SLIDE 1 Sub-sector assessment
Brick manufacturing in Nam Dinh – Vietnam
Paul Weijers - Swisscontact
SLIDE 2 Content
- 1. Information on brick manufacturing
sub-sector and social issues
- 2. Market of bricks
- 3. BDS
- 4. Input supply and financial services
- 5. Conclusions and recommendations
SLIDE 3
- 1. Information on B-M and social
issues
Brick manufacturing in Nam Dinh has grown
steady 14-18% annually.
Brick manufacturers concentrate along
riversides.
The production scale is small, mainly
household-based, concentrating in two districts
Available technologies: traditional fixed kiln,
VSBK, and tunnel kiln.
Total yearly brick output is approximately 400
million bricks (value of VND 145 billion).
SLIDE 4
- 1. Information on B-M and social
issues
Legal
f
m
sur veyed ent er pr i ses
Legal form
67% 25% 8%
Informal household enterprises. Formal household enterprises. Joint stock and State-owned
SLIDE 5
- 1. Information on B-M and social
issues
Ent
er pr i ses usi ng t r adi t i
f i xed ki l n t echnol
Household enterprises consist of informal and
formal household enterprises.
Concentrate in Nghia Hung, Hai Hau, Truc Ninh
and Vu Ban districts.
Technology and equipments are simple. Most of
the work is done manually.
SLIDE 6
- 1. Information on B-M and social
issues
Ent
er pr i ses usi ng t r adi t i
f i xed ki l n t echnol
Many enterprises have built chimney to reduce
smoke.
The ratio of usable final bricks is low (70-75%). Scarce source of clay is the biggest problem. The businesses frequently suffer from complaints
and claims for financial compensation by the local people and control by authorities
SLIDE 7
- 1. Information on B-M and social
issues
Enterprises using tunnel kiln technology
There are 7 enterprises using tunnel kiln
technology: 2 equitized and 5 state-owned.
The enterprises receive credits and loans from
banks for investment and working capital.
Capacity ranging from 5 to 15 mil. bricks/yr. Huge clay resource but taxable. Fierce competition with cheap traditional brick.
Market share is only 20 to 30% of the provincial brick market.
SLIDE 8
- 1. Information on B-M and social
issues
Soci
al i ssues – I ncom e: br i ck m anuf act ur i ng i s t he vi t al i ncom e sour ce
househol d busi nesses, especi al l y i nf
m al
– G ender : m or e wom en wor ki ng i n al l st ages
pr
i
No cl ear wage di f f er ence bet ween m al e and f em al e em pl
– W or ki ng condi t i
poor condi t i
am ong househol d ent er pr i ses.
SLIDE 9
- 1. Information on B-M and social
issues
Soci
al i ssues
– Chi l d l abor : 80%
t he ent er pr i ses di d not em pl
peopl e bel
t he age
15. – Soci al pr
em s: cr
( 53% ) , sm el l ( 37% ) . – Soci al associ at i
Ther e sever al soci al associ at i
but no busi ness associ at i
f
br i ck m anuf act ur er s.
SLIDE 10
M ai
n m ar ket
0 0 0 33% 67% 71% 19% 10% 68% 23% 9% 100% 0 0% 10 20 30 40 50 60 70 80 90 100
Own use Within the community Within the district Within the province Outside the province
M ain M arket of Brick M anufacturing by type of enterprise
Household (informal) Household (formal) Joint stock & State-
SLIDE 11
Cl
i ent s
4% 14% 49% 33% 8% 0% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Own use, fam ily, friends Retail traders Transporters E nd users/ households Public/ state constructions Other brick m anufacturers Other
Clients of SM Es
SLIDE 12
Com pet
i t
s
Manufacturers of same type of bricks in the
vicinity (69%), outside the vicinity (26%).
Manufacturers of lower quality bricks (22%),
(14%).
SLIDE 13
- 3. BDS: Types of BDS assessed
Market information Technical training Management training Business plan/ feasibility study Technical counseling Technology transfer Quality assurance Transportation and delivery
SLIDE 14
Some main conclusions on BDS
Market Information: Information comes
mainly embedded or via friends. Most interest is on price information
Technical training: Only very incidentally
external training organizations are used.
Management training: There is a moderate
demand, but virtually no supply of such training.
Feasibility study/ business plan preparation:
Only the preparation of business plans is sometimes used
SLIDE 15 Some main conclusions on BDS
Technical counseling: is hardly used, only in
the case of tunnel kilns.
Technology transfer: Technology is one of the
most important concerns of SMEs. However,
- nly relevant if “high-tech” is introduced .
Quality assurance: The quality of clay and of
the production process is most important. BDS providers are not known.
Transport and delivery: is very well developed
and functioning.
SLIDE 16
- 4. Input supply & financial service
Input supply
Sources of clay: alluvium soils on riversides
and fine clay from fields.
8% 16% 53% 45% 24% 0% 10% 20% 30% 40% 50% 60% Percentage of enterprises From owned land From river Supplier who take from land Supplier who take from river Other
Clay supply
SLIDE 17
- 4. Input supply & financial service
Input supply
Clay exploited from river is the long-term
source.
Some measures of saving clay include:
1) Mixing a certain amount of coal or young sand to the clay and 2) Making bigger hold.
Shortage of clay should not obstruct the
growth of the industry in a long term.
SLIDE 18
- 4. Input supply & financial service
Financial services
Near to 100% of the SMEs ever obtained a
loan.
Sources of loan include: banks (43%),
family/friends, and People’s Credit Fund.
Uses of loan: working capital (68%), raw
materials (48%), machinery and equipment (40%), infrastructure (22%), land (10%).
Annual interest rates are mainly between 10-
15%.
SLIDE 19
Opportunities - Constraints
– Traditional fixed kiln technology – Tunnel kiln technology
Recommendations
SLIDE 20 Opportunities-Constraints Traditional fixed kiln technology
Outdated technology
causing pollution and health problems.
Restriction/ seasonal
activities.
Low quality of
products.
Require experienced
burners
Low efficiency Simple
technology
Easy to build and
Promising VSBK
(China technology) Technology and product development Constraints Opportunities Category
SLIDE 21 Opportunities-Constraints Traditional fixed kiln technology
Primitive marketing
skills.
Lack of market
information .
Market limits within
the province .
Medium term trend
is decreasing demand for low quality brick
High demand for
cheap products from rural low income families.
Convenient and
cheaper transportation by water way. Market access Constraints Opportunities Category
SLIDE 22 Opportunities-Constraints Traditional fixed kiln technology
Serious shortage of
clay/clay supply locally and from other provinces.
Cost of fuel
increased (mainly coal).
Lack of information
For part of the
businesses from
access to river. Input supply Constraints Opportunities Category
SLIDE 23 Opportunities-Constraints Traditional fixed kiln technology
Limited awareness
management.
No long term
business plan.
No skill training for
laborers.
Labor easily
available.
Seasonable
business recruits farmers who are seasonable available Management and
Constraints Opportunities Category
SLIDE 24 Opportunities-Constraints Traditional fixed kiln technology
Policy to ban brick
production of traditional technology by 2005-2010.
Uncontrollable
exploitation of clay, violating governmental
protection and exploitation of clay .
No labor association.
Policy Constraints Opportunities Category
SLIDE 25 Opportunities-Constraints Traditional fixed kiln technology
Huge investment
for proper technology.
Lack of access to
long term credit.
Low investment
cost for traditional fixed kilns.
Low labor costs. Low tax.
Finance
Poor facility for
drying.
Less
transportation cost Infrastructure Constraints Opportunities Category
SLIDE 26 Opportunities-Constraints Tunnel technology
Available only for a
minimum capacity of 5 million bricks per year.
Production year
around.
More variety of
products. Technology and product development Constraints Opportunities Category
SLIDE 27 Opportunities-Constraints Tunnel technology
Tunnel brick more
expensive.
Products are not
appropriate for rural low- income households.
Market outlet limits at
Nam Dinh city.
Lack of marketing
techniques.
Bias against tunnel brick
by the majority of population in rural areas.
Increasing
demand for high quality bricks.. Market access Constraints Opportunities Category
SLIDE 28 Opportunities-Constraints Tunnel technology
Lack of knowledge
by the management.
Inefficient
business operation.
Structured
Management and
None
Better access to
clay exploitation. Input supply Constraints Opportunities Category
SLIDE 29 Opportunities-Constraints Tunnel technology
Higher production
cost due to imposing
social security for employees by government.
Governmental
favorable policy towards tunnel technology and longer term right
exploitation. Policy Constraints Opportunities Category
SLIDE 30 Opportunities-Constraints Tunnel technology
Higher investment
cost for technology and drying storage.
Good access to
credit by banks. Finance
None. More
comprehensive storage and drying system. Infrastructure Constraints Opportunities Category
SLIDE 31
Recommendations
Next steps:
Market research will be undertaken to obtain
further details on the end-users of the bricks and to map the market access BDS-providers that (potentially) serves the brick manufacturing sub-sector in Nam Dinh.
Management training BDS will be added to
the project and a pilot start in the 2nd time block.
SLIDE 32
Recommendations
Next steps:
Macro-level interventions include two
components:
Promotion of a brick manufacturers
association, and
Organization of a policy workshop.
The project will assess the financial services
and its relation to the BDS market.
SLIDE 33
Recommendations
In later stage…
Technical training: developing new training
materials that will match the kiln technology in existing training institutions .
Technology and technical counseling BDS
markets will be further assessed and/or supported upon final decisions of the project which technologies will be further promoted .
SLIDE 34
Recommendations
In later stage…
Quality assurance BDS will be addressed,
possibly parallel to technology transfer and technical counseling .
The gender issue will be assessed when
project support activities are ongoing and the project created a solid basis for operation.
