The ceramics industry uses a lot of energy in terms of LP gas, furnace oil, kerosene and electricity. High energy prices in Sri Lanka increases the cost of production and the industry constantly struggles to maintain competitive prices against competing countries, President, Sri Lanka Ceramics and Glass Council (SLCGC), Anura Warnakulasooriya said.
“Innovative thinking is needed in terms of designs and product ideas. Manufacturers need to invest more in designing their own brands and creating trends rather than following them. Sri Lanka has many skilled design students who only need some exposure and freedom to bring out ideas,” he said at an interview with Business Observer.
With the support of skilled and trained employees together with automation and semi automation and by moving into technical ceramics and advanced ceramics, the industry could contribute immensely to the national economy, he said.
Excerpts:
Q. What is the role played by the Sri Lanka Ceramics and Glass Council?
A. The word Ceramics encompasses a vast subject. Tiles (floor, wall and roof), Terracotta, Porcelain, Bone china, Stoneware, Earthenware, Cement, Glass are all considered different types of ceramic. The objective of the Sri Lanka Ceramics and Glass Council is to facilitate activities initiated by the Ceramics industry that result in an increase in competitiveness locally and globally. SLCGC is the apex body for consensus building among Manufacturers, Research and Development Institutes, Universities, Government Institutes and others involved in the ceramics Industry.
Q. What is the current situation of the ceramics and glassware industry in Sri Lanka?
A. The bombings and related events in the country last year affected the local ceramics industry drastically. All companies depending on local sales were badly affected. It seems to be slowly returning to normal but most companies say that it will take some time to recover the losses. The companies mainly involved in exports were also affected but not as much as the companies depending on 100 percent local sales.
Q. What are the other connected industries supporting the growth of your industry? What are their contributions in terms of production and sales volume increase?
A. The main connection is the suppliers of local raw materials. Quartz, feldspar, dolomite, ball clay, kaolin, silica sand are used in bulk in our industry and having a good quality supply at a reasonable price helps our industry move forward.
Archaic mining laws have impeded many mining companies from supplying the best quality raw materials and the processing of some raw materials such as kaolin have been completely stopped in Sri Lanka. This has forced all ceramics manufacturers to import the missing raw materials from other countries such as China, Vietnam, Thailand and India.
This is a loss for our country in terms of foreign exchange going out of Sri Lanka. It is important to note that in some cases, imported raw materials are cheaper than locally sourced raw materials but the industry is keen to buy local even at a higher price to support the local suppliers.
Q. What are the challenges faced by the industry at present?
A. The Ceramics industry uses a lot of energy in terms of LP gas, Furnace Oil, Kerosene and electricity. High energy prices in Sri Lanka increases the cost of production and we constantly struggle to maintain competitive prices against competing countries.
The lack of unskilled, trainable employees is also affecting the industry. The current negative mentality of the new generation who think being employed in a factory is a low-class job reduces the number of applicants for starting positions where the industry provides the needed training.
If steps can be taken to resolve this negative image it would help us hire and train more young people in the art and science of ceramic manufacturing. The jobs the younger folk are currently attracted to are in supermarkets and fast food outlets. This kind of employment does not get them a higher income, in most cases a factory income is more stable and more balanced in terms of work life.
Dumping of low-quality imported products into the local market: The tableware, sanitaryware and tile manufacturers are affected by unregulated imports which bring in low quality, potentially unsafe ceramics into Sri Lanka. Most of the time these are rejected batches from other counties which are purchased at very low prices and sold locally which cause a price imbalance and reduce the sales of ceramics which are produced locally at very high, international standards.
Q. What action could be taken and what is the way forward?
A. Our industry is doing our best to improve efficiencies in energy usage and productivity by adopting newer more advanced technology. Unfortunately, new technology is expensive and the high interest rates in Sri Lanka sometimes discourages high level investments as the Return on Investments (ROI) takes too long.
Q. What are the regulatory requirements to improve industry standards? What are the policy changes you envisage for the industry?
A. The expectation of policy changes is two fold. Free access to local raw materials which are mined in a sustainable manner would be a huge plus. Currently mining license has to go through 8 government authorities for approval and this takes too much time. Helping our suppliers to streamline this process will help the Ceramics industry purchase more locally and support the local suppliers.
It is necessary to provide an incentive to the industry to improve energy efficiency and productivity. Some incentives do exist in terms of low interest loans but these are not industry specific and are too complicated to apply for and secure.
Q. Is the business environment conducive for the industry to grow? What further facilities it requires?
A. At the moment it is stagnant. The industry is doing its best to survive. Help with issues mentioned in questions 4 and 6 will help us grow in the future.
Q. What is the industry contribution to the economy?
A. Value addition to local raw materials is a huge advantage for the economy. Unprocessed raw materials are locally sourced and immense value is added to it before it is sold as a product locally or internationally.
Local minerals like quartz, feldspar, dolomite, ball clay, silica sand are purchased as unprocessed minerals and the ceramic companies process it, add value to it. The value added to the raw material as a percentage in the ceramic tableware industry is over 300%. This is far better than exporting lightly processed raw materials from Sri Lanka at a very low price.
Q. What are the opportunities the industry has at present which could be harnessed to fuel growth?
A. 1. Trade wars between the USA and China has made Sri Lanka a potentially viable alternative. Unfortunately, the high cost of production is making this a difficult for the US companies to switch to Sri Lanka. If we are able to reduce our costs, we could secure new US clients.
2. The move towards sustainable living and reducing the use of plastics is an opportunity as ceramics are made from natural raw materials and cause no harmful effects when reintroduced back into the earth. Ceramics can be used for generations and we see a trend where clients are moving towards higher quality, more durable ceramics which will last generations and moving away from cheap, low quality ceramics and single use plastics.
3. Innovative thinking is needed in terms of designs and product ideas. Manufacturers need to invest more in designing their own brands and creating trends rather than following them. Sri Lanka has many skilled design students who only need some exposure and freedom to bring out their ideas.
Q. What are the new production approaches that need to be look in to in order to cater to the modern demand?
A. Some companies who compete on a mass scale will need to automate or semi automate its production to try and reduce costs to be more competitive. Smaller companies will need to concentrate on finding niche markets with high value ceramics to differentiate their products.
Q. What kind of new technology infusion is necessary to move the industry to the next level?
A. Automation and semi automation where necessary will take the industry forward. It is also necessary to introduce more energy efficient firing technology to reduce the use of energy.
Q. What are your suggestions for the industry to be future ready with a view to enhance export market and economic contribution?
A. Moving into technical ceramics and advanced ceramics will help the industry to move forward. This is a difficult, but inevitable jump we will have to make. If the governmental support for the issues faced by the industry is extended it will facilitate the industry to make it a vibrant economic sector in the country.