Publication Info.

State of the U.S. Ceramic Tile Industry

Presented by Robert E. Daniels, Executive Director of TCA
(Posted Fall 2001)

The ceramic tile industry has experienced a period of extraordinary growth in the past ten years. Sales in the United States have increased from less than one billion square feet in 1990 to about 2.3 billion in 2000-an increase of over 130%. However this year began with a decline in sales in the first half of about 2% and the tragic event of September 11th has increased the uncertainty of future sales.

There are over 40 countries that produce ceramic tile and report their output with some degree of reliability. Tile output in the year 2000 exceeded 50 billion square feet. We estimate the worldwide capacity to exceed 60 billion square feet per year. That's 10 square feet for every man, woman, and child on this planet. And high volume plant capacity is still being added with older, low output plants being idled. This portends an increase in capacity in the near future with continued price pressure.

Meanwhile virtually every tile consuming country is experiencing an economic slowdown, greater than the United States. That makes our market a juicy target for tile exporters. The U.S.A. has few barriers to trade therefore imports have gobbled up nearly 75% of our market. Exporting countries are aggressively pricing their product to penetrate our market. This price pressure has led to the recent closing of three ceramic tile factories in the United States and the reduction of the output of many more.

The United States is the 10th 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. Our economy may have taken a hit this year but it is still vibrant.

However the key to competitiveness is to build modern high volume automated factories that utilize low cost raw materials. Factories based in the USA have an advantage of low energy costs, access to technology and proximity to markets. This proximity enables the United States based suppliers to rapidly respond to the market needs. It is my guess that there will be new, efficient, and cost-competitive factories built in the United States in the next few years. These will be world class plants and will compete on every basis: quality, design, service, and cost. Crossville's new factory in Tennessee is one such example. Their newly installed kiln, for example, can produce three times the output with less labor than kilns installed a mere 15 years ago.

Notwithstanding the current uncertainty in the US economy, the TCA economist, Dr. Mark Glueck, who has been generating forecasts for us for the past 18 years, has predicted that sales in the years 2001 and 2002 will be relatively flat. He sees that solid growth will resume in 2003 and that it will accelerate through the years 2004 and 2005. A sales level of nearly 3 billion square feet per year is predicted for 2005.

Why is this? Simply put ceramic tile is a bargain. It is extremely versatile, long lasting, easy to maintain, and popular. It continues to increase its penetration of the finishing market. Today's lifestyle of increasing home sizes, low interest rates for mortgages and home equity loans, two family wage earners with little time for housework, and the "cocooning" that tends to grow with an aging population all indicated that ceramic tile will do well in the future.

But there are challenges. The past and predicted growth of the industry along with the new channels of distribution being developed require that those of us in the industry invest in ourselves. We need to educate our employees and ourselves and to keep current on technologies and trends. To stay stagnant is to fall behind. I urge all of you to stay involved with your associations, support and attend educational opportunities from all sources, and attend trade show, such as Coverings. Through these vehicles we will all help to grow our industry and to achieve our profit goals.