Development of the glass and ceramic industry in the period from 2003 to 2008

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In this part of the Annual Report characteristic values of the main production indices of the glass and ceramic industry of the Czech Republic in 2008 and in the period from 2003 till 2008 are recorded. In the context of real outer and inner background of the Czech Republic, based on these data, the aim is to analyze and describe the main trends of the development of economic and production indices of the glass and ceramic industry in above-mentioned years.

In the introduction of the glass and ceramic industry development analysis a survey of basic macroeconomic indices for the Czech Republic in the investigated period from 2003 till 2008 is given for understanding wide relations.

    2003 2004 2005 2006 2007 2008
Gross domestic product (GDP) Average growth in %, current prices 3.6 4.5 6.3 6.8 6.6 3.0
Average rate of inflation Average growth in % 0.1 2.8 1.9 2.5 2.8 6.3
Unemployment rate Average growth in % 9.9 9.2 9.0 8.1 6.6 5.5
Growth of average wages in % 6.5 3.7 3.2 3.9 4.4 2.0
Balance of trade bill CZK -69.4 -26.4 41.9 39.8 86.1 69.4
CZK / EUR Average per year 31.8 31.9 29.8 28.3 27.8 24.9
CZK / USD Average per year 28.2 25.7 24.0 22.6 20.3 17.0

(Czech Statistical Office - June 2009)

Main macroeconomic indices in the Czech Republic in the period from 2003 till 2008

The economic growth rate of the Czech Republic in 2008 significantly slowed down in comparison with previous years. The main cause was a decline of demand in the second half of the year, especially, in countries of West Europe. The glass and ceramic industry was significantly marked by this development, not only because of its export orientation, but also because of its dependence on a number of following industrial branches utilizing its products.

Data and analyses given below were gathered and processed for the glass and ceramic industry as the area of the Czech processing industry corresponding to the characteristic orientation of companies associated in the Association. The selected description method of the industrial development comes out from investigation of data arranged in individual branches of the glass and ceramic industry. For the analysis of 2008 available statistical data relevant to 15 July 2009 taken from the Czech Statistical Office (hereinafter Statistical Office), have been used.

In 2008 the Statistical Office changed the methodology of showing the individual branches production in weight units. The production is not stated consistently in tonnes, but for instance in m2, pieces, kg, etc. Therefore, in comparison with previous reports, information about the production in weight units in individual production branches is not given in this report.

In years 2003 and 2004 data were stated in the household and technical china and the technical ceramics and sanitary ware groups. Since 2005 data are given in the household china and ceramics and the technical ceramics and sanitary ware groups. Technical china is a part of technical ceramics.

Price indices for the group of products of the glass and ceramic industry

According to the Statistical Office data, the following trends of the price indices development are given in accordance to the classification CZ-CPA valid since 2008, substituting the Standard Classification of the Production (hereinafter Standard Classification):

Standard Classification CZ-CPA
DI 26 CG 23 Other non-metallic mineral products
DI 261 CG 231 Glass and glass products
DI 262 CG 232 Refractory products
  CG 234 Other china and ceramic products

Sector Class. 2003 2004 2005 2006 2007 2008
CG 23 99.1 100.9 100.7 101.4 105.4 102.4
CG 231 98.1 99.9 99.7 101.4 108.4 98.1
CG 232 101.5 100.6 97.1 101.1 102.0 103.3
CG 234 101.1 101.9 98.1 99.2 102.2 105.5

Inter - year price indices (same period of previous year = 100 %)

Sector Class. 2003 2004 2005 2006 2007 2008
CG 23 99.1 100.0 100.7 102.1 107.5 110.1
CG 231 98.1 98.0 97.8 99.1 107.5 105.5
CG 232 101.5 102.2 99.2 100.3 102.4 105.7
CG 234 101.2 103.1 101.1 100.4 102.6 108.3

Cumulative price indicies (2002 = 100 %)

A total average price index for the Glass and glass products group (CG 231) in 2008 decreased by 1.9 %, the price indices increased in the Refractory products group (CG 232) by 3.3 % and the Other china and ceramic products group (CG 234) by 5.5 % comparing with 2007.

Revenues for sale of own products and services

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 14.27 15.38 15.86 15.99 17.76 18.17 102.3
Container glass 4.39 4.66 4.96 4.75 4.84 4.33 89.5
Other glass 14.78 10.97 13.33 12.70 12.39 11.14 89.9
Glass fibres 4.14 4.81 4.23 4.53 5.42 4.39 81.0
Utility glass 7.84 6.79 5.30 5.38 5.77 5.00 86.7
Glass total 45.42 42.61 43.68 43.35 46.18 43.03 93.2
Household china and ceramics 3.37 2.83 2.63 2.34 2.90 2.66 91.7
Technical ceramics and sanitary ware 2.89 3.67 3.00 3.86 3.59 4.12 114.8
Ceramics total 6.26 6.50 5.63 6.20 6.49 6.78 104.5
Glass and ceramics total 51.68 49.11 49.31 49.55 52.67 49.81 94.6

Revenues for sale of own products and services (bill. CZK)

Development of revenues for sale of own products and services (bill. CZK)

In comparison with the previous year the revenues for sale of own products and services decreased totally by 5.4 % (2.86 bill. CZK).

The revenues amount for the flat glass in 2008 (in comparison with 2007) increased by 2.3 %. The growth of the flat glass production is dependent on the development in the building and automotive industry. The building production in 2008 increased, expressed in CZK, only by 0.6 %, comparing with 2007. A collapse of the demand from abroad struck, especially, the automotive industry. Due to the demand decrease the competitiveness escalated, and consequently the prices declined. Also the influence of a strong CZK was not negligible. The revenues for the flat glass include the revenues for the unfinished flat glass (raw unfinished glass) and the finished flat glass (finished glass, safety glasses, insulating glasses, mirrors, etc.). The revenues for the unfinished flat glass were approximately 52.8 % of the revenues for the flat glass, i.e. 9.59 bill. CZK, in 2008. In comparison with 2007 they increased by 3 %. The revenues for the flat glass products increased by 9.0 % (in 2008 they were approx. 47.2 % of the revenues for the flat glass, i.e. 8.58 bill. CZK).

In comparison with 2007, the revenues for the container glass decreased by 10.5 %. This decrease strongly influenced the export decline of this assortment. Nevertheless, the sale on inland market decreased too.

In comparison with 2007, the revenues of the other glass decreased by 10.1 %. Continually decreasing demand from abroad for fashion jewellery and glass semiproducts for fashion jewellery (the share of jewellery glass in the other glass group is about 53 %), has a decisive share on the revenues decrease for this group. The export decreased by 36 %, i.e. by 2.97 bill. CZK in comparison with 2007.

The revenues of the glass fibres decreased by 19 %. The decrease was influenced by a strong CZK, by continually stronger competitiveness of cheap products from China and by a crisis in the building industry in the second half of the year.

Worsening economic conditions (strong CZK exchange rate, competition of cheap goods from the third countries, economic recession) projected very significantly to the development of revenues for the utility glass and household china. In 2008 Crystalex, a.s. (production of utility soda potassium glass), Sklárny Bohemia, a.s. and Sklo Bohemia, a.s. (production of utility lead glass) and Karlovarský porcelán, a.s. and Concordia, a.s. (production of household china), shut down their activities. The revenues for the utility glass decreased by 13.3 % and the household china by 8.3 % in comparison with 2007.

In the technical ceramics and sanitary ware the revenues in 2008 increased by 14.8 % in comparison with 2007. Comparing the development in 2007, the revenues increased significantly in the sanitary ware (they represent 58.2 % of the production in this group), i.e. by 33.0 % (from 1.80 bill. CZK in 2007 to 2.39 bill. CZK in 2008). The revenues increased also in the technical ceramics.

Workers

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 3 791 3 878 4 134 4 151 4 683 5 175 110.5
Container glass 1 486 1 347 1 283 1 233 1 198 1 150 96.0
Other glass 14 421 12 226 13 182 13 364 12 865 10 206 79.3
Glass fibres 1 470 1 450 1 559 1 561 1 670 1 529 91.6
Utility glass 11 050 9 540 8 635 7 436 6 911 6 020 87.1
Glass total 32 218 28 441 28 793 27 745 27 327 24 080 88.1
Houusehold china and ceramics 6 218 5 153 4 908 4 234 4 136 3 749 90.6
Technical ceramics and sanitary ware 2 373 3 140 3 124 3 215 2 917 3 411 116.9
Ceramics total 8 591 8 293 8 032 7 449 7 053 7 160 101.5
Glass and ceramics total 40 809 36 734 36 825 35 194 34 380 31 240 90.9

Average accounting number of workers (persons)

Development of average accounting number of workers (persons)

Total workers number in the glass and ceramic industry stated in 2008 in comparison with the previous year, decreased by 3140 persons (9.1 %). In all other production groups the workers number decreased, with the exception of the flat glass and the technical ceramics and sanitary ware.

The growth of the workers number by 492 in the flat glass influenced the growth of 590 workers in the productions processing the flat glass (e.g. double insulating units, etc.). On the contrary, in the production of the unfinished flat glass the workers number decreased by 98 persons.

Since 2003 the workers number in the container glass group permanently decreases. The decreasing workers number is a result of continually proceeding rationalization measures. The workers number decreased by 4.0 % between years 2008 and 2007.

The workers number in the utility glass decreased by 12.9 % and in the household china by 9.4 % between years 2008 and 2007. Unfavourable outer conditions of sale causing measures followed by the decrease of the workers number and culminated in the third quarter of 2008 by a shut-down of Crystalex, a.s., Sklárny Bohemia, a.s., Sklo Bohemia, a.s., Karlovarský porcelán, a.s. and Concordia, a.s., still had an influence on the decrease of the workers number in the utility glass (by 891 persons) and the household china (by 387 persons).

The decrease of the workers number in the production of glass semiproducts for fashion jewellery and glass jewellery is sharing decisively on the decrease of the workers number in the other glass by 2659 persons (by 20.7 %). In this group the volume of orders decreases in the last years, what is the cause of production limits with the consequence of redundancy of employees.

In the technical ceramics and sanitary ware the workers number increased by 494 persons. The workers number increased both in the technical ceramics, and in the sanitary ware.


Average month-wages

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 22 256 23 029 23 980 25 406 26 785 27 271 101.8
Container glass 20 999 21 855 22 609 23 028 25 035 26 875 107.3
Other glass 14 463 15 554 16 014 17 043 17 798 19 745 110.9
Glass fibres 26 616 28 133 27 603 28 734 29 196 31 351 107.4
Utility glass 14 744 14 028 14 195 14 702 15 736 17 120 108.8
Household china and ceramics 11 412 11 743 11 958 13 058 14 177 14 650 103.3
Technical ceramics and sanitary ware 18 565 17 977 18 589 19 496 21 314 21 472 100.7
Glass and ceramics total 15 712 16 347 16 880 18 008 19 276 20 794 107.9

Average month-wages (CZK)

Development of average month-wages (CZK)

A noticeable tendency in differentiation of wages among groups with mass and full automatized productions (e.g. flat glass, glass fibres and container glass) and groups with more often changes (shorter production series) in the regime of automatized production lines and a certain share of manual production, is continuing. Average wages reached in the glass fibres and flat and container glass are high above the average of the Czech Republic (23,542 CZK). Below the level of the average wage in the Czech Republic is the average wage reached in the technical ceramics and sanitary ware, where the average wage in technical ceramics is 18,243 CZK and in sanitary ware 24,629 CZK. The height of the average wage in the other glass is influenced by strengthening of more qualified work share (a group of the technical glass productions) on one side, and low wages in the production of glass semiproducts for fashion jewellery on the other side. Due to the unpleasant situation of these groups, the average wages in utility glass and household china stay deeply below the average wage in the Czech Republic.

The growth of average wages reached in 2008 in the whole glass and ceramic industry exceeded inflation by 1.6 of a percentual point.

Productivity of labour from sales in current prices

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 3 764 3 965 3 835 3 851 3 791 3 511 92.6
Container glass 2 799 3 456 3 866 3 850 4 041 3 765 93.2
Other glass 896 898 1 011 951 963 1 092 113.4
Glass fibres 2 825 3 318 2 710 2 905 3 246 2 837 87.4
Utility glass 612 713 614 723 835 831 99.5
Household china and ceramics 524 550 537 553 701 709 101.1
Technical ceramics and sanitary ware 1 218 1 170 959 1 201 1 233 1 208 98.0
Glass and ceramics total 1 189 1 337 1 339 1 408 1 532 1 595 104.1

Productivity of labour from sales in current prices (ths. CZK/worker)

Development of productivity of labour from sales in current prices (ths. CZK/worker)

All above-mentioned conclusions (revenues amount, workers number decrease, and production character) are projected in more complex index of the productivity of labour from sales. The productivity of the glass and ceramic industry as a whole increased by 4.1 % in comparison with previous year. In comparison with the increase between the years 2007 and 2006 it is by 4.7 of a percentual point less. The value 1565 ths. CZK per employee in 2008 is the highest from the investigated development line.

Excepting the other glass the productivity of labour in other production groups declined or stagnated in comparison with 2007.

The group of technical glasses, where the productivity is markedly higher than the productivity of glass semiproducts for fashion jewellery and glass jewellery production (the production share decreased from 60 % in 2007 to 53 % in 2008), influenced the high inter-year growth of productivity in the other glass (13.4 %) more than in previous years.

A greater growth of the workers number between 2008 and 2007 (by 20.3 %) than revenues (by 9.0 %) projected to the decrease of the productivity of labour in the flat glass (by 7.4 %) in the production of flat glass shaping and processing. The inter-year revenues decrease in other production groups was greater than the workers number decrease.

In the absolute amount of this index the highest productivity is in the container glass, flat glass and glass fibres. The lowest productivity was reached in the utility glass and in the household china and ceramics.

In the glass and ceramic industry as the whole the inter-year growth of productivity was by 3.8 of a percentual point lower than the growth of average wages.


Export

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 10.364 11.048 11.471 12.988 13.004 12.799 98.4
Container glass 2.202 2.602 2.668 2.700 2.702 2.118 78.4
Other glass 11.764 13.667 16.314 14.902 13.611 10.134 74.5
Glass fibres 4.367 5.293 4.774 6.350 7.515 6.436 85.6
Utility glass 8.311 8.865 8.149 7.263 7.660 6.687 87.3
Glass total 37.008 41.475 43.376 44.203 44.492 38.174 85.8
Household china and ceramics 3.085 2.780 2.957 2.932 3.708 3.512 94.7
Technical ceramics and sanitary ware 1.874 2.531 2.206 2.261 2.358 2.087 88.5
Ceramics total 4.959 5.311 5.163 5.193 6.066 5.599 92.3
Glass and ceramics total 41.967 46.786 48.539 49.396 50.558 43.773 86.6

 

Export (bill. CZK)

Export development (bill. CZK)

The glass and ceramic industry of the Czech Republic is oriented to export.

The total export of investigated groups was 43.773 bill. CZK in 2008. It decreased by 13.4 % (6.785 bill. CZK) in comparison with the previous year. The export decreased in all production groups.

The CZK strengthening against the EUR (average 10.4 % in comparison with 2007) and also against the USD (average 16.3 % in comparison with 2007), decrease of orders and continually strengthening competition of cheaper products projected to the export of individual production groups in various extent.

Import

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 5.261 6.109 6.346 7.738 8.437 8.085 95.8
Container glass 0.918 0.883 0.908 0.950 0.926 0.968 104.5
Other glass 3.771 5.138 3.733 3.118 2.963 2.138 72.2
Glass fibres 1.802 1.889 2.174 2.577 2.761 2.340 84.8
Utility glass 1.375 1.696 1.791 1.575 1.600 1.626 101.6
Glass total 13.127 15.715 14.952 15.958 16.687 15.157 90.8
Household china and ceramics 1.149 1.011 1.413 1.311 1.394 1.316 94.4
Technical ceramics and sanitary ware 1.478 1.578 1.092 1.000 1.240 1.104 89.0
Ceramics total 2.627 2.589 2.505 2.311 2.634 2.420 91.9
Glass and ceramics total 15.754 18.304 17.457 18.269 19.321 17.577 91.0

Import (bill. CZK)

Import development (bill. CZK)

The total import of the glass and ceramic industry products decreased by 9 % (1.744 bill. CZK) in comparison with previous year. From other production groups only the import of container and utility glass increased.

The development of the utility glass import documents permanent penetrating of competitors with cheap products of this assortment to the inland market.

The strategy of the transnational companies controlling the container glass in the Czech Republic probably projects to the increase of this production group import.

The decrease of the products of other production groups documents the development of economic situation in the Czech Republic in 2008.


Balance of foreign trade

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 5.103 4.939 5.125 5.250 4.567 4.714 103.2
Container glass 1.284 1.719 1.759 1.750 1.776 1.150 64.8
Other glass 7.993 8.529 12.581 11.784 10.648 7.996 75.1
Glass fibres 2.565 3.404 2.601 3.773 4.754 4.096 86.2
Utility glass 6.936 7.169 6.357 5.688 6.060 5.061 83.5
Glass total 23.881 25.760 28.423 28.245 27.805 23.017 82.8
Household china and ceramics 1.936 1.769 1.544 1.621 2.314 2.196 94.9
Technical ceramics and sanitary ware 0.396 0.953 1.114 1.261 1.118 0.983 87.9
Ceramics total 2.332 2.722 2.658 2.882 3.432 3.179 92.6
Glass and ceramics total 26.213 28.482 31.081 31.127 31.237 26.196 83.9

Balance of foreign trade (bill. CZK)

Development of balance of foreign trade (bill. CZK)

Structure of balance of foreign trade

The groups of the glass and ceramic industry in the investigated period from 2003 till 2008 always very notably contributed to the active balance of foreign trade of the whole processing industry of the Czech Republic (see the Chapter “Position of the glass and ceramic industry in the Czech Republic”). The values of the balance of foreign trade confirm a significant export orientation of this industry. The balance of foreign trade was 26.196 bill. CZK in 2008 (decrease by 16.1 % in comparison with 2007). This value did not reach even the level of 2003. The export decreased faster (by 13.4 %) than import (by 9 %) in comparison with previous year. The groups of the other, utility and flat glass had the most significant share on the balance of foreign trade in 2008.

Effective home demand

The effective home demand index is defined by the formula: (The revenues from industrial activities + Import – Export)

  2003 2004 2005 2006 2007 2008 index 08/07
(%)
Flat glass 9.17 10.15 9.68 10.15 12.85 13.05 101.6
Container glass 3.11 2.89 3.07 2.96 3.03 3.13 103.4
Other glass 6.79 2.35 0.34 0.76 1.56 2.93 187.3
Glass fibres 1.57 1.32 1.39 0.63 0.39 0.04 10.3
Utility glass 0.91 -0.45 -1.20 -0.35 -0.34 -0.11 32.4
Glass total 21.54 16.26 13.28 14.15 17.49 19.04 108.9
Household china and ceramics 1.43 1.05 1.07 0.76 0.53 0.65 122.6
Technical ceramics and sanitary ware 2.49 2.71 1.86 2.57 2.45 3.12 127.3
Ceramics total 3.93 3.76 2.93 3.33 2.98 3.76 126.2
Glass and ceramics total 25.47 20.02 16.22 17.48 20.47 22.80 111.4

Effective home demand (bill. CZK)

Development of effective home demand (bill. CZK)

The development of the effective home demand in individual groups of the glass and ceramic industry is differentiated and specific.

Conclusions

The prediction of the Ministry of Finance comes out from an assumption that no other significant negative events on financial markets will occur, however, there are expected continuation of problems of real economy in global scale till 2010 with slight manifestation of improvement. All countries which are important commercial partners of the Czech Republic (excepting Poland) are in recession.

The following comments to the prospects of the Czech economy position and prediction to years 2009 and 2010 were processed from data of the Ministry of Finance from June 2009.

    2009 2010
Gross domestic product (GDP) Average growth in %, current prices -4.3 0.3
Average rate of inflation Average growth in % 1.1 1.1
Unemployment rate Average in % 6.8 8.5
Growth of average wages in % 3.4 3.3
CZK / EUR Average per year 26.8 25.5
CZK / USD Average per year 20.0 19.5

(Ministry of Finance - June 2009)

Prediction of the development of main macroeconomic indices

The economic crisis exhaustively affected the inland economy in the 4th quarter of 2008. The economy collapse accelerated in the 1st quarter of 2009. The prosperity indices of home and foreign economy show indications of decline deceleration. The Ministry of Finance expects stoppage of economic decline in the 2nd half of 2009 already. The economy should be stabilized on the present low level and the slight stimulation should appear within the year 2010.

The movement of market interest rates will be in 2009 henceforth influenced by relatively high risk. Slow stimulation of economy which is expected by the Ministry of Finance in the 2nd half of 2010 and the effort of the Czech National Bank to return the inflation to 2 % in the end of 2010 will be accompanied by gradual growth of market interest rates.

Weakening of the CZK exchange rate against the EUR in 2009 could help the exporters to face up better to the decline of foreign demand.

In comparison with previous years a significant increase of energy prices is not expected.

The glass and ceramic industry is very endangered by this economic development, not only because of its export orientation, but also because of its dependence on a number of following industrial branches utilizing its products. All groups of the glass and ceramic industry have to face up to impacts of economic crisis and permanently strengthening competition. The glass and ceramic industry has to search ways how to orientate to the production with a high added value, how to strengthen the innovation in the production and in the management and commercial strategies.

 


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