No basis for safeguard measure on imported ceramic tiles – traders

Local ceramic tile traders yesterday said there is no basis on the move to impose safeguard measure on this product saying local producers can only supply 20 percent of domestic demand.

In a reply addressed to Trade and Industry Secretary Ramon M. Lopez on the notice of initiation of preliminary investigation for the application of safeguard measures on the importation of ceramic floor and wall tiles from various countries, the Philippine Ceramic Products Importers’ Association, Inc. stressed the local ceramic tile producers, which is composed of Mariwasa Siam Ceramics, Inc. and Formosa Ceramic Tiles Manufacturing Corp., do not have the capacity to supply the strong demand for ceramic tiles in the country.

“Our industry association believes that there is no basis for the local tile industry to seek remedies under the Safeguard Measures Act,” the position paper dated January 4, 2019 stated.

According to the traders, the increase in import volume of tiles is due to the increase in demand of tiles brought about by the property and construction boom. Demand has outstripped local supply, which the traders said have not hiked their production capacity even with the growing demand resulting in the decline in the market share of the local industry.

The group pointed out that Mariwasa has an annual production of 154,000 metric tons (MT) while Formosa has only 30,000 MT annually for a combined 184,000 MT annual local supply. But, domestic demand already hit roughly 1,108,715 MT in 2017. The shortfall of 924,715 MT have been addressed by imports.

There is “no causal link with the increase in import volume and factors such as sales, production, profitability and employment on the part of the local tile industry,” the position paper stated.

In the Public Version Report, the group noted that the cost to produce per unit increased in 2014 by 5 percent and declined every year from 2014 to 2017 by percent, 5 percent, and 1 percent respectively. The lowest cost to produce was recorded in 2017.

“The increase in import volume, therefore, did not negatively affect the production cost of the local industry,” the group said.

In addition, the importers said that the 17 percent decline in employment in 2017 cannot be blamed to importation, but to the systems automation and digital printing machines the producers have implemented to stay competitive.

Automation has resulted in lesser staff in the glazing line. Local ceramic tile producers also invested in automatic packing palletizing machines to automate the sorting and preparation of goods.

Imposition of safeguard measure could not also be imposed in the name of public interest, the importers said, stressing the local industry is not able to supply the growing demand for tiles in the country. At most, it can only supply less than a quarter of the market demand.

“Thus, imposition of safeguard measure on imported tiles will either create a shortage in the supply or unduly increase the prices of tiles in the market,” the group said.

It is not also accurate to say that the cost of imported tiles has done down recently. On the contrary, the importers said, the cost of imported tiles continued to increase and imposition of safeguard measures would further hike cost of imports.

According to the group, trucking cost has increased by 100 percent over the past years. Average trucking charges for delivery from port of Manila to any point in the metropolis is around 115,000 per container.

The group also asked DTI to exclude porcelain tiles in the petition for application of safeguard measure because these two products are not produced by the two local producers, and Mariwasa is even importing this kind of tile.