Overall consumption of ceramic tile in the United States
increased 1.8 percent in 2006 despite numerous economic challenges, according
to the most recent data available from the U.S. Department of Commerce. This is
a remarkable statistic, given that during this time period, the U.S. housing
market ground to a near standstill, the dollar continued to lose value against
foreign currency, and energy prices continued to set new records. This continued
consumer demand for ceramic tile is testament to the outstanding designs and
top-quality products brought to market this year.
As significant as this statistic is,
it is only one facet of a more complex overall picture, as foreign and domestic
tile producers fight for market share in an increasingly competitive market.
This and other key factors are explained in detail in our annual ceramic tile
State of the Industry Overview, which appears in this issue of
TILE
Magazine. One of the most remarkable statistics in this year’s
overview is the dramatic growth in market share of Chinese manufacturers, which
increased an amazing 53 percent versus the previous year, surpassing Spain as
the fourth largest player in the U.S. market. This major grab of market share
has dire implications for both foreign and domestic manufacturers, who must
compete on an un-level playing field, in terms of manufacturing costs and
exchange rate manipulation. The issue of unfavorable exchange rates has become
a major thorn in the side of European manufacturers, as the ongoing weakening
of the dollar versus the euro makes European tiles more expensive for American
buyers.
Rather than sitting idle as they
lose market share, Italian manufacturers have taken a proactive approach to the
exchange rate issue, opting to shift manufacturing to domestic sources to
reduce long-term production expenses. A key example of this approach is the
Panaria Group’s recent opening of a state-of-the-art porcelain tile factory in
Kentucky last month. The facility, which will produce porcelain tile lines for
the group’s Florida Tile brand, represents a major step forward for both
Florida Tile and Panaria Group. By shifting production to U.S. facilities, they
not only reduce their long-term expenses, but also create goodwill in their
community by bringing much-needed manufacturing jobs back to the United States.
This approach has proven highly successful for Japanese auto manufacturers such
as Toyota, and will likely be adopted by more foreign tile manufacturers in the
future.
Rising production expenses, a declining housing market and a
weakening dollar have made this a rather tumultuous year for the tile industry,
which has held its own in spite of these adversities. If these factors continue
unabated throughout 2007, it seems likely that the decade-long growth period of
the industry will come to an end, at least temporarily.
Editorial Comment: Tile Industry Continues to Grow Despite Economic Challenges
November 1, 2007
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