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ISFA Publishes 2018 Countertop Industry Outlook

Posted on 15 March 2018 by cradmin

This month, the International Surface Fabricators Association (ISFA) published its annual Countertop Industry Outlook. This forecast is prepared each year by Kevin Cole, the communications director for ISFA and editor of the association’s magazine: Countertops & Architectural Surfaces.

As always, Cole analyzes a variety of metrics to make an honest, and usually on-point, prediction about what the year holds in store for the countertop industry, starting with economy and working more specifically to factors that directly impact fabricators.

General Economy

In 2017, the general economy had moved in a positive direction with a 2.3 percent increase in real gross domestic product (GDP), which is up from 1.6 percent in 2016. GDP is expected to continue to rise in 2018.

“Broadly speaking, the prospects for continued economic expansion in 2018 look reasonably bright,” said William Dudley, president and CEO of the Federal Reserve Bank of New York. “The economy is likely to continue to grow at an above-trend pace, which should lead to a tighter labor market and faster wage growth.”

As far as the general construction industry, which is measured by FMI, a major construction consulting firm, the outlook remains positive.

“CEOs are generally positive and upbeat about growth right now, but there’s an undercurrent about when the cycle might correct itself since this run has lasted so long,” said Scott Winstead, president of FMI. “The 2009 downturn still rings loudly in executives’ minds, so they’re looking at how to pro-actively address business challenges while the market is still strong.”

Housing

The countertop industry is very closely tied to the housing market, which showed growth in 2017 but not as much as it had in the past six years. In addition, all of the growth was in single-family homes while multifamily dwellings dropped for the second year.

In 2017, housing starts grew by 2.5 percent compared to 6 percent the previous year. Multifamily housing dropped by nearly 10 percent, substantially more than the 1.2 percent decrease in 2016. Single-family homes, however, grew by 8 percent last year, down from 9 percent in 2016.

Looking into 2018, the National Association of Home Builders (NAHB) predicts housing starts will grow by 3.4 percent by the end of the year, then slow to about 3 percent in 2019.

Nonresidential Construction

Growth slowed significantly in the nonresidential construction market in 2017 compared to 2016. Lodging increased by only 7.5 percent from 22.9 percent the previous year. Office space fell from 21.2 percent to 4.9 percent growth. Educational construction growth dropped to 0.8 percent from 5.5 percent, but educational construction grew by 1.9 percent after a 1.1 percent decrease in 2016.

FMI predicts that 2018 will be up in nonresidential construction across the board. The group forecasts that growth will improve for office construction the most, followed by commercial, lodging and healthcare.

Remodeling/Home Improvement

The remodeling/home improvement sector is also showing continued growth. According to the American Society of Interior Designers (ASID), the interior design industry will grow, but at a slower pace than originally predicted.

“The overall outlook for the profession remains positive and similar to the pace of the U.S. economy,” states ASID’s forecast. “The likely result is that [home improvement] will advance at a reasonable, though not spectacular, rate in 2018 and 2019.

The Joint Center for Housing Studies at Harvard University is more optimistic, however. According to Harvard’s Leading Indicator of Remodeling Activity (LIRA), the remodeling sector grew by 6.5 percent in 2017, which should rise from 6.9 percent to 7.5 percent in 2018.

Kitchen Cabinets

Cabinet sales continued to grow in 2017, but the increase has dropped for four straight years. As per the Kitchen Cabinet Manufacturers Association (KCMA) sales growth slowed from 4.5 percent in 2016 to 2.9 percent in 2017.

Countertops

Once again, the countertop market has been directly analyzed by the Freedonia Group, which is now part of MarketResearch.com. According to a 2017 Global Countertops Market report and a 2015 Countertops report, quartz remains the fastest growing countertop material, and the five largest material suppliers are Wilsonart, Formica, Panolam, DuPont and Cosentino.

U.S. demand for countertops is expected to increase 4.2 percent per year to a total of 810 million sq. ft. in 2019.

“Growth will be propelled by a rebound in new building construction activity as well as increased spending on improvement and repair of existing structures,” stated the report. “Value gains will also receive a boost due to a shift in the product mix from laminates to higher priced alternative materials.”

Laminate still receives the largest market share among the various countertop materials, but that share will continue to fall even though use is expected to grow by 3.4 percent through 2019.

“Laminates will maintain a significant share of the countertop market and account for over one-third of sales through 2019,” states the report. “These materials remain popular… due to their favorable performance characteristics at reasonable price points. Product developments providing a more stone-like appearance, such as high-definition graphics and complex edges, will also help to limit the decline in market share.”

Granite sales are also expected to increase, but high-end homes and businesses are moving toward other types of surfaces, such as engineered stone, metals, concrete and recycled materials.

Solid Surface will hold steady in third place with growth ranging from 3.1 to 4.3 percent in 2019 while engineered stone, in the fourth spot, will increase by 5.8 percent.

In fifth place is “cast polymer” countertops with growth predicted to increase from 2.3 percent to 3.6 percent through 2019. Tile holds the sixth spot, its use in countertops should increase over the next couple of years.

Finally, a significant increase is expected in the “other materials” category, which is slated at 10.1 percent per year through 2019.

Overall Outlook

According to ISFA, “the data paints a somewhat conflicting picture with a bit of potential volatility. However, overall, when looking at the data in terms of the general economy down through more specific and related markets, it seems like a safe summation to say that 2018 will be another year of growth for the countertop/surfacing industry, but perhaps slower growth than that of the past several years.”

To download a PDF of the full outlook, click here. For more features like this, subscribe to ISFA’s magazine: Countertops & Architectural Surfaces.

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ISFA Publishes 2017 Countertop Industry Outlook

Posted on 07 March 2017 by cradmin

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.

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ISFA Industry Outlook Predicts Growth in 2016

Posted on 26 April 2016 by cradmin

ISFA Outlook article grabThe International Surface Fabricators Association (ISFA) published its annual Countertop Industry Outlook for 2016 in its magazine Countertops & Architectural Surfaces. The ISFA forecast is the only one of its kind in a print publication (although it can also be read online), taking into consideration that it is not specific to a single type of countertop material. The forecast is researched and written each year by the editor of the magazine, ISFA Communications Director Kevin Cole, who predicts fabricators and others involved in the countertop industry are “poised for another year of growth.”

This is expected to be the fourth consecutive year of growth in the countertop industry since the economy recovered from the recession that began to hit hard in 2008. According to the 2013 industry forecast, the economy was still a bit sluggish but was beginning to look up, and since that time, most industries and the economy in general has improved.

Because there are very few sources available that specifically focus on countertops, the ISFA Industry Outlook is based on data that supports countertop demand, which begins with the general economy and then looks more closely at allied areas, such as U.S. housing starts data, nonresidential building construction, home improvement product sales, remodeling predictions, cabinet sales and others. If you are not a member of ISFA or are not otherwise receiving their quarterly publication, we strongly suggest you subscribe online. Subscriptions are free to qualified individuals and organizations in the United States, at least at the current time.

ISFA’s industry forecast has been anchored for the last four years by the Countertops study conducted by The Freedonia Group. The latest report is 389 pages in length and forecasts the state of the countertop market through 2024. According to this report, demand for countertops is expected to increase by 4.2 percent annually through 2019, which values the industry at about $29.3 billion.

The Freedonia Group also expects the share of laminate countertops will fall in terms of square footage in comparison to other materials, yet continue to account for more than one-third of the market through 2019, and demand will rise by 3.4 percent per year through 2019.

Natural stone is predicted to make the largest gains as low-cost imports enter the market and prices continue to drop. However, the forecast for total annual sales by square footage has dropped from 5.9 percent to 5.3 percent for the next few years.

Also according to the report, solid surface will hold steady as the third most-popular countertop material in terms of square feet after natural stone with demand predicted to rise by 1.2 percent, and engineered stone holds the fourth spot and is expected to grow by 5.8 percent. The fifth spot is occupied by the generic cast polymers category, and it is expected to increase by 1.3 percent.

Tile follows cast polymers in expected popularity, and the segment is expected to increase each year over the next several years. Finally, the forecast shows the Other Materials category, which includes concrete, metal recycled materials and pretty much everything else will increase by 10.1 percent through 2019.

This year, the 238-page “2015 Natural and Manufactured Stone Product Industry Report” published by Catalina Research in December 2015 complements the Freedonia report. According to Catalina Research, natural stone ruled the countertop market in terms of dollars (versus square feet, which is what Freedonia uses as a gauge, with 43 percent of the share in 2015 while laminate was at 18 percent and engineered stone at about 16 percent.

When it comes to residential construction, housing starts have increased by 10 percent at an estimated 1.1 million after breaking the million-unit mark in 2014, and starts for multifamily dwellings have increased by 15 percent since 2006. However, starts for single-family homes are less than half they were at the peak of the housing boom.

Another resource used for the ISFA forecast is the latest Construction Outlook from FMI, a leading investment banking and consultancy firm for the construction industry. Highlights of this edition, which focuses on non-residential construction, are as follows:

  • Four out of five non-residential construction categories have grown for five years straight.
  • Growth in lodging is centered on upscale properties, and green construction is becoming more common.
  • Office construction has increased by 19 percent from 2014 to 2015.
  • Food service and beverage establishments are the fastest growing segment in commercial construction.
  • Construction of healthcare facilities continues to remain in flux with most work going toward renovations and additions.
  • Increased attention to green building technologies will be apparent in the academic sector.

All in all, the 2016 ISFA Countertop Forecast provides a pretty in-depth and solid reasoning with substantial evidence for its positive outlook for the industry.

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