December 8/15, 2014; Volume 28/Number 12
Ceramic
By K.J. Quinn
2015 is expected to be a good year for the U.S. ceramic tile business, perhaps the best since the onset of the last recession, according to industry executives. Lower lending and unemployment rates, along with a recovering new home construction business, are among the factors forecast to stimulate demand in the residential and commercial sectors. Depending on whom you ask, U.S. floor tile sales are projected to increase 3% to 10% next year, with growth rates varying by sector.
Mark Shannon Executive VP of sales, Crossville
We are fairly optimistic about 2015 because 2014 did show some growth. My guess is the market will grow 6% to 9%.
I think we’ll see some growth in residential renovation and slight growth in residential new construction in 2015. I think we’ll also see some growth in the high end with retail work. I think building starts will stay flat, particularly if interest rates move north at all.
We’re optimistic about the residential remodel market. Crossville sells products through a large number of high-end showrooms, and we’re seeing respectable traffic in these locations.
The commercial market was flat this year for most people, but there are some reasons for that. Education, corporate work, hospitality, healthcare and retail, in terms of shopping malls and development, seemed to move forward. I think there is more Main Street-type work, with products competitively priced. I think we could see some growth there as well.
Without being overly optimistic, we had a number of initiatives we started a couple of years ago in anticipation of creating new markets. We invested heavily in advanced digital printing technology, and we are creating products better than ever before, combining that technology with a number of others we use. We refer to it as a “digital plus” approach to design, so the looks are better than ever.
We are launching a number of new products after the first of the year. If we continue with the design work we did in 2014 we’ll have some strongly positioned products for 2015 in the markets we serve.
Bob Baldocchi Director of marketing, Emser Tile
New home construction and residential remodeling will experience high single-digit, low double-digit increases next year. The real driver is new home construction; land and labor availability in the construction industry will certainly be factors that may hamper growth. In residential remodeling, there is also a healthy appetite for people investing in properties they own and refreshing inside the home.
The housing market is reasonably strong, although if you look at single-family housing starts in 2014 vs. 2013, indications are the market was flat, with total new home construction up but driven by multi-family housing starts. The increase next year will be in both multi-family and single-family housing starts. Two other indicators that could influence growth are whether unemployment rates stabilize or get lower, and if interest rates stay where they are.
We see commercial as another growth area for next year, mainly because there appears to be more new construction projects. We’re seeing hotels, restaurant and food sectors refreshing at a faster rate than previous years, which all point to solid growth next year. As long as people feel comfortable in investing in commercial spaces and have the ability to obtain funding, I think we’ll see growth.
In terms of innovation, we’ve had what I would call a pretty amazing last couple of years with technology shifts in the marketplace. In 2015 I think we’ll see people leveraging what’s been done in the marketplace; inkjet technology is no longer new, it’s just the way we make tile. We’re seeing improvement in the graphic treatment in what can be done with the face of tile, which will continue in 2015.
We’re also seeing changes in tile formats, which are getting bigger, and different sizes and shapes will continue to be a big part of the marketplace. Wood and contemporary looks are still trending.
There are opportunities in all segments, whether it’s retail or new home construction. We’re positioning ourselves to capitalize on those opportunities. We will be opening up new locations and have started the process of expanding our distribution network. We are positioning ourselves for future growth.
John Turner Jr. President, Dal-Tile
We should see a nice recovery in new home construction next year. We anticipate moderate recovery in the residential remodel sector and a sustainable, reasonable growth rate for commercial. We estimate ceramic tile volume will grow by 5% to 6% next year. The last several years, dollars outpaced volume in the tile business, as the residential remodel market was stronger than residential.
I think the commercial market is an area we can count on next year to grow. Units can grow in the 5% range commercially and dollars can be even stronger. We think Main Street commercial will move forward with retail/restaurant activity. This includes retail chains, stores, gas stations, quick-service restaurants, etc.
Ceramic is probably picking up a small market share vs. other floor covering categories. We’ve returned to a pre-recession trend, where tile was picking up 1⁄2 to one point of share vs. the balance of floor covering products. The installed cost is the key reason why the category hasn’t grown faster.
We’re spending an inordinate amount of time in product innovation and creating value so we can continue to offer the most innovative products at exceptional prices and have the best service in the marketplace. In the last three years, the industry moved to almost non-contact printing. We have non-contact printing on every line that we manufacture for tile in North America. In addition, our wall tile business is far and away the leader in non-contact printing technology. We call it “visual imaging technology,” which is a combination of technologies to provide both texture and print imaging on wall tiles.
The brand and product distribution across our four leading brands is critical to the success of the organization. In the balance of our core business, we have tried very hard the last few years to streamline product offerings in preparation for the category growth that we have just started to see. If and when the industry does recover to the degree we expect it to, we will be well positioned from a logistics, service and distribution position to meet that growth.
Pedro Riaza Secretary general, Spanish Ceramic Tile Manufacturers’ Association
The market is recovering as construction data has shown in recent months. While we cannot predict with any accuracy the growth for 2015, we hope we are on a pattern similar to 2014. Single-family residential growth is on the rise, about 21.6%, demonstrating that the U.S. consumer has confidence in the recovery of the economy. Building and ceramic tile use are increasing, and the number of distributors and retailers is also growing.
Spain is perfectly positioned with technology, design and sustainable product especially made for the U.S. market. Many companies have worked hard to improve their distribution to the U.S., so that tile is stocked and ready to be provided quickly for projects.
New products such as thin tiles open new uses for counters, showers, walls, facades and more. As the tile becomes more popular and is used in more projects, standards and training will help make it even more mainstream. Other trending styles presented by Tile of Spain companies at the CERSAIE trade show include matte black finishes, distressed wood planks, vintage patterns, delicate feminine motifs, mix-and-match patterns, gradients, subtle reliefs and geometric designs, including hexagons and metallics with mirrored effects.