Interceramic Adjusting To Industry Changes

Dallas, TX, Oct. 13--Increased competition and declining prices are bombarding traditional players in the fast-growing U.S. ceramic floor tile industry, spurring Garland-based tile maker Interceramic to overhaul some of its business, according to the Dallas Business Journal. Two other tile manufacturers with their headquarters in the Metroplex, Dal-Tile and Marazzi, are also responding to the highly competitive tile market. Tile is the fastest-growing floor segment in the U.S. Interceramic is modernizing its product line, tripling the number of products it launches annually, importing tile from other manufacturers and revamping its tile selection and packaging system. Changes also include expanding its wholesale distribution facilities and possibly adding a new plant in Chihuahua, Mexico, the base for its parent company, Internacional de Ceramica S.A. de C.V. "It's been a tough year," said Victor Almeida Garcîa, vice chairman, president and CEO of the company, but because of the changes, he's hopeful things are looking up. "It takes a lot of effort, expense and time to renovate the product showroom," Almeida said. "But it really opens the door for 2004 and 2005 to a much more complete and modernized product line. We think it's a nice base to grow from." Interceramic, whose market includes Mexico and North America, posted sales of $294 million in 2002, a decline of 4% from 2001. The company for 2003 expects to see 5% growth in its overall revenue and 10% growth in unit sales, Almeida said. The company, which today employs 3,100, including 474 in the Metroplex, reduced its labor force over the past four years by 1,000 employees, mostly in Mexico. The company sells 300 million square feet of tile annually and has 19 distribution centers. A 20th will open soon in San Diego and other sites are being targeted. And instead of launching only five new product lines a year, Interceramic will launch 15. Because Interceramic's own plants are already operating at 100% capacity, much of the increased product will come from imports. Competitors in places like Europe, Africa and the Middle East are now encroaching on the U.S. market. That has sent prices down from $1.10 a square foot in previous years to an average of 80 cents a square foot now, said Almeida. "We have to be much more innovative with the product, really competitive with prices and offer excellent service," he said. "We've grown, and we're making more tile, but we've been able to cut costs 25%. That's helped us stay competitive." Italian-based Marazzi Group, which has its U.S. headquarters in Sunnyvale, just east of Dallas, has always relied on innovative technology to stay ahead of the curve, and is upgrading its local plant. The 20-year-old American Marazzi Tile, which employs 390 people, produces more than 100 million square feet of tile a year. The company's $5 million expansion will facilitate greater efficiency and the production of increasingly popular larger-format tile, said Filippo Marazzi, president of the Marazzi Group, in an e-mail from Italy. Dallas-based Dal-Tile International, with nearly $890 million in sales in 2002, is the market share leader in the U.S., followed by Interceramic. Dal-Tile also feels the competition, said Matthew Kahny, vice president of marketing. "There's a lot of pressure from imports," said Kahny. To meet the challenge, Dal-Tile, which employs about 1,100 in the Metroplex, formed a joint venture with Italian manufacturer Emil Ceramica and invested $58 million in a new manufacturing plant in Muskogee, OK. The plant opened two months ago and combines Italian style, design and technology with the competitive advantage of reduced lead-times through domestic distribution.

Related Topics: CERAMICS OF ITALY, Mohawk Industries, Daltile, Marazzi USA