TRG | The Bottom Line – 4/15

Continuing the theme of unintended consequences of the Ukraine/Russia conflict, the ceramic tile industry has been hard hit on both high costs and limited access to key raw materials. Confindustria Ceramica, the Italian ceramic industry association, last week cited skyrocketing prices as the driver for production stoppages and limited furlough agreements. Exacerbating the situation has been the disruption of supplies of Ukrainian clays, which according to the association, accounts for 25% of raw materials used in the Italian ceramic industry. This conflict has forced the Italian ceramic industry to diversify the supply chain structurally, citing “In view of their geographical origin and the severe damage inflicted on port infrastructures, the Italian ceramic manufacturers realized immediately that it would be impossible to use these raw materials for years to come.” We are increasingly finding that the Ukraine/Russia conflict is proving to be the final tipping point in terms of supply chain securitization. The journey started with U.S. tariffs, was further significantly impacted by COVID lockdowns and overall disruptions, and the Russian conflict is the final straw that broke the camel’s back.