Producers see sales, unit increases for second straight year
by Louis Iannaco
Coming off a 2010 where most industry executives reported modest increases in tile consumption and sales—most of it going into inventory more so than anywhere else—indicators have shown a similar increase in 2011, only this time extending beyond inventory.
With a 6.5% increase in dollars for 2011 over 2010, industry executives seemed content with the year’s progress, albeit somewhat frustrated that the second half of 2011, much like 2010, did not enjoy the same growth seen in the first half of the year. The growth was stunted somewhat due to higher unemployment rates and lower consumer confidence.
A positive aspect for the segment in 2011 was multiple companies either opening new manufacturing facilities or expanding capacity of existing ones, as well as adding to or enhancing sustainability initiatives/programs. And once again, many firms reported larger increases in the commercial segment over residential, due mostly to the poor housing market and economy. Contributing factors also included fluctuating oil prices and rising raw materials costs, as well as unemployment figures, which remain underwhelming. Also much like in 2010, in addition to the high cost of fuel and natural gas in 2011, executives saw continued pressure on pricing due to an increase of imports from China and Mexico.
In commercial, executives saw increases in healthcare as the aging population continues to fuel growth in this segment. Plus, there is interest in making these facilities feel more “spa-like” or exotic (Asian, contemporary) versus clinical and sterile.
In education, while funding for schools has dropped off, remodeling of higher education institutions has been active. As several executives noted, large format porcelains and mainstream ceramic and porcelain products are used frequently and a good fit for the high traffic requirements.
Hospitality is a relatively small portion of the commercial ceramic tile market, but in 2011 the demand for value-priced products stayed strong, a trend executives say will likely continue into 2012.
Overall, during the course of 2011, executives have seen encouraging signs of strengthening marketing activity in commercial. They’ve observed growth primarily driven by renovation projects, with the hospitality, healthcare and retail sectors leading the way.
According to the Tile Council of North America (TCNA), although imports still comprise the majority of U.S. consumption, import penetration has fallen in each of the last five years. Mexico remained the top exporter to the U.S. in 2011. China held the second position, while Italy was in third place.
The top five countries from which tiles were imported in 2011 based on square feet were Mexico, China, Italy, Brazil and Spain.
Imports continue to account for a large part of the U.S. ceramic tile consumption pie. Among the nations supplying 80% of these imports are 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.
State-of-the-art innovations
One of the major highlights in 2011, as in years past, continued to be the progressing level of technology available to producers. Last year saw several producers introduce tiles with looks enhanced by printing a design or shading under the glaze.
Using inkjet 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.
Trends continue to run the gamut from the ever-popular wood looks (which are now being defined by either an aged, reclaimed design or a more smooth, contemporary pattern) to more planks, rectangular formats and different textures. In addition, bolder colors are being seen in accent pieces, not necessarily in primary tiles.
Another trend that will lower ceramic tile cost is the use of the same porcelain tile in both floor and wall applications. Floor/wall combinations continue to grow, and this will allow suppliers and retailers to lower inventory levels, thereby lowering related costs. This trend is becoming a significant factor.
In line with current trends in the industry, Italian, Spanish as well as American tile companies continue to launch a number of wood and stone look tiles 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 carryover trend in 2011 was the growth of thin tile offerings. An increasing amount of companies now offer these thin products. From a technological standpoint, execs pointed out, 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 2011 as a growing number of companies feature sustainable tile collections—some with more than 40% recycled content or up to 95% recycled glass.
Overall, ceramic executives saw 2011 as a building year and admit the industry still faces challenges as the economy continues to progress. Many noted being happy with the results of their efforts and will continue to move in the right direction regarding product development, sustainability and quality. 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 continue to be prevalent as well.