20 Years: Then and Now - July 2012

 

In 1992, the U.S. economy was coming out of a recession brought on by the savings and loan crisis and the first Gulf war. George H.W. Bush was in the last year of his first term as president of the country, though he would lose to Bill Clinton that November. 

Like today, the country was lifting out of a period of decline. Low interest rates were encouraging homeowners to refinance, which enabled them to spend more money on new flooring and a president was gunning for a second term. 

The consolidation within the manufacturing sector had already begun, the two biggest of which were Shaw Industries’ acquisition of WestPoint Pepperell’s carpet division in 1987 and Armstrong’s carpet mill purchase in 1990. But it really started to heat up in 1992. In February of that year, Shaw bought Salem Carpet Mills, giving it a combined marketshare of over 30%. Two months later, Mohawk went public at $15 a share and by August had agreed to buy Horizon—which was actually bigger than Mohawk. Shaw turned around and bought Amoco’s polypropylene carpet fiber plant. And in September, Dixie bought Carriage Industries and Queen bought Cumberland Mills. By the end of that year, the amount of carpet sold in the U.S. had increased by 9.6%, proof that the recession was over.
< ;br />Today, just two decades later, the world has changed quite a bit. Economically, we are still at least a year away from any substantial recovery, but at this point analyst Santo Torcivia is predicting 4% growth this year followed by 9% growth in 2013.

Regardless of all that, the landscape of the flooring industry is much different today from what it was in 1992. Today, carpet accounts for 42.8% of sales rather than 62.5% in 1992. Consolidation has continued throughout the 20-year period and there are substantially fewer manufacturers today than there were in 1992. The dominant players today have diversified, as part of this consolidation process, becoming multi-surface providers. 

On the retail front, home centers have not only replaced the department stores but they’ve also taken share from the builder accounts in the single-family construction sector. Today, we estimate there are fewer than 12,000 independent flooring retailers left in the market. The number of distributors has also dropped substantially, but those that are left have streamlined and expanded to run with greater efficiency. 

In the early stages of this 20-year period, the commercial contractor sector went through a major buyout and consolidation, but that has all stabilized now and the professionalism that they bring to the equation is still in high demand. 

Looking forward, there is a lot of change to come. The Internet is already shifting the traditional channels to market—particularly with area rugs. And Interface continues to open company-owned retail stores in the major U.S. markets. 

American consumers have limited free time today and their preference for home furnishings is shifting over toward more durable, low maintenance products—a trend that favors hard surface flooring. 

In the commercial sector, carpet continues to dominate and modular’s share of that mix—especially in the corporate sector—continues to rise. And a once brown industry has turned green.

For the complete 20 Years Then & Now, see the July 2012 issue of Floor Focus Magazine. 

Copyright 2012 Floor Focus

 

 



Other Archived Articles

NAFCD Releases Executive Trends Index   Full Article
Chicago, IL, July 17, 2014 -- The North American Association of Floor Covering Distributors said it has released its Q2 Quarterly Executive Trends Index.

Initial Jobless Claims Fall Again   Full Article
Washington, DC, July 17, 2014 -- Initial claims for unemployment benefits hit the lowest level in nine weeks, according to the Labor Department.

Metroflor Forms Sales Team for Aspecta Brand   Full Article
Norwalk, CT, July 17, 2014 -- Metroflor Corp. said it has established a network of specification representatives for its contract LVT brand, Aspecta Plank & Tile, which debuted at NeoCon last month.

Housing Starts, Permits, Fall in June   Full Article
Washington, DC, July 17, 2014 -- Housing starts fell unexpectedly in June to a nine-month low, according to the Commerce Department.

Summit International Names Sales Director   Full Article
Florham Park, NJ, July 17, 2014 -- Summit International Flooring said that Marc Becker has been promoted to national sales director.

Foreclosure Activity Hits Eight-Year Low   Full Article
Irvine, CA, July 17, 2014 -- Foreclosure activity hits its lowest level in eight years in June, according to tracking firm RealtyTrac.

Contract Furnishings Mart Opens 11th Location   Full Article
Beaverton, OR, July 17, 2014 -- Contract Furnishings Mart has opened its 11th Northwest location in Beaverton.

Producer Prices in June Rise More Than Expected   Full Article
Washington, DC, July 16, 2014 -- U.S. producer prices rose more than expected in June, according to the Labor Department.

Builder Confidence Grows in July   Full Article
Washington, DC, July 16, 2014 -- Builder confidence in the market for newly-built single-family homes rose four points in July to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index.

Industrial Production Rises in June   Full Article
Washington, DC, July 16, 2014 -- U.S. industrial production edged higher in June, according to the Federal Reserve on Wednesday.

Mortgage Applications Fall Last Week   Full Article
Washington, DC, July 16, 2014 -- Mortgage application volume fell 3.6% the week of July 11 from the previous week, according to the Mortgage Bankers Association.

J+J Flooring Group Offers Customized Rugs   Full Article
Dalton, GA, July 16, 2014 -- J+J Flooring Group has rolled out a new commercial customized area rug program called Invision Rugs that complements the broadloom and modular products offered by J+J brand Invision.

Shaw Releases Sixth Sustainability Report   Full Article
Dalton, GA, July 16, 2014 – Shaw Industries said it has released its sixth annual sustainability report.

New York Area Manufacturing Surges in July   Full Article
New York, NY, July 15, 2014 -- A New York-area manufacturing index rose to its highest level in more than four years this month.

Retail Sales Rise in June   Full Article
Washington, DC, July 15, 2014 -- Retail sales rose in June despite slower auto sales, according to the Commerce Department.

FIANA, CFI Planning Joint Event in September   Full Article
Vancouver, WA, July 15, 2014 -- The Floor Installation Association of North America and the Certified Floorcovering Installers are planning a joint convention in New Orleans Sept. 4-6.

Beaulieu International Group To Build Plant in Georgia   Full Article
Cartersville, GA, July 15, 2014 -- Beaulieu International Group said it will invest $200 million to build a campus-style manufacturing facility in Cartersville.

Volkswagen Chooses Chattanooga for New SUV   Full Article
Chattanooga, TN, July 14, 2014 -- Volkswagen said it will invest $600 million to build a new seven-passenger SUV at its factory in Chattanooga.

Median Age, Credit Scores For High-End Borrowers Fall   Full Article
New York, NY, July 14, 2014 -- The median age of borrowers seeking high balance mortgages has declined steadily over the last three years, according to private lender LoanDepot.

Meritage Homes To Acquire Atlanta Builder Legendary   Full Article
Scottsdale, AZ, July 14, 2014 -- Meritage Homes said it will acquire the Atlanta-based homebuilder Legendary Communities for approximately $130 million.