VZCZCXRO6699
RR RUEHROV
DE RUEHAM #3817/01 2561501
ZNR UUUUU ZZH
R 131501Z SEP 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 0316
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0138
RUEHBS/AMEMBASSY BRUSSELS 0234
RUEHBY/AMEMBASSY CANBERRA 0096
RUEHUL/AMEMBASSY SEOUL 0038
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 AMMAN 003817 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS TO AID 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EIND EAID JO
SUBJECT: JORDAN'S STONE AND MARBLE INDUSTRY: BETWEEN A ROCK 
AND A HARD PLACE 
 
¶1.  Summary: Exports to the U.S. from Jordan's stone and 
marble industry reached $1.3 million in 2006, representing 
one of the few Jordanian goods besides garments to enter the 
U.S. market, but still only a small fraction of the $1.4 
billion in total Jordanian exports to the U.S.  Although the 
construction boom in Jordan and preferential tariff treatment 
under the U.S.-Jordan Free Trade Agreement (FTA) provide 
opportunities for this sector, problems in licensing, 
shipping and labor have hindered growth, and some 
industrial-scale factories have found it difficult to 
penetrate the U.S. market.  Developing niche products and 
relationships with American buyers through USAID assistance 
has been the secret to at least one Jordanian exporter's 
success.  End Summary. 
 
Industry Stats 
-------------- 
 
¶2.  According to Mohammad al Shami, head of Jordan Stone and 
Tile Exporters Association (JOSTONE), Jordan's marble and 
stone industry is composed of about 1,500 businesses, the 
majority of which are small workshops with only a handful of 
employees.  Only 10-15 factories are industrial-scale, 
focusing primarily on exports and large construction projects 
in Jordan.  Shami told Econoff September 5 that the sector 
employs around 6,000 laborers, 80 percent of which are 
Egyptian.  Total exports of tiles and marble reached JD 7.4 
million ($10.5 million) in 2005 and dropped to JD 7 million 
($9.9 million) in 2006, representing 0.3 percent of Jordan's 
total industrial exports.  According to the U.S. 
International Trade Commission, exports to the United States 
of articles of stone, plaster, cement, and similar materials 
more than doubled in 2005 to $1.1 million and increased 
further to $1.3 million in 2006. 
 
Challenges: Supply of Raw Materials and Labor 
--------------------------------------------- 
 
¶3.  After participating in a JOSTONE-organized tour of three 
industrial factories with USAID Director on September 3, 
Industry and Trade Minister Salem Khaza'aleh praised the 
industry in the press for significantly enhancing its 
products and competing in international markets.  Shami noted 
to Econoff, though, that the factories visited during the 
tour represented the success stories, and the industry still 
faced some significant challenges to future growth, 
particularly access to labor and raw materials. 
 
¶4.  Shami commented that the Ministry of Labor had made it 
difficult to get work permits for foreign laborers, who are 
needed due to the lack of Jordanian interest in such work. 
Various factory owners have corroborated this perception to 
Econoff, saying that many Jordanians do not realize that 
high-tech equipment and computers now do the hard labor and 
enable employees "to not even touch a stone." 
 
¶5.  Claiming that Jordan has abundant stone, marble and 
granite resources, Shami also criticized the Government of 
Jordan (GOJ), particularly the Ministry of Environment and 
Natural Resources Authority, for restrictive policies, 
lengthy procedures, and arbitrary decisions on granting 
licenses for mining and quarrying in regions such as Ajloun 
and Mafraq.  In his view, such bureaucratic problems hindered 
Jordan's ability to supply large international markets such 
as the U.S. 
 
¶6.  In contrast, Nassar Nassar, the CEO and General Manager 
of Nassar Stone, told Econoff that a large enough quantity of 
raw materials does not exist in Jordan, adding that where it 
does exist, mining is prohibited.  With factories in the 
Palestinian territories, Jordan, and Oman, Nassar claims to 
have the largest stone company in the Middle East and to have 
established the trademark "Jerusalem stone."  Established in 
1999, Nassar's Orient Factory is the largest in Jordan, with 
approximately 50 Jordanian and 30 Egyptian employees and 
sales around $8 million.  Nassar said that he had bought at 
least ten expensive parcels of land in Jordan for quarrying 
and has had to shut them all down for lack of supply and 
quality.  He also noted that unlike in Oman, no geological 
surveys have been done in Jordan to help investors identify 
potential reserves.  Most of the stone and marble for the 
Nasser Group now comes from the Palestinian areas or Oman. 
 
Varying Degrees of Export Success to the U.S. Market 
 
AMMAN 00003817  002 OF 003 
 
 
--------------------------------------------- ------- 
 
¶7.  Although stone and marble are among the few goods besides 
garments that comprise Jordan's exports to the U.S., Jordan's 
stone producers have not yet achieved significant sales 
volumes in the United States.  The Jordan Overseas Investment 
Network in the United States (JOINUS) conducted an assessment 
of the U.S. stone market and implications for Jordan's stone 
exporters in January 2007.  It noted that Jordan's main stone 
products with potential in the U.S. market are travertine and 
limestone, including Hallabat, Ajloun, Karaki, and Mafraq. 
Most JOINUS interviewees, however, noted that they were not 
familiar with Jordan's stone products, and at least one U.S. 
company expressed concerns about problems with packaging of 
tiles and inability to deliver the color contracted.  Another 
issue identified was inventory financing as stone buyers 
rarely pay suppliers up-front. 
 
¶8.  Nassar identified a larger problem of shipping.  While 
75-80 percent of the Orient's production used to be exported 
to the U.S., he said that figure dropped to about five 
percent in 2006 due to high shipping costs that are double 
the costs of shipping out of Haifa.  Additionally, he said 
shipping companies in Jordan tend to be less professional, 
unable to trace containers and handle the delicate stone 
appropriately.  Thus, his factory in Bethlehem now services 
distributors and importers in the U.S. market, while the 
Jordanian factory primarily caters to the Gulf region, Korea, 
and China. 
 
¶9.  Management at the industrial-scale Jordan Marble factory 
also expressed frustration to Econoff about unsuccessful 
efforts since 1992 to enter the U.S. market, blaming Israeli 
competition.  The company is now trying a new tactic of 
exporting to the U.S. through agents in Greece.  Commenting 
on his competitor's (and "friend's") lack of success in the 
United States, Nasser noted that Jordan Marble has not yet 
transformed from within to have state-of-the art equipment 
and products that meet the high standards required in the 
American market.  Indeed, during visits to both factories, 
Econoff noted that the Orient factory - from the offices to 
the production line - was significantly cleaner and more 
modern than Jordan Marble. 
 
¶10.  Sultan Yasin, the General Manager of the stone and 
marble factory Yasin and Sons Co., agreed that reliability, 
high quality, and efficiency in delivering finished products 
have been key in developing relationships with U.S. buyers. 
He proudly described his success in penetrating the U.S. 
market with high-end projects in Beverly Hills, Detroit, and 
Orlando that contributed significantly to the company's $3 
million in sales in 2006.  Yasin's factory is actually 
smaller than Jordan Marble with about 35 Jordanians 
(including ten in management) and 30 foreign laborers. 
 
¶11.  When asked about the secret to his success, Yasin said 
that he greatly benefited from the USAID-funded Jordan-U.S. 
Business Partnership (JUSBP) in 2004 that helped him to 
promote his products through better business practices and 
participation in trade shows in the U.S.  NOTE:  The 
USAID-funded Tatweer program, as a follow-on to JUSBP, 
continues to support the stone and marble sector with 
firm-level assistance, as well as U.S. trade show attendance. 
 END NOTE.  Contrary to maintaining a stock of tiles for 
sale, as is done in Jordan Marble, he has been filling a 
"niche" market by specializing in fabrication of custom-made 
products.  Given problems with the restricted Jordanian 
supply and inventory financing, Yasin "does not care where 
the raw materials come from," and uses Jerusalem and imported 
stone to fill orders only as they come in, similar to the 
Orient Factory.  Yasin also commented that the tariff 
reductions under the FTA essentially translate into free 
shipping for the buyer. 
 
Who's Supplying Construction in Jordan 
-------------------------------------- 
 
¶12.  The construction boom in Jordan has resulted in 
increased business for the country's stone and marble sector. 
 The larger factories have been focusing on the larger-scale 
projects, such as new hotels, shopping malls, and 
restaurants.  Nassar said that his company's local projects 
have increased by about 10 percent in the last year, and he 
expects local business to increase another 40 percent by 2008 
 
AMMAN 00003817  003 OF 003 
 
 
due to a number of large construction projects in the 
pipeline.  Approximately 25 percent of Yasin's business is 
also directed at supplying stone and marble to new local 
hotels and other large-scale projects in Jordan. 
 
¶13.  According to JOSTONE, small- and medium-sized factories 
are being contracted to fill orders for the significant 
number of residential buildings that seem to be springing up 
on ever street corner in Amman.  Shami mentioned that the 
smaller-sized factories tend to go unnoticed by the 
government when they mine the Jordanian mountainsides without 
licenses.  Otherwise, he said stone for local projects is 
often imported from the West Bank. 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman/ 
Hale