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Ziegel International 8-2015

Construction materials manufacturers in The Netherlands demand fair competitive conditions

In 2014, domestic sales in the brick industry in The Netherlands were somewhat higher than had been anticipated at the end of 2013 (4%). Exports of facing bricks, especially to Great Britain, were the most important medium carrying the total sales growth (29%). A historically unprecedented number of bricks was exported (+76%). This masks the fact that domestic sales are growing only slowly, that they are recovering from an unprecedented poor level and that the sales growth is not consistent with turnover growth. It is particularly due to a good British market that the Dutch brick industry has been able to deal with the difficult domestic situation. This industry and similarly manufacturers of ceramic roof tiles and other tiles have no certainty whatsoever of the prospect of a good domestic market in the coming years.

A level playing field
Both at home and in Europe, the KNB has stressed the importance of a fair competitive position time and time again. The lack of a tax exemption for gas usage in the mineralogical transformation process, which exists in all of the neighbouring countries, is an issue that should be highlighted first (for years!). The general increase of the 2nd and 3rd energy tax band 2015 (by no less than 50%) was therefore not understood by the sector at all. A strong lobby regarding the Tax Plan 2014 could not avert this substantial increase in the tax burden for the sector and it even resulted in a disparaging qualification from the State Secretary for Finance ('there is always a small industrial sector or other'). It is an example of the lack of awareness that sectors in the manufacturing industry are extremely important for innovative strength, employment and economic growth in the region. The imbalance in the threshold value for nitrogen deposition between the Dutch Nitrogen Management Action Plan and the neighbouring countries is just another example of this lack of awareness.

The topicality of the subject was illustrated by the closing down of the last Dutch clay pipe factory in 2014. This means that the Netherlands has again become fully dependent on foreign countries for a construction product and again it has lost know-how. The production of ceramic toilet bowls, wash basins and services had already disappeared for good from the Netherlands.

Success with nature
It is not only a fair competitive position but also the preservation of the production possibilities that requires our attention. It concerns the incorporation of ancient production locations in areas that have only recently been designated as N2000 natural sites by the government. Our industry feels that it is self-evident that nature should be taken into consideration; it even helped create this! Having to legitimize the current long-established utilization with retroactive effect to 2000 is taking things too far. However, this would seem to be the fate of 'existing utilization' (stone factories and clay extraction) in or near Natura 2000 sites such as the Gelderse Rijntakken.

It is absolutely bizarre that a combination of economy and ecology that has proved to be successful throughout the centuries, will not be granted a legal place in the Management Plans for Natura 2000 sites. It forces manufacturers to incur financial and administrative burdens without any of these serving nature. "A factory cannot be picked up just like that", one of the members observed in a press coverage.

KNB supported an initiative of the Cerame-Unie, the European umbrella organization for the ceramics industry, in connection with the 2014 European elections. Using a manifesto, the KNB proposed suggestions for a policy to Dutch (candidate) members of the European parliament that would take our manufacturing industry, employment and the earnings capacity of Europe more fully into account!

The European "Green Paper A 2030 framework for climate and energy policies", also motivated the KNB to emphasize the importance of good production possibilities and realistic growth opportunities for the construction ceramics industry. Major industrial issues such as the 2030 climate targets, the Emissions Trading Scheme (ETS), the mechanisms of carbon leakage and the state-aid framework for the environment and energy must not affect our SMEs disproportionally. European studies show that it is because of this SME character that gas prices for (construction) ceramics manufacturers are up to 28% higher than for other energy-intensive sectors in Europe. Electricity prices are even up to 159% higher! 

Construction prospect
After two years of decline, the Dutch economy made some progress again in 2014 (0.8%). Restoration of consumer confidence and manufacturers resulted in growth of the domestic market. The first signs of recovery in the (owner-occupied) housing market play a role in this. The landlord charge at the end of 2013 and the increasing tightening of credit requirements are responsible for the fact that this recovery is slower than necessary.
According to the Buildsight prognoses followed by KNB, only 39,500 houses were delivered in 2014 (-6%). Statistics Netherlands recorded planning permissions for almost 26,000 owner-occupied houses (+66%). The number of permissions for the reconstruction and renovation of existing houses increased (+5.5%) as well. Because of the limited building activities of housing corporations, the increase in the number of granted rented houses lagged behind by 28% up to almost 14,000 new-build (rented) houses.

On the face of things, the Dutch brick industry was doing very well in 2014: a growth by 29% in the sales of bricks. This good number disguises the poor Dutch construction market in which only a total of 440 million WF was sold (+4%), half of which was sold on the Dutch market in 2008 and which was just above the historically low level in 2013 (424mln WF).
A lot of bricks were exported, especially to the British market. This growth by 76% in 2014, had already begun in 2013 with a growth of 35%. The Dutch brick industry is able to respond effectively to the British demand for bricks which is the result of the "Help to Buy" programme. This is a government programme which enables people to buy a house.

Clay pavers
The sales of paving bricks remained more or less the same (1%) and they managed to stabilize, following their poor results in previous years. Sales are still below the long-term average, however. The sales of paving bricks in mechanical packages decreased in 2014 (-4%).

Ceramic tiles
The market for ceramic wall tiles and floor tiles was a continued challenge in 2014. The domestic market deteriorated again in the course of the year which was mainly due to the still ailing construction market. Exports in Europe remained constant. Outside of Europe exports rose slightly. The difference in energy prices undermines a healthy competition on other continents.

Ceramic roof tiles
The market for ceramic roof tiles recovered somewhat; the renovation market in particular was stronger than in 2013. The new-build market was stable to slightly negative. The share of ceramic roof tiles compared to those made of other materials seems to have gone up again slightly. With a market share of approximately 70% in sloping roofs, ceramic roof tiles are by far the most preferred products in the Netherlands. 

The expectations for 2015 and 2016 are cautiously positive. The recovery of the new-build production is determined by the housing construction.
The increase in the rented sector is much less pronounced than in the owner-occupied housing sector although the winding down of incentives and stricter financing requirements slow down the latter rather than that they accelerate this. Constructors for the market build more rented housing than housing corporations. Exports will continue to shoulder sales again.

Read the original online article in ZI-8-2015