Focus on Leadership - Aug/Sep 2012

Interview by Kemp Harr

Arthur B. Dodge III is the fifth generation leader of a U.S. based flooring producer that now calls itself Ecore International and he currently serves as chairman and chief executive officer. Ecore, the largest user of recycled tire rubber in the U.S., manufactures a variety of flooring and sports surfacing as well as cork and rubber products for industrial applications like gaskets, and specialty products like bullet traps for shooting ranges.

Dodge earned a bachelor’s degree from the American University School of International Studies, a JD from the University of Pittsburgh School of Law, and an MBA from the Institut pour l’Etude des Methodes de Direction de l’Enterprise in Lausanne, Switzerland. He has also worked as a manager for Bain & Co. in London and as a law clerk/associate in Pittsburgh, Pennsylvania.

Q. Give us a little background on your family’s history in the flooring business.
A. In 1871, G.W. Dodge began manufacturing cork products in Berlin, New York. In 1876, the company moved to Lancaster, Pennsylvania. G.W. was succeeded by B.G. Dodge, his eldest son, in 1885, who along with Thomas Armstrong agreed to form the Armstrong Cork Co. in 1895. B.G. remained a director of Armstrong until the 1920s, when his son, Arthur, re-established the Dodge Cork Co. A.B. Dodge pioneered the production of composition cork floor tile and later vinyl cork tile in the 20s and 30s. The family also participated in the development of linoleum flooring and distributed linoleum manufactured by Nairn in Scotland, Krommenie in Holland and DLW in Germany until the middle of the last decade.

Both my grandfather and great-grandfather were engineers educated at Cornell. They lived at the height of the Industrial Revolution and they loved to invent. Prior to re-establishing Dodge Cork, my grandfather built railroads, designed cars and built one of the first tractors. History says that G.W. Dodge started in business for himself after securing a large contract for cork stoppers with the Gulden Mustard Co. He also befriended H.T. Heinz, so he had successful friends that helped him along the way.

Q. We see where you worked for Bain Capital at the same time as Mitt Romney. Based on that experience, can you share any stories about Romney? Do you think he’d make a good president?
A. I did work for Bain Consulting from 1984 to 1988. Mitt was the partner in charge of my first case. We worked for Al Taubman, who had just acquired Sotheby’s Holdings, and we did a profit enhancement analysis for the company. Mitt attended a few meetings and events. The work we did laid the foundation and strategy for what Meg Whitman did at eBay. Meg is an ex-Bainee as well. Mitt is an excellent manager with far more experience creating systemic wealth and dealing with complex problems than our current president.

Q. You obviously weren’t drawn to the flooring business in the early stages of your career despite the fact that your family has focused on flooring since the mid 19th century. What drew you back into it?
A. My re-entry into the family business was pure circumstance. I tore an Achilles tendon playing squash and contracted an infection from the surgery, which put me out of action for three months in 1988. During my recovery, my father asked me to look at recycled rubber as a new business opportunity. I was intrigued. It was going to take a massive effort to restructure the business, but that’s what I was trained to do.

Q. How did your company become the largest user of recycled tire rubber in the U.S.?
A. Dodge Cork was making recycled rubber and cork materials for industrial markets in the 1970s. The company produced the first recycled rubber commercial flooring in 1988. It was a black floor and our first customer was Nickelodeon, a division of Viacom. The order was for 36,000 square feet of 9mm tile.

Over the next 20 years, we scaled the technology through a joint venture and expanded rapidly. In addition, we were early supporters of USGBC and LEED. Lastly, we developed compelling brands such as Everlast and EcoSurfaces, now the leaders in their respective markets.

Q. Ecore has many businesses. What percentage of the company’s revenue comes from flooring products? What is the international vs. U.S. breakout?
A. Almost 80% of Ecore’s revenues come from surfacing products, which include playground safety surfacing and artificial turf fields. Approximately 45% of revenues are derived from commercial/multi-family flooring systems and 10% of revenues come from international sales. About 35% comes from interior flooring.

Q. Is there a downside to using recycled tire rubber as a raw material, such as contaminants? How do you overcome that?
A. Tire-derived scrap is extremely difficult to refine and clean into a homogeneous feed stock. Ecore has extensive facilities dedicated to rubber materials processing and refining. Ecore raw materials are contaminant free, which translates into the superior quality finished products.

Earlier this year Ecore opened a new recycling center at our York, Pennsylvania campus. The facility has the capacity to process in excess of 100 million pounds of rubber into uniform, homogeneous raw materials.

Q. What are the advantages of rubber versus other flooring materials?
A. Rubber is among the most engineered man-made materials. It is formulated to resist wear and degradation, remain permanently resilient, be unaffected by moisture, maintain a high coefficient of friction when dry or wet, absorb sound and impact, and be relatively inexpensive. The lifecycle costs for rubber flooring are lower than for virtually any other material.

Q. What is EcoSurfaces’ unique selling proposition? What sets it apart?
A. EcoSurfaces was designed in the early 1990s to deliver a new platform of cost effective, resilient commercial flooring with a uniquely compelling environmental story. Prior to the introduction of EcoSurfaces, there simply were no high recycled content floor coverings in the industry, period. Well before Ray Anderson became a green advocate, Ecore and EcoSurfaces were providing eco-based solutions to designers and end-users.

Five years ago, I decided it was time to take recycled rubber flooring to the next level. Rubber is exceptionally functional, but also has design limitations. So, we began work on new process technology that would enable us to marry a virtually unlimited range of ingredients to the universe of resilient and textile finishes. Crafting a new technology is very hard and we were plagued with unanticipated hurdles and issues. Investing millions of dollars and doing the development work in the face of the worst economy in our lifetime made me question myself on more than one occasion. But I was certain that if we could overcome the technology issues, we could create a new standard in the floorcovering industry. We now have a backing technology that resists moisture, can’t crack, chip or rot, has a whole range of ergonomic and acoustic benefits and contains 90% post-consumer recycled content. It sounds too good to be true, which is how we arrived at the name “itstru technology.”

Q. Tell us about Eco98.
A. Eco98 is our new product introduction using itstru technology. It is a combination of a 100% post consumer PET non-woven face on a 96% recycled rubber backing for a 98% post consumer recycled content product. The technology is not exclusive to Ecore products. We are developing products with other OEMs as we speak. We see this as a new platform technology.

Q. Today, Ecore is a marketshare leader in rubber gymnasium floors and even has an arrangement with Nike. Tell us about that sector and your relationship with Nike.
A. Our Everlast sports flooring is the category leader in the health and fitness market. We co-branded the product with Nike by incorporating a percentage of recycled shoe materials in all our Everlast products. Ecore is deeply committed to Nike’s sustainability objectives, so much so that we are Nike’s exclusive flooring partner globally. We plan to expand our offerings of Nike Grind branded products, particularly where we market directly to the consumer.

Q. We understand that you are trying to expand the target areas of where your products are used from traditional gym floors to broader applications like healthcare facilities and office buildings. Talk about the steps you’ve taken to build on that strategy.
A. Itstru technology opens a new platform for Ecore. We can dramatically enhance the performance and functionality of almost all resilient and textile floorcoverings, from vinyl to carpet tile. In addition, we enhance a product’s “green” characteristics. We are working with numerous OEMs in advancing our strategy. The biggest step is that we continue to take risks while others appear to be waiting for the sun to come out again.

Q. As a channel strategy, you’ve opted to go with sales agents instead of distributors. Tell us why you think that is the best strategy.
A. The traditional lines demarcating the roles of manufacturer, distributor, dealer and contractor vary widely across the industry and are increasingly muddled. Distributors play a vital role in servicing contractors with products that are in constant demand and turn over quickly. Ecore’s product line did not fit well into a traditional distributor model. Ecore also had a production focus and was not a sales oriented company. We were also a relatively small player in the commercial flooring market, so we simply could not support a company owned sales force. For these reasons, we’ve relied on independent agents supported by our regional managers network to service the A&D community and our Starnet allies.

Q. We ran the news earlier this year that you had added Tom Davis, former president of Mannington, to your board. How has Tom contributed to your strategy and future plans?
A. Tom is one of the storied leaders in our industry. I hope that with Tom’s help we can reposition Ecore Commercial Flooring as a recognized member of the resilient flooring fraternity. Tom is also a great mentor for me personally. You simply cannot teach experience.

Q. Are there certain parts of the flooring business that frustrate you?
A. On a macro level, the flooring industry is at the mercy of the chemical industry. So it’s frustrating to see input costs change with little to no warning or consideration of the impact random price changes have on our industry. There’s also what I call the standards lottery. Flooring standards and testing protocols are riddled with uncertainty and conflicts. There’s also a flagrant disregard for patent and trademark protections within the industry. A commercial floorcovering industry association is long overdue.

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