RAK Ceramics is one of the few home-grown success stories that can lay claim to global recognition.
Tile industry leads the way
RAK Ceramics is one of the few home-grown success stories that can lay claim to featuring prominently in the booking catalogues of professionals around the world. And just 15 years after starting production, the honours continue, with the world's largest producer of ceramic tiles recently being added to Washington University's MBA programme as a case study. There are just a few ceramic tile production centres in the world: Italy, Germany and Spain - and now the UAE. The banks of the alluvia-rich Po River in Italy is the birthplace of the industry, and also where the industry's technology and marketing were developed. Spain joined the game in the 1960s, with large factories in Valencia producing about 600 million square metres a year. Brazil is another large ceramic producer, as was Indonesia before the 1997 Asian financial crisis, and Turkey.
"We started after all of them in the early 1990s," said Dr Khater Massaad, the chief executive and founder of RAK Ceramics. And today, "RAK Ceramics produces almost the equivalent of the total Turkish production, with over 100m square metres a year". As Europe shrinks its ceramics production, with Italy achieving less than 500 million square metres a year in total, the Emirati company is booming, backed by a nationwide construction boom. "By the end of this year, we will be able to reach a production of 115 million square metres of tiles a year," said Abdullah Massaad, the company's assistant chief executive and Khater Massaad's nephew.
When Dr Massaad, a geophysicist, identified in the late 1980s suitable clay in RAK's mountains, the idea of creating a ceramic plant - the first non-oil industry in the emirate - came naturally. RAK Ceramics, owned by the RAK royal family, was founded in Nov 1989, with Dr Massaad as a project manager. Construction started in Feb 1990 and production kicked off that June with 4,000 square metres per day. Six months after production began, the company had already made US$2 million (Dh7.3m) in net profit. "This came as a shock for everybody," recalled Dr Massaad.
Today, the company owns 28 production lines and two sanitary plants, with five operations overseas - Sudan, Iran, India, Bangladesh and China. The UAE plant alone manufactures more than 220,000 square metres and 10,000 sanitary pieces a day, which makes it the largest ceramic plant worldwide. The secret to the company's success lies both in management and local circumstances, such as zero taxation. "Each time we need to expand, we choose the latest technologies and machines, the largest, most flexible and most intelligent production lines," Khater Massaad said. "By producing very high quality, we gained worldwide respect in comparison to other mass-producing nations like Sri Lanka, India or China, who sell very cheap. The Turks [made] the same mistake to sell tiles at $3 per square metre. People classified them immediately as cheap producers. We weren't at all."
The company invested in research and development and was the first to create the largest tile in the world - 1.20m by 1.80m - used for kitchen countertops or bathroom basins. It remains the only company in the world capable of producing the tile on an industrial scale. RAK Ceramics was the first to launch an antibacterial tile four years ago for use in hospitals, schools, hotels and restaurants. "Nobody else does this," said Dr Massaad.
Another innovation by the company is its luminous tile. "We created a chemical formula within the enamel that enables a tile, after only 30 minutes of daylight, to enlighten during 10 hours. Nobody has managed to do this so far. It can be useful in a cellar or a garage, for instance, when electricity goes down." The company's largest markets include the UAE, Saudi Arabia, Germany, the UK, Greece, France, Australia, Kuwait, Bahrain and Qatar. Production outside the UAE is dedicated mainly to the local markets, whereas 65 per cent of the company's UAE production is exported to 125 countries.
"This year we will sell 10 million square metres to Germany, which makes up 10 per cent of the country's total market," Dr Massaad said. "We delivered to Wembley Stadium, the largest stadium in England, to Heathrow Terminal 5, to high-end hotel brands [Hyatt, Sheraton], several presidential palaces. We have been specified by Mercedes-Benz for their showrooms, which means that when you want to open a Mercedes showroom, you have to use our tiles." The company is also contracted to produce tiles for the showrooms of Giorgio Armani, Hugo Boss and Benetton.
So far, the company enjoys a worldwide reputation and German distributors are bullish. "RAK Ceramics makes up 50 per cent of the products we buy," said Franz Beckert, the director of the German tile distributor in Freiburg. "Their large format tiles are 10 per cent cheaper than the Italian equivalent for a great quality. I saw the factory and it was clean. I was very impressed," the German businessman said.