Opinion of:

Luigi Di Geso

President and CEO, Mapei North America

From Realtà Mapei International n° 76 - 08/10/2019

United States, full steam ahead for Mapei

The American economy (and the construction sector) will continue to grow in 2019, maintaining Mapei’s positive trend.

A solid pace of growth marked the fourth quarter of 2018 for both the U.S. economy and Mapei Corporation. For Q1 2019, the American GDP experienced a strong 3.2% growth; however, consensus predictions for overall growth for 2019 remain at a more conservative 2.6%.1

The Congressional Budget Office is predicting 2.4% growth for 2019 as are members of the Federal Reserve Board2, while Kiplinger’s predicts 2.6% growth bolstered in part by a strong second quarter.3 And while the predictions seem “safe,” it is important to remember that they are still higher than they were at this point last year. There is no denying the fact that the economy continues to grow at a constant pace.

The U.S. construction industry is also expected to continue growing at a steady pace. In April, the U.S. Bureau of Labor Statistics (BLS) announced that the construction industry’s unemployment rate was down to 4.7% from 6.4% in January.4  According to the BLS, in April, construction employment rose by 33,000, with gains in nonresidential specialty trade contractors (+22,000) as well as in heavy and civil engineering construction (+10,000). The construction sector has added an estimated 256,000 jobs from April 2018 to April 2019. Combined with the fact that total U.S. unemployment is at 3.6% after the first quarter’s figures have been reported,5 the predictions for robust economic growth seem very realistic.

Dodge Data and Analytics predicts total U.S. construction starts for 2019 will be 808 billion US dollars, which is essentially even with the 807 billion US dollars that was estimated for 2018.6 Although Dodge is predicting minor retreats in commercial and utility building7, all other sectors of the construction economy are predicted to make gains. This is backed by other industry experts, including Associated Builders & Contractors and ConstructConnect. Mapei Corporation has the reach and products to support this increased demand.

STEADY GROWTH

Mapei Corporation’s growth has remained steady in the first quarter, continuing our growth from 2018. We finished 2018 with an 8% increase in overall sales revenues from the previous year. This positive sales trend is driven by organic growth in sales coupled with an increase in year-over-year (YOY) pricing. It was also helped by the fact that we saw strong performances in our Retail and Wholesale sales channels, which increased 15% and 7%, respectively, from 2017.

The ceramic tile products channel grew 11% and is up 5% over budget. Moreover, Mapei Corporation recently became the sole provider of tile installation materials to one of our major North American retailers. This is a great feat and something that we have been working on for many years. It has helped to increase our retail sales numbers. We are also in first position with the majority of our distributors coast-to-coast. Additionally, the impact of the Tax Cuts and Jobs Act of 2017 resulted in 1.3 million US dollars in tax expense savings. 

Mapei Corporation also expanded in terms of production capabilities. The past months have been a period of growth in which we have opened or expanded the following facilities to ensure that we remain ahead of the technology curve, as well as meeting increased production demands.

 

  • Calhoun, Georgia: currently a warehouse, this facility should open for resilient product production sometime in 2020.
  • Garland, Texas: a third line (powder production) will be up and running in the second half of 2019.
  • Fredericksburg, Virginia: This location’s 9,000-square-meter expansion will be completed by the end of 2019.
  • San Bernardino, California: A busy location, this West Coast facility has recently added one new powder production line.
  • Swedesboro, New Jersey: This location recently opened a new cutting-edge Center of Excellence research and testing lab for Mapei Corp. and Mapei/GRT, as well as one new powder production line.
  • West Chicago, Illinois: This facility has added two new powder production lines and three new packaging machines in order to meet accelerated demands.
  • Wildwood, Florida: This new location recently opened for distribution and warehousing and is slated for production by mid-2020.

 

Strategically located across the United States, these new and expanded locations allow Mapei Corporation to better serve our customers in a timely manner. Further growth is planned for other locations in the near future.

We also have introduced several new products over the course of the past eight months. Our Concrete Restoration Systems (CRS) division introduced ELASTOCOLOR TEXTURE, ELASTOCOLOR PRIMER AR, PLANISEAL CR1, PLANILEVEL 360, PLANILEVEL 420, PLANILEVEL 450, PLANILEVEL 500 and PLANILEVEL 560 at the World of Concrete tradeshow.

Our Tile & Stone Installation Systems and Floor Covering Installation Systems divisions introduced new products at The International Surface Event (TISE) including MAPECONTACT MRT and MAPECONTACT SRT, MAPESONIC RM, PLANISLOPE RS, POLYPLAN RSL, ULTRABOND ECO 811 and ULTRABOND ECO 977.

We were awarded “Best of Technology” for our ULTRACARE CEMENT GROUT HAZE REMOVER as part of the "Best of TISE Event" awards during TISE.

This industry recognition and continued success, including the success of award-winning products such as ULTRACARE CEMENT GROUT HAZE REMOVER, is attributed to the hard work of our various departments. Our product offerings are strong, and our technical innovations are unmatched thanks to the efforts of our Research & Development Department.  The development of new products and the improvement of existing products are handled so beautifully by that skilled team.

Any technical questions and the training that accompanies these new products are flawlessly handled by our Technical Services Department. Together, R&D and Tech Services ensure that we remain on the cutting edge of the industry.

Our Mapei North American Operations Department maintains the facilities to create those cutting-edge products. As discussed, we are in the midst of expansion at multiple facilities, and that would not be possible without the guidance and strategic planning of our operations team. The Operations Department also ensures that we are in compliance with ISO standards.

We are making large strides in our Sales and Architectural Groups, who are delivering strong performances  – both in terms of quality (increased sales) and quantity (growing the teams themselves). Our teams are reaching the end users, developing new relationships and continuing to foster existing ones. From the specification to the final walk-through, our Sales and Architectural teams are working hard to let our customers know that Mapei Corporation truly provides system solutions.

Our Marketing Department plays a strong role in this outreach as well, providing solid social engagement online and in our community. The variety of initiatives in which Mapei Corporation is involved ranges from donating to local charities and educational funds, to working with the Gary Sinise Foundation’s R.I.S.E. program to build smart houses for wounded veterans.

Mapei Corporation doesn’t just supply building materials, we also help build our communities. All these efforts combine to make Mapei the No. 1 desired brand in America.

This is why we are very optimistic about 2019. The American economy is stable, and Mapei Corporation is growing at a steady rate. As the new production lines begin to come online and the new products begin to be introduced to the market, we anticipate bigger growth in the coming quarters. We are positioned to drive sales and product to better reach and support our clients.

2019 has every indication of capitalizing on and improving the record growth we established in 2018. We are forecasting an incredible 12% growth for 2019.

 

1 https://www.kiplinger.com/article/business/T019-C000-S010-gdp-growth-rate-and-forecast.html

2 https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20190320.htm

3 https://www.kiplinger.com/article/business/T019-C000-S010-gdp-growth-rate-and-forecast.html

4 https://www.bls.gov/iag/tgs/iag23.htm

5 https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.construction.com/news/new-construction-starts-2019-steady-with-2018-dodge-data-analytics-oct-2018

https://www.constructconnect.com/blog/industry-snapshot/a-second-month-of-construction-starts-weakness-early-in-2019/

 

 

Fiscal Reform

The “Tax Cuts and Jobs Act” that the President of the United States, Donald Trump, wanted to introduce to boost the (already notable) growth rate of the American economy, create jobs, and encourage businesses that had transferred their investment elsewhere to return to the United States, was officially implemented on 22nd December 2017.


This is the most drastic fiscal measure in the United States for the last 30 years. It involved tax cuts of approximately 1500 billion US dollars.


One of the key points of this fiscal reform is the permanent reduction of corporate income tax.  As of 1st January 2018, corporate income tax was reduced to 21% compared to the figure of 35% set by the previous reform.


Fiscal reform is also intended to encourage investment in the United States: it allows immediate expensing (in the year of purchase) of investment in plants and machinery purchased and brought into operation from 27th September 2017 to 31st December 2022.

The figures of Mapei Corporation

   

+8%

increase in Mapei Corp.'s turnover in 2018


+12%

forecast increase in Mapei Corp.'s sales for 2019

 


+11%

increase in sales of products for the ceramic sector in USA

 
              .
 

566

million dollars 
Mapei Corp.'s turnover in 2018

 
   

13

 

Mapei Corp.'s manufacturing units in the USA (and further 2 to become operative in 2020)

   

4

 

Research & Development Centers

 
 

 

 
 
   

Realtà Mapei Tags: #theworldofmapei #infoclips #insights

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