Economy, Domestic Economy

Tilemakers Positive Amid Market Slowdown

Domestic Economy Desk
Tilemakers Positive Amid Market Slowdown
Tilemakers Positive Amid Market Slowdown

TecnoFerrari, one of the oldest foreign companies active in Iran’s tile industry, is among the participants in the 23rd International Tile, Ceramic and Sanitary Ware Exhibition (Cerafair 2015), organized by the Iranian Ceramic Producers Syndicate. The Italian company has been supplying Iranian factories with loading and unloading equipment and digital tile printing machinery for over four decades.

As many as 200 Iranian and 50 foreign companies are taking part in the exhibition that opened in Tehran International Fairground on Monday, parallel with the 13th Kitchen, Bath, Sauna and Pool Industries and Equipment Exhibition (KBSP 2015) and the 7th International Natural Stone, Mine, Related Machinery and Equipment Exhibition (Stonefair 2015). The events will run until July 23. “We are very proud of our 40-year history of working in Iran,” TechnoFerrari’s sales manager, Stephano Benatti told the Financial Tribune.

Italy is the world’s top producer of ceramic tiles and tile manufacturing machinery. Prominent Italian companies such as TecnoFerrari, SACMI and SYSTEM Ceramics have kept the Iranian plants running for a long time.

  Tough Competition

Nonetheless, in recent years, the Italians have been sharing this “very important market” with their Chinese rivals. “The competition is tough,” says Benatti, highlighting Chinese names such as KEDA and Sincoza among their main competitors.

Chinese manufacturers have recently been able to take over a considerable portion of the market. The reason behind their products’ success can be generalized to include all the products made in China: low prices.

Mani Javidi, head of KEDA’s representative company in Iran, Maniran, says their business has been quite profitable compared to their Italian competitors.

He, however, believes that European old-timers still have a fair share of the Iranian market and are making considerable profit.

As Javidi said, the rivalry does not seem to be of much concern at least for TecnoFerrari. Benatti believes the Italian companies are reaping what they have sown over the years.

“We have done a good job. We have created a good brand which is highly appreciated in Iran,” said Benatti, stressing that their products’ quality is improving day by day. Goudarz Razzazi, the technical sales manager of SACMI’s spare parts division, believes low quality is the Achilles’ heel of Chinese products.

“The customers are free to choose either good quality or low prices,” he said, noting that while some customers are more inclined toward buying Chinese products, many factories still prefer quality.

  Challenges and Optimism

Nevertheless, the main challenge ahead of the tile industry, according to Razzazi, is shortage of liquidity as a result of the recent market glut. At least 300 million square meters of ceramic tiles are piled up at factories or in distribution centers as manufacturers face shortage of demand in both domestic and foreign markets.

A record low level of construction activities in the current Iranian year (started March 21) has resulted in low demand for ceramic tiles, placing a heavy burden on manufacturers. “While there are hundreds of tile companies in the country, only about 60 are operating at the moment,” Razzazi said.

He, however, hopes that the situation will change in the coming months as the housing market is likely to pick up following the removal of sanctions.

Last week, Iran and world powers reached a breakthrough agreement on a Joint Comprehensive Plan of Action to end a longstanding dispute over Iran’s nuclear energy program. As part of the deal, the sanctions imposed by the US, the EU and UN Security Council will be lifted.

Javidi believes that, in the long run, the removal of sanctions will also work in favor of the tile industry. “It will pave the way for export of surplus tiles in warehouses to the neighboring countries,” he said.