The Effects of the Economy on Ceramic Tile Distribution November 10, 2011 Presented By: Donato...

The Effects of the Economy on Ceramic Tile Distribution

November 10, 2011 Presented By:

Donato GrosserD. Grosser & Associates, ltd

11 BroadwayNew York, NY 10004

Phone: (212) 661-0422

0

The recession has strongly affected the ceramic tile market

We will examine what happened to the system of distribution of ceramic tile

Introduction

D. GROSSER & ASSOCIATES, LTD.

1

The recession has been deeper than what the government originally suggested


The Recession2

9.1%

Housing Starts have been flat for almost three years

Housing Starts3


Source: U.S. Dept. of Commerce data

Housing Starts (Jan 2006-Sep 2011)


4

658K

233K

425K

Thousand of units

SectorSector%

Quantity 2006

% Quantity

2010New Residential ConstructionNew Residential Construction 40% 20%Residential ImprovementResidential Improvement 29% 38%

Non Residential Non Residential Construction/ImprovementConstruction/Improvement 31% 42%

Source: D.Grosser & Associates, Ltd.

5


Ceramic Tile Consumption by Sector

The fact that mortgage rates are lower than ever has not helped

630 Year Fixed Mortgage Rates


Effective Mortgage

Rate

10 Year Treasury

Yield

Source: Freddie Mac and U.S. Department of the Treasury

Percentage


Housing Starts jumped 17.1 percent in September from the prior month to a 658,000 annual rate, the most since April 2010

Multifamily Housing Starts jumped 51.3 percent in September to an annual rate of 233,000; the most since October 2008

Some Good News7


Housing Starts (Sep 2010-Sep 2011)8

658K

425K

233K

Thousand of units


150K

597K

Existing Single Family home sales are well below 5 million units


9Single Family


10

Single Family: Existing Sales vs Newly Built

4.33M

Existing Single Family

Sales

Newly Built Single Family

Sales


Million of units

313K

Remodeling activity until now has been up


11Remodeling (Quarterly Data)

Source: Joint Center for Housing Studies of Harvard University

Billion Dollars

Ceramic tile shipments by U.S. manufactures are flat

Imports are flat Ceramic tile consumption is flat


Ceramic Tile Consumption12


Ceramic Tile Consumption 1993–201013


Million Sq. Ft.

U.S. Ceramic Tile Shipments14


Million Sq. Ft.


U.S. Ceramic Tile Imports15


Million Sq. Ft.


U.S. Tile Manufactures

U.S. manufacturers benefited from the weak dollar

16


Eur-Usd (Jan 2002-Aug 2011)17


Landed Price of Italian Ceramic Tiles18


$ perSq. Ft.


U.S. Ceramic Tile Manufactures

Market share of U.S. tile manufacturers in 2010 was 30%

In 2006 was 17.6%

19


U.S. Tile Manufactures

There are six Italian tile manufacturing facilities in the U.S., their total shipments are 310 million sq. ft. (about 50% of total)

20


The recession affected


Contractors, Dealers and Distributors21

Contractors &

Dealers

Contractors &

DealersDistributorsDistributors


Ceramic Tile Contractors and Dealers in the U.S.22


- 22.6%

Number in 2008

Number in 2010


Ceramic Tile Distributors in the U.S.23


-19.3%

1,713Number in 2008

Number in 2010


Let’s Look at some Selected States24


Tile Contractors and Dealers in 2008 and 201025

StatesStates 2008 2010 % Change 2008-2010

CaliforniaCalifornia 3,205 2,525 -21.2%

FloridaFlorida 2,459 1,881 -23.5%

TexasTexas 1,553 1,212 -21.9%

ArizonaArizona 569 397 -30.2%

New YorkNew York 874 735 -15.2%

New JerseyNew Jersey 628 536 -15.3%

Other StatesOther States 12,437 9,519 -23.5%



Ceramic Tile Distributors in the U.S. 2008 and 2010 26

StatesStates 2008 2010 % Change 2008-2010

CaliforniaCalifornia 307 253 -17.6%

FloridaFlorida 213 148 -19.3%

TexasTexas 136 106 -22.0%

ArizonaArizona 62 44 -29.0%

New YorkNew York 92 81 -12.0%

New JerseyNew Jersey 77 62 -19.5%Other StatesOther States 826 688 -16.7%


27Home Centers in the U.S.



Home Home CentersCenters 2008 2010 % Change

2008-2010Home DepotHome Depot 2,052 1,944 -5.3%Lowe’sLowe’s 1,647 1,817 +10.3%MenardsMenards 261 256 -1.9%


Home Centers, Retailers and Distributors 28

2008 2010 % Change 2008-2010

Home CentersHome Centers 6,986 6,802 -2.6%Tile Retailers and Tile Retailers and

ContractorsContractors 21,725 16,805 -22.6%

Tile DistributorsTile Distributors 1,713 1,382 -19.3%


Carpet & Rug Retailers and Distributors29


2008 2010 % Change 2008-2010

Carpet Rug Carpet Rug RetailersRetailers 25,720 20,452 -20.5%

Carpet Rug Carpet Rug DistributorsDistributors 1,540 1,264 -17.9%


U.S. manufacturers gained market share

Home Centers gained market share Tile retailers and distributors lost

market share


Change in U.S. Tile Distribution30

Ceramic Tiles Distribution in 201031



31

11 BroadwayNew York, NY 10004

(212)[email protected]


The Effects of the Economy on Ceramic Tile Distribution November 10, 2011 Presented By: Donato...

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