The Effects of the Economy on Ceramic Tile Distribution November 10, 2011 Presented By: Donato Grosser D. Grosser & Associates, ltd 11 Broadway New York,

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Presentation transcript:

The Effects of the Economy on Ceramic Tile Distribution November 10, 2011 Presented By: Donato Grosser D. Grosser & Associates, ltd 11 Broadway New York, NY Phone: (212)

 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 D. GROSSER & ASSOCIATES, LTD. The Recession 2 9.1%

 Housing Starts have been flat for almost three years Housing Starts 3 D. GROSSER & ASSOCIATES, LTD.

Source: U.S. Dept. of Commerce data Housing Starts (Jan 2006-Sep 2011) D. GROSSER & ASSOCIATES, LTD K 233K 425K Thousand of units

Sector % Quantity 2006 % Quantity 2010 New Residential Construction 40%20% Residential Improvement 29%38% Non Residential Construction/Improvement 31%42% Source: D.Grosser & Associates, Ltd. 5 D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Consumption by Sector

 The fact that mortgage rates are lower than ever has not helped 6 30 Year Fixed Mortgage Rates D. GROSSER & ASSOCIATES, LTD. Effective Mortgage Rate 10 Year Treasury Yield Source: Freddie Mac and U.S. Department of the Treasury Percentage

D. GROSSER & ASSOCIATES, LTD.  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 News 7

D. GROSSER & ASSOCIATES, LTD. Housing Starts (Sep 2010-Sep 2011) 8 658K 425K 233K Thousand of units Source: U.S. Dept. of Commerce data 150K 597K

 Existing Single Family home sales are well below 5 million units D. GROSSER & ASSOCIATES, LTD. 9 Single Family

D. GROSSER & ASSOCIATES, LTD. 10 Single Family: Existing Sales vs Newly Built 4.33M Existing Single Family Sales Newly Built Single Family Sales Source: U.S. Dept. of Commerce data Million of units 313K

 Remodeling activity until now has been up D. GROSSER & ASSOCIATES, LTD. 11 Remodeling (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 D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Consumption 12

D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Consumption 1993– Source: U.S. Dept. of Commerce data Million Sq. Ft.

U.S. Ceramic Tile Shipments 14 D. GROSSER & ASSOCIATES, LTD. Million Sq. Ft. Source: D.Grosser & Associates, Ltd.

U.S. Ceramic Tile Imports 15 D. GROSSER & ASSOCIATES, LTD. Million Sq. Ft. Source: D.Grosser & Associates, Ltd.

U.S. Tile Manufactures  U.S. manufacturers benefited from the weak dollar 16 D. GROSSER & ASSOCIATES, LTD.

Eur-Usd (Jan 2002-Aug 2011) 17 D. GROSSER & ASSOCIATES, LTD.

Landed Price of Italian Ceramic Tiles 18 D. GROSSER & ASSOCIATES, LTD. $ per Sq. Ft. Source: D.Grosser & Associates, Ltd.

U.S. Ceramic Tile Manufactures  Market share of U.S. tile manufacturers in 2010 was 30%  In 2006 was 17.6% 19 D. GROSSER & ASSOCIATES, LTD.

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 D. GROSSER & ASSOCIATES, LTD.

The recession affected D. GROSSER & ASSOCIATES, LTD. Contractors, Dealers and Distributors 21 Contractors & Dealers Contractors & Dealers Distributors

D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Contractors and Dealers in the U.S. 22 Source: D.Grosser & Associates, Ltd % Number in 2008 Number in 2010

D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Distributors in the U.S. 23 Source: D.Grosser & Associates, Ltd % 1,713 Number in 2008 Number in 2010

D. GROSSER & ASSOCIATES, LTD. Let’s Look at some Selected States 24

D. GROSSER & ASSOCIATES, LTD. Tile Contractors and Dealers in 2008 and States % Change California3,2052, % Florida2,4591, % Texas1,5531, % Arizona % New York % New Jersey % Other States 12,4379, % Source: D.Grosser & Associates, Ltd.

D. GROSSER & ASSOCIATES, LTD. Ceramic Tile Distributors in the U.S and States % Change California % Florida % Texas % Arizona % New York % New Jersey % Other States % Source: D.Grosser & Associates, Ltd.

27 Home Centers in the U.S. D. GROSSER & ASSOCIATES, LTD. Source: D.Grosser & Associates, Ltd. Home Centers % Change Home Depot 2,0521, % Lowe’s1,6471, % Menards %

D. GROSSER & ASSOCIATES, LTD. Home Centers, Retailers and Distributors % Change Home Centers 6,9866, % Tile Retailers and Contractors 21,72516, % Tile Distributors 1,7131, % Source: D.Grosser & Associates, Ltd.

Carpet & Rug Retailers and Distributors 29 D. GROSSER & ASSOCIATES, LTD % Change Carpet Rug Retailers 25,72020, % Carpet Rug Distributors 1,5401, % Source: D.Grosser & Associates, Ltd.

 U.S. manufacturers gained market share  Home Centers gained market share  Tile retailers and distributors lost market share D. GROSSER & ASSOCIATES, LTD. Change in U.S. Tile Distribution 30

Ceramic Tiles Distribution in D. GROSSER & ASSOCIATES, LTD. Source: D.Grosser & Associates, Ltd. 31

11 Broadway New York, NY (212) D. GROSSER & ASSOCIATES, LTD.