June 29; Volume 30/Number 1
By Amanda Haskin
Despite 2014 marking the fifth consecutive year of growth for the ceramic tile category, U.S. tile consumption was basically the same as it was in 2013. Volume sales were a shade under 2 billion square feet (1.99 billion), up just 0.5% from 1.98 billion square feet in 2013.
However, ceramic performed much better in dollars, checking in at $2.38 billion, up 6.2% from $2.24 billion in 2013. The disparity between dollars and unit growth can be attributed to a favorable shift in product mix to more higher-priced goods moving through the pipeline as the economy improved, coupled with rate of exchange variations. With imports representing close to 70% of tile sold in the U.S., and the value of those imports fluctuating, the industry showed a more significant increase in dollar sales. (Editor’s note: These numbers represent only floor tile, which is estimated by most to be about 80% of the ceramic category.)
A good portion of the category is dependent on housing starts, which were bumpy throughout 2014. In illustration, November saw a sizable drop, with an equally sizeable jump reflected in December. The end result was a rather lackluster 8% growth from 2013, according to the U.S. Census Bureau. Previous annual growths of 18.5% and 28.2% in 2013 and 2012, respectively, showed housing starts slowing at a steady pace.
“People expected [the ceramic tile market] to increase by 5% to 10%; I even expected it to increase 12%, but that just didn’t happen,” said Donato Grosser, industry consultant and president of D. Grosser and Associates. “The end of 2013 was wonderful and the beginning of 2014 was lousy, and the whole year followed that kind of pattern and never recovered. Because the housing market didn’t pick up, the ceramic tile market didn’t pick up.”
That being said, 2014 marked the fifth consecutive year of ceramic growth, representing a 34% increase from 2009, which was the worst year of the recession for tile consumption. “2014 met my expectations for growth,” said Bart Bettiga, executive director of the National Tile Contractors Association (NTCA). “We were not overly optimistic even though we felt the economy was going to rebound, but it met our expectations. We’re pleased we continue to have market share, but we want to improve on it. We can only do so much based on the economy, but market share is definitely something we’re focused on.”
According to Jason Roshel, senior director of product strategy for Dal-Tile, ceramic tile now makes up approximately 13% to 14% of overall flooring sales, although FCNews research found ceramic to account for 12.1% of sales in dollars and 11.2% in volume.
Domestic vs. imports
According to the Tile Council of North America (TCNA), imports made up 68.7% of U.S. tile consumption (in square feet) with 1.71 billion square feet of tile (both floor and wall) arriving in the U.S., down from 1.72 billion in 2013. Domestic shipments made up the other 31.3%. There was 779.1 million square feet of product made and sold from domestic facilities, up 3.3% from 2013, with a dollar amount of $1.15 billion, up 6.8% from 2013.
It is worth noting that suppliers with domestic production facilities are also importers. “It is estimated that 450 million square feet of tile was imported by companies with a U.S. manufacturing base,” Roshel said. “So almost 50% of all tile that was sold in the U.S. last year was from a company with U.S. manufacturing.”
Mexico regained its position as top exporter to the U.S. (in square feet), which it lost to China in 2013, with a 29.5% share of imports. China came in second with a 29.4% share, followed by Italy at 18.1%, Spain at 6% and Turkey at 4.3%. Compared to 2013, these percentages represent drops in market share for both Mexico and China and increases for Italy, Spain and Turkey.
Based on value (including duty, freight and insurance), Italy was the top exporter to the U.S., commanding 34.8% of import value, followed by China at 25.7% and Mexico at 16.5%. All five top importers saw an increase in import value from 2013.
“Soon the U.S. will be within the same level of imports that it had in 2007,” said Rocamador Rubio Gomez, director of Tile of Spain USA. Spain saw a 13.4% growth from 2013, due in part to Tile of Spain’s Quick Ship Collection, a select group of products from Tile of Spain manufacturers that are in stock and available for immediate purchase in the U.S. “It has made it easier for consumers, tile installers and design professionals to source Spanish tile in the U.S.,” she added.
Ceramic sales by end use
According to Dal-Tile, residential remodeling made up 47% of tile consumption, while commercial work was at 28%. New residential construction comprised 25% of ceramic sales.
“Within the new residential segment, it is estimated that approximately 75% of the sales are in single-family homes and 25% in multi-family,” Roshel explained. “We are projecting that the growth in single-family home construction is expected to outpace the growth in multi-family over the next couple of years, which is favorable for ceramic tile.”
Within the commercial market, the three sectors that led growth were retail, hospitality and assisted living health care facilities. An aging population continues to fuel growth in health care.
“In terms of design, many facilities are striving to create an atmosphere that’s more home-like or similar to high-end hospitality settings,” Roshel said. “These types of design choices allow patients to feel more comfortable and out of the mindset of a clinical environment. Also driving growth in this category is the increasing development of extended stay rooms where patients’ family members can reside during long stays.”
Channels of distribution
Industry-wide, Roshel estimates that independent distributors account for approximately 44% of distribution, followed by home centers at 39% and manufacturer-owned stores at 17%. According to Grosser, there are 18,334 tile contractors and dealers, 1,370 tile distributors and 7,805 home centers as of 2014.
“Distributors across the country saw growth,” said Rick Church, executive director of the Ceramic Tile Distributors Association (CTDA). “All were optimistic throughout the year and are optimistic for continued growth in 2015.”
Industry experts believe that 2015 tile consumption will all come down to this year’s housing starts. Grosser predicts that if new construction can increase by 10% or more, tile consumption may increase by 7% to 12% in the coming year.
“This year is better than last year and the market is increasing more than 5%, but it all depends on the housing market,” he said. “Every month you get strange statistics—one month everything looks fine and beautiful and the next month the other way around. We are not in a completely stable economy yet.”
Another factor that industry experts are looking at is the recent steep decline of the Euro. Because of its depreciation, U.S. distributors say that imports may increase by 10% to 20%.