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

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.

Previous Record Low Rates Hurting Home Sales   Full Article
New York, NY, July 11, 2014 -- Low interest rates are keeping some people from selling their homes, which is limiting supply and putting a damper on the housing recovery.

Metroflor's Aspecta Wins Award   Full Article
Norwalk, CT, July 11 -- Metroflor said that its new LVT contract brand, Aspecta, was acknowledged by the Product Innovations 2014 awards bestowed by Buildings magazine to a group of 30 finalists exclusive to NeoCon exhibitors.

Buchanan Hardwoods Gets NWFA Certification   Full Article
St. Louis, MO, July 11, 2014 -- The National Wood Flooring Association said that Buchanan Hardwoods, of Aliceville, Alabama, has earned the NWFA/NOFMA Mill Certification for its Elite Flooring.

Business Economists See Improving Economy   Full Article
Washington, DC, July 11, 2014 -- Business economists have lowered their expectations for second quarter growth but don't believe a recession will occur anytime soon.

Initial Jobless Claims Beat Expectations   Full Article
Washington, DC, July 10, 2014 -- Initial claims for unemployment benefits fell 3.5% to 304,000 for the week ending July 5, according to the Labor Department.

McGrane Named Executive VP at Max Windsor   Full Article
Adairsville, GA, July 10, 2014 -- Joshua McGrane ?has been named executive vice president? of ?Max Windsor USA.

Tile of Spain Seeking Design Contest Entries   Full Article
Madrid, Spain, July 10, 2014 -- The 13th Tile of Spain Awards of Architecture and Interior Design is seeking entries.

Lumber Liquidators Lowers Forecast, Stock Plunges   Full Article
New York, NY, July 10, 2014 -- Shares of Lumber Liquidators fell as much as 15% in after-hours trading on Wednesday after the company lowered guidance for the full year 2014.

Soniclean Partners With Shaw on Soft Carpet Vacuum   Full Article
New York, NY, July 10, 2014 -- Soniclean said it has partnered with Shaw Industries to address the growing demand for a vacuum cleaner capable of cleaning soft style carpeting.

Teragren Names Vice President of Sales   Full Article
Bainbridge Island, WA, July 10, 2014 -- Teragren has named Mark Jordan vice president of sales.

Dixie Group Added to Russell Stock Indexes   Full Article
Chattanooga, TN, July 10, 2014 -- The Dixie Group said it was added to the Russell 3000 Index and Russell 2000 Index when Russell Investments reconstituted its comprehensive set of U.S. and global equity indexes on June 27.

Congoleum Closing New Jersey Warehouse   Full Article
Hamilton Township, NJ, July 10, 2014 -- The Congoleum flooring warehouse here will cease operations later this year.

CRI Posts Model Specification for Commercial Carpet   Full Article
Dalton, GA, July 9, 2014 -- The Carpet and Rug Institute said its Model Specification for Commercial Carpet is now available online at Carpet-Rug.org.