Development of the glass and ceramic industry in the period from 2004 to 2009

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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 2009 and in the period from 2004 till 2009 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 2004 till 2009 is given for understanding wide relations.

    2004 2005 2006 2007 2008 2009
Gross domestic product (GDP Average growth in %, current prices 4.5 6.3 6.8 6.1 2.5 -4.1
Average rate of inflation Average growth in % 2.8 1.9 2.5 2.8 6.3 1.0
Unemployment rate Average growth in % 9.2 9.0 8.1 6.6 5.5 8.0
Growth of average wages in % 3.4 3.0 4.0 4.3 1.9 3.0
Balance of trade bill CZK -26.4 41.9 39.8 86.1 67.8 153.2
CZK / EUR Average per year 31.9 29.8 28.3 27.8 24.9 26.4
CZK / USD Average per year 25.7 24.0 22.6 20.3 17.0 19.1

(Czech Statistical Office - April 2010)

 

Main macroeconomic indices in the Czech Republic in the period from 2004 till 2009

The economic slowing down which started in the second half of 2007 and continued in 2008 bore down on the Czech economy very strongly at the beginning of 2009. In comparison with an average of the inter-year growth rates of the gross domestic product from years 2004 till 2008 it decreased by great 9.3 of a percentual point. Recession in economy of the most notable trade partners, i.e. demand, was obvious mainly by reduction of export branches of the processing industry. The Czech export was compensated only restrictedly by the CZK exchange rate fall.

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 2009 available statistical data of companies with more than 50 employees relevant to 30 July 2010, have been used.

Since 2008 the production is not stated by the Czech Statistical Office 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 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

The following trends of the price indices development are given in accordance to the classification CZ-CPA valid since 2008.

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

 

REPR 2004 2005 2006 2007 2008 2009
CG 23 100.9 100.7 101.4 105.4 102.4 98.0
CG 231 99.9 99.7 101.4 108.4 98.1 93.6
CG 232 100.6 97.1 101.1 102.0 103.3 102.9
CG 234 101.9 98.1 99.2 102.2 105.5 104.1

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

The total average price index of the Other non-metallic mineral products group decreased by 4.4 of a percentual point in comparison with previous year. The price index in the Glass and glass products group decreased significantly, on the other side it increased in the Refractory products and the Other china and ceramic products groups.

REPR 2004 2005 2006 2007 2008 2009
CG 23 100.9 101.6 103.61 108.5 111.2 108.9
CG 231 99.9 98.7 101.1 109.6 107.5 100.6
CG 232 100.7 97.8 98.8 100.9 104.2 107.1
CG 234 101.9 99.9 99.2 101.4 107.0 111.4

Cumulative price indices (2003 = 100 %)

Revenues for sale of own products and services

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 15.38 15.86 15.99 17.76 18.17 13.96 76.8
Container glass 4.66 4.96 4.75 4.84 4.33 3.71 85.7
Other glass 10.97 13.33 12.70 12.39 11.14 9.63 86.4
Glass fibres 4.81 4.23 4.53 5.42 4.39 4.74 108.0
Utility glass 6.79 5.30 5.38 5.77 5.00 1.78 35.6
Glass total 42.61 43.68 43.35 46.18 43.03 33.82 78.6
Household china and ceramics 2.83 2.63 2.34 2.90 2.66 0.93 35.0
Technical ceramics and sanitary ware 3.67 3.00 3.86 3.59 4.12 3.32 80.6
Ceramics total 6.50 5.63 6.20 6.49 6.78 4.25 62.7
Glass and ceramics total 49.11 49.31 49.55 52.67 49.81 38.07 76.4

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

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

The glass and ceramic industry was impacted by financial crisis in 2009 with an unprecedented force. In comparison with previous year the revenues for sale of own products and services decreased totally by 23.6 % (11.74 bill. CZK). The revenues decreased in all investigated groups with the exception of the glass fibres.

The revenues amount for the flat glass in 2009 (in comparison with 2008) decreased by 23.2 % (4.21 bill. CZK). The flat glass production is dependent on the development in the building and automotive industry. The crisis impacted considerably the building industry. A great decrease of demand appeared as a consequence. A housing development, commercial projects and also reconstructions were reduced to minimum. In contrast with the building industry the number of produced motor vehicles increased in comparison with 2008 by 3.6 %, from which personal cars, including small utility cars by 4.12 %. In the Czech Republic there were produced totally 984,753 cars, from which 983,992 motor vehicles (data taken from the Automotive Industry Association).

In comparison with 2008, the revenues for the container glass decreased by 14.3 %. This decrease strongly influenced the consumption decline of this assortment in the Czech Republic. Containers made of plastics are strong competitors of the container glass.

The revenues of the other glass decreased in comparison with 2008 by 13.6 % (1.51 bill. CZK). The decreased demand impacted all its groups (technical and laboratory glass, glass semiproducts for fashion jewellery, etc.). The change of the statistical investigation of companies with more than 20 employees to companies with 50 employees, projected probably the most significantly in this group.

The revenues of the glass fibres and products made of increased by 8 % (0.35 bill. CZK). The consumption of insulating materials for building warming up projected to the increase.

The shutdown of Crystalex, a.s. (production of utility soda potassium glass), Sklárny Bohemia, a.s. and Sklo Bohemia, a.s. (production of utility lead glass) in 2008 was decisive for the decrease of revenues of the utility glass by 64.4 % (3.22 bill. CZK). The change of owners occurred during 2009. At the end of this year and at the beginning of 2010 the production in the closed plants was re-established step by step.

Not only the decrease of demand and the competition of cheap goods from the third countries, but also a significant of production reduction Karlovarský porcelán, a.s. and Concordia, a.s. (production of household china) in 2008 and 2009, and the following change of owner in 2009, had an influence to the decrease of revenues in the household china and ceramics by 65.0 % in comparison with 2008.

In the technical ceramics and sanitary ware the revenues decreased by 19.4 % (0.80 bill. CZK). The revenues in the sanitary ware decreased by 0.15 bill. CZK, in the technical ceramics by 0.65 bill. CZK.

 

Workers

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 3 878 4 134 4 151 4 683 5 175 4 453 86.0
Container glass 1 347 1 283 1 233 1 198 1 150 1 143 99.4
Other glass 12 226 13 182 13 364 12 865 10 206 7 447 73.0
Glass fibres 1 450 1 559 1 561 1 670 1 529 1 259 82.3
Utility glass 9 540 8 635 7 436 6 911 6 020 1 931 32.1
Glass total 28 441 28 793 27 745 27 327 24 080 16 233 67.4
Household china and ceramics 5 153 4 908 4 234 4 136 3 749 1 751 46.7
Technical ceramics and sanitary ware 3 140 3 124 3 215 2 917 3 411 1 885 55.3
Ceramics total 8 293 8 032 7 449 7 053 7 160 3 636 50.8
Glass and ceramics total 36 734 36 825 35 194 34 380 31 240 19 869 63.6

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 2009 in comparison with the previous year, decreased by 11,371 persons (36.4 %). The workers number decreased in all production groups. The main reason was the decrease of demand and the following austerity measures in companies. In the other glass (production of glass semiproducts for fashion jewellery) and utility glass, and the household china the production reduction from years 2008 and 2009 projected considerably as the consequence of closing of a great part of plants and large-scale redundancies.

Average month-wages

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 23 029 23 980 25 406 26 785 27 271 28 172 103.3
Container glass 21 855 22 609 23 028 25 035 26 875 27 007 100.5
Other glass 15 554 16 014 17 043 17 798 19 745 20 223 102.4
Glass fibres 28 133 27 603 28 734 29 196 31 351 31 351 100.0
Utility glass 14 028 14 195 14 702 15 736 17 120 13 828 80.8
Household china and ceramics 11 743 11 958 13 058 14 177 14 650 13 602 92.8
Technical ceramics and sanitary ware 17 977 18 589 19 496 21 314 21 472 23 863 111.1
Glass and ceramics total 16 347 16 880 18 008 19 276 20 794 22 364 107.6

Average month-wages (CZK)

Development of average month-wages (CZK)

The inter-year development of average month-wages in years 2009 and 2008 documents the economic situation of glass and ceramic industry companies. With an exception of the technical ceramics and sanitary ware, the average wages increased only negligibly in some groups, and strongly decreased in the utility glass and the household china and ceramics groups.

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 the flat and container glass are high above the average of the Czech Republic (23,598 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 the technical ceramics was 20,054 CZK and in the sanitary ware 26,082 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. According to the development within the last two years it is noticeable that a qualified work is preferred in this group. Due to the unpleasant situation of these groups, the average wages in the utility glass and the household china stay deeply below the average wage in the Czech Republic.

The increase of average wages in the technical ceramics by 9.9 % projected to more significant increase of wages in the technical ceramics and sanitary ware.

Productivity of labour from sales in current prices

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 3 965 3 835 3 851 3 791 3 511 3 135 89.3
Container glass 3 456 3 866 3 850 4 041 3 765 3 251 86.3
Other glass 898 1 011 951 963 1 092 1 293 118.4
Glass fibres 3 318 2 710 2 905 3 246 2 837 3 762 132.6
Utility glass 713 614 723 835 831 925 111.3
Household china and ceramics 550 537 553 701 709 527 74.3
Technical ceramics and sanitary ware 1 170 959 1 201 1 233 1 208 1 759 145.6
Glass and ceramics total 1 337 1 339 1 408 1 532 1 595 1 915 120.1

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, 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 the whole increased by 20.1 % in comparison with previous year. In comparison with the increase between years 2008 and 2007 it is by 16.0 % of a percentual point more. The value 1915 ths. CZK per employee in 2009 is the highest from the investigated development line. The productivity development in individual groups was, however, various.

The revenues of the flat and the container glass decreased in comparison with previous year quicklier than the number of workers, what projected to the decrease of productivity of these groups. The increase of productivity of labour in the group of the other glass is caused by gradual increase of products with higher added value.

A massive decrease of workers number and on the other side an increase of revenues in this group projected to the productivity of labour growth in the glass fibres group.

An increase of the productivity of the utility glass is very hard to evaluate. As stated above, basic changes appeared in the greatest companies. However, it can show a development of production with higher added value.

The productivity decrease in the household china and ceramics is directly connected with a lack of demand.

For the productivity growth in the technical ceramics and sanitary ware the inter-year growth in the sanitary ware by 34.8 %, i.e. by 484 ths. CZK per worker, was decisive.

In the industry of glass and ceramics as the whole the inter-year productivity increase was by 12.5 % higher than at the average wages.

 

Export

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 11.048 11.471 12.988 13.004 12.774 10.325 80.8
Container glass 2.602 2.668 2.700 2.702 2.123 2.128 100.2
Other glass 13.667 16.314 14.902 13.611 9.020 9.061 100.5
Glass fibres 5.293 4.774 6.350 7.515 6.436 5.904 91.7
Utility glass 8.865 8.149 7.263 7.660 6.685 3.805 56.9
Glass total 41.475 43.376 44.203 44.492 37.038 31.223 84.3
Household china and ceramics 2.780 2.957 2.932 3.708 3.518 2.395 68.1
Technical ceramics and sanitary ware 2.531 2.206 2.261 2.358 2.087 1.676 80.3
Ceramics total 5.311 5.163 5.193 6.066 5.605 4.071 72.6
Glass and ceramics total 46.786 48.539 49.396 50.558 42.643 35.294 82.8

Export (bill. CZK)

Export development (bill. CZK)

The glass and ceramic industry of the Czech Republic is oriented to export, and so it is directly influenced by economic changes in the world.

The export has been declining for two years already. The total export of investigated groups was 35.294 bill. CZK in 2009. It decreased by 17.2 % (7.349 bill. CZK) in comparison with the previous year. In 2008 the export was 42.645 bill. CZK. It decreased by 15.7 % (7.915 bill. CZK) in comparison with the year 2007.

An analysis of export is given in Chapter “Analysis of export and import of the glass and ceramic industry in the period from 2006 till 2009”.

Import

  2004 2005 2006 2007 2008 2009 index 09/08 (%)
Flat glass 6.109 6.346 7.738 8.437 8.167 7.583 92.8
Container glass 0.883 0.908 0.950 0.926 0.979 1.186 121.1
Other glass 5.138 3.733 3.118 2.963 1.761 1.637 93.0
Glass fibres 1.889 2.174 2.577 2.761 2.351 1.615 68.7
Utility glass 1.696 1.791 1.575 1.600 1.618 1.407 87.0
Glass total 15.715 14.952 15.958 16.687 14.876 13.428 90.3
Household china and ceramics 1.011 1.413 1.311 1.394 1.321 1.045 79.1
Technical ceramics and sanitary ware 1.578 1.092 1.000 1.240 1.104 0.895 81.1
Ceramics total 2.589 2.505 2.311 2.634 2.425 1.940 80.0
Glass and ceramics total 18.304 17.457 18.269 19.321 17.301 15.368 88.8

Import (bill. CZK)

Import development (bill. CZK)

The economic crisis influenced revenues and export of the glass and ceramic industry of the Czech Republic in last two years, and it influenced the import of products of this branch as well.

The total import of the glass and ceramic industry products decreased by 11.2 % (1.933 bill. CZK) in 2009 in comparison with previous year. It decreased by 10.5 % (2.020 bill. CZK) between years 2008 and 2007. From other production groups only the container glass import increased.

An analysis of import is given in Chapter “Analysis of export and import of the glass and ceramic industry in the period from 2006 till 2009”.

 

Balance of foreign trade

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 4.939 5.125 5.250 4.567 4.607 2.742 59.5
Container glass 1.719 1.759 1.750 1.776 1.144 0.942 82.3
Other glass 8.529 12.581 11.784 10.648 7.259 7.424 102.3
Glass fibres 3.404 2.601 3.773 4.754 4.085 4.289 105.0
Utility glass 7.169 6.357 5.688 6.060 5.067 2.398 47.3
Glass total 25.760 28.423 28.245 27.805 22.162 17.795 80.3
Household china and ceramics 1.769 1.544 1.621 2.314 2.197 1.350 61.4
Technical ceramics and sanitary ware 0.953 1.114 1.261 1.118 0.983 0.781 79.4
Ceramics total 2.722 2.658 2.882 3.432 3.180 2.131 67.0
Glass and ceramics total 28.482 31.081 31.127 31.237 25.342 19.926 78.6

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 important export orientation of this industry. The balance of foreign trade was 19.926 bill. CZK in 2009 (decrease by 21.4 % in comparison with 2008). This decrease of the balance of foreign trade is by 2.5 of a percentual point higher than between years 2008 and 2007.

 

Effective home demand

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

  2004 2005 2006 2007 2008 2009 index 09/08
(%)
Flat glass 10.15 9.68 10.15 12.85 13.16 10.74 81.6
Container glass 2.89 3.07 2.96 3.03 3.14 2.63 83.9
Other glass 2.35 0.34 0.76 1.56 3.67 1.46 39.8
Glass fibres 1.32 1.39 0.63 0.39 0.05 -1.20 2617.4
Utility glass -0.45 -1.20 -0.35 -0.34 -0.12 -0.68 572.3
Glass total 16.26 13.28 14.15 17.49 17.77 12.32 69.4
Household china and ceramics 1.05 1.07 0.76 0.53 0.65 -0.52 -81.1
Technical ceramics and sanitary ware 2.71 1.86 2.57 2.45 3.12 1.61 51.7
Ceramics total 3.76 2.93 3.33 2.98 3.76 1.09 29.0
Glass and ceramics total 20.02 16.22 17.48 20.47 21.53 13.41 62.3

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

In the summary of prediction of the Ministry of Finance from July 2010 there is stated:

“The world economy recovers from a contraction which appeared in the consequence of crisis on financial markets. However, with regard to plans of some EU countries to reduce high budget deficits and so to renew the confidence in the government bonds markets, the stimulation in the European Union in future can decelerate.

    2010 2011
Gross domestic product (GDP) Average growth in %, current prices 1.5 2.4
Average rate of inflation Average growth in % 1.5 2.3
Unemployment rate Average growth in % 9.4 9.3
Growth of average wages in % -0.1 4.3
CZK / EUR Average per year 25.5 24.6

(Ministry of Finance - July 2010)

Prediction of the development of main macroeconomic indices

The Czech economy get off the recession a year ago and from the 3rd quarter of 2009 it increases its productivity. However, the stimulation is fragile and the future development is still encumbered with great risks, especially from the outer surroundings.

A mild increase of real gross domestic product by 1.6 % is supposed. Due to the import increase in economy of our main trade partners the growth should be drawn mainly by the foreign trade. According to present presumptions the growth of economy could accelerate to 2.3 % in 2011.

We suppose the average inflation rate to be about 1.6 % in 2010. Next year we suppose the acceleration of consumer prices growth to 2.5 %.

Consequences of lower economic activity still projects on the labour market. After a noticeable growth of unemployment rate (Selective investigations of labour forces) from 4.4 % in 2008 the height approx. 7.6 % should be reached in 2010. Then the unemployment rate should slowly decrease. The employment should be reduced by 1.4 %, in 2011 mild growth by 0.6 % should be reached. A volume of wages and salaries should show decline by 0.3 % this year. Wages and salaries would increase by 3.8 % in 2011.

The proportion of a deficit of common account of payment balance to gross domestic product would stay on a favourable level, in 2010 the common account would be balanced.”

The year 2009 was very hard for the glass and ceramic industry of the Czech Republic. According to the above stated prediction, the present development of foreign and inland economy does not give great expectations to noticeable improvement even in 2010. All groups of the glass and ceramic industry have been facing up to impacts of economic crisis and permanently strengthening competition since 2008. 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. For companies there is still the same necessity 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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