ISFA Publishes 2017 Countertop Industry Outlook

In the first quarter of every year, the International Surface Fabricators Association (ISFA) publishes the annual Countertop Industry Outlook in its members’ magazine Countertops & Architectural Surfaces. ISFA Communications Director Kevin Cole conducts extensive research and analyzes a variety of statistics to predict the likely outlook for the countertop industry in the coming year and beyond, providing valuable data and indicators for fabricators and associated industry segments.

General Economic Factors

1One of the leading sets of statistics used in the 2017 Countertop Industry Outlook deals with the general economy, which determines the overall economic conditions that may lead to the construction of new homes and businesses and remodels for existing structures that require countertops.

The U.S. Congressional Budget Office reports that the gross domestic product (GDP) in 2016 increased by 1.6 percent, but this is a slight drop from the previous year when growth averaged 2 percent. However, economists believe the GDP will grow at 2.1 percent this year before falling back to 1.9 percent in 2018.

Another general economic factor to consider is unemployment. However, not all sources agree as to what to expect in 2017. The Federal Reserve believes unemployment will drop from 4.8 percent to 4.5 percent while a leading research firm, Trading Economics, says it will remain steady at 4.8 percent throughout the year.

The heated elections in 2016 cast a strong shadow of uncertainty on the construction industry, but according to Construction Outlook by construction consulting firm FMI, industry sentiment ranges from “cautiously optimistic” to “bullish.”

“Favorable general economic conditions, a high level of consumer confidence and the potential for tax reform and increased federal spending all promise to keep the industry on track for yet another productive year,” said Chris Daum, CEO of FMI.

Housing and Nonresidential Construction

Because the surfacing industry is closely related to the housing market, it only makes sense to look at overall growth in the previous year. As a whole, the housing market is far below its peak level in 2006, but it still managed to grow by 6 percent in 2016. However, while single-family home starts increased by 9 percent, multi-family starts fell by 1.2 percent. The regions that are dominating this trend are the South and West U.S.

It also looks like growth will remain positive for nonresidential construction, but it will fall short when compared to 2016. According to FMI, a few points to consider are as follows:

  • All segments of nonresidential construction, with the exception of healthcare, have increased for the past five years.
  • Lodging growth fell from 19 percent to 9 percent.
  • Office construction is expected to drop from 21 percent to 8 percent.
  • Internet sales shared online workspaces are causing commercial construction to fall from 21 percent to 8 percent.
  • Changes in healthcare policy will continue to hold back this segment.
  • Education construction will focus on green building, but less funding combined with increased enrollment will lead to additions and renovations rather than new buildings.

“Commercial construction activity is expected to increase in excess of 8 percent this year, which is slightly above the projection from mid-2016,” states the Consensus Construction Forecast from the American Institute of Architects (AIA).

Home Remodels

Leading economists also predict continued growth for remodels and home 2improvements, but once again, the specific amount of growth is a point of contention. The American Society of Interior Designers (ASID) states that an undersupply of homes for sale and increasing household income will elevate the renovation, remodeling and repair segments to their highest levels since the recession.

Another source, the Houzz State of the Industry Study, predicts that residential renovations will rise by 8.5 percent even though pre-recession levels were passed in 2016 while the Joint Center for Housing Studies at Harvard University predicts home improvement spending to increase at a rate of 6.8 percent in 2017.

Kitchen Cabinets and Countertops

According to statistics in the Trend of Business Survey from the Kitchen Cabinet Manufacturers Association (KCMA), the outlook for kitchen cabinetry has slowed, but the industry remains optimistic.

3In 2016, growth slowed significantly over the previous year after five years of much higher rates. Lower-end stock cabinets fell from 12.3 percent to 4 percent, and fully custom cabinets fell from 13.6 percent to 1.3 percent. However, mid-priced semi-custom cabinets rose from 4.2 percent to 5.9 percent. Interestingly, it is this category that includes the vast majority of sustainably produced cabinets.

The outlook for countertops is spearheaded by the most recent “Countertops” study from The Freedonia Group, which makes market predictions extending out to 2024. According to this report, the demand for countertops as a whole will increase by 4.2 percent, an improvement of nearly 2 percent higher than the average growth between 2009 and 2014. The study also names the top five suppliers for the U.S. market in terms of square feet sold: Wilsonart, Formica, Panolam, DuPont and Cosentino.

Demand for countertops in the U.S. is expected to grow by 4.2 percent each year through 2019 when the market will hit 810 million square feet and $29.3 billion. By comparison, the growth rate for countertops only averaged 2.3 percent from 2009 to 2014.

When it comes to countertop materials, natural stone, laminate and solid surface all surrendered market share in 2015 to engineered stone, commonly known as quartz. Other materials, however, are holding steady with a 12.4 percent share. Other materials, which include concrete, metals and recycled materials, are also predicted to grow at a much higher rate from 2014 to 2019 than the named categories, listed here in order of market share:

  • Laminates – 3.4 percent
  • Natural stone – 5.3 percent
  • Solid surface – 4.3 percent
  • Engineered stone – 5.8 percent
  • Cast polymers – 3.6 percent
  • Tile – 2.6 percent
  • Other – 10.1 percent

A different picture is painted, however, when you take a look at the countertop market in terms of dollars. A study conducted by Catalina Research titled “2015 Natural and Manufactured Stone Product Industry Report” states that natural stone topped the market with a 43 percent share with laminates a distant second at only 18 percent. Quartz is listed a close third at 16 percent, and Solid Surface falls dead last at 10.3 percent.

ISFA predicts, all in all, that 2017 will be a “fair year for market but with less robust growth than 2016.”

Read the full 2017 Countertop Industry Outlook online.