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

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 10004 Phone: (212) 661-0422. Introduction. The recession has strongly affected the ceramic tile market

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

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  1. 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 0

  2. Introduction • The recession has strongly affected the ceramic tile market • We will examine what happened to the system of distribution of ceramic tile 1 D. GROSSER & ASSOCIATES, LTD.

  3. The Recession • The recession has been deeper than what the government originally suggested 9.1% 2 D. GROSSER & ASSOCIATES, LTD.

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

  5. Housing Starts (Jan 2006-Sep 2011) Thousand of units 658K 425K 233K Source: U.S. Dept. of Commerce data 4 D. GROSSER & ASSOCIATES, LTD.

  6. Ceramic Tile Consumption by Sector Source: D.Grosser & Associates, Ltd. 5 D. GROSSER & ASSOCIATES, LTD.

  7. 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 6 D. GROSSER & ASSOCIATES, LTD.

  8. 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 7 D. GROSSER & ASSOCIATES, LTD.

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

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

  11. 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 10 D. GROSSER & ASSOCIATES, LTD.

  12. Remodeling (Quarterly Data) • Remodeling activity until now has been up Billion Dollars Source: Joint Center for Housing Studies of Harvard University 11 D. GROSSER & ASSOCIATES, LTD.

  13. Ceramic Tile Consumption • Ceramic tile shipments by U.S. manufactures are flat • Imports are flat • Ceramic tile consumption is flat 12 D. GROSSER & ASSOCIATES, LTD.

  14. Ceramic Tile Consumption 1993–2010 Million Sq. Ft. Source: U.S. Dept. of Commerce data 13 D. GROSSER & ASSOCIATES, LTD.

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

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

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

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

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

  20. 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.

  21. 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) D. GROSSER & ASSOCIATES, LTD.

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

  23. Ceramic Tile Contractors and Dealers in the U.S. Number in 2008 Number in 2010 - 22.6% Source: D.Grosser & Associates, Ltd. 22 D. GROSSER & ASSOCIATES, LTD.

  24. Ceramic Tile Distributors in the U.S. Number in 2008 1,713 Number in 2010 -19.3% Source: D.Grosser & Associates, Ltd. 23 D. GROSSER & ASSOCIATES, LTD.

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

  26. Tile Contractors and Dealers in 2008 and 2010 Source: D.Grosser & Associates, Ltd. 25 D. GROSSER & ASSOCIATES, LTD.

  27. Ceramic Tile Distributors in the U.S. 2008 and 2010 Source: D.Grosser & Associates, Ltd. 26 D. GROSSER & ASSOCIATES, LTD.

  28. Home Centers in the U.S. Source: D.Grosser & Associates, Ltd. 27 D. GROSSER & ASSOCIATES, LTD.

  29. Home Centers, Retailers and Distributors Source: D.Grosser & Associates, Ltd. 28 D. GROSSER & ASSOCIATES, LTD.

  30. Carpet & Rug Retailers and Distributors Source: D.Grosser & Associates, Ltd. 29 D. GROSSER & ASSOCIATES, LTD.

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

  32. Ceramic Tiles Distribution in 2010 31 Source: D.Grosser & Associates, Ltd. 31 D. GROSSER & ASSOCIATES, LTD.

  33. 11 Broadway New York, NY 10004 (212)661-0435 d@grosserconsulting.com D. GROSSER & ASSOCIATES, LTD.

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