Ceramic practices patience during slow recovery

Home Inside FCNews Ceramic practices patience during slow recovery

Ceramic tile producers continue to make a splash with industry professionals and consumers alike when it comes to innovation, color, styles and expanded product offerings but, due to the economy, it still looks as though patience will continue to play a major role as conditions in the commercial tile segment slowly move forward.

Lori Kirk Rolley, senior marketing director for Dal-Tile, said the company is “cautiously optimistic” about the balance of 2011. “We believe the recovery will continue the balance of the year. Commercial renovation is improving as companies begin to reinvest.”

Bart Bettiga, executive director of the National Tile Contractors Association (NTCA), said “Commercial projects have continued to hold steady, but due to new companies (mostly residential contractors) entering the bid phase there has been a heavy emphasis on price versus quality during these tough times.”

The consensus among executives currently has commercial sales representing approximately 40% of the total ceramic tile market, and most saw this trend continue during the first quarter of the year with commercial actually outperforming residential.

As Bettiga noted, bidding is slowly improving and the second half of 2011 and first half of 2012 will result in slight increases for our members in work. “Backlogs (future projects) are definitely healthier compared to a year ago. The companies that are surviving are being flexible, ready to work in areas outside of their normal comfort zone, such as traveling, partnering with other contractors on projects, and diversifying their offerings into specialized niches such as maintenance, restoration, remodeling, etc.”

There is a sense that the field has been “cleansed to some degree,” he added, “and those who have stayed fluid and financially healthy are poised to reap the benefits in the next 12 to 24 months.”

According to Kirk-Rolley, in addition to the economy, the two biggest challenges in 2011 involve pricing and fuel costs. “We’re seeing continued pressure on pricing due to an increase of imports from China and Mexico. We’ve expanded our portfolio to include the value priced products the market is demanding, but have maintained the quality and realistic looks customers have come to expect from Dal-Tile.

At the same time, raw material and freight costs have been rising, she explained. “To recover some of them, we’ve increased prices on select products and transportation.”

For the most part, industry executives agreed that segments in which the most growth has been seen recently include healthcare, higher education and government.

In healthcare, the aging population continues to fuel the segment’s growth; in higher education, while funding for schools has fallen off, remodeling of institutions has remained relatively active, and in government, many noted how military bases and offices are increasingly being remodeled, as many haven’t been updated for years. Executives also noted the hospitality channel rebounding after several years of reduced spending.

While most executives believe the commercial segment in particular values products offering green features and benefits, they aren’t willing to sacrifice the aesthetic or quality of the product. “Specifiers value transparency from manufacturers who are telling a green story,” said Kirk-Rolley. “It’s important they are able to get all of the information they need from a manufacturer to determine if the product they are considering not only meets their project objectives, but green objectives as well.”

-Louis Iannaco

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