Table 5


Table 6
Editor's note: In the previous issue of TILE Magazine, we featured the first part of an interview with ceramic tile industry expert Donato Grosser, in which he discussed the growth of the industry during the past year, as well as historic trends that affect the industry. Following is the remainder of this interview.



Chart J
Another important trend that took place in the last three decades is that foreign companies started to manufacture in the United States. During this time, Marazzi, Florim and Roca entered the U.S. market and built or bought manufacturing plants here. New domestic companies also entered the market, notably Crossville, which opened and expanded its plant with the strategy of combining the latest products and technology.



Chart K
Another important change that occurred during this period was that home centers began selling tiles, and this segment has grown dramatically, from approximately 4 percent of the market in 1985 to approximately 20 percent of the market in 2004. Competition from home centers in the 1990s forced Color Tile, which had 700 small stores, to go out of business. Home centers are now an important cause for the expansion of the tile market.



Chart L
Other important changes that occurred during this time concern the distribution network for ceramic tile. Mohawk and Shaw began selling directly to retailers, bypassing the distributor section of the distribution. For a graphic representation of the distribution chain, refer to Chart I. During this period, the number of tile distributors increased, while many independent flooring distributors disappeared. Suppliers of tile, such as floor covering manufacturers like Shaw, Mohawk and Armstrong, are selling more tiles than ever before. It's not a revolutionary shift, but it has been a substantial change; they have now become important players in the market by selling tiles to the floor covering dealers.



Chart M
Current Trends Include Increased Imports from South America and Asia
One of the most important trends in the ceramic tile industry is the increase in imports from the Far East and South America. Countries such as Brazil, Mexico and China continue to increase their market share in the U.S., spurred on by favorable exchange rates and low manufacturing costs (Table 5 and Charts J, K, L and M).



Chart O
Another important current trend is increased Italian manufacturing in the U.S. In order to counteract somewhat the increased manufacturing and shipping costs, Italian manufacturers such as American Marazzi, Florim, and most recently, Granitifiandre, have all invested in new factories in the U.S., a trend that will likely continue among companies that already have established markets in this country.



Chart I
Other current trends are taking place among the retail segment, and include more floor covering retailers moving into the tile segment. A large number of floor covering retailers prefer to buy from manufacturers such as Mohawk and Shaw, who bypass distributors and sell directly them.

Tile Market Will Continue to Expand During 2005 and Beyond
For the remainder of 2005 and beyond, there will be a continuing general expansion of the tile market, which follows the overall growth of the U.S. economy, particularly increased home remodeling sales. Tile imports will see a continued increase, and there will be increased competition at the lower end of the market as low-cost manufacturers compete for market share.

Looking ahead to what we can expect in 2010, there will be a projected yearly expansion of the U.S. ceramic tile market, from 2005-2010, of 7 percent on average. Tile consumption is projected to increase from 292 million square feet in 2005 to 410 million square feet in 2010 (Table 6 and Chart O). During this period, imports will increase to account for 85 percent of U.S. consumption. There will be increased imports from the Far East and South America. This period will also see a continued increase in U.S. per capita consumption of tile. Also, there will be more sales of ceramic tile through flooring retailers.

Overall, the prospects for the ceramic tile industry during the next year are very good, but there are some unknown factors that could influence the industry, such as inflation, interest rates, and the housing market. Any change in these factors, positive or negative, will have a corresponding impact upon the ceramic tile industry. Other important factors to watch out for are the strength of the dollar, the impact of new tile manufacturing technology, and sociopolitical factors such as immigration and demographic growth, and the situation with international terrorism. If the situation in Iraq is resolved favorably, the federal deficit will be reduced substantially and the dollar will likely increase much more.