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Ceramic state of the industry: Rise in consumption yields growth

Nov. 18/25 2013; Volume 27/number 15

By Louis Iannaco

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One of Dal-Tile’s newest ColorBody porcelain tile collections, Santino, features a sleek, contemporary visual in large format sizes, including 18 x 36 and 24 x 24.

After enduring several years of economic uncertainty, which included rising raw materials costs, low-cost goods from China infiltrating the market and ongoing installation issues, industry executives are looking at the current and future state of the industry with a steadily growing confidence.

According to the Tile Council of North America (TCNA) and the U.S. Census Bureau, through the second quarter of 2013 U.S. tile consumption stood at 1.22 billion square feet, up 11.7% versus the second quarter of 2012, year to date. The value of U.S. tile consumption through the second quarter of 2013, year to date, was $1.37 billion, up 14.5% from the second quarter of 2012, year to date.

According to Andrew Whitmire, TCNA’s trade data analyst, the reasons for the positive numbers are the continued expansion of the U.S. residential market and new housing starts which, like U.S. ceramic tile consumption, are headed toward a fourth consecutive year of growth.

As of August 2013, he noted, new home starts were at an annual rate of 891,000 units, “up 19% versus August 2012. Additionally, new home sales, with which ceramic tile sales are closely linked, were at 421,000 units as of August 2013, up 12.6% from the same time last year.”

TCNA’s executive director Eric Astrachan sees domestic production as the key to increased U.S. consumption. “There’s no question that the advantageous price of natural gas in the U.S. has been beneficial to domestic tile producers,” he explained. “Environmentally, it is a very clean fuel for the production of tile. And with the increasing cost of transport from foreign countries, we fully expect to see a continued increase in the amount of tile made in America.”

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New from Del Conca is Del Conca Fast, a system for dry laying floor tiles. Shown here is the Saloon collection, the company’s wood look offering.

Bart Bettiga, executive director of the National Tile Contractors Association (NTCA), agreed, saying NTCA members continue to report slow and steady growth in 2013, and they expect this trend going into 2014. “This appears to be the case in both residential and commercial projects. There is significant optimism for the future of the tile trade as compared to the same time one year ago.”

“Ahead of plan” is the way Bob Baldocchi, director of marketing of Emser Tile, described the company’s business in 2013. “We went through a few years of what I’d call a ‘challenging environment,’ where certain market segments really got hammered by the [poor] housing market. I believe some of the same markets are starting to come back to a large degree.”

At Crossville, president and CEO John Smith said the company is satisfied with 2013. “Our company, and our industry as a whole, is on track and moving in the right direction in terms of growth in sales, tile consumption and also innovations such as new standards, certifications and adoption of technology. Tile is becoming more popular, and that’s good news long term.”

In spite of the recent challenging economy, industry leader Dal-Tile saw growth in ceramic tile in dollars and volume. According to Lori Kirk-Rolley, Dal-Tile’s vice president of brand marketing, the company “estimates growth from 4% to 6% for the industry overall. Dal-Tile sales have exceeded our expectations so far in 2013. Through September, our sales grew 9% during the quarter, or 8% on a constant exchange rate.”

Like Dal-Tile, Bellavita Tile had positive numbers to report coming out of 2013. Mike Ward, North American sales manager for the company, said Bellavita “has been fortunate to perform significantly better this year sales-wise than last year. To date, our sales for 2013 have increased by more than 25% over last year’s amount.”

As Baldocchi noted, there is still some cautious optimism despite the obvious comeback. “People are still leery the economy [will decline] again,” he said. “They are watching unemployment and interest rates, which certainly had an impact this year.”

ACT reaction

Another positive turn in the world of tile came recently with the newly enacted Advanced Certifications for Tile installers program (ACT), a certification initiative created through the combined efforts of the NTCA, TCNA, the Ceramic Tile Distributors Association (CTDA), the Tile Contractors’ Association of America (TCAA) as well as the International Masonry Institute (IMI). According to prominent industry figures, the response to ACT, thus far, has been enthusiastic.

Bettiga explained that by creating a pool of qualified installers available to perform specific installation requirements, the industry is providing consumers, homeowners, project owners and general contractors and builders with the opportunity to hire trusted individuals for projects.

“Many industries point to ‘failed installations’ as the single biggest detriment to industry growth,” he said. “Tile and stone are no different. We want to overcome this obstacle, and associations representing tile installers have joined together in this mission. This is a clear message to manufacturers and distributors: Start recommending certified installers install your products, and you’ll start to see less claims and failures. If they send this message, installers will have no choice but to get on board and become certified. We’re gaining momentum with this effort but still have a ways to go.”

Screen Shot 2013-11-25 at 2.28.49 PMTim Bolby, Crossville’s executive director of technical services, noted that ACT is not a training program, but evaluates skill level and provides certification to installers who qualify based on those skill levels. “It is unique in that it brings together five professional organizations for contractors, unifying the standard of professionalism across the board. This is helpful to people who make the decisions about installation services; a designation they can trust. With better installers in the marketplace, there’s more opportunity for our products to be used and used well.”

As noted by Kirk-Rolley, the installation professional is one of the core customers of Dal-Tile, and “we support industry initiatives like ACT that assist in their professional development. The industry is best represented when products are installed perfectly and used in the proper application. ACT takes that to the next level. The end result of certification is a visually stunning installation that will last.”

Design trends

On the style and design side, NTCA is seeing an increasing request for more information on thin tiles and panels.

“We have a lot to learn with this technology,” Bettiga admitted, “and NTCA is working closely with the TCNA to provide input from the installers so we develop standards as quickly as possible. The technology is innovative and will impact the tile industry in a positive way, but we have to quickly establish the best process in disseminating important information related to properly selling and specifying the material for the right applications, and obviously training the installers in how to work with and install the products. It is quite different in many ways from traditional tile installations.”

However, Baldocchi doesn’t see thin tiles impacting the industry for quite a while. “It’s a nice concept that we are certainly developing ourselves,” he noted. “But as it relates to a trend in terms of what is selling in the marketplace, it hasn’t been a driving [force]. Other areas, such as larger format tiles and digital inkjet technologies, have had a much bigger impact on the overall category. That could change a year from now.”

Ryan Fasan, consultant for Tile of Spain, agreed with Baldocchi, saying thin tile remains a small portion of the overall market of traditional floor and wall tile installations mostly due to lack of installer and designer confidence or minimal training in the material. “The TCNA standards and hopefully another ACT training module will help to address this issue for North America.”

Ceramics of Italy’s Chris Abbate, who represents Del Conca as well as dozens of other Italy-based companies, believes the distribution of thin tile could be important to the industry’s future.

Other trends with continued prevalence include longer plank sizes, wood looks and glass accents. “Rectangular-sized tile in both floor and wall applications continue to be extremely popular, specifically long, linear plank sizes,” Kirk-Rolley said. “Planks are often being used on both the floor and on the wall. This results in more pattern options, which designers are utilizing more frequently for creating unique designs.

“We continue to see larger and larger sizes being used,” she noted, “as manufacturing capabilities become even more sophisticated. We also anticipate the various shapes of tile will continue to evolve. First, we had squares, then rectangles, followed by planks, which raises the question: ‘What’s next?’ Presently, 18 x 36 and 24 x 48 large-format sizes are entering the market in the U.S.”

The advent of digital technology also continues to make its mark on the industry. “Digital is just the way companies are going to make tiles in the future,” Baldocchi said. “It was a new technology, but now it’s the way people should be making tiles.”

Wood looks are still among the hottest trends in the market, as the use of tile that emulates wood is something that’s been gaining momentum in floor and wall applications for several years.

“What was first introduced as a traditional take on hardwood floors has evolved to include more colors and textures to choose from,” Kirk-Rolley said. “Wood looks with warm rustic visuals and various structures are common. Water-stained and brushed visuals have recently been introduced. Porcelain tile featuring wood looks can be used in unlimited applications, including high-traffic areas and rooms exposed to high moisture levels, such as the kitchen and bathroom.”

Green developments

TCNA standards development and green initiative manager Bill Griese said the industry’s Green Squared ANSI standard is steadily gaining momentum. “Green Squared is referenced in its entirety by the NAHB National Green Building Standard and ASHRAE 189.1, where points are awarded for the use of Green Squared-certified products. The National Institute of Building Sciences (NIBS), in its Whole Building Design Guide, specifically recommends the use of the Green Squared certification program when considering tile in sustainable buildings.”

Fasan agreed, saying the Green Squared standard is gaining visibility among design professionals and end-users alike “since it provides a simple answer to what constitutes a ‘green’ ceramic tile choice. As LEED v4 comes into effect this year we believe this standard will gain even higher visibility and clout in product selection.”

Additionally, it is becoming increasingly important for manufacturers to make available lifecycle environmental data for their products. “One way to achieve this is through an Environmental Product Declaration (EPD), which is a report of quantified environmental impacts of a product based on its lifecycle assessment,” Griese explained. “Similar to a nutrition label, an EPD tells a product’s full environmental story in a familiar format so an end user can make an informed decision.

“Currently, the tile industry is working on an industry-wide EPD,” i.e., a generic EPD for tile, he added. “Such an EPD will provide an in-depth report of current industry lifecycle data, summarizing the generic environmental footprint of North American tile. This effort will be helpful in establishing baseline data and a common foundation upon which future EPD and LCA initiatives can grow in a consistent and organized fashion.”