Publication Info.

State of the United States Ceramic Tile Industry as of August 2003

Presented by Robert E. Daniels, Executive Director of TCA
(Posted August 2003)

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.