Executive Forecast: Ready to roll—Leaders bullish on 2017 prospects

Home Inside FCNews Executive Forecast: Ready to roll—Leaders bullish on 2017 prospects

December 5/12, 2016: Volume 31, Number 13
By Ken Ryan

Things are looking up for the flooring industry in 2017. That’s the general sentiment shared by the industry’s top executives who cite any number of positive trending economic indicators to conclude that pent-up demand will finally give way to more consumer spending on flooring.

Ed Duncan, president, Mannington Residential
While we continue to forecast growth, we think it will continue to be relatively slow growth—approximately 2%-4% in the remodeling sector— and slightly more robust, about 10%, in new home construction. Mannington is a major player in the hard surface categories, and with some of the things we have planned for next year we think we will be on par with that growth, perhaps outperforming it in some areas.

It’s probably no surprise that the economy is the biggest unknown going into 2017. Specifically, we don’t know how the economy will truly react, over the long term, to the new administration. A lot will be determined in the first 100 days; what changes will be made in the tax law, healthcare and other areas and how consumers will react to those changes.

There are several challenges but one that really stands out, particularly for Mannington, is competition from imported products. We face this every day in the marketplace with copyright and patent infringement in addition to the challenge of communicating the price/value proposition of domestically produced products. We have made significant investments in our manufacturing plants—and we also invest heavily in style and design—to keep one step ahead of this type of competition.

We believe emerging technologies hold the key to the future. We’re thinking very far outside the box these days, and considering any and all options as far as the advancements that technology can bring in manufacturing, styling, product performance and installation. It’s a very exciting time.

Mannington continues to focus on our core competencies: introducing new products that look and perform great. We’re leveraging the investments we’ve made in our plants and look forward to Surfaces, where we’ll unveil what we have to offer for 2017.

Tom Lape, president, Mohawk Residential
We’re optimistic about 2017 based upon the fact that we see all of the influential indicators trending positive for flooring purchases. Most notably, home valuations continue to improve and both new home sales and, more importantly, existing home sales continue to trend favorably. Credit availability is quite favorable. Indexes like LIRA (The Leading Indicator of Remodeling Activity) continue to trend positive, predicting strong gains in home renovation and repair spending to continue.

We have invested from a Mohawk view to take advantage of new capacities in each of the growing categories. Vinyl, laminate, wood and ceramic are the fasting growing categories and we have expanded both our North America and global capacity.

Flooring products are largely deferrable purchases, so how the consumer feels is quite important. The big unknown was the election but regardless of which side of the political spectrum you were on, the uncertainty has now been eliminated. There are positive signs out there. For example, new car sales in November were quite strong, and that is a good precursor for our business as well. Things are teeing up favorably and bode well for 2017.

Consumers’ ability to buy the high-end market continues to fare well. We want to see those in the middle incomes come off the sidelines and come back to the flooring space. Whenever you see Middle America they look at these flooring purchases as an investment.

As a company we have invested heavily—product segment by product segment, all the while driving innovation. This all ties in with great marketing, great merchandising, great promotion and a great consumer story.

For 2017 we have a full pipeline ready across every product category. It doesn’t start with a new display or an ad campaign—it starts with great product with great innovation, design and functionality, and then we add great marketing, merchandising, promotion and the great story. But you have to start with great product, and we have that in 2017.

Donald Maler, CEO, Armstrong Flooring
We see the industry continuing to show slow but steady improvement. Consumer confidence and market stability will drive repair and remodel as well as new construction markets that will deliver modest growth for the industry in 2017. The builder market is showing improvement. We are focused on driving our mix for both single- as well as multi-family buildings. Consumers are willing to spend more for quality flooring.

We’re in the midst of a transition to new leadership here in the U.S., and we are optimistic and monitoring this closely so we may take full advantage of any opportunities this may create. We believe our growth strategy and resources have us well positioned.

We are focused on combining innovative products and leading-edge design with our world-class distribution network to provide the highest-quality products and service both to our customers and to the end consumer. The centerpiece is our distribution partnerships, which allow us to drive demand generation and best-in-class support to help our retailers grow their business.

We also believe hard surface will continue to benefit from its popularity over soft surface. And let’s not forget that LVT is a category that continues to offer great opportunity. It’s still growing and evolving, and we are continuing to innovate in this category with winning products like Vivero and Luxe Plank. We have new product launches planned for Surfaces, some of which build upon the leadership of our proprietary Diamond 10 Technology. Another big initiative, specifically for the independent specialty retailer, is our retailer-centric program Elevate. We launched the program to help specialty flooring retailers grow their businesses.

Armstrong Flooring continues to invest in strategic initiatives to support our retailers. We are partnered with a world-class distribution network to deliver our innovation and leading-edge designs to our retailers and to their customers. Our goal is to be our customers’ preferred business partner and flooring brand.

Randy Merritt, president, Shaw Industries
We’re upbeat about 2017. Business is continually getting better. New home sales are rising and slated to ramp up over the next several years, and commercial sales are good. Investments in new plants and innovation will drive us forward along with the acquisition of USFloors, which is poised for continued innovation and growth in the year ahead.

Today consumers and commercial clients have more choices than ever before. Those choices can be confusing and even overwhelming. It requires retailers and manufacturers to provide even clearer, easy-to-understand communication about product features and benefits than ever before and to be a trusted advisor that can ascertain what the buyer’s needs and preferences are and what product can best achieve that. This diversity of product also brings a need for a keen understanding of consumer and market insights that allow us to strategically invest in manufacturing and innovation that will have the most impact.

Shaw has invested in manufacturing capacity with the completion of our new LVT facility in Ringgold, Ga.; the opening of our new carpet tile facility in Adairsville, Ga.; the expansion and modernization of our extrusion facility in Columbia, S.C., and the expansion of our hardwood plant in South Pittsburg, Tenn., all coming online in 2016.

In 2017, we’ll truly begin to see the benefit of those investments with each entering a full year of operation. That gives us even greater ability to meet customers’ quality and service needs with a diverse portfolio of products.

By the end of 2017, we’ll complete our recently announced 67,000-square-foot Create Centre in Cartersville, Ga., which will house our commercial division’s marketing, design and innovation associates. This Centre will spur further growth and innovation. Bringing these talented professionals together, the new workspace will provide a collaborative environment.

Additionally, the acquisition of USFloors will provide increased opportunity in hard surface with its WPC flooring, as well as cork, bamboo and hardwood products. It expands and complements our leading position in the LVT and hard surface markets and further diversifies our product portfolio.

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