The Bright Future For Tile Floor Covering in America

1. The Bright Future For Tile Floor Covering in America Presented by: Dr. Jay Lehr

2. Business Is Always Difficult Of the top 26 companies in the year 1900 only two remained in 1960 Of the 25 top companies in 1961 only six remain at the top

3. Thomas Watson, Jr., Founder of IBM: “Believe that if an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except its beliefs.”

4. Forget the fashionable chatter that America is on the way down We will be stronger in this century than we were in the last China will not upstage us or even bury Asia

5. Europe is in decline The Moslem world is in disarray though clearly our biggest threat Liberal Capitalist Democracy Remains the Wave of the Future

6. Technology and youthful innovation is our strength. Our entrepreneurial spirit which defines us will keep us on top. You know this as the very best men and women in the tile floor covering industry are in this room, because you care enough to still get better.

7. Your three associations are the three legs of a stool that does not stand without all of you together, just as the world is a globalized market place with many factions doing what they do best, and trading skills and assets for each to gain. No on individual or even a country can make a simple pencil.

8. We are on a journey where soon there will be no newspapers, books, checks, computer storage, post offices, land line phones, or TV’s as we know it, and of course privacy. Sadly political aristocracy, government unions, and socialist public schools will remain.

9. Simple Future Trends to Predict Include: • Population Growth • Middle Class Growth • Europe’s Reduced Role • Globalization • China • Declining US Infrastructure • Electricity Production in 20 to 50 years • Feeding the World

10. Your industry’s biggest challenge as with most industries is the global economy depressed by lack of business and consumer confidence. Evidence for this is that normally there is $4 trillion in cash floating in the economy. TODAY THERE IS $8 TRILLION.

11. The U.S. is the “BEST OF THE WORST,” as Greece, Spain, Italy, and Portugal are virtual basket-cases, and China banks are in disarray with 400 million people beginning to face-off against the other 900 million.

12. The government must wake up to the fact that small business accounts for most new jobs, and thus bank credit, must being to loosen soon.

13. Your Industry Lost Nearly 50% of Itself Since 2008 This chart shows U.S. shipments, imports, and total consumption of ceramic tile for the last 15 years

14. Is survival of the fittest really a bad thing when you can eliminate your weakest employees and eliminate unnecessary expenses?

15. Perhaps your industry had 5,000 installers, 500 distributors, and 50 manufacturers. Now it has perhaps 3,00,300 and 30 of each. I believe the real problem with your industry is the lack of confidence to kick it to the next level.

16. We need to convince our bankers of the importance of our projects to the local economy. The dollars is weak and will stay that way as long as the government wishes it to be so.

17. My survey of your industry indicates cautions optimism for the next two quarters but not approaching past time. Most of you as well as the international builders association think this year is on the upswing.

18. Small business is the engine of growth, but this administration appears more committed to the Wall Street and Crony Capitalism. Can we afford four more years of it? Yet the entrepreneurial spirit is so strong that in a major survey 73% of small business leaders say they would do it ALL OVER AGAIN!

19. Regulations from EPA, OSHA, Energy, and Interior are strangling American business. We all need to decide if we want free enterprise or a government controlled economy, and work to gain our choice.

20. Most Small Businesses Desire To: • Reduce Taxes • Reduce Unnecessary Regulation • Lower Heath Care Costs • Increasing Credit for Small Business • Reduce the Power of Government-Supported Unions

21. We must return to these words Calvin Coolidge spoke on the lawn of the White House is 1924: “I want the people of American to be able to work less for the Government and more for themselves.”

22. Let’s Get Down To Business: Your industry must battle for more square footage of America’s floors Take advantage of America’s chemophobia Radiant heat is the wave of the future but not under carpet. Get with heating contractors and promote it. Perhaps your associations can make alliances with those folks. Good News for Manufacturers: Lower Cost Natural Gas for Kilns

23. The Upside is Incredible • Spain covers 36% of its floors with tile • Brazil 36%, Italy 265, China 24%, Canada 11% • We are not there but should, and will be Let’s talk about how to get there.

24. You Are An Amazingly Sophisticated Industry Today Perhaps More Knowledge Than Skill: • You have a 296 page standards manual • How many of you own it? • How many of your members own it? IT NEEDS AGGRESSIVE PROMOTION

25. Decades ago your industry decided to call highly-compacted clay yielding strong non-absorptive tile “Porcelain.” That was likely a mistake as it conjures up fragile dolls and China dishes. It needs to be scratched with keys and rocked on a pencil. It is cheaper to transport, easier to cut, simpler to fasten, and the price differential is declining.

26. Reflective glass and metallic tile should be widely promoted in a less robust economy where small improvements can bring great joy.

27. Big Box stores try to commoditize tile. The industry must battle to explain why quality, beauty, art, and longevity do not come from a Big Box store. The Big Box buyer self-installs or hires a cheap installer, and tile takes the blame when it is less than fabulous.

28. This Chart Shows How Cheaper Mexican and Chinese Tile Has Gained Ground Through This Period The percent share of U.S. imports for the top five countries over the past five years

29. Installation costs are so high that the industry needs to continue researching less costly, but equally effective methods, while remembering durability ultimately makes tile less expensive than all other floors in life cycle costs.

30. The public does not understand that installation costs are generally equal to tile material costs. While with other coverings the installation is small enough that distributors often fold it into profit margins and thus offer installation free.

31. Certification of installers is critical to the public’s understanding of the importance of this aspect of your business. The program is new and needs rapid expansion to create a critical mass where all buyers and architects will have the choice across the country.

32. Certification should be continually upgraded to make it viable and appreciated. Distributors should make warranties subject to certified installations.

33. Tile Covering’s biggest problem is the home owner with a short-term attitude and a low-cost view point. We must focus on low maintenance, odor-proof, scratch-resistance, and a “work of art.” We must promote the increased sale value of every tiled house.

34. We must focus not on tile competitors, but on increasing the size of our pie by kicking the butts of carpet installation. Life cycle costs of tile beat all other options a number of years after installation.

35. We Need a Slogan Like “THE INCREDIBLE EDIBLE EGG” Perhaps: • “Tile, It’s For Life” • “Ceramic Tile: Art Beneath Your Feet” • “Built Tough: Tile” • “Tile: Value Beauty, Longevity” • “Tile: Tough, Clean, Durable.” • “Tile: The Masterpiece Beneath Your Feet” Nothing Is Off Limits in the Creative Process!

36. The goal for us all is to increase the ridiculously low percentage of tile floor covering in America!

37. Distributors need to be more active in their show rooms to impede people from leaving and ordering on line. Your expertise makes it worth while for your customers. Do NOT leave this to an under-paid hourly sales person.

38. We need to harness the social network with videos of great tile and great tile installation.

39. Installation bids should include every detail of the installation to insure the customer understands all that is involved. I.E. Supplies, Backing, Underlayment, Fasteners, Adhesives, Layout, Assembly, Hauling, and Disposal of Waste.

40. With consumer confidence low and unemployment high, remodeling will likely exceed new construction for a while, but tile is the way to brighten any home for a long time.

41. Bring tile back from the commodity of the Big Box stores to a luxury that most can afford. Another Slogan: “Tile: Always Luxurious”

42. The trend now is to stay in a home for 7 years, instead of the previous 5, making tile competitive with less or cheaper floor coverings. Last year found the lowest mobility in home changing since records were kept 50 years ago.

43. Battle the idea that tile is cold, particularly if it is above another floor. My bedroom tile is not cold, and I walk on it to the bathroom every night and it’s never been cold.

44. Most distributors carry a range of coverings and do not push tile enough due to initial cost and low margins, which is a disservice to their customers. They need to explain all that is involved in tile and promote certified installers.

45. Tile use increased for 11 straight years prior to 2008. The industry can get back to that level with appropriate enthusiasm. When The Going Gets Tough, The Tough Get Going!

46. The industry needs a major outreach program for architects and home remodelers. They need a fabulous color brochure to pass out explaining why tile is the best option, and promoting installer certification.

47. How many of you have a business card with beautiful, color tile as a background or corner illustration? YOU ALL SHOULD.

48. You are Selling Yourselves Short. You have the World’s best floor covering in beauty, maintenance, wearability, and even long term prive, but you are being impeded by poor quality, short-sighted competition. In doing so, you are selling the public short. You have the best product in the world, and the economy will improve. Hopefully the Government will improve and you will be ready to kick butt.