Better Ceramic Tile Brings the World to Italy’s Door
Sassuolo may be the ugliest place in Italy, but its dusty, factory-lined streets are likely to become a popular destination for investment bankers.
Set in rolling hills southwest of Bologna, Sassuolo is the center of Italy’s tile-making industry, which over the last 30 years has grown into the world’s largest and most advanced, and now accounts for 25% of world production.
Several of Sassuolo’s top companies, including Ceramiche Filippo Marazzi SpA and Cisa Cerdisa SpA, have recently bought rivals to gain market share at home and abroad.
At the same time, Compagnie Financiere de Paribas of France recently bought a 25% stake in a Sassuolo manufacturer, Gruppo Concorde SpA. Others, meanwhile, are preparing to sell shares to the public, ending family ownership.
“It’s an extremely strong industrial base they have there, not only the quality of the design but also the deep industrial tradition,” said Jean-Michel Coulot, a Paribas executive responsible for investments in building materials companies.
“But many of these companies are jostling to expand internationally, so it’s natural they are looking to link with a group like ours,” he said.
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Hand-painted tiles are still made the traditional way in centers spread through Sicily, Umbria, Puglia and near Naples. But the real volume is in the tiles made in the factories near Sassuolo--tiles that cover floors in homes, shopping malls and offices worldwide, as well as the outside of skyscrapers.
A total of 220 companies in a 10-mile swath will produce 550 million square meters of tiles this year for a value of about $5 billion. That’s enough tile to cover half of Rhode Island or all of greater London, or to pave a 12-meter-wide road around the world’s equator.
About 65% of production is exported, with Germany, France and the United States the largest markets.
There is nothing artisanal about Sassuolo. It is a succession of steam-belching factories crammed on roads clogged with trucks and lined with rubble. The factories, rather than relying on ancient crafts, invest on average 10% of their revenue every year to come up with new processes and products.
“There is constant innovation,” said Franco Vantaggi, co-director of the ceramics industry association Assopiastrelle. “They are constantly looking to reduce energy, workers and time, and to make tiles that are ever more resistant.”
That investment has reduced to 45 minutes the time it takes to go from raw clay to a finished tile, which took as much as two days just 25 years ago. It has also reduced employment to 30,000 from 45,000 in 1980, while almost doubling production.
And it has developed materials that appear to be handmade but can stand up to thousands of footsteps every day.
The largest producer in Sassuolo is Marazzi, which will have revenue of $625 million this year. Early last November, Marazzi bought 49% of the French ceramics company France Alfa from French metals and building materials maker Imetal SA. The price wasn’t disclosed.
The purchase follows the acquisition of another Sassuolo tile maker and a company in Spain in recent years, as well as industrial ventures in Mexico, Turkey and Malaysia. Marazzi has also set up a factory in Dallas.
Marazzi has met with investment bankers about selling shares to the public, either in New York or Milan, sometime in 1996. It is now fully owned by the Marazzi family.
The next largest company is Iris Ceramiche SpA, which is owned by the Minozzi family. Third-largest is Cisa Cerdisa, which is owned by the Zannoni family, which bought Ceramiche Ricchetti last month.
Ricchetti was owned by Swedish investors and has a strong market presence in northern Europe. The price wasn’t disclosed.
Investment bankers say the recent flurry of acquisitions is the result of the larger companies trying to boost market share and gain economies of scale as they expand overseas.
Assopiastrelle’s Vantaggi said “these have been some very profitable years.” He said most of the companies suffered with the rest of the economy in 1992, but recovered in 1993 as the weak lire lifted exports.
Concern about Italy’s budget deficits, public debt and unsteady politics caused the lira to fall 14.1% in value against the dollar in 1993.
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Sassuolo became a dominant tile center because it is home not only to companies that make tiles--which were originally drawn by local clay deposits, now exhausted--but also to the companies that make the machines that make tiles. In addition it has many of the support services, such as designers, U.S. economist Michael Porter concluded in his 1987 book, “The Competitive Advantage of Nations.”
“Foreign firms must compete not with a single firm, or even a group of firms, but with an entire subculture,” he said. “The organic nature of this system is the hardest to duplicate.”
The companies that manufacture the tile-making machines are in such nearby towns as Modena, Reggio nell’Emilia and Bologna.
Spain and China are the world’s next largest tile producers after Italy, but the equipment they use is mostly Italian.
In Sassuolo, it takes just minutes to get a machine fixed or to find a new employee, and processes are constantly being improved.
Similar industrial concentrations are found elsewhere in Italy: Como for silk, the Dolomite mountains for eyeglasses and the town of Montebelluno for ski boots.
“Here we live on tortellini and ceramics,” said Vantaggi, referring to the local filled pasta. “We talk ceramics from morning to night.”
