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The loss of employment in the Spanish tile industry, Europe’s largest producer of the material, continues unabated after two consecutive years of sharp declines in production. A crisis expected to last until 2024 after Altadia, the world’s largest provider of chemical coatings for ceramics, was forced to join the cuts.
The Castellón Group entered into firm negotiations last week for a major personnel adjustment affecting its main companies.
The industrial group, owned by the Carlyle fund, which acquired it from Lone Star two years ago in a deal worth 1.9 billion euros, has submitted labor regulation files (ERE) in six of its companies to cut staff. According to union information, a total of 285 jobs of the holding company’s approximately 1,500 employees in Spain would be affected. The adjustment will not affect factories and subsidiaries in the other 18 countries where the company operates, with Italy and Brazil being the most important.
The Vila-real-based group points out that the measure was implemented due to the decline in sales and the difficult situation of the sector in Spain. A scenario in which no signs of recovery are expected in the next twelve months, according to the group, which, although it does not give any figures, emphasizes that an ERE has since been and is being negotiated for each company and not for the group as a whole that there are other companies that are not affected.
Altadia brings together several manufacturers of glazes, frits, paints and digital inks that give the design and final look to ceramic surfaces. Born from the old Esmalglass, over the last two decades it has become the world leader in the sector following the acquisition of other Castellón manufacturers, such as Fritta, or multinational companies based in Castellón, such as the ceramics division of American Ferro. The rebranding to Younexa was the company’s last major purchase and in turn allowed it to integrate companies such as Endeka and Quimicer, previously acquired by Ferro.
According to the data published, those acquired from these acquisitions are the most affected by the initial proposal, since it includes 33% of the workforce of the Valencian company Zircosil (inherited from Endeka) and 32% of Younexa, while in Esmalglass and Ithaca The share is between 15% and 10%.
Industry precedents
Although it is usual in these processes to reduce the final number of exits, the proposed adjustment in terms of the number of people affected is the largest of those made so far in the sector, both among tile manufacturers and enamel suppliers, in the two long years of crisis that this industry is going through. Problems that began with the sharp increase in energy costs for this industry, which relies on gas for its ovens, and increased fivefold due to the war in Ukraine. Added to this was the slump in sales last year with an export decline of almost 20% and the loss of competitiveness on international markets due to increased prices compared to emerging countries with lower energy costs.
The loss of profitability has multiplied the number of temporary workers (Erte) and has already led to closures such as that of the historic Todagrés, with 160 employees. Large manufacturers in the hands of funds and multinationals such as Grupo Halcón and Saloni – owned by the British Victoria, which also owns Keraben – have also resorted to downsizing through EREs for almost a hundred workers. The Spanish and European market leader Pamesa also closed one of its atomization subsidiaries. In the case of enamel machines, the Italian subsidiary Colorobbia has also approved another regulatory act.
Rating and relocation risk
In the case of Altadia, the group has also seen Moody’s downgrade its debt rating from ‘B2’ to ‘B3’ at the end of 2023, as EBITDA in 2023 and 2024 will suffer from the associated weakness in European demand construction. The group has debts of around 1,375 million euros, which it used to finance the takeover by Carlyle. According to the rating agency’s report, adjusted Ebitda was 181 million euros in the twelve months to June 2023.
In its October 2022 report, Moody’s had already warned of a possible rating review due to the effects of the gas increase. In addition, he pointed to the possibility that the group, which includes companies such as Esmalglass, Itaca, Fritta, Quimicer and Endeka, could relocate production to countries where gas is cheaper due to reduced competitiveness. “Altadia has a global production presence and can, to a certain extent, relocate its European production, mainly located in Spain, to other countries with lower energy costs,” the agency’s analysts said in the text.
SOS of the sector in Madrid
Fears of a shift are growing in the Castellón sector, where funds and multinationals are now increasingly common compared to traditional local family ownership. Tiles are the largest industry in Castellón and have made this province one of the most industrialized in Spain: 36.6% of GDP is industrial, compared to the Spanish average of less than 16%.
For two years, the industry has been calling on the central government for direct aid similar to that in Italy, to no avail. As in 2023, this Wednesday in Madrid, the autonomous employers’ association CEV will once again present the manifesto for the preservation of Castellón’s economy, supported by 67 organizations, from administrations to unions, civil society and the university. A document with which all these associations demand solutions for a sector that is the great economic engine of the province, so much so that some describe it as the industrial “monoculture” of this region.
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