|
WORLD OVERVIEW
Although this talk will focus on the United States,
I thought that a quick look at the world ceramic tile
situation would be instructive.
Recently I attended a meeting of the World Forum of
Ceramic Tile manufacturers in Istanbul, Turkey. Statistics
were presented in that meeting from 12 tile-producing
countries for the year 2002. Non- attending countries
provided some statistics but there were a number of
countries that haven't reported since the year 2000
or at all. Taking into account the known figures plus
some suppositions, it appear that the world output was
over 5.3 billion square meters with capacity of 7.0
billion square meters. That means that excess capacity
is at least 1.7 billion square meters. There appears
to be a general lack of growth in most of the world's
economies and tile sales are shrinking in many areas.
There are new major sources of production being built
in many countries including Poland, Russia, and China.
China reports huge capacity at 2.24 billion square meters
most of which is consumed internally. The current excess
capacity combined with this new growth in capacity concerns
existing tile-manufacturing countries. Here is a look
at the top ten producers as reported.
KEY UNITED STATES ECONOMIC TRENDS
The US economy has had a period of excellent growth
in the past two quarters and especially in the last
quarter of 2003. The G.D.P. showed a big jump and unemployment
decreased. Yet this period has been largely a so-called
jobless growth period. This is because employers are
reluctant to add people after a slow period, a decline
in labor-intensive manufacturing, and an increase in
automation.
Despite this, the recent, highly debated tax cuts are
likely having a positive effect on the economy. Virtually
all taxpayers have received an increase in take-home
pay because of these tax cuts. And excess money is essentially
either spent on consumer goods or invested. In either
case there will definitely be a trickle-down effect
in my opinion.
Interest rates are remaining low and this helps to
stimulate sales of items that are typically financed
such as automobiles and houses. The category that affects
tile sales is housing. One negative for our industry
is that the dollar has been declining in value thus
raising the price of imports. Ceramic tile is now 78%
imported in the US market. Note the top ten countries
that ship tile to the United States. The US is the largest
importer of tile in the world having surpassed Germany
in 2001.
However, the fundamental demand for ceramic tile is
still strong. This is a product that is used extensively
in remodeling, the strongest segment of the market.
And new forms of financing such as home equity loans
make it easy for consumers to upgrade their houses.
Ceramic tile is popular and is in high demand. Tile
is easy to maintain for two-wage earner families and
is easy to deign with.
TILE INDUSTRY TRENDS
Total tile sales in the United States in 2002 reached
240 million square meters. Sales increased by 8.5 %
on an annualized basis in the first half of 2003 over
2002 and could reach 260 million square meters, following
an increase of 16% in 2002 over 2001. It should be noted
that 2001 was essentially flat from the previous year
but this followed a period of substantial growth during
the late 1990's. Suffice it to say that tile sales have
doubled in the past seven years. And it appears that
the third quarter of 2003 started slow but finished
well therefore we expect 2003 to end on a strong note
overall.
The US consumer is demanding new styles and sizes of
tile. It is becoming a decorator's delight. A generation
ago few people used interior designers and now the baby
boomers are demanding high fashion in their homes. Tile
that mimics natural stone products are very popular
and porcelain tile, those with water absorption less
than 0.5% are in demand (although the consumer doesn't
know why).
CHALLENGES
Despite the good news there are challenges that the
industry faces. Most of these problems face manufacturers
all over the globe. There is clearly a lack of trained
tile installers and other industry personnel especially
in the distribution and sales arena. All the attendees
of the World Forum face this problem in their respective
countries. Young people today do not see construction
trades as desirable occupations. Many that do install
tile are woefully under trained.
Fast track construction combined with many new building
materials adds to the challenge. Environmental concerns
increase the dilemma. The lack of availability of large
soft wood trees has decreased the use of high quality
large-sized sawn framing lumber and "engineered"
products are taking their place. In many cases these
are very strong but must be properly used or tile failures
can result. Large numbers of new installation products
are entering the market, sometimes with insufficient
testing and instruction as to use.
Environmental concerns extend to the factories and
the workplace. There is a new EPA and OSHA activity
to study the effect of silica dust in the factory and
in the field. Air and water qualities remain as concerns
for all tile producers. The Green Movement is demanding
recyclable materials. While tile is long lasting and
does not emit vapors, it is not easy to dispose of after
a tear-out or if defective. Ways to use industrial and
municipal waste in producing tile are being studied.
FUTURE TRENDS
As I always say, if I could foretell the future I wouldn't
be in this job but still it is in my province to guess
at what will be. I predict that tile sales will continue
to increase in the United States and that consumption
will double in the next 10-15 years. There will be better
training institutions developed in the coming years.
Already we are seeing some signs that this is improving.
The Ceramic Tile Education Foundation that we founded
and support is teaching more tile installers next year
than ever before. The school is scheduled to run classes
almost continuously in 2003.
Technology in home construction and tile installation
products will continue to improve. New tools to make
work easier are coming onto the market at a rapid pace.
And tile production itself is improving all the time.
There will be more productive capacity added in US factories
while industry consolidation will continue. Old low
volume factories will either be shut down or converted
to specialty factories and new highly automated factories
will take their place. There is definitely an advantage
to having a factory close to the market, especially
if energy costs continue to rise.
SUMMARY
Thank you for listening to this paper. I have tried
to provide a capsule of the market, gone out on a limb
with a projection, and close by saying that by working
to educate the consumer, installer, salesperson, and
everyone in the ceramic tile chain, we can reach the
loftiest goals.
|
