Asian Ceramics AC19-5

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AC19-5

A FINE LINE:

ADVANCED CERAMICS IN INDIA

IN FOCUS: Sanitaryware trends The US tile industry What next after Brexit?

Plus news, views, analysis and much more!

News

Contents: AC 19-5 News

Features

2 Inside Asia

28 Advanced ceramics: a slow burn

Blast off for critical technologies.

4 Welcome

Revealing the mess in Gujarat.

6 Across The Continent

Openings, closures and industry moves from across Asia.

18 International News Our eye on the international arena.

22 Material Matters

The ins-and-outs of ceramic raw materials.

24 Comment & Analysis Vietnam: a country built on potters.

Rohan Gunasekera ponders why, despite the clear and apparent demand, the development of the country’s advanced ceramic sector remains in a seemingly permanent nascent phase.

32 Bracing for no deal: ceramics in the spotlight

AC looks into how the continually shifting deadline for the UK’s exit from the EU is having a material impact on supply chains and the ceramics industry in general.

42 Urban legends: north Asian sanitaryware

Jahir Ahmed examines how changing attitudes, more income and a modernization and urbanization programme in the North and East of Russia is spurring on an increase in sanitaryware demand and supply…

54 USA – China trade war bites tile makers

AC looks at how the deepening trade war between the USA and China is likely to have an impact on not only the ceramics manufacturers of the Peoples Republic, but the importers and distributors spread from coast to coast in North America.

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Analysis 58 Talking Shop As part of a mid-year review, in this issue’s talking shop, our guest columnist William Hunter, provides his unique spin on all things “status” and questions if the money spent on ever-more expensive ceramics is really a castle built on sand…

60 Insight

Analysis and insight into Russia.

62 The Hunter And The Hunted

William Hunter looks into the future at rise and ambition of Chinese and Indian business culture as they compete within the ceramics sector...

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Inside Asia

ALKANE STRATEGIC MINERALS LTD, CRITICAL ELEMENTS FOR FUTURE TECHNOLOGIES. Ask the average person about the applications of ceramics and you’ll probably get a list like this: kitchenware, decorative objects, bricks, tiles and pipes.

This is a good summation of the first 20,000 years of ceramic technology, but in recent decades the list has lengthened dramatically to include specialised ceramic materials with advanced applications ranging from biomedicine to armour, electronics to jet engines.

The latest addition to the list is ceramic smartphone cases. Apple looks likely to wrap its next generation of 5G smartphones in thin but outstandingly tough zirconia ceramics instead of aluminium, and most competitors will follow suit.

China’s Xiaomi and Oppo, and Korea’s Samsung and LG are already selling smartphones using ceramic cases. Add in tablets, PCs, watches and other devices that would benefit from zirconia ceramic cases and it’s clear that demand for zirconia could skyrocket. However, zirconia supply chains are not ready to meet high demand, so new supply is needed to keep up with demand.

The Dubbo Project (DP) is a large in-ground resource of zirconium, hafnium, niobium, yttrium and rare earth elements (including praseodymium and neodymium). It is the most advanced poly-metallic project of its kind outside China, making it a potential strategic and independent supply of critical minerals for a range of sustainable technologies and future industries. It has a potential mine life of 70+ years.

Located at Toongi, 25 kilometres south of Dubbo in central western NSW, the Dubbo Project is owned by Australian Strategic Materials Limited (ASM), a wholly owned subsidiary of Alkane Resources Limited (a gold production company with a multi-commodity exploration and development portfolio throughout Australia).

One such industry being targeted by ASM, and their worldwide agents Minchem Ltd, based in the UK, is for communications technology. Alongside the usual rare earth materials used in communications satellites, and the internal parts of a smartphone, the introduction of 5G wireless technology requires the use of alternative smartphone cases to avoid interference issues with traditional metal casings. The answer to this is Yttria-stabilised zirconia (YSZ). In addition to extreme toughness, and allowing resistance free wireless charging, importantly YSZ is transparent to radio waves. This removes one of the major issues associated with transferring from 4G to 5G networks when using existing smartphone case materials. As the number of smartphone users continue to increase, the demand for YSZ could be out of this world. ASM and Minchem have the resources to help.

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AC19-5

CONTACT DETAILS EDITORIAL

W

ell, it’s about time I guess.

Gujarat has got away with flouting A FI N E LI N E: international norms on pollution, ADVANCED CERAM emissions (and even in the ICS IN IND IA early years of is “boom” , labour conditions) for long enough. Now, established as the prime ceramics hub of the Asian continent IN FOCUS: Sanitaryware trends outside Southern China, it has taken the bull by the The US tile industry What next after Brex horns, so to speak, and is opting to considerably it? clean up its act.

Plus news, views, analy sis and much more!

We have all read in recent months how the NGT has clamped down on emissions by placing more stringent requirements on the region’s fuel consumption, and there is a great deal of development underway in that regard…finally!

For many, it cannot come a moment too soon. Even as the work gets underway to clean up the fuel supply, a committee appointed by the National Green Tribunal (NGT) has identified 12 sites contaminated from illegal dumping of coal tar-bearing gasifier wastewater in Morbi.

The Red / brown wastewater was found discharged in some low-lying areas and abandoned mines, according to a report by the panel. The sites were covered with white slurry from tile polishing, indicating to a potential cover-up.

“It is a case of negligence towards natural resource, common man’s need and environment by the gasifier operators and ceramic producers,” according to the report.

On March 6 a three-judge NGT bench directed the closure of coal gasifiers and units operating on them in the town. It asked the Gujarat State Pollution Control Board (GSPCB) to immediately start prosecuting violating industries and recover compensation for heavily polluting the air.

To oversee the execution of the order, the tribunal appointed an oversight committee headed by Just (retd) BC Patel, former Chief Justice of Delhi High Court and former Judge of Gujarat High Court.

The NGT asked a committee including representatives of the Central Pollution Control Board (CPCB), GPCB and National Environmental Engineering Research Institute (NEERI) to assess the damage, costs associated with it and suggest a resoration plan.

The GPCB visited 952 industries in the area from March 13-31. Gasifiers were found in 568 ceramic industries. Together, they would have discharged an estimated 2160 cubic metre (m3) wastewater and 1176 tonnes coal tar in their premises. All stored condensate wastewater needs to be disposed scientifically to Common Hazardous Waste Treatment, Storage, and Disposal Facility (CHW-TSDF). Coal tar should be forwarded to cement and silicate industries.

The committee also found large quantities of solid waste — polished waste, broken tiles, sanitary waste, abrasion dust, spray dryer HAG ash, etc — haphazardly dumped all over Morbi, including Matel Road, Sartanpur Road, Makansar Road, Jambudiya, Rafaleshwar, Lalpar, Lakhadhirpur Road, Ghutu Road, Pipali Road, Unchimadala, Kandla Port Bypass Road.

Let’s hope this move towards a brighter, cleaner ceramics manufacturing hub is not just skin-deep…and that companies are not allowed to simply “appear” to be doing the right thing…

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Crackdown on “back door” Chinese imports • Morbi-makers opt for self-financed LNG • Government fears Indian Truc on the way back in pottery • Import duty may “hammer” distributors • US tile companies seek stricter tariffs end in brick kilns • SACMI hits 1.44bn Euros of sales • Brick kilns hit in latest budget • Asian Granito and Panar VIETNAM

Crackdown on “back door” Chinese imports Vietnam has vowed to crack down on companies that have been relabelling Chinese goods as Vietnamese to avoid US tariffs, in a move that underscores the south-east Asian country’s growing role as a regional export hub in the intensifying USChinese trade war. Vietnam’s customs department said that it had ordered provincial and municipal customs departments to step up their inspection and verification of certificates of origin to root out fraudulent ones. In a statement posted to its website on Sunday, the body said that companies were importing goods from China, then removing or replacing the packaging on goods to describe them as “Made in Vietnam”. Statecontrolled media quoted Hoang Thi Thuy, head of the agency’s customs control and supervision

department, as saying that authorities had identified “dozens of cases” where this happened.

In one, dating back to 2017, before US President Donald Trump began his trade offensive against Beijing, the customs department in the northern port of Haiphong found a company that had imported speakers and phone chargers from China that had “Made in Vietnam” printed on their packaging. Vietnamese customs officials said that the trans-shipment of goods under forged certificates of origin was happening most often in the areas of textiles, seafood, agricultural products, ceramic tiles, honey, iron steel, aluminium and pressed wood. News of the relabelling of Chinese goods will add to growing scrutiny of Vietnam’s role as a winner in the US-China trade war, as

more Chinese, US and other companies step up purchasing or manufacturing in Vietnam to avoid rising US tariffs on a swath of Chinese goods. Nomura, in a research note published last week, found that Vietnam was “by far the largest beneficiary” of import substitution as buyers around the globe shifted their buying from China. Imports to the US from Vietnam grew by 40 per cent in the first quarter of this year, about double the rate of imports from South Korea and Taiwan, and one of the fastest growth rates for any economy. The US is now Vietnam’s largest export market, and its trade surplus with the US reached $39.5bn last year.

Vietnam has drawn closer to the US in recent years because of their shared suspicion of China’s growing regional ambitions. It hosted Mr Trump at February’s

nuclear summit with North Korea’s Kim Jong Un in Hanoi. Last month Vietnam escaped being designated by the US Treasury as a currency manipulator.

However, trade tensions have simmered for years, including in a long-running dispute over catfish.

Last week, Darin LaHood, a US state representative from Illinois, called for an investigation of Minh Phu Seafood, Vietnam’s biggest shrimp producer, accusing it of evading antidumping duties on Indian frozen shrimp by importing it, minimally processing it, then selling it through its US subsidiary Mseafood as Vietnamese product. The Vietnamese company has denied any wrongdoing, and said it believed any potential US investigation would exonerate it. The Office of the US trade representative declined to comment.

INDIA

Morbi-makers opt for self-financed LNG Tile manufacturers in Morbi, India's largest ceramics cluster have come together to ensure they receive a continuous supply of cheap natural gas.

A consortium formed by tile matkers has chalked out plans to build a floating storage and refassification unit (FSRU) with a provision for a coastal LNG terminal at Jodia, near Navlakhi Port, some 45km from Morbi.

The proposed terminal will have a capacity of 2.5 million tonnes (MMTPA) and could be scaled up to 5 MMTPA. The project is likely to cost Rs3,000 Crore, according to sources.

Oresa Energy Private Ltd, an entity backed by the consortium of some ceramic tile makers, has already submitted an expression of interest to Gujarat Maritime

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Board for the project.

The state maritime authority had invited bid proposals for the LNG project and Oresa Energy is the only company to have shown interest in it, said one official.

“The project is at a very early stage of planning and a pre-feasiiblity repost is being prepared” said a Morbi-based tile manufacturer associated with the project.

According to ceramics industry players, the aim is to have a dedicated, liquefied natural gas (LNG) terminal for Morbi, which is among the largest gas consuming industrial clusters in India with a requirement of 6 million standard cubic metres per day (mmscmd).

The move assumes importance as demand for natural gas

in Morbi has increased with hundreds of units switching to natural gas following the National Green Tribunal (NGT)’s order to shut down coal gassifiers.

Several ceramic tile units had to face a 20% cut in LNG supply due to the increased demand.

“Fuel and electricity make up 50% of the production cost in the ceramics industry. The industry relying on a single source of gas is a cause of concern, especially when fuel accounts for such a large chunk of the cost” said one industry player.

Facilities proposed to be developed for the on-shore LNG terminal include an LNG unloading system, trestle for LNG unloading lines and two LNG storage tanks, the company said in its proposal to GMB.

LNG will be stored in tanks at the on-shore terminal. Stored LNG will be regassified for transport by pipeline to end users, it says.

“Since 2007, natural gas demand in Morbi has been massive. If this alternative (FSRU) was availablie before, the industry would not have had to face gas cuts” one company stated.

Sources also added that once the project gets in-principle approval from GMB and the location of the project is finalised, the project proponent will go for the requisite clearances.

“Although ceramics players have the financial capability, they don’t have the expertise to run an LNG project. Hence they are also looking for technical and strategic partners” sources add.

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n tile influx • Giulio Mengoli is the new General Manager for SACMI • Bau s • Production costs a barrier to increasing exports? • Child labour finally to ria Group exit JV...

INDONESIA

Government fears Indian tile influx While the influx of ceramic tiles from China has subsided after the government imposed a protective tariff, local ceramic tile producers are concerned by the influx of similar products from India.

According to the Indonesian Ceramic Industry Association (Asaki), ceramic imports from China declined 14 to 15 percent in the first quarter of 2019. “ Meanwhile, imports from India

jumped significantly,” said Asaki chairman Edy Suyanto in Jakarta on Sunday as quoted by kontan. co.id.He did not mention an exact figure.

Edy projected ceramic production would reach 75 percent of the installed production capacity, which was 550 square meters.

Edy said Asaki was monitoring the entry of ceramic tiles from India and would consider

seeking protection from the government.

He said as usual, ceramic tile sales were stagnant in the first quarter but the association hoped sales in the second quarter would increase by 2 to 3 percent owing to increased demand ahead of Idul Fitri.

Edy, however, believed ceramic tile demand would increase during the second half of 2019, supported by higher

demand from both retailers and construction projects.

However, not all ceramic tile producers expect sales to increase ahead of Idul Fitri. PT Cahaya Putra Asa Keramik, for example, projected sales to decline in the second quarter because of limited transportation.

Cahaya Putra director Juli Berliana also projected a decline in production because of the long Idul Fitri holiday.

WORLD

Giulio Mengoli is the new General Manager for SACMI Since 1st of June, Giulio Mengoli has been the new General Manager of the SACMI Group. His appointment was made official by the Board of Directors of the parent company, SACMI Imola.

A native of Padua, 49 years old, Giulio Mengoli has a long international experience, having held top positions in France, the United States, Brazil, Sweden and Italy.

The meeting with SACMI

came in November 2018 and for 7 months Mengoli acted as General Manager of SACMI Business Units, immediately

working alongside the present management to define the governance and strategic planning of the Group.

Giulio Mengoli takes over from Claudio Marani, who has led the SACMI Ceramics Division since 2000 and has been the Group's General Manager since 2016.

"With the appointment of Mr. Mengoli as head of the SACMI Group - observed the president of SACMI Imola, Paolo Mongardi - we want to give a clear signal

in the direction of further consolidation of the Group's international vocation and strengthening of its leadership in all sectors of activity". In the medium term, in addition to the development of core sectors, SACMI's priorities include the issues of digital transformation and the circular economy, "to offer products and services that are increasingly customised and in line with the real needs of production and of the market".

VIETNAM

Bau Truc on the way back in pottery In the journey to search for Cham culture, pottery is "key" to the material and spiritual life of people. Bau Truc in Ninh Thuan province is one of the two oldest pottery making villages in Southeast Asia. In the past, the whole village was enthusiastic about making pottery, but in the modern world, the traditional pottery profession here is facing many difficulties.

Previously in Bau Truc traditional pottery village,

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houses were bustling with pottery making.

Although experiencing many ups and downs, thanks to the enthusiasm and passion of creativity of artisans, the jars, pots, boilers, vases and statues were always full of life.

However, pottery makers are now old, so passing down the traditional occupation is a struggle.

According to artisans, the reason for this situation is

because pottery making is very hard but the income is low, with a lack of investment capital and poor consumption. This has posed serious consequences for the pottery making village.

Bau Truc traditional craft making pottery is the pride of Cham people in Ninh Thuan. However, due to many difficulties, the number of households pursuing the trade has decreased significantly.

Three years ago, the whole

village had more than 550 households making traditional pottery, now the number is only 150.

There is no link between pottery-making establishments to create products with good quality and beautiful patterns, so many ceramic products have not really attracted consumers. This is a challenge, a problem for Bau Truc pottery village that needs attention from local authorities.-

AC 19-5

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News

PHILIPPINES

Import duty may “hammer” distributors The government’s plan to impose a safeguard duty on imported ceramic floor and wall tiles may aid local producers hurt by surging imports, but an additional cost of up to 30 percent may be detrimental even to consumers who prefer cheap tiles used for low-cost housing.

During the preliminary conference on the formal investigation on the imposition of safeguard duty against importation of ceramic floor and wall tiles in the first week of June, Napoleon Co, president of the Philippine Ceramic Products Importers Associations Inc., said prices of cheap tiles could be 5 to 10 times higher than their current prices if the safeguard measure is formally implemented by the Department of Trade and Industry (DTI).

“We have to pass on because the margin of the tiles, let’s say for cheap tiles, the cost would be around P130 per square meter, you add P30,” Co said. “The difference between the landed cost and the selling price is around P20

to P30 on gross add on. So with the safeguard coming in, we have to add on, unless changed. For the high end there would be no problem.

What is P50 for P2,000? It’s just 2 or 3 percent. The high end probably would not be affected. We can absorb,” he explained.

Advertisements This, Co stressed, would tremendously hit industries involved in low-cost housing.

“You don’t see cheap tiles on five star hotels.”

Following reports of sudden surge on ceramic floor and wall tile imports in the past years, which was said to be hurting the local industry, DTI Secretary Ramon Lopez said in Department Administrative Order 19-06 dated May 7 there was a need to impose a safeguard duty on these products in the form of cash bond amounting to P3 per kilo.

The safeguard measure was imposed following DTI’s preliminary investigation aimed at determining whether increase imports

of ceramic floor and wall tiles under several codes of Association of Southeast Asian Nations Harmonized Tariff Nomenclature were causing serious injury to the local industry.

The provisional safeguard duty on the products is effective for a period 200 days from the date of issuance by the Bureau of Customs of customs memorandum order (CMO), or 15 days after DTI’s order is published in two newspapers of general circulation.

Imports coming from Europe and Central Asia, Middle East, Americas, East Asia and Pacific, East and Southern Africa, West Africa, North Africa and South Asia are not subject to safeguard duties.

While unglazed, porcelain, mosaic and marble tiles as well as glazed ceramic tiles imported from the European Union are excluded from the safeguard duties since they are not produced locally, the counsel of petitioners urged the Tariff Commission to include such products in

the investigation.

“Our position is that they are of the same use [and] they are contributing to the injury suffered by the industry. Any safeguard measure that would be imposed would be useless if unglazed and porcelain tiles are not covered,” a petitioner said.

For its part, the Tariff Commission committed to “study also the legal nuances of the case,” noting that there has been a petition filed by the Ceramic Tiles Manufacturing Association (CTMA) on what products are alike.

“We will still look into the products covered by the ceramic tiles industry,” Tariff Commission chairperson Marilou Mendoza said. “[We will] issue a staff report on product comparison and increased volume of importations” between July 29 to August 2, following the conduct of the ocular inspections, she added.

Public hearings were set on August 12 to 16, 2019, the Tariff Commission said.

CHINA

US tile companies seek stricter tariffs Seizing on the momentum generated by the Trump administration’s timber and steel tariffs, a coalition of tile manufacturers is lobbying the U.S. government to impose tariffs of over 400 percent on Chinese-supplied ceramic tiles. While the approval of new duties could lift domestic producers, some design industry professionals are pushing back.

On April 10, eight U.S. ceramic tile producers, all members of the Tile Council of North America, successfully petitioned the Department of Commerce (DOC) to launch an investigation into China’s practice of tile dumping. That group, collected under the name “Coalition for Fair Trade

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in Ceramic Tile,” included American Wonder Porcelain, Florida Tile, Inc., Crossville, Inc., Florim USA, Dal-Tile Corporation, Landmark Ceramics, Del Conca USA, Inc., and StonePeak Ceramics.

The coalition claims that the Chinese government is subsidizing the production of ceramic tiles to below-marketrate prices (or even below production costs) to artificially crowd out the competition, and the group is asking that the DOC impose retaliatory penalties on Chinese manufacturers to level the playing field.

To avoid confusion over what is and is not a tile, the coalition has issued a blanket request pertaining to any tilelike product, no matter the use,

thickness, or design, for pieces up to five-feet-by-fifteen-feet.

The scope of the complaint also includes tile originating in China and modified— beveled, painted, or refined in any way—in the United States.

In response, the newlyformed Ceramic Tile Alliance (CTA), a group of designers, retailers, and distributors, has launched a petition against imposing new tariffs on Chinese tile. The group argues that doing so would hurt the long-term health of the U.S. ceramics industry to the benefit of domestic manufacturers, that architects and interior designers would lose valuable connections that they’ve cultivated with international artisans, and that

retailers would only be able to offer a limited selection.

Additionally, the CTA alleges that showrooms would need to renovate their displays, some of them larger wall and floor pieces, to reflect that certain products would be no longer available. Overall, the CTA estimates that “thousands” of jobs could be lost as distributors and retailers would be forced out of business by higher prices and restricted supplies.

The United States International Trade Commission (ITC) will issue a preliminary injury determination by May 27. If the ITC and DOC find in favor of the coalition, the duties could be imposed as early as the beginning of next May.

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BANGLADESH

Production costs a barrier to increasing exports?

Industry insiders consider high production costs as the main barrier to exporting Bangladeshi ceramic products including tiles, sanitary ware, and tableware to global markets.

Speaking to the Dhaka Tribune, President of Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA) Shirajul Islam Mollah, said that ceramic products were very promising for the country’s export basket.

“But we are failing to compete in the international market due to higher production costs compared to other countries,” he said.

“We have to pay 15–25% customs duties, along with other duties, on import of raw materials for the industry. This is why our production costs are going out of control,” added Shirajul, also Managing Director of China-Bangla Ceramics.

He also mentioned that rising gas prices were also driving up production costs, adding that they were going to meet representatives of the National Board of Revenue (NBR) today

for a pre-budget discussion on the issue.

“Although we have been privileged with 10% cash incentives on export of ceramic products since last year, we need 5% more for faster export growth,” demanded Shirajul, also a member of parliament (MP).

Claiming that more incentives would gear up the ceramic industry to the level of the readymade garments (RMG) sector, he said locally produced ceramic products could now meet the domestic market demand.

In the previous fiscal year (FY2017-18), the industry witnessed exports worth Tk380.1 crore, a 33% rise from FY2016-17.

Exporters have observed that if promoted properly with tax exemptions and cash incentives, ceramics could be the leading export sector of Bangladesh.

Previously, the tradermembers of BCMEA presented four major demands in a proposal to NBR keeping in view the budget for FY2019-20.

Their demands were reduction of customs duties on raw material imports; increase in tariff price of finished imported products; exemptions of 15% supplementary duty on locally produced tiles; and exemption of value added tax (VAT) on gas bills.

At least 13 types of raw materials have to be imported to produce ceramic products — photographic powder, zirconium silicate, cover coat, printing ink, potash soap, thinner, body binder, nano-chemicals, packing belt, lavatory seats, covers, and silk screen.

These materials have minimum 27–87% duties including customs, regulatory and supplementary duties.

The traders demanded, in the proposal letter, only 5% customs duty and exemptions from all other duties.

Additionally, the proposal demanded increase of tariff prices on imported finished products to a substantial amount, so that locally produced ceramic products could compete with imported ones.

Currently, a total of 66 factories are producing ceramic products locally, 20 are making tableware, 28 making tiles, while 18 are producing sanitary ware.

Investment of all the factories amounted to a total of Tk8,616 crore, while 47,098 people are directly employed there, according to BCMEA data.

BCMEA said total domestic market consumption of ceramic products was Tk5,452 crore in FY2017-18, of which locally produced ceramic products were worth Tk4,338 crore, while imports hit Tk1,114 crore.

In case of tableware, a 92.87% market demand is met by locally produced goods, while the remaining 7.13% is met by imported products.

In case of tiles, local companies occupy 76.18% of the total market share and imported products hold 23.82%.

While 88.32% market demand of sanitary ware is met from locally produced products while 11.68% by imported ceramic goods, according to BCMEA.

CAMBODIA

Child labour finally to end in brick kilns The Cambodian Ministry of Labour and Vocational Training has called on relevant agencies to turn to the Criminal Code to prosecute brick kiln owners who employ child labour.

Under a new directive (dated 5 June 2019), brick kiln owners who hire children can go to jail.

The owner of such a place in the southeastern province of Kandal will be among the first to face criminal charges after a nine-year-old girl lost her arm in an accident.

Kilns now have to post clearly visible signs that say that minors are not allowed on the premises. The mere presence of children is tantamount to a criminal offence by owners who fail to keep them out.

Debt bondage as a violation of workers’ freedom is also

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strictly prohibited. Kiln owners must provide accommodations to their employees and families who live far from their workplace. Such housing must be surrounded by an enclosure.

The new regulations stem from a serious incident on 9 March in Preah Prasap, a village in Khsach Kandal district, involving Chheng Srey Pheak, 9, who lost an arm to a machine.

Her injuries were so bad that the limb had to be amputated.

Both the provincial director of the Department of Labour and the provincial police said the girl had been helping her parents and had not been forced to work at the factory.

Like in all developing societies, "child labour is a widespread" in Cambodia, said Fr Luca Bolelli, a priest with the Pontifical

Institute for Foreign Missions (PIME). The clergyman, who arrived in Cambodia 12 years ago, has been the pastor in Kdol Leu, a village in the northeastern province of Kompong Cham, for the past ten years.

"Culturally, child labour does not seem to be such a big deal, especially amid extreme poverty,” Fr Bolelli explains. “I serve a rural community, where it is normal for children to help families in kilns and in the fields.

This is due in part to the sense of duty, obedience and sacrifice, which the local culture imposes on children."

Today’s Cambodian society is at a critical juncture. It has a very young population, and economic growth is driving it towards modernity. "I see small steps forward in terms

of children's rights, but in my opinion,” says the missionary, “regulations like those adopted by the ministry are imposed mostly to meet international standards of organisations such as ASEAN” (Association South East Asian Nations).

With respect to children, "Given the importance the Gospel places on human dignity, Christian communities are engaged in much valued work of awareness raising,” notes the clergyman.

“Starting in kindergarten, children receive a lot of attention. At the liturgical level, we try to involve kids in religious activities, to enhance their experience of faith. It is necessary to counter the idea that those who do not produce are useless to society."

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News

WORLD

SACMI hits 1.44bn Euros of sales After five very positive years, results continued to improve, making 2018 one of the best years in the Group's history.

Goals for 2030: reinforced leadership in 'core' sectors, seizing opportunities offered by the circular economy and Industry 4.0 On Saturday 18th May 2019, the SACMI Imola S.C. Shareholders' Meeting approved the Group's consolidated Financial Statement. Once again, 2018 saw revenues exceed 1.4 billion euro (1.44 BLN), with net equity growing further to 668 million euro and a balance sheet profit of 50 million euro.

“The year 2018 produced one of the best results ever in SACMI's history with, compared to 2017, an improvement in net operating margins”, points out the President of SACMI Imola, Paolo Mongardi. That performance is all the more significant when viewed against the international economic backdrop “in which the initial forecast - one of vibrant continuity with previous years, as predicted by economists on all markets - gradually gave way to a substantial weakening of growth indicators”.

With stable export quotas (85% of volumes) and rising investment levels (42 million euro in 2018, over 220 million in 5 years), SACMI ended the year with a larger workforce which, at Group level, now numbers over 4500 employees.

SACMI Imola S.C. parent company sales were largely driven by the Ceramics and Closures, Containers & PET Divisions in 2018; they continue, in fact, to account for about 70% of parent company volumes.

S a n i t a r y w a r e &Ta b l e w a r e produced excellent results while the Tiles area exhibited stability thanks to strong sales of flagship products (e.g.

Continua+ and large slab decoration lines), offsetting the relative market slowdown, especially in Europe.

“In terms of volumes Italy is as regards goods and services

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supplied to the ceramic industry - easily the leading market.

Investment was boosted by 4.0-driven governmental policies and, more specifically, sought to strengthen new, emerging products such as larger, thicker tiles, wall and designer tiles and slabs with through-body veining”, explained SACMI's General Manager, Claudio Marani. Tilerelated product sales continue to be driven by the more mature European markets, “thus rewarding the company's decision to maximise plant engineering integration”.

In the Closures field, the launch of new cap manufacturing standards and innovative solutions – such as the new CCM Multilayer

- with the establishment of a new Customer Service Division and reorganisation of the food division, now SACMI Packaging&Chocolate – has laid the foundations for more effective market action, characterised by a strong focus on the Group's mission of developing dedicated, personalised solutions to meet the real needs of the market and the reinforcement of long-term partnerships with customers worldwide.

Advanced Materials which brings together the Group's skills in highly specialised sectors such as carbon, lithium battery component development and foamglass - also generated excellent results.

“The year 2018 produced one of the best results ever in SACMI's history which reduces the amount of virgin polypropylene in singleuse caps in favour of biocompatible materials – confirm SACMI's commitment to sustainability. This opens the way towards even closer allround partnerships between the SACMI Group and the international Beverage industry, where, in 2018, sales were driven by complete plants and labellers. The Metals business continued to grow apace, with SACMI strengthening its Europe-wide leadership in the design of complete powder metal solutions, thanks also to close collaboration with the continent's main industry associations and research facilities.

Completion of the Group governance renewal process

In terms of markets, results for Europe as a whole fell short of initial expectations, but performance in Italy proved to be more than encouraging.

A look at the rest of the world highlights a substantial recovery on markets (Russia, Ukraine, Brazil) that had, in previous years, led the way. North America, instead, displayed signs of sluggishness, especially in the USA where trade policies have generated uncertainty among investors. Africa performed well, the overall picture being one of an increasing number of projects and higher investment levels. Asia, alongside a strengthening of SACMI's position in the Indian area, was characterised by the ongoing challenges posed

by Chinese competition, to be seen in a broad global geo-political context.

For SACMI - which, this year, prepares to celebrate its centenary - the approval of the 2018 Financial Statement also offered an opportunity to lay the basis for future action by setting ambitious new goals for 2030. “Our objective in the coming years”, points out the President of SACMI Imola, Paolo Mongardi, “is to strengthen skills, processes and facilities and shape the digital changes that will involve products, services and business models. In 2018 our achievements included the completion and inauguration of the new SACMI Innovation Lab and the establishment of a partnership with the Massachusetts Institute of Technology of Boston (MIT), reinforcing our role as international leaders in applied industrial research”.

Continuing along this path, concludes the President, “constitutes a strategy designed to create an even more integrated, efficient, international Group, one characterised by managerial excellence and strong values: achieving this will require us to intercept the new challenges of the circular economy and embrace a culture of sustainability, factors now vital to the well-being of the wider global

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PAKISTAN

Brick kilns hit in latest budget The federal government on presenting the budget 2019-20 proposed to reduce tax slab imposed on brick kilns and food supplied by restaurants and bakeries in order to relieve the inflation stressed masses.

The state minister for Revenue Muhammad Hammad Azhar in his budget speech said that at present, brick kilns were being taxed at standard rate of 17 per cent.

“It is proposed to decrease the rate of sales tax from 17 percent to a fixed rate based on location. The industry pertains to rural area, where it is difficult to fulfill the requirement of documentation. Therefore, this measure shall ensure improved compliance at a lower cost,” he added.

However, the state minister for revenue in an deliberate move to ensure least impact of strict economic decisions, taken by the government, on the public proposed reduced rate of sales tax on food supplied by restaurants and bakeries.

He noted, “Food related inputs such as meat, vegetables, flour etc are difficult to document and resultantly require increased cost of enforcement.”

Therefore, in order to encourage compliance, he said at a minimal cost of enforcement for the tax

authorities, it was proposed to reduce the sales tax rate from 17 per cent to 7.5 per cent against which input tax adjustment would not be allowed.

While taking the account of the current non-uniform sales tax regime on various forms of milk powder, the state minister for revenue proposed reduction of rate of sales tax on concentrated milk (Powder).

“Similar products are subject to varied tax rates. Therefore in order to remove this anomaly, it is proposed to tax both milk and cream, concentrated, and unsweetened / unflavoured at 10 per cent instead of current 17 per cent,” he announced.

The federal government had also suggested reducing extra tax in addition to sales tax on many items which would help to exploit stagnant revenue potential and reform extra tax regime.

Azhar in his speech went on to mention that currently extra tax of 2 per cent in addition to standard sales tax, was payable on many items such as electric and gas appliances, foam, confectionary, arms and ammunition, lubricants, batteries, auto parts, tyres / tubes etc.

“In order to realise full revenue potential, it is proposed that these items (auto parts and arms & ammunition) be moved

to Third Schedule (retail price taxation) of the Sales Tax Act, 1990,” he said.

In respect of two remaining items i.e. auto parts and arms and ammunitions, it was proposed to withdraw extra tax on the same to reduce the cost of production of local industry, he added.

The government in order to encourage local production of PMC and PVC plastic products had suggested to remove bar on export of PMC and PVC to Afghanistan.

“Removal of bar on export of PMC and PVC is proposed by zero rating export of these items to Afghanistan and Central Asian Republics. This measure would encourage local manufacturing of the aforementioned materials in the country and at the same time shall also promote exports,” the state minister mentioned.

In the wake of incorporating the erstwhile federally and provincially administered tribal areas namely FATA and PATA into the national economy the expansion of exemption to tribal areas were also proposed.

After the merger of FATA and PATA exemptions were extended for five years in respect of supplies to promote economic activity. It was proposed to extend exemption

to tax on import of industrial raw materials and plant and machinery also, Azhar said in his budget speech.

Additionally, exemption was also proposed for supply of electricity to all residential and commercial consumers and to industries set before 31-52018 excluding steel and ghee sector in these areas.

The government had also suggested withdrawal of 3 per cent value addition on import of mobile phones.

“Currently commercial imports are subject to 3 per cent value addition tax which has unnecessarily increased the tax burden.

Therefore, it is proposed that 3 per cent value addition tax on import of mobile phones maybe withdrawn.

This measure would also ensure rationalization of tax on import of mobiles,” he mentioned.

The budget proposals made by the government also included reforming 3 per cent Value Addition Tax (VAT) on petroleum products.

“Exclusion of VAT is only available on those products imported by oil marketing companies (OMCs) where prices are regulated.

It is proposed that exclusion be provided to all Petroleum products like furnace oil, imported by the OMCs,” the state minister for revenue said.

INDIA

Asian Granito and Panaria Group exit JV Panaria Group Ceramiche, one of the leading ceramic tile manufacturers from Italy and Asian Granito India Ltd have exited from their joint venture, AGL Panaria Private Ltd. This joint venture was formed in the year 2012.

The purpose was that Asian Granito would get benefit of imported advanced technology of Italian company Panaria. The JV

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also aimed at importing luxury ceramic tiles to cater high end market segment.

Italian company, Paneria Group was established in 1974 and specialised in the production of porcelain and laminated porcelain stoneware. The Group has focused on the high-end and luxury segments of the market that it caters for by means of nine brands: Panaria Ceramica,

Lea Ceramiche, Cotto d’Este, Blustyle, Florida Tile, Margres, Love Tiles and Bellissimo.

However, in last couple of years Indian Market dynamics have changed dramatically in terms of advanced production technology. Asian Granito India Ltd has upgraded to cater all types of market requirements for domestic as well as in export. Due

to these changes, both the companies have agreed to part with the JV with effective from 21st May, 2019.

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AUSTRALIA

Brick industry set for 80s-style revival?

The managing director of Australia's largest brickmaker predicts a re-run of the late 1980s in the housing market if Labor wins the federal election, and has also warned that a downturn in construction will worsen in May and June.

Lindsay Partridge said volumes were expected to decline more sharply in NSW and Queensland in particular beyond April as an existing pipeline of housing is built out.

"The pipeline varies by state.

The pipeline is a bit longer in Victoria,'' he said.

Brickworks operates the Austral Bricks business along with Bristile Roofing and Auswest Timbers, although the hardwoods division of Auswest is up for sale.

The Australian building products division at Brickworks makes up about 20 per cent of the company's operations. Its earnings before interest and tax slumped 35 per cent to $26 million for the six months ended January 31, 2019. Revenues slipped to $375 million from $376 million.

Mr Partridge blamed much tighter lending criteria imposed by the banks for the housing downturn. "People can't get credit. That's the issue. An enormous number of people are getting knocked back on valuation or their expenses,'' he said.

He also said people were very nervous about the proposed changes to negative gearing proposed by Opposition Leader Bill Shorten and the Labor Party.

This was adding to the lower confidence levels.

"It's a re-run of what happened in the 1980s,'' he said.

Investors were a crucial part of the housing market and would make clinical decisions, weighing up housing returns against the sharemarket and bonds.

While the changes proposed by Labor this time are different than Labor's scrapping of negative gearing for rental property investors in 1985 by the Hawke government, the impact would be similar. Those 1985 changes were soon reversed after rents soared.

Recent research reports predicted Labor's planned

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negative gearing and capital gains tax changes would push housing prices down as much as 12 per cent over the next three years.

Confidence levels would continue to sour in the broader economy.

"I would say that's pre-election jitters,'' he said.

Mr Partridge said the NSW market was particularly vulnerable as it faced a state election and then a federal poll.

Property sales and revaluations helped lift net profit after tax for the six months ended January 31, 2019 by 18 per cent to $115 million. Brickworks also reaped $208 million from the sale of 7.9 million Washington H Soul Pattinson shares.

Brickworks lifted its interim dividend by 6 per cent to 19¢ per share, to be paid on April 30.

High energy costs continue to be a drag on the Australian business with an extra $12 million impost over the full year.

Mr Partridge said the group would make further acquisitions in the US, where there are 37 brickmakers in a highly fragmented industry.

Briworks made its first foray into the US market in November with the $151 million acquisition of Glen-Gery, the fourth largest brickmaker in the US. The integration was proceeding to plan for the business in the north-east of the US, with the usual winter slowdown having been factored in.

"There's been no surprises,'' Mr Partridge said.

Brickworks spent 15 months evaluating the US market before making its first acquisition, and was in talks with several different players.

"We're talking to everyone,'' he said.

The company is eyeing further acquisitions in the US, where the industry is highly fragmented with 37 brick-making firms competing across the country.

Technology trials The company has also set itself up with ASX-listed robotics group FBR Limited to accelerate testing of a large robotic bricklaying vehicle called Hadrian X in a commercial setting.

Brickworks, says the formal joint venture company, to be known as Fastbrick Australia, replaces what had just been a memorandum of understanding between the two to work closely together.

Brickworks managing director Lindsay Partridge said the group wanted to advance testing of the Hadrian X in a commercial setting in the building industry.

It has already sent a shipment of specially developed masonry blocks to a facility in outer Perth in Western Australia operated

by FBR for further testing, ahead of offering the Hadrian X as a serious service to residential builders.

Mr Partridge said the aim was eventually to use the Hadrian X to lay Brickworks' blocks in the Australian building market in residential construction.

The large Hadrian X vehicle utilises technology involving lasers which carefully guide masonry blocks down an extended ''arm'' and places them into position on the wall

being constructed.

The Hadrian X lays a masonry block every 45 to 55 seconds, but FBR is aiming for a speed of up to four times faster, as it develops the technology further.

One masonry block equals about 12 standard bricks.

Industry players say a human bricklayer can lay between 300 and 500 bricks a day, depending on their experience and speed.

FBR chief executive Mike Pivac said the new optimised blocks developed by Brickworks would enable a step up in the commercialisation of the service.

Mr Pivac said FBR had global ambitions in the residential building market.

There are two Hadrian X robotic vehicles. One is already in operation, and a second is still in the commissioning phase.

The joint venture between Brickworks and FBR is for three years, but the term can be extended by agreement. FBR operates from a site at High Wycombe, near Perth Airport.

NEWS IN BRIEF The 140km gas pipeline project from Ayer Tawar to Lembah Kinta in Perak will be completed by the end of this year, the state assembly of Malaysia has heard. State Investment and Corridor Development Committee chairman Datuk Seri Mohammad Nizar Jamaluddin said development and installation of the gas pipeline project were beyond the two-thirds mark. “The project has seven packages, which involves three districts namely Manjung, Perak Tengah and Kinta.“And as of February 28, about 67.7 per cent has been completed,” he said. This will spell great news for the development of the country’s ceramic industries as the availability of clean, cheap fuel will spur on capacity expansion.

The Sungai Rapat assemblyman said that the RM180 million gas pipeline project would benefit 44 manufacturing companies.

“Among the sectors which would be benefited from the project are ceramic, gloves, textiles, steel, glass, and iron production.

“The project is also environmentally-friendly and gas is cheaper compared to the usage of electricity, which is also would be a ‘pullfactor’ for investors to come and invest in the state,” he said.

Nizar also noted that the project, which involves the federal and state government as well as Gas Malaysia Berhad, has no major problem.

“At the moment, we don’t have any major problems in the development project. Only some technical issues such as compensating the houses affected by the project along with the gas pipeline project,” he said.

Nizar also said the gas pipeline project may be extended to other places in the state in the future.

“Discussion on the matter has been raised in the meeting, which involves Invest Perak, State Economic Planning Unit and also the Gas Malaysia Berhad.

“We could extend the project to Batang Padang, Teluk Intan, Bidor, Sungkai and even until the Muallim district,” he said.

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International News

Lobbyists at odds over imports United States

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pair of industry coalitions are squarely at odds over whether U.S. trade officials should impose antidumping and countervailing duties on ceramic and porcelain tile products that are imported from China.

The sharply opposing viewpoints came to light this month, literally weeks after an alliance of eight U.S. ceramic tile producers filed antidumping and countervailing duty petitions with the Commerce Dept. and the U.S. International Trade Commission in an effort to impose unfair-trade penalties on virtually all ceramic and porcelain tile products imported from China.

The petitions were filed by the “Coalition for Fair Trade in Ceramic Tile,” a manufacturing alliance that includes American Wonder Porcelain, Florida Tile, Crossville, Florim USA, Dal-Tile Corp., Landmark Ceramics, Del Conca USA and StonePeak Ceramics.

In response to the April filing, a newly formed coalition, the “Ceramic Tile Alliance” (CTA) ” – a broad-based organization of North American importers, distributors, retailers and design professionals” – announced it was strongly opposed to the potential duties, charging that, if imposed, they would “jeopardize the long-term health and growth of the entire ceramic tile industry against other

competing floor and wall products.”

The opposing viewpoints regarding antidumping and countervailing duties for Chinese tile imports mirrors the battle currently underway in the U.S. cabinet industry, where advocates and opponents of antidumping and countervailing duties – manufacturers versus distributors – have lined up on either side of the emotionally charged issue. Decisions in both cases are scheduled at various times throughout the year, with final determinations expected to be announced by the spring of 2020.

The unfair-trade petitions filed by the Coalition for Fair Trade in Ceramic Tile seek the imposition of penalizing duties of more than 400% on virtually all Chinese imports of ceramic and porcelain floor tiles, mosaics and decorative wall tiles. The coalition claims the imports “are causing injury and damage to the domestic ceramic tile manufacturing industry.”

Potentially impacted by the unfairtrade petitions is a wide range of Chinese ceramic tile imports that are commonly used for flooring, walls, paving and other kitchen and bath applications.

U.S. antidumping laws impose special tariffs to counteract imports that are sold in the U.S. at less than “normal value.” Countervailing duty laws impose special tariffs

to counteract imports that are sold in the U.S. with the benefit of foreign government subsidies.

For both duties to be imposed, trade officials must determine not only that dumping and/or Chinese-government subsidies are occurring, as charged, but also that there is material injury due to the imports. Importers are liable for any duties imposed.

According to the CTA, however, the duties, if imposed, would only serve to “jeopardize the long-term health and growth of our industry,” benefitting domestic ceramic tile manufacturers at the expense of ceramic tile distributors, retailers, installers and design professionals.

As in the case of cabinet-tariff opponents, the CTA argues that Chinese imports have not negatively affected the growth of domestic manufacturing and are not the lowest-cost products imported into the market.

“Our united focus is an attempt to save American businesses and the thousands of American jobs which will be at risk if this petition is allowed to move forward,” the CTA said. “A tariff on imports is a tax on the industry. With tariffs as high as 400%, American companies will be forced to end long-term relationships with Chinese suppliers who’ve provided hundreds of products not significantly produced domestically. Many specialty tile

companies may be forced to close their doors, resulting in thousands of lost jobs.”

The CTA added that, in the event these products can no longer be imported, “significant financial losses for tile distributors and importers” would result.

“Investments made to sample and merchandise product collections will be lost,” the CTA said.

“Distributors will also be faced with managing unproductive surplus inventory (and) the architecturaland-design community will lose entire product segments where labor-intensive, uniquely crafted designs are critical. Our greatest number of sales transactions (decorative tiles and mosaics), which are typically the most profitable, may suffer due to a lack of available assortment.

The impact of the potential duties, the CTA alleged, would also be felt throughout the product supply chain.

“Dealers, retail showrooms, kitchen and bath boutiques will need to retrofit costly displays, vignettes, floor and wall installations to remove products that will no longer be available,” the CTA charged, adding that “this will cause a significant disruption to the majority of businesses in the tile industry and will result in significant price increases for the American consumer.”

Desford brick plant expansion underway United Kingdom

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£95m major investment project is now underway to double production capacity at Forterra’s Desford plant.

The major investment promises to transform the Desford facility in Leicestershire into both the largest and most efficient brick factory in Europe, whilst increasing our overall production capacity and consolidating our role in the future of UK housebuilding.

With a current output of 85 million bricks per year, the Desford plant’s production capacity is set to double in the next three years as

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a result of the investment to 180 million bricks annually – enough to build 24,000 average-sized family homes. On a company-wide scale, this will increase our overall brick production capacity by 16%.

This twofold increase in output will be achieved via the construction of a new, modern facility with state-ofthe-art automated processes that will minimise the plant’s environmental impact.

The new premises will be built alongside the current factory, ensuring that the latter remains operational in order to maintain

production during the changeover.

Situated just two miles from the M1 with excellent transport links, the modernised Desford site will offer a range of red and buff bricks designed to meet the demands of housebuilders.

Production is expected to commence in 2022, by which time our production capacity is projected to approach 0.7bn bricks per annum.

Forterra’s Chief executive, Stephen Harrison, said: “As one of Britain’s biggest manufacturers of building products, we endeavour to

set the benchmark in terms of manufacturing efficiency, output and sustainability.

“In keeping with our strategic focus on manufacturing excellence, our new facility’s modern manufacturing methods will allow us to respond to our customers’ increasing demand for products as the rate of housebuilding continues to accelerate nationwide.

“We have every confidence that this project marks a sound, long-term investment in the future of both Forterra and UK housebuilding.”

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Fully Automatic Tableware Manufacturing System

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Variety of models Takahama Industry Co.,Ltd.

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First tile plant slated for start-up Rwanda

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wanda will soon get the first ceramic tiles manufacturing plant, thanks to a deal that was signed between Nyanza district and Africeramics Ltd in late May. Africeramics is the subsidiary of Milbridge Holdings, which already has investments in Rwanda’s cement production space.

Nyanza district owns a minority stake in the investment in exchange for the land availed by the district to Africeramics Ltd, according to a statement from Rwanda Development Board which facilitated the deal.

Planned to be operational in less than two years, the hightech multi-million euro factory is expected to directly employ over 100 people in the district

and indirectly employ over 300, they say.

In the first phase of production, 9,000 square meters of tiles will be produced daily and this will be doubled in the second phase targeting both the domestic and regional market.

Subsequent phases will focus on other ceramic products on demand.

According to Francesco De Martino, the Group CEO, Milbridge Holdings, their choice of Nyanza was based on its strategic location.

“We chose Nyanza as the base of our plant because it is strategically located where we can source high quality inputs such as clay, granite and other alloys needed for ceramics,” he said.

Nyanza boasts a number of

people involved in small scale ceramics production. It has for long been widely practiced in this district and a few other places across the country, but using traditional methods, which made the products uncompetitive.

The Mayor of Nyanza district, ErasmeNtazinda, said they have much expectations from the new investment.

“We are excited to attract this mega investment and have high expectations for this project. This accelerated process showed that all the parties were interested in ensuring the successful commencement of the project.

I thank Africeramics Ltd for investing in our district. We commit our support to this project”.

The Deputy Chief Executive

Tecnargilla announces 2020 dates mechanics, today the event hosts all sectors of ceramic industry supply, from raw material and paint manufactures to design firms, to suggest ideas for future trends in ceramics, design and architecture.

The latest technological solutions for brick manufacturers will be presented alongside new products for the ceramic sector also considering the profound innovation that has concerned the brick industry in recent years to adapt to the most advanced standards of health, durability and low environmental impact.

The intense development is also expressed through conferences, events, exhibitions and awards

that have contributed to further strengthen Tecnargilla, asserting it a technological innovation hub and an opportunity for exchanging, sharing and meeting for all international operators.

"Tecnargilla 2018 reconfirmed the results of the previous edition testifying that the world continues to see it as the number one event", declared Paolo Gambuli, General Manager of Acimac. "The two years of intense work that precede the fair deserve results like these".

For Ugo Ravanelli, CEO of the Italian Exhibition Group, "Tecnargilla has all the characteristics of a trade fair recognised as the world benchmark of the sector given its rate of internationality, completeness and strategic innovation content. We are working to ensure that this is repeated and developed in 2020 to the benefit of our customers".

$72 million (280 million Reais) to acquire Cerâmica Urussanga (Ceusa), a company with a 2018 output of 5.3 million square metres of tiles.

As the group’s chairman Antonio Joaquim Oliveira explained, the aim of the latest acquisition is to expand the group’s portfolio in the home product sector while strengthening its ceramic industry presence and improving its competitiveness with respect to the major local players.

Cecrisa owns three production plants (two in Criciuma, Santa Catarina, and another in Santa Luzia, Minas Gerais)

with an annual production capacity of 20 million sq.m and the Portinari premium brand, one of the best known names in the porcelain tile market. The São Paulo-based group also aims to exploit operational and administrative synergies valued at more than $64 million.

Cecrisa, founded in 1966 by Manoel Dilor Freitas, has 1,700 employees and in 2018 posted net revenue of 652 million Reais (around $169 million) and an EBITDA of 17%.

The Duratex group, whose largest shareholders are Itaúsa (Investimentos Itaú SA) with 40% and Companhia Ligna with 20%, posted sales revenue of $1.28 billion in 2018.

Italy

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he most innovative technologies, materials and equipment will transform the ITALIAN EXHIBITION GROUP exhibition centre in Rimini into the ceramic capital of the future from 28 September to 2 October 2020.

The spotlight will be on the twentyseventh edition of Tecnargilla, the world's most important trade fair for ceramic supplies and design.

Tecnargilla 2020 kicks off from the excellent results achieved in the past edition held in 2018, which attracted 16,652 international visitors, amounting to 48% of the total. Italian operators registered 18,040 presences, for a total of 34,693 visitors from over 100

countries around the world. The internationality of the event was also confirmed by exhibitors. Of the 433 companiespresent at the fair, 40% came from 26 countries.

The trade fair is confirmed as the only event in the world capable of attracting the top management of major tile, sanitaryware and brick manufacturers, addressing technical staff as well as the decision-makers who define strategies and plans for technological, productive and design development.

The strength of the event lies mainly in its innovative spirit and its ability to anticipate the times and themes of ceramics. From a simple showcase dedicated to instrumental

Cecrisa acquired by Duratex Brazil

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ecrisa Revestimentos Cerâmicos, one of Brazil’s largest ceramic tile manufacturers with the Cecrisa and Portinari brand names, is changing hands. The total share capital (owned 77% by Vinci Partners and 23% by the Borges de Freitas family) is being acquired

by Duratex, a major Brazilian building materials producer and owner of the brands Durafloor (laminate and LVT floors), Deca (sanitaryware and taps), Hydra (heating systems), Duratex (wood panels for

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furniture and residential applications) and Ceusa (ceramic tiles).

The deal is subject to the approval of the antitrust authority (CADE) and is worth 539 million Reais (around $139 million), around half of which consists of a cash payment while the rest will be paid at a later date when certain conditions are met. Added to this is the value of Cecrisa’s net debt of 442 million Reais (around $114 million).

Cecrisa is Duratex’s second ceramic tile sector acquisition. In August 2017, it invested around

Officer at Rwanda Development Board, Emmanuel Hategeka, cited that the investment aligns with the country’s domestic market recapturing strategy.

“This investment fully aligns with our domestic market recapturing strategy and will go a long way to reduce our import bill on construction materials, generate exports while at the same time generating jobs,” he noted Being located in Nyanza district, he added, presents an added advantage of distributed development uplifting the rural economy.

Currently, all ceramic tiles in the country are imported yet studies show that the country has some of the best quality clay for ceramics in the world.

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Raw Material News Fine ceramics to be hit by rare earth scarcity?

UNITED STATES/CHINA // Rare earths States in the latest trade war round by cutting off US supplies of rare earth products.

While President Donald Trump has raised tariffs on many Chinese exports to the United States, no tariffs were put on rare earth materials. As matters now stand, the US and its top Asian allies are totally dependent on China for rare earth metals and products, a dangerous situation impacting both national security and competitiveness, even halting the emerging batterypowered car market that depends on rare earth materials.

What can the US do?

China produces about 97% of rare earth ore, 97% of rare earth oxides, 89% of rare earth alloys, 75% of neodymium iron boron magnets (NdFeB) and 60% of samarium cobalt magnets (SmCo). The United States almost entirely lacks the refining, fabricating, metal-making, alloying and magnet manufacturing capacity to process rare earths and is nearly completely dependent on China.

Rare earth metals are used in commercial and defense applications. For example, Virginian-class nuclear-powered submarines each use 9,200 pounds of rare earth metals, while Arleigh Burke guided missile destroyers require about 5,200 lbs of rare earth metals – there are 66 destroyers in service and 14 either under construction or on order.

The F-35 Joint Strike Fighters each require 920 lbs of rare earth metals – 380 have been built so far and the total buy for the US alone is 2,663 aircraft with Japan now about to order an additional 105 F-35s.

Overall, the US defense market for rare earth materials is less than 5% of domestic consumption. But the defense market needs are for very high leverage applications such as fin actuators in missile guidance and control systems, disk drive motors installed in aircraft, tanks, missile systems and command and control centers, lasers for enemy mine detection, interrogators, underwater mines and countermeasures, satellite communications, radar and sonar on submarines and surface ships and optical equipment.

The Rare Earth Technology Alliance writes: “The electrical systems in aircraft use (rare earth) samarium-cobalt permanent magnets to generate power. These magnets are also essential to many military weapons systems.

“In addition, aircraft use small high-powered rare earth magnet actuators that control their various surfaces during operation. Heat-resistant ceramic coatings are applied to jet engines as a barrier to protect metal alloys. The ceramic coating maintains its heat-resistant durability thanks to yttrium oxide – an important rare earth element – which prevents the zirconia from transforming from a tetragonal to a nonclinical structure.

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“Terfonal-D is a rare earth alloy made of terbium, iron and dysprosium that is used in high-power sonar on ships and submarines. Stealth helicopters use Terfonol-D speakers in their noise cancellation technology blades and NdFeB super magnets.”

While there are some government-supported cooperative research projects with industry, these are mostly small scale.

In spite of the rising importance of rare earth elements for national security, the US Defense Department has not sought to safeguard US supplies, either by stockpiling materials or partnering with industry to develop rare earth mining and refining outside China.

This is rather odd, because when it came to semiconductors and the need for certain products – even products coming from allied and friendly sources – the DOD invested a bundle.

Perhaps the most famous investment was in supporting very high-speed chip development and manufacturing in a program called VHSIC (Very High Speed Integrated Circuit).

The VHSIC program office in the Defense Department spent more than US$1 billion – in today’s dollars about $2.37 billion – in the 1980s trying to upgrade US manufacturing of very high-speed semiconductors. What is most interesting about this, and about other efforts to secure special semiconductors for different military applications, is that semiconductors for defense was less than 1% of the overall US market compared to rare earth materials for defense that are now less than 5% of the US market.

Comparatively, commercial high-speed semiconductors actually outpaced any dedicated military high-speed integrated circuits, so much so that after 10 years the VHSIC program folded and the DOD contented itself buying commercial off the shelf semiconductors for high-value defense applications.

Another key difference is that the US has always had semiconductor FAB facilities in the United States producing topend products, and friendly countries including Japan, Taiwan and South Korea that were more than happy to compete for DOD-related business.

It is also interesting that it was the Reagan administration, which was conservative and free-trade oriented, nonetheless was willing to step in to backstop the semiconductor industry, yet subsequent administrations – both Republican and Democrat – simply failed to act on rare earth despite the compelling importance for national security and the danger, already clear since 2010 when China curtailed rare earth exports to Japan, that China could rather easily cut off the United States from supplies, as they appear to be getting ready to do now.

The difference between semiconductors and rare earth materials in the eyes of the US government and the Pentagon specifically raises a serious question as to why the Defense

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Department has done little to support the rare earth domestic industry, or enter into partnerships with other countries that are friendly and who would have no cause to cut off supplies to the United States?

In the short term, stockpiling is probably the only practical measure available. Without a stockpile of rare earth materials and metals, the US could find some of its top strategic programs such as the F-35 in trouble should China cut off or curtail supplies.

This could leave the Trump administration with little choice but to make big concessions to China to get a rare earth supply cut off canceled, a difficult political choice for a trade-aggressive president.

But the mid-term is full of more opportunities for the United States and the Trump administration has a chance to set the stage. The best chance is to partner with Japan. Japan has discovered huge deposits of rare earth materials at Minamitori Island (Minami-Tori-shima), about 1,150 miles (1,850 km)

southeast of Tokyo.

The estimate of the Minamitori deposits indicates that there is enough yttrium to meet the global demand for 780 years, dysprosium for 730 years, europium for 620 years and terbium for 420 years. US policymakers could seek a partnership with Japan in commercializing Minamitori’s rare earth resources and arranging assured supplies for defense and vital commercial applications.

Indeed, it is too bad that President Trump and Japanese Prime Minister Shinzō Abe didn’t address the subject in their recent meeting in Tokyo.

But the president probably was not encouraged by the US bureaucracy, which has – largely for political reasons – been sitting on its hands and not moving the rare earth issue forward.

Yet the opportunity is there if the US and Japan consider the national security and supply issues objectively.

In short, there is a short-term and mid-term opportunity to end US dependence on China and assure US national security.

Rio Tinto project could “suppress” market prices SERBIA // Borates/Lithium Swift development of Rio Tinto's Jadar project would push down lithium prices and have a negative impact on the company's borates business, analysts say.

Rio is studying development options for the Serbian lithium borates project, which was discovered by Rio in 2004 and presents a way for the company to gain greater exposure to booming demand for battery minerals and electric vehicles.

The fastest possible development schedule touted would involve board approval next year and first production in 2024, but Ord Minnett told private clients the project should proceed much more slowly.

Ord Minnett said it expected lithium supply to exceed demand by 45,000 tonnes in 2025, and a further 50,000 tonnes of lithium from Jadar would only exacerbate the oversupply.

"The added supply would almost certainly affect [lithium] prices,'' said the firm in a note published on Monday. ''We believe the Jadar project presents a number of challenges in terms of market impact.''

74.41 at 1/9/18 Jadar would also produce boric acid as a byproduct and is capable of producing about 7 per cent of world's boric acid supply.

Rio is already a big player in boric acid markets through its long-standing Borax operation in California.

While small by Rio standards, Borax has contributed net earnings of between $US111 million ($159 million) and $US126 million in the past three years, and Ord Minnett warned that those cash flows would be threatened if Jadar were developed swiftly.

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''The asset would swamp the boric acid market, with a negative impact on Rio Tinto's Borax asset,'' said the analysts.

"It may make sense for Rio Tinto to keep [Jadar] on the back burner until market requirements are higher and confidence in economic returns improves."

Ord Minnett's analysis was based on Jadar producing 50,000 tonnes a year of lithium carbonate equivalent at a construction cost of $US1.5 billion and lithium prices averaging $US9500 per tonne.

Based on those estimates, the project would have a 14 per cent rate of return, and an eight-year payback period.

Ord Minnett's lithium price forecast is not bullish: batterygrade lithium carbonate was fetching $US11,472 per tonne in the first three months of this year, and JP Morgan predicts the price will remain above $US11,000 per tonne until at least 2021.

Ord Minnett estimated lithium carbonate demand would reach 820,000 tonnes in 2025; for comparison ,US lithium producer Albemarle believes it will be closer to 1 million tonnes by that time.

Ord Minnett said the project would have a 15 per cent rate of return if lithium prices were assumed to be $US10,200 per tonne in 2025, rather than $US9500 per tonne.

"Strategically we see the project as appealing, giving the company exposure to lithium and the growing electric vehicle market,'' said Ord Minnett. ''Based on its challenging economics and likely market impact, however, we believe Rio Tinto may look to delay its development."

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Vietnam: an industry built on potters

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olouring is among the final steps of making a ceramic painting, now among the best-selling items in Phu Lang Village in Que Vo District, Bac Ninh Province.

Viet is among the younger generation in the village who are giving pottery, a craft that has been passed down for generations over the last 700 years, a modern twist.

“One of the key things in this industry is that you have to keep ahead of the ever-changing tastes of customers. People now are looking for quality products so we have no choice but to create new designs,” said Viet.

As a native of Phu Lang where most local households own a kiln, Viet has grown up with ceramics.

Firing clay was part of his childhood as he worked part-time at his uncle’s ceramics workshop while still at high school.

A typical day for him at the time was divided into two parts: school in the morning and the workshop in the afternoon.

When he graduated from high school, unlike some of his peers who enrolled in finance or banking majors with the hope of getting well-paid jobs, Viet followed his hometown’s tradition and pursued a ceramic sculpture major at the University of Industrial Fine Arts (UIFA).

After graduating from university, Viet returned to his hometown and started a small ceramics business.

“Going to college gave me a sound knowledge of ceramics and art.

Things like the rules of perspective, composition and colour have helped me a lot in my work,” said Viet.

In his small workshop full of brushes, paint and clay, there are ceramic paintings ranging from 0.420 square metres.

Viet works on an average of 100sq.m. of paintings every month.

The high season is from October to January before the Lunar New Year.

The costs range from VND150,000 to 50 million (US$62,100 depending on the size and complexity of the painting.

His business now provides stable jobs for four staff with monthly incomes of VND7-10 million each, which is quite a decent salary, given the GDP per capita in the district in 2018 was about $2,500.

His paintings mostly feature

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landscapes with images familiar to Vietnamese people like bamboo, pagodas and buffalo.

“I choose rural landscapes because they make me feel nostalgic. Many of my customers were born and spent their childhoods in rural areas but then moved to the cities, so they like my paintings a lot. Hanging them in their homes somehow connects them to the countryside,” said Viet.

Besides paintings, he also makes decorative ceramic items, which can be displayed in houses, offices, restaurants or hotels.

Viet is one of many young people who are following in the footsteps of Vu Huu Nhung, also a native of Phu Lang.

Nhung, a lecturer at UIFA, was the first in the village to turn local ceramic into works of art.

He started by making figurative pots and vases with complex patterns, abstract decor and vibrant colours. His products, ranging from 500 to thousands of dollars, are sold to high-end clients including collectors in Vietnam, the US, South Korea and Japan.

Nhung is eager to put local ceramics on the world art map.

“I want to take Phu Lang ceramics to a new level. I want our trade to be known and remembered as something unique, skillful and high quality rather than mass produced,” Nhung told Viet Nam News.

Nhung started his own business after graduating with a sculpture major from UIFA in 1999.

While local households only produced everyday items like flower pots and jars, Nhung focused on decorative items such as vases and paintings.

When his business was at its peak, he had more than 100 workers. Yet in 2010, Nhung decided he had to do something more with local ceramics.

He decided it was time to start creating limited edition products.

“If you choose mass manufacturing over limited edition goods, it relies a lot on the customers. The products are based on their tastes and preferences. But when it comes to artwork, there’s more room for creativity. It’s your own work of art so it has higher value,” he said.

Nhung wanted others to follow in his path but it was ‘difficult’ because mass production generates faster benefits.

“People keep saying that we need to preserve the tradition but they might not fully understand what tradition means. I think tradition is something that we create ourselves. Let’s say, if more people start turning ceramics into works of art, then making ceramic artworks will become a tradition of Phu Lang in the next ten or twenty years,” said Nhung.

In his opinion the younger generation today enjoys both advantages and disadvantages.

“Nowadays, infrastructure and technology help a lot. Improved quality of life also pushes demand for ceramic products. However, one of the biggest challenges still lies in funding. A young person might not have the money to pay staff or rent a workshop. But once they overcome these problems and don’t have to worry about financial issues, I believe Phu Lang ceramics will have a new face in the next few years,” Nhung said.

Phu Lang, about 60km from Hanoi, is among the three ancient ceramic centres in the Red River area (along with Bat Trang in Hanoi and Tho Ha in Bac Giang Province).

It is believed locals started making ceramic products some 700 years ago, according to Nguyen Minh Ngoc, chief of Phu Lang Village.

Phu Lang has long been known for its everyday items like flower pots, jars and vases.

In the early 21st century, given the availability and low cost of items made of plastic, metal and glass, the demand for Phu Lang ceramics declined dramatically.

Many left the village to work in big cities or shifted to new jobs.

In the late 2000s, the younger generation like Nhung brought a breath of fresh air to the village by diversifying the products.

Following in Nhung’s footsteps, young students from the village have studied ceramics and sculpture and returned to their hometown to start their own businesses.

In 2018, there were more than 300 households in the village making ceramics, and total revenue hit VND130 billion ($5.5 million). Local ceramic products which include both everyday items and artworks have been exported to the US, Japan and South Korea, according to Ngoc.

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ADVERTISER FEATURE

Special Focus:

The Minchem Group The Minchem Group comprises four wholly owned and independent companies, namely, Minchem Ltd, Minchem Europe srl, Minchem HMP Ltd and ACCS Ltd. All four companies operate in the Minerals and Chemical fields (as our name suggests), providing a range of niche products and services for special applications in diverse markets.

Minchem HMP Limited

Our world-class expertise dates back over 45 years and encompasses long-established technologies through to new, state-of-the-art technologies, providing high-tech solutions to today’s demanding raw material selection and application processes.

Joining the Minchem Group in 2007, Minchem HMP Ltd offers a unique brand of zircon specialities, such as our Zircozon™ range. These are world-class materials accepted in all ceramic manufacturing countries, and used by major players in investment casting, foundry, tableware/tile, sanitaryware applications and related areas. Zircozon 5 is our top selling, high quality grade opacifier giving high-white glaze opacification results, meeting international standards.

Minchem Limited

Minchem Ltd was formed in 2000 by a management buy-out of the well-established Minerals and Chemicals division of Palabora Europe Ltd (then Mandoval Ltd), a wholly-owned subsidiary of Palabora Mining Co Ltd, South Africa, which in turn was part of Rio Tinto plc.

Minchem Ltd offers a range of specialised inorganic and mineral-based products for use in world markets in abrasives, animal feed, catalysts (automotive and industrial), ceramics (advanced, dental, fine and technical), chemical manufacture, coatings, electronics, healthcare, leather tanning, metal finishing, paper and board, pharmaceuticals, refractories (cement, glass and steel) and related areas.

Minchem HMP Ltd (formerly known as Hines Milling & Processing Ltd) is based in the heart of the Potteries in Stoke-on-Trent, UK. It is a well-established manufacturer of a range of wet and dry ground products based on zircon, zirconia, alumina and related ceramic/refractory raw materials.

Minchem HMP’s range includes zircon, zirconia and alumina products such as cements, paints, coatings, patches, castables and ramming compositions. These products are used to serve the above and other diverse markets worldwide in abrasives, ceramics, ceramic colours, electrical insulation, frits, glass, glazes, kiln furniture, metal filtration, paints, pigments, refractories, welding electrodes and a host of other technical applications.

Carrying on from Palabora’s market leader position in baddeleyite zirconium (Zr) products, Minchem’ baseline is Zr oxides and reactive Zr chemicals. In addition, we supply various forms of aluminium, cobalt, potassium, sodium, titanium, nickel and other salts. Marketing of these niche products is covered by agency/distributorship/special arrangements with leading manufacturers around the world such as:

Minchem HMP Ltd also offers blending, contract milling, sieving, classifying, spray drying and other processing services. Raw materials, zircon, zirconia, alumina and other ceramic/refractory materials can be processed and supplied to your own formulation and specifications under strict confidentiality.

Daiichi Kigenso Kagaku Kogyo Co Ltd (DKKK), where we have been sole European agents for many years. DKKK is one of the leading producers of high purity monoclinic and partially stabilised Zirconias for use in advanced technical fields. With manufacturing bases in Osaka, Gotsu and Fukui, in Japan, DKKK offer a comprehensive range of Zirconia.

Specialising in high quality corrosion, thermal and abrasionresistant materials, ACCS Ltd helps customers across the world who are involved in the processing and storage of acidic and alkaline (basic) materials.

Australian Strategic Minerals Ltd (a wholly owned subsidiary of Alkane Resources Limited) and their Dubbo Project. This is a large in-ground resource of zirconium, hafnium, niobium, yttrium and rare earth elements. This makes it a potential strategic and alternative supply on the global market of critical minerals for a range of “hightech” and sustainable technologies.

Minchem Europe srl

The most recent addition to the Group, formed in 2019, Minchem Europe srl will allow the Minchem Group to continue to trade in the EU in the event of a hard Brexit.

With a no Brexit deal, our registrations known as REACH (EU Regulation 1907/2006/EC – the Registration, Evaluation, Authorisation and Restriction of Chemicals) will no longer be valid in the EU. By transferring our registrations to Minchem Europe srl, we can then continue to serve our many customers in the EU and continue supply lines.

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ACCS Limited

For over 50 years, ACCS’ sole focus has been providing high quality protective lining materials to niche chemical markets with acid production, processing and storage facilities. Due to this, ACCS is adept at working in a huge range of industries from oil refining, and nuclear fuel processing, all the way to food and drink manufacture.

Since joining the Minchem Group in 2008, ACCS have continued to grow from offering materials manufacture, supply and installation services, to now include design and technical services.

Minchem Ltd The Old Pottery 4 Hillside Road, Aldershot, Hampshire GU11 6NB United Kingdom Tel: +44 (0) 1252 350504 Fax: +44 (0) 1252 350770 enquiries@minchem.co.uk

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Ceramics make superior phone cases and cleaner metals, but supply is short

Yttria-stabilised zirconia (YSZ) is a ceramic in which the crystal structure of zirconium dioxide (a.k.a. zirconia) is stabilised by adding yttrium oxide (a.k.a. yttria). It was called ‘ceramic steel’ when it was invented by CSIRO in Australia in the 1970s, and it’s even better today. YSZ is used in gas and aviation turbines, automotive sensors, fibre-optic connectors and fuel cell components.

Apple looks likely1 to wrap its next generation of 5G smartphones in thin but outstandingly tough2 zirconia ceramics instead of aluminium. Competitors will follow suit. Add in tablets, PCs, watches, etc, and it’s clear that demand for YSZ could skyrocket.

Another growing market for YSZ is in cleaner extraction of metals from ores. YSZ users should be warned that existing supply chains won’t stretch to meet high demand.

What’s so great about YSZ smartphone cases?

They enable stronger signals, faster data download and wireless charging. They also look great in a multitude of surface textures and colours and can be ultra-thin yet scratch-resistant because zirconia scores 8.5 on the Mohs scale of mineral hardness (only diamond scores a perfect 10). Should your smartphone case still somehow sustain an injury, it could even self-heal3. Production costs should be similar to existing materials when mass-produced.

The exceptional mechanical properties of YSZ permit ultra-thinness to minimise weight, while excellent thermal shock resistance protects your device against sudden changes in temperature.

YSZ is transparent to radio waves, which is essential for fast data download at the high frequencies used for 4G and 5G networks.

Current materials are hitting their speed limits but YSZ is ready for 5G, when download speeds will increase by 10 times. Being nonconductive, YSZ also permits wireless inductive charging, freeing us from annoying cables.

How can YSZ reduce greenhouse emissions?

A major source of greenhouse emissions is the extraction of metals from ores, traditionally involving either reduction with carbon at high temperatures, or electrolysis. Both processes are ‘dirty’ because they produce carbon dioxide, a greenhouse gas.

Clever researchers and innovative companies are developing cleaner metal extraction techniques.

Producing zero direct carbon emissions and reducing energy consumption by up to 50%, a new, clean means of metal extraction is electrolysis using solid oxide membranes (SOM) made from YSZ4. SOM electrolysis can purify aluminium, magnesium, and titanium – key industrial and aerospace metals – as well as other critical materials for advanced technology: rare earths, hafnium and niobium.

What’s the demand forecast?

In 2017, smartphone sales were 1.54 billion5. Assuming just 37g of zirconia per case, for all smartphones to move to YSZ cases would require at least 54,000 tonnes of zirconia (plus 3,000 tonnes of yttria) annually. To meet this demand, global zirconia supply would need to increase by 75%.

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Commercialisation of SOM technology for extraction of any of the major industrial metals would also create unprecedented demand for zirconia and yttria. China currently dominates global supply of both, but supply is being disrupted as the Chinese government applies stricter environmental standards to production processes.6 Zirconia is produced from zircon (zirconium silicate). The Chinese import almost all of the zircon they process, mostly from Australia and South Africa.

Demand for zircon is increasing at around 3% compound annual growth . This growth requires at least one new mine to come online every year, but major zircon producers such as Iluka, RBM, and Tronox have little or no capacity to increase supply in the near future. In fact, global supply of zircon from existing producers is predicted to decline rapidly, down 4-5% per annum to 2022 Meanwhile, the Industrial Minerals Company of Australia estimates that global demand for yttria production will be 10,000 tpa in 2020, exceeding supply by 30%.

How will demand be met?

Fortunately, Alkane Resources’ Dubbo Project in NSW, Australia, offers an alternative, sustainable source of supply for 70+ years.

Not just another zircon extraction facility, the Dubbo Project will value-add in Chinese fashion and produce over 16,000 tonnes of zirconia and over 1,000 tonnes of yttrium oxide annually.

The oldest ceramics in the world were found in China7. The newest ceramics could come out of Australia, but to progress the Dubbo Project to construction, Alkane Resources seeks a blend of financing from export credit agencies, strategic partners and equity and debt markets. More information is available at alkane.com.au/operations/dubbo-project

About Alister MacDonald

Alister is the General Manager Marketing of Alkane Resources, a multi-commodity mining and exploration company. For more than 30 years, he has provided market research, supply chain analysis, business development strategy and technical marketing services, in industries including advanced ceramics, mineral sands, rare metals and precursors.

1. https://www.forbes.com/sites/quora/2016/10/18/why-isapple-moving-to-ceramics-in-iphones 2. https://www.phonearetna.com/news/The-ceramic-Xiaomi-Mi5-survives-torture-test-against-a-key-saw-file-and-even-a-drill_ id79710 3. https://www.researchgate.net/publication/283314953_ Crack_healing_in_yttria_stabilized_zirconia_thermal_barrier_ coatings 4. https://link.springer.com/content/pdf/10.1007%2Fs40831016-0044-x.pdf 5. https://www.statista.com/topics/840/smartphones/ 6. https://www.linkedin.com/pulse/chinese-zirconium-supplystalling-so-how-australian-alister-macdonald/ 7. https://www.theguardian.com/science/2012/jun/28/ancientchinese-pottery-oldest-yet

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Analysis: Fine Ceramics

A slow bur fine ceramics in the sub-continent

Rohan Gunasekera ponders why, despite the clear and apparent demand, the development of the country’s advanced ceramic sector remains in a seemingly permanent nascent phase

T

he advanced ceramics industry in India is still growing slowly with the anticipated expansion not happened yet despite the vastness of its market, from ordinary consumer products to automotive engineering as well as esoteric applications like guided missiles.

The reasons why the market has not exploded as anticipated are still the same, the main one being economies of scale – quantities are just not big enough to justify big investments. The capital intensive and risky nature of the investments that only a few can afford, means it is still cheaper to import, especially from producers like China who produce on a global scale or from established multinational Western manufacturers. Furthermore, some of the ceramics come in components that are cheap to import and therefore are not produced in India.

Indeed when the industry should be expanding, India actually lost one of its players last year when Manufacturer of porcelain insulators for electrical transmission lines, WS Industries, shut down its operations. Founded by V Srinivasan, the company had risen to become synonymous with the electrical industry in Southern India when it was first set up in 1961. Blaming an onslaught by Chinese imports, the company claimed that its factory just never became fully viable.

Right now there are only a few Indian players supplying advanced ceramics products as the size of orders are not big enough for any significant capacity expansion. A few MNCs have production plants in India, and even then some are mostly assembly plants while other have sales offices to do the marketing. There are no advanced ceramic manufacturing clusters that have emerged in India yet, unlike those for making more mundane products like tiles and sanitaryware, the best known being the state of Gujarat.

Government support

There is some government support for the advanced ceramics industry, some sort of hand-holding of Indian firms, where research

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is done by government labs and knowhow transferred to private companies for commercial production with the latter then being supported with orders from government agencies, especially in aerospace, defence and atomic energy.

Dr. Shyam Rao, Chairman of the Indian Ceramic Society Karnataka Chapter, and Senior Vice President, Industrial Ceramics at Carborundum Universal, said the current state of advanced ceramics research and commercial production in India is broad-based. “The major areas in which currently there is significant ongoing research in advanced ceramics are Battery Materials, Semiconductor Materials, Graphene and Carbon Nano Tubes, Materials for Vacuum Electronics and Nanomaterials,” he told Asian Ceramics magazine. However, commercial production is mostly in Alumina Materials and Silicon Carbide materials. Dr Rao estimates overall Indian advanced ceramics industry growth at around 10% a year.

Key drivers of growth in the industry are investments in the power sector, expansion in mining and materials, investments in the auto sector for Bharat VI Emission norms for gasoline and diesel

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Analysis: Fine Ceramics

rn…

vehicles, investments towards E-vehicles, both two wheelers and four wheelers, and import substitution in the areas of electronics and semiconductors, especially under the Make in India initiative. Other growth drivers are offset programs in aerospace and defence which have mandatory requirements for manufacturing a portion of the assembly in India, and local sourcing of ceramic armours for personal and vehicle protection.

“Most local players are investing in capacity in advanced ceramics manufacturing in India,” Dr Rao said. He estimates total installed capacity for advanced ceramics manufacturing in India at about 15,000 tons per annum.

Professor H. S. Maiti, former director, Central Glass and Ceramic Research Institute (CGCRI) , in Kolkata, has been a long time observer of the sector. “The advanced ceramics industry is growing but not at a very fast rate. This is because many products are costly. Some of the specialised items are needed in small quantities by strategic sectors,” he said. “But demand is growing. For example in the space sector, there is need for large numbers of ceramic substrates for microwave devices. They are sometimes difficult to import, so they support small firms to supply them.”

In the defence sector, the Bhabha Atomic Reseach Centre (BARC) recently developed what’s billed as a next-generation bulletproof jacket for Indian security forces, which is lighter than the existing jacket and also cheaper. It is made of extremely hard boron carbide ceramics that is hot-pressed with carbon nano-tubes and composite polymer. The jacket weighs just 6.6 kg in comparison to the 17-kg jackets in use. While the cost of a Bhabha jacket is ₹70,000, jackets of similar strength are available in the range of ₹1.5 lakh and have to be imported.

The body armour was developed at BARC’s Trombay centre in response to a request from the Central Reserve Police Force (CRPF) and the Ministry of Home Affairs. BARC has transferred the technology to Mishra Dhatu Nigam, Hyderabad, for large-scale production, with about 100,000 jackets required annually.

Close to the chest

Another firm, indigenous defence manufacturer SMPP Pvt Ltd., has also won a contract for bulletproof jackets it developed with similar materials - boron carbide ceramic plates inserted into ballistic fabric.

Ashish Kansal, Executive Director of SMPP has said the firm was one of only five companies that made the ceramics, one of the lightest and hardest materials used for stopping bullets.

The automotive industry is another potential growth area given India’s emergence as a global manufacturing hub for vehicles, especially small cars, that has seen MNCs set up plants in the country to serve not only the Indian market for also export. For instance, in the automotive sector, research is being done on car batteries, with the aim of improve the range and retention of power.

“Instead of lithium ion batteries, which have been troubled with the disadvantage of having a tendency to catch fire, the industry is going for ceramic batteries,” said Dr. Rao. “Although new, ceramic batteries

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THE (DEFENCE) INDUSTRY IS GOING FOR CERAMIC BATTERIES are more stable and the technology is getting stabilised and it’s widespread adoption won’t take too long.”

India’s power sector has been a long standing user of advanced ceramics products and although a slowdown is seen in some areas like porcelain insulators, other areas offer growth prospects. The more ordinary advanced ceramic products like insulators have now become almost traditional ceramic products. Industry officials say that for porcelain insulators demand is not growing because the power sector is shifting from thermal power generation to renewable energy like solar power.

Members of the Indian Electrical & Electronics Manufacturers' Association (IEEMA) have raised serious concerns about the future of the porcelain insulator industry. The porcelain insulator industry faced a big problem in 2018 because of a sharp fall in orders. Furthermore, high imports from foreign countries severely impacted the domestic composite insulator industry. The IEEMA complains that Indian utilities are inviting international competitive biddings and meeting the country’s requirement through large scale imports from China.

“In the power sector, the use of porcelain insulators is coming down but alumina-based vacuum interrupters are being used in power plant sub stations,” Dr Rao said.”Medium voltage switch gear in which vacuum interrupters are used is growing very fast.” The growth in the power sector is driven by the fact that more transmission lines are being laid in India while other countries to which India exports are also upgrading their power transmission networks.

Traditional markets

Demand from the railways for the traditional insulator remains the same with a lot of the railway electrification already done.

Nevertheless, with the Indian Railways being one of the largest transportation networks in the country and one of the biggest in the world, growth potential remains.

Prof. H. S. Maiti, former director of CGCRI, said the advanced ceramics industry is still dogged by the problem of not having economies of scale. “There are some products getting manufactured in this country but not on a very large scale. One problem is that demand is not that great. Many of them use specialised technologies primarily in the defence sector or space or atomic energy sectors. But the volume requirement is not that large. We do not produce in large quantities but we do produce in some quantities.” For example, in

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Analysis: Fine Ceramics

alumina products, there are quite a few manufacturers, big and small, such as Carborundum Universal, Grindwell Norton and Jyoti Ceramics and ANTS Ceramics. Some firms make ceramic pump seals, various types of nozzles, welding nozzles, thread guides in the spinning industry and vacuum interrupters made of alumina for high voltage switch gears.

“It is a very complex situation,” said Prof Maiti. “Apparently, there is a huge market but in reality making a business in this area is not very viable. But the outlook is not completely bleak as things are changing.

May be in another 5-10 years the market will be better. ”Overall demand increased mainly in the strategic sector and some of the components are getting manufactured by some of the R&D labs and supplying to the strategic sectors. One example is people trying to make different radomes for missiles. You need a large variety of radomes but they are not yet being developed and produced in commercial scale. There’s a little bit of hand holding with the government supporting some companies. Applications developed in the lab are given to some companies for production. It is not a commercial thing but particularly user oriented.”

Electronics is also a sector with growth potential. “Another growth area is vacuum electronics, which is very different from consumer electronics, with applications like x-ray tubes and electronic tubes used in high voltage applications,” said Dr Rao.

Electronic hurdles

Even in electronics there are hurdles for Indian manufacturers that are not visible at first glance. “Many ceramic electronic components are small in size but are needed in very large numbers. Although the market is not too small, even then it is mostly getting imported,” explained Professor Maiti. “One reason is that substrates and other things like components for medical instruments, they are not marketed at component level. Instead, somebody buys components and then assembles them. So it is a systems level market. If somebody can produce systems including some of these electronic ceramic components, then it will be ok. But the components only market is not that large. It is used in large quantities but in assembled form. For example, printed circuit boards - large numbers use electronic ceramic components but there are not many manufacturers of printed circuit boards in India.”

Advanced ceramic industry officials say cost is also a factor in holding back the sector and the reason why ceramic components are mostly imported from China. Indian manufacturers simply are not able to compete with China on price as their cost of production is higher than China’s the quantum of manufacture is much less. China is making them on a large scale “Very often it is not very commercially viable, given the limited quantities needed, because production cost and equipment you need is a bit costly,” said Professor Maiti. “Until you can make large quantities and supply across the globe, it is difficult. One of the bottlenecks is that it is difficult for companies to set up very large facilities only for the Indian market.”

Even with the government’s ‘Make in India’ initiative, it seems that in advanced ceramics not many people are ready to come forward.

It is risky investing in anything ceramic as the costs are very high.

Only very few players will be interested to invest so much, industry sources said.

And, since the required economies of scale are still not there, Dr Rao does not see prospects for greater production either, given the fact that established producers supply on a global scale and are highly competitive. He notes that: “There are no prospects for more plants. Unless you put up plant on a global scale and fight with these

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Saint Gobain Saint Gobain’s ceramic materials plants are located in Bangalore, Karnataka; Halol, Gujarat; Tirupathi, Andhra Pradesh; Palakkad, Kerala; Perundurai, Tamil Nadu and Phuentsholing, Bhutan.

Saint-Gobain Group businesses in India come under two entities, Grindwell Norton Limited (GNO) and Saint-Gobain India Pvt. Ltd. The businesses of GNO, listed on the Bombay and National Stock Exchanges, which started the manufacture of grinding wheels in India, include silicon carbide, abrasives, and high performance refractories. GNO’s subsidiary, Saint-Gobain Ceramic Materials Bhutan makes silicon carbide. Its high performance refractories unit makes body armour.

Carborundum Universal Carborundum Universal Ltd., part of Murugappa Chettiar Group, has been a major player in advanced ceramics or almost two decades and the only manufacturer of metallised ceramics. Products include bonded abrasive, super refractories , industrial ceramics and ceramic fibres. It exports products globally and has 28 manufacturing locations across India, South Africa, Russia, Australia and China. Its ceramic plant in Sriperunbudur, Tamil Nadu makes bonded and coated abrasives, super abrasives, industrial ceramics, super rfractories and electrominerals. It makes lightweight bullet proof armour for the military for both personnel and vehicle protection, and products for ither sectors like oil and gas and power.

BHEL Bharat Heavy Electricals Limited’s ceramic products and systems are made under its Ceramic Business Unit (CBU) with its electro-porcelain plant in Bangalore and insulator plant in Jagdishpur. BHEL makes high tension insulators, ceramic wear resistant liners, industrial ceramic products, control panel, composite insulators and associated systems.

The firm is one of the largest engineering and manufacturing enterprise of its kind in India and one of the largest insulators manufacturing units.

BHEL has a long term Manufacturing Associate Agreement with GE India Industrial Pvt. Ltd. for membrane based technology.

Bhukhanvala Industries Advanced Ceramics Division Formerly known as Boron Carbide (India) Ltd., has manufacturing facilities in Navsari, Gujarat. The company in close association with DRDO has developed various advanced ceramic solutions in materials like Boron Carbide, Alumina, Silicon Carbide, various borides for applications in body armour, vehicle armour, helicopter armour, and nuclear shielding applications. It has developed high density components like pellets and plates. It was established in 1995 with a direct technology transfer from Bhaba Atomic Research Centre (BARC), which today has enabled it to become a leading supplier of nuclear grade boron carbide to Indian power companies and government institution.

Jyothi Ceramics Jyoti Ceramic has manufacturing units at Nashik, around 180 kms north east of Mumbai, is one of the pioneering manufacturers of technical ceramics in India. The family owned company has developed several proprietary ceramic body formulations in high purity Zirconia and Alumina oxides, Cordierite, Forsterite, and Steatite. Products include zirconium oxide ceramic micro-macro milling media, zirconium silicate ceramic micro milling beads, high density high alumina ceramic milling media and wear resistant lining tiles, ballistic armour, bio-ceramic products, Zircon based high temperature resistant refractory coatings and corrosion abrasion resistant coating compounds.

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Analysis: Fine Ceramics

global giants, we will not be competitive. You will not be competitive with a plant to serve only the Indian market.”

Quality of raw material also a problem and much of it is still imported. Most players find it comfortable to buy different grades of powders from abroad and make their products. The government’s Make in India does help in some cases but is not seen as having a lot of impact in this particular area as the availability and suitability of raw materials for advanced ceramic manufacturing is still limited in India. “The major raw material is calcined alumina which is largely imported,” said Dr Rao. “There’s limited manufacturing of calcined alumina in India.” Most suppliers of raw material are making metallurgical grade alumina used for making aluminium metal.

“Availability and suitability of raw materials is an important issue,” noted Professor Maiti. “Most of the raw materials are still getting imported from outside. Raw materials are not being produced on a commercial scale. Alumina is imported from the American multinational Alcoa. Monoxide based raw materials like silicon nitride and silicon carbide are mainly imported from Germany and the USA. Although a few Indian companies do makes their own raw materials they are not very sophisticated products. The reason is that some of them are mostly synthesised raw materials and need a high degree of purity and also sinterability.”

Ceramic batteries: a way forward?

Researchers from Carnegie Mellon University's Mellon College of Science and College of Engineering have developed a semiliquid lithium metal-based anode that represents a new paradigm in battery design. Lithium batteries made using this new electrode type could have a higher capacity and be much safer than typical lithium metal-based batteries that use lithium foil as anode.

The interdisciplinary research team recently published their findings. Lithium-based batteries are one of the most common types of rechargeable battery used in modern electronics due to their ability to store high amounts of energy. Traditionally, these batteries are made of combustible liquid electrolytes and two electrodes, an anode and a cathode, which are separated by a membrane. After a battery has been charged and discharged repeatedly, strands of lithium called dendrites can grow on the surface of the electrode.

The dendrites can pierce through the membrane that separates the two electrodes. This allows contact between the anode and cathode, which can cause the battery to short circuit and, in the worst case, catch fire.

"Incorporating a metallic lithium anode into lithium-ion batteries has the theoretical potential to create a battery with much more capacity than a battery with a graphite anode," said Krzysztof Matyjaszewski, J.C. Warner University Professor of Natural Sciences in Carnegie Mellon's Department of Chemistry. "But, the most important thing we need to do is make sure that the battery we create is safe."

One proposed solution to the volatile liquid electrolytes used in current batteries is to replace them with solid ceramic electrolytes. These electrolytes are highly conductive, noncombustible and strong enough to resist dendrites. However, researchers have found that the contact between the ceramic electrolyte and a solid lithium anode is insufficient for storing and supplying the amount of power needed for most electronics.

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CeramTec CeramTec, one of the world’s top manufacturers of technical ceramics serving mainly medical and automotive customers, has a sales office in India. Its ceramic components in automobiles and engines should have a big market in India, given the growth in India’s auto industry and car sales. It also supplies the electronic, construction and industry sectors.

Application for metal/ceramic composites (also called metal matrix composites, MMC) are cylinder sleeves in engines, piston-recess walls, brake pad backing plates, bearings, brake discs, and heat-sinks in electronics.

NGK Japan’s NGK Spark Plug Co, set up a manufacturing plant at Bawal, Haryana in 2006 to manufacture the high quality spark plugs in India.

The company says it is presently the third-largest spark plug maker in India, spreading business across OEMs, OE spare parts as well as the aftermarket. The plant in Bawal is mainly an assembly operation with an annual capacity of about 18 mn units. The parts required for the manufacturing such as insulator and metal shells are shipped from NGK’s operations in Japan and Thailand and assembled into the final product at the plant.

Sipei Li, a doctoral student in Carnegie Mellon's Department of Chemistry, and Han Wang, a doctoral student in Carnegie Mellon's Department of Materials Science and Engineering, were able to surmount this shortcoming by creating a new class of material that can be used as a semiliquid metal anode.

Working with the Mellon College of Science's Matyjaszewski, a leader in polymer chemistry and materials science, and Jay Whitacre, Trustee Professor in Energy in the College of Engineering and director of the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon, who is renowned for his work in developing new technologies for energy storage and generation, Li and Wang created a dual-conductive polymer/carbon composite matrix that has lithium microparticles evenly distributed throughout. The matrix remains flowable at room temperatures, which allows it to create a sufficient level of contact with the solid electrolyte. By combining the semiliquid metal anode with a garnetbased solid ceramic electrolyte, they were able to cycle the cell at 10 times higher current density than cells with a solid electrolyte and a traditional lithium foil anode. This cell also had a much longer cycle-life than traditional cells.

"This new processing route leads to a lithium metal-based battery anode that is flowable and has very appealing safety and performance compared to ordinary lithium metal. Implementing new material like this could lead to step change in lithium-based rechargeable batteries, and we are working hard to see how this works in a range of battery architectures," said Whitacre.

The researchers believe that their method could have far reaching impacts. For example, it could be used to create high capacity batteries for electric vehicles and specialized batteries for use in wearable devices that require flexible batteries. They also believe that their methods could be extended beyond lithium to other rechargeable battery systems, including sodium metal batteries and potassium metal batteries and might be able to be used in grid-scale energy storage.

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Analysis: Brexit

Ground Ze ceramics braces for a no-deal scenario AC looks into how the continually shifting deadline for the UK’s exit from the EU is having a material impact on supply chains and the ceramics industry in general.

F

or 300 years, Stoke-on-Trent was the heart of Britain’s ceramics industry, but overseas production and changing tastes have left many of its kilns dark and its businesses shuttered.

When Britain leaves the EU, changing tariffs could endanger what’s left of an ancient craft.

Sharon Yates looks at the light grey clay that lines the edges of her fingernails and smiles.

She’s just finished her shift at Dunoon Fine Bone China, where she starts work at 6 a.m. and puts handles on cups. “I can do roughly 4,000 or 5,000 a day, she says, beaming as she sips a mug of coffee at a local café. “Yes, I’m proud that I stick handles on cups. I really love the job that I do because I come from the potteries. I’ve been born and bred a potter … . It’s in my blood."

Despite Ms. Yates’s pride, she knows she’s part of a dying breed in Stoke-on-Trent, a working-class city south of Manchester with about 250,000 residents. Stoke’s 300-year-old ceramic industry, made famous by brands such as Wedgwood, Royal Doulton, Waterford and Royal Albert, has been hit hard by changing consumer tastes, offshore competition and a history of bad management. A generation ago the industry employed around 58,000 people in the area and hundreds of factories lined the city’s streets. Today employment in the potteries stands at around 7,000 and Stoke’s skyline is dotted with abandoned kilns and empty buildings. And now just as the industry has finally stabilized, and is even showing signs of modest growth, there’s fear that Brexit could land a fatal blow.

Right now the industry is protected by European Union tariffs of up to 50 per cent on nearly all imports of ceramic goods into the bloc.

But if the United Kingdom leaves the EU without a deal to remain in a customs union, which allows for free movement of goods, those tariffs will no longer apply. That could pose a double whammy to British ceramic makers: Not only will they be vulnerable to a flood of cheap imports from Asia, they’ll also face EU tariffs on exports to France and Germany, which are big buyers of English tableware. Britain could impose its own tariffs after Brexit, but the government hasn’t announced what measures it will take and International Trade Minister Liam Fox has said he wants to keep tariffs low to protect consumers and promote free trade.

The ceramics industry isn’t the only sector grappling with a post-

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Brexit drop in tariffs. Farmers, for example, could see tariffs on imports of sheep meat, beef and chicken fall from as high as 65 per cent. But there’s a sentimental attachment to the potteries and the industry has emerged as the focal point in the debate over how the government will protect jobs after Brexit, while also ensuring low prices for consumers. The fate of the industry has also become something of a reality check for Stoke, which voted 70 per cent to leave the EU in the 2016 referendum.

Ms. Yates, 49, is typical of many people in Stoke. She’s deeply rooted in the potteries and fearful about Brexit. She’s been working at Dunoon for 27 years and is the union representative for ceramic workers across the city, including the 94 who work with her.

She took over the cup-handling job from her mother who worked in the industry for 22 years mainly as a “sponger,” someone who smooths the clay on newly made cups. Her father made plates and saucers. Her grandmother and great grandmother put gold linings around tea cups.

“When I was growing up, the industry was booming, it was absolutely booming,” she recalled adding her family lived across the street from the factory where her parents worked. “You used to see hundreds and hundreds people walking past you every morning to the potteries.”

But now all of that is largely gone. She rhymed off a long list of factories that have closed and named a multitude of nearby towns that have been left desolate. None of her three children work in the potteries and she doubts any of her 11 grandchildren will either. “It’s that small now and it’s at a breaking point.” she said, adding that Brexit could finish it off. Ms. Yates, who voted to remain in the EU, said she was shocked when she heard Mr. Fox muse about slashing tariffs after Brexit. “By the time it takes to adapt to it, it might be too late,” she said.

“These cheap imports come in and smaller factories wouldn’t be able to survive at all.”

Not everyone in Stoke shares those concerns. Long-time community activist Peter Yates (no relation to Ms. Yates) voted to leave the EU and he hasn’t changed his mind one bit. He says there’s been too much scare mongering and he’s convinced that Stoke, and the United Kingdom, have enough resilience to overcome anything. “We’ve gone through two world wars,” he said.

“We’ve managed our own.”

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Analysis: Brexit

ero Evolution not revolution

Indeed, Stoke has shown remarkable adaptability over the years. For centuries the city’s economy drew heavily on the rich clay and coal deposits in the surrounding countryside. That laid the foundation for the potteries, mining and steel industries. By the 1990s, the coal mines had closed, the steel mills shut down and the potteries were in decline. But Stoke managed to reinvent itself, turning to new ventures such as logistics and gambling. The city is now a major warehousing hub for companies such as Amazon, grocery chain Sainsbury’s and construction equipment maker JCB. It’s also the headquarters of locally owned Bet365, one of the world’s largest online gambling companies. All of that has kept unemployment below the national average and job creation booming.

But the city still faces plenty of challenges; wages are far below the national average and pockets of Stoke are among the most impoverished areas in the country.

Paul Farmer has lived and worked in Stoke all his life and he’s found the whole debate surrounding Brexit frustrating. Mr. Farmer is co-owner and managing director of Wade Ceramics, a 200-year old business that specializes in making ceramic bottles for the whisky industry. Wade has been on an upswing lately, with sales climbing 25 per cent last year to around £13-million ($22.3-million). The company has invested £15-million in its plant and boosted employment from 146 to 217 in the past year. It’s also branching out into new product lines such as fragrance bottles, candle holders and even piggy

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banks, which have suddenly become popular again. “This industry has been to the depths and is coming back,” Mr. Farmer said sitting at a table in his office just steps away from the humming factory floor.

Closing doors

All around the city companies such as Steelite, Portmeirion, Wedgwood and Dudson have expanded their operations to take advantage of the growing demand for English-made ceramic products in places such as South Korea and the United States.

But the uncertainty over Brexit has left almost everyone in the industry reeling.

Mr. Farmer blames politicians for turning the Brexit talks with the EU into such a mess that the country runs the risk of leaving on March 29 without an agreement. “My concern is they won’t make their bloody minds up. It’s as simple as that,” he said.

The company’s new-found success has made the chaotic Brexit process even more troubling, he added. Mr. Farmer is looking for a new clay supplier and he’s worried about sourcing material from Portugal, which could face tariffs after Brexit. His big customers could also see a slowdown in their sales to Europe after Brexit, leaving Wade vulnerable to losing business. And finding workers could get harder too, if it becomes more difficult for people from Eastern Europe to work in Britain. Around 20 per cent of Wade’s staff comes from Poland and other Eastern bloc countries, filling jobs that locals just won’t take.

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Analysis: Brexit

Mr. Farmer, who voted to remain in the EU, doesn’t support tariffs or protectionism. But he’s concerned that if the United Kingdom slashes its tariffs, other countries won’t follow suit and Wade will continue to face high tariffs on exports to the EU and other countries. “If we are going to go tariff-free in terms of imports, we have to go tariff-free on exports. That’s the challenge,” he said.

Back at the café, Ms. Yates waves her hands to indicate the number of ceramics factories that used to stand near the coffee shop. She remembers when pottery classes were part of the school curriculum and she yearns for the days when real craftsmanship mattered. She handles one cup every four seconds at Dunoon, carefully attaching the handle by hand. “It’s all precision work. All done by the eye,” she said, adding that it takes two days to make one cup. If the floodgates open after Brexit, the country will be swamped with cheap, machinemade knockoffs.

“The pots is becoming a bit of a lost soul,” she said. “My main thing is for the pottery industry to survive, because at the end of the day it’s one of the most historic industries left in the world. And it’s here.”

Turning the screw

In the last few weeks, ceramics leaders have hit out at Boris Johnson and other senior Tories for using their industry to argue against a customs union with the EU. The British Ceramic Confederation has sent a strongly-worded letter to the current Prime Minister Theresa May to dispel ‘myths’ and state the BCC’s actual position on Brexit.

A group of 14 Conservative backbenchers, including Mr Johnson, former Brexit Secretaries David Davis and Dominic Raab, and 1922 Committee chairman Sir Graham Brady, wrote to Mrs May advising her against doing a deal with the Labour Party which involved a permanent customs union.

Such an arrangement would make trade with the EU easier, but would prevent the UK from striking new trade deals for goods with non-EU countries. The Tory MPs claimed that this would harm industries such as ceramics.

The letter stated: “In any such customs union, the EU would also most likely run our trade defences (or trade remedies), which are particularly important to industries such as steel and ceramics producers. It would even be possible for Brussels to make a decision which was actually harmful for the UK, particularly if that product was only made in the UK or wasn’t made in the UK (and might get a heavy tariff, thereby harming the users of the product for no UK gain for any producers).”

But Dr Laura Cohen, chief executive of the BCC, says the organisation’s board would ‘strongly support’ a permanent customs union. Most of the UK ceramic sector’s exports currently go to Europe.

In her letter to Mrs May, Dr Cohen said that the real danger facing the industry was a no-deal Brexit leading to zero import tariffs. Many businesses ‘could struggle to stay afloat’ under such a scenario.

And the BCC also argues that the EU had actually been more active than the UK Government in protecting the ceramic industry through anti-dumping measures.

Dr Cohen’s letter states: “We know a customs union isn’t perfect.

However, it provides more frictionless and closer trade with the EU where 57 per cent of our members’ exports are sent.

“Use of our industry to try and nudge you, the Cabinet and the Commons away from a customs union option is disingenuous to say the least, particularly when a no deal Brexit and independent trade policy has already shown such a horrendous democratic deficit for our sector. It’s this sort of proliferation of rhetoric that is fuelling the current political crisis and threatening to drive the UK economy off a cliff edge.

“We need MPs of all parties to put aside their narrow ideological and

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party differences. They need to work together at this time of national crisis for the good of the country to find a consensus.”

The BCC has previously called on MPs to vote in favour of Mrs May’s withdrawal agreement.

Indecision and error

What has compounded the industry’s frustration, is that one of Stoke’s members of parliament, Labour MP Gareth Snell , has just admitted that he ‘made a mistake’ in voting against Theresa May’s Brexit deal for a third time.

The MP for Stoke-on-Trent Central made the admission during the parliamentary debate on Labour’s latest attempt to block a no-deal Brexit in October.

Both Mr Snell and his Stoke-on-Trent North colleague Ruth Smeeth abstained on the motion, which was defeated 309 votes to 298 at the last hurdle.

Mr Snell said that while he remained opposed to no-deal, the motion would not actually take it off the table but merely ‘make the table longer and put it further away’. The only way of preventing no deal, he argued, would be to either approve a deal or revoke Article 50.

He admitted that he should have backed Mrs May’s withdrawal agreement when it was put up for a vote in the Commons for a third time on March 29.

Mr Snell voted with the Labour whip against the deal, as he had done on the two previous occasions, and it was defeated by 344 votes to 286. But he said he would vote for a deal at the next opportunity.

He said: “I made a mistake: on that day I should have voted for a deal. I will now vote for a deal if one is brought forward, because it is inconceivable that we can continue with this line of debate in which we seek to make the decisions that we want to make and avoid making the decisions that we have to make.

“I do not object to the content of the motion, but I will not be voting for it. I shall abstain and withhold my vote, but not because I believe that no deal is something we should play with or that no deal is acceptable. I have voted continually to prevent no deal - I have ruled it out and taken it off the table - but in doing so all I have actually done is make the table longer and put it further away. Delaying Brexit does not stop no deal being the ultimate default endpoint; it just pushes it further into the future.

“The fact is that there is a deal. It is not a great deal, but it is what we are presented with. We can make decisions only on things that are presented to us. Until we face up to that, instead of messing around on what we want to do, we will make no progress, and my manufacturing constituents may be at the mercy of no deal. That will be the responsibility of everybody in this house who refuses to decide between the deal and revoking.”

The motion would have given MPs the chance to table legislation to prevent the UK leaving the EU without a deal on October 31, the latest Brexit deadline.

Ten Conservative MPs rebelled against the government and backed the motion. But these votes were mostly cancelled out by eight Labour MPs. Stone's veteran anti-EU Tory MP Sir Bill Cash, who voted against the motion, said it would result in 'government by Parliament'.

He said: "I have already described this as a phantom motion for a phantom bill. We do not know what the bill will contain. We have had various suggestions that it may contain some elements of what has been proposed by some of the so-called leadership candidates. I do not know what they will propose by the end of the process.

"What I can say, however, is that this is, as I said earlier, an opendoor motion. It opens the door for any bill, of any kind, to take precedence over government business, which is inconceivable as a matter of constitutional convention."

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Analysis: Brexit

During his speech, Mr Snell mentioned that the British Ceramic Confederation had urged all MPs to back Mrs May’s deal.

The BCC is strongly opposed to a no-deal Brexit, which it says would be a disaster for the industry. More than half of British ceramic exports currently go to Europe.

Indeed the organization has already said that no deal would be really harmful for ceramic manufacturing jobs, businesses and investment, and must be avoided.

Dumping to be maintained?

The Government has agreed to maintain defences against Chinese dumping of pottery after Brexit – but industry leaders say more protections are needed.

Trade Secretary Liam Fox announced that anti-dumping measures for ceramic tableware and tiles would be among 43 existing trade remedies rolled over once the UK leaves the European Union.

The measures will allow the UK to impose duties on artificially cheap Chinese ceramic imports in order to protect British manufacturers – including those in Stoke-on-Trent.

Dr Fox, who made the decision to maintain the trade remedies after lobbying by the British Ceramic Confederation and MPs, said the measures would provide UK industry with ‘a level playing field’.

But the BCC still has major concerns that the UK will move to unilaterally slash tariffs in the event of a no-deal Brexit, which it says could put thousands of ceramics jobs at risk.

After Dr Fox made his announcement in the House of Commons, Stoke-on-Trent South MP Jack Brereton asked him about the need to protect British ceramic producers from ‘unfair’ trade practices.

Dr Fox said: “While we want our imports to fall given the cost to consumers, protection is necessary when countries are following policies that are designed to undermine the concepts of international trading law. We will resist those. We are rolling over the protections for the ceramics industry today because it is very vulnerable to the practices of dumping, overproduction and subsidy which we so deprecate.”

Under the current EU trade remedies, duties of up to 36.1 per cent for tableware and 69.7 per cent for tiles can be imposed on Chinese imports, which benefit from state subsidies.

These duties are applied on top of the underlying tariffs, which the BCC fears could be slashed to zero if the UK leaves the EU without a deal.

Dr Laura Cohen, chief executive of the BCC, said: “What’s crucial is what’s missing from Government’s announcement. We still do not know what they are going to do with those underlying, most favoured nation tariffs, onto which trade remedies are added.

“If Government drops these to zero in a no-deal Brexit, then ceramic tiles and tableware, and many thousands of other goods manufactured in this country will be in jeopardy, because a flood of imports will cause untold damage to our domestic markets.

“We are proud British manufacturers and this is a moment for our Government to stand up for our manufacturing, rather than give a leg up to foreign businesses.”

But Dr Fox’s announcement was welcomed by Mr Brereton, who lobbied for the ceramic trade remedies to be maintained.

He said: “This is hugely reassuring news for the ceramics industry in Stoke-on-Trent. I am delighted that we have persuaded the Government of how important it is to defend our manufacturers against the unfair trading practices of some other countries.

“I have been clear that trade remedies that reproduce the protection our potteries currently have from overseas dumping of goods must be in place from day one after Brexit. I am pleased that these measures

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I MADE A MISTAKE; I SHOULD HAVE VOTED FOR THE DEAL will apply from the very start after a transition period, if one is agreed, or immediately in the event of a no-deal Brexit.”

Of course, that’s easy to say now. When the chips are down, however, and countries elsewhere hold all the cards in terms of striking new deals, the chance for the UK to be able to turn away cheap ceramic imports will undoubtedly be rapidly diminished. It is at that time, that the ceramics industry of the UK could simply be lost as a “casualty” in a far greater picture.

So what happens next?

After three years and two missed deadlines, we must leave the EU on October 31.” Thus did Boris Johnson launch his campaign for leadership of the Conservative party at a pivotal moment in the UK’s history. Choices made now will reverberate for generations. The implications are clear: if he cannot obtain a better deal than Theresa May’s (which the House of Commons has rejected three times), he must either turn tail or choose a no-deal Brexit. Leaving the EU is in itself damaging: it will worsen the UK’s trading opportunities and influence on its continent and the world. That this is happening when the western order is disintegrating and a new cold war between the US and China is emerging makes the UK even more vulnerable. But a no-deal option would be far more damaging than leaving the EU in an orderly manner. The fact that senior politicians are contemplating it renders them altogether unfit for office. What then is wrong with a nodeal Brexit? Here are six answers.

It will be disruptive. Nobody knows quite how disruptive, for the obvious reason that no advanced country has terminated its principal trading agreements overnight, in peacetime. A large proportion of UK businesses, especially small and medium-sized ones, are unlikely to be ready, for the good reason that they still do not know what will happen. A confidential cabinet note has recently warned that the country will not be ready on October 31.

EU co-operation in a no-deal Brexit would be limited. The EU would ensure basic road, rail and air connectivity. Financial continuity should also be ensured. It would try to manage the fallout of a no-deal Brexit on the island of Ireland. In all, it would not set out to “punish” the UK (contrary to what many Brexiters believe). The UK would just be treated as a “third country”, across the board. But the jump from being a full EU member to this very different status is sure to be disorderly.

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Analysis: Brexit CASE STUDY: Brexit and Minchem Ltd Group – REACH As a Group of three companies, Minchem are involved in the manufacture and supply of a range of specialised inorganic and mineral-based products for use in world markets in Chemicals and related areas. We import raw materials into the UK/EU and also manufacture at our factory based in Stoke-on-Trent, UK. Our products are all chemical-based and so fit under the Speciality Chemicals bracket within the UK Industry sector.

The UK has a very long history in chemicals, which together with Pharmaceuticals, is the UK’s second largest industry, with a contribution of £18billion a year to the UK Economy. It employs some 140,000 persons and has £50billion worth of exports – the largest of any manufacturing sector. Chemicals are needed as essential building blocks to make cars, planes etc and provide solutions to climate change through fuel cells and insulation of buildings. A successful chemicals industry is at the heart of every successful economy.

Brexit will mean massive changes for us. This is especially true for relatively small companies, of which 36% are in the 5 – 49 employees portion of the Chemical Sector Enterprises. For our business we would much prefer to remain in the EU since many of our suppliers and customers are EU based. However, recognising that we may leave EU without a deal, Minchem have had to be positive in our thinking.

One key point in Brexit is EU Regulation 1907/2006/EC, known as REACH, which was introduced in 2006 and came into effect 1 June 2007. REACH – the Registration, Evaluation, Authorisation and Restriction of Chemicals – addresses the production and use in the EU of chemical substances and their potential impact on human health and the environment. It is also supposed to enhance the competitiveness of the EU chemicals industry, though this has not been most companies’ findings.

REACH applies to all chemical substances and requires each chemical to be registered with very significant costs. This registration applies to any chemical being made or supplied within the Table EU.1 REACH is implemented by the European Chemicals Agency (ECHA), and the UK Chemicals Industry is regulated based 2014 661,157,226 2015 590,940,554 on EU legislation.

REACH applies to all UK-based manufacturers 2016 553,629,053 2017 598,359,963 and importers of chemicals. REACH requires companies to 2018

654,488,104

Total ceramic exports from the UK (US$'000)

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register their chemicals with ECHA before placing them on the market. Those producing and exporting chemicals from outside the EU must comply with REACH either by procuring the services of an Only Representative who take on the legal duties under REACH, or by ensuring the EU-based importer they are supplying fulfils the REACH registration.

In 2006, Minchem had to register key products within REACH at significant costs. We form part of some £550million spend on REACH registrations from the UK. The REACH registrations favour the big companies who have the resources to cope with the additional costs. With a no deal Brexit these registrations either become null and void or have to be moved to another Only Representative. Big companies will likely move their registrations to one of their EU offices. Smaller businesses either have to give up their EU REACH registration with no refund or, as in Minchem’s case, find an alternative way to continue to supply our EU customer base.

Being proactive, Minchem decided to set up an EU company based in Milan, Italy. This is Minchem Europe Srl, a wholly-owned subsidiary of Minchem. This was done to answer many concerns from long-standing EU customers who would have serious problems if we could not supply. They pointed out that changing to a new supplier would require the products to be reclassified which is some cases could take many years. The inconvenience and cost of this would mean their profitability would drop – and may be a deciding factor in giving up the business.

The UK has decided that we will have the same REACH registration system following our likely departure from the EU. This will mean that all UK-based Chemicals producers/importers will have to duplicate their REACH registrations.

As mentioned, Minchem are set up to continue to work within the EU should we leave with no deal. As part of our business, we act as Agents/Distributors within the Ceramic and related areas, and are interested to grow this activity. Any Producers/Exporters from outsideTable the 1 UK/EU who want to consider sales in the UK/EU but do not have a REACH registration should contact us. We are a 2014 2,027,196,543 Technical Group of Chemists, Materials Engineers, Metallurgists, 2015 1,963,140,751 2016 1,777,251,737 Logistics personnel who can help build new business for you.

2017 1,753,398,424 2018

1,821,905,662

Total ceramic imports into the UK (US$'000)

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Analysis: Brexit

This is why standard trade agreements have long transition periods — far longer, in fact, than in the withdrawal agreement signed

by Mrs May. The long-run costs of being without any deal with the EU would be substantial. Some important sectors — cars, for example — would face high tariffs (10 per cent in this case). The operation of complex supply chains would become substantially more difficult. It is very unlikely that UK financial regulation would be deemed “equivalent” to that of the EU in such circumstances, with significant adverse implications for UK-based companies. The ability of UK-based professionals to supply services in the EU flexibly would probably disappear.

No deal could not possibly be the end of negotiations, but a shift to new ones from a far weaker position. The EU would remain a far more important trading partner to the UK than any other. Reaching a good trade deal with the EU would remain a vital UK interest. Yet, to make progress, the UK would still have to satisfy the EU on the three principal areas of the withdrawal agreement: money, treatment of EU citizens and the Irish border.

The EU knows that no deal would weigh more heavily on the UK. Yes, the absolute costs might be similar to both sides. But the gross domestic product of the rest of the EU is almost six times as big as the UK’s and its population almost seven times as big. The cost per unit of GDP and per person would be far bigger for the UK. The EU’s view that the UK will come to terms is one reason why no UK leader will persuade it to change the withdrawal agreement. Not allowing the UK “to have its cake and eat it” is also an existential interest of the EU, since the alternative might be the end of the project in which its leaders passionately believe.

Leaving the EU without a deal would impair the UK’s credibility as a partner, for everybody. It would make it more difficult for it to co-operate with European neighbours on such issues as security or science. It would devastate the country’s residual reputation for competence, stability and probity. No deal is either lunatic or a confidence trick.

No deal preparations

Britain’s businesses are being urged to step up their preparations for a no-deal Brexit amid signs that Theresa May’s successor could be prepared to leave the EU without a deal at the end of October.

The Institute of Directors (IOD) – one of the UK’s employers’ groups – said its members had so far failed to take advantage of the sevenmonth delay to Brexit and warned that companies should not put faith in politicians to produce an agreement.

The IoD produced figures that showed less than half of businesses had Brexit plans, and said firms should be considering all reasonable preparations for no deal.

Some Tory candidates for prime minister – including the frontrunner, Boris Johnson – have said they would be prepared to leave the EU without a deal but an IoD survey of almost 1,000 companies found the proportion that had activated contingency plans between January and

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April rose from 18% to only 23%.

Only 4% of those questioned said they would be using the extension period to pick up the pace.

Edwin Morgan, the IoD’s interim director general, said: “This week’s vote won’t be the last twist in the Brexit saga but it made clear how real the possibility of no deal is.

Business can have no absolute reassurance that an agreement will be reached, particularly given the commitment of some Conservative leadership candidates to leaving the EU in October, with or without a deal. It feels like the extension is at risk of being wasted.”

The IoD said there had been very limited financial support from central government for small businesses to prepare, despite repeated calls from the employers’ group for Brexit planning vouchers to help small and medium-sized enterprises (SMEs) receive professional help for complex trade and legal issues.

Morgan said that getting a deal would be “by some distance” the better outcome, adding that it would prolong the uncertainty if Britain had to trade with the EU on the same World Trade Organization terms as countries such as China and the US. “If businesses can’t have faith in politicians that means they have to look out for themselves. With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want to put resources towards preparing for something we still hope won’t happen. But the risk of no deal is very real and so we’d urge all businesses, if they haven’t done so already, to carefully consider their exposure and draw up mitigation plans now.”

Speaking on Thursday, Tesco’s chief executive, Dave Lewis, said it was harder for supermarkets to prepare for a no-deal exit from the EU in October than it was in March because they will be storing more products for Halloween and Christmas in their warehouses, leaving limited space for Brexit stockpiles.

“October will be much more challenging than March was,” Lewis said. “We’ll be coming out of Halloween and building stock for the Christmas peak, so the capacity in the supply chain will be much more challenging. It’s about sheer physical capacity. It’s not just the availability – it’ll be the space.”

Diamonds in the rough?

Britain has taken some (small) steps towards shoring up worldwide trade relations in the event of a no-deal Brexit by signing a stopgap agreement with South Korea on Monday. But the continuity agreement with Seoul, with which the EU signed a showpiece deal in 2011, fell short of guaranteeing permanent tariff-free trade in all circumstances, especially for goods with content from both mainland Europe and the UK. Theresa May’s government has sought to reduce the disruption that Brexit might cause by replicating the trade accords that the EU has struck with the rest of the world. Despite criticism this year of the slow pace of negotiations, the UK has now secured agreements with countries that account for 63 per cent of trade now covered by such deals

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Analysis: Brexit

— up from 28 per cent three months ago, according to the UK’s international trade department. The agreement with Seoul is the first trade deal the UK has signed with a trading partner in Asia since the June 2016 referendum in which Britain voted to leave the EU. Liam Fox, trade secretary, said: “Providing continuity in our trading relationship will allow businesses in the UK and Korea to keep trading without any additional barriers, which will help us further increase trade in the years ahead.” The two countries plan to ratify the deal before the UK’s scheduled departure from the EU on of October 31. The existing Korea-EU agreement eliminates tariffs on almost all products traded between the bloc and Seoul.

“The deal is significant as it eased uncertainties sparked by Brexit, amid the already challenging environment for exports on the escalating trade row between Washington and Beijing,” said Yoo Myung-hee, Seoul’s trade minister, on Monday. However, the agreement is not a permanent trade deal between the UK and South Korea and would need to be renegotiated within two years. In future Britain will need to obtain South Korea’s consent to maintain existing tariff-free terms for UK goods with significant European components and for UK components in EU exports.

Peter Holmes, a director at the UK Trade Policy Observatory at Sussex University, said: “The EU, South Korea and the UK are all going to have to treat each other’s products as if they were made nationally and this requires agreement between all three participants, not just between the UK and Korea.”

The Department for International Trade was not able to say what had been agreed between the UK and South Korea on rules of origin, but added it would provide greater clarity in due course.

Mr Fox, who visited Seoul for the signing ceremony, said the deal would pave the way for increased bilateral trade by allowing both countries to maintain no tariffs on their exports, even if the UK leaves the EU without a deal. Bilateral trade was worth £13.3bn in 2017 and has increased by an average of 12 per cent a year since the EU-South Korea free trade agreement was signed.

Official figures show the UK and Korea have generally had relatively balanced goods trade, along with a UK trade surplus in services trade.

But such figures do not capture the whole picture, since South Korea exports many components into products assembled in China and exported onwards to the UK. Britain is South Korea’s second-largest trading partner after Germany among current EU members. Recommended The FT View The editorial board The Tories badly need an honest debate on Brexit The UK imported £5.1bn worth of goods and services from South Korea in 2017 — notably cars, car components, ships and aircraft parts. The

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UK’s exports to South Korea were worth £8.2bn in 2017, mainly consisting of services, cars and fuel. Seoul will try to update the deal, especially in the area of protecting investors, in the two years after the preliminary agreement takes effect, South Korea’s trade ministry said.

Philippines

Elsewhere in Asia, The Philippines is confident that it will continue to enjoy market access to and incentives from the United Kingdom (UK) even after it leaves the European Union (EU), the Trade department said on Friday.

“The retention of the Philippines’ GSP+ (Generalized Scheme of Preference Plus) level preferential market access to the UK is a huge assurance for PH exporters,” Trade Secretary Ramon Lopez said in a statement.

The GSP+ outlines trade incentives for countries exporting to the EU and the Philippines has been enjoying zero-duty perks for over 6,000 products since 2014.

Total trade between the Philippines and the UK stood at $1.2 billion last year, up 14.5-percent from 2017.

In case a no-deal Brexit happens, the Philippines has been assured of continued GSP+ like trade incentives, Lopez said.

He downplayed a “recent study from the United Nations Conference on Trade and Development that PH will be the 12th trading partner that will be most affected in a postBrexit scenario, as the study did not take into consideration ongoing bilateral talks between PH and UK.” “For products that are not covered by the GSP+, Most Favored Nation (MFN) rates will apply; on this front, PH is also actively engaged in negotiations in the WTO (World Trade Organization) for the final MFN bound rates that UK will apply after Brexit to ensure that products of interest for the PH will not be prejudiced by any changes,” Lopez said.

The Trade department said officials had been meeting British officials to secure postBrexit commitments.

“In all of these engagements, UK has given reassurances about the continuation of PH’s GSP+ level market access…,” it said.

The Philippines recently inked a partnership statement and joint action plan on economic cooperation, trade and investment with the UK. Lopez stressed that Brexit would have no overall impact on Philippine trade with the world.

The same view was expressed by EU Ambassador Franz Jessen last month, who said the UK accounted for “probably about 8 percent” of the EU trade to the Philippines.

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Analysis: Brexit India: a giant issue…

India and the U.K. share strong trade relations. There is a sizable Indian diaspora in Britain, which means India receives a lot of remittances from the U.K. As per previous estimations, the U.K. sends approximately $4 billion to India through formal and informal channels. Indians are among the most common non-British nationalities in the U.K., with 832,000 residents. India sees the U.K. as a lucrative market in itself and a gateway to the European Union. Between 2000 and 2018, total foreign direct investment (FDI) that flowed into India from all channels from the U.K. is estimated at $50.57 billion. Of this, the U.K. directly invested $26.09 billion in India – increasing its investment by $847 million between 2017 and 2018 – representing 7 percent of all FDI coming into the country.

India also shares strong relations with the EU that could be developed further. The EU is India’s largest trading partner and India was the EU’s ninth largest trading partner in 2015. The EU accounted for 92 billion euros worth of trade in goods in 2018 or 12.9 percent of total Indian trade, ahead of China (10.9 percent) and the United States (10.1 percent). The EU is also a leading destination of choice for Indian exports. Eighteen percent of total Indian exports are to the EU. The relationship is set to become stronger as both parties have been considering entering into a free trade agreement, which would reduce tariffs and barriers to bilateral trade.

How is Brexit likely to affect India’s economic relations with both these parties? A lot of it depends on whether there is a “soft” Brexit or a “hard” Brexit. In simpler terms, it depends on whether or not the U.K. leaves the single market. The EU imported around 44 percent of U.K. exports in goods and services in 2017 — 274 billion British pounds’ worth, out of 616 billion pounds of total exports. Should the U.K. leave the single market, it may have to look for other buyers for its goods and services. In a post-Brexit world, India could benefit from this. South Korea did exactly that recently, by agreeing to sign a free trade deal with the U.K. The

timing is no coincidence. The U.K. needs trading partners and leaving the single market will give London strong incentive to expand in markets elsewhere, particularly the Commonwealth.

India is one of the biggest economies in the bloc and has strong trade relations with the U.K. Moreover, Brexit may devalue the pound, which could be a boost to trade volumes between India in the U.K., providing a strong base to build upon. The timing is also ripe for India, with a new government coming in.

A flagship trade deal with the U.K. would serve as great news in times where trade wars dominate the news. This is not to say that an FTA is the only way to go. Another feature of Brexit may be that European labor workers might need to leave the EU or stay on different visa requirements should Brexit turn out this way.

India could also take advantage of this to incentivize movement of labor between the two countries.

A hard/soft Brexit could also mean stronger ties between India and the EU. With the U.K.’s departure, the EU is likely to want to fill that economic gap. As far as trade with India is concerned, the first order of business might be to work toward finalizing the free trade agreement. If the U.K. can no longer serve as a gateway to Europe, Indian companies might also consider diversifying their current investments in London. An attractive destination could be Ireland, because of its close proximity to the U.K. and membership to the EU. This could also mean investments in other EU trade capitals, such as Frankfurt and Paris. Doing so would benefit the EU as a bloc in a post-Brexit world.

While the full impact of Brexit spans across sectors, the changing nature of the U.K.’s involvement in the single market is what India should be concerned with. While trade relations between India and the EU/U.K. have been strong historically, Brexit could be the catalyst that makes them stronger. As the EU and the U.K. both look for new trade opportunities elsewhere, India could emerge as a beneficiary of this new arrangement.

The reshuffle that Brexit brings with it is something the Indian economy should welcome, soft Brexit or otherwise.

CASE STUDY: Craven Fawcett: Planning for a No-deal Scenario.

1) Engagement. Given the potential damage that a no-deal Brexit may cause UK industry, Craven Fawcett’s parent company, Group Rhodes is engaging with relevant organisations to assist with its Brexit planning.

The Group Rhodes CEO, Mark Ridgway is a Director of the UK’s Manufacturing Technologies Association (MTA) which sits on EURIS, an advisory body of 13 trade associations representing industrial product suppliers covered by the Single Market. The organisation represents a huge range of manufactured products and processes in the UK with a combined turnover of £148 billion. Mark has also been involved with the compilation of a report to Government on the impact of Brexit on the UK’s Manufacturing Sector and the importance to our sector of a fully negotiated deal that does not create additional barriers to trade.

2) Domestic and International Contracts. Craven Fawcett has reviewed its Terms and Conditions and has drafted a ‘Brexit clause’ to mitigate the impact of a negative market reaction to the UK leaving the EU. In addition, we are working to ensure that contracts (where appropriate) adequately clarify the terms for trade across EU borders, including how VAT is processed.

The volume of Craven Fawcett exports to the EU is currently less than those to the Far East, Middle East, India and North Africa. Where we do conduct business in Europe, we have a contingency plan in place for any foreseeable increases in both tariff and non-tariff barriers. All

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overseas contracts (including those to the EU) will include incoterms.

3) Supply Chains. Supply chain mapping has been an integral part of our Brexit planning. Craven Fawcett, through its parent company Group Rhodes has conducted a full supply chain audit and mitigated the majority of potential supply chain issues by underpinning European stakeholders with UK and (in a few cases) North American suppliers. Overall 83% of our wider group supply chain partners are UK based businesses, and the corresponding figure for Craven Fawcett’s wear parts division is above 75% (subject to an average product mix).

Three EU foundries / forges currently supplement Craven Fawcett’s UK sourcing for reasons of capacity; when Brexit terms are known a decision will be made to remain with the EU supplier or re-shore / source elsewhere. Costs may increase through the introduction of tariffs or currency weakness, but this risk is outweighed by the potential disruption to existing delivery times by prematurely relocating Craven Fawcett patterns etc. Alternative suppliers are continually being assessed to underpin existing sources.

Importantly, secondary imports (our suppliers exposure to the EU) are also currently being audited, particularly with respect to EU Rules of Origin (see item 9 below) Our raw material suppliers have some exposure to imported product as do technical component producers; this is currently deemed to be low risk.

4) Exchange Rate Fluctuation. We are a UK registered company and

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Analysis: Brexit transact through the UK banking system. As such UK customers carry little risk with respect to exchange rate fluctuations on Craven Fawcett / Group Rhodes contracts, particularly given our strong domestic sourcing policy. Conversely, UK currency weakness may enhance export competiveness.

5) Authorised Economic Operator (AEO) Status. This status allows faster clearance at borders if a company’s procedures are deemed compliant by authorities in both countries. The marginal gain is not deemed significant for Craven Fawcett, but AEO status will be considered if it will assist the flow of goods after Brexit.

All Group Rhodes companies are already compliant with the relevant European and UK product standards and quality / health and safety legislation. This is particularly important given the possibility (no matter how remote) of ‘standard disengagement’ after Brexit. EURIS is working to avoid such a situation, which would otherwise mean UK companies having to remain compliant with any new EU standards if they wished to continue to export to Europe (see item 6). There is of course the equal possibility of EU suppliers having to be similarly reassessed to any new UK standards that are introduced post Brexit.

6) CE Marking Status. In the event of a ‘no-deal’ scenario, checks will be made to ensure that our UK notified body is recognised by the EU as validating a CE mark on our products. This will involve ensuring that each of our technical files is accessible from a ‘nominated person’ physically located in the EU. 7) Skills / Employee Nationalities. Group Rhodes does recruit from overseas but currently does not have any EU nationals on its books.

We note the possibility of a purely skills based immigration policy which is likely to focus on a reduction in the barriers to entry of skilled non-EU workers to compensate for the loss of free movement

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of workers from the EU. Our previous success in recruiting engineers from India, where we have a physical presence, may be assisted by such policy reform.

8) Corporate Systems Infrastructure. In a no-deal scenario, the Single Administrative Document for import / export declarations is likely to be applied to all trade between the UK and the EU. Internal Craven Fawcett resources are deemed adequate to manage any associated increase in administration.

9) EU Free Trade Agreement. Being UK based, Craven Fawcett is not exposed to any ‘Rules of Origin’ within the home market that may, post-Brexit impede EU competitors. All Craven Fawcett products will continue to be tested by established EU Notified Bodies and fully comply with EU Rules of Origin as they currently stand. Using a bilateral trade agreement may save costs on tariffs but will increase bureaucracy in having to prove each good is significantly British. (It is our view that the UK and the EU27 will agree to protect the status quo).

10) Adequate Cash flow for VAT and Additional Inventory. The requirement for additional cash flow is heavily mitigated by our strong UK based supplier network. The possibility of VAT being charged at the border when importing goods can therefore be classified as low risk, alongside the associated need to carry more inventory.

11) Intellectual Property Rights. Group Rhodes registers patents where appropriate; its last filing being July 2018. It is expected that such protections (that include trademarks, registered designs and software copyright) will still apply in the EU after Brexit, but the same assurances for the UK have not yet been given by the EU27.

Craven Fawcett is ready to reapply for existing trade mark and design protection which in many cases may lapse after Brexit.

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Analysis: Sanitaryware

Urban lege Russian lifestyles support sanitaryware boom

Jahir Ahmed examines how changing attitudes, more income and a modernization and urbanization programme in the North and East of Russia is spurring on an increase in sanitaryware demand and supply…

R

ussian efforts in last two decades to boost up economic activities in the greater Siberian region has continued to increase the growth of housing and resultant consumption of sanitarywares in North Asia.

The ongoing industrialization and housing in the vast and sparsely populated Asian part of the country is concentrated mostly in the southern area, bordering Volga Federal District of the European part of Russia, Kazakhstan, Mongolia, China, and North Korea and sharing maritime border with Japan.

Siberia’s growth areas are well connected with the manufacturing bases of China, the world’s largest exporter of all ranges of ceramic sanitarywares, as a result, in a situation of short supply of local bathroom products to meet the local demands, North Asia became a lucrative market for China.

The size of ceramic sanitaryware market in the North Asia is estimated to be about a quarter of Russia’s total of around US$400 million a year, as estimated for the current year. Geographically, North Asia contains the vast and entire Siberian area and the whole of Asian part of Russia, with roughly a quarter of the country’s total population of about 146.8 million and three quarters of the territory of 17,125,191 square kilometres, stretching from Ural mountains in the west to Bering Strait in the east that separates it from Alaska state of USA. Instead of setting up plants in North Asia the Russian sanitaryware manufacturers, located in European part of Russia, continues to prefer build up strong distribution points all over Siberia taking advantage of less expensive Trans Siberian Railway networks and trucking routes.

Russia is the world’s largest country by area and known as Russian Federation as the country is divided into 85 constituent units, called federal subjects (such as, oblasts, republics, krais, okrugs, and federal cities), grouped into eight non-constituent federal districts, of which, three, Ural Federal District, Siberian Federal District and Russian Far East Federal District, are in the greater Siberian region or North Asia. The entire northern Asian

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Analysis: Sanitaryware

ends region of 13.1 million sq km (larger than China and India combined) with a sizeable population of about 36 million is almost without local sanitarywares, although, attempts were made and still continuing by some companies for manufacturing locally, while supplies at highly competitive prices from other parts of Russia, China and other neighbouring countries remain very dominant.

The lone organized ceramic sanitaryware manufacturer, OAO Zavod Universal, with a production capacity of 38,000 tons of porcelain/vitreous china sanitarywares a year is located in Dorogino, a Novosibirsk oblast (region) satellite urban settlement, in Cherepanovsky district, about 100 km south of Novosibirsk city, about 300 km away from Universal’s base in adjacent Kemerovo oblast’s Novokuznetsk city. The urban growth centres and large cities of the southern Siberia are some of the booming sanitaryware markets of Russia and significantly advantageous for Universal to exploit. Yet, the market is highly competitive that keeps Universal under pressure to control its capacity utilization.

IN RECENT DECADES NORTHERN ASIA HAS EXPERIENCED RAPID DEVELOPMENT AND LIFESTYLE TRANSFORMATION However, Universal was able to withstand that pressure since last three decades. Under a similar situation a western Siberian ceramic sanitaryware manufacturer, Uralkeramika (PJSC ZKI, now manufactures Alma Ceramic brand floor and wall tiles) had to close down sanitaryware production line six decades ago. Uralkeramika is located in Russia’s leading transport hub, Ekaterinburg, in the heart of the most urbanized area of Ural region, where it was in more advantageous position due to local clay quarries.

Universal manufactures porcelain sanitarywares for budget segments for installation in residential houses, cottages, offices and apartments. The products are inexpensive and designed mostly for the small family homes. Its single piece compact toilet is popular.

Universal has different models including compact ones that contain water closet with porcelain funnel-shaped bowl, slanting descent and tank with a bottom or side liner. Installation of toilet with a slanting release does not require special plumbing skills. Universal is a major building material manufacturer in Novokuznetsk. It manufactures various other products, including metal sanitarywares. Universal also exports its ceramic sanitarywares to the rest of Russia and neighbouring countries.

Urbanisation

North Asia or Siberia’s largest and Russia’s third largest city of Novosibirsk on the Trans Siberian Railway is now a major distribution centre of the Russian sanitaryeare manufacturers. Importers are also participating in the regularly organized building material exhibitions in Novosibirsk city which has a rising population of nearly 2 million, including adjacent urban areas. Kemerovo oblast’s two largest cities, Novokuznetsk and Kemerovo, with population of 600,000 each, are also two major distribution centres for sanitarywares.

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Analysis: Sanitaryware

In recent decades Northern Asia has been experiencing a rapid development in transforming the lifestyle of the people with rapid urbanization following improved industrial, mining and tourism activities. 10 largest cities of Siberia is now home to over 10 million urban population. About 80 percent of the people of the region live in the cities, towns and other urban centres and settlements, and mainly in apartments. Some of the people also live in rural areas, in simple, spacious, log houses. Besides dozens of cities with population of more than 0.1 million to over 1.6 million, there are hundreds of urban locations with population of over 10,000 to around about 100,000. The higher concentration of new urban population helped develop modern housing complexes and high rise apartment buildings that install average segment to high-end sanitarywares.

Besides the largest city Novosibirsk, with population of over 1.6 million, and the 10th largest Vladivostok, with over 0.6 million people, the other eight biggest cities include Yekaterinburg, Chelyabinsk, Omsk, Krasnoyarsk, Tyumen, Barnaul, Irkutsk and Khabarovsk, all of which major hubs for sanitarywares. Most urban centres of the region are located in Ural and Siberian federal districts and are centred between Omsk and Irkutsk. Sanitaryware manufacturers are well represented in all the major cities and towns through own offices, distributors and dealers who also provide showrooms.

The greater Siberian region generates much of Russian cash income. The area is rich with forests, minerals and industries, providing most of Russian natural gas, oil, coal and metal products, as well as tax incomes, mostly from industries that include many of the Russian top engineering and manufacturing plants. Other minerals include, platinum, copper, chromium, iron, gold, zirconium dioxide, titanium dioxide, bauxite, nickel, cobalt and others. Previously many townships were developed in and around the mining and metal industry regions. Now with gradual exhaustion of many mines some of the mining towns have declined and the people have shifted to the southern parts, mainly the urban areas.

Sanitaryware manufacturer Zavod Universal’s operating area Novosibirsk and Kemerovo oblasts, each with a population of some 3 million, are two of the most urbanized and industrialised oblasts in Russia. 80-85 percent of the population live in the cities, towns and satellite urban settlements. Both the regions are rich in minerals and have several dozens of deposits of nonmetallic minerals, extracted for use in the ceramic and glass industry and others in Russia. Besides extraction of huge natural gas, oil, coal, bauxite, zirconium dioxide and titanium dioxide, the two oblasts’ available reserves include fluxing limestones, dolomites, quartzite, fireclays, and moulding sand, currently used mainly in the local and other Russian steel and other metal industries.

New apartments

The regions are going ahead with plans for massive housing construction with further development of urbanization and setting up of new townships. Kemerovo will build up new townships and urban areas with many thousands of new high and low rise apartment buildings in the next decade, said Aman Tuleyev, outgoing Governor of Kemerovo Oblast, who resigned last year after over two decades at helm.

Because of huge housing demand and construction of new residential buildings and remodeling, the ceramic sanitaryware markets in Russia’s North Asian Ural, Siberian and Far East federal districts have tremendous growth, according to Vladimir Kieselev, General Director/Owner of Universal.

Kieselev said, since the Russian government’s renewed efforts to provide modern living conditions through easy financing has impacted positively, the demand of sanitaryware products for new

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OAO Zavod Universal Location: 654 032 Novokuznezk, Kemerovo Oblast, Siberian Federal District, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: OAO Zavod Universal is the only major ceramic sanitaryware manufacturer in the Siberian region of Russia, and has a production capacity of about 38,000 tons a year. It manufactures a wide range of products. In addition to ceramic sanitarywares, Universal manufactures metal sanitarywares and various other building materials, which are marketed all over Russia. However, its ceramic sanitarywares are distributed mainly in all three Russian North Asian federal districts of Ural, Siberian, and Russian Far East. Universal also exports to other countries.

Kirovskay Keramika (Kirov Ceramics JSC) Location: Kirov, Kaluga region, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Popular Rosa and Kirovit brand producer Kirov Ceramics is one of Russia’s leading sanitaryware manufacturers. Produces about 2 million units of sanitarywars a year or some 17 percent of Russian production. It claims increase of its production by 5-8 percent every year.

Equipped with Italian and German machinery. It supplies to all region of Russia and have large distribution facilities in North Asia. It exports to CIS countries and Western Europe.

Roca Location: Tosno, Tosnensky District, Leningrad Oblast, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Roca has seven plants in Russia. It offers complete range of sanitarywares. Markets Roca, Laufen, Jika, Santek, Santeri, Aquaton brands.

Santek Location: Cheboksary and Novocheboksarsk, Chuvash Republic, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Santek is a part of Roca Group and producer of bathroom solutions, such as, floor standing and wall-hung water closets, washbasins with pedestals, urinals, and bidets.

Santeri (CJSC Ugrakeram) Location: Vorotynsk, Kaluga Region, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Santeri is a producer of the wide range of sanitarywares. The company is a part of the Roca Group. Its production capacity is 2.5 million pieces of sanitarywares a year.

Eczacıbaşı VitrA Location: Serpukhov, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: VitrA’s Serpukhov sanitaryware plant, located in Serpukhov, about 100 km from Moscow, has an annual capacity of 250,000 large pieces. VitrA branded products are available at 1000 sales point around Russia.

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Analysis: Sanitaryware

and remodeled homes, mostly in apartment buildings, will continue to rise in the coming years for which his company is continuously modernizing and expanding the plant’s capacity with flexibility to go with the market and product trends, for better utilization of the plant in manufacturing products with the change of market demand for product types.

The plant is currently equipped with reputed Italian machineries.

The sanitaryware market is expanding due to growing demand from the new housing segment and remodeling of bathrooms all over the three federal districts in greater Siberia region. Kieselev said the Siberia region offer plenty of opportunity to the suppliers of quality ceramic sanitarywares.

The whole region of North Asia is catered by over a dozen ceramic sanitaryware manufacturers of Russia located in the European part and several other suppliers of the neighbouring European and Asian countries, mainly China. Other major regular suppliers to North Asia and the rest of Russia are Germany, Italy, Poland, Turkey, France, Spain, Czech Republic, Belarus, Hungary, Vietnam, Bulgaria and Romania. Some of the Russian wholesale and distributer companies also have developed their own brands manufactured in other Russian and East European plants to meet the demand of the North Asian markets.

Russian housing growth raises demand

Russia, with an annual domestic production of an estimated 1214 million pieces of sanitarywares, mainly of vitreous china and porcelain, has emerged to be a major regional country in Eastern Europe and Central Asia in export and import of sanitarywares as the country consumes a diverse range of products from the global sources following privatization of economy, and has a large domestic production capacity that meets demand of the neighbouring countries, particularly the Commonwealth of Independent States (CIS).

Several global majors are currently engaged in manufacturing in the country. Many global players are supplying to the country through organized marketing and distributions. Among the CIS countries, Kazakhstan imports annually about 18,000 tons of ceramic sanitarywares of worth about US$20 million from Russia, according to Geneva based International Trade Centre (ITC).

Other major export markets of Russian sanitarywares in CIS are, Belarus, Uzbekistan, Kyrgyzstan, Ukraine, Armenia and Tajikistan.

Also, some Russian sanitarywares are regularly exported to Georgia, Germany, Turkey, Azerbaijan, Moldova and other countries worldwide.

The sanitarywares imported into Russia as well as in its North Asian regions of three federal districts are increasing rapidly since last few years with the growth of housing spending. Much of the imports are quality products of upper middle class to high-end segments.

According to ITC, in 2018, Russia imported around 30,000 tons of sanitarywares of worth over US$67 million. Import from China alone was of worth US$19 million.

Among the imported sanitarywares, the Chinese products are the most demanding. Consumers are increasingly buying Chinese and Vietnamese model of toilets for modern attractive look at lower prices, according to the market sources.

However, the growth of exports also remains steady since the past several years. In 2018, Russian ceramic sanitaryware exports

46

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AC 19-5

Cersanit Location: Krasnystaw and Syzran, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Cersanit is a major manufacturer of sanitarywares. Its plant is equipped with machinery supplied from Italian SACMI and others.

Sanitec (Geberit) Location: Moscow, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Markets Geberit, Keramag, Ifö and Ido brands.

Sanita Luxe Location: Samara, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Sanita Luxe’s collections included, Infinity, Ringo, Art, Flora, Best, Next, Classic, Attic, etc. The company also manufactures and sells components for the entire line of its products.

Della Location: Noginsk city, Moscow region, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Della is a Russian brand of quality porcelain sanitarywares.

Oskolskaya Keramika (Oskol Ceramics) Location: Belcityskaya area, Starij Oskol, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: Oskol is a Russian brand and manufacturer of compact and standard sanitarywares.

St. Petersburg Sanitaryware Location: St. Petersburg, Russia Products: Ceramic sanitarywares Markets: Russian domestic and export markets Others: St. Petersburg is a Russian brand sanitaryware manufacturers.

www.asianceramics.com

Analysis: Sanitaryware rose to about 37,000 tons of worth about US$45 million from about 15,000 tons of worth US$24,417 million exported in 2014, as estimated by ITC. The increasing domestic consumption trend is the result of Russian demand for new houses. Despite current years’ estimated slower GDP growth of 1.5-1.8 percent, compared to 2.3 percent of 2018, housing growth is better, following liberal availability of mortgage loans to purchase homes and high growth of spending with consumer loan.

Now four of every five Russian families own private home and they prefer comfortable sanitarywares in bathroom. Russian mortgage lending agency sources said about 45 percent of the Russian families want to improve their housing conditions. Russian Public Opinion Research Centre studies indicate that every third family in the country is planning to purchase new house in the next couple of years.

“As the trend of growth of mortgage loans have further strengthened, the volume of issued mortgage loans rose by 68 percent, during the first half of 2018,” said Andrey Vakulenko, Executive Director of MACON Real Estate Consulting, based at Krasnodar, in Russia’s Southern Federal District.

have invested significantly in plants in different locations to grab a good market share of average to upper segments.

Roca and Cersanit have diverse product ranges, while VitrA manufactures large size ranges of sanitarywares in Russia. In design, VitrA collaborates with such famous international designers, such as, Christophe Pillet, Ross Lavgrove, NOA, Pentagon Design, INDEED and many others. VitrA branded products are available at 1000 sales point around Russia.

Local Russian manufacturers who previously responded to the demand for sanitarywares of segments of low or average purchasing power have been marketing many upgraded designs suitable for remodeled bathrooms at affordable price. Most of the Russian manufacturers, including the leading operators, Kirovskay Keramika (Kirov Ceramics) with annual production capacity of over 2 million pieces and CJSC Ugrakeram/Santeri (under Roca group) with capacity of about 2.5 million pieces a year, have increased production outputs and designs in recent years and operating in a highly competitive market.

Dynamism the key

Because of higher growth of demand, the Russian sanitaryware market has been gradually transforming into a dynamic one since last two decades with the expansion of improved housing and remodeling of bathrooms with quality products purchased by those who can afford. The changing lifestyles have attracted the global Spanish manufacturer Roca, Polish group Cersanit and Turkish market leader and regional major Eczacıbaşı VitrA to set up plants in Russia and introduce many attractive designs and reputed collections, in addition to generally popular durable products of universal type designs. They

Russian ceramic sanitaryware exports to main destinations, in tons Importers of ceramic sanitarywares shipped from Russia

2014

2015

2016

2017

2018

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

World

14,995

25,119

34,111

33,939

36,617

Kazakhstan

10,918

15,787

18,303

15,369

15,637

Uzbekistan

904

1,966

3,264

2,726

3,843

Kyrgyzstan

261

938

1,660

2,355

2,155

Georgia

226

670

1,355

1,565

2,116

Belarus

1,184

1,245

1,780

1,540

2,033

Armenia

6

527

1,414

1,738

1,836

Ukraine

109

597

1,131

1,359

1,658

Germany

317

936

1,487

1,943

1,606

Tajikistan

4

282

738

823

1,299

Azerbaijan

87

200

1,084

808

1,128

Moldova, Republic of

216

418

474

782

859

Turkey

268

317

274

435

827

0

NA

0

429

631

Czech Republic

219

994

681

758

389

France

NA

NA

1

320

239

Netherlands

NA

NA

114

190

146

Latvia

71

91

86

162

120

United Kingdom

41

21

21

43

47

121

94

66

64

33

Italy

Lithuania

48

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AC 19-5

www.asianceramics.com

Analysis: Sanitaryware

With improvement of their products, the Russian manufacturers are exporting regularly to the neighbouring regional markets in CIS countries.

Among the products, compact toilets of different dimensions and affordable prices are meeting much of the consumer demands, both at home and export markets. The compact toilets are both floor-mounted and wall-hung toilet bowls, and have matching urinals, bidets, washbasins and others.

Compact and bijou?

Russians are price sensitive at the same time they look at quality. The demand for high quality and larger sized toilets and wash basins with various furniture types have been increasing among the affluent house and apartment owners, but less expensive compact sizes of relatively smaller-dimension toilets, suitable to install in small bathrooms, especially, in widely used small apartments are attractive among budget conscious consumers. Originally imported from various sources, the compact toilets are now largely manufactured in Russia by almost all the ceramic sanitaryware manufacturers.

In Russia, toilets designed as ‘compact’ are among the most popular as they do not take up much space, which means that they can be safely installed even in very small rooms. Such compact toilet is a one-piece construction in which the drain tank is installed on the shelf of the toilet bowl and is connected to it. Flushing water is supplied to such toilet’s water closets from the bottom and side of the tank. As budget oriented it is cheaper than standard models, its installation is simple and easy to maintain.

In compact design, toilets have its different mechanism, tank, inlet and drain valves, and drain button. It has bowl, and with it a pipe that

connects to the sewage system, and the connecting elements themselves.

Such toilets with modest dimensions are not considered luxury. They have simple and patterned look, and according to the users, it is not convenient to keep the toilet clean than a standard ones, for which it get dirty faster, so needs intensive cleaning.

Their width, length and height is generally, 35 cm, 63 cm and 77 cm, respectively.

The narrowest and widest bowl may be 33 cm and 45 cm, respectively. The length of the bowl can be from 59 cm to 75 cm.

Compact toilet bowl’s height together with the cistern is often 47-90 cm, according to the reviewers of the products.

Brand-building

Roca group is Russia’s leading quality and popular ceramic and porcelain sanitaryware manufacturer and foreign investor.

It is based in Tosno, 53 kilometers southeast of the center of St. Petersburg, in the Leningrad Oblast of Northwestern Federal District. Roca Russia manufactures a wide range of sanitaryware products in seven production plants under the brand names of Roca, Laufen and Jika. Roca also markets Santek, Santeri, Aquaton brands, under Roca group.

It manufactures sanitarywares both for elite and the average consumers. It has marketed a wide range of quality compact toilets, manufactured locally and also imported from its other plants.

Particularly, from its popular Dama Senso collection, which are modern and attractively sleek in design, equipped with a water saving dual-mode flush. It is distinguished by an ergonomic seat shape and a high-quality microlift system for smooth lowering of the cover. It is

Russian ceramic sanitaryware exports to main destinations, in thousand US$ Importers of ceramic sanitarywares shipped from Russia, value in 000 US$

Exported value in 2014

Exported value in 2015

Exported value in 2016

Exported value in 2017

Exported value in 2018

World

24,417

24,578

33,402

43,615

44,923

Kazakhstan

17,111

14,049

15,271

19,539

18,932

Belarus

2,433

1,864

3,156

3,853

4,001

Uzbekistan

1,319

2,083

3,390

3,223

3,898

Kyrgyzstan

448

1,089

1,716

2,821

2,624

Georgia

445

809

1,491

1,904

2,604

Ukraine

324

705

1,356

1,868

2,585

Armenia

13

538

1,439

2,030

2,095

Germany

482

882

1,254

1,820

1,583

Tajikistan Azerbaijan

5

321

781

961

1,395

116

148

1,064

929

1,238

Turkey

547

349

419

655

1,059

Moldova, Republic of

310

459

588

1,004

1,022

1

0

1

451

664

390

949

828

918

465

0

0

2

325

217

127

110

117

258

217

Italy Czech Republic France Latvia Netherlands United Kingdom Lithuania

www.asianceramics.com

0

0

127

196

152

81

37

38

66

84

182

115

67

73

47

AC 19-5

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49

Analysis: Sanitaryware

produced in Russia. Other produced popular compact models include Roca Victoria and Victoria Nord.

The Dama Senso products are durable white porcelain and all items of the collection are thought out to the smallest detail, and a wide size and model range allows to satisfy a diverse and vast range of tastes, claims Roca. The washbasins are presented in the form of angular, mini, compact overhead, rectangular, square and oval. The toilet bowls are compact, suspended, and wall-mounted, for a high-spaced cistern. Bidets can be in the floor, wall or suspended version.

Roca Victoria and Victoria Nord collections are widely used in Russia as they are attractive and affordable. Products from the Victoria collection have a classic design that combines convenience and compactness. They are easily recognizable among other analogues.

The line includes toilets and seats to them, sinks and pedestals, bidets, mixers. Toilets of this series are made of porcelain, in the compact version there is a floor and hanging version.

The Victoria Nord collection is a harmony of smooth lines and functionality. It presents furniture for bathrooms, cabinets with a sink, hanging cabinets, canisters, mirrors, and others. The advantage of toilet bowls consists in universality of installation of release of water, both in a wall, and in a floor. The design of models allows to hide engineering communications of release and corrugations, said Roca.

Roca toilets are durable and have different designs, such as, compact floor, added, suspended, monoblock, etc, with different systems of water release, including, universal. Various combinations of technical characteristics help choose a model for any room and any consumer.

Santeri, a reputed Russian brand owned by CJSC Ugrakeram, under Roca group, produces compact as well as standard sanitarywares in its plant located at Vorotynsk of the economically advanced Kaluga Oblast in the Central Federal District of Russia.

Santeri manufactures quality ceramic and porcelain sanitaryware products with a wide range of design series and collections of water closets and washbasins. Santeri compact toilets have gained popularity among consumers for its quality porcelain. It has many compact models, such as, Version, West, Victoria, Vorotynsky, Orion, Sonata, Pro, Forward, Prime, Ultra, Alpha and others.

Santeri’s suspended toilet Alpha emphasizes the modern design of bathroom. Due to its compact size, the toilet fits well into any, even the smallest space. The bowl of the suspended Alpha toilet is made of quality white porcelain. The product, in addition to compact size and elegant style, simplifies the process of cleaning. The seat is made of antibacterial polypropylene.

Santek sanitaryware compact range includes models with two buttons, horizontal release into wall mounted and oblique into the corner toilet. Santek products are inexpensive. Its models include Animo, Alcor, and League. Santek is under Roca group.

Multiple choice…

Russia’s best known and century old large local ceramic sanitaryware manufacturer Kirov Ceramics produces Kirovit and Rosa brand compact porcelain sanitarywares along with standard models. Its compact products are constantly and dynamically updated and expanded, meeting the requirements of various design preferences,

Russian ceramic sanitaryware exports by product types, in tons HS Code

Product label (exported by Russia)

691090

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures (excluding of porcelain or china, soap dishes, sponge holders, toothbrush holders, towel hooks and toilet paper holders)

691010

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures of porcelain or china (excluding soap dishes, sponge holders, toothbrush holders, towel hooks and toilet paper holders)

2014

2015

2016

2017

2018

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

12,872

22,610

29,049

25,387

23,264

2,123

2,508

5,062

8,552

13,352

Russian ceramic sanitaryware exports by product types, in thousand US$ HS Code

Product label (exported by Russia, value in 000 US$)

691090

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures (excluding of porcelain or china, soap dishes, sponge holders, toothbrush holders, towel hooks and toilet paper holders)

691010

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures of porcelain or china (excluding soap dishes, sponge holders, toothbrush holders, towel hooks and toilet paper holders)

50

asian ceramics

AC 19-5

Exported value in 2014

Exported value in 2015

Exported value in 2016

Exported value in 2017

Exported value in 2018

20,851

21,836

26,850

30,678

27,565

3,566

2,742

6,551

12,938

17,359

www.asianceramics.com

Analysis: Sanitaryware

quality and affordability, claims the manufacturer. The designs of products are developed by a creative group of professionals of the company together with leading European design studios and specialists in Germany, Italy and the Czech Republic.

Kirov says each product embodies a combination of beauty and functionality. It markets a wide range of Kirovit brand washbasins.

It informs its experts maximally take into account all the needs and expectations of the customers, constantly expanding the range of products, developing new models and improving their equipment and functionality.

Rosa brand’s standard and compact toilets have good demand in the domestic markets all over the country and also in the neighbouring countries. Rosa compact and small water closet models include Vector, Prime, Elegant, Euro, Lyra, Oka, Premier, Comfort, etc. Kirov says its products are chemically resistant, withstands mechanical stress and has a low porosity value, less than 0.5 percent.

Russian budget grade ceramic sanitaryware manufacturer Oskolskaya Ceramics offers popular compact models. It competes with imported low-budget sanitarywares imported from China and Vietnam, claims the company. Its brand, Ceramics Oskol, and other designed products, specially, its Rainbow series compact sanitarywares are oriented to the local attraction and reasonable price and other adaptabilities related to modern look, water usage and local plumbing systems. Backed by Italian

technology and machinery, Ceramics Oskol porcelain sanitarywares’ water absorption is less than one percent. It also produces standard quality water closets, bidets, washbasins, urinals and others.

Siberia’s Novokuznetsk based Universal sanitaryware factory manufactures various sizes of ceramic sanitarywares, including compact and small toilets for the average and lower end consumers. Universal’s one of the most popular collections is Ob brand. Ob toilets are with classic design, oblique release and anti-splash function, and affordable to the quality and design conscious average segment consumers.

Russian manufacturer Lobnensky Stroyfarfor is known for quality with reasonable price and reliable designs for its compact toilets. Its models include Debut Economy, Optima, Universal Standard, Universal Economy, etc.

Della is another Russian manufacturer of compact and standard porcelain sanitarywares. Its compact toilets are popular.

In addition to simple white coating, it has many beautiful prints and patterns.

Its products are known for quality, original and attractive design, and wide selections.

Along with imported compact sanitarywares, several other Russian compact porcelain and vitreous china sanitary toilet manufacturers, such as, Keramin, Iddis, etc, offers inexpensive and reliable products.

Russian ceramic sanitryware imports by product types, in tons HS Code

Product label (imported by Russia)

2014

2015

2016

2017

2018

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

691090

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures (excluding of porcelain or china, soap dishes, sponge holders, tooth-brush holders, towel hooks and toilet paper holders)

41,580

20,656

13,628

14,440

15,525

691010

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures of porcelain or china (excluding soap dishes, sponge holders, tooth-brush holders, towel hooks and toilet paper holders)

27,139

21,796

9,686

9,940

13,198

Russian ceramic sanitaryware imports by product types, in thousand US$ HS Code

Product label (imported by Russia, value in 000 US$)

691010

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures of porcelain or china (excluding soap dishes, sponge holders, tooth-brush holders, towel hooks and toilet paper holders)

51,252

31,155

21,513

26,393

33,747

691090

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures (excluding of porcelain or china, soap dishes, sponge holders, tooth-brush holders, towel hooks and toilet paper holders)

77,534

37,749

27,679

31,721

33,629

www.asianceramics.com

Imported value in 2014

Imported value in 2015

Imported value in 2016

AC 19-5

Imported value in 2017

Imported value in 2018

asian ceramics

51

Analysis: Sanitaryware

Russian ceramic sanitaryware imports from main supplying sources, in tons Exporters of ceramic sanitarywares shipped to Russia

2014

2015

2016

2017

2018

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

World

68,718

42,453

23,314

24,380

28,723

China

26,521

9,779

6,493

8,729

11,934

Belarus

5,816

4,468

1,734

584

2,154

Turkey

4,552

2,527

1,432

1,543

2,073

Poland

3,772

3,049

2,145

1,711

1,790

Bulgaria

3,210

1,863

1,418

1,377

1,188

Viet Nam

1,113

769

398

629

1,045

Germany

1,283

835

966

1,110

1,037

Czech Republic

1,294

1,021

960

1,142

894

Italy

1,308

990

879

1,269

892

12,947

11,258

2,506

1,359

859

France

501

686

599

859

790

Morocco

365

393

337

529

691

Spain

1,497

1,103

1,114

1,071

592

Hungary

2,022

2,191

943

599

565

Egypt

113

108

109

286

525

Romania

396

422

301

324

398

Portugal

53

133

159

380

379

Austria

319

232

188

247

208

India

222

101

160

96

185

Thailand

239

190

134

124

113

Switzerland

155

101

65

109

81

Tunisia

NA

NA

NA

NA

55

United Kingdom

48

32

50

44

54

351

45

38

13

37

Mexico

1

2

11

29

34

Hong Kong, China

2

3

10

17

32

Kazakhstan

88

NAÂ

0

11

17

United Arab Emirates

NAÂ

1

0

0

17

6

5

5

7

12

Iran, Islamic Republic of

24

11

26

44

11

Korea, Republic of

20

7

15

16

11

Netherlands

84

41

30

10

11

6

3

15

16

10

103

42

30

15

4

47

13

14

11

4

193

0

21

5

3

Ukraine

Sweden

Japan

Latvia Finland Lithuania Serbia

52

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www.asianceramics.com

Analysis: Sanitaryware

Russian ceramic sanitaryware imports from main supplying sources, in thousand US$ Exporters of ceramic sanitarywares shipped to Russia, value in 000 US$

Imported value in 2014

Imported value in 2015

Imported value in 2016

Imported value in 2017

Imported value in 2018

World

128,785

68,904

49,192

58,114

67,376

China

36,548

13,569

9,521

13,290

18,822

Germany

7,611

3,978

5,625

6,483

6,578

Italy

7,773

4,782

4,552

5,616

5,505

Poland

6,863

4,444

3,779

4,103

4,258

Turkey

8,946

3,998

2,855

3,300

4,218

France

2,481

2,847

2,548

3,525

3,550

Spain

4,608

2,900

2,936

3,223

2,416

Czech Republic

3,710

2,237

2,012

2,474

2,363

Belarus

6,854

4,411

1,569

914

2,355

Hungary

5,661

4,809

2,796

2,250

2,274

Viet Nam

1,508

1,020

550

815

2,065

Bulgaria

6,563

3,115

2,196

2,224

1,903

Romania

1,245

901

877

1,190

1,598

Egypt

398

292

310

777

1,573

Morocco

876

887

746

1,098

1,361

Austria

1,655

1,051

968

1,469

1,320

Ukraine

19,113

11,179

2,676

1,825

1,220

162

288

349

813

1,048

1,049

521

430

979

817

657

441

351

383

378

Japan

91

56

71

101

339

India

570

225

351

82

238

1,695

180

162

74

201

Netherlands

375

150

178

145

179

United Kingdom

242

143

157

130

160

40

20

45

129

87

0

0

0

0

84

120

0

0

6

75

Mexico

4

4

19

64

66

Latvia

22

19

79

81

59

Hong Kong, China

5

9

15

30

54

United Arab Emirates

0

13

3

3

52

Taipei, Chinese

22

10

15

36

21

United States of America

45

21

37

18

21

Finland

539

171

195

139

20

Lithuania

139

34

45

31

16

Portugal Switzerland Thailand

Sweden

Korea, Republic of Tunisia Kazakhstan

www.asianceramics.com

AC 19-5

asian ceramics

53

PO RT RE IA L EC SP

USA – China

trade war bites tile makers

W

hen President Trump unveiled plans to launch a trade war with China early last year, Marisa Bedrosian Kosters, an executive at an Anaheim-based ceramic tile and stone retailer, sprang into action.

Like many of the tens of thousands of retailers who move Chinese goods through Southern California’s giant port complex, Bedrosians Tile and Stone turbocharged its imports to get ahead of the threatened tariffs and other duties.

But when its new supplies from Foshan reached the Port of Long Beach, the company, which has outlets in 10 states, ran into a massive traffic jam. With thousands of extra containers piled up dockside, Kosters struggled to get her tiles off ships and onto trucks, incurring thousands of dollars in extra costs assessed by the terminals. And now she faces a supply glut. Her 389,000-square-foot tile distribution center is overflowing, and she has had to store more than 7,500 pallets outside.

“There’s no space inside,” she said. “We don’t have anywhere to put the materials.” Meanwhile, despite the bottlenecks, “We’re having to bring in more because there’s so much uncertainty about what country is being hit next.”

Perhaps nowhere in the United States is the tariff war with China having a more tangible effect than at the twin ports of Los Angeles and Long Beach, the nation’s leading gateway for trans-Pacific trade. The complex handles 47.5% of U.S. containerized trade with China — including toys, bicycles, furniture, electronics, sneakers, scrap paper, cotton, soybeans and auto parts.

The tariffs have thrown a giant wrench into Southern California logistics industries, rippling through a broad web of companies that handle shipping, trucking, railroads, warehousing, construction, manufacturing and farming. Nearly a million jobs in the five-county region are tied to international trade.

The tariff fallout has “really gummed up the operations of the supply chain,” said Eugene Seroka, executive director of the Port of Los Angeles. “We’ve got a lot of cargo coming in that just sits. Containers are stacked high. Truck lines are long. And warehouses are bursting at the seams.”

Southern California’s warehousing and distribution complex, the largest in the world with 1.8 billion square feet within 50 miles of the ports, has less than 1% vacancy, down from the usual 5% to 7%, he added.

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The effect on corporate decision making may be less visible, but it is worrisome, Seroka said.

“A lot of money is sitting on the sidelines,” he said. “Do you buy more trucks? Do you hire more people? Do you build another warehouse? Do you invest in digital technology? Few companies want to invest at this point in time in the supply chain, not knowing where it is going in the future.”

Over more than a century, the twin ports, which moved $506 billion worth of goods for 212,000 companies last year, have thrived. Container traffic last year reached record levels. The more than 17.5 million units of cargo that moved in 2018 marked a 20% increase over five years ago.

But since last April, as the Trump administration began slapping tariffs on Chinese products — eventually escalating them to 25% on $250 billion worth of goods — the ports’ growth pattern has been upended. China pushed back with tariffs on $60 billion worth of U.S. exports.

At the twin ports, containerized imports from China surged in the summer and fall, and then fell by 11.9% in the first four months of this year compared with the first four months of 2018.

Over the same period, exports to China plummeted by 27.4%.

Now Trump’s threat to tariff an additional $300 billion in Chinese imports is creating even more uncertainty. It would mean a tax on nearly everything that the U.S. buys from China and would probably trigger more Chinese retaliation.

“There is a lot of concern about jobs,” said Mario Cordero, executive director of the Port of Long Beach. “We have 10,000 dockworkers. If they’re not called to do work, they don’t earn money. The less cargo we have, the less demand for logistics workers, for warehouse workers. Whether you’re a trucker or a clerk or you work in manufacturing, the tariffs affect the whole supply chain.”

Jock O’Connell, a trade expert at Beacon Economics, a Los Angeles consultancy, foresees “a prolonged and bruising period of trade turbulence” between the U.S. and China. Tariffs on the additional $300 billion in Chinese goods could take effect as early as July, he said, and another import surge could tie up California ports as companies seek to get ahead of the new taxes.

As China retaliates, it will hammer companies that had identified that fast-growing nation as a prime opportunity for expansion. “It won’t have

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a catastrophic effect on the Southern California economy,” O’Connell said. “But if you are a company struggling to do business with China, it could be devastating.”

Although they have set records for growth, largely thanks to imports from China, the Southern California ports have lost market share in recent decades to competitors on the East and Gulf coasts and in Canada and Mexico. The trend accelerated after a 2014-15 labor conflict that led to massive congestion.

Logistics experts worry that tariff-related bottlenecks could encourage shifts to other ports.

“The supply chain needs a lot of work,” said Weston LaBar, CEO of the Harbor Trucking Assn., which represents several hundred local trucking firms.

“Now we’re seeing many of the same issues we saw during the complete gridlock in late 2014 and early 2015.”

But not as severe. Then, ships stacked up for days, unable to unload as dockside work slowed during contentious contract negotiations between the shipping industry and the International Longshore and Warehouse Union.

But as with that earlier snarl-up, tariffs are a threat to the intricate manufacturing supply chain that the ports support, LaBar said.

“So, for instance, China imports scrap metal from the U.S. and recycles it into slab steel. A steel company in Los Angeles imports it back from China and turns it into rolled steel for the aerospace industry,” he said.

“Now that L.A. company, because of the China tariffs, has had to source steel from Brazil. But there’s a cap on how much slab steel they can import from Brazil. And there are hundreds of manufacturers all over the country looking at layoffs because of these tariffs.”

Snafus at the port complex have been “a nightmare,” said Steve Hughes, president and CEO of HCS International, an auto parts consultancy. As companies scrambled to get ahead of the tariffs by ordering months’ worth of inventory, containers normally stacked three or four high after being unloaded from a vessel were piled seven high, he said.

“Imagine yours is at the bottom: You have to unload and stack six others before you can get to it,” Hughes said. “One client called me at the end of January. A large importer in Torrance. He had 10 or 15 containers stuck inside a terminal since November. They were actually lost.”

When the containers were finally found, Hughes added, the terminal, owned by a global shipping company, charged the importer tens of thousands of dollars for exceeding the usual three-day storage window. Under the controversial practice known as “demurrage,” Hughes said, “you have to pay before you can pick them up. You are blackmailed.”

The import surge also spurred ocean carriers to ignore agreed-to rates in signed contracts with cargo owners, Hughes said.

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“Freight volumes went up,” he said. “Ships were full. Rates went from about $1,000 per container unit to $2,000. If you didn’t pay, your cargo sat in Asia.”

As the trade war escalates, the most economically vulnerable workers will suffer, predicted O’Connell, the Beacon Economics trade expert.

“Truck drivers are paid by the load, and fewer loads impact their income,” he said. “And warehouse workers from Los Angeles and the Inland Empire up to the San Joaquin Valley are mostly temps.

They are sent to work by temp agencies on demand, and they are sent home when the number of boxes declines.”

Despite talk of moving supply chains from China to Vietnam, Malaysia, Bangladesh or West Africa, he said, “How fast can you build a new manufacturing facility and move all your component suppliers into a cluster in a new country? We are already starting to hit a wall in Vietnam where the transportation sector — with inadequate roads and ports — is overwhelmed.”

Trump has contended that U.S. manufacturers can fill the void as importers exit the China trade. But like many U.S. business executives, Kosters, the Anaheim tile merchant, doesn’t see how.

“For ceramic and porcelain tile, domestic producers currently only have capacity to produce about 30% of the U.S. market demand,” she said. “China is the largest exporter of ceramic tile to the U.S. [with] 31.5% of U.S. imports in square feet in 2018.”

Sourcing her inventory from other countries would mean “discontinuing more collections than I would like to think about and having to trash tens of millions of dollars in marketing materials,” she said. “Our company will also need to reinvest millions of dollars in marketing collateral for new replacement collections.”

US TILE REPORT GRAPH

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PO RT RE IA L EC SP Kosters is keeping a stiff upper lip.

“We’re doing the best we can to anticipate what the next moves will be and what other countries might be affected, or product segments,” she said. “We’re going to come out fine on the other side, but it’s still a huge, huge transition.”

The Vietnam issue

Companies operating in China are facing stiff increases in tariffs on exports to the United States as the trade war between the two countries escalates.

So, there's an incentive for manufacturers in China to move their production to countries not subject to these tariffs.

And one of these beneficiary countries has been Vietnam, China's increasingly business-friendly southern neighbour.

So what can we say about changing Chinese investment into Vietnam?

The first thing to note is that foreign firms, including those from China, have long taken advantage of Vietnam's cheaper labour and attractive business environment, well before the imposition of the first round of US sanctions last September.

"Vietnam has already been gaining as wages have been rising in China," says Mary Lovely at the Peterson Institute for International Economics, a US-based think tank.

But there are also indications that investment has accelerated since the imposition of US sanctions on China last year.

In the first four months of 2019, Chinese investment into Vietnam has already reached about 65% of the total for 2018.

So there's certainly been an upsurge in Chinese investment, but how much of this is to do with tariffs?

Vietnam's economy has grown rapidly in the past decade.

Its manufacturing industry has done particularly well, with multinationals like IKEA, for instance, bolstering operations there.

And while the growth of industry is a long-term trend, experts say there's growing evidence that an increasingly stringent US tariff regime on Chinese goods is driving further investment into Vietnam.

"Many companies were investing in production outside of China, particularly in South East Asia, before the current trade conflict", according to corporate law firm, Baker & McKenzie, based in Hong Kong, but "the recent trade friction has simply accelerated this evolution."

There are, however, clear signs that the pressures of rapid growth in Vietnam are taking their toll.

There were just over 14.5 million people in 2018 working in industry in Vietnam, according to the International Labour Organization.

That compares with more than 200 million in China.

Labour costs in Vietnam are rising, and the pool of new labour to draw on is much smaller than for its giant neighbour.

The ability for Vietnam to continue to absorb foreign investment will also be constrained by rising land and factory costs.

According to JLL Vietnam, a firm that specializes in real estate, industrial rental prices rose by 11% in the second half of 2018 in southern Vietnam. This has been attributed to the shift of producers from China, partly because of tariffs.

Sanctions?

For firms moving all or part of their supply chains from China to Vietnam to avoid US sanctions, there is a risk that the US could take action against Vietnam as well.

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Some multinationals are taking on a "China plus one" approach - firms keeping a foothold in China while also operating in a lowwage economy elsewhere in Asia.

The US administration is aware of the shift into production operations outside China as a way to avoid sanctions.

President Trump recently tweeted: "Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That's why China wants to make a deal so badly!"

In the escalating trade war between the United States and China, the label "Made in Vietnam" may not in the future be enough to avoid US tariffs.

Indeed, Vietnam (as we’ve written elsewhere in this issue) is already seeking to “outlaw” the re-labelling of Chinese goods through Vietnam. Added to that, the domestic tile industry in Vietnam is also under pressure from imports…and the last thing it needs to do is attract even more.

Domestic industry keeps growing

While the US economy continues to enjoy an excellent state of health, the US ceramic tile market is struggling to maintain growth. Tile consumption rose by just 1.2% last year to an estimated 288 million sq.m (around 4 million sq.m more than in 2017), well below the levels of growth of the last eight years. This is due partly to the slowdown in the real estate and building renovation sector and partly to the growth of LVT, which is capturing market share from ceramic tile. At the end of 2017, tile accounted for 14.3% of the US floorings market in value compared to the 9.3% of LVT, which however is advancing at a rate of around one and a half percentage points a year.

In this context, competition in the ceramic tile market is becoming tougher for all competitors. The US industry bore the brunt of the slowdown last year. Domestic sales of US tile dropped by 5 million sq.m (down 5.6% from 89.4 to 84.4 million sq.m). This marks the first year-over-year decline in domestic shipments since 2009, reducing the market share of local products to 29.3% of total US tile consumption.

On the other side, imports increased from 195 million sq.m in 2017 to 205 million sq.m in 2018 (year-end figure), a result, however, which is attributable to just three countries: China, which has extended its leadership with a 6.5% increase in exports to the USA compared to 2017; Spain, which has seen 25.8% growth from 23 to 29 million sq.m despite a 13% fall in average price (CIF&Duty) in the space of two years; and Brazil, which exported 14.7 million sq.m to the USA (4 million sq.m or 37.7% more than in 2017).

The other big exporters are having a tougher time. Mexico has continued to see a decline in sales (4.6% down on 2017 to 35.2 million sq.m), and while Italy remains the top exporter in terms of value it lost 3.6% in volume to 34 million sq.m. Similar falls in exports were experienced

by Turkey (11.9 million sq.m, -2.4%), Peru (5.4 million sq.m, -12.5%) and Colombia (1.5 million sq.m, -20.8%).

Although volumes are still low, India performed strongly in 2018 with 123% growth in exports to the USA to reach 1.6 million sq.m.

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ADVERTISER FEATURE

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in carbon emissions. Plus, the inks do not require using chemical solvents when cleaning the press. The inks produce accurate, highquality colour for reduced waste and rework.

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About EFI

EFI™ is a global technology company, based in Silicon Valley, and is leading the worldwide transformation from analogue to digital imaging.

We are passionate about fuelling customer success with products that increase competitiveness and boost productivity. To do that, we develop breakthrough technologies for the manufacturing of signage, packaging, textiles, ceramic tiles, and personalised documents, with a wide range of printers, inks, digital front ends, and a comprehensive business and production workflow suite that transforms and streamlines the entire production process. (www.efi.com)

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Talking Shop

Talking Shop The Fyre Fiasco As part of a mid-year review, in this issue’s talking shop, our guest columnist William Hunter, provides his unique spin on all things “status” and questions if the money spent on ever-more expensive ceramics is really a castle built on sand…

There is a documentary on Netflix that is well worth watching; Fyre: The Greatest Party That Never Happened. It is about Billy McFarland and the planned Fyre Festival scheduled to be held at a private island that failed spectacularly, never happened and defrauded thousands out of millions of dollars.

Billy McFarland was supposedly a businessman – he gained fame and some notoriety by issuing an invitation-only charge card that was targeted at aspirational millennials and other people who seek the high life and exclusivity usually reserved for the very rich or very famous. The clever bit about this card was that it didn’t really deliver on its promises very much in return for the fees associated with actually buying one but it did appeal to the status-conscious. The launch of the card was funded by equally aspirational investors.

Next up was actually rather a good idea, McFarland and his friends had an idea for an app that would allow event organisers to book various talent, musicians and DJs and such and cut out the middlemen of agents thus cutting costs. It is not an incredibly original or unique idea but it would offer a service. Indeed, I know people working on such types of services now using blockchain technology (which as we’ve mentioned in previous articles allows transactions to be transparent, secure, unchangeable and removes the need to have to trust the other party in a transaction). Well Billy McFarland didn’t have any of that so he decided to hold a massive, luxurious, exclusive festival to advertise his app). Because that’s just what you do when you want to build a customer base, I guess?

So, Fyre Media (another McFarland creation) launched Fyre Festival and the fun really started.

Getting rich…quick Not having ever held a festival wasn’t going to stop McFarland, he managed to get a famous DJ / Rapper, Ja Rule (no, I don’t know either) to appear as co-organizer and they went to a private island, previously owned by Pablo Escobar (of pharmaceuticals fame) and shot a very glamourous video showing Ja Rule, McFarland and a host of models including Kendall Jenner, Bella Hadid and Hailey Baldwin (no, I don’t know either) showing them all having fun, running on beaches, drinking champagne and splashing around in the sea, hanging out with other famous and beautiful people and having a great time; smiling, laughing and acting in suggestive manners. The sort of thing status-conscious people want to do with celebrities, I guess. The festival promised pretty much everything; music, art, models, exclusivity, Michelin standard

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food, luxury accommodation, adventure and all on an uninhabited desert island previously owned by a drug lord.

Things started to go wrong and quickly. First, the custodians of the island stipulated that no connection to Pablo Escobar could be stated in advertising or be made public. Since McFarland had blown that rule the custodians withdrew the permission to use it. Fyre had to find a new island but couldn’t find a private one so they rented a part of a big island and forgot to tell anyone – they simply doctored maps to make it look like a private island.

Secondly whilst Fyre might have had good app developers and public relations people it hadn’t got any experience at all of organising music festivals. Or organising food, or organising accommodation, or organising sanitation, or organising fresh water, or organising security, or organising the private jets that were going to bring festival goers to the festival.

No matter! They just ploughed ahead anyway.

When experienced organisers pointed out organising a festival of such complexity would take at least a year Fyre decided they would put their festival on in a matter of weeks. There was no need to listen to reason or to experts – pure optimism and hard work would be enough.

Only it wasn’t. As deadlines approached it became obvious to anyone with sense (or that wasn’t deluded or who wasn’t simply a fraudster) that the Fyre Festival could not be delivered as advertised – if it could be delivered at all. In an attempt to stick to the schedule McFarland borrowed more and more money often misrepresenting the value of his company and falsifying documents to make it appear that Fyre was rich and things were going to plan.

The balloon’s gone up…

Late in the day someone experienced in event organising came on board and when he realised how chaotic and of course the event organisation was he recommended that the festival should be postponed, that the people who had bought tickets should be informed, that the festival be simplified and the attendees advised in advance of the changes so their expectations could be managed. Sound advice – which was ignored.

All the while the PR machine kept churning out the message that it was going to be a tremendous Festival. One of the key aspects to the advertising was social media and being somewhat unregulated the use of ‘influencers’ – the same beautiful people in the PR video using their

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Talking Shop

social media presence too, well – advertise what a marvellous, not to be missed event this was going to be. These people of course didn’t know and didn’t care what the reality was – they got paid anyway.

Well, of course, come the festival weekend it was a total fiasco.

People who had bought tickets to stay in luxury accommodation on a private island and watch a score of famous musical acts and hang out with models in luxurious condos, whilst eating lobster soon found themselves dumped at a remote location on an inhabited island after flights from Miami on elderly 737 charter aircraft. There were a few FEMA disaster relief tents, wet and soiled bedding, insufficient sanitation and water. Food was processed cheese sandwiches. One local act played a few songs on a stage, the great party was the car park of a local bar.

In the end, those that actually got to the island had to await emergency chartered flights to get them home. There was no sign of the organisers.

The headline acts had long since advised they had pulled out. So had the catering, so had potential new investors.

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Only a day or so before the spectacular failure Fyre Media ‘executives’ continued the delusion that things would be okay – ‘Let's just do it and be legends’. Honestly.

But it was funny as hell – who doesn’t like schadenfreude? To laugh at ‘status-conscious’ people who think they will be able to pay a couple of thousand dollars and have a luxury adventure experience with beautiful people on a beautiful island, eating wonderful food, drinking champagne and having a marvellous time with other status-conscious people?

The reality though is that the local people on that island thought the festival was going to be real. Local businesses invested in food and drink, employed people to try to build the stage and accommodation, they, of course, were not paid, they, of course, are out of pocket – they, of course, could not know that at best it was a pipe dream, that its objectives were never going to be met, that the people in New York living in luxury accommodation, who managed to woo investors – never had a chance of delivering. The real victims maybe aren’t only the ticket buyers who were scammed – the victims are the people who simply trusted the organisers and trusted the authorities to oversee such events and make sure that they were legal and deliverable. They are the people left to pick up the pieces, to endure hardships when salaries and bills are not paid, to try to rebuild.

Billy McFarland never was a businessman; he didn’t run anything successfully – he borrowed money and spent it on himself. He conned people whether it was creating false documents to make it look like his ventures were earning money or his companies were worth a lot of money (in one case he claimed Fyre Media was worth US$90 million yet authorities have found it only ever did US$60,000 business). Or whether it was selling tickets to events that would not ever happen – or making promises that he could never keep. Did he believe his only publicity or was he just a simple but brazen crook?

Billy McFarland is in prison doing 6 years for wire fraud and falsifying documents. He faces class action lawsuits of over US$100 million.

People who were associated with him claim that he conned them too.

It’ll drag on for years but whoever gains from it won’t be the workers or the people who bought the dream and bought the tickets.

www.KeramischerOFENBAU.de

Phone +49 - 51 21 - 74 74 00 · Fax +49 - 51 21 - 74 74 74 Keramischer OFENBAU GmbH · Benzstraße 5 · 31135 Hildesheim · GERMANY

Like something else I could mention – but at least McFarland is in gaol.

Unlike that other thing.

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Insight

RUSSIA Table 1 Table 1

6,473,221 1,614,264 1,571,074 995,543 742,306 632,108 686,626 259,079 259,303 215,561 230,687

Kazakhstan Belarus Germany Kyrgyzstan Ukraine Latvia Azerbaijan USA Italy Romania Uzbekistan

Leading unglazed tile export destinations (sq metres)

12,093,689 8,170,803 8,039,240 3,918,888 4,099,764 2,821,258 2,587,370 751,377 402,451 277,721

Leading unglazed tile import sources (sq metres)

Table 1

Table 1 2015 2016 2017 2018

Spain Italy Belarus China Ukraine Germany Poland Turkey Portugal Iran

2015 2016 2017 2018

16,664,476 7,273,233

32,092,444

43,790,989

Total unglazed tile imports (sq metres)

1,297,422 1,715,334 1,884,745 2,048,963

Total sanitaryware exports (no. items)

1

1

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Table 1 Kazakhstan Belarus Uzbekistan Kyrgyzstan Georgia Ukraine Armenia Germany Tajikistan Azerbaijan

954,320 120,153 203,407 126,260 87,340 74,929 98,256 89,095 72,646 53,912

Table 1 2015 2016 2017 2018

Leading sanitaryware export destinations (no items)

2,149,862 1,185,817 1,242,312 1,388,815

Total sanitaryware imports (no. items)

Table 1 China Germany Italy Poland Turkey Czechia Belarus Viet Nam Bulgaria Morocco

547,044 46,713 47,083 92,875 95,118 52,633 134,762 36,076 57,331 40,644

Table 1 2015 2016 2017 2018

Leading sanitaryware import sources (no .items)

4,358,284 4,181,974

21,199,055 15,041,668

Total unglazed tile exports (sq metres)

1 Table 1 China Belarus Germany Poland Turkey Romania United Arab Emirates Thailand United Kingdom China, Hong Kong SAR

Table 1 Kazakhstan Belarus Rep. of Korea Armenia Ukraine Azerbaijan Italy Areas, nes USA Kyrgyzstan

222,265 196,472 16,617 35,821 96,058 173,331 6,635 13,318 3,481 15,989

Leading tableware export destinations (Kg)

1

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21,968,601 7,097,231 155,036 599,080 406,514 620,840

1

246,643 113,761 142,798 168,701

Leading tableware import sources (Kg)

1

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Hunter and the hunted

“ I n di a h a s to i mprove its s i nfra st ru ct u re a n d t h g u tho a ddre ss in equ a lity" India or China for the Future?

Dear Diary,

you tend to think ‘factories’ whereas with If you think of China’s development over the last 20 years simplified that sounds about right. All the vastly India you tend to think ‘call centres’ – in a nutshell, and service line it seems I’m often talking to er custom a call if but China in Made products in the house are an Indian. ructure projects, building powerplants, China it is said is better at doing ‘hard’ business, infrast that to create anything like a big given really ing surpris Not es. factori ports, roads, very big need access to a lot of investment. This you if ially espec rt company will require government suppo foreign governments are (at last) realizing is but one of the reasons, of course, that increasingly a or Huawei) means that you are indirectly Alibab (think ny compa e that dealings with any big Chines they want without much worry of what do can dealing with the Chinese Communist Party, who from legal and reputable sources least at e financ getting of m proble the being replaced. In fact, Especially at a time when China back. sses busine e is one thing reported to be holding Chines ack by major export markets pushb a is needs a far more dynamic approach especially as there ment favours its Stategovern the as rbated exace is m proble The at Chinese trade imbalances. or Tangshan #3 the big #1 y Factor r Tracto called Owned Enterprises. Though they are no longer of trying to privatise years many so after lly ironica what (some d Owne State companies still are ial support (interest financ other and loans on tages advan dinosaur SOEs) and thus not only get recruiting talent, itions, acquis and rs rates, repayment terms) but also get favoured in any merge that made China things The on. so and pment develo and ch resear , access to land for development Chinese now.

China apping handic are that such a behemoth in the past are the same things many workers are poorly too t, efficien aren’t nies compa the tive, innova not companies really are ing superiors and elders (ultimately educated, will accept menial jobs and due to fear of upsett e the box or do something challenging in everyone is scared of The State) rarely will think outsid . case it upsets the wrong people it is approved, things can develop in You can say though that within the system, as long as comprehensive that is now compared to unusual and surprising ways. Look at WeChat and how tanding, the CCP knows everything unders the with sly, Obviou App. Whats a Western alternate like you do on WeChat. Everything. has a more entrepreneurial attitude.

On the other hand, India seems to provide services and an equivalent to Alibaba, TenCent or of think to le strugg I India of think I Outside of TATA when circuits but what do you think of for India? ted integra or nics BaiDu. You can think of Chinese electro nds, medicines, refined petroleum and Checking India’s main exports, we can see jewellery, diamo heard of. The automobiles thing though even never I’ve list 10’ ‘Top automobiles; nine names on the bought or copied western models or or ent is interesting. China basically relied on foreign investm Indian roads and Indian pockets. A suit to s model own its ped develo India entire production lines. in each country. airport the of out step very noticeable difference as soon as you g up on the 1980’s it could rely openin started it China has had notable other advantages, since s e citizen and sharing common language on the rich countries around it, many with ethnic Chines or simply customer/supplier relationship ent investm ss busine and culture to invest money and also markets China needed. It is almost export to bring to China the management skills, technology and pro-unification when if it wasn’t being not for days these Taiwan g amusing to hear China beratin have struggled to adapt and would China etc. oreans for the Taiwanese and Hong Kongers, Singap ble skills and talents invalua in t ns brough develop as fast as it did. But also, the Japanese & Korea West Coast.

USA’s the to g shippin for nient conve is it China & technology. It is also a benefit to China bring to d locate who world the over Never mind the significant numbers of expats from all diverse skills and experience.

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

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India didn’t have that & still doe several of which it has politica sn’t. It’s surrounded by poorer countries with far less to l Antarctica hardly offers a vas and military frictions with – or those countries have strif offer and e of their own. t market for exports on the other side of the Indian Oc less & less diverse regional ean; India has exp population that is still growin ort business to help it develop and add value. It has tho g. rote learning it does have fair China’s is ageing and will decline. Whilst China educat ugh a young es through mostly equality of the sexes where education is said to be sup erior to Chinese however due as India still has to address inequality. Indian endeavours are rewarded; to however, coverage is inadeq widespread English skills and individual uate for both basic & higher again, I recall a law lecture r in Singapore telling me Ind education. Then ian learn the laws and statutes the Indian students were ver students did better as whilst Chinese could y happy to debate and argue anyone! Something familiar to those that do business in any point with India.

So, India has to improve its infrastructure and address inequality if it is to integrate global economy. It needs to mo make it easier to do busine ss, easier to move people and re into the and get the full value out of its population not just its rich er males. It needs to leverag products around democracy and its openne ss. e its freedom, its At the recent Indian Ceram ics exhibition in Gandhinagar since I last attended two yea , I was struck at the improv em rs halls in a modern purpose-b ago when the show was in Ahmedabad. It now covers ents made uilt exhibition centre. The sho two and a half obvious as well as a strong w was well attended with the Chinese contingent and a num big seemed busy and I’d expect ber of foreign visitors and exh internationals that it would become a larg ibitors. It er and eve n more important show in the The tile industry centred in future.

Morbi, Gujarat is in many res reported in Asian Ceramics pects Indian ceramics succes recently there are issues with s sto ry alb eit as India ceramics industry gen corruption that still need a solu era would choose China as eas lly usurp China now China faces a multitude of threats tion. But, can ily the winner but I’m not so ? In the past, we sure now.

A lot of eyes will be on the upcoming Indian elections to see as hundreds of millions of Ind ians vote in a contest that ma if Prime Minister Modi will be reelected Even though Modi won a lan dslide last time it was on the y be closer than previously expected. a swing against could see back of a low percentage of him and his party, the BJP the vote so ousted. For whilst Modi has improvements; reducing infla made significant tion, robust growth, improv ed security and attempts to people are questioning his tackle corruption, record. Young Indians struggl e the rural communities who are (as usual) left behind by to find employment, there is distress in progress. A recent military Pakistan is leading to questio confrontation with ns about him there is the risk tha of why it happened. With Modhi making the succes ses of the past t the opposition will make the that there is a swing against failures about him also and him and therefore the BJP. Thus, unemployment and the will unite so mentioned reflect on Modhi and not regional and global inequalities challenges that any party wo ‘strong on security’ mantra is being questioned as the uld face. Even the recent against terrorists is being trea ted with skepticism. Neverthe military actions which claimed success allowing for regional alliance less , the opposition is splintered s simply being ‘anti-Modhi’ and even may not be enough.

Whatever happens India and thu s the cer am ics industry needs to address China which doesn’t have how it to worry about democratic choice – Chinese leadershi can compete with Year Plan which has to be p can unveil a 5 rubber stamped. For India to better to avoid the politics of personality and focus on continue to develop and improve it might be ma become far bigger and effi cient global business power nifestos as India has an opportunity now to but only if it embraces a lon short-term point scoring. g-term plan not Until next time Your humble servant William Hunter

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