The Effects of the Economy on Ceramic Tile Distribution November 10, 2011

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The Effects of the Economy on Ceramic Tile
DistributionNovember 10, 2011

• Presented By
• Donato Grosser
• D. Grosser Associates, ltd
• 11 BroadwayNew York, NY 10004Phone (212)
  661-0422

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Introduction

• The recession has strongly affected the ceramic
  tile market
• We will examine what happened to the system of
  distribution of ceramic tile

D. GROSSER ASSOCIATES, LTD.
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The Recession

• The recession has been deeper than what the
  government originally suggested

9.1
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Housing Starts

• Housing Starts have been flat for almost three
  years

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Housing Starts (Jan 2006-Sep 2011)
Thousand of units
658K
425K
233K
Source U.S. Dept. of Commerce data
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Ceramic Tile Consumption by Sector
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.
D. GROSSER ASSOCIATES, LTD.
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30 Year Fixed Mortgage Rates

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

Effective Mortgage Rate
Percentage
10 Year Treasury Yield
Source Freddie Mac and U.S. Department of the
Treasury
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Some Good News

• 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

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Housing Starts (Sep 2010-Sep 2011)
658K
597K
Thousand of units
425K
233K
150K
Source U.S. Dept. of Commerce data
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Single Family

• Existing Single Family home sales are well below
  5 million units

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Single Family Existing Sales vs Newly Built
Existing Single Family Sales
4.33M
Million of units
Newly Built Single Family Sales
313K
Source U.S. Dept. of Commerce data
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Remodeling (Quarterly Data)

• Remodeling activity until now has been up

Billion Dollars
Source Joint Center for Housing Studies of
Harvard University
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Ceramic Tile Consumption

• Ceramic tile shipments by U.S. manufactures are
  flat
• Imports are flat
• Ceramic tile consumption is flat

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Ceramic Tile Consumption 19932010
Million Sq. Ft.
Source U.S. Dept. of Commerce data
D. GROSSER ASSOCIATES, LTD.
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U.S. Ceramic Tile Shipments
Million Sq. Ft.
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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U.S. Ceramic Tile Imports
Million Sq. Ft.
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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U.S. Tile Manufactures

• U.S. manufacturers benefited from the weak dollar

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Eur-Usd (Jan 2002-Aug 2011)
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Landed Price of Italian Ceramic Tiles
per Sq. Ft.
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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U.S. Ceramic Tile Manufactures

• Market share of U.S. tile manufacturers in 2010
  was 30
• In 2006 was 17.6

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U.S. Tile Manufactures
20

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

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Contractors, Dealers and Distributors

• The recession affected

Contractors Dealers
Distributors
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Ceramic Tile Contractors and Dealers in the U.S.
Number in 2008
Number in 2010
- 22.6
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Ceramic Tile Distributors in the U.S.
Number in 2008
1,713
Number in 2010
-19.3
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Lets Look at some Selected States
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Tile Contractors and Dealers in 2008 and 2010
States 2008 2010 Change 2008-2010
California 3,205 2,525 -21.2
Florida 2,459 1,881 -23.5
Texas 1,553 1,212 -21.9
Arizona 569 397 -30.2
New York 874 735 -15.2
New Jersey 628 536 -15.3
Other States 12,437 9,519 -23.5
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Ceramic Tile Distributors in the U.S. 2008 and
2010
States 2008 2010 Change 2008-2010
California 307 253 -17.6
Florida 213 148 -19.3
Texas 136 106 -22.0
Arizona 62 44 -29.0
New York 92 81 -12.0
New Jersey 77 62 -19.5
Other States 826 688 -16.7
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Home Centers in the U.S.
Home Centers 2008 2010 Change 2008-2010
Home Depot 2,052 1,944 -5.3
Lowes 1,647 1,817 10.3
Menards 261 256 -1.9
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Home Centers, Retailers and Distributors
2008 2010 Change 2008-2010
Home Centers 6,986 6,802 -2.6
Tile Retailers and Contractors 21,725 16,805 -22.6
Tile Distributors 1,713 1,382 -19.3
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Carpet Rug Retailers and Distributors
2008 2010 Change 2008-2010
Carpet Rug Retailers 25,720 20,452 -20.5
Carpet Rug Distributors 1,540 1,264 -17.9
Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
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Change in U.S. Tile Distribution

• U.S. manufacturers gained market share
• Home Centers gained market share
• Tile retailers and distributors lost market share

D. GROSSER ASSOCIATES, LTD.
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Ceramic Tiles Distribution in 2010
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Source D.Grosser Associates, Ltd.
D. GROSSER ASSOCIATES, LTD.
33
11 Broadway New York, NY 10004 [phone] d_at_gro
sserconsulting.com
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