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Commercial ceramic: Earliest rebound not until mid-2011

Ceramic tile producers continue to hit home runs when it comes to innovation, colors, styles and expanded product offerings. The plan of attack continues to provide distributors and retailers with the best product possible so they can be armed and ready for the recovery.

“We estimate the overall tile industry was down 20% to 25% in 2009, with the commercial sector down a similar amount,” said Lori Kirk-Rolley, senior marketing director, Dal-Tile. She estimated commercial in 2008 at about $950 million, dropping to between $750 and $800 million in 2009. “Driven by federal construction, the public sector was strong in 2008 and 2009. Education and healthcare were performing well, but those are slowing down from 2008. The hospitality, retail and corporate sectors are all weak.”

While Rolley expects the commercial segment to be down again in 2010, she expects recovery to begin later this year. “By 2011, we expect modest growth in the commercial tile sector. However, because tile is installed at the end of the construction process, we don’t anticipate seeing the impact of the recovery until 2012.”

Doug Hayes, director of business development for Florida Tile, said the company is seeing some very strong activity in hospitality and retail. He agreed with Kirk-Rolley in that it will not be until, at best, mid-2011 until the category begins to see signs of growth. He believes the indicators of a true turnaround will be something as mundane as requests for sales calls, product presentations and samples. “I don’t know if there is a [definitive] economic indicator that, from my perspective, will say things have ‘broken loose.’”

Meanwhile, Hayes said the advent of digital printing technology for delivery of the aesthetics on the surface of tile has been huge for the industry. “Repeats now occur only once in every 150 tiles. It has created such a dramatic range of colors and shades that you don’t get a repeat of patterns very often.”

According to Vittorio Vaccari of Italy-based Ceramiche Refin, the commercial ceramic tile market is showing some positive trends after two “horrible” years. “This activity is mainly concentrated on the remodeling segment. I don’t see a lot of demand from new houses yet. Overall commercial demand is still flat as many important jobs have been put on hold or delayed.”

Andrew Whitmire of the Tile Council of North America (TCNA), noted, “we’ve heard from our members that domestic tile shipments started to increase in March and were quite strong in April. We believe this indicates the beginning of a recovery in the commercial market.”

Among current product trends, he said there seems to be a comeback of the stone look versus the more minimalistic looks that have been offered. “The new digital technology allows for a more realistic interpretation of natural stones. The environmentally friendly products are welcome in terms of image, but a little less in terms of price. This is an issue toward which the designers are more sensitive than the general public, therefore I believe will play a major role when the commercial market pick ups once again.”

Mauro Manfredini, marketing manager from Casalgrande Padana, another Italy-based company, believes being innovative during tough times is key to the success of the segment and its customers. “We try to be flexible, satisfying the requests of our customers and we won’t stop to invest in research and development of new products.”

According to industry consultant Donato Grosser, the commercial market is behind the residential housing market by at least two years. In other words, there will be no recovery until 2012. “Ceramic tile is affected much more by housing starts and sales of existing homes than by the economy in general. Remodeling is more affected by the economy; the improvement of the economy has had a positive effect on remodeling, which is the segment of ceramic tile we expect to grow faster.”

-Louis Iannaco