Q: How has the slowing of the U.S. economy affected the ceramic tile market?
A: Virtually every major tile consuming country is experiencing an economic slowdown, with the possible exception of China. The U.S. has few barriers to trade, therefore imports have gobbled up over 75 percent of the market, fueling much of the recent growth.
Exporting countries are aggressively pricing their product to penetrate our market. According to Capital Economics, Italy -- by far the foreign producer with the greatest penetration in our market -- exports more than 151 million square feet of product to the United States. Second is Spain, with 85 million square feet, followed by Mexico’s 65 million square feet. Brazil sends nearly 48 million square feet of product to U.S. shores, and Indonesia exports about 13 million square feet to the United States.
The ceramic tile industry remains vibrant. A year with no significant decrease in sales, despite the sluggish U.S. economy in 2000 and 2001, portends a bright future. In the near term, it may be hard to predict the sales levels, but in the long run tile is a winner.
The U.S. is the ninth largest producer of ceramic tile in the world. It is the largest importer on a yearly square footage basis, and is the fourth largest consumer of ceramic tile on an absolute basis.
Q: Has the strong showing of the U.S. real estate market affected the growth of the ceramic tile market?
A: No doubt, the strong showing for housing construction and the low interest rates for mortgages and home equity loans have helped to sustain ceramic tile sales despite slowing construction of commercial buildings.
Consumer spending on remodeling is anticipated to continue to grow. This forecast is strengthened by people who are choosing to invest in their homes instead of the equities market. In addition, approximately 21 million homes built in the 1970s are entering peak remodeling years, and aging baby boomers are reaching peak earning power.
The National Association of Home Builders’ (NAHB) most recent consumer survey, “What 21st Century Home Buyers Want,” identified ceramic tile walls (55 percent) and a separate shower enclosure (69 percent) as a desired bathroom feature.
And according to Harvard University’s Joint Center for Housing Studies’ report, “Improving America’s Housing,” growth in the home-improvement market should accelerate relative to home building over the coming decades.