Executive Outlook: Residential demand isn’t expected to bounce back until later next year, but executives remain focused and optimistic - Dec 2023

By Jennifer Bardoner

What goes up must come down, and following the record years induced by the pandemic, overall demand is waning. But industry leaders remain cautiously optimistic. The fundamentals are there, they point out. And in the meantime, the outlook isn’t dire, more of a bump in the road back to traditional growth, which many expect to start to see later next year on the residential side. In the interim, commercial backlogs should help fill the coffers for companies serving that market. Here, executives of ten leading flooring providers share their outlook.

Tim Baucom
Shaw Industries CEO and president
Q: What do you foresee as we prepare to enter 2024?
Baucom: We, like most people in the home finishes space, expected renovation, refurbishment and repair to have been stronger than it was this year, but we see the pent-up demand over the next five years to be really good. The equity in homes is up. The needs of people in their homes are great-as they age, they are staying in their homes longer; or they’re not moving because they have a favorable mortgage.

We’re seeing a fair amount of project activity, but it tends to be smaller and more conservative than we anticipated. We’re hearing of more people doing two rooms instead of the whole floor. I don’t think that’s going to break free in the next six months. There’s still so much uncertainty. Also, some of the activity is postponable, and labor is constraining projects. There are a lot of people who want to do a project, but they’re in a queue.

Q: You describe your outlook as ‘uncertain but optimistic.’ What is contributing to that?
Baucom: Affordable housing is an issue at every economic strata right now. I think the fact that it’s being talked about across generations and incomes will be good for housing, and that will be good for our category. If a problem can be compartmentalized, we as a society don’t necessarily fix it. In the meantime, we are seeing more energy around better, best products. I think all our products are getting more exciting, so better goods aren’t reserved only for the highest price points. Our mindset is, “The units are going to be what the units are going to be. Let’s maximize excitement for the units we have.”

Q: How is carpet faring, and what is your outlook moving forward?
Baucom: The good news about carpet is that it’s been a valid indicator of where the market has been. LVT had such disruptions in the supply chain-you had overfilling, and now you have draining-that it probably distorted category demand. We’ve done a fair amount of listening to consumers, and they still like carpet in bedrooms. They are also open to understanding what is new and different and exciting about carpet. We believe there are opportunities for carpet next year to generate excitement, making it more likely that the rug that goes on top of hard surface is properly sized fabricated broadloom, rather than an inexpensive machine-made product.

Q: How are you strategizing around carpet?
Baucom: We’ve invested more in carpet in the last five years than I can remember, and I’ve been here a long time. We have redone our fiber and yarn extrusion assets to give us flexibility, and you will be seeing new assets come onstream all the way into the first quarter of 2025. I believe we are uniquely positioned within our family of premium fiber and yarn blends. We can make the right product out of the right ingredients, be it nylon or PET, natural or solution dyed. For example, a new extruder that can extrude polyester can also extrude nylon; it doesn’t necessarily go the other way. Similarly, an extruder that can make solution dyed can also make natural.

We want to be flexible, so we also repositioned our West Coast assets to be close to our extrusion in Columbia and Aiken, South Carolina; Dalton, Georgia; and Andalusia, Alabama.

Q: What are you seeing as big purchase drivers?
Baucom: One of the trends we see, particularly with younger consumers, is they want their individual personality to come forward. That particularly lends itself well to [carpet], even if that means covering the floor twice, first with a hard surface product and then with a rug made from properly sized broadloom. If people understand the exciting part about your product, they will pay for it.

Another thing our consumer research shows is that sustainability is a big driver-but you have to understand what that means. If you’re buying a whole building worth of flooring, like in commercial, the carbon footprint may be important. If you’re buying two rooms of flooring, you may care about carbon footprint, but you may see sustainability more as “What does that company do about carbon? What are the product’s health benefits or drawbacks for me, my children and my pet?”

Paul De Cock
Mohawk Industries president of flooring for North America
Q: What is your market outlook for 2024?
De Cock: We think the market will still be tight in 2024 until interest rates start coming down, hopefully, in the second half of the year. It will then take a while before demand reignites in the market. Under those circumstances, in most of the market segments, such as new-home construction, residential remodel and commercial, we are forecasting low- to mid-single digit declines. That being said, market weakness is never an excuse for Mohawk not to deliver. We plan to do better, execute more efficiently and create consumer preference in all the segments we participate in. The goal of the Mohawk team is to deliver growth in 2024.

Q: How can the industry better position itself to attract remodeling dollars?
De Cock: There are no other investments that can be enjoyed every day of the year and every moment of the day than an investment in the spaces where we live, work and play. Our industry needs to do a better job of influencing consumers to make this investment-to show them that new flooring not only adds to the functionality and value of their homes but also improves their emotional wellbeing.

Q: What strategic changes are you planning to implement in 2024?
De Cock: Mohawk is igniting a “Resilient Revolution.” We are going all-in with unique, new-to-the-world products, including our incredibly realistic SolidTech Premier SPC featuring Signature HDX technology.

We are also expanding our PureTech line of planet-friendly, PVC-free, waterproof flooring products. In addition, we are preparing for the rebound, which will ultimately come when rates go down and consumer confidence comes back. We have multiple product and merchandising updates across all our product categories going into the market in early 2024.

Q: With the ongoing hybridization of LVT and laminate, do you think category definitions need to be revisited?
De Cock: Category and products names are like wrappers that help you communicate all the flooring needs a consumer is requesting in one package. As long as you are fulfilling these needs-whether they are sustainability, performance or visually focused-category and product names are a methodology to communicate these relevant attributes more efficiently to the market. Mohawk is relying heavily on category definition, category brands and technology ingredient brands to convey the uniqueness of its products.

Q: Are you adding any domestic production capacity?
De Cock: Mohawk is a domestic company. We believe in better quality, better sustainability, better service and better reliability from domestically made products, and we will continue to focus on our domestic production. We are also sourcing products in niches where other countries might have better competitive advantage.

James Lesslie
Engineered Floors president & COO
Q: How was 2023, and what does that mean for 2024?
Lesslie: While there is no doubt that 2023 has been a difficult year for carpet, the seasonality trends have returned, with the second and third quarters being the stronger quarters and the first and fourth being weaker quarters. Due to Covid, that has not happened since 2019. I can’t say we’re seeing growth, though, and for 2024, the demand outlook-at least for the first half of the year-is more of the same. But the level of shrinkage is declining. That doesn’t mean demand is growing, it just means last year’s comps are easier. The relatively soft industry comps of third and fourth quarters suggest that this year we may be bumping along the bottom.

The commercial industry definitely started to slow down after the first quarter of this year, but our commercial business continues to grow, although at a slower pace. Multifamily slowed down a lot, both remodel and new construction. Until interest rates come down, there’s not a lot of people moving, so I see that for the next six to eight months demand will continue to be a little sluggish.

Q: Do you see any bright spots?
Lesslie: Retail is not the disaster people think it is. We’re still moving product into retail. Our Kinetex product works for so many retail stores; carpet works; LVT works. On the commercial side, school and institutional remain good. The weakest part is corporate office, but after another year, I see a turnaround coming in that segment.

Q: How can carpet better position itself in the market?
Lesslie: All the technology is making it a much better-performing product than it was five, ten years ago, and that’s encouraging, because if you buy carpet and have a good experience, you’re more likely to say, “I’m going to buy more.” We have seen with our new PureColor High-Def that differentiated products that are truly innovative-not just “Oh, it’s a new color,” but things that look and perform different-will catch the consumer’s eye.

Q: Has carpet managed to stem its losses to hard surface?
Lesslie: I think the bulk of losses have stopped; now it’s going to come down more to the economy. There will be demand that comes back when the economy comes back. When demand swings, it could be challenging on the supply chain side for people to keep up with it. There’s been a lot of capacity that’s been mothballed and even shut down, and some of it shut down so much that I’m not sure it can come back. I believe we have more go-power than our competitors combined. This year, we expanded in soft surface and in hard surface by building our LVT plant.

Q: How will your new plant’s digitally printed LVT factor into your offerings?
Lesslie: Our proudest achievement of 2023 is having commissioned that DLVT factory-we don’t call it LVT, because DLVT is as different from traditional LVT as laminate is. There will be a full array of introductions at Surfaces and samples in the field before then. The first wave will be middle to high-end products. It’s performance based, and a visual like nothing else, so you don’t make a commodity out of that. We see a great blending of our imported business and our manufactured business. The consumer will determine which side of our business will grow faster, and we plan to grow them both as fast as they want.

Laurel Hurd
Interface CEO & president
Q: Are you seeing growth anywhere, and, if so, how are you preparing?
Hurd: Across our segments, we are continuing to see strong demand in healthcare and education, and with corporate office holding steady, we are cautiously optimistic about that segment. Although we’re seeing some planned retail projects postponed, we think that business will come back. Looking ahead, we remain focused on selling our integrated system of carpet tile and resilient flooring solutions, and we’re pleased by the continued growth of our LVT and Nora rubber categories.

Diversification within our go-to market strategy has been and will continue to be important as we address the space-specific flooring needs of customers across multiple segments. We’re continuing to invest in our selling organization, building out our digital and physical communications strategies to meet our customers where they are, and delivering integrated flooring solutions to meet our customers’ space-specific needs.

Q: What is your biggest focus for Interface, now that you’ve settled in as CEO?
Hurd: Currently, one of my top priorities is implementing a new strategy to capitalize on our strength as a global flooring leader. We’ve globalized our functional teams, bringing together our expertise from around the world, and we’ve seen strong momentum in this area, as evidenced by the great work coming out of our recent global product launch, Past Forward. The wonderful thing about Interface is that it already has the secret sauce embedded within. I’m focused on unlocking our full potential and accelerating growth in a way that honors our legacy while looking forward to the future.

Q: What do you see as some of the biggest opportunities technologically speaking?
Hurd: There is a lot of innovation happening in the green technology space and with bio-based materials in particular that could totally change how we make products and the ingredients used to make them. Bio-based materials played a huge role in the creation of our CQuest backings, helping us further reduce the carbon footprint of our carpet tile and develop carbon-negative products.

These types of solutions are increasingly important as we see more interest from the A&D community in reducing the carbon footprints of their projects. Today’s customers are using tools that make it easy to find the carbon footprint of the materials they are specifying, and that’s driving innovation as well. We’ve invested in new software that allows our Interface Design Studio to provide customers with floor designs that include carbon footprint metrics right on their floorplans, so designers immediately understand how the flooring contributes to their project’s overall carbon footprint.

Q: What is your next big focus in terms of sustainability?
Hurd: We are constantly innovating with respect to our manufacturing processes, our raw material choices, our supplier partners and more as we work toward our goal of becoming carbon negative by 2040. A key customer-oriented sustainability initiative for us right now is the expansion of our carbon-negative carpet tile portfolio, which will help customers take direct action to reduce the embodied carbon in their projects. We are very focused on addressing our science-based targets, which aim to halve our absolute greenhouse gas (GHG) emissions by 2030. This is an aggressive goal for any company, and we’re doing this on top of already reducing the GHG emissions from our carpet business by more than 95% since 1996.

Tom Pendley
Mannington Mills CEO & president
Q: How do you feel heading into 2024?
Pendley: From a Mannington perspective, I feel really good about what we’ve been through in the last couple of years actually setting us up for 2024 to be a good year. We’ve had our challenges with the Invista conversion, and 2023, for us, was a challenge, specifically in residential. It’s no secret that we were heavily impacted by UFLPA. We’re happy with where we are going into 2024, but we aren’t kidding ourselves-the market is not going to be strong. I think it will be flat to slightly down in residential and commercial. In residential, specifically, I think we are seeing the bottom. In commercial, we’ve still got some headwinds and some downside risks in general.

Q: Do you see any bright spots?
Pendley: There are some commercial segments that are going to be really strong relative to others. Healthcare and senior living continue to be strong markets in the areas we play; also, education and government. I think the builder market will react very quickly when interest rates bounce down. There’s so much demand for housing, and you have so many existing homes that are locked into low interest rates. Some of the remodeling activity was brought ahead during Covid. I think remodel is going to be a challenge in 2024. But the fundamentals are really good for residential as well as commercial.

Q: What is your outlook on workplace, and how are you strategizing?
Pendley: Workplace is yet to be determined, and we’re looking at it as an opportunity. There’s a lot of commercial real estate risks and back-to-the-office risks, but at the end of day, if you own an empty building or you hand the keys back to the bank, one of the things they’re going to do is put paint and powder in that building, and that’s where we come in from a flooring perspective. We think well-designed, high-performance LVT is going to continue to gain traction in workplace, so we will drive our capabilities in LVT, our domestic manufacturing capabilities and being a design leader and promote that from a workplace perspective.

Looking at our carpet design, we went through a few years with our Invista conversion where design was not at the forefront as we worked to get a new fiber in place and substituted for all our Invista. We’ve now had about 12 months where we’ve really been able to focus back on design, so we’re going to be selling design again and driving our design capabilities with new construction and new capabilities that we’ve developed through the conversion.

Q: Will new investments come online?
Pendley: For 2023 and now going into 2024, we are heavily focused on our customer experience and core execution of our business processes, especially those that touch our customers. We’re going to continue to do that through significant IT investment. We’re about 40% of the way through.

We’re also going to invest in our product lines. After losing Invista, we are aggressively reinvesting in both carpet lines through commercial and residential product launches. And UFLPA impacted our [hard surface] product launches for 2023, so we will be reinvesting heavily in 2024 now that the supply chain is re-established. After the disruptions we’ve seen in 2023, we’ll be investing heavily in innovation and process improvements at our domestic rigid and flexible LVT plants, as well as in our global supply chains to support that business.

Brian Carson
AHF Products president & CEO
Q: What are you forecasting for 2024, and how are you preparing?
Carson: I think the first half of the year is going to be challenged, because residential remodel slowed as we went through 2023, and in 2024, you’re going to be lapping yourself. I expect we will see some improvement in residential remodel sometime later next year. I think new-home construction will grow next year, despite interest rates. Affordability is an issue, but people have to live somewhere, so you’re either going to be in something you own or in something you rent, and the population is growing. The remodel part of multifamily should also remain relatively strong, because, again, everybody needs a place to live. New multifamily, however, is going to slow. Financing for larger projects is more difficult and more expensive to get. We’re already seeing some new projects get put on hold in multifamily.

Commercial overall has been a bright spot in 2023, and I think it’s going to continue to be positive in 2024. Healthcare, education and government should continue to be strong. Office is going to be slow, but office is not a big category for us.

Q: How do you think market expectations will impact product launches?
Carson: I think you’re going to see the shows this winter be very active-many people have not reassorted their offering in a couple years. We’ve got all kinds of folks asking us for new product because they’re worried they’re going to miss opportunities when the consumer comes back. That’s why we’re launching so many new products, so when the consumer comes back, they will have the styles, visuals, colors and price points that today’s market finds appealing.

Q: How does your acquisition of Crossville position you in the market?
Carson: Five years ago, we were entirely residential, and almost entirely residential remodel. Our business today is half vinyl, half wood, and about one-third of it is commercial. Crossville makes us even more commercial oriented, which is a good thing. Our ability to bundle in those specifications is going to be very powerful for us, both commercially and residentially. If you’re looking for anything in hard surface, we have it, and we have differentiated products with tremendous value backed with blue chip service and brands. We both have factories and warehouses in Tennessee, so we’re going to get some logistic synergies, but fundamentally, it’s a service story: we’re easier to do business with because we have more of the solutions, backed through the relationships you know, love and respect.

We’re not looking to change Crossville’s direction-it had a really good 2023, and we’re looking to build upon it. We want to breathe investment into it and get it to the places it wants to go, even faster. We’ve got more access to capital; we can invest behind the good ideas.

Q: What investments are you planning for next year?
Carson: We’re continuing to invest in increasing our web presence, not just for the consumer but for the B2B aspect. We’re investing in five of our wood and vinyl plants in the U.S., and Crossville is investing in both its tile plants in Tennessee. We’re adding capacity in our commercial vinyl and our porcelain parts of the business. The commercial markets are doing relatively good right now, and we need some additional go-power there. We’re also doing some things in those plants to make new products and improve efficiencies. We’re very fortunate that we’ve got the financial wherewithal to do that. Not everybody does. That matters now more than ever because of the constraints on capital and the cost of capital.

Harlan Stone
HMTX CEO
Q: What are you most excited about for 2024?
Stone: Our thermoplastic polyurethane (TPU) flooring will be ready to go in 2024. Not only are we launching a new material, we’re launching a truly circular economy-designed product. People are trying to backend circularity into an existing product. We designed this product with a use, reuse, refurbish and recycle capability in mind. If the product is made so well that when you lift it off the floor, it is still intact, the value of that product in the supply chain and in the circular economy is multiplied. And if you use digital printing, there are a lot of opportunities to re-digitally print products. I think it will put us in an incredibly strong position to excite the potential of purchase based on a truly circular economy product.

Q: Is sustainability a major purchase driver?
Stone: The motivations of consumers are changing as the demographic changes. What do younger people care more about than older people? The first thing is sustainability. There is no doubt this is a rising value in the marketplace. They also care deeply about transparency and the moral attitudes and values of the companies with which they choose to spend their money. I see all of these as positive indicators for the future, and we’re trying to position our company to be a real 21st century flooring company by focusing on those three initiatives.

Q: How does price point factor in?
Stone: In my 43 years in the vinyl flooring industry, I’ve only seen the price go up. There may be dips along the way, but the average selling price over the last four decades has increased 10x-not 10%, not 100%; 1000%. I believe if you give the consumer perceivable value they can sink their teeth into, they will continue to buy flooring that suits their needs. It is not the consumer who is rejecting the cost of flooring, it is people who are scared of having too much inventory.

American consumers are the best and smartest consumers in the world. You’ve got to give them real value in order to get them to open up their wallet. Quality is first, so the really cheap products that perform badly will decrease in their percentage of the market. We believe there’s been an incorrect movement in our industry over the last few years, and we see it starting to wane. We’re looking now at better materials. Quality means durability and performance.

Q: Is there any new technology that could have a real impact on the category?
Stone: There’s going to be at least six or seven players with high-quality, high-speed, extremely accurate and responsive digital printing coming onboard in 2024. This will enable those players to launch new products more quickly, and that will speed up the delivery time of innovative and design-appropriate products. It is possible that we will see a more fashion-oriented view in flooring because of this. That’s our goal.

Q: Will those new capabilities mean we won’t have to continue to rely on China?
Stone: The thought that the flooring industry, specifically LVT, can decouple from China is not grounded in reality. Over the last ten years, many people, myself included, have invested in domestic production, and we’ve yet to break 5% of the total market domestically sourced. If the market is going to grow at 8% per year, it’s impossible. It will become more diverse; it may be nearshored. Diversity in the supply chain creates better sustainability in terms of your business continuing operations. We are embarking on an extremely broad diversity of our supply base. I’m not going to list the countries, but our goal is to increase to five.

John Wu
Novalis Innovative Flooring CEO
Q: Has 2023 lived up to your expectations? What are you forecasting?
Wu: Everybody was so excited last year that we were going to have a great year, then inflation drove interest rates up, and that has affected consumer sentiment. This has been a soft year. We were able to maintain our marketshare and our business levels, but it wasn’t a growth year like we expected. I see softness going into the first two quarters of 2024, minimum, then hopefully it will come back. But long term, we all know there’s not enough housing. Builder activity has surprisingly been pretty strong-I would even use the word “strong.” They have this sense of nervousness: “If I don’t build now, I won’t be able to handle it in two years when we’re out of this minor slowdown. If the interest rate is not going to come down anytime soon, I have to build now; I can’t wait much longer.”

Q: Are there any bright spots on the commercial side?
Wu: Healthcare continues to have money to spend. They are continuously trying to improve their look, especially after Covid, because for a long time they weren’t able to upgrade their facilities. There are some bright spots with hospitality as well. As people are traveling more, they’re seeing the need to upgrade to attract the tourists again. It’s hard to predict too far out, but there is enough backlog to last most of next year, not only for us but generally for these markets.

Q: How can the industry attract more remodeling dollars?
Wu: I think products below $4 or $5 per square foot will be high-volume drivers. We need to stop driving to the $5, $6, $7 per square foot price point unless it’s a really unique product or you’re targeting a specific audience. At the end of the day, consumers want to buy a good product at a reasonable price. That’s what value truly means.

Q: Are there any new offerings that could help move the needle?
Wu: At Surfaces, we will be launching a new product that has a high amount of bio-based content. One of the more sustainable products, I think it will make a huge dent in the marketplace, and even if it’s not next year, the adoption will be fast. We’re trying to satisfy what we see as a missing feature of LVT-sound transmission-and we’re trying to make it as ecofriendly as we can while still making it affordable. PVC-free is still too expensive. We’re also continuing to invest in our NovaFloor collection with new offerings for our distributors. Our distributor customers are very excited about what we’re going to launch. It will be more competitive than ever.

Q: What does your sourcing strategy look like these days?
Wu: We added a Mexico SPC facility this year, and we plan to expand that next year. It’s the best of both worlds between the U.S. and Asia. If you look at export reports, there’s still a significant amount of LVT coming from China. Vietnam is picking up big shares, and that’s obviously because of the tariff. We have expanded into Vietnam ourselves, so we grabbed some volume from there to try to help our customers. We also have production in the U.S., so we give our customers options. Some prefer to pay more so they have a closer supply chain, less inventory they have to deal with, and fewer potential headaches due to long distances, the freight challenges of a few years ago, tariffs, UFLPA. To us, it’s about offering a full portfolio of options to our customers.

TM Nuckols
The Dixie Group president of residential
Q: How are you positioning yourselves going into 2024?
Nuckols: We have made significant cost reductions since 2022 that have improved our margins and results. We will continue our cost reduction efforts into 2024. I see a continuation of the soft conditions we have been experiencing well into 2024, hopefully not the whole year but at least into Q3. We will continue our share-gain strategy by expanding into targeted segments, including a stronger push in the polyester, decorative/wool and hard surface categories. Our bright spots have been our upper-end brands, which have consistently outperformed the market in recent years.

Q: How does your decorative brands’ performance tie into your overall outlook on the higher end of the market?
Nuckols: Our decorative segment has grown significantly, even in today’s tough market conditions-the higher-end carpet segment has outperformed the general market for years. 1866 by Masland has seen a significant lift in business from our new introductions over the past couple of years. Décor by Fabrica was a bit later getting into the market, but we are now starting to see good traction in that program as well. The strategy is working, and we are now in the consideration set for many product categories where we simply did not have an offering in the past. We see a lot of room to grow and will continue investing in this segment.

If there are fewer units being sold, selling higher-end goods is the best strategy for a retailer to maintain or even grow their revenue and gross-margin dollars in their carpet category. Retail sales associates can make more commissions, and dealers can make more money. There is really no barrier to selling high-end carpet. It sells for the same price points as middle of the road hard surface products, and it has fewer installation issues and complications.

Q: What is your outlook for carpet, and how does capacity correlate?
Nuckols: Compared to the peak in 2021, unit volumes declined double-digit percentages in 2022 and again in 2023. There is excess capacity in the carpet industry right now. Many manufacturers have consolidated carpet manufacturing operations, us included. But in terms of carpet share, carpet has already been relegated to the bedrooms and sometimes a basement or home office, and I believe carpet will continue to be the preferred choice of flooring in those areas. Also, with the increased share of hard surfaces, well-styled carpet will see a lift in fabricated rug sales as well as hallway and stair runners.

Q: Are there any new capacity or efficiencies that will come online in the next year?
Nuckols: We have invested in nylon fiber extrusion, which will start up in early Q2 2024. This will provide a lower-cost fiber option and help protect us from any other unexpected disruptions that could occur in the nylon supply chain. Our plans for an LVT plant have been tabled based on the significant reductions in ocean freight over the past year or so. That will not slow us down in our hard surface segment. We will continue introducing new innovations and updated visuals across all of our TruCor and wood programs.

Scott Maslowski
Dal-Tile senior vice president of sales
Q: Do you think tile will be able to take back marketshare from LVT?
Maslowski: LVT has its place as an easy installation, but tile continues to hold its own in all segments. The visuals are good, and tile has a proven long lifecycle. Typically, whether on the commercial side or the residential side, end users are making an investment for an extended amount of time, and tile delivers.

Installation labor is one of the things that really hold us back-I think the demand for tile is greater than what we have the ability to install today. We’re continuing to work with the National Tile Contractors Association, Ceramic Tile Education Foundation, Tile Council of North America and Tile Contractors’ Association of America on education and training and doing more to educate people on the benefits. We need to be partnering more at the high-school level. We have to be much more aggressive, because it’s definitely a constraint.

Q: What is your forecast for 2024?
Maslowski: The residential remodel business is probably the most unpredictable, but we think there is some upside there. Because a lot of people are locked in at interest rates of 3.5% or 4%, they’re not going to be motivated to relocate, so there’s a fair amount of investment possible for the houses they are in.

Commercial should be pretty good for the first half of the year based on backlogs. We’ll probably start to see some slowdown in the second half. A couple areas, we think, will hold up. Education has always been recession resistant. There is still a lot of investment going on in healthcare. And national accounts in general, whether it be automotive or fast food, continue to be bullish and are still playing into the cycle thinking it’s going to be short-lived.

Q: Are you planning any new capacity or capabilities for next year?
Maslowski: We have begun making 2 cm products out of our Dickson, Tennessee plant and will continue to expand this.. We’ve spent a fair amount of time in the last couple years talking about tiles getting bigger. Now, tiles are also getting smaller. Our Florence, Alabama plant, in particular, will have a lot of related capabilities.

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