Jan 4/11; Volume 30/Number 14
By Steven Feldman
Much like Intel is the engine that drives many of the PCs on the market, American OEM is about to drive much of MaxWoods’ product offering. Not to sound cliché, but it is a marriage made in heaven. MaxWoods, after facing challenges with its sourcing from China, found exactly what it needed in American OEM, a domestic OEM supplier, launched in 2014 by the legendary Don Finkell. And American OEM found exactly what it was looking for—an established hardwood flooring supplier that was seeking a Made in the USA platform, which also happens to be headed by an industry legend in Peter Spirer, chairman of MaxWoods. FCNews recently sat down with Spirer and Finkell to talk about the relationship.
Let’s discuss the arrangement between MaxWoods and American OEM.
Peter Spirer: Fundamentally, MaxWoods is a customer that uses the services of American OEM to develop the products we are interested in marketing. So we work very closely with the product development people and color experts, and it’s just a matter of going item by item until we are satisfied we have a complete line we can bring to market.
What are some of the advantages of partnering with American OEM?
PS: American OEM can cut samples right in the manufacturing facility, which cuts a great deal of time out of the process. It’s an efficient and speedy process to get to market in comparison to imports.
Don Finkell: Having an in-house sample department allows us to make sure the samples are representative of the product. The people we have making the samples are only making our samples, so they are familiar with our product. The second thing it does is give us one more look at the finished product. So if the sample department takes a board out of our finished goods inventory, they have a quality control board to compare it to. They are comparing to the standard. If you were doing that remotely, they are not going to know what the product is supposed to look like. Here everyone is elbow to elbow with the box.
The other thing is we are the first people to get the product when it is finished, so our sample department can immediately turn product into samples. And if Peter has a customer, he is not going to get an order until that customer has a sample.
Talk about the decision to change MaxWoods’ course from overseas sourcing to domestically made product.
PS: The reasons are similar to what we already touched on. One is the time factor; developing a product line over there is a complicated, time consuming and expensive proposition—air freight from China is costly. Often the samples have to go back two or three times for color correction or a change in texture. The other choice is to go over there and work with the manufacturer in the factory. But China is set up in such a way where most of these plants outsource certain elements of their operations. Conversely, the American OEM plant is so vertical. They don’t do solids, and they have their own veneers, which is very conducive to making an engineered product.
Developing a product is a quick process here. We can see a sample that only exists in our mind within days. If we want to send samples back and forth to make changes we can use FedEx or UPS. Or we can get in a car and drive a few hours. The communication is ideal working with this company. They have pros working at every level. They are very familiar with color trends, luster levels, textures, surfaces—you name it. It’s a broad menu, and we are able to make a lot of great selections.
What does MaxWoods bring to American OEM?
DF: They bring business. They bring a lot of expertise with customers in the marketplace. We are not set up to find those people. The concept at American OEM is to manufacture a good, well-designed product at the best price possible. All of the marketing and sales efforts, and holding inventory is something we don’t have to do. So MaxWoods is a channel to the market for us. They are also knowledgeable about some things we may not be because they are eyeball to eyeball with the customer so they tune us into what’s selling. There is a big difference between exactly right and almost right.
Explain the product mix. Who is responsible for the styling?
PS: It’s a collaboration. It starts off with the sharing of information; we know where the market is trending, we know what products are selling and why they are successful, so you take that information as your base, narrow it down, then look at species, width, dimension of the profile. Then you get into the whole area of color. That’s the distinguishing factor. Color and texture are what sells these boards. OEM has the ability to make planks over 6 feet wide in an 8-foot-long profile. That is something sought after because it results in 50% to 60% fewer seams. Big planks are very important to this launch and have been very well received.
DF: We might have some ideas with species or constructions we think will offer something unique or a value proposition, so we will take that to MaxWoods and see if there is something we can make out of this. When the answer is yes, we can put together some nice products that have a better-than-average price point. We look for something that will strike a chord in consumers’ hearts rather than their pocketbooks. Conversely, MaxWoods may bring products to us and will say this is something that has some direction in the marketplace. So it flows both ways.
PS: To me it’s an open and shut proposition. I think communication is as important as anything in the industry. With China, aside from sending emails, there was no communication. Here it is a rare week where we don’t talk to Allie [Finkell, vice president, administration] or the plant folks. It really cuts out the surprises.
Are the products/designs proprietary?
DF: I think the product we end up with is proprietary. There are certain design directions, if you have multiple customers wanting something in that area, that may be shared. But the exact colors and SKUs are proprietary. It’s somewhat of a gray area—how close can you go before you infringe? We are not territorially exclusive, but we are design exclusive.
Will these products be marketed strictly as MaxWoods or might there be some co-branding with American OEM?
PS: We will market these products as MaxWoods. Don and I have never had a conversation as to how close to draw the two companies in terms of public vision. We go after the top 200 retailers—that is our base. Of those guys, we are probably doing business with 80 or 90 of them. We hope to expand on that. We don’t find ourselves stepping on the toes of the distributors because they tend to sell to smaller stores. I don’t know how thrilled OEM would be to say we work with MaxWoods as our sales arm.
DF: We don’t keep it a secret. The consumer doesn’t care. But the trade cares because we have some experience in doing this. We are proud of our association with MaxWoods as we are with our other customers. The trade knows by word of mouth that we manufacture their products. I don’t think we have to co-brand it for them to know.
PS: If people ask, we happily tell them it’s Don Finkell and the OEM crowd that manufacture the products. The more we get as one, the better it will be. We don’t have to publicize it and put it on our boxes. There might come a time when we change that if it makes sense to bring more recognition to the partnership.
The Don Finkell brand has equity in this industry. Any thoughts on playing up this relationship?
PS: Absolutely. The man is considered a godfather of the wood business, has a wonderful reputation as a leader and is very involved in many of the organizations that strive to make the industry even better. We are happy with that association. We are proud to claim him as a friend. Allie services the account and knows the business as well as we do. The parties stay very unified.
DF: Peter’s reputation in the floor covering industry is well deserved and storied, and we are proud of our association with him. Peter has a gift for choosing product, and he is an early adopter of trends. It is significant that he got involved in domestic production. That validated our thinking in creating OEM in the first place.
What are you calling this collection?
PS: The products made by American OEM comprise our Field of Dreams collection of five products, soon to be six. All are highly recognizable looks—7½-inch widths, ½-inch profile, 8-foot lengths. They vary by specie, price point and veneer. The other side of the line is a 3⁄8-inch collection of products made in Vietnam that can be sold here at a competitive price. They are good for builder, retail, maybe DIY. But there is a clear separation from the Field of Dreams collection.