Coming off what most industry executives considered to be a terrible 2009, the ceramic segment was looking for something, anything resembling a turnaround heading into 2010. And while certain indicators signaled a modest increase of 5% to 6% in tile consumption and sales, professionals saw that as going mostly to inventory more than anywhere else.
As the end of 2009 was particularly lean, most observed, what happened during the course of 2010 represented a growth not necessarily in sales, but one to fill or put product into the pipeline some believed had been restrained heading into the year by both attitude and perception.
Most firms did report larger increases in the commercial segment over residential, due mostly once again to a poor housing market and a lackluster economy. Contributing factors also included rising oil prices as a result of the Libyan conflict, rising raw materials costs, as well as continued sluggish unemployment figures. In addition to the cost of fuel and natural gas, mills also felt continued pressure on pricing due to an increase of imports from China and Mexico.
In commercial, execs believe the industry would still face challenges as the economy slowly begins to advance. But that being said, select segments within the commercial market remained steady for most of 2010, including healthcare, higher education and government facilities.
In healthcare, the aging population continued to fuel the segment’s growth in 2010, while at the same time there seemed to be an interest in making facilities feel more “spa-like” or exotic (Asian and/ or contemporary) as opposed to sterile and clinical.
In higher education, while funding for state-run schools fell off in 2010, remodeling of institutions remained relatively active, with large format porcelains and mainstream ceramic and porcelain products often used as they are viewed as being a good fit for the segment’s high traffic requirements.
Regarding government facilities, many noted how military bases and offices are increasingly being remodeled, as many haven’t been updated for years. The goal here seems to be to make these spaces look not nearly as institutional as they have in the past. Executives also noted the hospitality channel rebounding after several years of reduced capital spending.
Relative to that in the rest of the world, the U.S. ceramic tile market is small. Also, unlike other flooring products, imports accounted for just over 60% of all U.S. consumption dollar value in 2010. Among the nations supplying a large portion—80% of these imports— are from Italy, Spain, Mexico, and China. Because of the many shapes and types of ceramic tile, nearly all U.S. manufacturers import and private label a portion of their product lines, which are used to augment their domestically produced product.
The ceramic market in 2010, in terms of employment and consumer confidence, execs noted, did not rebound as quickly as expected and, therefore, sales and volume growth did not recover as anticipated. Overall, the economy was expected to grow more than it did and sales reflected this slowdown as a result.
Technology marches on
Carrying over from recent years, one of the major developments in the industry in 2010 continued to be the advancing level of technology available to manufacturers. The year saw several producers introduce tiles with looks enhanced by printing a design or shading under the glaze.
Using ink jet printing technology, stone and other looks continue to be greatly enhanced creating extremely realistic simulations with little additional cost. These new designs have been met with a hugely positive response from the trade. While too early to assess sales, expectations remain high for these new products and this technology.
Another trend that will lower cost for ceramic tile is the use of the same porcelain tile in both floor and wall tile applications. This will allow suppliers and retailers to lower inventory levels thereby lowering related costs. This trend has been taking hold and is becoming a significant factor in the ceramic tile industry.
In line with current trends in the industry, Italian, Spanish as well as American tile companies introduced a number of wood and stone look tiles that were convincing as ever with many companies using the aforementioned digital printing techniques. Others continue to play with the concept and introduced tiles with unnatural or colorful hues and varying “process techniques” such as saw-cut wood or cross cut and vein cut stone used side by side.
Another significant trend continues to be the growth of thin tile. More and more companies now offer these thin offerings. From a technological standpoint, thin tiles are one of the most exciting trends for their aesthetics, flexibility and ease of installation. Because of their slim size, they can be installed over existing surfaces and can often be used for exterior cladding, facades, raised flooring systems and false ceilings.
In addition, the industry’s commitment of turning waste into resources was apparent in 2010 as a growing number of companies featured sustainable tile collections—some with over 40% recycled content or up to 95% recycled glass.
Overall, ceramic executives saw 2010 as a difficult year and admit the industry still faces challenges as the economy continues to slowly progress. They expect to see moderate, single-digit growth as housing and employment start to rebound, and they believe an increase in imports from China and Mexico will be prevalent as well.