Growing global floor coverings selling opportunities: A Catalina Research Report

Major U.S. floor coverings manufacturers are looking to global markets for future growth despite the recovery of U.S floor coverings sales. U.S. and foreign-based manufacturers are competing for the more than 200 billion square feet of flooring sold worldwide, according to Catalina Research, Inc. This is up from 156 billion square feet in 2006. Global demand increased at a 5.2 percent compound annual rate over this period. Demand is estimated to be increasing at even sharper rates during 2013.

The strongest gains have been in Asia-Pacific markets led by gains in the Chinese market. The Chinese floor coverings market surged since 2009 as government actions to stimulate the economy led to soaring rates of nonresidential and residential construction. The gains in world market sales were sharpest for ceramic tile and stone flooring since these products are heavily used in China and other developing countries. Conversely, U.S. sales have lost ground. In 2012, U.S. sales are estimated to have accounted for only 9 percent of total world demand. This is down from 17.1 percent in 2006.

As non-U.S. markets increased in importance, leading U.S. manufacturers increased their reliance on global markets. Mohawk has made a number of strategic acquisitions to increase its reliance on world markets including the purchase of Dal-Tile, with a significant manufacturing presence in Mexico, and European-based Unilin. As a result, Mohawk sales outside of North America accounted for 17.1 percent of total company sales in 2012. This is up from 14.6 percent of total company sales in 2007. This figure could increase further in 2013 due to their purchase of Pergo and Marazzi Group earlier in the year. In fact, these acquisitions have made Mohawk the world’s leading manufacturer of ceramic tile and laminate flooring.

Interface is another company that relies heavily on foreign market sales with some 55 percent of total sales outside the United States. Interface supplies carpet tile from seven plants located in Europe, Asia, and Australia. Armstrong makes some 20 percent of its total flooring sales outside North America, primarily resilient flooring sales in Europe.

Shaw and Mannington have expanded their foreign-based manufacturing capacity in order to take advantage of growing foreign market selling opportunities. Shaw built a carpet tile plant in Nantong, China near Shanghai.  The plant supplies Chinese and other Asian markets such as Hong Kong and Singapore where Shaw has recently opened sales offices. Mannington extended its global reach in the high-end LVT market with the March 2012 acquisition of Coventry, England-based Amtico International. Amtico has manufacturing facilities in Atlanta and the United Kingdom.

Based on these trends, do not be surprised if there are additional cross-border acquisitions or capacity expansions by the world’s leading manufacturers in order to increase their share of growing global floor coverings demand.

At the same time, Tarkett, a European-based company, increased its reliance on the North American market with the 2012 purchase of Tandus, a U.S.-based manufacturer of commercial carpet and resilient flooring.

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