The gas bill has become the worst nightmare for tile manufacturers in Castellón , the largest producer of ceramic tiles in Europe and the third largest exporter in the world. After months applying partial stops or with lines at half throttle, in recent days a wave of layoff announcements has been triggered that already total 420 affected in three employment regulation files (ERE) and will mean the closure of two plants: Todagres and Azulejera Alcorense, from Pamesa .
An escalation of cuts that both employers and unions consider may only be the beginning if gas prices continue to skyrocket and direct aid such as that approved in other countries is not received.
According to the calculations of the Ascer tile employer, in 2021 energy already represented extra costs of 1,000 million euros and this year the increase may reach 2,500 million . That is to say, half of the business that moves the ceramic industry. Costs that include electricity and CO2 rights, in addition to gas, which in the case of the sector accounts for 8% of Spanish industrial consumption.
The effects of the energy bill are already more than visible in the factories. Production has fallen by 25.4%, as reflected in the Industrial Production Index (IPI) until August, a month in which the price of gas per MWh exceeded 300 euros, after multiplying by 11 in one year. Until then, many companies had already accepted Ertes to make their production more flexible, as is the case in other industries such as the automobile.
But after returning from vacation, many more manufacturers have chosen to take advantage of this temporary lifeline. Between January and August, 41 Ertes had been filed for 5,416 employees in companies such as Cerámicas Belcaire (former subsidiary of Roca in the hands of the Mexican Lamosa). In September that figure took another jump, with 22 new files that raised 7,233 workers affected, including groups such as Grespania or Bestile. A number that represents almost half of the use of the tile.
“More than 400 jobs have already been destroyed, we have more than 7,000 workers in Erte who can follow the same path and we do not see any measure on the part of the Government,” says Alberto Echavarría, general secretary of Ascer. With a demand that begins to suffer in Europe and with a rise in prices that reduces competitiveness in markets such as the United States, companies fear that the adjustment will inevitably go further.
The sharp rise in costs and their impact on tile prices has another collateral effect. Red body ceramics, the traditional raw material used in Spain, are being left out of the market. As explained by the Halcón Group, one of the manufacturers that has resorted to an ERE, it is much more difficult to pass on the prices of this type of ceramic upwards, as it is considered to be of lower value in the market.
The gas is also the basic energy to produce the atomized earth, the mixture of clay and other minerals that is introduced in the ovens. The cost to achieve a ton of atomized has multiplied by 10 in a year according to the calculations of Pamesa, the largest tile producer in both Spain and Europe. For this reason, manufacturers prefer to focus on white paste and porcelain, which allow them to have higher prices.
Waiting for the government
After a year with continuous increases and facing a winter full of uncertainty in Europe, the tile workers have raised the tone of their demands before the Government. The Executive has sold as a show of support the inclusion of cogeneration within the gas capping mechanism , but for businessmen it is not the solution.
For this reason, they demand direct aid much higher than the 400,000 euros set by the Government, such as those already allowed by the European Commission for the most affected companies, which can range from 2 to 50 million and are applied in Portugal, Poland or the Czech Republic. They also claim bonuses and tax credits like those received by their Italian rivals, of up to 40% of the difference in gas prices.
The effects on business
Pamesa: Fernando Roig’s group has focused its adjustments on the plants included in the purchase of Azuliber in 2021. In addition to the closure of Alcorense with 78 jobs, it maintains an Erte for 117 jobs in its atomizer from that same acquisition.
Todagres: After several years of losses and the current gas costs making the arrival of buyers unfeasible, Grupo Fuertes has chosen to close the historic mark, with 158 jobs.
Halcón: Since the entry of the US investor Falcon, the group has risen to become the third largest Spanish manufacturer by volume with acquisitions such as the Cicogres assets. With 5 plants, it now proposes an ERE for 185 jobs for its 900 workers and to reduce the red paste lines.
Mark Phil is a former market analyst and consultant. Mark in his 9-year career as an analyst, worked with top market players like Prodge LLS, Westat Inc. and Precision Opinion Inc. He moved towards writing in the year 2013. In the past, he undertook several freelance projects to begin his writing profession. Mark completed his economics degree from Columbia University. Along with performing sub-editorial duties, he is also writing a book on Market analysis.