Wood: Keeping costs down for customers

Home Inside FCNews Wood: Keeping costs down for customers

October 26/November 2; Volume 30/Number 10

By Jenna Lippin

In recent years the flooring industry has seen plenty of headlines regarding lumber prices; the words “hike,” “increase,” and “raise” were often used. But with rising prices the hardwood category never really took a hit, mainly because it is still the coveted option for most consumers to have in their homes. The appeal will always remain for eager shoppers—especially those with flexible budgets—but the concern about pricing often comes from the manufacturers’ conduit: retailers.

One way suppliers are cutting costs for customers at the manufacturing level is through more efficient production processes. For example, automated tasks help with labor costs in a way that is overall more helpful than detrimental. Brian Greenwell, vice president of sales and marketing for Mullican Flooring, explained, “We’re always working with manufacturing to find ways that can take costs out of the product so we can sell goods as economically as possible. We find ways to move products without having to touch it, or automation. It’s not great for employment but it helps keeps costs down. It is something we do a lot better than importers because their labor is so cheap they can throw hundreds of people at a task. [Our processes] require less work, so that keeps costs down in paying less people.”

Mannington is another supplier that controls costs with the help of “plant improvements,” according to Dan Natkin, senior director, residential products. “We continually invest in equipment and technology to control grading, which means we work projects all the way back through our system to ensure minimal defects make it through, reducing waste and thereby controlling costs.”

Similarly, Somerset Hardwood Flooring invests in the latest, most efficient machinery and technology to be as cost competitive as possible, explained Paul Stringer, vice president of sales and marketing. “We are installing an approximately $2 million equipment upgrade to help keep costs under control and improve quality. We have made capital expenditures and other improvements almost every year I have worked here, which is more than 15 years. Those investments help make Somerset more competitive and offer even more value to our customers.”

Lumber costs are also taken into account by manufacturers for their expenditures, which ultimately affect costs for their customers. Mullican puts continual effort into buying lumber in the most cost effective ways possible. “Lumber has been coming down over the last six to eight months so that has helped all of us,” Greenwell said. “The last couple of years prices were really escalating which meant all manufacturers had to raise prices. We’re in a little bit of a better situation this year, which has allowed us—in some cases—to lower prices and keep them competitive.”

While Stringer noted that lumber prices are cost factors “out of our control,” Somerset works to offset those inevitably absorbed increases with methods like reducing the cost of waste. “We use sawdust waste to produce energy and to make wood fuel pellets. This reduces cost of waste for our company and helps us keep raw material costs down and the value of our products up. Plus we get the added value of the green story as none of [the sawdust waste] goes to landfill while producing a biofuel that reduces our country’s dependence on fossil fuels.”

Many hardwood manufacturers supply product to retailers via distribution, which adds another step in the process of getting product to market. Therefore, additional points must be in consideration when calculating costs. “Our distributors do a fantastic job of having a lean logistics system,” Natkin noted. “They have very efficient delivery systems to get product to market vs. shipping from just one or two locations in the country.”

What should be kept in mind while considering all contributing cost factors is the final price consumers must pay for product. “I am sure every manufacturer is looking for ways to reduce cost,” Stringer said. “But there are so many factors that impact cost reduction decisions. First and foremost is making sure you don’t sacrifice quality for lower pricing. Every manufacturer has its own quality standards and those standards will impact the cost to the consumer. Just because an item may be priced lower does not necessarily mean it’s the best value for the consumer.”

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