Dal-Tile moving ahead while economy slowly improves

Home Inside FCNews Dal-Tile moving ahead while economy slowly improves

Recent past a springboard for the future

Nov. 18/25 2013; Volume 27/number 15

By Louis Iannaco

For the past 18 months plus, Dal-Tile has been on a roll. Whether it is by way of new technology, acquisitions or investing, compared to its competition, the largest domestic ceramic tile and stone producer in the industry continues to grow into the second half of 2013 at an impressive rate. With economic conditions seemingly turning around, albeit slowly, Dal-Tile continues to lead ceramic producers into the light.

According to John Turner Jr., who recently completed his first year as president of the company, Dal-Tile’s business grew more than 11% in 2012 with continued significant growth in 2013. “I believe that’s a little better than the industry’s rate of growth,” he recently told FCNews. “We feel good about the past 18 months, but beyond just the growth numbers, we did a lot of work during the year strategically to position ourselves for the future, particularly in our manufacturing footprint in the U.S.”

A large part of that footprint is the 90-million-square-foot manufacturing facility Dal-Tile opened in Salamanca, Mexico, during the first quarter of 2012, a factory that has since been ramped up to full capacity.

The company also added more Reveal Imaging digital printing technology in North America than any of its competitors, Turner noted. “So much so that we’re the first North American manufacturer—and one of the first in the world—to use digital printing technology across all our glazed products. That includes glazed floor and wall tile, ceramic and mosaic, as well as trim and decorative products. It’s a fairly significant step forward for our company in preparing for the future.”

Turner noted that the company has some “fantastic” projects set for the future. “The acquisition of Marazzi has changed a few of those around a little bit (FCNews, Jan. 7/14), but I believe we performed very well in the recent economic environment. We laid the foundation for the future growth of the company from a manufacturing technology perspective. As a result, we’re happy with where we are right now.”

Through the last part of 2013, Dal-Tile finds itself in the double-digit growth range. As it moves through the balance of the year, Turner predicts very strong top-line growth for the company. “Like everyone else, we’re seeing strength in the new residential sector. We have a very strong position with national builders and have been working diligently to expand our presence at the regional and local builder level. We’ve done that through product and a sales force strategy, and it seems to be working.”

Turner also noted that Dal-Tile is maintaining strength in the commercial arena and features a sizable sales organization on that side. “While we believe commercial business is growing year to date in the low single-digit range, we’ve been growing stronger than that.”

Expanding on its sales force strategy, Turner explained Dal-Tile’s national footprint on the builder side. By leveraging that footprint the company has the ability to reach the major national builders and players and accomplish what others cannot, which is “offer a consistent level of service, product and experience, no matter what market they may build in. We’ve been executing that strategy for quite some time very successfully and, as a result, have a very large share of the national builders’ business.”

According to Turner, Dal-Tile had needed tighter, deeper relationships with the builder community, so it restructured its sales organization to have people focus specifically on developing those relationships versus exclusively with the flooring subcontractor.

“We do both now,” he said. “We have the relationships with the flooring subcontractor as he continues to drive the majority of the product selections going to those regional builders. But having that relationship at the regional builder level allows us to head off any type of problem. It also allows us to explain our value proposition to that regional builder more directly than relying exclusively on the flooring contractor.”

Trends emerge

In discussing recent trends, Turner cited home centers picking up share in the residential remodel arena. “Home centers have expanded their focus on ceramic tile over the past 12 to 18 months. However, flooring retailers who invest in the tile and stone category, and commit to it, continue to show strong signs of growth, particularly in the higher end of the market.”

Another trend is the inclusion of the Internet and the role it plays in consumer awareness. In the past, Turner recalled, whether it was a dealer or salesperson, ceramic tile contractor or remodeler, “someone in the middle of the transaction would direct the consumer to where she should select her products.” Now with the complete, 100% adoption of the Internet to research and prepare for purchase, he explained, “we’re reaching out for that consumer more directly through our own web and social media presence. We’re trying to make sure she knows who Dal-Tile is, what our brands are, how those brands are distributed, what those brands mean from a quality, style and design story and make sure she’s in a position to ask for our products when she arrives at one channel of distribution or another, versus being directed to them via the more traditional manner.”

Continuing to position itself for the future long-term is imperative for Dal-Tile, and that includes leveraging its new relationship with Marazzi, as well as integrating the company “into the whole tile picture,” including the greater organization of Mohawk. “There will be a very specific differentiation by brand, product and channel distribution with the Marazzi brands and Daltile legacy brands.

“There will be a very specific brand, product and distribution strategy to keep the Daltile, American Olean, Marazzi and Ragno brands differentiated in the marketplace while touching all our core consumers with that type of product, branding and distribution,” he explained.

Turner also noted that one of the most positive, yet unforeseen, developments he’s experienced in recent years is the people who have come to Dal-Tile as a result of the Marazzi acquisition. “It’s a great team both in the U.S. and Europe. Some of the things we’ve already been able to accomplish with our European partners include products coming soon for fall launches. Those from our European production capacity in our Daltile and American Olean brands are staggeringly beautiful and unbelievingly technological for our market.”

Beyond that, he noted, Dal-Tile’s short-term objectives include consistent service for its customers, topping its competitors and “earning a larger share of their business.”

The company’s core channels of distribution are company-owned wholesale stores, the independent distributor channel for the American Olean brand, and now the Marazzi brand, and the home center channel. “We always want to do better than the market, and we feel we’re doing a little bit better on that side,” Turner said.

He also noted the company’s product launch this year was one of the largest introductions Dal-Tile has had in recent Dal-Tile history. “We were really able to make a big, stylish dynamic launch with our spring initiative in 2013.” And now he is looking forward to even more product launches later in the year.

One of the most exciting things for Turner now, and for 2014 and beyond, is all the expansive developing technology on the decorating side. “With planks,” he concluded, “we’re combining stone, fabric and wood looks as well as other natural-look finishes like concrete, stone, grass and bark into mixed visuals.”

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