Prospects for growth in Europe Inker

PROSPECTS FOR

GROWTH IN EUROPE

Inker d.d. is a Croatian manufacturer of sanitary ceramics, located in the small town of Zaprešić, near Zagreb, capital city of Croatia. The managing director, Mr Christian de Haro, updated us on the recent market situation. Vanja Švačko reports.

Inker started as a manufacturer of ceramic tiles and porcelain tableware in 1953. Very soon it expanded its production to sanitary ceramics, which remain its main activity. Being the only domestic manufacturer of similar products in Croatia, Inker has been widening its product portfolio (washbasins, toilet bowls, bathroom furniture, bidets, bathtubs etc), using the best raw materials from western European mines.

The end of the 20th century brought an unpleasant reality check to many businesses in the Balkan region. Strongly affected by the war, the market rapidly changed while sudden economic crises have slowed down any sign of development. For Inker, significant positive changes started in 2006, when the Spanish group Roca Corporacion Empresarial SA decided to acquire the company. The membership in the Roca group, which is recognised as a benchmark in the production and design of bathroom products, helped Inker to become part of a global corporation that is number one in its field.

In transition

The experience of Inker mirrors what has been happening with many companies in the former Yugoslavia. Following the loss of domestic markets due to political turmoil, investing in modern equipment and new technologies was the only viable option to stay competitive in European markets.

After 2006, Inker introduced innovations in design and the functional and environmental features of its products, the quality of which was tested and approved by European quality standards, German DIN and Dutch KIWA. The company has gained some new markets in Europe in addition to its long-term clients such as Italy, Germany and the Netherlands. This favourable period ended up with an annual turnover of €20 million.

“Upon becoming a subsidiary of Roca, Inker has developed significantly,” explained Mr De Haro. “However, not only did Roca have to invest in modernisation and production of new lines, but it also put a lot of work in establishing economic relationships among former partners in the Balkan region, especially between Croatia and Serbia.”

Former Yugoslav regions Macedonia, Slovenia, Serbia, Croatia and Bosnia were importing 50 per cent of Inker’s products. In the last few years production and sales have been strongly influenced by economic crisis and the decrease in market demands. Two years ago Inker sold its tableware division and focused on the production of sanitaryware that now brings in all of its revenue.

“Investments have changed since our focus on industry sectors has changed. Our production is mostly linked to the construc-

tion sector, which is currently going through hard times in southern Europe. The market has experienced a drop of around 50 per cent since 2008 and our sales are affected significantly,” said Mr De Haro. “We had to reduce our production, the number of employees and currently we are running only 60–70 per cent of our production capacity. However, we strongly believe that in the next few years the situation will get better.” Thinking Europe

In 2013, Croatia will become a member state of the EU. Fast growth in its tourism sector had already in 2012 accounted for one-third of the country’s GDP. Croatia is certain to attract even more tourists from abroad, which would increase demand in the construction sector.

On the other hand, it is important to mention that currently the majority of the Balkan countries that are Inker’s target customers are signatories of the Central European Free Trade Agreement (CEFTA), under which all products manufactured in Croatia can be exported to all CEFTA members without any customs duty. “But after Croatia’s accession to the EU, Serbia will have a customs duty for our products, which would further affect our export,” added Mr De Haro. “This is a big problem

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for Croatian industry overall, since Serbia is one of its major customers. However, customs duties are supposed to be reduced to zero in 2014.”

Despite the fact that today Inker is employing 195 people and has a turnover around €10 million, which is a significant change from 2007, its efficiency has grown over these years thanks to major investments in the mixing of raw materials, new installations for casting, new glazing facilities etc. According to Mr De Haro, Inker is benefiting from these facilities, although not to its full capacity due to reduced production volumes. The company also stays active in researching new models and designs that respond to the customers’ demands and at the same time to the requirements of environmental issues.

“Some of our new models that are designed on the group level are significant examples of products that make you particularly conscious about the environment. We have started a project whose goal is to eliminate any residue from our factories. Year by year we are reducing this amount by utilising it in our own factory or selling it to cement factories,” explained Mr De Haro. While less internal research is happening in its subsidiaries, the main projects are within Roca.

Inker demonstrates a robust corporate culture that will be needed for the company to take a leading position in the region when the market becomes favourable. Croatia’s forthcoming accession to the EU could enable companies like Inker to be in the lead of the country’s long-awaited economic recovery. n Visit: www.roca.com