CERAMIC TILE INDUSTRY: ITS CONDITION AND PROPECTS IN THE ERA OF CRISIS.The current economic crisis has dealt a deadly blow to the industries of building materials Building materials used in the construction industry to create .
These categories of materials and products are used by and construction project managers to specify the materials and methods used for . , including ceramic tiles. The cost of ceramic tile production has soared especially because the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. of basic materials for ceramic tiles is partly dependent on import sources. Meanwhile, the sector of construction --especially the development of property such as office buildings, shopping centers, hotels, apartment blocks, and real estates--has discontinued dis·con·tin·ue
v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues
1. To stop doing or providing (something); end or abandon: its activity due to the collapse of the business sector. The retail market for building materials-- which is composed of households and individuals-- has also slumped with the people's weakened purchasing power Purchasing Power
1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase.
2. as a result of the monetary and economic crisis. As a result, the performance of Indonesia's ceramic tile industry has continued to worsen wors·en
tr. & intr.v. wors·ened, wors·en·ing, wors·ens
To make or become worse.
to make or become worse
worsening adjn , notwithstanding the fact that the installed production capacity of this industry rose by as high as 33.5% in 1997.
In Data Consult's estimates, the total domestic consumption of ceramic tiles for 1997 reached only 140.2 million square meters, down 12.8% from the previous year. In 1998, the decline is expected to be higher, i.e. 30% at the very least, due to the stronger pressures from the crisis. The Department of Industry and Trade projects the ceramic tile industry's rate of production capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. for 1998 at only 30%. Such circumstances have practically discouraged new investors from entering the ceramic tile industry as can be seen from the fact that not a single investment project in this industry has been approved during the first ten months of 1998.
The weak domestic demand has forced Indonesian ceramic tile producers to seek ways to boost their exports. With the sharp depreciation of the rupiah ru·pi·ah
n. pl. rupiah
See Table at currency.
[Hindi rupay, rupiy against foreign currencies, notably the U.S. dollar, Indonesian ceramic tile producers have an opportunity to raise high profits from exports. The problem, however, is that the export markets for ceramic tiles are not easy to penetrate because they are already marked with tough competition. Assuming that production costs in Indonesia are very low, foreign buyers generally ask Indonesian ceramic tile producers to sell their products at prices lower than what is applicable on the international market. Last year, Indonesia managed to export only 28,452 tons of ceramic tiles (worth US$ 11.7 million), as opposed to 33,830 tons (worth 13.3 million) in 1996. For the first four months of 1998, the volume of such exports reached only 13,815 tons and the value US$ 4.6 million.
Indonesian ceramic tile producers are basically oriented to the domestic market. A developing country with a large population, Indonesia provides a market with a large potential to absorb building materials, including ceramic tiles. In fact, Indonesia has been one important target market for foreign ceramic tile producers. This can be seen from the fact that Indonesia imported as much as 41,957 tons of ceramic tiles (worth US$ 15.9 million) in 1997. In 1996, the volume of such imports was even bigger (54,092 tons) and so was the value (US$ 20.9 million). These import figures were higher than the volume and value of ceramic tiles which Indonesia managed to export.
A number of ceramic producers also turn out a new type of products that are called granito ceramic tiles, which are consumed mostly by luxury houses and high-rise buildings. A granito ceramic tile is a ceramic tile which is homogenous homogenous - homogeneous , meaning that every part of it is made from the same mixture of materials. The surface of a granito ceramic tile is glazed glaze
1. A thin smooth shiny coating.
2. A thin glassy coating of ice.
a. A coating of colored, opaque, or transparent material applied to ceramics before firing.
b. . Since it has to be homogenous and strong, a granito ceramic tile has to be made from high-quality materials.
Among the advantages of granito ceramic tiles over the regular products are that the former are more solid and less water-absorbant than the latter. This means that a granito ceramic tile are more resitant to impact and scratches than a regular product. In addition, the color of a granito ceramic tile is also more durable than that of a regular product. As is the case with regular ceramic tiles, the main basic materials for granito products are as follows: feldspars, clay, pigment pigment, substance that imparts color to other materials. In paint, the pigment is a powdered substance which, when mixed in the liquid vehicle, imparts color to a painted surface. , and silica silica or silicon dioxide, chemical compound, SiO2. It is insoluble in water, slightly soluble in alkalies, and soluble in dilute hydrofluoric acid. Pure silica is colorless to white. sand. The clay for granito ceramic tiles is procured partly from import sources.
Indonesia is in a good position when it comes to producing ceramic tiles: the basic materials are found in abundance in the country; labor wages are low; and per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. domestic consumption is still low, even the lowest in ASEAN ASEAN: see Association of Southeast Asian Nations.
in full Association of Southeast Asian Nations
International organization established by the governments of Indonesia, Malaysia, the Philippines, Singapore, and Thailand in . This condition provides a good opportunity for Indonesia to develop its industries of ceramic goods.
The industries of ceramic tiles in Indonesia produce, among others, tableware, wall/floor tiles, sanitary sanitary /san·i·tary/ (san´i-tar?e) promoting or pertaining to health.
1. Of or relating to health.
2. ware ware See Groupware, Hardware, Shareware, Software. , insulators, roof tiles, and handicraft handicraft: see arts and crafts. products. The most rapid growth has been shown by the ceramic tile industry, followed by the tableware industry.
Ceramic is an end product which is produced by burning a mixture of certain non-metal minerals in very high temperatures. The non-metal minerals used in producing ceramic include clay, kaolin kaolin (kā`əlĭn): see china clay. , feldspar feldspar (fĕl`spär, fĕld`–) or felspar (fĕl`spär), an abundant group of rock-forming minerals which constitute 60% of the earth's crust. , quartz sand, and other additives. In Indonesia, the types of ceramic products that are produced on a large-scale basis are wall tiles, floor tiles, bricks, and roof tiles.
Basically, ceramic tiles have standardized sizes and shapes. However, ceramic tiles come in different physical qualities, especially in terms of surface hardness. In this regard, there are three categories of ceramic tiles as follows: light duty/traffic, semi-medium, and medium-duty/traffic. Light duty/traffic ceramic tiles are used for houses while semi-medium and medium duty/traffic ceramic tiles are used for buildings where there are lots of people walking to and fro to and fro
Back and forth.
to and fro
1. like shopping centers, hospitals, and hotels.
The process of ceramic tile productions consists of the following stages: the processing of basic materials, the shaping of bodies through pressing, the making of glazing Glazing
The application of finely ground glass, or glass-forming materials, or a mixture of both, to a ceramic body and heating (firing) to a temperature where the material or materials melt, forming a coating of glass on the surface of the ware. line, printing, and burning (inside a kiln). The making of glazing line can be conducted either before or after burning, and the method can be dipping, spraying, or smearing Smearing is a term used in rock climbing.
It is the practice of using the sole of a shoe against a flat rock face. Smearing can be one of the most insecure and technical techniques used in climbing, requiring a combination of leg/ankle tension, foot placement, and good .
Seen from how the surface looks, there are two types of ceramic tiles: glazed and unglazed. Nearly all ceramic tile producers in Indonesia produce the two types. By design, there are also two types of ceramic tiles: plain and texturized. Most ceramic tile producers produce plain ceramic tiles in white or grey color, and nearly all of them produce ceramic tiles with a marble design.
Ceramic tiles are found in different colors, of which light colors, dark colors, maroon maroon, term for a fugitive slave in the 17th and 18th cent. in the West Indies and Guiana, or for a descendant of such slaves. They were called marron by the French and cimarrón by the Spanish. , and brown are dominant. As for light colors, blue and green are the most produced. As for pastel pastel (păstĕl`), artists' medium of chalk and pigment, tempered with weak gum water and usually molded in the form of sticks; also a work done in this medium. Pastel was in use in Italy in the 15th cent. and is doubtless much older. colors, pink and peach are dominant.
Ceramic tiles come in three different size categories: small (with a surface of up to 200 square centimeters), medium (200-900 square centimeters), and large (more than 900 square centimeters). Among the different sizes, ceramic tiles with a surface of 10 x 20, 20 x 20, and 30 x 30 square centimeres are the most produced.
Imported basic materials
Clay, feldspars, and kaolin are found in abundance in Indonesia. However, since they have low quality, some ceramic tile producers use imported clay, feldspars, and kaolin. To make high-quality ceramic tiles like granito products, producers use feldspars imported from, among others, Turkey, clay imported from Ukraine, and pigments from Spain. Silica sand (kaolin) is procured mostly from import sources because local kaolin has low quality.
Kaolin is used not only by the ceramic tile industry but also by other industries such as paper, rubber, paint, and pharmaceuticals. For the period of 1993-1997, the volume of Indonesia's kaolin imports fluctuated with the tendency to decline. It reached its peak level of 132,108 tons in 1995, up 74.7% from 75,597 tons in 1994. In 1997, it dropped to 106,393 tons. Over the same period, the volume of such imports grew at an average annual rate of 14%. For the first four months (January-April) of 1998, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. data from the Central Bureau of Statistics, the volume of such imports reached 23,111 tons and the value US$ 6.4 million.
Table - 1 Indonesia's kaolin imports, 1993 - 1998
Volume Value Year (tons) (US$'000) 1993 74,637 20,437 1994 75,597 20,084 1995 132,108 37,142 1996 125,343 33,353 1997 106,393 29,116 1998(*) 23,111 6,380
(*) January - April
Source: Central Bureau of Statistic/Data Consult
Production capacity 227 million square meters per annum Per annum
The abundant supply of basic materials and the sheer size of Indonesian population were among the most important factors which led to the expansion of the ceramic tile industry in Indonesia. For the period of 1993-1997, the industry's production capacity rose the most rapidly in 1997, from 170 million square meters per annum in 1996 to 227 million square meters or by 33.5%.
Table - 2 Indonesia's ceramic tile production capacity, 1993 - 1997
(000'[m.sup.2]/year) Production Growth Year capacity (%) 1993 136,000 - 1994 156,000 14.7 1995 168,000 7.7 1996 170,000 1.2 1997 227,000 33.5 Average growth 14.3
Source: Department of Industry and Trade/Asaki/Data Consult
Floor tiles the most produced
According to the Department of Industry and Trade, there are currently 43 ceramic tile producers operating in Indonesia with a combined production capacity of 227 million square meters/annum. Nearly all of them produce floor tiles. Some 71.9% of the installed production capacity or 163,300,000 square meters per annum is for the production of floor tiles, and the rest for the production of wall tiles.
The largest of the ceramic tile producers is PT Keramik Indonesia Asosiasi (KIA KIA
A member of the armed services who is reported killed during a combat mission.
[k(illed) i(n) a(ction).] ), which was established in 1970. Initially, the company operated under the foreign investment (PMA PMA (papillary-marginal-attached),
n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation.
PMA Progressive muscular atrophy ) scheme and it had only one plant, which is located in Tanjung Pandang, Belitung. In 1992, PT KIA changed its status into one operating under the domestic investment (PMDN PMDN Penanaman Modal Dalam Negeri ) scheme. Affiliated to the Arya Upaya Group, which itself is owned by the Ongko Group, PT KIA currently has two ceramic tile plants with a combined production capacity of 24 million square meters per annum, one in Belitung and the other in Cileungsi, Bogor.
A pioneer of Indonesia's ceramic tile industry, PT KIA has recently diversified to a new type of products, i.e. roof tiles. The company's roof tile production plants are located in Java, and they are managed by its two affiliates, namely PT Serpih Mas and PT Keramik Mas. PT Serpih Mas has a capacity to produce 12.8 million square meters of roof tiles per annum and PT Keramik Mas 19.2 million square meters.
Originally, PT KIA was jointly owned by Hock hock: see wine. Soon & Co of Singapore (46.2%) and its local partners Kaharudin Ongko (36%), Diah Koswara (14.8%), and Darwin Thiohardi (3%). Following the change in 1992 of its status into a PMDN company, PT KIA became a publicly listed company in 1994 and its shareholding composition changed as follows: 67.53% owned by PT Ongko Multi Corpora corpora
plural form of corpus.
see corpus albicans.
sandy or gritty bodies, found in the pineal body; appear to be of glial or stromal origin; have the structure of , 3.06% by Kaharudin Ongko, and 29.41% by the public.
The other big players in Indonesia's ceramic tile industry are as follows: PT Mulia Keramik Indahraya (of the Mulia Group), which has a capacity to produce 29 million square meters of floor tiles and 17 million square meters of wall tiles per annum and markets its products under brand name "Mulia Keramik"; PT Senrico Djaja Mariner Mariner
Any of a series of unmanned U.S. space probes sent near Venus, Mars, and Mercury. Mariners 2 (1962) and 5 (1967) passed Venus within 22,000 mi (35,000 km) and 2,500 mi (4,000 km), respectively, and made measurements of temperature and atmospheric density. Industries (of the Manunggal Sempurna Group) with its "Super Italia" products; PT Angsa Daya (of the Kedaung Group) with its "IKAD" products; PT Metropole Met´ro`pole
n. 1. A metropolis. Megah/PT Satyaraya Keramindo Indah (of the Satya Djaja Group) with its "Roman" and "Royal" products; and PT Asia Victory Industry Ltd. with its "Asia Tile" products. Brandless ceramic tile products are also available on the domestic market to cater to medium-lower income consumers (simple houses).
PT Senrico Djaja Mariner Industries (SDMI), which commenced its commercial operations in 1979, also has sanitary ware and tableware production units. With its plant located in Jakarta, SDMI has a capacity to produce 10.2 million square meters of ceramic tile products per annum.
PT Angsa Daya, which operates under the domestic investment (PMDN) scheme and is affiliated to the Kedaung Group, is known for its glassware products. The company commenced its operations in 1977 and markets its ceramic tile products under brand name "IKAD." As for its tableware products, it markets them under brand name "IKG IKG I Kiss Girls (website) ." In addition to ceramic tiles and tableware, PT Angsa Daya also produces brick fire roofs, granite tiles, and mozaic tiles.
PT Metropole Megah and PT Satya Raya Keramindo Indah are both affiliated to the Satya Djaja Raya Group, which itself is a wood-based business group. The two companies' plants are located in Tulungagung, East Java East Java (Indonesian: Jawa Timur) is a province of Indonesia. It is located on the eastern part of the island of Java and also includes neighboring Madura and Bawean islands. . PT Metropole Megah, which commenced its operations in 1979, now has a capacity to produce 22 million square meters of ceramic tiles per annum and markets them under two different brand names: "Royal" and "Roman." The company is currently the largest ceramic tile producer in East Java.
The other two ceramic tile producers in Fast Java in addition to PT Metropole Megah and PT Satya Raya Keramindo Indah are PT Asia Victory Industries Ltd. and PT Keramik Diamond Indah (KDI KDI Knowledge and Distributed Intelligence (NSF)
KDI Korean Development Institute
KDI Kernel Debug Interface
KDI Kernel Downloadable Image (LynxOS)
KDI Kosovo Democratic Institute ). Like PT Metropole Indah, KDI is affiliated to a wood-based business group, namely the Kayu Mas International Group. PT KDI produces not only floor tiles and wall tiles but also exclusive ceramic tiles for export purposes. These exclusive ceramic tiles are marketed under brand name "Diamond Tiles." Besides purchase orders, PT Asia Victory Industries and PT KDI also serves purchase contract agreements. These two companies currently have annual production capacities of, respectively, 25 million square meters and 9 million square meters.
Table - 3 Ceramic tile producers and their production capacities, 1997
('million [m.sup.2]/year) Location Producer of plant Brand Wall Floor Muliakeramik Indahraya Bekasi Mulia Ceramic 17.0 29.0 Asia Victory Industri Surabaya Asia tile/ 10.0 15.0 KIA Serpih Mas Bogor KIA/ 7.5 16.5 Platinum Setya Raya Keramindo Tangerang Roman/Royal 6.0 16.0 Masterina Keramik P. Tangerang Masterina - 17.0 Senrico Djaja Marmer DKI Jakarta Superitalia 2.7 7.5 Union Keramik Utama DKI Jakarta Union 9.0 1.0 Keramik Diamond Indah Gresik Diamond 2.0 7.0 Angsa Daya Tangerang Ikad 2.5 5.5 Arwana Citra Mulia Tangerang Arwana - 7.2 Intikeramik Alamsari Tangerang Essenza - 7.0 Adi Buana Persada Gresik Milan - 6.0 Citra Mandiri Cakrawala Serang n.a. - 4.2 Jaya Industri Prakarsa Tangerang n.a. - 4.0 Raja Keramik Indah Majalengka RKI - 3.6 Surya Ragam Prima Tangerang n.a. 3.0 - Cikarang Indah Cikarang Asahi - 2.8 Tjigombang Nusantara Tangerang n.a. - 2.1 Keramik Indah Sejati Bogor n.a. - 2.1 Ubin Kimas Mutiara Gresik n.a. - 2.0 Kualimas Sidoarjo n.a. - 2.0 Karya Kalindah Pontianak n.a. - 1.8 Bermis Sarana Wisma Indramayu Bermis - 1.6 Banua Batusuri Pontianak n.a. - 1.4 Tera Cota Indonesia Cirebon Terracota - 1.0 Others - - 4.0 - Total 63.7 163.3 ('million [m.sup.2]/ year) Producer Total Muliakeramik Indahraya 46.0 Asia Victory Industri 25.0 KIA Serpih Mas 24.0 Setya Raya Keramindo 22.0 Masterina Keramik P. 17.0 Senrico Djaja Marmer 10.2 Union Keramik Utama 10.0 Keramik Diamond Indah 9.0 Angsa Daya 8.0 Arwana Citra Mulia 7.2 Intikeramik Alamsari 7.0 Adi Buana Persada 6.0 Citra Mandiri Cakrawala 4.2 Jaya Industri Prakarsa 4.0 Raja Keramik Indah 3.6 Surya Ragam Prima 3.0 Cikarang Indah 2.8 Tjigombang Nusantara 2.1 Keramik Indah Sejati 2.1 Ubin Kimas Mutiara 2.0 Kualimas 2.0 Karya Kalindah 1.8 Bermis Sarana Wisma 1.6 Banua Batusuri 1.4 Tera Cota Indonesia 1.0 Others 4.0 Total 227.0
Source: Department of Industry and Trade/Data Consult
Production growth slows down
After several years of rapid growth, Indonesia's ceramic tile production started to decline in mid-1997, especially because of the monetary and economic crisis. As has been mentioned earlier, the economic crisis has resulted in the construction sector discontinuing its activity and in the people's purchasing power weakening. Meanwhile, export demand has also shown the tendency to shrink. With the continued decline in market demand, Indonesian ceramic tile producers have had to cut down on their production rates on a gradual basis, more so because the cost of basic material procurement--especially as regards imported basic materials--has continued to soar SOAR - 1. State, Operator And Result. A general problem-solving production system architecture, intended as a model of human intelligence. Developed by A. Newell in the early 1980s. SOAR was originally implemented in Lisp and OPS5 and is currently implemented in Common Lisp. .
In 1997, Indonesia's total ceramic tile production reached only 139.3 million square meters, down 12.2% from the previous year. In 1998, it is expected to drop by at least 30% due to the worsening wors·en
tr. & intr.v. wors·ened, wors·en·ing, wors·ens
To make or become worse.
Noun 1. worsening - process of changing to an inferior state
decline in quality, deterioration, declension national economic condition.
Table - 4 Indonesia's ceramic tile production, 1993 - 1997
Production Growth Year ('000 [m.sup.2]) (%) 1993 114,698 - 1994 131,673 14.8 1995 151,556 15.1 1996 159,233 5.0 1997 139,290 -12.2 Average growth 5.6
Source: Department of Industry and Trade/Data Consult
Export demand stagnant stagnant /stag·nant/ (stag´nant)
1. motionless; not flowing or moving.
2. inactive; not developing or progressing.
For the past five years (1993-1997), the volume of Indonesia's ceramic tile exports fluctuated with the tendency to decrease. In 1993, for example, it reached 31,367 tons (consisting of unglazed tiles, other unglazed tiles, and glazed tiles) worth US$ 11.2 million. In 1995, the volume rose by 7.1% to 32,111 tons. In 1997, however, it declined by 7.7% to 28,452 tons.
When the U.S. dollar exchange rate hit a record high of Rp 10,000, Indonesian ceramic tile producers found themselves encouraged to boost exports. On the export market, one box of ceramic tiles sold for US$ 2-3, as compared to only Rp 15,000-25,000. For the first four months (January-April) of 1998, according to data from the Central Bureau of Statistics, the volume of such exports reached 13,815 tons and the value US$ 4.6 million.
Table - 5 Indonesia's ceramic tile exports, 1993 - 1998
Volume Value Year (tons) (US$'000) 1993 31,367 11,247 1994 29,983 13,091 1995 32,111 13,448 1996 30,830 13,320 1997 28,452 11,712 1998(*) 13,815 4,623
(*) January - April
Source: CBS/Data Consult
United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. the main destination
On the global market, Indonesian ceramic tile products have to compete with those from advanced countries. On the European market, for example, they have to compete with ceramic tile products from Italy, Spain, and local producers. Up to now, Indonesia has been exporting ceramic tiles to a number of countries, of which the United States has been the most important destination. In 1997, for example, Indonesia exported a total of 28,452 tons of ceramic tiles, of which 13,287 tons or 46.7% went to the United States. The second largest importer of Indonesian ceramic tiles is Singapore. In the same year, Indonesia supplied Singapore with 4,982 tons worth US$ 2.6 million. The shares of the other countries in Indonesia's total ceramic tile imports have been relatively small.
Table - 6 Indonesia's 1997 ceramic tile exports, by country of destination
Country of Volume Value destination (tons) (US$'000) USA 13,287 5,428 Singapore 4,982 2,581 Australia 2,983 1,249 Brunai Darussalam 1,924 677 Myanmar 1,831 555 Kuwait 864 230 South Korea 801 91 Others 1,780 901 Total 28,452 11,712
Source: CBS/Data Consult
Imports still high
Although Indonesia is an exporter of ceramic tiles, it still imports such products in considerable quantities to help meet domestic demand. In 1993, for example, Indonesia imported 21,997 tons worth US$ 7.5 million. With the hectic hec·tic
1. Characterized by intense activity, confusion, or haste: "There was nothing feverish or hectic about his vigor" Erik Erikson.
2. development of property and office buildings, the volume of such imports also grew rapidly in the following years. In 1996, it reached 54,092 tons (worth US$ 20.9 million). In 1997, due to the monetary crisis, the volume of Indonesia's ceramic tile imports declined sharply although it remained relatively high, namely 41,957 tons. For the first four months (January-April) of 1998, according to data from the Central Bureau of Statistics, the volume of such imports reached 7,523 tons and the value US$ 2.4 million.
Table - 7 Indonesia's ceramic tile imports, 1993 - 1998
Volume Value Year (tons) (US$'000) 1993 21,997 7,456 1994 21,205 7,221 1995 39,233 16,057 1996 54,092 20,942 1997 41,957 15,860 1998(*) 7,523 2,435
(*) January - April
Source: CBS/Data Consult
Other glazed tiles the most imported
Indonesia's ceramic tile imports are dominated by ceramic tiles of rectangular shape whose sides are more than seven centimeters long. Of the different types of ceramic tiles, that which is called "other glazed tile cube & similar articles" is the most imported. In 1997, Indonesia imported a total of 41,957 tons of ceramic tiles, of which 32,775 tons or 78.1% were of this type. The second most imported type is the so-called "other unglazed tiles." In the same year, Indonesia imported 7,851 tons of ceramic tiles of this type (worth over US$ 4 million).
Table - 8 Indonesia's 1997 ceramic tile imports, by type
Volume Value Type of ceramic tile (tons) (US$'000) -Other glazed tile, cube & 32,775 10,966 similar articles -Other unglazed tiles, 7,851 4,046 cubes & similar articles -Unglazed tile, cube & 1,124 752 similar articles -Glazed tile cube & similar 207 96 articles Total 41,957 15,860
Source: CBS/Data Consult
Investor interest non-existent
The prolonged pro·long
tr.v. pro·longed, pro·long·ing, pro·longs
1. To lengthen in duration; protract.
2. To lengthen in extent. monetary crisis seems to have had its impact on the investor interest in the ceramic tile industry. According to a source with the Investment Coordinating Board (BKPM BKPM Badan Pengawasan Pasar Modal (Indonesian investment coordinating board) ), there has been no investor interest in this industry for the last ten months while at least 19 new and expansion projects in the same industry were approved during 1997. In fact, the number of ceramic tile producers currently in operations is quite high, resulting in them having to operate below installed capacity levels and to face tough market competition.
Distribution and marketing
Every ceramic floor/wall tile producer adopts the same pattern of domestic distribution and marketing. They sell their products both directly to end-users and indirectly through distributors, agents, and retailers.
They deal in direct selling Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and phone calls. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or brokers. when serving large-scale buyers such as developers of office buildings, real estates, hotels, and shopping centers, and they use distributors, agents, or retailers to serve small- and medium-scale buyers.
Certain producers leave all its distribution and marketing activities to distributors. One example is PT Senrico Djaja Marmer Industries, which market its ceramic tile products under brand name "Super Italia." PT Senrico uses PT Sumber Cipta Keramika Utama as its sole distributor, which supervises all the domestic distributors of "Super Italia" ceramic tiles. PT Sumber Cipta Keramika Utama uses Jakarta as its base for distributing "Super Italia" ceramic tiles to all retailers in the area of Jabotabek (Jakarta-Bogor-Tanggerang-Bekasi). Its market targets are large-scale property projects which develop real estates, stations, office buildings, shop-houses, and apartment blocks.
Another ceramic tile producer which trusts all its distribution and marketing activities to a distributor is PT Mulia Keramic Indahraya, which uses PT Catur Aditya Sentosa as the sole distributor if its "Mulia Keramic" products for the area of Jabotabek. Meanwhile, PT Metropole uses PT Satya Langgeng Sentosa to distribute its "Roman" and "Royal" ceramic tiles.
Prices still unstable
Compared to wall tiles, floor tiles are in higher demand because they are consumed not only by large-scale property projects but also by simple houses, very simple houses, and individuals. Since the monetary crisis started in mid-1997, there has been a shift in the consumption of floor tiles by the real estate and office building sector, namely from the regular products to granito and marble products. Currently, floor-tile producers rely more on individual consumers (i.e. house owners) than on large-scale property projects to consume their products.
According to some information, the prices of ceramic tiles on the domestic market have remained volatile due to the fact the value of the rupiah is still unstable. Meanwhile, the pricing of ceramic tiles by producers is based on production cost and distribution cost. In the end, ceramic tiles differ in prices according to size, color, design, and strength.
Normally, a distributor obtains a 10%-20% discount from the producer, and a dealer or retailer sets its profit margin at 15%-20% of the purchase price. The retail price of ceramic tiles, namely the price that has to be paid by the end-user, is inclusive of inclusive of
Taking into consideration or account; including. a 10% VAT. Thus, a ceramic tile end-user has to pay 151% of the price set by the producer.
There are three quality categories of ceramic tiles on the market and they are as follows: first quality (spotless spot·less
1. Perfectly clean. See Synonyms at clean.
2. Free from blemish; impeccable.
spotless·ly adv. ); second quality (defective); and third quality (with flaws in shape and design).
"Super Italia" ceramic tiles, which are produced by PT Senrico Djaja Marmer Industries and marketed through its distributor PT Sumber Cipta Keramika Utama, are sold at Rp 22,500 per square meter Noun 1. square meter - a centare is 1/100th of an are
centare, square metre
area unit, square measure - a system of units used to measure areas (on the truck at the project site in Jabotabek; OFT/once fired tiles) in the case of type M, first quality, size 32 cm x 32 cm and Rp 26,000 in the case of type G, size 20 cm x 20 cm.
Meanwhile, PT Satya Langgeng Sentosa --the sole distributor of PT Metropole Megah, which produces "Roman" and "Royal" ceramic tiles-- sells them at Rp 25,500 per square meter in the case of type A 22103, size 20 cm x 20 cm, Rp 27,500 in the case of size 30 cm x 30 cm, and Rp 42,500 in the case of 33 cm x 33 cm.
Table - 9 Prices of several brands of ceramic tiles, August 1998
Price Size (Rp/ Producer Brand Type (cm) [m.sup.2]) Senrico Djaja Super Italia M 32 x 32 22,500 Marmer Industries P 32 x 32 23,000 Q 32 x 32 26,000 G 20 x 20 23,000 H 20 x 20 24,000 J 20 x 20 25,000 Setya Raya Roman & Royal 22103 20 x 20 25,500 Keramindo/ 20104 20 x 20 26,500 Metropole 3302 30 x 30 27,000 3349 30 x 30 27,000 36203 33 x 33 42,500 44004 40 x 40 49,000
Source: Data Consult
Domestic consumption down 12.8% in 1997
Figures on the national consumption of ceramic tiles are obtained using the following formula: national consumption = production + imports - exports, with the assumption that domestic production for a given year is totally consumed in the same year. For 1993, the domestic consumption of ceramic tiles is estimated at 114.1 million square meters, which rose by 16% to 152 million square meters in 1995.
In 1996, domestic ceramic tile consumption still grew albeit more slowly than it did in the previous years, i.e. by only 5%. One major reason for this was the fact that the domestic supply was already high with the continued expansion of the ceramic tile industry's production capacity. Following the outbreak in mid-1997 of the monetary crisis, the construction sector (which deals in the development of property, real estate, and other construction projects) slumped and has continued to be sluggish since then. In practice, therefore, ceramic tile producers now rely on the retail market, which is composed of house owners, to consume their products. However, the capacity of this market segment to absorb ceramic tiles has also declined with the people's weakened purchasing power. In 1997, the domestic consumption of ceramic tiles reached an estimated 140.2 million square meters, down 12.8% from the previous year.
Table - 10 Estimates of Indonesia's ceramic tile consumption, 1993 - 1997
Year Consumption Growth ('000 [m.sup.2]) (%) 1993 114,155 - 1994 131,164 14.9 1995 151,970 15.9 1996 160,784 5.8 1997 140,190 -12.8 Average growth 5.9
Source: Data Consult
Due to the prolonged monetary and economic crisis, which began in mid-1997, the domestic demand for ceramic tiles has been on the decline. In 1998, it is expected to decrease even more rapidly, namely by 30%, with the collapse of the construction sector and the shrinking purchasing power of the people.
The current economic woes have made the future of Indonesian economy difficult to forecast. The same crisis has affected various aspects of the nation's life, including the political aspect. However, the recent monetary development in which the rupiah started to strengthen against the U.S. dollar provides a good reason to hope that the construction sector will begin to return to normal in the year 2000.
Basically, Indonesia being a developing country, the domestic market has a high potential to absorb building materials, including ceramic tiles. In view of this, a good number of investors were once interested in entering the ceramic tile industry in Indonesia. In addition, foreign ceramic tile suppliers have also continued to eye the Indonesian market.
Up to now, not many Indonesian ceramic tile producers have started to orient o·ri·ent
1. To locate or place in a particular relation to the points of the compass.
2. To align or position with respect to a point or system of reference.
3. themselves to the export market. With the sharp depreciation of the rupiah against the U.S. dollar, Indonesia theoretically has a good opportunity to increase its share in the international market for ceramic tiles. However, the competition on the export market for such products, especially the high-quality ones, is already quite tough. On the international market segment for medium-to-low quality ceramic tiles, Indonesia has to compete tightly with other developing countries, notably China.
Another problem which Indonesia's ceramic tile industry faces is the fact that glazing and coloring materials still have to be procured mostly from import sources. Besides, the basic materials that are found in abundance in Indonesia usually have non-standard quality. Apart from this, the supply of Indonesian nationals skilled in the techniques of ceramic tile production is also limited.