b'INDUSTRIAL TARIFFS (continued) Commission (ITC) also determines that imports of ceramicsituation, but no direct business relationships with Chinese tilefromChinamateriallyinjures,orthreatensmaterialfactories. We have not adjusted our current selling strat-injuryto,thedomesticindustry,Commercewillissueaegy, though we have made decisions to discontinue a few countervailing duty (CVD) order. If either Commerces orlines that we know are sourced from China, Hays said. theITCsfinaldeterminationisnegative,noCVDorderThis has really been a combination of sales history and will be issued. The ITC is scheduled to make its final injuryalso price increases due to the tariffs increases.determinationapproximately45daysafterCommerceAtArleyWholesale,Inc.,Scranton,Pa.,ScottLevy, issues its final determination, if affirmative.President,explainedthat,Our What does this mean for the tile industry? In a word,suppliershavebeenshiftingpro-upheaval. China has been a growing source of supply toduction from China to other coun-thetileindustryintheU.S.andmanydistributorsaretries.Ontheporcelainsideitis heavily invested in Chinese factories as sources of sup- mucheasiertoshiftproduction ply. Commerce revealed the volume of ceramic tile fromthaninthepastduetodigital China increased from 583.4 million sq. ft. in 2016 to 657.2printingtechnology.Wearefind-million sq. ft. in 2017 and 692.1 million sq. ft. in 2018, foring it more difficult to shift produc- Scott Levya total increase of 18.6%. Subsequently, the market sharetion with our mosaics.for Chinese imports in the U.S. grew from 20.4% in 2016Floor & Dcor Holdings, Smyrna, to 21.8% in 2017 and 22.5% in 2018. The ITC reported inGa.,initsQ22019EarningsCall, June that, For purposes of these preliminary determina- discussed the situation with China, tions, we find that the volume of subject imports, andwhichTomTaylor,Floor&Decor theirincrease,weresignificantinbothabsolutetermsCEO, said has been the source for and relative to consumption in the United States duringabout50%ofitsmerchandise.He the POI (period of investigation). creditedFloor&Decorsflexible With tariffs against China and the ADD/CVD penalties,global supply chain of over 20 coun-its time for a course correction with many distributors.tries with the ability to begin a shiftTom TaylorWe talked with a few companies to get a feel for how theyin 2018 to diversify its countries of are approaching this situation and what it will mean fororigin, which he expects will result in a drop from 50% of supply and pricing.materials sourced from China to 30% by the end of 2019. DistributorswhocontributedtothisstoryFloor& Decor, Arley Wholesale, Conestoga Tile and Virginia TilePassing on price increaseshadavaryingratioofproductsourcedfromChina,TrevorLang,Floor&DecorExecutiveVicePresident fromonly1%atConestogaTileto5%-10%atVirginiaandCFO,saidthatwiththe25% Tile, to 30% at Arley and 50% oftariffsnowineffect,priceshave all merchandise at Floor & Decor.beenmodestlyincreasedatretail So,thetariffs,theCVDandADDfor those items that have not been decisions didnt have much impactsourcedfromothercountries.He onConestoga,butSteveVogel,said, The implementation of higher ConestogaTileExecutiveVicetariffs will modestly lower our gross President, Hanover, Pa., said thatmargin expectations as we intend toTrevor LangSteve Vogel it has caused one of its vendors only pass along the incremental cost Bellavita Tileto shutter its busi- we incur versus making a margin on the new tariffs.ness.Goingforward,VogelsaidAt Virginia Tile, Hays said, As suppliers raise our pric-Conestoga will neither be sourcinging,wehavepassedtheseincreasesontocustomers or promoting Chinese tile. (both tariff increases). At times we will wait and see what RandyHays,AccountManager,the competition is doing, before moving forward with the CommercialBusinessTeamwithincreases.VirginiaTile,headquarteredinLevy admitted that at Arley, prices rose at different lev-Livonia,Mich.,alsohassuppliersels each time there was a tariff imposed. We absorbed Randy Hays who were affected by the currentwhat we could but ultimately, had to pass on the tariff 302019|TECH'