Resilient: Domestic LVT capacity continues to expand

HomeInside FCNewsResilient: Domestic LVT capacity continues to expand

Jan 4/11; Volume 30/Number 14

By Ken Ryan

 In 2014, several major flooring suppliers announced multi-million dollar investments in domestic LVT manufacturing. While some of these facilities are already churning out products, the full extent of this investment will likely be seen in 2016 as plants operate at near peak capacity.

Onshoring has been one of the biggest trends of the last five years and is gaining strength, according to executives. Tom Lape, president of Mohawk residential, said the demand for North American products made domestically represents a “sea change” in how business is being conducted.

Other major players attest to the trend. When Mannington purchased Amtico in 2012, its LVT products were sourced entirely from China. In 2016, virtually all of Mannington LVT—commercial and residential—will be produced in the U.S., at its plant in Madison, Ga., which has quadrupled in size in the past few years. The expansion has allowed Mannington to increase capacity to meet customer demand, improve customer service and control its own destiny.

“There are multiple reasons for this onshoring trend, not the least of which is service,” said Dan Natkin, senior director of residential products at Mannington. “You have much shorter lead times when you do it domestically.”

Quality is another factor, Natkin added. “We can strictly control quality, we can get to the market a lot faster and domestically we can do some specialized stuff, which is our core competency.”

This onshoring trend has picked up steam across all industries, including flooring, as manufacturers consider costs beyond labor such as supply chain risk, transportation and increased productivity through automation. “With labor, energy, duty and transportation costs accelerating at a faster pace than exchange rates and import fees, it is becoming more cost effective to produce in the U.S. for domestic consumption,” said Don Maier, CEO of Armstrong Flooring.

For its part, Armstrong continues to invest significantly in U.S. production and has recently ramped up investments across its manufacturing networks with significant capacity and capital investments in its LVT facility in Lancaster, Pa., which is already up and running. Maier said this state-of-the-art LVT facility allows the company to bring innovative products to market.

“Our investments in LVT are across all market segments—glue-down, floating and groutable,” he explained. “We will be introducing a tremendous number of SKUs as part of our Lancaster LVT plant start-up, using proprietary technology developed by Armstrong.”

By onshoring LVT manufacturing, Armstrong expects to realize a more competitive cost structure with shorter lead times and improved customer service. Not only will it be an exponentially faster trip from factory to retail, Maier said the company now has the ability “to integrate the voice of the customer into our product design and development processes. By staying nimble, we are able to be both proactive and responsive in meeting demands of the market.”

The LVT facility in Lancaster is the latest domestic resilient manufacturing plant for the company. Its vinyl sheet products are made in Lancaster and Stillwater, Okla.; it has vinyl tile factories in Beech Creek, Pa.; Jackson, Miss.; South Gate, Calif.; and Kankakee, Ill., where Alterna engineered tile is made.

Upping the ante

The first Mannington LVT products that were made in Madison were for commercial applications; the facility is now producing for the residential side, with a continued ramp up in 2016. “We are just about a 24/7 operation, and we will continue to scale up,” Natkin said.

In 2014, Shaw announced it was exiting the rug business and repurposing its Ringgold, Ga., facility to make LVT. Randy Merritt, president of Shaw Industries, said that LVT plant “will provide a locally made product and enhanced service capability for our customers.” The Ringgold facility should be completed and operational by the first quarter.

Also in 2014, IVC US broke ground on a new LVT/LVP plant in Dalton. The $80 million, 300,000-square-foot facility will allow the company to keep all domestic manufacturing activities on the same site. The facility will make products for parent company Mohawk as well as IVC. Production should begin early this year. When completed, it will join a vinyl sheet plant that now operates 24/7.

While manufacturers such as Armstrong, IVC, Mannington and Shaw moved production stateside, some overseas producers have added capacity as well. Novalis Innovative Flooring, an Asian manufacturer, operates a 1 million-square-foot LVT facility with 700,000 square feet of workshop space in Zhenjiang, China, 150 miles northwest of Shanghai.

John Wu, president and CEO of Novalis, said the acceptance of LVT as a desirable replacement floor throughout the home, increased supply and availability of LVT from numerous sources, growing acceptance of LVT for specified commercial as well as the continued strong value equation for LVT vs. other flooring options are all playing into the category’s growth.

Wu said the onshoring trend has not stunted his company’s growth. “This additional U.S. domestic capacity may affect some smaller Asian manufacturers, but for larger Asian producers with a good customer base and good growth— such as ourselves—we do not expect to be impacted that much.” In fact, Wu is expecting double-digit growth for Novalis in 2016 on the strength of the company’s environmental story. “That resonates with millennial home buyers and the A&D market,” he said.

In another case, Nox Corp., a leading Asian LVT manufacturer, plans to move production to the U.S. The manufacturer was expected to open a state-of-the-art LVT manufacturing facility in Fostoria, Ohio, by the end of 2015. According to company executives, the move will make Nox the first Asian producer to operate its own LVT facility in America.

Nox said it would invest tens of millions of dollars into modifying the space, which spans a little over 300,000 square feet. The plant will supplement the company’s primary manufacturing facility in South Korea, which has a capacity of 500,000 square feet. Fostoria will initially have a capacity of 50 million square feet, with the ability to expand based on consumer demand.

The decision to start producing LVT in the U.S. was made in an effort to create further differentiation for the manufacturer, and was not in response to U.S. manufacturers building domestic plants, the company said.

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