Many believe more on the horizon
volume 27/number 9 August 19/26, 2013
By Louis Iannaco
Against the backdrop of rising raw materials prices, North American hardwood flooring manufacturers have been forced to raise prices on finished goods. Some announced increases pre-summer (FCNews, June 10/17), while others are increasing prices in September.
Armstrong, for one, will initiate a 3% to 10% increase in the U.S. and Canada on select solid hardwood products—mostly wider-width and non-oak species—and select engineered hardwood products effective with shipments on Sept. 13.
“We continue to see increases on both veneer and lumber costs, especially on certain species of lumber,” said Kevin Biedermann, senior vice president, Armstrong Residential. “We continue to do everything we can to compensate and truly understand how hard it is to pass along price increases.”
Biedermann went on to say how difficult it is to speculate raw lumber costs because there are many factors other than flooring that make up the demand. “We do not expect raw lumber to decrease in the near term, but we are hopeful the costs will stabilize.
“As the largest hardwood manufacturer,” he added, “we’ve been in a good position in regard to our access to raw materials and capabilities to dry and mill the lumber into quality flooring. Our lumber yards all have state-of-the-art drying capability; we’re proud of how we’ve been able to maintain quality as we’ve increased our production (shipments up approximately 25% YTD) to meet the increased demand.”
Luc Robitaille, vice president of marketing for Boa-Franc, which manufactures the Mirage brand, noted it was inevitable that prices had to come up because pricing on lumber for most species has gone up “significantly.”
What has compounded the issue, Robitaille said, is that many manufacturers did not have enough lumber to meet the sales growth the market is experiencing this year. They were forced to purchase kiln-dried lumber that has increased in price much more than green lumber. “This translates into the numerous increases from various manufacturers we have seen recently.”
As for future increases, Robitaille believes there will still be a few more coming for the bigger players in the coming months. “We can expect at least one to two more. Right now at Mirage we don’t anticipate any price increases for the near future. We’ve been able to maintain our prices to our customer base throughout the year because of a very good supply of green lumber coupled with our large kiln-drying capacity to support our production increases.”
Mirage has always placed great importance on a consistent lumber supply and has developed its supplier network accordingly, he added. “Drying and conditioning green lumber ourselves is an integral part of ensuring the quality associated with the Mirage brand.”
Kim Holm, president, residential business for Mannington, said while it’s hard to predict the future, “the increasing demand during this long-anticipated recovery, coupled with a shortage of both sawmill and log capacity, most likely points toward further increases.”
As Biedermann commented, hardwood was hit particularly hard by the recession, and the industry continues to be challenged by capacity issues. “When demand was low, many loggers and sawmills went out of business. Getting those businesses back up will take time and, in some cases, it may not happen at all. These lumber capacity issues in the market have led to significant raw material price increases for manufacturers—the increase is due to a the raw material increase of over 55%. A lot of this is good, old-fashioned supply and demand.”
He believes that activity in the housing market means some degree of relief is around the corner. Also, buyers are becoming more comfortable spending again, and they want an attractive, quality product for their dollar. “Designer-driven products at competitive prices, like our American Scrape and Midtown collections, for example, are appealing to today’s consumers.”