Ceramics fever: What did the industry transform into??

Q&A with Mr. Abdallah Massaad, CEO, RAK Ceramics

How did you grow over the course of years to become one of the world's largest ceramics manufacturers?

RAK Ceramics was established in Ras Al Khaimah in 1989 by H.H. Sheikh Saud Bin Saqr Al Qasimi, member of the Supreme Council and Ruler of Ras Al Khaimah, who aspired to have the best machinery, latest technology, and to produce the best products possible for sale in the world. Ceramics were an imported product in the region at that time, but every year we have added capacity and demand continues to grow.

We became a leading player in the GCC region in 2000. From 2000 to 2004 we invested heavily, expanding the company, and exporting to almost 120 countries by 2004. We now have a strong global client base. We invested further in customising products to meet the needs of specific markets. We always try to produce something unique, and this has made us one of the largest players in the field. We are pioneers in many ways; we were the first company to produce antimicrobial and luminous tiles. In 2005, we produced the largest porcelain slabs available at that time at 1.2 by 1.8 metres, a breakthrough in the industry. We are continuing with our vision. Most recently in 2015, we launched Maximus Mega Slab, a 1.5 by 3 metre large format tile and are the only factory in the region with the capability to do this.

We are blessed to be based in an area that has also expanded at a phenomenal rate. Manpower is accessible in the UAE, particularly from the Indian subcontinent, as well as worldwide. The UAE has great infrastructure. We have the best airlines and ports, which enable us to access world markets, and in Ras Al Khaimah our raw materials are delivered directly to the port in RAK City. We are uniquely positioned to sell to the entire GCC with no barriers. Each of these factors contributes to our success.

When I joined RAK Ceramics in 2005, it was an exciting time. I was lucky to be surrounded by visionary entrepreneurs and was privileged to become part of a highly driven and ambitious team. I witnessed the development and the vast growth of the ceramics industry in general and RAK Ceramics in particular which grew from manufacturing close to 1 million m² of tiles in 1991 to a world-wide market leader, which has supplied 1 billion m² worldwide.

In 2008/2009, whilst many industrial companies struggled under the pressure of the financial crisis, RAK Ceramics' successfully weathered the downturn through the strength of its balance sheet and sound investment decisions. The company was not forced to lay off workforce or make any redundancies, on the contrary, RAK Ceramics continues from strength to strength as global markets recover and an increase in infrastructure investments and construction is registered globally. Tiles market is expected to register a 9.2 annual growth by 2019 as per a report by Transparency Market Research, with Asia Pacific dominating the global market for ceramics.

Today, RAK Ceramics is one of the world's largest manufacturers of ceramic tiles and sanitaryware with a global production output of 117 million sq.mt of tiles, 4.6 million pieces of sanitaryware and 24 million pieces of tableware per annum, which accounts for a US$ 1 billion annual turnover. The company exports to over 160 countries in 5 continents, a testament to the global appeal of its products and its excellent reputation in the ceramics industry.

How is the ceramic industry performing in the GCC?

There have been mixed opinions about the direction of growth in the construction sector; however we anticipate that the GCC has been and will continue to experience a significant increase in construction activity, encouraged by factors such as an increase in tourism, positive macroeconomics, and high-budget allocations towards mega-projects. Saudi Arabia, the UAE, and Qatar are the leading consumers of ceramic tiles in the region, which will continue to increase as these countries win the rights to host international events, such as the FIFA World Cup 2022 in Qatar and the Dubai Expo in 2020. Furthermore, following the announcements of mega projects at this year's Arabian Travel Market 2015, it is evident that construction growth will accelerate as work commences on these new projects.

As ceramics is a crucial component in the completion of the majority of construction projects, the growth of the construction industry is positive for RAK Ceramics specifically and the ceramics industry at large. RAK Ceramics' products are sold to a wide range of segments, including residential, commercial, industrial, and hospitality segments among others, which maximises our exposure. Similarly, from a geographical standpoint, RAK Ceramics' products are sold in over 160 countries, reaching a wide range of customers with varied preferences and needs.

Furthermore, the GCC has an advantage, as it is able to competitively price its products, primarily due to the availability of raw materials. The GCC imports almost 40 percent of its total demand; with China, Spain, Italy, Egypt and India supplying the largest number of tiles. The GCC also "actively" exports tiles to countries in the Middle East and Africa.

What are some of the bottlenecks that often stand in the way of ceramics manufactures in this region?

The performance of the ceramics industry is correlated with the construction and the raw material industry.

Several challenges from an economical and operational standpoint may create situations where output would be limited. Examples in the ceramics industry could include increased demand caused by a construction boom that cannot be met by companies, old technology producing outdated designs that cannot be sold, or inefficient operational networks causing long delays in shipment and delivery.

At RAK Ceramics, we have implemented an ERP SAP system to circumvent these bottlenecks. The highly advanced system supports business automation and IT processes, integrating key business functions, which aims at improving the company's overall transparency, efficiency and productivity, with solutions rolled out across all plants globally, warehouses, showrooms and offices to ensure accuracy and consistency in data collection and data management. Phase I, which was completed in a record of 8 months, commenced in April 2012 which was then followed by phase II of the project in the 2^nd quarter of 2014.

Can you tell us about the latest trends in this industry forward?

Ceramics has always been an essential commodity but has transformed significantly into a design-oriented product. The different uses of ceramic designs by designers, artists, individuals and corporates alike have pushed ceramics to become fashionable rather than simply functional.

Additionally, advanced digital technologies, rising urbanisation and increased construction projects are considered key driving forces that have led to the development of unlimited flooring options ranging from basic aesthetics and functionality to eco-friendly, hi-tech, and designer-based ones in terms of appearance, feel, finish and touch.

At RAK Ceramics, we try to educate customers about the different types of ceramics and advise them on what best fits their needs. We also get feedback from them on what they would like to see in their houses and what inspires them. This two-way communication process and customer-focused approach made us grow into who we are today.

Customers are beginning to understand that ceramics is the best alternative to any flooring material due to its strong technical and aesthetic characteristics. Most recently, the trend is for nature inspired designs in larger format tiles. We have seen strong demand for our Maximus Uni range in the markets of GCC, India and Europe because of their unique finish and designs which give the collection a distinct look. Also our Marble and Wood ranges are popular because of their distinct designs, marble-like and wood-like finish which enhances the look of both residential and commercial interiors.

The green building trend is also contributing to an increase in demand, because ceramic products are green.

Instead of using wood, you can achieve the same look with ceramics but better; ceramics is more hardwearing, easier to clean and requires less maintenance.

At RAK Ceramics we have been ahead of the trend and already produce many ranges of nature-inspired and eco-friendly products. Our Wood Art and Stone Art collections provide that highly sought after natural look in durable, cost-effective tiles. We have also started producing RAKSLIM, a revolutionary 4.5 mm thick, eco-friendly tile. It helps in a significant reduction of dead load on the building structure because of its slim design. RAKSLIM is also easy to install, utilises less space and has energy-saving features.

What does innovation mean to your business?

In recent years, the UAE has achieved great strides in diversifying its economy through focusing on innovation and technology development. At RAK Ceramics we have always invested heavily in research, development and the latest technologies to ensure that we remain at the cutting edge of ceramics' production in the region. Being a technology leader means staying ahead of the curve, and to be competitive in the global marketplace, we must continue to drive innovation in our products. For us at RAK Ceramics, innovation means cutting edge design and state-of-the-art technology and we will continue to keep an open mind regarding the latest developments in ceramics. We possess a deep passion to become a lifestyle brand that is a first choice for everyone in the business. Innovation is what drives and inspires us and I believe it will ultimately help us to remain an industry leader.

What are the latest technologies that are taking the ceramics industry forward?

RAK Ceramics is proud to be at the forefront of technology and has its finger on the pulse of new developments in the ceramics industry. The company has started implementing new technologies in the production of brand new designs in sanitaryware and tiles. Our sanitaryware and tableware plants are equipped with state-of-the-art high pressure casting machines and robotic spraying technology which produce high quality pieces with a consistently impeccable finish. RAK Ceramics is the first manufacturer in the GCC to introduce Continua+ technology to manufacture large format Porcelain+ tiles such as Maximus Mega Slab. These large format tiles are twice as strong as traditional porcelain and can be used on walls, floors and façades or to replace kitchen counters or bathroom vanity units. We have also invested in a new glow-in-the-dark Luminous series and Antimicrobial, a hygienic easy to clean tile especially suited for use in schools, healthcare facilities or the hospitality industry.

What are your plans for the next few years?

We have a clear three year vision, underpinned by our Value Creation Plan. In the next few years RAK Ceramics is expecting major improvements and innovations in its corporate and production strategies. We are focusing on our "core business operations," identified as tiles, sanitaryware, tableware and faucets, and at the same time scaling down "non-core businesses," such as joint ventures, construction companies, and less profitable overseas expansions.

The company's market priorities remain to be in the top three players in focus markets -GCC, India and Bangladesh, to be among the top five exporters to value markets -Europe and MENA, and to strengthen its presence in frontier markers--USA, Africa, South-East Asia and Russia.

RAK Ceramics will also focus on improving profitability and sales and distribution strategies through a significant expansion in the sanitaryware business and investing in the distribution platform in Saudi Arabia.
 
Our sanitaryware production capacity is set to increase significantly with the expansion of production lines in India, Bangladesh and the UAE. We have already invested in building a showroom and employing a sales team in Saudi Arabia. As a result, RAK Ceramics will have a wider footprint in the region and consequently expects a significant rise in sales. RAK Ceramics' priorities remain to be in the top three players in focus markets -GCC, India and Bangladesh, to be among the top five exporters to value markets -Europe and MENA, and to strengthen its presence in frontier markers--USA, Africa, South-East Asia and Russia.

Ultimately, our goal is to become a provider of total ceramics' lifestyle solutions and be the most recognised brand in the world.

© Capital Business 2015