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The year 2002 held many surprises for the ceramic tile
industry. According to figures from the Census Bureau
and the Customs Department of the United States government,
factory shipments plus imports totaled 2.63 billion
square feet in 2002 an increase of 15.7% over 2001.
The output of 638 million square feet from US factories
was the greatest on record with 41.7 million square
feet being exported, primarily to Canada and Mexico.
The breakdown of the increase was that exports increased
by 25.2% (although from a sluggish 2001 sales year)
and imports increased by 18.5%. Domestic factory sales
increased by 8%. Italy has garnered 26.9% of the US
market with the US producers holding 22.7%. Following
these two are Spain at 14.9%, Mexico at 11.0%, and Brazil
at %9.1%. About 90% of the ceramic tile sold in the
United States in 2003 was larger sized glazed tile both
floor and wall. Unglazed tile grew but most of the growth
was in the porcelain category (water absorption of less
than 0.5%). The unglazed porcelain tiles have taken
market share from unglazed quarry tile.
Mosaic tiles (those less than 6 square inches of facial
area) have stayed at a low level while the growth in
the marketplace has been mainly in 12X12" and larger
tiles. It has been estimated than nearly 2/3 of the
tile produced in Italy is now in the porcelain category.
While all this is good news the negative for the manufacturers
is that prices have been steadily declining. In the
past four years prices have decreased by 8 cents per
square foot for imports and 10 cents per square foot
for domestic sales. There is still substantial worldwide
surplus capacity to make tile. The capacity is at least
65 billion square feet with consumption running at 55
billion (this is a rough estimate, as many countries
are not accurately reporting their statistics). Many
European and some Asian markets have been in a slumping
market condition and therefore are looking at the growing
US market as a way to sell more tile.
Per the current tariff structure for ceramic tile,
duty rates are now 9.6% for large sized glazed tiles
and 11% for unglazed tiles (and glazed mosaic tiles)
except for Mexico, which under NAFTA is at 6.3% and
6.7% respectively. The rates will decrease to 8.5% and
10% for all other countries in 2004 and under the current
trade agreement stay at that level indefinitely. However
there is a new trade negotiation round that started
in Doha and has the intent of reducing all duties on
all products to zero in some period of time. In the
meantime the NAFTA rates will drop linearly to zero
in 2008.
In a recent survey of tile distributors the majority
(75%) said that the duty rates did not influence their
buying decisions. Keep in mind that the Euro went up
by over 20% in the past year and this had a greater
effect on tile import prices than the duty rate.
The country to watch is China. They now have about
½ of the world capacity to make tile (estimated
at 30 billion square feet per year) and have not been
a major exporter to the US yet but it is clear that
they have the intention of marketing tile here. Their
technology is very modern and pricing very low. I believe
that they will be a formidable competitor in the next
few years.
What will happen in the future? Certainly ceramic tile
will remain popular. There are new styles and designs
coming along all the time. And tile is long lasting,
easy to clean, a good value, and has unlimited deign
capabilities. The recent period of low interest rates
combined with the "cocooning" trends and construction
of ever-larger high-end homes opens the market for continued
growth. Traditional areas that use tile, namely kitchens
and baths, have increased in size too. The US consumption
is about the lowest for any developed country (9.3 square
feet per person per year compared to southern Europe
at over 40 square feet). We have a long way to go and
our challenge is to find people who know how to market
and install ceramic tile in ways that give the consumer
complete satisfaction. As always education leads the
way.
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