Indusparquet responsibly carves out its niche

Home Featured Company Indusparquet responsibly carves out its niche

Miami—Brazilian hardwood flooring manufacturer Indusparquet has always had the reputation for producing some of the finest exotic hardwood flooring available. But the company has evolved into so much more. Supply chain issues and global events have put the company in a position to capitalize on its competitive advantages, more so now than ever before. Those include an OEM revenue stream as well as the purchase of a veneer factory to circumvent any potential plywood shortages.

Visitors to Indusparquet’s booth at the 2022 Wood Floor Expo expressed great interest in Brazilian oak flooring products in particular.

“This is the first year we will do more OEM business than we’ll do with the Indusparquet brand,” said Jodie Doyle, vice president of sales and marketing. “Companies are saying, ‘What can you make for us?’ I think part of it is China and part of it is trying to figure out how to diversify; there are not a lot of places to go.”

Doyle said the recent NWFA Expo in Tampa was a case in point. “A large amount of people were coming up to us, somewhat unsolicited, and they weren’t asking about the brand, they weren’t asking about Brazilian cherry. They were asking if we could make the Brazilian oak floor we had down on the floor for them.”

Brazilian oak, or Tauari (the official species name), has a different look than American white oak in that it is much cleaner. “Or a really clean European oak, but this has no knots; it’s a very linear look,” Doyle explained. “It almost has a rift and quartered look, although it’s not rift and quartered. And it’s about 30% harder than American red or white oak.”

While Indusparquet does not have a crystal ball, its timing couldn’t be more on point. “All these companies are trying to source prime white oak, which is a big problem because a lot of it comes from Eastern Europe,” he said. “Our company has made an enormous investment in Brazilian oak—we’ve probably bought three years’ worth of inventory.”

In illustration, Doyle said a large Midwest-based distributor was looking for something different to put in their private-label program. “They called us and said they figured he could only look to Canada or South America. Long story short, we now have four SKUs in its premiere hardwood offering with about 1,200 displays.”

Plywood aplenty

Indusparquet has—unwittingly—become a defacto source for hardwood plywood in the absence of Baltic birch from Europe.

Indusparquet showed more foresight about a year ago when it purchased a Brazilian veneer facility, in essence making the company vertically integrated. This could not be more critical given how much of the industry’s plywood comes from Eastern Europe, leaving many hardwood flooring manufacturers scrambling for alternate sources of supply. “Now we are actually working to expand capacity to produce plywood, not just for flooring but for other uses as well,” said Flavia Baggio, general manager. “The plan is to expand, but the truth is that’s a commodity product and we’re not really a commodity company.”

That’s not to say there isn’t an opportunity. People were approaching Indusparquet at NWFA about plywood, too. “We had three or four customers come up to us and ask if we could get them plywood,” Doyle recalled. “We weren’t advertising plywood anywhere, but they probably knew that we were somewhat integrated and have the capacity. I don’t think we’re at the point where we can sell it here in the U.S. right now; we’re just not competitive enough for it. But if being competitive becomes secondary to, ‘Do you have it?’, that’s where selling plywood may make sense.”

When it comes to plywood, Doyle said Baltic birch is the gold standard because it’s extremely stable, but South American pine is the next natural step for those companies. “If we had a company come to us and say they’re going to need 10 containers a month, that’s the kind of thing we would probably do. I don’t think we want to sell a container here and there.”

Baggio said she sees stress on plywood supply lasting for a while, even if the war in Ukraine ended tomorrow. “That’s because most of the plywood manufacturers were not in Russia; they were in the Ukraine because of lower labor costs, and many factories were completely destroyed.”

Doyle concurred, recalling a conversation he had recently on the matter. “I talked to somebody who was told by his source, ‘Look, you’re going to have to find another source.’ And the guy was like, ‘What do you mean? Does that mean it’s going to be another two months for me to get it?’ And he said, ‘No, you don’t understand; they bombed the factory. The factory doesn’t exist anymore.’”

Cost-effective containers

As it imports exclusively from their parent company in Brazil, Indusparquet enjoys a competitive advantage over many Asian importers in that it is paying around $10,000 for a container vs. $20,000. “When we’re selling you Brazilian oak in an engineered form, that actually is a real advantage,” Doyle said. “But when you are putting solid Brazilian cherry in a container, you can only get 11 pallets on a container. So even though the container is cheaper, you’re getting less square footage, so per square-foot cost is actually similar to what you’re getting out of China. On the engineered side, it’s actually a benefit for us. Not only the freight price, but the lead time is probably half, 60 days vs. 120.”

Commitment to sustainability

Indusparquet goes to great lengths to ensure every piece of hardwood it imports has been legally and responsibly sourced.

Brazilian wood importers have come under scrutiny in the U.S. to ensure compliance because there have been “bad actors” in the past. To that end, Indusparquet has taken bold steps to ensure every piece of wood it imports has been legally and responsibly sourced. How bold? About $100,000 bold.

“We decided to take a very proactive approach,” Baggio stated. “What can we do to at least say we’ve done our part? Before we were being audited by the big firms, like Floor & Décor and Lumber Liquidators, it was more of a reactive approach. There are very few auditors for traceability and legality and risk management in the industry.”

To ensure it would not be subject to audits by the big retailers, Indusparquet turned to an Indonesian company called DoubleHelix to look at everything it was doing. One of the things DoubleHelix recommended was purchasing a software program that maps sourcing and it mitigates risks. “It tells you what type of documents you’re getting, licenses, forest management authorizations, etc., all in very good detail,” Baggio explained. “That’s one part: the risk mitigation for all your suppliers, make sure that they’re good, make sure they’re not condemned with anything. But the second part of it is the chain of custody and making sure it traces back to the log and that part the software is not as good. But I can say that we’ve been very proactive in terms of investing in a firm that would come with non-biased or no conflict of interest.”

Indusparquet has also invested and become more rigid in terms of compliance training. “Now on our POs, they have an obligation to supply us with chain of custody,” Baggio said. “We now have more formal procedures. We’re not there, if you think about it, a chain of custody for one container, because that lumber doesn’t come from one forest; it comes from several suppliers and every chain of custody pack is huge. So, the best we can do is know your supplier.”

Doyle added that, in theory, on the computerized system, if somebody wants to question where that product came from, you’re able to hit a couple of mouse clicks, send it to them and they’ve got a complete chain of custody. “Right now, DoubleHelix would tell you our company has always done the right thing. We have the documentation, but if you tried to produce the paper that it takes to show everybody what that is, it becomes too cumbersome.”

Nobody asked Indusparquet to do this. Rather, they say they wanted to be proactive. “The reason was because until we did it, companies like Floor & Décor, Home Depot and Shaw, if they want to buy product from us, they’re going to struggle to do it without the transparency layer,” Doyle explained. “We feel that we owe it to our customers, big and small, to step up our game as it relates to transparency of sourcing and documentation.”

Much of the focus also moves to education, where both Baggio and Doyle agree that they need to do more to carry the flag for Brazilian manufacturers that do the right thing. Managed forests are essential for the long-term viability of the entire ecosystem, and that does mean that trees are cut down to enable the rest of the forest to live and grow. “We do a poor job of explaining a managed forest and how they are important to the ecosystem,” Baggio said. “That’s the only place we pull product from—managed forests.”

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June 6/13, 2022

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