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

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NAFCD Names Award Winners   Full Article
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First TISE East Draws International Attendees   Full Article
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NAFCD Urges Members To Support Habitat Stores   Full Article
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Desso Using Water Company Waste in Carpet Tile   Full Article
Waalwijk, The Netherlands, Nov. 11, 2014 -- Carpet company Desso said it is using chalk from local water companies to make its products.

Investment Adviser Reduces Stake in Armstrong   Full Article
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Mr. David's Founders Named Persons of Year   Full Article
Chicago, IL, Nov. 11, 2014 -- David and Leonard Zmijewski, the founders of Mr. David's Flooring International, have been named Persons of the Year by the Chicago Floor Covering Association.

Dover Rug & Home Wins Philanthropy Award   Full Article
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More Home Refinancers Taking Cash at Closing   Full Article
Washington, DC, Nov. 10, 2014 -- Borrowers cashed out an estimated $8 billion in home equity through refinancing of conventional mortgages in the third quarter, according to Freddie Mac’s quarterly refinancing report.

Berkshire Hathaway Reports Lower Sales and Earnings for Shaw   Full Article
Omaha, NE, Nov. 10, 2014 -- Berkshire Hathaway reported third quarter net earnings of $4.6 billion, or $2,811 a Class A share, compared with $5 billion, or $3,074 a share, a year earlier.

Existing Home Sales Expected To Pick Up Next Year   Full Article
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Former Starnet Chairman Wins Mayoral Election   Full Article
Point Pleasant, NJ, Nov. 7, 2014 -- Former Starnet chairman Bob Sabosik won his bid for mayor in Tuesday's elections in Point Pleasant.

Mohawk CEO Lorberbaum Discusses Firm's Growth   Full Article
Chattanooga, TN, Nov. 7, 2014 -- Mohawk Industries CEO Jeff Lorberbaum told the Chattanooga Rotary Club that his firm is investing $500 million in its existing businesses in a bet on an improving economy.

Economy Adds 214K Jobs, Unemployment Falls   Full Article
Washington, DC, Nov. 7, 2014 -- Employers added 214,000 jobs in October and the unemployment rate fell again, the Labor Department said.

Attendance at Cersaie Rises This Year   Full Article
Bologna, Italy, Nov. 7, 2014 -- Attendance at Cersaie 2014, the international exhibition of ceramic tile and bathroom furnishings held in Bologna in September, once again topped 100,000 visits, according to organizers.

Builders More Confident in Senior Housing Market   Full Article
Washington, DC, Nov. 7, 2014 -- Builder confidence in the 55+ housing market was up again in the third quarter, according to the latest release of NAHB’s 55+ Housing Market Index.

Housing Markets Improving at a Gradual Pace   Full Article
Washington, DC, Nov. 6, 2014 -- Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter.