Outlook 2004: The Shape, Size and Color of Things to Come
 
January 1st, 2004

by Jeffrey Steele
Jan-Feb 2004

In recent years, manufacturers, distributors, and dealers of ceramic tile have profited handsomely from strength in new residential construction. With interest rates at or near historic lows and real estate proving to be today’s best investment option, Americans haven’t had to have their arms twisted to grasp the wisdom of home ownership. The resulting boom has delivered a business bonanza for makers, distributors, and dealers of ceramic tile products.

So what’s ahead this year? Industry experts look glowingly on the next twelve months. They’re convinced 2004 will hold more of the same, but with the added sales catalyst of a revived commercial building industry and the renaissance of the retail replacement market.

In the next pages, experts weigh in with their prognostications for 2004, and the trends they believe will impact the ceramic tile industry.

SIZING UP THE MARKET

As dealers, distributors and manufacturers look forward to the New Year, they’re seeing several important trends taking shape. One of the most notable — and one impacting all markets — is the use of larger-format square tile, says Ed Steed, director of commercial sales for Laufen and U.S. Ceramic Tile Company, ceramic tile manufacturers and marketers based in North Canton, Ohio, and owned by the Barcelona-based Roca group, a global manufacturer of tile. About 90 percent of the ceramic tile sold in the US in 2002 was 12-by-12 inch and larger glazed wall and floor tile. Steed says the standard in the industry has grown from 12-inch to 16-inch tile. And more and more customers are asking for 18- and 20-inch-formats.

That observation is substantiated by Harold Yarborough, vice-president for West Fort Lauderdale-based D & B Tile Distributors, a more that 40-year old business founded by Yarborough’s father David, and one of the top dealers in the competitive South Florida market. Yarborough calls Florida “one of the leaders in trends of size.” He observes that 15 years ago in the Sunshine State, 12-by-12 was a “big size,” and that a quarter century ago 8-by-8-inch tiles were standard. Today, 16-by-16-inch dimensions are considered small in both wall and floor tile among South Florida designers and consumers. D & B Tile Distributors’ largest volume product is a 20-by-20-inch tile, and there are even 24-by-24-inch products in common use.

The reason for the growth in tile format? Says Steed: “It’s the evolution of the artistic side of the product. Larger format looks better aesthetically, and has less grout. Manufacturers are spending their time in research and development labs creating larger products.”

Along with the growth in the size of ceramic tile have come tile products almost indistinguishable from marble, stone and other hard surface offerings, Yarborough says. “The manufacturers’ technology is growing every year,” he notes. “The products are amazingly superior, year after year. The look, the quality, the textures, the style.”

Some of these new products are the result of a technology called “double pressing.” Rather than single pressing and firing, the double pressing process involves pressing a host body, glazing it, and then repressing it to fuse the whole entity together. The result is a product that mirrors the natural characteristics of stone, yet provides the technological qualities of porcelain, including ease of installation, ease of maintenance and life cycle considerations. In addition, characteristics that ensure compliance with Americans with Disabilities Act (ADA) requirements for coefficient of friction can be engineered into double pressed product, which is impossible with stone. “We’re very excited about the double press technology, because we think this stone evolution will revolutionize porcelain,” Steed says.

Also noting the enhancement in the appearance of porcelain tile is Svend Hovmand, president of Crossville, Tennessee-based Crossville Porcelain Stone, a 17-year-old manufacturer that sells almost exclusively through tile distributors to commercial end users. Hovmand says that in porcelain tile, his company is able “to make some very high-level looks. We make it very natural looking. Today, it goes into any application on the floor, and has started creeping up the walls.”

Hand in hand with this enhancement in ceramic tile aesthetics has come the growing preference for glass and metal tile, both of which are classified as ceramic tile. Increasingly used in full bathrooms to add an eye-catching brilliance to surfaces, glass tiles are also being incorporated in accents and inlays, as well as in fountains, pools and backdrops, Yarborough says. Glass tiles come in all kinds of colors, among them blues and greens. He also notes the increasing use of metal tiles, such as brushed stainless steel and rustic textured brass, many with what he terms “medallion-type imprints” cast into the metals. “It’s a very classic look, and it’s very appealing in a kitchen with all stainless steel appliances to use it in countertop backsplashes,” he says. “The brass materials can be used in a rustic atmosphere with in-laid stone in a vertical wall surface. It really is amazing what this industry does.”

Asked to name a tile manufacturer he finds especially progressive, Yarborough says there are so many that naming just one is difficult. Finally, he cites Crossville Porcelain Stone. “They’re one of the most innovative in the US market. So many of the foreign manufacturers are not focused on the American market,” but Crossville is, he observes.

Marketplace by the Numbers

TileDealer took a look at some of the numbers that define the US ceramic tile marketplace. The most complete statistics are available for 2002, when the US Census Bureau reported that factory shipments plus imports of ceramic tile totaled 2.63 billion square feet, an increase of 15-percent over 2001. In 2002, Exports increased 25.2% (from a sluggish 2001) and imports increased by 18.1 %. Domestic factory sales increased 8%.

The largest share of the US market belongs to Italy (26.9%), then US producers (22.7%), Spain (14.9%0, Mexico (11%) and Brazil (9.1%).

Italian ceramic tiles account for more than 600 million square meters of tiles annually, about 13% of world production and 43.35 of total European Union production. Exports accounted for about 72% of 2002 sales (437.7 square meters). Nearly two-thirds of the tile produced in Italy is in the porcelain category.

The Embassy of Spain -Trade Commission, Department of Tile, Stone & Building Materials reports exports (in square meters of tile) to the US of 31,466,000 square meters in 2000; 31,724,000 square meters in 2001; and 36,361,000 square meters in 2002, also reflecting a 15% increase compared to 2001.

COLORS TO WATCH FOR

According to Steed, it’s not hard to forecast the colors that will be popular this year. Neutrals have always been favorites, he says, but the trend for the past few years and into 2004 has been the use of deeper, richer neutrals, such as nocce, also known as walnut. “We don’t look at any residential line without considering nocces,” he says.

Neutrals are perennial favorites in residential applications because Americans still sell their homes on average about every seven years, and neutral colors are better accepted by potential buyers, Steed points out. The nocces, which are a medium to dark brown, imbue the residential environment with added warmth, and are not as stark as whites and beiges. In addition, they appear to be excellent at “camouflaging lifestyle,” he adds. That quality fits well with homeowners’ increasing preference for the ease of maintenance and ability to hide the wear and tear of daily life offered by tile and hardwood in general. One of the reasons tile and hardwood are gaining in the marketplace at the expense of carpet and vinyl is that they’re not only more durable, they’re more hygienic, easier to maintain and better at absorbing family lifestyles, Steed observes.

Hovmand agrees with the popularity of neutrals, but adds that one of the biggest stories in color is the increasing by tile manufacturers. “We have very broad palettes, very wide choices in color,” Hovmand observes. “Our color selection is much broader than it was just a few years ago.”

While agreeing the lighter tones of beiges, browns and nocces are dominating, another observer reports he’s seen growing demand recently for what he calls “stronger colors.” That expert is Harold Turk, executive vice president of Dallas-based Dal-Tile Corporation, the largest manufacturer and distributor of ceramic tile and natural stone in North America. Turk says the stronger colors, including reds and greens, are increasingly favored because ceramic tile and stone are fashion items in homes and require strong colors to add complementary tones to existing decor elements. “People want to use that, and are not afraid to use that,” Turk says.

As for ceramic tile in non-residential settings, Steed notes that he and his colleagues are seeing more greens, olives and darker blues in commercial applications. What’s more, grays — particularly those edging into the midcharcoal hues — are increasingly popular. Dark gray or charcoal tends to be a gender-neutral color appreciated by both men and women, he explains. When large, upscale retailers select the design schemes for their chains of stores, they look for colors that not only appeal to upscale sensibilities, but that also are not too feminine or masculine. Grays and charcoals seem bill on both criteria, Steed observes.

Color preferences aside, he also sees the commercial market seeking more concrete looks and larger sizes. Commercial purchasers will increasingly demand products that look like stone without the installation and maintenance problems of stone, Steed says.

THE FUTURE TAKES SHAPE

Steed also sees emerging trends in tile shapes. He reports that commercial applications will increasingly feature rectangular tile, in sizes such as 12-by-24, 13-by-26 and even larger. “I think it’s an aesthetic that’s been driven by design,” Steed says. “The rectangle is a shape that has deep roots in the American design community. If you looked at tile from one hundred years ago, a lot of it would be rectangular, because it replicated brick. The rectangle shape has come and gone three or four times in the last hundred years.”

He adds that one of the sizes of rectangular tile that has particularly seen its ups and downs is the 3-by-6- inch tile. Several years ago, there may have been only one or two 3-by-6-inch tiles on the market, he says. These days, there’s not a manufacturer that doesn’t make that size. “If you make wall tile, you make 3-by-6,” Steed says. Hovmand also foresees rectangular tile growing in favor. “We see tile getting bigger, with more irregular or rectangular shapes,” he says. “People are putting more emphasis on design, with different sizes and accents.”

It’s clear from the comments of experts quoted here that tile manufacturers and marketers place a great deal of emphasis on charting the psychology of tile selection by both the residential and commercial markets. And for good reason, Steed says. “We are in a fashion industry, but more important, we are in one of the most expensive parts of the fashion industry,” he notes. “If you put tile in your home, it could be the fourth most expensive purchase you make in your life.” He points out that adding one to two thousand feet of tile could turn out to be a $15,000 to $20,000 installation, and that it’s not uncommon for a homeowner selecting a high-end master bath to expend $40,000 on a tile installation. “As a manufacturer, you produce something that costs you x amount to produce, but by the time it filters through the distributor and retailer and installer, it’s more expensive yet,” Steed notes. “It goes back to the psychology. We do spend time on the psychology of the product and its intended use, but also the psychology of how you sell that to the market.”

THE OUTLOOK FOR 2004

Ceramic tile industry executives seem unanimous in their forecast for an outstanding year in 2004. The industry has benefited from a strong new housing market for the last several years, but has been hamstrung by an economic climate that tended to discourage robust commercial development and large-scale remodeling of residential housing. As the economy improves in the coming year, they see commercial building and residential renovation providing strong markets.

Turk echoes the thoughts of many other industry experts in his forecast for the year ahead. “We’re very optimistic about 2004,” he remarks. “Even if interest rates climb a bit and the residential market cools somewhat, we feel it will have only a modest impact. And the number of homes built will still be at one of the highest levels in our history. In addition, the improving economy bodes well for an improvement in commercial building.”

Steed agrees, forecasting new construction to continue at a record pace, and the builder market to remain vibrant. He also foresees an upsurge in commercial development, with all leading indicators pointing to 2004 as a strong year for commercial growth. Finally, he envisions a renaissance coming in the residential replacement, or traditional retail market. Said Steed: “It’s going to integrate us into the residential remarket in a way we haven’t been before.”

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