Hardwood: Producer Overview - Apr 2016
By Darius Helm
Hardwood has always been an American tradition, but over the last couple of decades that tradition has returned with renewed vigor. These days, everyone wants the look of hardwood, from homeowners and property managers to institutions, corporations, restaurants and hospitals. And when hardwood can’t meet the price or performance demands for a particular application, LVT, ceramic tile and laminate flooring fill the need with convincing visuals and textures.
Last year was a fairly good year in hardwood, with the category up by low to mid single digits (see next month’s Annual Report for a full analysis of the hardwood flooring market in 2015). And according to Wood Resources International, the U.S. lumber market was up almost 5% last year. It looks like supply and demand is not as volatile as it has been the last few years. Michael Martin, president and CEO of the National Wood Flooring Association, reports that demand is down for solid hardwood and supplies are strong, while demand for engineered flooring, and longer, wider boards, is up. Overall, solid hardwood prices are more volatile than engineered prices.
CHALLENGES IN HARDWOOD
The most significant issue in the hardwood industry right now seems to be private label imports. Over the last few years, there has been a surge in private label programs out of Asia, generally going to distributors and sometimes even retailers—and putting domestic hardwood producers in direct competition with their distributor and retail partners. These low cost imports also put pressure on price points, narrowing margins. Santo Torcivia of Market Insights points out that this trend is partly the result of hardwood producers not putting enough effort into the branding of their products. Instead, distributors and retailers are doing the investing and reaping the results. The most prominent example is Lumber Liquidators’ Bellawood brand, with $100 million in annual revenues.
Mind you, Lumber Liquidators is hardly the poster child for sound business practices in the industry. Another challenge to the industry relates to fall-out from the Lumber Liquidators formaldehyde controversy. Even though the issue was about laminates, consumer concerns immediately bled over into hardwood. This is mostly due to market confusion. Lumber Liquidators is best known for hardwood; consumers confuse hardwood with hardwood looks in other categories; and there is actually formaldehyde in all hardwood flooring, though generally at levels far too low to impact human health. Nevertheless, hardwood vendors have had to defend their products over the last year. Some manufacturers report that it’s actually been good for them, because the quality of their products has lifted them above the fray.
Another challenge to the hardwood industry comes from lookalike products, like LVT, laminates and ceramic tile. With the exception of tile, most of these products cost less than real hardwood, and the quality of the visuals and textures has evolved so much that many consumers feel comfortable using these faux wood products instead of the real thing.
The formaldehyde issue and the lookalike issue provide an interesting opportunity for the industry, because the response in both cases is an environmental one. Hardwood is generally greener than the lookalike categories and doesn’t harbor the sheer volume and variety of chemicals and synthetic materials. So it falls to the hardwood industry to unite and make their case to the consumer.
THE DIVERSIFIED LEADERS
Four of the largest domestic hardwood manufacturers are major producers in multiple flooring categories. Armstrong, Shaw, Mohawk and Mannington together account for over $1 billion in U.S. hardwood flooring sales. Next month’s Floor Focus Annual Report will include a complete analysis of the latest developments at these firms, along with two other prominent hardwood leaders, Somerset and Mullican.
The largest domestic hardwood producer is Armstrong, with $474 million in total net sales in its wood flooring segment, most of which comes from U.S. business. That’s down over 5% from 2014. Armstrong is also a major producer of resilient products, along with a substantial laminate business. That side of the business had sales of $708 million last year, up about 2% from 2014.
The firm is part of Armstrong World Industries, which a year ago announced that it would split into two separate companies, Armstrong Building Products (its ceiling business) and Armstrong Flooring. The ceiling operation has annual revenues of around $1.3 billion, while Armstrong Flooring is just over $1.2 billion. Last month, Matt Espe, president and CEO of Armstrong World Industries since 2010, announced that he would step down when the companies split up later this year. It is anticipated that Armstrong Flooring will be run by current flooring CEO Don Maier, while Vic Grizzle will continue to run the ceilings business.
The bulk of Armstrong’s hardwood is manufactured by the firm, with some collections coming from overseas production. Overall, 40% of its hardwood is engineered and 60% is solid. In terms of design, the firm has been adding to its rustic offering with new collections, like the solid hardwood TimberCuts line and the engineered TimberBrushed. TimberCuts features saw marks and other distressing, while TimberBrushed has a wirebrushed visual, and it’s 7-1/2" wide and 84" long.
Shaw Industries, the largest carpet manufacturer in the flooring industry, also has substantial hard surface operations, including a hardwood business with close to $300 million in total sales. Its business is split about evenly between the builder and remodel markets, and last year the single-family builder market helped drive high single-digit growth. The firm goes to market with hardwood through Shaw Floors, which goes direct to the firm’s retail partners, and Anderson Hardwood Floors, which is shifting its strategy and also going direct to dealers, starting in June.
Following the trend away from solid hardwood, the firm has expanded its engineered hardwood assets, specifically its production of hybrid engineered hardwood floors with high-density fiberboard cores, Epic and Duras. Epic was originally introduced in 2007, and last year Shaw took its Epic concept one step further, with an enhanced HDF core, called Stabilitek, for higher performance and increased moisture resistance, and the development of a new tongue and groove profile. The new product goes to the retail market as Epic Plus and to builders as Duras.
Engineered hardwood accounts for about 75% of Shaw’s hardwood flooring offering. The firm manufactures engineered flooring in its two facilities in Clinton, South Carolina and its facility in South Pittsburg, Tennessee. The Epic products are largely made in South Pittsburg, which was recently expanded to accommodate the new line. Solid hardwood is manufactured in Stuart, Virginia and in two facilities in North Carolina, one in Bryson City and one in Franklin.
Most of Shaw’s solid hardwood is made of oak, while hickory accounts for the majority of engineered veneers. Maple also accounts for a lot of flooring, both solid and engineered. The three combined make up about 85% of the firm’s production. The balance comes from other North American hardwoods along with some exotics from South America.
Mohawk Industries, the largest flooring producer on the planet, is also the third biggest domestic hardwood producer, with U.S. sales north of $220 million. The firm, which reports double-digit hardwood growth in 2015, has three domestic facilities as well as one in Malaysia and another in the Czech Republic, acquired in 2014. The domestic facilities include an engineered flooring operation in Danville, Virginia, as well as solid hardwood mills in West Virginia and Arkansas. The Arkansas facility is also adding engineered hardwood capacity this year.
Mohawk has a handfull of hardwood brands: Columbia and Century, which both go through distribution; Mohawk, which goes direct to the firm’s retail network; Pergo Wood, which goes to Lowe’s; and QWood, a hardwood line under the Quick-Step brand, which also goes through distribution.
The Mohawk brand accounts for the largest portion of hardwood sales. Columbia and Century, which together make up the other big chunk of Mohawk’s hardwood sales, have been part of the Mohawk family since the firm’s $147 million acquisition from Columbia Forest Products in 2007. The acquisition included three domestic facilities as well as the Malaysian mill. Pergo Wood, the home center brand, was launched in 2014 as a locking program, but has since been expanded with longer and wider boards, and it includes solid hardwood. QWood, which is about two years old, is most notable for its finish, which has the look of an oil finish but the performance of polyurethane. That line was also launched with a glueless installation system, but this year its longer, wider Elongé plank, with widths from 4" to 7" and lengths up to 6', doesn’t come with a click system.
Last year, the home center channels posted the strongest growth, due to the new presence of Pergo Wood. However, much of the firm’s overall growth was due to traction from new introductions, including the domestic production of handscraped products. About 80% of Mohawk’s products are made in-house. The rest are sourced from overseas, and some of that comes from the firm’s Malaysian facility.
Mannington Mills, which turned 100 at the end of last year, is another hardwood leader. The firm also makes resilient sheet, LVT, commercial sheet and tile, carpet tile, broadloom and laminate flooring. Last year, hardwood revenues were up an estimated 7%, in part because it sold a better mix of products. Regionally, business has been strong in the Midwest, and the firm is starting to see renewed activity on the West Coast. One of the more sluggish markets has been the Northeast.
While Mannington sells to builders, the bulk of its business is on the remodel side, entirely serviced through independent flooring dealers, and almost entirely via two-step distribution, to the U.S., Canada and Mexico. Price points are in the middle to upper end.
All of Mannington’s hardwood is engineered, and about 80% of it is produced domestically. The balance is typically sourced because it requires formats the firm isn’t capable of or finishing techniques that it could not otherwise accomplish. The major species Mannington uses are, in order, oak (red and white), hickory and maple. On the builder side, oak heavily dominates, while hickory is the number one species at retail.
Hickory is in such high demand that it’s approaching oak in Mannington’s total volume, and that’s a problem—not just for Mannington but also for the industry as a whole—because the U.S. lumber business has always been heavily oriented around oak. About 58% of standing hardwood timber is oak, while hickory makes up only 20%. The other trending species is white oak, but it doesn’t face the same supply constraints.
When it comes to design, the firm is continuing to develop larger formats. It already has several collections that are 7" wide and up to 7' long. This year, some of those larger formats will be introduced at lower price points.
THE CANADIAN CONTINGENT
Canada’s vast forests are a major source of lumber for its many hardwood producers, the most prominent of which are in the province of Quebec. In general, hardwood coming out of Quebec is heavily weighted toward maple, since it’s prevalent in northern forests, while U.S. producers focus more on oak. Also, Quebec’s hardwood producers have long had a reputation for high-end classic looks, and many were reluctant to follow U.S. trends over the last decade toward rough hewn handscraped looks. However, as the trend has shifted toward wirebrushing, timeworn textures, white oak wide planks and low gloss pale visuals—driven by European tastes—these Canadian manufacturers have once again found themselves at the center of fashion forward developments. A movement back toward higher grade hardwoods, rather than character grades, also suits the Quebec hardwood aesthetic.
Some Canadian producers go direct to U.S. retailers while others use traditional two-step distribution. However, sales in Canada generally go direct.
Canadian hardwood manufacturers report that the Canadian market has been fairly restrained over the last year, with growth in the east held back by sluggish western provinces. This is largely due to a major slowdown in shale oil and gas development in provinces like Alberta and Saskatchewan, with the entire industry almost ground to a halt by artificially low global crude oil prices.
However, eastern Canada has been a different story, with more economic growth and stronger hardwood sales. That’s particularly true in Ontario, thanks in part to developments in and around Toronto, which is still in a building boom, despite expectations of a slowdown. The region is also a locus for the nation’s burgeoning immigrant population—Ontario takes in the bulk of immigrants entering Canada. Tens of thousands of residents move into the region every year. And Toronto itself has continued to defy expectations with its commercial and residential expansion.
One of the most prominent North American hardwood producers is Mirage, which is based in St.-Georges, Quebec. The firm, whose corporate name is Boa-Franc, makes both solid and engineered flooring, in approximately equal amounts, with its U.S. sales largely from engineered hardwood and Canadian sales stronger in solid. Solid hardwood is also strong in New England, where tastes run toward the traditional, and in parts of the northern Midwest.
Last year, Mirage’s sales were up by single digits, with Canada outperforming the U.S. However, good growth is expected in the U.S. this year. Mirage goes direct to Canadian customers, and through two-step distribution in the U.S. Its Canadian business is split between retailers and higher end builders, but in the U.S. its products largely go to retailers for residential remodeling.
Mirage, a producer of higher end hardwood, has an enviable reputation for quality, and it’s hugely popular among U.S. retailers—it regularly beats out the competition when it comes to quality, according to Floor Focus’ annual survey of independent retailers. And in the East, where Mirage is strongest, it also tops the list in terms of service and design.
Keeping up with demand for matte finishes, last year Mirage came out with Duramatt, a polyurethane based finish with the look and feel of oil, currently available in the Flair collection. And when it comes to formats, Mirage just introduced a 7-3/4"x84" engineered plank, geared toward the U.S. market. Mirage’s main species is maple, followed by red oak and white oak, with maple more popular in Canada than in the U.S. It also does a small amount of exotics, like sapele and jatoba, and all of its products are made at its facilities in Quebec.
Boa-Franc was founded in 1979 and in 1983 was purchased by Pierre Thabet, president of the firm. For more on Thabet, see this month’s Focus on Leadership, starting on page 17.
Mercier, also based in Quebec, manufactures both solid and engineered hardwood. Currently it’s about 65% solid and 35% engineered, but engineered is growing quickly, and the firm anticipates it to be closer to 55% solid and 45% engineered within the year. The bulk of Mercier’s sales are in Canada, which is also the stronger solid hardwood market. In the U.S., most of Mercier’s solid hardwood goes to the Northeast and upper Midwest.
Mercier has grown every year since 2011, including last year, although 2014 showed the most growth. So far, this year is looking strong. Its products go direct in Canada and through distribution in the U.S., where it’s strongest in the South. Red oak and hard maple make up the bulk of sales, but the trending species are white oak and hickory. And its price points range from middle to high-end.
In terms of formats, Mercier’s products run the gamut. It offers wider width planks on higher end engineered products, like a 6-1/2" plank with a thick sawn face veneer and Baltic birch plies, with lengths from 18" to 84".
The firm makes all of the products it sells, except for exotics like Brazilian cherry and Santos mahogany, which only account for a small portion of sales. The bulk of its wood is sourced from forests in eastern Canada and the U.S. Northeast.
Another prominent Quebec firm is Lauzon, which serves the markets in Canada and U.S. with both solid and engineered hardwood. Currently, solid hardwood accounts for about 70% of sales, though most of its recent gains have been in engineered hardwood. Specifically, its 3/4” engineered Expert Line has been driving sales. The line was launched in 3" and 4" widths, suitable for the Canadian builder market, but later this year it will come out with a 5", to be followed by a 7". The product is manufactured with a very thick 5.4mm veneer and lengths up to nearly 78".
Lauzon had a strong 2015, with double digit growth, led by builder business in Ontario, where its 3/4" engineered product has been in particularly high demand. Apparently, the thickness of the product works well in transitions from ceramic tile, which is the other major flooring category in Canada.
Also driving growth is the firm’s Pure Genius surface treatment, introduced two years ago, featuring titanium dioxide. The photocatalytic finish removes pollutants and particulates from the air, so when the firm marketed the products to retailers, it was tough, because Pure Genius’ impact was largely intangible. Then came the Lumber Liquidators debacle and everyone was talking about formaldehyde, which happens to be one of the chemicals Pure Genius removes from the air, along with 95% of bacteria, according to Lauzon. That new focus on formaldehyde helped drive sales, and last year Pure Genius products accounted for 12% of Lauzon’s sales.
Lauzon’s Canadian business is different from its business in the U.S. In Canada, it’s 70% builder and 30% remodel, while in the U.S. it goes mostly to retailers via distribution. Lauzon’s U.S. business is strongest in the mid Atlantic and California, where its distribution is most comprehensive, and it’s also seeing strong growth in the Northeast. And the firm goes direct across much of the South, from Texas to Florida.
Lauzon owns its own forest, which yields mostly maple, along with some birch and a little red oak. In the U.S., it sells mostly red and white oak. Other species include black walnut, beech, hickory and sapele. The firm makes at least 90% of its own flooring, outsourcing products it currently can’t manufacture, like its 7-1/2" boards.
Another major Quebec producer is Preverco, which manufactures both solid and engineered hardwood, about 50-50, selling direct to retailers in both Canada and the U.S. Last year brought record growth in both the U.S. and Canadian markets. In the Canadian market, growth came through its existing network of dealers—driven by activity in Ontario in general and the Toronto metro market specifically, while in the U.S. the firm made a lot of gains through new accounts, though its existing network also posted organic growth.
Preverco sources the bulk of its lumber from the U.S., and it manufactures mostly red and white oak, maple and yellow birch. The firm used to offer exotics, but it dropped the program as demand waned. Preverco makes 100% of the products it sells. Even though demand for solid hardwood is stronger in Canada, most of the firm’s solid hardwood is sold in the U.S., thanks to the firm’s extensive builder network. Its U.S. business is strongest in the Midwest and Northeast, and business is up in Florida and California, driven by new accounts. And the firm is working on increasing its presence in the South and lower Midwest.
Right now, the biggest challenge for Preverco is productivity, and the firm is currently working to increase the number of square feet it can produce per day. In terms of design, the focus is on the efficient production of rustic looks and the development of new neutral colors. And the firm also does large format planks. Its Solid Genius XL platform features 7"x84" planks.
While Preverco’s focus is on the middle to high end of the market, its Pro products for the builder market are also a growth engine.
The province of Quebec has many more hardwood producers, some targeting niche markets and others with a full range of products. Among them is Seasons, which makes solid prefinished hardwood. Its parent company, Commonwealth Plywood Co., has a forestry operation that manages 10,000 square miles of forest in Quebec. And Mont-Royal Hardwood, located on the South Shore suburbs of Montreal, offers hardwoods in both domestic and exotic species.
There are also prominent hardwood producers in Ontario, including Muskoka, which has a well established presence in the U.S. Muskoka makes both solid and engineered hardwood, including a 3/4" engineered with a 4mm sawn face. Vintage, another Ontario firm, makes both solid and engineered prefinished flooring, which is sold in both Canada and the U.S. BreezeWood, another Ontario hardwood manufacturer, specializes in prefinished solid hardwood. The firm is part of Townsend Lumber, which also makes unfinished solid hardwood. And Satin Finish Hardwood Flooring, based in Ontario and dating back to 1922, makes both solid and engineered hardwood, including a floating engineered product. The firm recently changed its name to Satin Flooring to reflect its diversification into laminates.
PROMINENT HARDWOOD PLAYERS
One of the domestic hardwood leaders is Mullican, which started in 1985 as a manufacturer of unfinished solid hardwood in 2-1/4" strip flooring made of red and white oak. Soon after the turn of the century it added prefinishing, then around 2004 it started outsourcing engineered flooring from Asia. And finally in 2012, it built an engineered flooring facility in Johnson City, Tennessee. The firm also has three solid hardwood facilities in Norton, Virginia; Holland, New York; and Ronceverte, West Virginia. And the firm has a finishing facility in Johnson City.
The builder market accounts for about 75% of Mullican’s sales, and the rest goes to retail. The firm covers all price points, though a lot of its success has come in the middle to higher end, largely in retail. However, the builder market held back revenues last year, and the result was that business was about flat. So far this year, volume is up, though revenues are lagging due to price decreases in unfinished hardwood.
Mullican serves the independent flooring retailer through distribution and also goes direct to big boxes. Its strongest markets are in the eastern half of the country, but it’s growing in the Midwest and West Coast.
Solid hardwood still accounts for 85% of Mullican’s sales, though engineered hardwood is growing at a faster rate. Its top species are red oak, white oak, hickory and maple, with oak as the go-to builder product and hickory trending heavily on the remodel side.
Mullican has large formats on both the solid and engineered side. Its engineered offering goes up to 9-1/2", with 6' boards. On the solid side, its prefinished goes up to 5", but unfinished goes as high as 7", with lengths up to 8'.
Mullican has been focusing on color, and at Surfaces it introduced 30 new shades of grey. In all, it has nearly 60 colors in or near the grey family. The firm makes about 85% of the product it sells. The rest, featuring styles or techniques that the firm can’t manage, are outsourced from Asia.
Kentucky based Somerset Hardwood Flooring is another domestic leader. It’s a major producer of solid unfinished, solid prefinished and engineered hardwood, with engineered growing fastest and solid prefinished accounting for the biggest part of the business. Last year the firm posted growth, but margins narrowed by lumber prices kept the firm from making the gains it had hoped for.
Widths on solids go up to 5", and 7" on engineered. Somerset has been making sawn-face engineered flooring in Crossville, Tennessee for about five years, producing 1/2" thick product in a wide range of textures, finishes and formats. The firm’s SolidPlus engineered hardwood is up to 10" wide and 77" long.
Somerset, which is strongest in the middle price points, goes to retailers through distribution, and it doesn’t sell to big boxes. The firm is strong across most of the continental U.S., though it’s working on building its presence in Texas, Oklahoma and Louisiana.
Somerset has been investing in both its engineered and solid facilities, with everything from new scanning technology to capacity increases. In fact, it’s adding 50% to 60% capacity at its engineered facility, to be completed this summer.
The firm’s main species are red and white oak, along with walnut, maple and hickory. And 100% of its products are made in its U.S. facilities.
One of the more interesting firms in the market is DuChateau, which has only been in business for a decade, but has already made its mark with its rich and complex high-end designs, all using engineered hardwood. It uses mostly white oak, along with some walnut and ash, for its DuChateau brand, which also feature a hard wax finish. Its American Guild brand features similar textures and constructions but uses a low gloss polyurethane finish, and in addition to oak, the line features maple and long and short leaf acacia.
Most of the DuChateau brand is made through a European partnership, except for the new Atelier sub-brand, which is textured and finished at the firm’s finishing facility in San Diego, California. A couple of years ago, the firm brought over from Europe Tom Goddjin, the master craftsman responsible for DuChateau’s unique look, and he now works his craft in San Diego. Most of its products, which serve the remodel market, are long and at least 7" wide. New Atelier products go up to 9-1/2"x8'.
DuChateau is also rapidly diversifying. In the last two years, the firm has added LVT, porcelain, wall coverings and a doors division. Next, it’s looking at adding a furniture division. Its wall coverings are finished in San Diego.
As of last month, following the dissolution of its relationship with Haines for distribution along the Eastern Seaboard, DuChateau now goes direct nationwide.
Kährs, the Swedish firm that holds the original patent for engineered flooring, makes most of its product in its 100 million square foot facility in Sweden, from which it serves the U.S. market, and it also produces in Poland, Croatia and Russia. And it has manufacturing partnerships in China.
In the U.S. market, 90% of the firm’s hardwood goes to residential—split about evenly between builder and remodel—and the other 10% is commercial. The firm doesn’t participate in the entry-level market, and most of its products are in medium to medium-high price points. However, in Europe it offers a wider range.
Europe, including Russia, accounts for 75% of Kährs’ revenues, with North America making up another 13%. Most of the balance comes from the Middle East and China.
The firm serves the U.S. market through distribution. About 70% of its distributor volume is shipped directly from Sweden, and the rest comes from its warehouse in Pottsville, Pennsylvania.
Kährs always showcased a strong European aesthetic, and that has served the firm well in recent years, as the wirebrushed European white oak in pale colors, matte finishes and wide and long planks have taken the U.S. market by storm. Now Kährs is experimenting with patterns, including planks that install in herringbone and chevron designs. And it’s also launching wood products in tile and rectangle designs. In addition, the firm is working on developing ultra matte finishes, with the challenge being to sustain the performance that is found with harder, glossier finishes.
Kährs’ has products go wider and longer than just about any on the market. Its Real collection, for instance, is 12"x12'.
Last year, Kährs’ U.S. business was up 18%. Over 85% of its hardwood is made from oak (and 90% of that is white oak), and the balance comes from cherry, ash and other northern species.
Kährs believes that sourcing for raw materials will be the big struggle in the future, so the issue is less about manufacturing capacity and more about locating that capacity near lumber sources. Its Swedish facility sources 85% of its supply within a radius of 100 or 200 miles, working with over 30,000 farmers for its sourcing.
US Floors was formed in 2001, and its first product category was bamboo. Within a year, the firm had partnered with Natural Cork, broadening its offering. A few years later it added high-end hardwood, FSC certified. And nearly three years ago it began to develop what is now the hottest product category in the market, WPC (wood polymer composite), with its patented Coretec product. As of this year, licensing for Coretec technology is through Välinge and Unilin, the two click-system licensing giants.
All of US Floors’ hardwood is oak, and it’s all high end. For instance, its entry level product is 1/2" thick, 7-1/2" wide and 75" long. At the other end is Castle Combe Grande, which is 10-1/4"x110", and 13/16" thick. All of the product is manufactured through two Chinese partnerships.
US Floors goes direct to the U.S. market through 93 territory managers to independent flooring retailers and buying groups. Its plan is to have 120 territory managers by the third quarter and 140 by the fourth. It has the strongest presence in the South, from Texas to Florida, and in the mid Atlantic states, and it’s working on building its business in the upper Midwest and Northeast.
About 10% of US Floors’ business is in the specified commercial market, which it serves with its USF Contract brand, and its products are used not only on floors but also, increasingly, on walls. Last year, US Floors’ total domestic hardwood business was up by around 11%.
Johnson Hardwood, headquartered in City of Industry, California, produces its hardwood through manufacturing partnerships in China and Cambodia. With warehouses in City of Industry and Farmer’s Branch, Texas, along with a leased warehouse in Pennsylvania, the firm goes to the residential dealer both direct and through distributors—about two thirds is direct. The 15-year-old firm is well established in most markets, though it’s still in growth mode in the upper Midwest and the Southeast.
Johnson’s products are priced medium low to medium high, with growth at the higher price points, and it’s mostly engineered hardwood, with solid accounting for 10% of revenues. And though the flooring is fabricated in Asia, many of the veneers for the engineered wood come from North America.
Last year, Johnson posted double digit growth, though the pace was off somewhat from 2014. A lot of the growth is driven by the firm’s wide selection of colors and textures, like handscraping. And it has plenty of large formats, like a 7-1/2"x84", as well as a 10-1/4" higher end product with a European hard wax finish.
Like some other trend-savvy firms, Johnson has started making products for walls. Last year, it came out with Rowlock, a wall panel system backed with plantation grown pine. Rowlock designs feature a horizontal linear pattern of irregular face fillets either too short or too narrow for floorings, as well as quarter-turned wood tile patterns.
Home Legend, which is headquartered in Fontana, California, with offices and an additional warehouse in Adairsville, Georgia, has been around since 2004, serving independent retailers and builders but more heavily focused on the big boxes at lower price points. The firm’s California warehouse largely serves Home Depot, which just a few years ago accounted for 95% of the firm’s revenues. The Adairsville warehouse serves independent retailers.
Over the last year, Home Legend, which is owned by China’s Power Dekor, has shifted its approach to the market, focusing on growth in the independent retailer channel through 32 sales reps covering all regions except the Pacific Northwest, where Cronin distributes its products. The firm is now going to the retailer channel as Eagle Creek to distinguish it from its Home Legend big box business, and it’s focusing on higher price points.
The firm is well established on both coasts and weakest in the Midwest, and it’s currently working on building its presence in the Chicago metro market. Home Legend’s hardwood is mostly engineered, and it comes from the firm’s Chinese facilities, but it also sells LVT, laminate, bamboo and, more recently, WPC. Its hardwood lumber is largely sourced from the U.S., with species including oak, hickory and maple. It also has some exotics, like acacia and tigerwood.
After changing hands a few times in the last three decades, Harris Wood was acquired by QEP in 2010. The hardwood business, based in Johnson City, Tennessee, includes both the Harris Wood brand, which goes through distribution, as well as unbranded and private label programs that go direct to distributors, home centers and buying groups. Total sales are around an estimated $50 million.
Most of the business is engineered wood produced in its vertically integrated facility in Montpelier, Indiana. The firm no longer has solid hardwood capacity, and the solid product that it sells is sourced.
Last year, hardwood revenues were up. The firm has the strongest presence in the Southeast, and is growing in the Northeast, West Coast and Southwest. It reports that the West Coast market is the most challenging because of competition from the imports flooding the Pacific ports.
Harris Wood covers most price points but is strongest in the middle tier. It also sells a broad range of hardwood floors, including click system flooring mostly to home centers, unfinished engineered for the builder market, and wider and longer formats—Harris Wood products will go up to 6-1/2"x48". Most of its hardwood is made of red oak, followed by hickory, maple, birch, white oak, cherry and walnut.
American OEM, founded by Don Finkell three years ago, is headquartered in Burns, Tennessee and manufactures engineered hardwood for private label programs. It makes 100% of its own products, all sourced from Appalachian and northern forests. It started off with 1.5mm rotary peeled veneers, and last year it built a facility in Indiana for 2.5mm sliced veneers, and it shipped its first sliced face products at the beginning of the year.
American OEM targets the middle to high range of price points, and it does not compete at the low end. Its main species is white oak, followed by hickory, maple, walnut and red oak. Its products are all 1/2" thick and 96" long, with widths from 6-1/2" to 7-1/2".
Most of American OEM’s customers are distributors, along with some larger retailer chains. Some of its customers sell exclusively to buying groups. What’s unique about the firm is that it offers so much flexibility. It can create hardwood product lines in as little as two months. Increasingly, American OEM is also getting involved in naming and marketing products for its clients.
Another thing that’s unique about American OEM is its prison program. In the course of his career, Don Finkell and his team have built eight hardwood facilities in prisons—previously, he built two for Shaw and three for Anderson. His latest facility is in Only, Tennessee, in the Turney Center Industrial Complex, a medium security prison. Overseen by the Department of Labor, American OEM’s inmate employees get the same wage that they would receive in the outside world. According to Finkell, the recidivism rate for inmates who join his prison programs is 7%, compared to an average of 50%. And Finkell’s civilian staff includes former inmates.
REMODEL VERSUS BUILDER
These days, the talk in hardwood is all about widths and lengths, trending species like hickory, textured surfaces, new color directions and low gloss levels, but it’s important to remember that this is only about one side of the market, the remodel side. Builder hardwood is an entirely different story.
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