Hardwood Update 2010 - October 2010
By Jessica Chevalier
Though hardwood has suffered significantly in the recession, down 44.4% from its peak in 2006, Market Insights/Torcivia projects growth for the category this year and in the years to come. For 2010, 9.2% growth over last year’s sales is projected; for 2011, 24.4% growth; and for 2012, an 18.3% increase is anticipated. By 2013, the industry is expected to exceed 2006 numbers. The return of housing and commercial construction is expected to drive this growth; these will, of course, walk hand-in-hand with the country’s emergence from the recession. Hardwood’s nature as an inherently sustainable product shouldn’t hurt matters either, considering the specifier and buying public’s ever growing preference for green.
Still, many manufacturers question whether that growth will come in 2010 after all, since the rebound certainly hasn’t shaped up as expected. For the most part, flooring players don’t believe that the country will see a double dip recession, but they do acknowledge that the comeback stalled somewhere in the second quarter. Whether that pause lasts for six months or a year is still to be seen. Most within the industry are anticipating solid improvement by the second half of 2011; some believe that a true turnaround won’t materialize until 2012. Whatever the situation, at this point most manufacturers have implemented plans to both handle the slowdown and prepare for the resurgence of business when it does come.
All the while, in addition to rapidly escalating raw material costs, hardwood manufacturers report that they are dealing with significant price pressure from both Asian products and from suffering companies that are seeking to move inventory at close-out prices. A few manufacturers like Mohawk and Armstrong have already announced price increases. Others say that the weight of raw material costs will force them to pass the escalation along to consumers in the months to come.
In regard to styling, many manufacturers report that design is dividing down regional lines. The California market is moving away from handscraped looks toward smoother surfaces and glossier finishes. The South favors rustic handscrapes and character woods. In the North, oaks remain strong. It’s hard to determine, however, whether these regional trends are based as much on style preference as on the state of the economy. The lessening of Californians’ interest in handscrapes, for instance, may be due more to financial hardships or lifestyle changes than tastes. It will be interesting to see how style trends develop along regional lines in the future, as several manufacturers report that they plan to gear their future roll-outs toward regional tastes.
Though styling is what first attracts a customer to a particular flooring type, in a recession cost gains clout. Manufacturers report that low- and high-end flooring is selling best while the mid-range products gather dust. The reason is simple. The affluent continue to renovate and choose costlier flooring. The middle class, if they do renovate, choose the value price point, and builders certainly aren’t going to splurge for anything but the most affordable flooring choices. In response, some historically mid- to high-end manufacturers, like Model, are engineering products that cater to the lower end of the market. Anderson plans to begin selling value-priced product from its Chinese partner Power Dekor to the U.S. market.
While product price points may be coming down, many mills are continuing to invest for the future. Quite a few have earned Forest Stewardship Council (FSC) certification at this time, but most of these only offer FSC certified products by special order. Mullican’s Green Haven line—available in both solid and engineered—is an exception, and Mohawk’s new Zanzibar is an inventoried product line as well.
CORK: STYLISH AND SUTAINABLE
The Portuguese Cork Association (APCOR) launched a $3 million dollar promotional campaign called North American Decor(k) on September 1. The campaign, which opened in New York City, will tour 16 cities across North America. The program features a 53 foot long mobile showroom that highlights the styles and varieties of cork flooring. Celebrity designer Candice Olson is acting as spokesperson for the campaign. The goal of the program is to define cork as a stylish flooring option.
Since style seems to be dividing down regional lines, Armstrong, the industry leader by marketshare, is gearing many of its roll-outs toward particular markets. The recently launched Bruce Legacy Manor line targets Southwestern tastes with its bold, rustic handscraping. Armstrong is planning a series of launches for the first half of 2011; many of these products will have a regional focus. The company notes that regional preferences are much stronger for hardwood flooring products than for resilients.
In an effort to promote its rollouts, the company launched a new display initiative in the Armstrong hardwood line. The displays have wing racks and larger samples to help customers differentiate between the ever expanding array of looks and finishes. At present, 1,500 of these units are in the field.
Armstrong works with the Hardwood Forestry Fund to replace the trees that it harvests. In 2009, the company organized two plantings—one in Pennsylvania and one in Wisconsin—as well as forest regeneration in West Virginia. In the last three years, Armstrong has added roughly 1.5 million trees to U.S. forests through these efforts. The Lancaster-based company is also working with the Pennsylvania chapter of the American Chestnut Foundation to replant the American chestnut species, which was wiped out by blight in the mid 1900s.
As a result of the downturn, the company has idled certain manufacturing processes at its Center, Texas and Oneida, Tennessee facilities.
The acquisition of Stuart Flooring has been a boon for the Shaw hardwood group. The company bought the manufacturer in spring 2010 just as lumber supplies began to tighten and raw material costs started to rise across the category. Having access to Stuart’s lumber basket helped the company maintain its growth momentum.
Shaw sees a continued escalation in distressed and handscraped looks, except on the West Coast where the styles in demand are more smooth and shiny. Along with the more standard rustic handscraped visuals, Shaw is creating more subtle, elegant scraping as it does in its Grand Canyon line, which features both rugged and more refined looks. Shaw also notes a trend back toward lighter visuals. This summer, Shaw introduced wider looks and multiple width options.
In late 2009, all Shaw hardwood products were Greenguard certified, as were the Epic products. Shaw sells hardwood under the Shaw, Anderson, Virginia Vintage and Appalachian brand names. Across its lines, the company has retail price points from $2.99 per square foot all the way up to $20.00 per square foot in the Appalachian line.
Shaw’s Anderson line was honored with the Gifford Pinchot Award in July. The award, given by the Hardwood Forestry Fund, acknowledges Anderson’s outstanding contributions toward promoting sustainable forestry. The award is named for Gifford Pinchot, who was appointed by President Theodore Roosevelt as the first chief forester of the U.S. Forest Service and founded the Society of American Foresters. Rather than giving the award annually, The Hardwood Forestry Fund presents the honor only when it feels that a company or an individual is deserving.
Anderson continues to work with the National Wood Flooring Association (NWFA) on its Responsible Procurement Program. Currently, the company is aligning with other certified manufacturers like Mannington and Sheoga to bring a label to market. Anderson encourages other hardwood flooring manufacturers to become certified, believing that the program needs critical mass to achieve the best results.
Since the Lacey Act was amended to include hardwoods in May 2008, Anderson has increased importing from its Paraguay plant that specializes in temperate, rather than tropical, species. In addition, Anderson has expanded its Exotic Impressions line, which offers domestics engineered to look like exotics. The newest of those looks, the high-gloss Tropical Reflections, introduced at Surfaces 2010, features the company’s new Luster Lock Ultra finish, which is six times more scratch resistant than previous finishes.
Anderson ramped up production at its Mountain City, Tennessee prison plant, which opened in 2009. The Mountain City plant specializes in handcrafted floors and is the fifth prison plant for the company.
Mullican is launching its first consumer advertising campaign on the HGTV and DIY networks. This campaign coincides with the company’s sponsorship of HGTV’s Urban Oasis apartment giveaway. Mullican provided solid, wire brushed Frontier hardwood for the New York City apartment located in The Residences at W. The television commercials, which are independent from the giveaway message-wise, reinforce the idea that Mullican hardwood is a perfect choice for active families. Mullican is also launching a fall promotion, which gives retail sales people the opportunity to earn cash. The promotion is called Urban Renewal.
Mullican added to its Green Haven line at Surfaces 2010. The 20 new SKUS are engineered hardwood in domestic and exotic looks. All are registered FSC Pure.
Weyerhaeuser concurs that middle class buyers are choosing lower cost flooring than they were previously for building and renovation projects. At the same time, the affluent continue to purchase high-end products, in spite of the recession. Since Weyerhaeuser is positioned in the middle of the market, 2010 is expected to be on par with 2009 numbers.
However, the enforcement of the Lacey Act has ebbed the flow of some exotics to the market, and Weyerhaeuser believes that its eucalyptus wood flooring has been able to pick up some of this share. In addition, the company is hearing that some distributors are experiencing an upswing, and it hopes to soon share in that relief.
Weyerhaeuser recently passed the audits to receive FSC Chain of Custody Certification for its lumber mill in Brazil and sales office in Washington State. The company will soon be able to offer FSC certified products.
Weyerhaeuser notes that distressed looks are still in high demand. It is currently working on new lines for 2011 that will feature distressed styling, new color options and possibly wider widths. The colors stone and natural are the Weyerhaeuser’s top eucalyptus wood sellers at present.
With roughly 222 stores across 46 states, Lumber Liquidators poses a significant threat to the independent floorcovering retailers' hardwood business. The company estimates that its sales accounted for 11% of all hardwood flooring sold in 2009 and 6% of all laminate flooring. With over $544 million in retail sales last year, Lumber Liquidators continues to open new retail locations, planning to add an additional 36 to 40 new stores annually over the next couple of years.
Mannington’s Earthly Elements wood flooring line, launched at Surfaces 2010, has seen strong success since it hit the market this spring. The line features square and rectangle shapes and is applicable for both commercial and residential installations. The collection won NeoCon’s Best Hard Surface Product award. Currently, the line comes in eight colors and two species. Mannington plans to introduce a complementary plank shape to increase installation design options. Due to the new UltraFlex display system, the company’s Inverness series is enjoying a renaissance as well.
In the last year, all Mannington’s domestically produced products were FloorScore certified. In addition, the company achieved FSC Chain of Custody certification and is beginning to produce FSC flooring for custom jobs. The company was also the third to become certified under the NWFA’s Responsible Procurement Program.
In March, the company named Russell Grizzle as its chief operating officer. Grizzle will serve as COO until the end of 2011, when he will take over the CEO position from Tom Davis. Formerly, Grizzle served for eight years as president of Milliken’s global floorcovering business. Mannington is currently working with a partner to increase its brand in China. At present, 750 Chinese retailers carry products branded under the Elegant Living Mannington name.
Mirage has been working hard to increase efficiencies—reorganizing systems and improving product flow so that it is positioned for success when the market comes back. Mirage hopes these changes will lead to enhanced customer service in the long term.
The company notes that higher price point and lower price point products are strongest at present, and expects this trend to continue as specialized dealers gravitate towards high-end flooring and big boxes focus on the low-end market.
In terms of styling, character looks are still popular for Mirage, although the company sees a slight shift back towards smoother, cleaner looks. In January, Mirage introduced ten new products including new looks in its Sweet Memories and Alive collections. Sweet Memories features three new colors on wide boards with a low matte finish and more character features like knots. Alive is wire brushed red oak in a wide board format with a low matte finish.
The company boasts a number of environmental certifications including those through the FSC and the Programme for the Endorsement of Forest Certification. The company is also in compliance with phase one of CARB. Mirage recently changed its finishing lines to a chemistry without VOCs or formaldehyde. Its Mirage Lock product, with a 100% recycled HDF core, helps earn LEED credits.
Like Mirage, Earthwerks has used the slower market as an opportunity to strengthen its infrastructure. The company has upgraded its IT systems as well as added new office and warehousing space. Earthwerks reports that sales are up from 2009.
Earthwerks serves the Texas, Louisiana, Oklahoma and Arkansas markets and says that handscrapes are showing the greatest growth in that region. Even within the state of Texas, however, Earthwerks notes regional style preferences. In the northern part of the state, customers prefer random width installations. Houston residents like handscrapes, while Austin buyers are concerned about the sustainable nature of products. The company also reports an increase in customers’ interest in locking systems and, across the board, a decrease in requests for exotic hardwood species. Earthwerks products are available across the spectrum of prices, from the low to high end.
US Floors reports that the cork industry, as a whole, is trying to shed its bulletin board-look image and put on a higher style quotient—moving beyond the environmental buyer market and into the consideration of mainstream America. Whereas in the past a cork floor was either composed of 1’x1’ square-edge, glue down tiles or a 1’x2’, square-edge floating rectangles, the material is now available in beveled edge and narrow plank options, offering more refined and hardwood-like looks.
To that end, the company’s Almada, introduced last month, is a 4’ plank that is offered in four veneer patterns and 24 colors, 18 of which will be inventoried. In addition, the company recently added a new program called Cork Colors to its commercial USF Contract line. Cork Colors has seven veneer patterns and is available in 36 colors.
By the end of 2010, the entire roof of US Floor’s 100,000 square foot Dalton, Georgia warehouse will be covered with a solar panel array. The company’s corporate manufacturing facility, also is Dalton, already boasts one of the largest arrays in the state.
Mohawk introduced its FSC certified Zanzibar in August. The company believes that it is one of the first suppliers to offer FSC flooring for sale without requiring a special order. Zanzibar, an engineered product outfitted with the Uniclic glueless installation system, is situated at a higher end price point and qualifies for LEED credits. The company has two additional FSC certified lines available as well; like Zanzibar, the Kingsmill and Queenstown Reclaimed lines are being offered without order limits or wait times.
Mohawk recently introduced its ArmorMax hardwood finish, which increases the wear resistance of a floor and comes with a 50 year wear warranty. Mohawk’s Rockford Collection and Columbia’s Hampton Forge feature the ArmorMax finish. The product was introduced in mid 2010. DuraBeauty, Mohawk’s acrylic impregnated flooring, was rolled out in the second quarter of this year. DuraBeauty is available on the Testcott line. The company is also continuing to invest in locking system technologies, where its subsidiary Unilin holds intellectual property.
Mohawk implemented a new focus display system. The system has a smaller footprint and, therefore, can be used in a high traffic area of a retail location. The company has received a good response in regard to this system.
Harris Wood was purchased by Q.E.P. Company in February 2010. Q.E.P. is a manufacturer and distributor of flooring tools and accessories for the home improvement market.
Harris Wood is offering a new FinishLoc System that provides ten times more wear and scuff resistance than a traditional aluminum oxide finish. FinishLoc is featured on all domestically produced Harris products and comes with a lifetime warranty.
Harris believes that while the popularity of rustics will continue to grow, the market is trending towards more refined, subtle handscraping and distressing. The company has seen an increase in the demand for domestic exotics like hickory, maple and American cherry, and colors are trending from reds to true browns. Harris’ new Taos Distressed Collection features random distressing and subtle age marks as well as hand-beveled edges. The distressing technique is totally random, eliminating repeats.
Sunshine has shifted its focus to the Chinese market during the United States’ recession. The company notes that the Chinese market is booming at present. To that market, the company sells flooring, doors, trim, and other corresponding wood products. The company produces its wares in China but has a warehouse and support office in New Jersey.
Sunshine notes that its bread-and-butter handscraped products are showing the strongest sales. At the Domotex 2009 convention in China, the company won the Luxury Flooring Brand award for its handscraped products, which are actually scraped by hand.
Kährs is building a LEED Gold warehouse in Scandinavia. This facility will allow the company to reduce greenhouse gas output by approximately 450 tons each year. In addition, the company is planning to build a pellet plant within the next two years, enabling it to utilize 100% of the log. Pellets will be used for heating and energy production in the Swedish facilities, and ashes from the burned pellets will be returned to the forest as fertilizer. The company has a host of other environmental goals and undertakings, including a five-year mission to reduce its overall energy needs by 20%.
Kährs is seeing a lessening of interest in distressed and beveled edge products. The company reports that oaks dominate the North American market and that a demand for lighter species, white stains and square edges is emerging.
Kährs recently introduced its Woodloc 5S locking system. The system allows for faster, glueless installation and is available on all Swedish-produced 15 mm and 30 mm Activity floor products. The innovation will be applied to additional products in the future.
The company has a new sub brand called Kährs Supreme. The brand includes the Grande, Elegance and Avenue collections, and will target a high-end price point.
Model made a major investment in its mill this year, investing $4 million to replace almost all the plant’s equipment. One hundred percent of the company’s production will now take place at the Saint-Édouard-de-Lotbinière facility. In August, brothers Sébastien and Jean-François Dion of Scierie Dion & Fils became shareholders in the company, giving Model access to the largest supply of FSC-certified hardwood in Quebec. Model sees this access as a significant benefit, since it anticipates a fight for supply once the economy recovers and demand increases.
Jerome Jobin was installed as the new general manager of Model. Jobin is training under president Claude Garneau and will take over day-to-day operations of the company in approximately five years. Jobin has been working for Model for over eight years already.
A mid- to high-end hardwood supplier, Model notes the trend toward low-end product. This trend is being driven by home builders. To accommodate these needs, Model is creating value products, but the company is not compromising its reputation with lower grade hardwoods. In addition, the company is launching two new color options this month.
All waste from Model’s factories is recycled or reused in one way or another. Wood waste is used to create MDF wood panels. The company works with the American Institute of Architects as a continuous education provider to inform members about ways to make a positive environmental impact through the specification process.
Five-year-old DuChâteau Floors will launch a reclaimed wood line, which should hit the market in about six months. In the last year, DuChâteau products were picked up by several large flooring distributors including Patriot, Wheeler, JJ Haines and All State. The company’s engineered hardwood floors, which are treated with a natural hard-wax oil finish, retail from $6.00 to $10.00 per square foot.
DuChâteau is committed to minimizing waste. The company’s new packaging design reduces material use by 40%. The company also holds FSC certification.
HARDWOOD RECOGNIZED AS ENVIRONMENTALLY PREFERABLE
In August, the U.S. Senate recognized hardwood as an environmentally preferable building material. The resolution, S. Res. 411, acknowledges that "U.S. hardwoods are an abundant, sustainable, and legal resource under United States law." The Department of Agriculture analysis shows that inventory of U.S. hardwood has more than doubled in the past 50 years.
Copyright 2010 Floor Focus
Related Topics:Domotex, Armstrong Flooring, The American Institute of Architects, Coverings, Mannington Mills, Mohawk Industries, Haines, Lumber Liquidators, Mirage Floors, NWFA Expo, RD Weis, Shaw Industries Group, Inc.