The Economy, Imola, Aquafil and NeoCon East: Startegic Exchange

 

By Kemp Harr

 

Last month we watched another bout of political bickering and once again the can was kicked further dOwn the street. Should we be relieved? Perhaps, like someone who was shot at but not hit. The situation is hardly something to celebrate. Standard and Poor’s estimates this shutdown will cost the economy $24 billion and that fourth quarter GDP will be affected by about 0.6%, so instead of the economy growing 3%, we’ll see 2.4% growth.

The question we have to ask ourselves is what the net effect of October’s government shutdown will be on the floorcovering business. Some warn that the hit to consumer confidence will act as a deterrent to retail sales, especially for big-ticket deferrable purchases like floorcovering. They argue that most consumers recognize that all that really happened in mid-October was a 90-day deferral and that we’re going to have to find a longer term solution to the nation’s spiraling debt. Others would argue that Americans see this policy brinkmanship as just another chapter in the Washington political saga and things will work themselves out in the end.

Americans do need to take a longer term view and focus more on the patient’s overall health as opposed to the ailment of the day. One solution to the debt crisis is reducing the size of government and reforming the tax code. Or, as Clinton discovered during his presidency, grow the economy fast enough to at least stabilize the spiraling debt situation. These are the areas where Washington needs to focus its time. Squaring off on Obamacare, given where the balance of power stands today in Congress and the executive branch, is borderline quixotic. 

Fortunately, while politicians are out chasing windmills, private industry is busy investing in infrastructure that will bring more jobs back to America. I mentioned in this column last month that the floorcovering industry is in the process of breaking ground on capex projects that total well over a billion dollars here in the U.S. We can only hope that the distractions in Washington don’t stifle the momentum that’s been building as we continue to recover from the last recession.

IMOLA’S ADVANCED CONTINUA LINE
The Italians continue to lead the world in tile manufacturing. In 2012, Italian tile companies produced 34% of the $19.5 billion (wholesale) worth of tile made around the world. At the Cersaie show in September, one of the oldest tile companies in Italy, Cooperativa Ceramica d’Imola, was celebrating its 100th year of making tile. As the name suggests, this tile producer is owned by its employees; it has been a cooperative since 1874. Much like Crossville here in the U.S., Imola is named after the city where it is headquartered. The town of Imola is located on the Santerno River in north central Italy, about 30 miles east of Bologna. 

Prior to getting into the tile market in 1913, Imola’s product focus was on tableware. And while the company has maintained the artisan focus from that era, it now operates five production facilities throughout Italy, employs 1,800 associates and has an annual capacity of 25 million square meters. Over the years, Imola has grown its presence here in the U.S. and it operates a major distribution center in Miami. The company’s logo is the symbol of the worker bee.

Less than two years ago, Imola enhanced its capacity to produce distinctive looking large format tiles with its state of the art Continua line. This new tile line cost $55 million and produces tiles that are approximately four feet square. Using equipment built by Sacmi, this line not only produces 5,000 square meters a day but does so with zero waste. The line is also super automated and requires very little human interaction. It creates distinctive through-body visual effects by layering raw materials on a moving belt, which are then precompacted and eventually compressed with the largest tile press in the world.

AQUAFIL’S ECONYL PLANT IN SLOVENIA
Thanks to Aquafil’s recent expansion (with its acquisition of Xentrys) in Germany, the company now commands over 200 million pounds of annual capacity for nylon 6 BCF carpet fiber, making it a major supplier to the carpet industry. With 13 facilities around the world, this privately held company now employs 2,100 people and 85% of its $685 million in annual revenue comes from supplying BCF nylon 6 to the carpet industry. The company’s factory in Cartersville, Georgia, which is on the verge of another expansion, currently produces 35 million pounds of nylon carpet fiber. 

These figures by themselves are impressive, but the best part of the story is what the company is doing on the sustainability front. In the past several years, the company has invested $50 million on its Econyl depolymerization plant in Ljubljana, the capital city of Slovenia. This investment was motivated by the increasing demand for carpet that contains post-consumer recycled content, and, as Giulio Bonazzi, the company’s CEO, says, “Our business is carpet and we wanted to make carpet more sustainable.”

One twist to this operation that sets it apart from the other recycling facilities around the world is that one third of its post-consumer waste comes from discarded nylon fish nets. Bonazzi quoted a United Nations statistic that estimates there are 1.5 billion pounds of abandoned fish nets in the sea and the number increases every year. These abandoned nets can wreck havoc on the underwater habitat for fish and turtles, so recycling them into carpet fiber is better for the environment.

At its current pace, the Econyl plant is converting ten million pounds of used fish nets into nylon carpet fiber on an annual basis. The remainder of its waste nylon feedstock comes from recycled carpet fiber. Of the 33 million pounds of renewed nylon fiber produced in Slovenia, half of it ends up back in the U.S.

While on a recent tour of the Econyl plant, I asked Bonazzi why he chose Slovenia for the location of the Econyl facility. He told me there were multiple reasons. Aquafil first moved into Slovenia in 1994, so there was already some infrastructure and real estate that could be expanded. But he added that the Slovenians are not only well educated but they were also one of the first societies in Europe to focus on recycling and minimizing waste. And lastly, Slovenia borders Italy on the northeast corner of the boot, so the Econyl plant is only four hours from Aquafil’s headquarters.



NEOCON EAST PERFORMED WITHOUT GOVERNMENT ATTENDANCE

NeoCon East has always been a major venue for architects, designers, manufacturers and contractors who target the GSA market. This year, though, the Baltimore show lacked the traditional crowds of government employees—they normally account for about 12% of attendance—because of the government shutdown.

In spite of the shutdown, this year’s attendance was only slightly down from last year’s because architects, designers and other non-government visitors—most of whom come to see products on the GSA schedule—showed up in greater numbers than last year.

Many of the manufacturers who exhibited said they rely on the GSA for as much as 50% of their total NeoCon East sales. They might have been disappointed by the no-shows, but there was still an air of optimism among both show-goers and exhibitors. Overall commercial flooring sales are up slightly so far this year, and the commercial market is expected to grow even more in 2014.

The beautifully designed Baltimore Convention Center is a considerably smaller venue than the Chicago Merchandise Mart. More than 250 exhibitors were spread out over a single floor, in spaces much smaller and more intimate than in Chicago. One of the more prominent spaces belonged to Bentley Mills, which won the Large Booth Award for its unique Western lodge look, which proved to be the ideal setting for its new product line, Western Edge. Like many exhibitors, Bentley showcased one or two important collections in the smaller spaces.

A total of 28 flooring manufacturers were among the 250 commercial product manufacturers who showed their products in Baltimore this October. Prominent among them were Atlas, Bentley, Bolyu, Crossville, Flexco, Forbo, J&J, Johnsonite, Mannington, Masland, Mohawk, Parterre, Patcraft, Roppe, Shaw Contract and Tandus.

Newcomers to this year’s show: Capri Cork and Centiva. Centiva, which was acquired by Tarkett in 2010, exhibited with Tarkett’s carpet brand, Tandus. Capri rolled out its new Mediterra Studio collection of cork tile with decorative details and borders for elegant custom looks. 
Frank O’Neill

 

 

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.

Copyright 2013 Floor Focus

 



Other Archived Articles

Gerflor Acquires Connor Sport Court   Full Article
Chicago, IL, Nov. 5, 2014 -- Gerflor said it has acquired Connor Sport Court of Amasa, Michigan.

Armstrong Illinois Plant Wins Sustainability Award   Full Article
Lancaster, PA, Nov. 5, 2014 -- Armstrong Flooring said its Kankakee, Illinois manufacturing facility has received the 2014 Illinois Governor’s Sustainability Award.

Services Sector Continues To Grow in October   Full Article
Washington, DC, Nov. 5, 2014 -- The services sector of the economy continued to expand in October but at a slower pace, according to the Institute for Supply Management.

Mortgage Applications Fall Last Week   Full Article
Washington, DC, Nov. 5, 2014 -- Mortgage application volume fell last week as interest rates increased, according to the Mortgage Bankers Association.

Businesses Add 230,000 Jobs in October   Full Article
Roseland, NJ, Nov. 5, 2014 -- Private employers added 230,000 jobs in October, payroll processor ADP said.

Earthwerks Names Head of Product Development   Full Article
Houston, TX, Nov. 5, 2014 -- Earthwerks has named Lindsey Nisbet head of product development and marketing strategy.

Linron Names de Beaumont VP Business Development   Full Article
Houston, TX, Nov. 5, 2014 -- Linron Co. has named Gilles de Beaumont, vice president of business development.

Domotex Asia Anticipates Larger Wood, Laminate Area   Full Article
Shanghai, China, Nov. 4, 2014 -- It will require four dedicated halls to house just the wood and laminate exhibitions at Domotex asia/Chinafloor’s 17th annual flooring show March 24-26 in Shanghai, organizers said.

Factory Orders Decline in September   Full Article
Washington, DC, Nov. 4, 2014 -- New orders for manufactured goods fell for second straight month in September on softness in the aircraft sector.

Lexmark Names Wellman Director of Architecture, Design   Full Article
Dalton, GA, Nov. 4, 2014 -- Lexmark Carpet said that Jennifer Wellman has been named director of architecture and design solutions.

Shaw's Tuftex Wins Cool Planet Award   Full Article
Dalton, GA, Nov. 4, 2014 -- Shaw’s Tuftex Division won the 2014 Cool Planet Award, which recognizes Southern California Edison business customers for demonstrating exemplary leadership in energy and carbon management.

Q.E.P. Completes Acquisition of Flooring Trade Supplies   Full Article
Boca Raton, FL, Nov. 4, 2014 -- Q.E.P. said that it has completed the acquisition of Flooring Trade Supplies, an accessory distributor in Sydney, New South Wales.

Stifel Nicolaus Praises Mohawk's Performance   Full Article
New York, NY, Nov. 3, 2014 -- Analyst Stifel Nicolaus says it continues to recommend the stock of Mohawk Industries with a "buy" rating as Mohawk "continues to execute in a very impressive manner given the slower demand environment across the globe."

Manufacturing Expands at Faster Pace in October   Full Article
Tempe, AZ, Nov. 3, 2014 -- U.S. manufacturers expanded at a faster rate in October, according to the Institute for Supply Management.

Construction Spending Dips in September   Full Article
Washington, DC, Nov. 3, 2014 -- U.S. construction spending fell for a second consecutive month in September, according to the Commerce Department.

Share of First-Time Home Buyers Lowest in 27 Years   Full Article
Washington, DC, Nov. 3, 2014 -- First-time buyers have accounted for the smallest portion of home sales in 27 years this year, according to the National Association of Realtors.

Economists See Strong Year for Builders in 2015   Full Article
Washington, DC, Nov. 3, 2014 -- A growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to increase in 2015.

Tarkett Acquires Carpet Maker Desso   Full Article
Paris, France, Oct. 31, 2014 -- Tarkett has acquired Dutch carpet maker Desso from Bencis Capital Partners.

Consumer Sentiment Highest in Over Seven Years   Full Article
Ann Arbor, MI, Oct. 31, 2014 -- U.S. consumer sentiment rose in October to its highest level in more than seven years, according to the Thomson Reuters/University of Michigan index.

Consumer Spending Declines in September   Full Article
Washington, DC, Oct. 31, 2014 -- U.S. consumer spending fell in September for the first time in eight months, according to the Commerce Department.