Category bends, but doesn’t break, under pressure
By Megan Salzano
Facing an unprecedented year of tumult, ceramic tile has continued its downward trend in 2020 following the category’s 2019 decline—its first loss in a decade. As ceramic tile continues to meet several challenges on its road back to growth, the onset of the coronavirus only added to the category’s hardships.
According to the Tile Council of North America (TCNA), tile consumption in Q3 2020 totaled 2.04 billion square feet, down 11.6% vs. the same timeframe in 2019. At the current pace, the TCNA said U.S. ceramic tile consumption for 2020 would be 2.6 billion square feet, down from 2.94 billion square feet the previous year, and the lowest point for the market since 2014.
Ceramic suppliers agree, it will be difficult to judge the impact the pandemic will have on the category in terms of dollar sales and volume, but most say another low, single-digit decline is expected.
One bright spot for tile is the dramatic rebound in the housing market. Housing remains a steady meter against which to gauge the health of the ceramic tile market in the U.S., and numerous factors such as housing starts and mortgage rates have had a positive impact on the category’s outlook.
“The tile industry is stable due to the strength of remodel and new home construction,” said Paij Thorn-Brooks, vice president of marketing, Dal-Tile Corporation. “The United States is experiencing one of the strongest housing markets in history, with low mortgage rates enabling people to afford a new home more than ever.”
Last month, single-family starts experienced continued gains and the highest production rate since the spring of 2007, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Single-family construction is up 8.6% year-to-date, with notable gains in 2020 for the Midwest and other lower-density markets. Single-family building increased 6.4% to a 1.18 million seasonally adjusted annual rate.
“An increase in new home construction not only increases demand for flooring in new homes, but remodeling occurs at the same time in older homes,” said Raj Shah, president, MSI. “In addition, we are seeing significant increases in home values. This improves home equity and enables the funds required for a remodel, which also increases the demand for tile.”
However, tile suppliers say the full gains from new home construction might not be realized until 2021. “As a result of the longer build cycle caused by the supply chain challenges of other industries, the benefits within the tile category from the surge in new construction have not been fully recognized yet,” explained Mara Villanueva-Heras, vice president of marketing, Emser Tile. “We will not see the full impact of the current trends until December and into Q1 of 2021.”
The pandemic has created a unique situation for tile. While it caused a disruption in supply chains, forced many retailers to shut their doors for extended periods and led to construction challenges, it has also caused many consumers to redirect funds traditionally earmarked for other spending toward home remodeling and renovations.
“People are spending more time at home due to COVID-19, so they are reminded daily of remodeling projects they want to tackle,” Thorn-Brooks said. “The time at home is also providing the opportunity to remodel, especially DIY projects, and many are using stimulus dollars for home remodeling.”
Ryan Fasan, ceramic tile specialist and consultant to Tile of Spain, added that the shelter-in-place mandates that swept the globe have many consumers looking at their spaces—both indoors and out—to see how to improve on livability, mainly by creating flex-spaces and outdoor rooms. This has highlighted tile’s inherent benefits.
“Performance and longevity in multiple use-cases are often becoming deciding factors when it comes time for material choices,” Fasan explained. “Ceramics, having a useful lifespan of 50-plus years regardless of abuse and [being hygienic] make it about the only material choice that can answer all those requirements in the affirmative.”
Another consequence of the pandemic has been growing consumer interest in hygiene—an area where ceramic tile shines. “The fact that tile is inert, inorganic and largely impermeable (if glazed) makes it an ideal surface for easy sanitization and peace of mind that we are doing all we can to keep ourselves and our loved ones healthy,” Fasan noted.
While the pandemic may have had some positive consequences for tile, the category has other challenges it continues to grapple with—namely the growth of LVT, tariffs and labor woes.
The growth of the resilient category remains a thorn in ceramic’s side. While it hasn’t had the detrimental effects experienced by hardwood and carpet, suppliers say it has caused confusion around the true benefits of resilient products vs. ceramic. “While the impact to our tile flooring sales has been minor, it has created some confusion around ‘waterproof’ applications,” Villanueva-Heras explained. “While [LVT] is waterproof, in most cases, the application is not. [LVT’s] ceramic visuals will potentially further confuse this point. Tile can replicate many sophisticated shapes, textures and patterns, with inspiration taken from nature, architecture, materials and fashion. These advancements afford us the opportunity to translate those ideas into our products in ways LVT cannot.”
The volatility caused by trade wars, tariffs and the anti-dumping case has had lasting effects on ceramic consumption in the U.S. Earlier this year, the U.S. Commerce Department made a final determination that Chinese exporters had dumped ceramic tile in the U.S. market at less-than-fair value. The department has imposed hefty duties on top of the current Section 301 tariffs on ceramic tile.
The most glaring impact, according to Fasan, has been the 98.38% (almost total) decline of Chinese imports to the U.S. “The largest sectors impacted were small-format ceramics where there are relatively few manufacturing sectors setup to fill that void,” he noted.
Finding skilled and qualified installers has been an ongoing challenge for the industry as a whole but hits the tile category hard as it relies heavily on a skilled labor force. Suppliers agree this will continue to be a challenge into the future.
One of the tile category’s distinguishing qualities is its ability to continuously innovate. Domestic manufacturers as well as those abroad continue to tap new technologies and design trends in order to bring unique and in-demand solutions to market.
“Innovation is helping the ceramics industry soar to new heights,” said Rodolfo Panisi, CEO Florim USA/Florim Solutions. “For decades, ceramics were known solely for wall and floor applications. Innovation has helped our industry to grow in new market segments, such as the countertops and outdoor pavers business.”
MSI’s Shah echoed Panisi’s sentiments, noting, “Today, tile can meet almost any surfacing requirement due to the innovation. Add to this that inspiration is being made available through many ‘at home’ experiences such as augmented reality, web inspiration, shop at home, etc. Shopping for tile has never been easier for the end consumer.”
In addition to moving tile up the wall and onto countertops, new technologies have allowed for a new kind of realism in flooring design. “Technology is expanding the flooring tile category with new visuals and empowering homeowners and designers to create any look they desire without performance concerns,” Thorn-Brooks said. “New digital printing allows tile manufacturers to create realistic-looking materials, while still retaining all the benefits of tile.”
Emser’s Villanueva-Heras noted that in addition to their style, tile and stone products feature benefits such as slip-resistance, stain-resistance and water-resistant properties, making them well suited to multiple areas in the home. “These advancements have opened a whole new world of possibilities and affords us the opportunity to be even more creative and translate those ideas into our products,” she explained. “And, they will continue to drive the market in 2021.”