My take: By the numbers

Home Editorials My take: By the numbers

by Steve Feldman

It’s interesting how things work. In the months leading up to the production of our annual statistical issue, we “unofficially” surveyed manufacturers across all segments on their take on business in 2010. Most projected the market was flat at best, down a few percentage points at worst. It wasn’t until a little more than a month ago that FCNews began its due diligence in earnest, looking at government data, talking on and off the record to industry executives and analyzing published reports in an attempt to compile the industry’s most accurate data for 2009.

Here’s the interesting part: When the dust cleared, when every number was added up, we found the industry to be flat in dollars compared to 2009 and down just a bit in square footage. Hours of work to uncover what everyone was telling us all along. At least now it’s not anecdotal; it’s factual.

In most years, flat would be considered disappointing. But given how the market dipped in each of the previous three years, flat can be considered a victory and something to build on. One caveat: A portion of all this was due in part to price increases in just about every category.

When you look at 2010 from a macro standpoint, it was basically a “Tale of Two Cities.” The first half was fueled by the housing credit, which benefitted the residential segment. But by year’s end business had come to a standstill. Meantime, while residential tanked, commercial started gaining momentum in the fourth quarter.

From a specific segment standpoint, a few things catch my eye. First, resilient. The category for which many were sounding the death knell 10 to 15 years ago is doing just fine, thank you. The average price per square foot rose last year due to a few dynamics, not the least of which is a shift in product mix. Fiberglass-backed sheet is taking share from the traditional felt, and luxury vinyl tile (LVT) is taking share from sheet vinyl. Fiberglass has a higher cost than felt, and LVT is traditionally more expensive than sheet. In addition, more premium VCT is being moved through the channels.

Carpet did well to come up flat in 2010 when you consider it is the most petroleum-dependent flooring product. As such, we saw a continued shift in market share from nylon to polyester. In addition, the commercial comeback in the second half saved the category. By the way, much of the comeback was attributed to the corporate office segment. (How long has it been since you heard that?)

More square feet of laminate was sold in the U.S. than the year before for the second straight year. Problem is the increase is not coming via the specialty retail channel. It’s home centers, Lumber Liquidators, cash-and-carry retailers, etc. The other dynamic is that with many foreign-based manufacturers setting up shop on U.S. soil over the years (Pergo, Unilin, Kronotex) and Shaw always producing domestically, the amount of imports are in decline.

Hardwood at times was at its best and at its worst. When the housing credit was realized, wood soared. But once the credit evaporated, the housing market sank as did wood. Also, a major shift continues toward domestic species at the expense of exotics. That is said to be attributed less to the Lacey Act and more to cost advantages.

Finally, we have ceramic tile, which posted the largest category gain of 5% to 6%. However, many saw that as going more to inventory than anywhere else— in other words, to put product into the pipeline.

Also, commercial was stronger than residential, due mostly once again to a poor housing market.

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