Periodical

16
Tile & Stone
Tile & stone inch ahead
By Tanja Kern
2011 tile and stone numbers showed that
the U.S. really is seeing the “beginning of the
end” of the recession.
Ceramic tile dollar sales increased by 6
percent to $2.21 billion, while square foot
sales rose by 4.5 percent to 2.08 billion — the
highest rate for any flooring material. Stone
sales were up 0.2 percent to $1.06 billion —
and square foot sales nudged up 0.57 percent
to 261.5 million square feet.
“It was not a great year, but we have already
hit bottom, and we are a little bit ahead of
before,” said Donato Grosser, consultant to
the tile industry and owner of D. Grosser &
Associates, Ltd.
As the overall economy recovered in 2011,
manufacturers felt confident enough to pass
along rising material, energy and transportation
costs to consumers, but price competitiveness
actually improved for ceramic tile
because the sector experienced only moderate
raw material cost increases.
The average square foot price stayed steady
in 2011 — up just a penny. According to
Catalina Research, average square foot selling
prices stood at $1.06 per square foot in 2011
with the category gaining market share — 12.4
percent of total U.S. floor covering dollar sales.
As the struggling housing market shows
signs of improvement, there has been a reversal
in the six-year trend in smaller home sizes,
according to the American Institute of Architects.
This is the case for custom and luxury
homes, as well as for additions to existing
homes. A preference for outdoor living, especially
blended indoor/outdoor living, continues
to increase. These consumer preferences
are opening more doors for natural stone and
high quality porcelain tiles.
Segment breakdown
The current administration’s recent housing
scorecard shows signs of burgeoning
stability in the housing market, with home
equity numbers rising 7.4 percent between
the fourth quarter of 2011 and the first quarter
of 2012. The scorecard, which is compiled
by the U.S. Department of Housing and
Urban Development, the Obama administration
and Treasury, noted that home equity
rose $457.1 billion in the first quarter of 2012.
Catalina Research market segment analysis
showed that homeowners are investing in
their homes with 41 percent of ceramic tile
sales going to residential replacement in 2011.
“Last year was better commercially and we
are seeing some movement in hospitality,
multi-family housing and retail,” said Lori
Kirk-Rolley, senior marketing director for
Dal-Tile. “I think that there is a lot of pent up
demand and we are seeing a lot of that on our
national accounts, on the retail side and with
large retailers.”
Non-residential construction accounted
for 25 percent of the tile market. The commercial
contract market held 19 percent of
the tile market.
“The commercial market is where we
are seeing the growth for Florida Tile,” said
Florida Tile marketing director Sean Cilona.
“The hospitality and healthcare segments are
doing pretty well and those smaller commercial
jobs — those types where people are
installing tile as a replacement floor coverings
are also doing well.”
Gianni Mattioli, president of Marazzi USA,
added, “We are already established in the
residential remodeling market and business
is picking up, but the commercial markets are
where we have made a lot of key investments
in people, marketing and technology.”
Import/Export
Although imports still comprise the majority
of U.S. consumption, due to the U.S. dollar
losing value to the Euro, import market penetration
has fallen in each of the last five years.
In 2011, imports accounted for 69.2 percent of
U.S. ceramic tile consumption — the lowest it
has been since 1998, according to Eric Astrachan,
executive director of the Tile Council of
North America (TCNA). “As you can see, we
are moving in the right direction,” he said.
There are six Italian-owned tile plants in the
United States — Marazzi USA with three locations,
Florim USA, Iris-Stonepeak and Florida
Tile. According to Ceramics of Italy, the Italian
tile association, those plants make up 50 percent
of U.S. ceramic tile production. “These companies
invested in the United State due mainly to
weaknesses in the dollar,” Grosser said.
2011 key points
Sales remained on the rise as consumers
continue to turn to hard surface flooring.
Ceramic tile value increased by 6.3 percent
to $2.21 billion, while volume rose
by 4.5 percent to $2.08 billion.
While imports still comprise the majority
of U.S. consumption and sales of imports
continue to grow (by 3.8 percent in 2011,
according to Catalina) the TCNA said that
imported product’s market share in comparison
to domestically made tile declined
over the last five years to 69.2 percent.
Look ahead
Despite the lingering effects of an overbuilt
housing market, the continued difficulty
to obtain financing for real estate projects,
budget shortfalls and the anxiety surrounding
the prolonged European debt crisis, there
are signs that the U.S. design and construction
industry will be improving and with it,
along with tile and stone industry.
Improved price competitiveness and
consumers’ overall rising preference for hard
surface flooring has already helped ceramic
tile experience some of the strongest industry
gains in the first half of 2012.
Ceramic tile sales (shipments minus exports
plus imports) are estimated to increase by 6.5
percent in square feet and 7.7 percent in dollars
in the first half of 2012 over the previous year,
according to Catalina’s second quarter report
for 2012. This could push ceramic tile square
foot sales to account for 12.3 percent of total
U.S. floor coverings square foot sales in the first
half, and 12.7 percent on a dollar basis. FCW
Chart 14
Ceramic tile market value and volume
(in billions)
3.5
3.0
2.5
2.0
1.5
1.0
$2.83 (R)
2.66
$2.51 (R)
2.26
$1.91 (R)
2007 2008 2009 2010 2011
1.85 (R)
$2.08 (R)
1.99
$2.21
2.08
Chart 16
Stone market value and volume
(in millions)
2,000
1,500
1,000
500
0
$1,689
436.4
$1,408
351.6
$1,079
2007 2008 2009 2010 2011
270.8
$1,062
260.0
$1,064
261.5
Chart 15
Market sales
Square feet
Ceramic tile imports value and volume
(in millions)
3,000
Source: Catalina Research R=Revised
Market sales Square feet
Chart 17
Ceramic tile export value and volume
(in millions)
80
Source: Catalina Research
2,500
2,000
1,500
1,000
500
$ 2,084 (R)
2,176
$1,721 (R)
1,684
$1,203 (R)
1,332
$1,276 (R)
1,393
$1,325
1,409
66
52
38
24
$52.3
56.6
$56.2
61.3
$50.3
55.6
$50.3
50.8(R)
$52.5
53.7
0
2007 2008 2009 2010 2011
10
2007 2008 2009 2010 2011
Market sales
Volume
Source: Catalina Research R=Revised
Market sales
Volume
Source: Catalina Research