Not unlike flooring’s other categories, ceramic tile experienced a significant double-digit decline in 2009. In the minds of many ceramic executives, it was a year to forget. And while the economy played a prominent role, with the usual suspects being high unemployment, tighter lending practices, soaring foreclosures, falling home prices and a more cautious buyer, many industry pundits put the blame more squarely on poor housing starts— something tied very closely to this segment—rather than the overall economy.
By the numbers, ceramic tile in 2009 was down versus 2008 in the neighborhood of 24% in dollars and 22.5% in volume, not the greatest neighborhood to be in by anyone’s standards. For the year, FCNews estimates the ceramic floor tile market at $1.347 billion, or 8.3% of the total flooring market, down half a point from 8.9% in 2008. If that seems low compared to other estimates, keep in mind that FCNews considers only floor tiles, eliminating wall tiles from the mix. By all industry accounts, floor tiles represent between 78% and 80% of total ceramic tile sales dollars.
In terms of volume, ceramic floor tile checked in at about 1.28 billion square feet, or 7.6% of the total flooring market in terms of volume. That’s a 24.2% drop from 2008 and the third consecutive year of declines in the 20% range. The category certainly lost some ground compared to other segments given its 8.5% share in 2008. However, the belief within industry circles is the American manufacturers fared a little better than their foreign counterparts, mainly due to the fact that in 2009 they had a backlog of commercial projects.
Some believe domestic shipments actually posted a slight gain in 2009. If that is true, then ceramic tile may be the only domestic floor covering to post a shipments gain in 2009. One explanation may be that the stimulus program that specified “buy American” products may have provided domestic kilns a hand up. The same reasoning may explain the relatively good showing for ceramic exports in 2009. Military and government facilities rebuilding war-damaged countries in the Mideast may be specifying the use of U.S.-made tile.
The only segment of the market that had been doing fairly well is residential replacement. Any improvement in the economy, it was noted by executives, has had positive effects on remodeling. In fact, it is estimated that between 40% and 45% of ceramic sales dollars are earmarked for residential replacement and around 50% of ceramic’s square footage.
Because of its inconsistency, new construction business for ceramic tile was down overall in 2009 to the tune of nearly 30%. Piling on that decline is the fact that producers have been confronted with a difficult commercial climate—down more than 25% in 2009. It’s behind residential by at least two years with no recovery expected until 2012, executives said. And while residential remodeling was not down as significantly as commercial or new construction, it seems like the days of 20% growth are eons in the past.
Imports comprise nearly two- thirds of ceramic tile sales in the U.S. The sources of imported tile supply for the U.S. in the ceramic segment, according to the Tile Council of North America, continue to be represented by a breadth of players, with Mexico, China and Italy constituting about 70%. Other players include Brazil, Thailand, Spain, Columbia, Peru and Turkey.
In terms of volume, Mexico is the top exporter to the U.S. with an approximate 30% share. Mexico’s proximity to the U.S. market, along with lower tariffs and shipping costs, helped make it the leader. These factors and the falling value of the dollar vs. the Euro have helped shift demand away from Europe. Mexico overtook Italy in 2008 as the top exporter to the U.S. and has only grown its share from 25.3% in 2008.
Just five years ago, Chinese tile comprised 4.4% of imports. Now it is estimated that China accounts for about 20% of all imported tile. In fact, China has steadily gained market share in each of the last 10 years.
Italy is next in line at 17.5% followed by Brazil (9.3%) and Spain (5.9%).
However, Italy remained the largest exporter in dollar value with a 35.4% share. This total decreased significantly compared to 2008, when it had a 42.4% share of dollar value.
Mexico and China are next in line in terms of import dollars with approximate shares of 18% and 17%, respectively.
It should be noted that Mexico continues to import less expensive tile when compared to other countries. The per-unit value of Mexican imports fell about 9% in 2009 while Chinese and Italian imports’ per-unit values rose 9.9% and 1.6%, respectively, from 2008. The per-unit value of all imports declined 7.9% from slightly over $1 to between $0.92 and $0.93.
Porcelain products continue to proliferate the industry. This includes offerings from China as well as Italy and Spain. It was noted that in today’s market, most flooring tiles are porcelain, especially the Italian variety (over 90%). There is a higher percentage of non-porcelain wall tile. Several noted porcelain’s performance qualities, which include low water absorption, low maintenance and high durability, make it suitable for areas in which other materials could not be used.
Sustainability has no doubt affected the ceramic tile market and continued to do so in 2009. Most Italian manufacturers, for example, as well as others such as those from Spain, have put forth great effort and made huge investments in order to meet environmental standards.
While 2009 may not have been positive, a huge bright spot for ceramic tile continues to be the technology that is now available, which can make products replicate the real thing, like stone. For example, ink-jet technology allows tile surfaces to mimic any look from wood to wallpaper. From damask prints to wood grain, the patterns are now so precise it is almost impossible to tell the difference.
In 2009, tile surfaces included those inspired by marble, limestone, travertine and basalt. Another benefit of the faux-phenomenon is the ease of mixing and matching. Since it is all the same material (ceramic), it simplifies the installation process.