Supplying the global market with Ras Al Khaimah’s tiles

Since operations began 15 years ago RAK ceramics has grown to become one of the world’s largest tile suppliers

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By  Rhys Jones Published  June 5, 2004

History and growth|~|aerialbod.jpg|~|The vast plant in Ras Al Khaimah is a kilometre long and a kilometre wide. The plant now exports tiles to well over 100 individual countries, where they are distrbuted to local consumers via a network of dealers.|~|As one of the world’s leading ceramics producers RAK Ceramics is a true UAE success story. Founded less that 15 years ago the company has experienced tremendous growth and now has factories around the world. Construction Week spoke to chief executive officer, Dr. Khater Masaad about how the company has developed, and what its plans are for the future.

What is your involvement with RAK Ceramics?

I have managed the ceramics factory since it first opened. The factory is now a public shareholding company but it was initially founded and promoted by Sheikh Saud Bin Sakr Al Qasimi the crown prince of Ras Al Khamaih. I was personally involved in the project from the very beginning. After I discovered the raw material in Ras Al Khaimah I produced a feasibility study and the factory was started based on that study. Once the factory was built production could start and we could sell our ceramics. We are now probably the number one ceramics supplier in the world.

What is your background?

I am originally Lebanese, but I did my all my studies in Switzerland. I stayed there for so long that I eventually became a Swiss National. I came to Ras Al Khamaih in January 1989 so I have now known Sheikh Saud for the last 15 years, and I have worked for RAK Ceramics all of that time.

How did you become involved in the Al Hamra Village project?

I was on the board of directors for the Al Hamra Fort Hotel and Resort, which is owned by Sheikh Saud. At the time I was not really managing the business - I just sat on the board - but he delegated the task of building up the tourist industry in Rak Al Khamiah, and since there was vacant land surrounding the existing hotel I was asked to make an interesting proposal for the fort area, and that’s what was done.

What was RAK Ceramics like when you first arrived in the UAE?

Nothing, RAK Ceramics did not exist. I became involved in the company because raw material was discovered in Ras Al Khamaih and I found that this material was suitable for making ceramics. I showed my findings to Sheikh Saud and I proposed setting up RAK Ceramics. He told me to make a feasibility study and from that study he founded the company.

What was the raw material?

There are various clays that can be used for producing ceramics. The reserves near the mountains will last for 50 to 100 years. This material is only available in RAK because if the unique configuration of the mountains here.

How much has the company grown?

When we started production in 1991 there were just 100 employees. The company itself was founded in 1989 and construction of the plant facilities began in February 1990. Production began in June the following year. It was meant to start in April but the Kuwait War disrupted things and the Italian technicians who were supposed to start up the factory machinery could not come before April.

When the war finished we could proceed, and production started on the 1st June 1991. Since then the company has grown to employ 3 500 people. Internationally we employ another 1 500 people, so overall the company now has 5 000 employees.
||**||RAK in the marketplace|~|masbod.jpg|~|Dr. Masaad is now heavily involved in the development of Ras Al Khaimah. The Al Hamra Village project, across the road from RAK Ceramics head office is just one project that is designed to put the Emirate on the map as a global destination for tourism and leisure.|~|What is RAK Ceramics’ international presence?

We now have factories in Bangladesh, China, Sudan Slovakia, Iran and most recently India. We also have a number of distribution centres in the UK, Germany, France, Switzerland, Belgium, and Italy. RAK Ceramics product are now sold in 128 countries.

Why not just export from Ras Al Khamaih?

China imposes a 45% custom duty on imports. In Bangladesh it’s 87%, Sudan it’s 100%, Iran it’s 126%, and India it’s 60%. They are big interesting markets and we feel we should have a presence there.

When I proposed to setting up a factory in Bangladesh six years ago everyone thought I was crazy. When I told them it’s a country with 130 million people and they have oil, gas, cheap manpower, there is custom duty of 87% and they need tiles they realised you can’t go wrong. Today that factory is making $4 million net profit per year, or a 30% - 40% return each year. No other foreign investors think of going to countries like Iran and Sudan so you always have a kind of exclusivity.

You need to take a risk but the returns are there. In Sudan there were no tile factories until we built ours. Believe it or not, after we started production in Sudan a few weeks ago, not a single square metre is now in stock. Every tile that comes out of the kiln goes straight onto a truck for delivery.

Does RAK ceramics bring any unique products to the marketplace?

The company has introduced a lot of innovative new products. We now produce the world’s biggest tile, which measures a massive 1.2 m x 1.8 m. No one else produces tiles this big.

Could anyone with a good source of raw materials be successful in this industry?

I don’t think it is just a matter of raw materials. The most important thing has been the trust, support and drive of Sheikh Saud. He is very supportive and this allows myself and everybody else who works here to concentrate and get on with their job and improve the company without any unnecessary hassles.

We have also used the best available technology, the best technologists, and have maintained a strong customer-focussed approach, so that we produce what customers actually want. The company does not want to just produce something and then try to sell it. We check with clients around the world to find out what they want and then we produce it for them. This is very important when running a successful business.
||**||UAE and the future|~|dr-khater massaadbod.jpg|~|Dr. Masaad has played a key role in RAK Ceramics’ success since it was created in 1989. Since then he has seen the company grow into be a truly international concern with a number of factories around the world.|~|Who were RAK Ceramics first customers?

At first we sold to customers in Saudi Arabia, Qatar, Bahrain and UAE. Nowadays we sell directly to projects, builders and contractors in the UAE, we do not sell to dealers. We have now supplied a number of very prestigious projects in this market including the Fairmont Hotel, Grand Hyatt, all the Le Meridien hotels, the Holiday Inn hotels, and many of the new towers. We also supply tiles to a number of ongoing projects, including a number Emaar projects, the Palm Island, and all the Public Works Departments in Abu Dhabi and Dubai.

What is the market like in the UAE at the moment?

Over the last five years we achieved a market share of about 75% in the UAE, so we have no real competition today. It was a different story when we first started. We approached all the dealers with my tiles and we were rejected because they did not want to deal with local products, they just wanted to deal in imported products.

We had no choice so we went directly to contractors who started to use our products because we could offer very competitive deals. And if a contractor can save Dhs2-300 000 or maybe even Dhs1 million on the cost of tiles for a building he will be very happy, so the contractors began to push the architects to specify our tiles. After a number of successful projects the architects now fully trust RAK Ceramics products.
It is very funny because now all the dealers really want to work with us.

Do you think the UAE market will maintain its current trajectory?

I believe the UAE market for tiles is fairly stable. For the last five years the market has enjoyed a boom. I don’t think it will grow much faster than it is now, it will just maintain the same rate of consumption.

What is the future for RAK Ceramics?

The future is Europe. Europe has a population of 350 million, and consumes 3 m2 of tiles per capita each year. In Italy and Spain the consumption rate is even higher. So it’s a 1 billion m2-plus market for tiling. The market is also growing. In the UK the tiling market is currently booming and we now have 450 dealers in the UK. It is currently our best market for sanitary ware. Germany is our best market for tiles. We have developed very good contacts in Europe and this is good because it is a very quality conscious market, they do not simply look for the cheapest price.

We have also been able to make use of the fact that the cost of container from the UAE to the UK is just US $800, which amazingly is cheaper than going from Italy to the UK. This is because the containers arrive here from the UK normally go back empty.

What are you long term goals?

We hope to build an even more prosperous company, we are certainly working on it. As a company we aim to be the world leader in the ceramics business. This will give us a strong say in the market, and this is important because consumers will have to deal with us. In 2005 the RAK Ceramics group will produce some 70 million m2 of tiles, which equates to 18% of total Italian production and they have 400 factories.
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