Manufacturers maintain positive outlook despite concerns

Home Inside FCNews Manufacturers maintain positive outlook despite concerns

December 8/15, 2014; Volume 28/Number 12

Wood

By Ken Ryan

Supply issues and raw material price hikes have forced hardwood flooring manufacturers to up their game in what they do best: produce high quality, stylish products that exhibit the value consumers demand. These efforts are expected to help steady the wood business in the coming year.

Michael Martin President and CEO, National Wood Flooring Association

Industry experts are predicting that the hardwood category will continue to grow at a slow and steady pace. Estimates for 2014 put sales at about $2.7 billion, and projections out to 2019 are about $3.5 billion.

A big issue we’re seeing right now is the concern about installation taking place before HVAC is turned on in new construction. This creates a problem for other trades as well, not just hardwood, and could ultimately lead to flooring failures. To address this we’re meeting with national building organizations to tackle the problem and have our guidelines included in national building codes.

Another big issue we’re experiencing, and is occurring in all flooring segments, is the lack of qualified installers. Fewer young people are entering the trades these days—flooring in particular—because the work is physically demanding and they can earn better wages sitting at a computer. We’re working with other flooring groups through the Floor Covering Leadership Council to address this issue and develop training programs for vocational technology schools and veterans’ groups.

We also recently participated in providing feedback to the EPA on formaldehyde regulations. This is an issue that will definitely impact our industry going forward.

NWFA continues to monitor issues like the long-eared bat through our involvement in the Hardwood Federation. We also continue to monitor lead paint regulations, which affect wood flooring refinishers, Lacey, etc. Each year we visit Capitol Hill in conjunction with the Hardwood Federation to meet face-to-face with our legislators who can have the most impact on these issues. These meetings provide education and also real-life stories about how their decisions and votes affect people in their districts.

Paul Stringer Vice president, sales and marketing, Somerset

I pay little attention to what I hear related to forecast. There are so many variables that I can and can’t control. If I work hard on the things I can control, that will affect my performance more than any forecast. Now, what I hear from others in the industry is a year much like 2014, maybe 6% to 7% growth, but what I am more concerned about is how I reduce back orders. How do I handle sales promos that have more of a percentage impact than the overall forecast?

Lumber availability and prices will be key factors. I think the hardwood market is going through some changes related to higher-priced product due to higher raw material cost, insurance and other inflationary costs, which allow for lower-cost alternatives to be considered by consumers. What this does, in my opinion, is put more pressure on hardwood manufacturers to produce high quality, stylish products that exhibit the value consumers demand. The manufacturers that deliver these key attributes will fare better in the long run than price cutters. That has been our formula for success and it has been fun to sell and market products this way.

Somerset—and our customers as well—invested a lot of money and production time in 2014 on samples, displays and introducing new products. We think that Somerset and our distributors and retailers are in a great position to take advantage of that investment. We experienced strong introduction sales numbers on our new collections that only really had half the year in the market. We have continued to invest in better machinery, more kilns and other capital projects that improve the quality and service that is part of our philosophy for continued improvement. We don’t announce new infrastructure projects or make a big splash in the press when we do these things, but it is key to our goal of adding more value to our product for those customers who are driving our growth.

Pierre Thabet Founder and owner, Boa-Franc/Mirage

The U.S. economy is recovering but the housing forecasts are still shy for 2015. The industry shouldn’t have high expectations on the new construction side of the market but there should be nice opportunities in the remodeling business. Being able to keep market share in the overall floor covering industry will remain a challenge for hardwood flooring manufacturers as people have moved down in their flooring options from wood to other less expensive alternatives. But on a more positive note, consumers’ growing preference for renewable, natural and local products will make hardwood manufacturers like Mirage more attractive.

Lumber pricing has stabilized, but supply remains a challenge. As I mentioned previously, maintaining market share will be of key importance as the hardwood industry is being attacked by all other categories with products that try to look like wood. It is understandable since wood is what consumers want to have in their homes, but for various reasons—budget, installation constraints, high traffic—cannot always purchase it. But, on the other side, it is comforting to know that people’s desire for wood is not abating at all.

In terms of trends, floors presenting character and color variations are hot and will continue to be in 2015. Consumers don’t have time to worry about the upkeep of their floors; they want a floor that is trendy but, moreover, they want it to be forgiving and easy to maintain. Textured floors such as our Imagine Collection and time-worn looking floors with character marks and color variations such as our Sweet Memories fulfill all these needs and will continue to have consumer preference in 2015. Obviously, the larger the better, so wide widths of 5 inches and more will also be everywhere next year.

Neil Poland President, Mullican Flooring

Mullican Flooring’s growth target for 2015 is 10%, and our ability to reach that goal will depend on the growth of the housing market. If housing market growth remains flat or grows only at a single-digit rate, we will need to readjust our goal. We are bullish on the housing market over the next several years and truly believe that pent-up demand, combined with continued low interest rates, will be catalysts for significant growth.

As for trends, obviously wider widths and alternate species have been the drivers of any recent growth. We believe, however, that the combination of species, surface treatments and colors will merge together to create a visual element that will be in demand by consumers, designers and specifiers. Hardwood flooring manufacturers that are open minded, flexible and totally focused on style and design will lead the charge over the next five years. We are in the fashion business, and I believe that introducing the most fashionable products will be more important than ever.

The domestic lumber supply remains a concern. Sawmills have increased their production volume to meet the excessive demands that were experienced in 2014. In spite of this increased production, we are concerned about future global market growth and the ability of hardwood lumber producers to stay ahead of any additional increases in demand.

Lukasz Piatek Key accounts manager, Elegance Exotic Wood Flooring

We see the overall market continuing to grow. As it does, our largest customers continue to open new locations, so we’re seeing their businesses expand as well. These customers are paying attention to things like the Lacey Act and CARB (a California regulation that restricts the use of formaldehyde in all wood products). For us that is an advantage because we are getting all of our raw materials from legitimate suppliers.

In 2015 we’re looking to increase our line with the mindset of quality vs. quantity. Our introductions will have a narrow focus aiming to be the products that move through the channel. We are coming out with some click products that we are excited about. While we have seen growth in solid and engineered, in the last two years we have seen the biggest spike in click products.

Must Read

Mohawk donates supplies to local schools

Calhoun, Ga.—Mohawk is supporting safety precautions as local students, teachers and staff return to school by making several large donations in northwest Georgia prior...

Daltile supports Gary Sinise Foundation

Dallas—Daltile recently supported the Gary Sinise Foundation provide a new home for wounded veteran Rico Roman and his family. The home is the 64th...

UNY-Groups partners with Välinge

Japan—UNY-Group, an importer and producer of flooring products for the European market with a sales focus in the Netherlands, UK and Germany, is investing...

Technology, training go hand in hand

By Jason Goldberg I’ve been working in the flooring industry for 34 years. In every one of those years, having enough qualified installers has been...

Retail Lead Management tracks prospects from start to finish

By Megan Salzano Three years ago, Retail Lead Management (RLM) hit the market as a first-of-its-kind software system specifically designed to help flooring retailers manage...

Top tips to creating better video content

By Nicole Murray In today’s tech-dependent world, businesses are utilizing various electronic/digital tools to engage with consumers and generate brand awareness. One of those technologies...
X