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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.
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