CASTELL6N (SPAIN) ~t QUALIWL 2004 THE BRAZILIAN CERAMIC TILE INDUSTRY Anselmo O. Boschi Laborat6rio de Revestimentos Ceramicos - LaRC Departamento de Engenharia de Materiais - DEMa Universidade Federal de Sao Carlos - UFSCar Rod. Washington Luiz, Km. 235 Sao Carlos, S~ Brazil ABSTRACT W~th a production of 508.3 'million m' in 2002, a growth of 7.4% in relation to 2001, and an internal market of 453.6 million m', Brazil is today the 4/ h largest world tile producer and the second largest consumer market. The Brazilian tiles export reaches 121 countries and have grown 24.3% between 2001 and 2002. The Brazilian ceramic tile industry has reached this position through a steady, continuous and fast growth and, in keeping the present growth rate, will soon reach the production of Italy and Spain. The aim of the present pt:zper is to present a brief overview of what lies behind such an extraordinary achievementfor a third world country. P.CI - 329
!I QUALICt2JG2004 CASTELL6N (SPAIN) 1. THE INTERNATIONAL MARKET The world ceramic tile production in 2002 totalled 5904 million rrr', a growth of 10.4% in relation to 2001 due almost entirely to Asian countries (China, India, Iran and Vietnam) and Brazil. Figure 1 shows the variation of the production of ceramic tiles of 4 of the major worldwide producers, Spain, Italy, Brazil and Indonesia between 1999 and 2002. China was left out to improve the perception of the variation through time. 700.,-- - - -...""""" """""......-..., 600 :: SOO o ::::i oj :E 400 :: a til 300 1999. 2000 0 2001 0 2002 200 100 SPAm ITALY BRAZIL mootlesia Figure 1. Production of ceramic tiles from 1999 to 2002 by countrf". Production in Italy is decrea sing, while it is gro wing in Spain, Brazil and Indonesia. The Brazilian growing rate is the fastest. 2. BRAZILIAN TILE INDUSTRY: PRESENT SITUATION The 120 Brazilian ceramic tiles manufacturers produced in 2002 508.3 millions m" (Figure 2), a growth of 7.4% in relation to 2001. With this mark Brazil retains its positions as the 4 th largest world tile producer. The projection for 2003 is of 533.7 milli ons m', a growth of 5%. 600..,-- - - - - - - - - - - - - - - PROJECTION -L-- - -...J..'''''''''IIIr-----, 533,7 500 +-------------------::=-~- 6 400 -..:l ~ 300+-----=:::1.::...- ~ fl 200 100 o 1994 1995 1996 1997 1990 1999 200 \'EAR Figure 2. Brazilian production of ceramic tiles". P.C I - 330
CASTELL6N (SPAIN)!' QUALIC@G2004 Considering the whole chain of production, commercialization and services, the Brazilian ceramic tile industry represents a business estimated in US$ 2.2 billion. With a domestic market of 453.6 million m' in 2002 (Figure 3), a growth of 9.6% in relation to 2001, Brazil is the largest consumer market in the Western World (the second largest, after China). The projection for 2003 is of 470 million m", a growth of 3%. Considering Brazil ha s a population of 177.674.925[31, the present con sumption per inhabitant per year is 2.6 m', what leaves plenty of room for growth, especially when one con siders the climate, tradition and the perspectives of improvements of the economy. An important characteristic of the Brazilian domestic market is that the import of ceramic tiles is practically insignificant. Figure 3. Brazilian ceramic tiles domestic inarket'". In 2002 the exports reached 73.9 million m' (Figure 4), 14.5% of the production, a growth of 24.3% in relation to 2001, exceeding US$ 205 million. The proj ection for 2003 is of 94.1 mill ion m', a growth of 27.3%. Figure 4. Brazilian ceramic tiles exports". P.GI- 331
!I QUALI((2JG2004 CASTELL6N (SPAIN) At present Brazil exports ceramic tiles to more than 121 countries. Figure 5 presents the main destinations of the Brazilian ceramic tiles exports. Figure5. Brazilian ceramic tiles exports main destinations in 2002(2/. In 2002, the United States of America, the largest ceramic tiles importer, consumed 22.4 million rrf (more than US$ 88 million) of Brazilian products. At present Brazil is the 4 th largest ceramic tiles supplier for the USA with a share of 12% of the total market. Also in 2002, South Africa considerably increased its imports of ceramic tiles from Brazil (more than US$ 15 million), becoming our 3 rd largest buyer. 3. BRAZIL, A BIRD'S EYE VIEW To understand Brazil, the first thing one has to be aware is that it is a country of continental dimension. Brazil has an area of 8,547,403 Km 2 and a population of almost 180 million inhabitants. For reference purposes, the area of the whole Europe and USA are 10,349,915 and 9,372,608 Km 2, respectively. Some distances to use as references are given in Table 1. As a consequence of its history and size Brazil is a country of diversity and long distances. So the design of products for the domestic market has to take into consideration the economic and cultural contrasts as well as the location of the major consumer markets'". In Brazil almost all transportation of goods is done by trucks and for long distances may represent a considerable part of the costs. CITY STATE DISTANC E (Km) Florianopolis Santa Catarina 705 Salvador Bahia 1962 Recife Pernambuco '. 3127 Table 1. Distances between Sao Pallia city and some other reference cities in Brazil. 4. THE BRAZILIAN CERAMIC TILE INDUSTRY, AN O VERVIEW The Brazilian ceramic tile industry can be divided into two big groups in terms of the production process, namely wet and dry route. In general the industries using the wet route are mainly located in the State of Santa Catarina, in the south, forming the Ceramic Pole of Criciuma, and the industries using tit dry route are in the State of Sao Paulo, in the southeast, forming the Ceramic Pole of Santa Gertrudes (Figure 7). Recently the number of industries located in the northeast has grown considerably and probably in the near future we will have a third ceramic pole that, apart from avoiding the costs of transportation, that are quite considerable in Brazil, will supply P.G! -332
CASTELL6N (SPAIN) an important part of the domestic market (Figure 6) and will benefit from excellent conditions to export to America and Europe. NORlH 5,6% 2002 Figure 6. Distribution of the Brazilian domestic market for ceramic tiles". 4.1. THE CERAMIC POLE OF SANTA GERTRUDES A few years ago the strongest part of the Brazilian ceramic tile industry was located in the Pole of Criciuma. However, in the last decades the production of tiles in the southeast has grown at very fast rates. Nowadays the production of Sao Paulo State represents 50.8% of the total Brazilian production. At present a considerable part of Sao Paulo State's production, 65%, comes from the Pole of Santa Gertrudes whose incredibly fast growth in the last decade has transformed the Brazilian tile industry (Figure 8 and Table 2). Some of the main competitive advantages of the Pole of Santa Gertrudes relative to Criciuma are: lower production costs; consumption of a single local raw material with minimum transportation costs and the relatively short distance to a major consumption area, the so called big Sao Paulo and nearby cities. Figure 7. Brazilian map with the current main tile production centres. P.GI -333
CASTELL6N (SPAIN) PRODUCTION DOMESTIC EXPORTS MARKET Sao Paulo State share of the 60% 62.7% 31.5% Brazilian Sta. Gertrudes share of the Sao 65% 65.5% 60.9% Paulo State Sta. Gertrud es share of th e 39% 41.5 % 19.2% Brazilian Table 2. Performance of the tile industry of Siio Paulo State and the Pole of Santa Gerirudes in 2002 141 The following sets out some brief comments about some of these aspects and related ones. RAW MATERIAL: The majority of the industries use a single local clay as raw material for the body. The previous statement defies all theoretical recommendations to avoid variations that would lead to production problems, however the practical results have proved that, to certain limits, thi s method can be quite effective. What makes the difference here is the skill of the producers and colour manufacturers' technicians and the unique characteristics of the local clay (Corumbatai Formation). DRY RO UTE: Th e producers, with the help of the colour manufacturers and equipment su p pliers, adapted the dry route to the peculiar ch aracteristics of the local raw material with exceptional results. The estimate is that the dry route is about 30% cheaper than the wet route and through the year the improvement in quality has been quite remarkable. However, as the development was done by trial and error, at present the good results obtained are restricted to the characteristics of the local clay and attempts to adapt it to other raw materials didn't produce the same results. The absence of a d eeper understanding of the technical aspects behind the results obtained made it quite difficult to transfer the sam e technology to other regions and created a certain dependence of the clays from th e Corumbatai Formation. PRODUCT: To deal with the ab sence of a proper granulation process and th e consequent absence of flowability of the pressing powder, th e producers d eveloped a BUb product, with w ate r absorption usually between 6 and 8%, and w ork with relatively high water conte n t, between 9 and 10%. They developed a product that would se rve both, wall and floor ap plica tions. They red uced th e number of typologies to a minimum and only kept th ose th at sell well. They also tr ansferred to th e colour manufacturers th e responsibility for the designs and th e se tu p of th e production lin e to guaran tee th e quality and constancy of th e p roducts through time. BOLDNESS: Th e producers were bold. Despite the incredulity of the scep tical foreign technicians of the glazes and equipments su p p liers, th e producers pursu ed the development of an alternative fabricati on method that would lead to products compatible with the taste and eco no m ic power of the d omestic market and were successful. P.Gl - 334
CASTELL6N (SPAIN) ~. QUALIU2JG 2004 60 so SAOPAULO 400 ~ ~ 300 ~ 1Il 200 100 o 2000 2001 2002 2003 Figure 8. Tile production in Brazil, Sao Paulo State and the ceramic pole of Santa Gertrudes". 100 90 80 70 z 0 60 :i ::: 50 (3 CIl 40 30 20 10 0 2000 2001 PROJECTION 2002 2003 BRAZIL ssopaulo o STA GERTRUDES PARTIAL DATA UPTO SEPTEMBER Figure 9. Tile exports of Brazil, Sao Paulo State and the ceramic pole of Santa Gertrude". 4.2. THE IMPACT OF THE GROWTH OF THE POLE OF SANTA GERTRUDES In the beginning the principal concern of the producers was to provide cheap products destined to the lower economic classes that, due to changes in the economic policies of the central government, has considerably improved their buying power. Thi s strategy worked quite well. One can say they were in the right place, at the right time and had the right product. With the success of these first steps the local industry boomed and in a few years the volume of product destined to the lower economic classes was larger than the consumption capacity of the domestic market for this sort of product. Meanwhile th e effects of the growth of Santa Gertrudes on the industries located in th e Pole of Criciuma was not significant, mainly because, in general, the producers of Criciuma didn't have sim ilar products destined to this part of the domestic market. However, in a few years the produced volume of economic products was larger than the domestic market could absorb and the detrimental war of prices has started. So, some producers felt it was time to move forward and develop products destined to the slightly higher economic classes of the domestic market. This cycle has repeated itself many times in the last decade and the Pole of Santa Gertrudes, which began with a few industries producing almost the very same products de stined to the P.GI - 335
QUALIWL2004 CASTELL6N (SPAIN) same market, today has a considerable diversity of products destined to different segments of the domestic market and moves quite fast towards conquering an increasing share of the international market (Figure 9). This development required a considerable improvement of the quality that now rivals a considerable part of the products produced by the wet route and lead Santa Gertrudes to take a considerable part of the domestic market that traditionally belonged to industries of Criciuma. This change in the local scenario has forced the industries of the Pole of Criciuma to review their strategies and produced deep changes in the Brazilian ceramic tile industry as a whole. The dispute for the domestic market became very aggressive. The growth of the production of the Pole of Santa Gertrudes has forced the rest of the sector to look with more emphasis for the external markets. Between 2001 and 2002, the Brazilian exports have grown 24.3%. In the same period the exports from Sao Paulo State have grown 44.9% and, in Sao Paulo, the exports of the Pole of Santa Gertrudes have grown 70.2%. The growth of the Brazilian exports in the last few years is a remarkable achievement by any standard. 4.3. DIFFICULTIES The future development of the Brazilian ceramic tile industry depends on a series of factors. Some of than, unfortunately, are not under the influence of the producers. That's, for instance, the case of the stability of our currency, the real. So far the Brazilian currency has been one of the more unstable of the world. This instability has a profound impact on the economy, particularly over the exports. The new government is quite concerned with the problem and is adopting economic measures to solve it. Let us hope the measures will be effective in the near future. Another aspect that also has plenty of room for improvement is the associative spirit of the producers. At present Brazil have two major associations, ANFACER and ASPACER. In general terms the first one represents the interests of the producers that use the wet route and the second, the dry route and there is not an institution that represents the interests of the sector as a whole. In the last months there has been a movement towards the foundation of a Brazilian association that would play that part. Meanwhile, both ANFACER and ASPACER have been very active dealing, among other subjects, with incentives for exports. These institutions, however, are particularly concerned with economic and political aspects and, so far the Brazilian ceramic tile industry doesn't have a reliable data bank with technical information to allow the effective use of modern administrative tools. One of the detrimental consequences of the lack of stronger associations is the absence of a clear policy to establish the prices of products in the domestic and international markets. Despite the significance of the Brazilian tile industry so far the education of specialists and the research, development and innovation aspects have not been dealt with properly. 4.4. THE FUTURE Based on the information presented one thing seems clear: the Brazilian ceramic tile industry will keep growing fast in the near future. This growth shall be directed mainly to: 1. the development of the ceramic pole of the northeast of Brazil and 2. the exports. PCl - 336
CASTELL6N (SPAIN) REFERENCES [1] Sezzi, G. - CERAMIC WORLD REVIEW - Year 13, N 53, July - September, 2003, p. 86-102 [2] ANFACER - Ceramic Tile Industry Overview, 2003 [3] IBGE - www.ibge.gov.br [4] ASPACER - Private communication. PCI - 337