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WHAT HAS CHANGED IN CERAMIC TILE DISTRIBUTION? April 18, 2011. Introduction. The Recession. The Recession has strongly affected the ceramic tile market. New Housing Construction (thousand of units). -79%. +38%. Source: U.S. Department of Housing and Urban Development. Excess Supply. - PowerPoint PPT Presentation
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WHAT HAS CHANGED IN CERAMIC TILE DISTRIBUTION?
April 18, 2011
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The Recession has strongly affected the ceramic tile market
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-79%
+38%
Source: U.S. Department of Housing and Urban Development
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With the Recession came an excessive supply of housing
Existing Homes + New Homes
Source: Census Bureau, NAR, BofA-Merrill Lynch Global Research
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…This made housing prices go down
Source: S&P/Case-Shiller Home Price Indices
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In order to help the economy the Federal Reserve reduced interest rates to almost ZERO
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Source: Board of Governors of Federal Reserve System
People with savings were financially hurt
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Mortgage rates are lower than ever
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Source: Board of Governors of Federal Reserve System
The lowest mortgage rates in history are not enough of an incentive for consumers to buy homes
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The sector that has benefited most from the weakness of new construction has been REMODELING
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When people cannot afford a new home they remodel the old one
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Remodeling Activity is up from 2010…
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From 2006 to 2011 the ceramic tile market contracted by 39%
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Source: Board of Governors of Federal Reserve System
Source: U.S. Department of Commerce
-39%
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• Before the recession imports made up about 80% of U.S. Tile Consumption
• In 2011 the percentage was below 70%
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Million Sq. Ft.
Source: U.S. Department of Commerce
-48%
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The deep recession in the housing sector and the decline of ceramic tile imports contributed to changes in distribution
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During the recession the number of tile Contractors, Dealers, and Distributors’ outlets declined
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Source: D.Grosser & Associates,ltd
in 2008
in 2011
- 23.5%
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1,713
in 2008
1,353
in 2011
Source: D.Grosser & Associates,ltd
- 21.0%
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Source: D.Grosser & Associates,ltd
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States 2008 2011 % Change 2008-2011
California 3,205 2,600 -18.9%
Florida 2,459 1,796 -27.0%
Texas 1,553 1,174 -24.4%
New York 874 721 -17.5%
North Carolina 771 560 -27.4%
New Jersey 628 527 -16.1%
Arizona 569 389 -31.6%
Georgia 589 391 -33.6%
South Carolina 314 218 -30.6%
Other 10,763 8,254 -23.3%
U.S.A. 21,725 16,630 -23.5%
Source: D.Grosser & Associates,ltd
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States 2008 2011 % Change 2008-2011
California 307 255 -16.9%
Florida 213 132 -38.0%
Texas 136 99 -27.2%
New Jersey 77 81 +5.2%
New York 92 61 -33.7%
Arizona 62 41 -33.9%
Georgia 52 36 -30.8%
North Carolina 39 33 -15.4%
South Carolina 20 26 +30.0%
Other 715 589 -17.6%
U.S.A. 1,713 1,353 -21.0%
Results of a survey conducted in January 2011:
Florida, California, Texas, New York, N. Carolina, and S. Carolina
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• 50% of Distributors said sales were flat or down
• Two distributors reported 50% increase in sales
• Sales were down because many retail stores went out of business
• Most sales were for remodeling projects
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• Some increases in sales (5% - 25%)
• But also decreases (5% - 50%)
• Most sales are for remodeling
• Some new non residential construction
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• A majority of distributors reported sales increases
• Some increase in non residential construction
• Good market for non residential remodeling
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• Most distributors reported flat or lower sales
• Very little new construction• Most sales to remodeling
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• Some increases in sales• But also decreases• Mostly remodeling• Little new construction
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Home Centers
2008 2011% Change 2008-2011
2,052 2,195 +7.0%
1,647 1,797 +9.1%
261 262 +0.4%
Source: D.Grosser & Associates,ltd
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2008 2010 2011% Change 2008-2011
Home Centers
6,986 6,802 7,226 +3.4%
Tile Retailers and
Contractors21,725 16,805 16,630 -23.5%
Tile Distributors
1,713 1,382 1,353 -21.0%
Source: D.Grosser & Associates,ltd
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2008 2011% Change 2008-2011
Carpet Rug Retailers
25,720 20,460 -20.5%
Carpet Rug Distributors
1,540 1,286 -16.5%
Source: D.Grosser & Associates,ltd
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• The U.S. Dollar lost value vs. the Euro
• Imports lost market share due to a weak Dollar
• U.S. manufacturing gained market share
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There are 6 Italian owned tile plants in the U.S.: Marazzi (3), Florim, Iris-Stonepeak, and Panaria-Florida Tile
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• These plants make up about 50% of U.S. ceramic tile production
• These companies invested in the U.S. due mainly to weakness of the Dollar
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Sector 2006 Percentage 2011 Percentage
New Residential Construction 40% 20%
Residential Improvement 29% 43%
Non-Residential Cons./Improvement 31% 37%
TOTAL 100% 100%
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U.S. Tile ManufacturersU.S. Tile Manufacturers ProductionForeign Tile ManufacturersForeign Tile Manufacturers
U.S. Manufacturers’ U.S. Manufacturers’ ShowrromsShowrroms Tile DistributorsTile Distributors Flooring Flooring
DistributorsDistributors
Home CentersHome CentersTile Tile RetailersRetailersFlooring RetailersFlooring Retailers
New Residential
Construction20%20%
Residential
Improvement
43%
Non-Residential Cons./Improvement
37%
Wholesale
Retail
Final Destination
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Donato GrosserD. Grosser & Associates, Ltd.
11 Broadway, Suite 630New York, NY 10004
Email: [email protected]
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