Guest column: The great urbanization, threats/opportunities

HomeColumnsGuest column: The great urbanization, threats/opportunities

Part 1 of 2

by Jim Gould

In this two-part series we address two converging forces that will impact the world’s economy and affect demand for finished flooring, its raw materials and even where the flooring will be made. Threat or opportunity? In the near future Asia will not be able to meet its domestic demand for flooring, it will consume more timber each year than several countries can harvest, and the balance of supply and demand will shift from the West to the East.

Emerging trends

Spotting and acting on emerging trends is how companies take advantage of market opportunities. Over the coming decade, two global trends—urbanization and a shift in supply and demand caused by emerging markets— will profoundly reshape the global economy and, by extension, the floor covering industry in a surprisingly direct manner.

According to McKinsey & Co., more than 70 million people are joining the ranks of the middle class each year, virtually all in emerging countries. By the end of the decade, the globe’s middle class will have doubled. Emerging markets will no longer be suppliers of lowcost goods and services, they will be consuming economies with huge demand for goods and services—half of the world’s work force and half of the world’s new construction will be in emerging markets.

Asia’s cities will hold 54% of the world’s urban population creating the largest work force ever known. Already its labor productivity is growing five times faster than in the West. By 2025 nearly 2.5 billion Asians will create an unprecedented shift in supply and demand, not the least of which will be floor covering for the billions of square feet of new construction required to support the urbanization. If estimates are correct, Asia will add more than 30 billion square feet of floor space a year to support its migrating populations. China will account for two-thirds and India the rest. Consider that most of the flooring in Asia is hard surface; in China it’s about 90%. Now consider in 2009 the U.S. hard surface flooring market (new plus remodel/replacement) was 5.66 billion square feet. Asia’s huge demand will surely create opportunities for Western mills to become suppliers to this growing market. It will also stress the supply of many raw materials.

Impact on timber

By 2015 the gap between China’s supply and demand for timber will exceed Canada’s entire timber harvest in 2009, according to International Wood Markets Group.

Canada has increased its lumber exports to China by almost 800% in the last four years making China the largest importer of North American wood. China is already the world’s largest manufacturer and consumer of wood-based flooring, panels, furniture and doors causing difficulty for the country to meet its current demand for timber. Its panel board output in 2009 was more than triple that of North America.

China’s wood flooring usage has increased domestically 7% to 8% annually and some of its capacity and raw material supply has already shifted to fill domestic demands.

Some U.S. mills that opened a plant in China to supply North America have realized the better strategy is to redirect those factories to supply the burgeoning Asian market.

Is the global industry ready to recognize and act upon the threats and opportunities these converging trends will cause? We’ll discuss that in part two.

Must Read

Mohawk kicks off National Karastan Month campaign

Calhoun, Ga.—For over 30 years, Mohawk has hosted National Karastan Month for the critical spring selling season. The "Journey Into Savings" event, running until...

FS Builder Resources acquires Leedo Cabinets

The Colony, Texas—FS Builder Resources, a family-owned flooring and interior finishes company, acquired Leedo Cabinets, an American cabinet manufacturer. FS Builder Resources’ acquisition of...

Daltile launches Artefino collection

Dallas, Texas—Daltile recently launched its brand-new porcelain tile collection, Artefino, with three unique sub-collections: Jewel, Vintage and Element. "Professional designers and consumers are expecting the...

Companies ramp up moisture testing tools

When Charity Adeoti first became a flooring installer, she said she didn’t realize how crucial moisture testing was until she experienced it firsthand. “We did...

MSI renovates Atlanta showroom

Austell, Ga.—MSI, a leading supplier of flooring, countertops, wall tile and hardscaping products in North America, has renovated its MSI Atlanta Showroom, located here....

Bjelin launches high-tech wood flooring

Viken, Sweden—Bjelin unveiled its new Slate Collection, a high-tech wood flooring solution. With deep textures and natural color variations, it delivers a cool yet...
Some text some message..
X