Ceramic Tile Report: The tile industry invests heavily in USA
The American tile market is growing. Year over year tile sales grew by 4.2% from 2013 to 2014, according to Market Insights LLC, and in the past five years, tile has taken a 2.1% greater share of the overall flooring market. Domestic manufacturers and distributors continue to build new facilities and upgrade existing ones, and European companies continue to open operations in the U.S. in order to target the American market.
“Looking ahead, U.S. demand for ceramic tile is forecasted to rise approximately 5% to 6% per year through 2017, reaching over three billion square feet,” says Lori Kirk-Rolley, vp of brand marketing at Dal-Tile Corporation, which represents 40% of the domestic market. “Based on this forecast, we are very optimistic about growth in the year ahead for the industry as a whole.”
The tile industry is currently experiencing a huge move toward domestic production. Italian companies, which once cornered the world tile market, have poured millions of dollars into U.S. manufacturing, attracted to the proximity of raw materials and more immediate access to American end-users.
Gruppo Concorde, the second largest tile group in Europe, announced at a meeting in Italy that it will build a new manufacturing facility on a 96-acre site in Mt. Pleasant, Tennessee to open in late 2016. Del Conca opened a facility in Loudon, Tennessee last year, and Florim, GranitiFiandre (StonePeak), and Panariagroup (Florida Tile) recently invested in new equipment for enhanced production at existing domestic plants.
In addition to helping fulfill domestic orders more quickly, U.S. facilities allow Italian manufacturers to create product specifically aimed at the American consumer, whose tastes differ greatly from their Italian counterparts. Some of the interest in domestic production has also been driven by consumers’ growing attention to products’ origins. Several manufacturers mentioned the increased importance of the “made in the USA” distinction.
Access to raw materials and to key interstates combined with a business friendly environment have made Tennessee a hotbed of activity for tile production. In addition to the new Mt. Pleasant and Loudon plants, Florim USA’s headquarters is in Clarksville and StonePeak’s is in Crossville. Dal-Tile is building a facility in Dickson, and American producer Crossville is headquartered in the town for which it’s named. And Florida Tile produces just up the road in Lawrenceburg, Kentucky.
Floor tile accounts for the majority of U.S. tile sales, outpacing wall tile 82% to 18%, but Thomas Smith, president of Cooperativa Ceramica d’Imola North America, has noticed a shift. He reports a “surprisingly strong demand” for ceramic wall tile, elevating the ceramic side of Imola’s business, as opposed to porcelain, from around 5% to 10% within the past 18 months. Porcelain is finding its way to the walls as well, sometimes used to clad floor-to-ceiling fireplaces or to create feature walls. Emser is responding to increased demand with two new wall tile collections to launch this year.
Tile continues to be more heavily weighted toward the residential sector than the commercial sector. Many manufacturers speak of the blurring of lines between commercial and residential, however, saying that the numbers get more and more difficult to track internally. Also, product is now produced and specified for both sectors, with less and less delineation.
BARRIERS TO GROWTH Despite tile’s expansion, it remains at less than 15% of overall flooring dollars spent in the U.S., leaving plenty of room for growth. Smith believes that time is the biggest hindrance to the growth of tile. He says that the expected timeframe from specification to delivery of materials is shrinking. “We’ve had developers call and say, ‘Can we have 75,000 square feet on site in three weeks?’ That’s really difficult to do, whether you’re an Italian manufacturer or a domestic manufacturer.” To shorten the time gap, Imola’s new distribution center in Indianapolis allows quicker access to a greater portion of the country than its original location in Miami, and provides more space to keep a larger inventory on hand.
Paolo Mularoni, president of Del Conca USA, sees the barriers to tile expansion slowly crumbling. “Honestly, I think it’s a matter of habits,” he says. “Habits are very slow to change, especially in construction that’s a very traditional field, but we see the usage of tile in the U.S. growing every year.”
Some tile manufacturers give a nod to the carpet industry for holding its ground, especially through innovative product development. Others point out that the flooring industry will always remain diversified for the basic reason that consumers prefer and demand choice.
SUSTAINABILITY One of tile’s chief benefits is its inherent sustainability. The Tile Council of North America (TCNA), which serves to expand the ceramic tile market in the U.S., recently completed an environmental product declaration (EPD) for ceramic tile made in North America. According to a TCNA report, when compared to all other flooring types, “ceramic tile has the lowest 60-year environmental impact per square foot across all major impact categories,” including global warming, smog formation and ozone depletion, among others. The EPD was certified in late 2014 by UL Environment, making it available for specifiers participating in LEED or other green building programs.
TCNA conducts research and publishes guidelines for installation, tile standards and economic reports, and the organization has been working to compile a guide that tells specifiers which compliance requirements of each green building program the EPD will help meet. “A couple years ago, [green building programs] didn’t include references to EPDs at all, but now they all do. That’s definitely a trend,” says TCNA’s Stephanie Samulski.
Some individual tile companies are working on EPDs of their own. Dal-Tile invested in an extensive project to create environmental product declarations for all products manufactured in its North American facilities, which was completed in early 2014. And Crossville issued its first third-party verified sustainability report, for enhanced transparency among the design community, which includes an EPD released in late 2014 to cover all floor and wall tile made at the Crossville facility.
FROM THE SPECIFIERS Many specifiers appreciate tile not only for its LEED points, but also for its artistry and wide array of uses. Architect Richard Fleischman of Richard Fleischman+Partners has specified a great deal of tile during his extensive experience with education and institutional projects. “I love tile. I love the playfulness; I love the flexibility.” He has noticed a rise in the use of tile and says that his clients are more receptive to using it.
Fleischman bristles at the thought that tile might be relegated to certain “appropriate” areas of a project. “I think it’s insulting when people say, ‘You can use it in the bathroom. You can use it in the hallway.’ Why limit it? It’s a great material to be used anywhere and everywhere.”
Fleischman says that designers are confined only by their lack of imagination and creativity. He balks at talk of trends, which he says are simply a game of follow the leader. “My colleagues see a level of success, and they jump on it.” As an architect, he is most excited about the fact that porcelain tiles can now be used on the exterior of buildings. “An all red tile, bright red tile building—wouldn’t that be fascinating? You’re walking down the street and here’s this jewel of a building.”
Amy Lau of Amy Lau Design in New York caters to high end residential clients and also enjoys using tile in unusual ways. “I love tile, and not just on the floors and the walls,” she says. Lau is currently working on a project where she has taken a tile by Stark that emulates mercury glass and specified it for the floor, walls and ceiling in a space adjacent to a cabana. Then she took the same tile out into the cantilevered ceiling of the cabana. She is also working on a collection of outdoor furniture that incorporates tile.
In addition to modern looks, Lau has seen Old World looks trending in tile, but used in new ways. She gives the example of a designer who put wood look plank tiles next to traditional hexagonal tiles and followed the lines of the hexagons to break into the wood tiles rather than cutting the hexagons into a straight line to abut the planks.
When specifying tile, Lau says that she doesn’t stop at picking out the tile. “You can’t just specify tile. You really have to look at it as an art form. I want the installer to lay it out digitally for me.” Lau will move walls by inches one direction or another to avoid cut tiles or to be sure sinks and cabinets center in the tile.
“I’m particular about grout, too,” Lau says. “I don’t like the usual white or off-white. I love tinted grout.” She coordinates grout with her tiles and will often ask an installer to show her four or five samples, pairing the tile with different colors of grout, so she can see the effect.
Both Fleischman and Lau agree that the selection of tiles available from today’s tile manufacturers is more than ample. “I just don’t think that we as consumers understand even a small percentage that’s out there, from artistry to craftsmanship to new techniques,” Lau says. “It’s amazing. It’s at a really incredible stage, and I’m very impressed with the industry as a whole.”
THIN TILE One of the industry’s rising stars is thin tile, and TCNA has been actively researching to develop product standards. Samulski says that the goal is to arrive at a battery of tests, such as system performance, breaking strength and impact resistance, to effectively determine a standard for the new category.
Crossville entered the thin tile market as the exclusive U.S. distributor for Laminam, an Italian brand of thin porcelain tiles in thicknesses of 3+mm for interior walls and 5.6mm for floors. To help installers with the new products, Crossville has invested in training sessions across the nation and at its Tennessee plant to disseminate guidelines and methodology for proper installation.
The Panariagroup, which includes Florida Tile, has a separate factory in Italy dedicated to making thin tile, and Florida Tile is preparing to launch its new Thinner line with three collections to be introduced this year. Both Crossville and Florida Tile know that additional education will be needed for thin tile to reach a level of comfort in the American market, especially among installers, but the trend is already well under way in Europe and picking up steam in the U.S.
LARGE FORMAT Tile formats have been steadily growing in recent years, due in part to designers’ desire for a seamless, monolithic look. The ubiquitous 12”x12” first gave way to 24”x24”, then 12”x24” planks took off, and the sizes have continued to grow, with planks far outselling squares. This year at Cersaie, Italian manufacturers, including Florim and Ava, unveiled mammoth slabs, measuring a whopping 1m x 3m, which is about 3’x10’. Crossville, one of the first U.S. manufacturers to distribute the huge format tiles, stocks 1m x 1m and 1m x 3m Laminam panels for quicker domestic delivery.
Lau, a fan of the ever-expanding porcelain, says, “I was really blown away at Cersaie by these monolithic pieces of tile.” She is excited about the idea of using the oversized tiles on both the floors and walls, “almost using these huge porcelain slabs like wallpaper.”
The larger sizes do pose unique installation issues, and so far represent a very small part of the U.S. market, but they continue to gain ground nevertheless. Imola introduced its first 48” plank tiles in the U.S. approximately three years ago, when they were slow to be received. “Now we have to increase our inventory levels,” Smith says. He believes that installers are becoming more comfortable with larger format tiles, leading to greater acceptance in the market.
StonePeak currently owns the only plant in the U.S. that can produce polished materials up to a 24”x 48” size, and is considering even larger slabs. To help facilitate acceptance of the large panels, StonePeak has held training sessions for contractors to educate them on the appropriate use and help them feel more comfortable with the product. Sarah Eamigh, director of U.S. marketing, says that large panels are finally beginning to gain ground in the market. “The porcelain panels are opening up a horizon for exterior facades, countertops, veneers. Porcelain is not just for floors or walls.”
However, some companies are taking incremental steps to the larger sizes, like MSI’s new assortment of 16”x32” tiles, and Florida Tile, which is introducing tiles up to 36” square. “The market is definitely going there,” says Sean Cilona, director of marketing for Florida Tile. “Obviously the volume residentially for the 18”x36” will be low, but the commercial part of our business is really calling for larger format tiles, as it has been for the last couple years.”
Not all tiles are growing, though. “I love the confluence we’re seeing of bigger and bigger and smaller and smaller tiles,” says Lindsey Waldrep, vice president of marketing at Crossville. She notes that at the other end of the spectrum, tiles are shrinking, becoming “Chicklet” sized, and small round tiles are popular as well.
AESTHETICS On the surface, the tile trends have not changed much since digital printing came on the scene. Wood and natural stone continue to dominate, reported as almost every manufacturer’s strongest sellers. However, tastes within the looks have changed.
When wood look tiles first emerged, they mimicked traditional hardwood floors, and then manufacturers branched out to replicate exotic species. More recently, rustic looks have come into vogue with knots and distress marks, and this year manufacturers introduced charred, painted and weathered wood visuals. Conversely, companies like MSI are responding to a demand for tiles that replicate the more clean contemporary looks with oil rubbed finishes that are beginning to appear in many hardwood lines.
For stone looks, digital reproductions of marbles and travertines came first, followed by slates and limestones. As inkjet technology advanced, manufacturers created tiles with more intricate veining and depth of color for more impressive likenesses. Now everything from moonstones to river rock are available in realistic, high definition renderings, although many designers are showing a preference for more spare, open striated stone designs with less veining.
Metallic, fabric and cement looks have been gaining traction, and this year cotto is the new buzzword for tile. Cotto tiles imitate Old World pavers with deep rich color variations similar to stone, but without the busyness of the veining. Combined looks, such as a blend of stone and cement or cement and fabric, are also trending.
KEY SUPPLIERS Dal-Tile Corporation, the tile division under the Mohawk umbrella, produces ceramic and porcelain for four brands: Daltile, Marazzi, American Olean and Ragno. Daltile sells through 250 sales service centers across the country, while the other three brands sell mainly through independent distributers.
Last year Dal-Tile announced plans to build a glazed porcelain and color-body tile plant in Dickson, Tennessee. Construction is currently underway, and the facility should be operational in early 2016. The Dickson location will provide 150 million square feet of capacity and employ an estimated 300 to 350 people. It is Dal-Tile’s 11th manufacturing center in North America.
At an existing facility in Sunnyvale, Texas, an expansion project added capacity to handle larger format tiles and technology to enhance graphics and textures.
Dal-Tile estimates that 60% of its tile ends up in residential projects and 40% in commercial. Kirk-Rolley points out that the sectors were already difficult to track, but the lines blurred even more during the recession, when commercial contractors took residential work and residential builders put in bids for commercial work to survive. Also, designers and architects often specify residential tile for commercial spaces and commercial tile for residential, especially in modern spaces. Kirk-Rolley says that Dal-Tile tends to create tiles to target gaps and needs for customers, not necessarily dedicated to one category or another.
Kirk-Rolley says that the technology to create high definition visuals for tile continues to improve, becoming more and more sophisticated. She adds, “When I look at the visuals that we are launching, it’s really amazing to me, for somebody who has been in this business for quite a while, how sophisticated and realistic those visuals are. When you have a product that was designed to look like a reclaimed hardwood, and you see a little paint drizzle on one piece, but you don’t see that in any other piece of tile, and you’re looking at a 300-square-feet area, that’s really impressive.”
She is particularly excited about River Marble, a collection shown at IBS in Las Vegas that emulates marble with a translucent glaze for added depth and dimension. “It’s stunning,” she says. “I look at that and think to myself, ‘We’ve come a long way.’”
Like other manufacturers, Dal-Tile reports that wood and stone looks continue among their best sellers, and Kirk-Rolley notes that the combination of materials in a single look is trending, such as concrete and natural stone. Also, she has noticed more minimalistic designs gaining traction this year, giving rise to the popularity of visuals with a cotto influence. She also says that the colors grey and white have been appearing in home decor magazines, putting marble and quartz looks in demand, especially for kitchens.
Crossville invested in new technology during 2014, adding several pieces of equipment, including two digital printers. One of the printers was added to the trim line to ensure that all of the new products coordinate perfectly with the corresponding trim. In addition, Crossville expanded its manufacturing capability with a “massive addition” and a new kiln. Crossville is the only major tile company that can crush fired scrap and recycle it into new tile, and this fall, it also added a new piece of machinery at the crushing facility.
As with the majority of the flooring industry, Crossville reported having a good year in 2014, but not the great year economists had forecasted. For 2015, the company will focus on its strongest segments, national accounts such as McDonald’s, Wendy’s, gas station chains, and automotive and retail chains. Crossville also does strong business with airports and malls, as well as the hospitality sector, and lately has seen more interest from movie theaters.
Porcelain accounts for 85% of the company’s tile business, and the other 15%, which includes glass and ceramic, it imports from other manufacturers. About 18% of Crossville’s tile business lies in the residential and retailer category, and the remainder is A&D specified. In 2014, retailer business grew, and Waldrep attributes the growth to an attractive new display program launched two years ago, as well as continued marketing to the contractor market and a residential advertising program.
Butler Johnson, which used to provide distribution for Crossville in northern California, went out of business in 2014, shifting the work to Longust, which also does distribution for Crossville in Nevada and southern California.
Italian owned Florida Tile is headquartered in Lexington with a manufacturing facility in Lawrenceburg, Kentucky. In 2014, Florida Tile invested in equipment, adding two digital printing lines as well as handing equipment with both sorting and decorating capabilities for 36” tile. Florida tile previously launched a successful wood line with 36” planks that were produced in Italy, and has noticed a growing demand for larger format tiles in the U.S. Utilizing the new domestic equipment, Florida Tile has now added to an existing wood line and launched another in the 36” format. At Coverings, it will introduce a contemporary cement look as well.
Since 2010, Florida Tile has been growing its commercial sales force, with around 50 people dedicated to calling on commercial customers, including national accounts, large commercial contractors, architects and interior designers. According to the company, approximately 20% of the manufacturer’s sales are now coming from the commercial market.
Many of Florida Tile’s products have both residential and commercial appeal, although several lines are specifically focused on the commercial market. The goal is to strike a 50-50 balance between commercial and residential products, says Cilona, but “technically all the products that come out of our factory in Lawrenceburg are rated for commercial use.”
“Florida Tile has seen significant year-over-year growth that puts us well above the industry average, easily double digit growth,” says Cilona. He attributes this growth to commitment from the distributers to embrace the product lines, along with expanding distribution and expanding its salesforce and branches. If the first half of the year goes well, Cilona says that Florida Tile will make “significant improvements in our manufacturing that’s going to allow us to increase our capacity.”
Florida Tile is betting on the thin tile trend, launching three new product lines branded as Thinner during the first quarter. Two are 3.5mm tiles, referred to as 3Plus with a fiberglass mesh backing. The tiles will coordinate with existing lines, and sizes will include a huge 40”x10’ panel.
A third line called 5Plus (5.5mm) will offer a rustic, reclaimed wood look in 8”x39” and 8”x59” formats. All three lines will be rated for floors and walls, both interior and exterior. 3Plus will be intended for residential and light commercial applications, and 5Plus will be rated for heavy commercial use, although they will likely be cross marketed.
Thin tile can be placed over existing flooring, making installation less expensive. For 3Plus, Florida tile will focus on the commercial market, especially the hospitality and multi-family markets, which tend toward consistent remodeling, whereas 5Plus will be targeted more toward the dealer market with special merchandising and displays. Florida Tile expects that the 5Plus will be more accessible with its more familiar sizes for the retailers and installers.
StonePeak, a division of Italy’s GranitiFiandre, celebrated its 10th anniversary last year, and this year is installing new machinery in its Crossville, Tennessee production facility to broaden its product offerings, including more large format tiles.
The company has enjoyed increased business from the hospitality and retail sectors, which gravitate toward the large panels and wood looks. “Everything that we make is commercial rated but it’s residential ready,” Eamigh explains. As with many other manufacturers, StonePeak tile is not relegated to a single category. The firm introduced a more residential driven line called Palazzo last year at Coverings and will add a couple of new lines this year that will be appropriate for both commercial and residential, “but might be more eye catching for residential design.”
Already Greenguard certified, at the end of 2014 StonePeak also became Green Squared Certified, and joined the list of manufacturers partnering with EcoScorecard.
Florim USA, part of the Florim Group of Italy, manufactures domestic product at its facility in Clarksville, Tennessee. After a major renovation that began in 2013 to improve inkjet technology and expand format size, Florim started producing 6”x36” and 18”x36” tiles. And in 2015, it will begin production of 24”x48” tile. The Florim Group already produces the largest slabs in the industry at over 5’x10’, but they are not produced domestically.
Stefano Rabaioli, vice president of sales and marketing, says that 2014 was a good year for Florim USA, although it did not live up to the hype from economists. He explains that regardless of what happens with the economy in 2015, Florim expects to outperform the market with its larger format tiles and high quality porcelain.
Florim estimates that its business is 80% residential and 20% commercial, and Rabaioli sees the smaller commercial sector as potential for growth. The company is working to produce looks, such as more minimalistic stone looks with less veining, specifically for the commercial market. Rabaioli says the company is already gaining ground in the hospitality and retail segments.
MSI was once known for selling countertop slab material and natural stone. The company continues to sell natural stone, and also hardscapes like pavers, but it has branched out to become a full service supplier of porcelain and ceramic tile to retailers and to the distribution market.
MSI develops proprietary products in partnership with manufacturers around the world. An in-house designer travels the world to stay abreast of trends in color, fabrics, furniture and clothing, and then works with manufacturers to design unique mosaics and tile collections that anticipate market demand.
The formula has been working. MSI enjoyed upwards of 20% growth in both 2013 and 2014, with an increase of over $100 million in total business last year, and tile has become one of the firm’s fastest growing segments. Manny Llerena, director of sales and marketing, attributes that growth to a combination of market penetration and “cutting-edge” product development.
To distribute its products, the company has 18 centers throughout the U.S. “We hold a tremendous amount of inventory and we are unafraid to move product where it’s needed,” Llerena says. For the commercial market, MSI supplies a great deal of natural stone, but its porcelain and ceramic products are geared more toward residential, residential builders and mainstreet commercial.
The Italian based Del Conca Group opened Del Conca USA in Loudon, Tennessee in early 2014. The 320,000-square-foot facility produces porcelain products designed specifically for the U.S. market. “We’re seeing that our customers appreciate immediate availability of the products and the ease of logistics,” Mularoni says.
The company creates more tile for the residential market than commercial, although some Italian lines are geared more toward the commercial market. Wood looks are Del Conca’s best U.S. sellers by volume, and show no signs of decreasing. Stone looks are also big sellers, and Mularoni notes that the looks are “revisited” to make them more interesting with more variation. He makes the point that varied looks are in great demand, so that the tiles within a collection have as little repeat as possible.
ImolaCeramica, an Italian cooperative that manufactures in Italy and distributes in the U.S., completed a new distribution facility in Indianapolis during the fourth quarter of 2014, and its new headquarters in Chicago will open this spring. The company has been focusing on improving communication between architects, developers and contractors to keep projects flowing smoothly and to minimize time from specification to delivery.
“We definitely saw an increase in business in 2014,” Smith says, with shopping centers, quick service restaurants and the hotel industry providing Imola’s strongest segments. Smith says the company witnessed positive movement in both ground-up construction and remodeling in the second half of 2014.
Imola doesn’t deal much in commodity tile, aiming the majority of its products at the $4 per square foot and up range. Its customers, by and large, are second-time tile buyers who are refinancing and remodeling to upgrade beyond builder grade.
Emser designs and develops products through partnerships with 75 factories around the world in over 12 countries. The products are proprietary to Emser in its market.
When the recession hit, Emser put its resources toward infrastructure and new products and new systems. Now it is back to investing in expansion, opening new branches last year in Maryland, Indianapolis, northern Virginia, North Carolina and Florida with plans to open at least five more in 2015, which would bring its total to nearly 70 locations.
Emser had positive growth in both 2013 and 2014, and gained more balance in terms of segments. “Our homebuilder business continues to be a very solid foundation, but we also saw nice progress in the commercial and retailer business,” says Bob Baldocchi, vice president of marketing, sales support and business development. To achieve that balance, Emser has expanded the product lines suitable for the commercial market, and has added more commercial salespeople throughout the country.
Emser tracks its products through three sectors: residential, builder and commercial, reporting that builder is slightly larger, but that the three are fairly evenly split. In the next couple of years, however, commercial may take a larger slice of the pie. “All you have to do is look outside and see the number of cranes that have gone up in the last year or two,” explains Baldocchi. “The commercial business is strong right now. There is tremendous opportunity out there. There’s a lot of building happening; there’s a lot of funding for projects.”
Baldocchi reports movement in several commercial segments. “Everybody from hospitality to retail spaces, malls and developers are all busy right now. And they’re all looking to update or do new builds. And when that happens, that part of our business really soars.”
Emser has more than 4,500 SKUs, including ceramic, porcelain, an expansive line of natural stone, glass and mosaics. The wood look continues to sell well, but Baldocchi says that he has seen a return to a preference for real stone versus tile that looks like stone.
Baldocchi reports that trends differ based on particular segments within the commercial market. He says that malls use lots of natural stone with contemporary looks in larger formats. The hospitality market, especially hotels, tend to use wood looks. The hospitality market has also shown an expansion of tile specified for the walls, especially contemporary planks styles. And multi-family markets are beginning to expand beyond value-driven products, although value remains important.