Ceramic firms start to crack

November 03, 2011 | 16:43

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Ceramic firms are being squeezed by surging costs and shrinking consumption.

According to Vietnam Building Ceramic Association (VIBCA) figures, ceramic firms’ inventories amounted to 30 million square metres, the highest ever.

Vicenza factory has designed capacity of four million square metres per year. However, now the firm’s inventory came to over 800,000sqm.

Vicenza factory director Do Duc Ty said the firm was struggling to keep its head above water.

“This is the most difficult period for the local ceramic industry. Many firms have to cut volume, just running at 50 to 70 per cent capacity, but the inventory is still pilling up,” said VIBCA secretary Vu Quoc Hung.

Besides, cutting public investment, high lending rate and rising input costs against huge inventory have put great pressure on Vietnamese ceramic makers.

Cutting public investment in accordance with Decree 11/2011 ND-CP has led to dwindling consumption since there was a sharp fall in construction projects’ budgets.

According to the Ministry of Planning and Investment, lending interest rates, which the State Bank is trying to reduce to 17-19 per cent per annum, were fluctuating from 18-21 per cent.

On the other hand, Vietnam is facing increasing competition from Chinese imported products.

Dong Tam Group Vo Quoc Thang chairman said: “Local firms’ products can’t compete with products imported from China equally because there are too many smuggled goods.

With import tax level of 25 per cent plus other costs, products imported China can’t compete with Vietnam’s products both its price and value if they come into Vietnam through official channels.”