Financial Times

Providing that competitive edge to Sri Lankan ceramics
By Nimesha Herath
In the past when Sri Lanka was using imported China clay for its ceramics, industries in neigbouring India in Kerala were importing China clay from here for their products. That was at a time when the country was unaware of its own resources.

Today even after the Meetiyagoda Kaolin refinery was established in 1977, Sri Lanka is still battling to remain competitive in the global market.
The ceramics industry is badly in need of support to face fierce competition from countries like China and Indonesia.

According to Dr. Bandula Perera, Additional Director General, Board of Investment of Sri Lanka – speaking at a workshop held recently by Sri Lanka Ceramics Council - the entire perception on the way the industry is looked at needs to change. The decline in Sri Lankan competitiveness is mainly due to the higher cost of production which comes across mainly due to high cost in raw materials used.

Dr. Alberto Silva, Consultant for the Raw Material Processing Improvement Programme 2006, also told the workshop that improving raw material consistency was perhaps the highest priority action needed to improve the overall competitiveness of the Sri Lanka ceramics industry. Availability and quality of raw materials do have an important impact in the industry.

“There is a future for the ceramics industry in Sri Lanka.
In any case Sri Lanka’s competitive advantage is its flexibility and trainability. With almost 8600 metric tonnes of China clay being the annual requirement for ceramics, rubber, paint, refractory and other industries there is a grave need to develop the status and availability of raw materials,” the BOI’s Dr. Perera said.

Do we need manufacturing industries in Sri Lanka?It is a question much debated in the context that Sri Lanka is more suitable for services. Dr. Perera however illustrated that no country is able to progress without value addition for which new goods and services need to be developed. It’s important that the small and medium enterprises are developed where manufacturing industries out of Colombo and Gampaha are encouraged.

This will generate jobs so that the masses are benefited in improved living standards. What went wrong? Dr. Perera said that to begin with Sri Lanka was affected by rising energy prices (ceramics being an industry having a large consumption of energy) that resulted in increased production cost. Secondly it was the lack of development in local raw materials due to insufficient investment in this sector.

He said that labour issues are also a prime reason why the industry is suffering. The managers should concentrate on “continuous development” of the workers and make them understand that dishing out benefits will not simply work. Worker benefits should be linked to productivity of the business. Dr. Perera also pointed out that lack of Research and Development (R&D) – another topic discussed frequently now – reflects highly on the ceramics industry as well.

Today where people demand quality goods for the value of their money, manufacturers are expected to continuously be on their toes for better value additions. He said there is a need for the state to facilitate investments in the ceramics industry, involve in R & D, develop SMEs at village level and supply affordable and reliable energy for the industry.

However given the keen interest of the professionals in the industry, the Sri Lanka Ceramics Council is taking steps to develop a “centre of excellence” where large or small raw material processing companies will be able to test kaolin, develop a sub-committee to review problems the suppliers, manufacturers, managers are facing and to educate newcomers to the industry.

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