Stone fever

In the jewellery world they say ‘a diamond is forever’ but in the construction world there is one material that has already endured for millennia and remains the material of choice.

  • E-Mail
By  Eudore Chand Published  December 13, 2003

|~|chris_sunil_200w.jpg|~|Christopher Sunil, of RAK Ceramics, takes a call between customer meetings at the Big 5.|~|In the jewellery world they say ‘a diamond is forever’ but in the construction world there is one material that has already endured for millennia and remains, for many solutions, the material of choice.

We walk on it, we clad walls with it, we decorate with it. We make our kitchen surfaces with it and, in rich folks’ homes, they bathe in it. Most of the time, in the locations where it is used for its hard-wearing rather than aesthetic qualities, those who use it seldom even think of it or appreciate the qualities that help enhance our modern lifestyle.

‘It’ is, of course, marble and natural stone. It is a sector of the building industry that is enjoying a massive growth in the Gulf region, where recent construction activity has been and continues to be defined by large scale projects which favour natural marble and granite against less expensive alternatives. Just think of recent projects like the Emirates Towers and Burj al Arab and the next step into mega developments defined by Dubai Marina, Dubai Festival City, the Palm and World Islands.

RAK change

Neither must we forget planned projects elsewhere, such as Noor City, a US $2 billion dollar project containing homes, hotels, offices, leisure facilities and a cruise ship harbour that the developers describe as “destined to change the face of Ras al Khaima forever.”
The marble and machinery sector at last year’s Big 5 experienced massive growth and this year only improved the numbers yet again. Nearly forty producers took space to compete for a slice of the business in what is recognised as one of the world’s fastest growth regions.

According to the Big 5 organisers, construction activity in the UAE is now running at around US $4 billion per annum and the event provides access to buyers not just from the UAE but from the rest of the region, which is also enjoying spectacular growth in development and construction spending.

Demand for marble and granite has been growing at around 6% per annum. Both products tend to be imported in large uncut blocks or rocks and slabs polished for final use. Imports of blocks and slabs account for approximately 12% of total imports. Demand for flooring stone in the UAE is the highest in the whole region, higher even than Saudi Arabia and Kuwait.

Look around you the next time you go to a shopping mall or upscale hotel. Marble and natural stone products are all around you. There are few local producers, so these materials are mainly dependent on imports, currently estimated at around $100 million in 2002. To put that figure in context, the Portuguese confederation of stone and marble exporters claims that its share of the US market, which eclipses the Gulf region in terms of population, is less than $12 million a year. If you multiply that for each of the six main exporting countries you still fall short of the materials coming in to service the building explosion here.

Exhibitors at this year’s Big 5 include companies from the traditional producers, Italy, Spain and Portugal, as well as from Turkey, Germany, Belgium and, inevitably, China.

More than thirty exhibitors bear testimony to the importance of the region to the stone, marble and ceramics producers. A walk around the various pavilions gave even the casual observer some idea of the magic surrounding the materials; seemingly acres of elegantly lit displays of marble, intricate, delicate marble mosaic patterns and translucent claddings contrasting with the near everlasting solidity of the polished granite and ceramic slabs.

And it was evident that business was being done. Everybody is interested in beautiful things and this sector is remarkable in that it provides materials that combine beauty with a high degree of durability and functionality. Stopping, from time to time, to evesdrop, it was clear that real business was being done as customers and sales people pored over, and sometimes signed, documents. These were orders being placed, not just contact sheets being completed.

As recorded earlier, this is a sector dominated by exporters, mainly from the traditional suppliers in Europe. Italy is the recognised ‘home of marble’ but is hard pushed by Spain and Portugal. Europe, however, has been hard hit this year by the strength of the Euro. The global stone business is reckoned in dollars, so its plummet last month to record lows against the Euro has done the European producers no good at all.

Shelia Stella, from one of Italy’s biggest producers Bresciana Marmi, admitted a 30% fall in exports, “Our business is built on exports, with 80% going abroad until this year. Now it is a roughly 50/50 split.” She did not hesitate in blaming the strength of the Euro for the company’s reverse. She is undaunted, however, in her belief that the GCC represents a tremendous opportunity.

Founded in 1962, Bresciana Marmi is one of the leading producers of Botticino marble. It quarries 24 000 tonnes (672 000 m2) of marble from its own quarries near Milan and Verona. From other sources it takes another 10 000 tonnes (280 000 m2) and it exports into markets all around the world. Stella says, “We came to Big 5 for the first time two years ago and are now developing a client base here. We are writing some business but we are here because we see this as a booming region. It is only our second visit to Big Five and we want to expand here.”

It is a sentiment echoed by Italy’s arch European competitor, Spain, which brought twelve stone and ceramics producers together under the banner of the Spanish Federation of Natural Stone. A representative on their stand, who did not wish to be named talked about a tighter market situation because of the Euro/dollar exchange rate but also brought another big factor into play. China.||**||Chinese|~|chengdu_zaijian_200w.jpg|~|High quality, high price marble mosaics from Chengdu Zaijian blow away the low cost, low quality myth about Chinese products.|~|“We see the main competition coming from China, especially in the polished granite sector. Like northern Spain, China has huge deposits of granite and the sector is getting quite tough. This is an important and growing market,” she said.

For the first time at Big 5, China took a mini hall for itself. It still accommodated around 50 stands, with the marble mosaic producer, Chengdu Zaijian, taking one of the largest areas. It may have been one of the biggest in the Chinese pavilion but it was still small by comparison with its European and local competitors and, if judged by the glitzy standards set by its competition, the most understated display in the sector.

Yet the facts speak for themselves. In a remarkable 12 year history this private company has grown to be the largest supplier of marble mosaic in the world with ten factories and around 120 000 m2 of exports (80% of its production) now reaching 65 countries through more than 50 global distributors each year.

You have to admire the thoroughness that ensured its top management was trained in Italy, the recognised home of the mosaic craft, plus the creativity and marketing that enables it to claim such prestigious projects as two restaurants at Dubai’s Emirates Towers hotel, the Chicago Intercontinental, Saudi Arabia’s Defence Minister’s villa and, on an entirely different scale, Disneyland Tokyo. The thoroughness extends to the use of English, with CEO Yalding Howe having a greater command of the international business language than most of his European competitors with whom Construction Week spoke.||**||Export awards|~|milling_demo_200w.jpg|~|Potential customers watch a demonstration of marble milling.|~|The company holds a string of export awards from its home province of Chengdu, as well as winning pan-European quality awards. Howe is particularly proud of winning the most creative design award from one of Spain’s leading industry publications, Roc Maquina.

He rates the GCC countries among his five most important markets, with 20% of the export tonnage coming into the region. He says, “Our products are high end or the market so we are looking for customers who can pay high end prices. That makes the Gulf an important target for us.”

It blows away the general perception of Chinese products, which suffer the reputation of being low price and low quality.

A local exhibitor, RAK Ceramics, claims that cheap Chinese products are damaging the industry. Senior Sales Manager Christopher Sunil talks of one contract where a new shopping mall bought its flooring at low cost from China and is now having it replaced with local product.

But even he recognises that the low cost, low-quality tag is not likely to remain for much longer. He says, “There is no doubt, China is the big competitor. It has entered the market with some very low priced product that does not maintain a consistent quality but that is a short term situation.

“Their industry is soon to be privatised and it will be better looked after by new managers who have a real interest in making a profit. In China their product sells for Dh80/m2 but it’s half that price here. They won’t be able to hold prices so low for much longer as privatisation will lead to a new accountability and a demand for consistent high quality from customers.”

Yalding Howe’s company is one of the leaders in that drive for quality. He says, “Our concept is the exact opposite from low price and low quality. We are changing that perception. In fact some of our prices are higher than our competitors in Spain and Italy. Our company aim is to cover the whole world and to give people a different view of Chinese people and Chinese creativity.”

RAK Ceramics is not in competition with Chengdu Zaijian. It is a lot larger, with a much more diverse portfolio, and Christopher Sunil’s insight to China’s privatisation policy is the result of RAK building a factory in Shanghai, which began production last year. It is evidence that RAK is taking the battle of production costs right into the ‘enemy’s’ back yard. That development, plus its factories in Sudan, Bangladesh, Iran and the building of its latest unit in another low labour cost area, near Hyderabad, demonstrates the UAE company’s recognition that the ‘home’ is no longer a particularly low cost area.

RAK is a major global exporter with up to 60% of its production (a massive 140 sq metres per day) going to overseas markets. Its success, though, was built on the regional building boom and Sunil can claim some major developments as customers, the largest being the contract to supply Nakheel’s world-beating development, The Palm, with its stone and ceramics requirements.

We asked whether this contract was a real commercial decision or whther he felt that Nakheel, a Dubai government enterprise, was making a political decision by favouring a local firms? Sunil had no doubt, saying “It’s the right policy for a government owned developer to use local producers first and to look at overseas producers if they cannot find what they want at home.”

Labour costs

Yalding Howe is sanguine about the issue of labour costs. He has his string of awards from both China and Europe, plus his lucrative high profile contracts to testify to the quality that his company promotes.

He does, however, admit that cheap labour is the biggest factor in giving his company the edge over the competition. “Don’t forget,” he says, “that this is a hand-made, luxury product so the labour cost is an important factor.” And, despite the fact that China is enjoying ten times the annual growth rate of developed countries, with pressure growing to pay its workers better and so increasing costs, he sees that competitive edge remaining. He predicts, “It will be 20 to 30 years before we see a significant change in labour rates.”||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code