 2015, Ancora became a member of the SITI B&T Group, supplementing a range of technology offerings that cover the entire production process.

SITI-B&T Group, quoted on the AIM Italy market since March 2016, offers complete systems for the world ceramic market, with top-shelf technologies and innovative services. In addition to Ancora, the Group also has the following divisions: “Tile” (complete tile manufacturing systems), Projecta Engineering and Digital Design (digital decoration and digital graphic design solutions) and “B&T White” (complete sanitary ware manufacturing systems). It has a consolidated turnover of 180 million euro, of which more than 80% is in exports. www.ancoragroup.com www.sitibt.com Press relations Simona Armichiari, SITI B&T Group S.p.A. simona.armichiari@siti-bt.com, Tel. +39 059.446323 Marco Fiori, INtono Comunicazione marco.fiori@intonocomunicazione.it Cellphone +39 334.6007739

AC 17-3

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55

Talking Shop

Talking Shop Pressure mounts on kiln technology AC reveals ongoing research into the replacement of the firing aspect of ceramics manufacture with high pressure production techniques and asks if such a process can ultimately become commercially viable.

The manufacture of cement, bricks, bathroom tiles and porcelain crockery normally requires a great deal of heat: a kiln is used to fire the ceramic materials at temperatures well in excess of 1,000°C. Now, material scientists from ETH Zurich have developed what seems at first glance to be an astonishingly simple method of manufacture that works at room temperature.

The scientists used a calcium carbonate nanopowder as the starting material and instead of firing it, they added a small amount of water and then compacted it.

"The manufacturing process is based on the geological process of rock formation," explains Florian Bouville, a postdoc in the group of André Studart, Professor of Complex Materials.

Sedimentary rock is formed from sediment that is compressed over millions of years through the pressure exerted by overlying deposits.

This process turns calcium carbonate sediment into limestone with the help of the surrounding water. As the ETH researchers used calcium carbonate with an extremely fine particle size (nanoparticles) as the starting material, their compacting process took only an hour. "Our work is the first evidence that a piece of ceramic material can be manufactured at room temperature in such a short amount of time and with relatively low pressures," says ETH professor Studart.

Stronger than concrete

As tests have shown, the new material can withstand about ten times as much force as concrete before it breaks, and is as stiff as stone or concrete. In other words, it is just as hard to deform.

So far, the scientists have produced material samples of about the size of a one-franc piece using a conventional hydraulic press such as those normally used in industry. "The challenge is to generate a sufficiently high pressure for the compacting process. Larger workpieces require a correspondingly greater force," says Bouville.

According to the scientists, ceramic pieces the size of small bathroom tiles should theoretically be feasible.

Energy-efficient

"For a long time, material scientists have been searching for a way to produce ceramic materials under mild conditions, as the firing process

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requires a large amount of energy," says Studart.

The new room-temperature method - which experts refer to as cold sintering—is much more energy-efficient and also enables the production of composite materials containing, for example, plastic.

The technique is also of interest with a view to a future CO2-neutral society. Specifically, the carbonate nanoparticles could conceivably be produced using CO2 captured from the atmosphere or from waste gases from thermal power stations. In this scenario, the captured CO2 is allowed to react with a suitable rock in powder form to produce carbonate, which could then be used to manufacture ceramics at room temperature. The climate-damaging CO2 would thus be stored in ceramic products in the long term. These would constitute a CO2 sink and could help thermal power stations to operate on a carbon-neutral basis.

According to the scientists, in the long term, the new approach of cold sintering even has the potential to lead to more environmentally friendly substitutes for cement-based materials. However, great research efforts are needed to reach this goal. Cement production is not only energy-intensive, but it also generates large amounts of CO2 - unlike potential cold-sintered replacement materials.

Both hobbyists' pottery and engineered high-performance ceramics are only useable after they are fired for hours at high temperatures, usually above 1000 °C. The sintering process that takes place causes the individual particles to "bake" together, making the material more compact and giving it the required properties, like mechanical strength.

Cold sintering

In the journal Angewandte Chemie, American researchers have now demonstrated that sintering can also take place at significantly lower temperatures. This cold sintering process is based on the addition of small amounts of water to aid the key transport processes that densify the material.

"Since the stone age, ceramics have been fabricated by sintering at high temperatures," reports Clive A. Randall from Pennsylvania State University (USA). "This includes the Venus of Doli Vestonice, one of

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Talking Shop

the oldest ceramic objects." The traditional firing process may now become unnecessary for many ceramic materials, because a broad spectrum of inorganic materials and composites can also be sintered between room temperature and 200 °C. In conventional high-temperature sintering processes, individual ceramic powder particles densify into a hard, dense object. The driving force for this process is the reduction of the high surface free energy of the powder by material diffusion—a process that only occurs at high temperatures. "In contrast, cold sintering relies on interfacial solution effects in water for the densification of the material; a process that occurs at low temperatures and over much shorter time frames, minutes instead of hours, when pressure is applied," says Randall.

Small amounts of interfacial water serve as a transient liquid phase. The details vary for different systems, but for a number of ceramic materials the first step is dissolution of the sharp edges of the boundary surfaces between the particles, reducing the surface free energy of the powder. Then, under appropriate pressure and temperature combinations, the dissolved material diffuses through the liquid and preferentially precipitates away from the contact areas between the particles. This process closes the pores and makes the material more compact.

Says Randall: "Cold sintering functions for a broad palette of inorganic compounds, including metal oxides, carbonates, halides, phosphates, and multimaterial systems (composites). The properties of the cold sintered samples were equivalent to those sintered by

COLD SINTERING RELIES ON INTERFACIAL SOLUTION EFFECTS IN WATER FOR THE DENSIFICATION OF THE MATERIAL conventional methods." The Penn State scientists examined the process in detail using sodium chloride, alkali molybdates, and vanadium oxide amongst other materials.

"Composites of ceramics with metals, polymers or other ceramics are in high demand, but because of their different thermal stabilities, shrinkage and possible chemical incompatibilities, systems made from different materials are not so easy to sinter at high temperatures," says Randall. "These problems are minimized in cold sintering and most importantly, this process opens exciting sustainable and low cost manufacturing possibilities for ceramics and their composites."

Composites made by the cold sintering of ceramics with metals, polymers, or other ceramics should make it possible to develop new properties and materials systems for next-generation technologies.

Advertiser feature

EQUIPCERAMIC COMPLETES THE UPGRADING OF THE DE-HACKING LINE AT HERMANOS DIAZ REDONDO’S ROOF TILE FACTORY. The Hermanos Díaz Redondo Group, one of the main manufacturer of heavy clay products has concluded a new contract with Equipceramic, S.A. aiming for the upgrade of their roof tile factory in Cobeja, Toledo.

Improving the product to foster the export of roof tiles to other highly competitive markets was the main reason why Hermanos Diaz Redondo knocked on Equipceramic’s door looking for a solution adapted to their needs and at the height of the new requirements of the market.

Equipceramic conceived a fully automated proposal based on robotics for removing wire from roof tile initial packs, sorting out and replacing them and arranging new rows with several strapped roof tile bundles.

Wire is automatically removed from packs on the current rotary platform that turns two rows of roof tiles 90º. A device consisting of 4 jaws grips and tightens the wire on the convex side of the row so it can be cut out by 4 cutting disks on the opposite side. Once the wire is released, it is pulled back by the jaws and collected in a container.

A gripper mounted onto a frame with double row capacity and with a spacing mechanism, takes the two wire-free selected rows and delivers them to two manipulators, each one consisting of an inclined conveyor with stop pieces and a robot with a double gripper

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turning 90º. Roof tiles are set into 4, 5 or 6-unit groups on the conveyors at the bundle strapping area by this gripper which is equipped with a device for pressing rows before being collected.

Strapped roof tile bundles are always turned frontwards by a 4-blade turning device. Each package making line is equipped with a bundle strapping machine and some space has been left for the installation of two additional bundle strapping machines in the future.

One of the most relevant advantages offered by this installation is the possibility of making bundles containing a variable number of roof tiles (between 5 and 7), so dispatch packs can be tailored made resulting in a most efficient use of the available space and therefore in significant savings in transport expenses.

New equipment was designed so it was fully compatible with the equipment already existing in the plant and it could be comfortably integrated in the current production line. It has a production capacity of 7,500 roof tile/hour. The new installation was completed in August 2016.

Equipceramic, S.A. thanks Hermanos Díaz Redondo Group for the confidence placed on our company by sharing this project which will position their factory among the most technologically advanced ones in this sector.

AC 17-3

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Insight

USA

Leading unglazed tile export destinations (2016, sq metres)

Total unglazed tile imports (sq metres)

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Leading unglazed tile import sources (2016, sq metres)

Leading glazed tile import sources (2016, sq metres)

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Total glazed tile imports (sq metres)

Leading glazed tile export destinations (sq metres)

Leading sanitaryware export destinations (no. pieces)

Leading sanitaryware import sources (no. items)

Total sanitaryware exports (no. pieces)

Total sanitaryware imports (no. pieces)

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AC AC17-3 17-3

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25 59

Hunter and the hunted

Technically Replacing Outsourcing?

Dear Diary,

n politicians of 'Bringing jobs back!'

There has been a lot of talk in recent months by certai that on the face of it is a nice nition admo st populi simple A s. or some similar worded choru were given away by some usly previo and alluring promise that great, tremendous jobs that easily brought straight be can ago, years misguided incompetent fool or corrupt system paying substantial salaries will soon be back, very quickly and that wonderful, fulfilling work be more jobs there will be more income available. This will be perfect as not only will there have legions of unemployed waiting not will unities tax, less benefits to pay out and comm employed on safe, long term contracts for the devil to find work for idle hands to do. Fully ns we will enter a golden age of with all manner of health insurance, holidays and pensio s with no fear for the future and queen and kings as live prosperity and we will once again* prosperity too. Who would not support this able to plan for our children's and grandchildren's evable. unbeli wherever in the world you may be. It's idyllic. It's promise which can guarantee votes of kind the its times lt Its very convenient and in difficu comments from the President of the USA and support. Although I'm obviously alluding to the ses are heard in other developed promi of and the Brexit politicians in the UK these sort around election times anyway. But on comm fairly are and countries falling on tough times are they even remotely realistic? the past 20 years. Though its A great deal is made of the trend to outsourcing over China entered the WTO and when when l mode cant signifi the always happened it became cheaper to source products from places corporations, retail focused realised that it was far ng environmental protection, workers coveri with cheap labour and lax, if any regulations y, enthusiastic and aggressive trading rights and health and safety. They were aided by hungr between the sophisticated and in companies more than happy to act as the middle men rate to fill their production and despe ies factor nt demanding foreign buyers and the ignora equally desperate owners looking to get rich. ional manufacturing in 'The West' The result has been completely predictable. Tradit for the obvious commercial reasons just not now es has been in decline for several decad want to go into dirty and physically including the cost of labour – but labour also that didn't to go into further education chose demanding industries. As more school leavers also e as support. Also as retail degre a need which jobs ultimately to try to find better paying jobs in the supply chain. Not exactly sexy expanded fueled by cheap credit there were more y. factor or glamorous jobs but preferable to working in a of a pipe dream and another example hing somet seems It Can jobs really be brought back? of a wish to return to a golden age that never was.

On the face of it you simply First of all – how do you encourage jobs to come back? manufacturing in the home and ment invest on s break tax introduce duty on imports and ned there may be mentio has country. But that may not be enough and as The Trump facturers. Regulations manu to ble desira cuts in regulations – to make a the country more an example that might as us teach can China As t. nmen protecting workers and the enviro as an adesh Bangl with mean increased pollution of air and water. It may mean s nation ped develo would – rs worke example far more dangerous conditions for want that?

– if you impose taxes and However trade is more global now than ever before

*The views expressed in this piece reflect those of the author, and not of the magazine or its staff

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Hunter and the hunted

s t h g t h ou

a ck? It s e e ms b t h g u o r b e b y ll a re s b o j n "Ca m" so m et hi n g o f a pi pe d rea

retaliation. If I ramp up protectionist duties on some imports its highly likely you will meet back it is highly likely I'll be hit with jobs ing factur manu bring policies on certain products to will only cost jobs and investment. tit for tat measures on products I want to export. Which a time where the dreams and fears at live We But are the jobs actually their to bring back? g old jobs easier or creating makin simply than rather – reality of automation are becoming a new class 'The create ation might new jobs in high technology manufacture – autom Unneeded'. How do we support them? on the whole in recent years has Looking at ceramics the single biggest impact on jobs is that the ink jet printer which has been technology and the most obvious example of lost for economic reasons but technology been have revolutionized tile decoration. Jobs may made a whole raft of jobs, talents & skills irrelevant. at what was then one of the first ink A few years ago whilst in Modena I was taken to look s being abraded by the ceramic nozzle the about was jet printers. At this time more of the talk time I remember thinking the printed pigment and how it might be insurmountable. At the colours. For sure they looked a bit like tiles were very pastel – very detailed prints but weak natural rock – but...? not be printed on a tile. Recent Today it seems there is pretty much nothing that can nies confirmed how flexible ink compa visits to Cevisama and to tile surface decoration effects it can achieve – relief ative decor rful wonde y jet decoration is now and what frankl mimicked and added to. Yet a few effects as well as all manner of natural stone & metal d rotocolour, screen printing, decals, neede years ago effects not as dramatic or innovative technicians... create jobs – it will just move a few.

Even if your tile line moves countries – it hardly will n't we need again decal houses would ies But what about tableware – if it moved countr way to create manufacturing jobs – one be could That those? and people to make and apply everything. what about the complex shapes? A robot can't do with both traditional tableware designs I also saw recently some plates decorated inglaze plates look very attractive and they were and some effects typical of current tile design. The m. This could indeed be another all ink jet printed. The curves of the rims were no proble manufacture are aware. Speaking decal in and are game changer and few people in tablew jet printers so far can only accommodate to the manufacturers of these new systems the ink However they note that in theory the modest curves of flatware but not the holloware. te this – its just a cost issue at moda accom to ped machines could be modified or develo interested, one major player simply the moment. But tableware companies are already they saw photographs. This level of commentating 'Wow – we are very interested!' when printers – I'm certain they will follow up. jet ink tile first the interest exceeds mine when I saw ries too and some skills and trades These technological advances happen in other indust ulated outsourcing (my basic unreg of simply become obsolete. Whilst I'm no supporter comply with customer regulations should ct produ a t marke premise is that if sold in a certain it is sold in) the fact is that that ship has and also manufacturing regulations for the country not just be ineffectual – it may force may sailed – trying to stop it now through tax and duty do without. can really we Which ility. other protectionism and instab Until next month, Your humble servant William Hunter

*The views expressed in this piece reflect those of the author, and not of the magazine or its staff

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