Made in America: Manufacturers discuss the benefits and challenges of U.S. LVT production – April 2024

By Jessica Chevalier

While centralized manufacturing of a product may be beneficial cost-wise, global challenges-from Covid to climate change to conflicts-have highlighted the disadvantages of production distant from consumption. In the case of LVT, the stream of product from Asia has been disrupted numerous times, most recently due to UFLPA legislation, which prohibits LVT made with PVC from China’s Uyghur region and has resulted in traffic jams at the ports as containers await inspection. For this and other reasons, U.S. production of vinyl products has increased in recent years. Preliminary estimates by Market Insights indicate that domestically produced LVT accounted for 20% of the U.S.-consumed LVT in 2023.

The proliferation of vinyl manufacturing on U.S. soil is particularly compelling because the product was conceptualized and refined in Asia, which became both the heart of innovation and production for the category. The question has always been whether America, with its higher raw material costs and labor rates, could compete. For the manufacturers that have invested in U.S. plants, the answer has been to lean into technological innovation and product quality. U.S. producers won’t win the commodity battle, but they can win the on-time and American-preferences war.

FROM GLOBALIZATION TO LOCALIZATION
AHF, led by Brian Carson, has bet big on U.S. manufacturing. Carson believes that while globalization has been the trend over the last 20 years, the regionalization of economies will command the next 20. This will be driven by a host of factors, including geopolitical volatility, freight volatility and costs, material availability, and exchange rate volatility, as well as the fact that the U.S.’s relationship with China has fundamentally changed and will

remain altered. “What you are seeing is the movement of production closer to consumption,” he says. “It doesn’t matter if it’s flooring or car parts or whatever. It used to be that producers would go where it was cheapest for a marginal penny. But we have been reminded of how fragile the world is, how fragile supply chains are, and there is a desire to get things closer to home-if not in your own country, close to it. And that will bode well for U.S. producers.” AHF has ten manufacturing facilities in the U.S.-including its recently acquired Crossville porcelain factory in Tennessee-and one in Cambodia, and Carson points to the fact that AHF has shifted some of its SKU production from its Cambodia plant to its U.S. plant as a means of de-risking business.

“I believe we will see more flooring product sold in North America that is made here. That’s why we are making the investments domestically, and we’re investing a ton, so I hope I’m right,” Carson laughs.

James Lesslie, Engineered Floors’ COO, points out that U.S. manufacturing is all about strategizing past potential obstacles. “We believe pricing for PVC is more favorable in Asia, but you can’t import it,” he says. “However, we can overcome the polymer increase. We believe the U.S. is the greatest country in the world, and with a level playing field-including no subsidization for foreign manufacturers from their governments-we can compete with anyone. We have close to $100 million invested on the bet that we can make U.S.-produced products work.”

One of the ways Lesslie believes Engineered Floors can overcome cost increases is through the implementation of technology; late last year, the company began production of LVT utilizing the first domestic up-and-running Hymmen Jupiter digital print line for LVT.

The SPC that Engineered Floors is producing on its Hymmen machine is direct digitally printed, meaning that the company doesn’t have to source or produce films-the aesthetic is printed on the core-and the machine is efficient from a labor standpoint. The products target the middle to upper LVT price points, as does the bulk of LVT produced by manufacturers on U.S. soil.

David Morgan, executive vice president of operations for Shaw, points to a sometimes-overlooked benefit of having business operations and manufacturing in close proximity. Morgan notes, “Given our headquarters in the U.S., manufacturing in-country often also fosters easier collaboration between manufacturing, design and innovation teams.”

According to Novalis CEO John Wu, “The most significant con is that even with the latest technologies and most efficient manufacturing processes, it is unfortunately still more expensive to produce vinyl products domestically.”

CONSUMER SENTIMENT
Lesslie believes that, over the course of the last 12 months, the American consumers’ desire for American-made has increased more quickly than over the course of the prior five years combined. He adds, “With Chinese jets buzzing ours, Americans are noticing that China is not an ally, and they are saying, ‘We don’t want to send money to China in the same way we have been.’”

The long-held sentiment has been that American consumers will choose American-made if the cost is comparable to foreign-made. “There is a continuum of customers-from those that view made-in-the-USA as extremely important to those who don’t really see it as a deciding factor,” explains Dave Sheehan, senior vice president of residential marketing and product at Mannington Mills. “That said, the data demonstrates that most will not pay a premium for made-in-the-USA. Many retailers understand the inherent service advantage domestically produced goods provide, and for that reason, they default to U.S.-made. Some believe that having a strong domestic manufacturing base is important for our economy.”

“American-made isn’t the number one consideration in the minds of consumers today but is certainly an added benefit behind price and color,” says Wu. “With inflation causing consumers to manage their money differently than in years past, having access to quality, budget-friendly products is key. We believe consumers do appreciate the opportunity to support the domestic economy by purchasing American-made products and are proud to offer that option.”

However, the key may be convincing those further down the supply chain, and, given the headaches many retailers and distributors have endured getting their hands on goods over the last few years, that might be a simpler task. “In response to international political issues that caused logistical failure over the last few years, U.S. customers have shown stronger demand for U.S. products that can ensure a stable supply chain with a U.S.-made premium,” says Dan Koh, CEO of Nox.

Carson believes that, given the challenges of importing that distributors and retailers have struggled with, they understand the value of U.S.-made more than ever before. “Our customers are more sophisticated now and have learned, through hard knocks about supply stability and pricing, that if you can buy a product produced in the U.S. or North America or somewhere close to home, you can get better ROI over the cycle,” he says.

DISRUPTION
One key to keeping plants and operations competitive is to continually innovate. Carson points to how swiftly product innovation happens in flooring. SKUs introduced only five years ago are now obsolete. “The flooring business declines on an annual basis as products age out,” says Carson. “What are you doing every month to reinvent yourself? The obsolescence rate is real and relentless. We are always focused on reinventing ourselves and creating value.”

“If you look at disruptive technology, solution-dyed polyester was the disruptor that allowed Engineered Floors to become what we are,” says Lesslie. “We have driven growth by implementing disruptive technology. Innovation comes in waves; it’s not linear. Soft polyester didn’t come into the market until two or three years after solution-dyed polyester was introduced. Innovation takes time.

“We have been running our domestic LVT line for four to six months, and we’ve already figured out new innovations we can do. We’re on the front of this technology. We believe it’s as disruptive as solution-dyed polyester, and it will take years for us to develop new derivations of the technology. Second waves of innovation will follow this first wave. You can’t rush innovation. You can try to expedite it, but it takes a gestation period to get it all done,”

ETHICAL CONSIDERATIONS
One of the disadvantages to sourcing abroad can be that foreign producers do not follow the same humanitarian, ethical or product-safety protocol as U.S. producers. No company wants to be caught using a supplier with questionable practices. And that’s another way that keeping a supply chain close can be beneficial.

In addition, U.S. production allows companies to support the U.S. economy directly and on the local level. “We talk a lot about giving back to the towns in which we operate,” Carson says, “and the single biggest gift we can give these towns is to keep our factories competitive. When factories leave, many towns are never the same. We ask folks to come to work every day and not only to win against other factories in their towns but, say, the other 800 producing flooring around the world. You have to put the plants in the position to compete and win, arming them with the right technology and management, leadership, investment in skill development. You have to put your plants in position to win on the global stage.” AHF is halfway through a $40 million dollar investment in its North American plants and plans to make a large investment in its newly acquired Crossville facility to expand capacity.

Adds Wu, “Sustainability is a core value at Novalis and is always top of mind across every aspect of the company. Like any business, we are certainly focused on margins and profitability, but whenever possible, we attempt to evaluate things through the lens of those sustainable values. In fact, there are times when we may forfeit greater margins if it means an unreasonably negative impact on our overall environmental efforts.

“In terms of fair labor/wages, we are committed to upholding the highest ethical standards in all aspects of our business. We have a zero-tolerance policy against forced, compulsory, or child labor-full stop. We have specific hiring practices and social policies in place to prevent such occurrences, and we also do not knowingly procure materials from companies or locations where child, forced or compulsory labor is acceptable or even suspected.”

AHF PRODUCTS
AHF initially was formed by acquiring Armstrong’s hardwood business in 2018. The following year, the company acquired LM Flooring and its Cambodia manufacturing facility. Initially with its engineered hardwood products, AHF’s U.S. manufacturing facilities made its base-grade products, while the Cambodia factory made the higher-end sliced and sawn veneers. The company’s acquisition of American OEM in 2021 added a plant in Turney, Tennessee and enabled AHF to reconfigure its hardwood production footprint. The company began drying its own hardwood in its West Virginia, Arkansas and Missouri plants, then moving that wood to Tennessee to cut face lamellas. Further, the company invested in its Somerset plant to make rotary, sliced and sawn products, just like its Cambodia facility.

“By drying the wood ourselves and making our own lamellas, we have been able to cut out most of the economic disadvantage of making high-dollar products in the U.S.,” explains Carson. The company reports that demand for its engineered wood products is off the charts. At present, AHF has ten domestic manufacturing facilities-all making hard surface.

The company’s sheet vinyl production is also U.S.-based. Carson explains that sheet vinyl is fundamentally a European and American product, with most of AHF’s sheet vinyl consumed within North America. He says, “Particularly for the residential side, our sheet vinyl is manufactured in the U.S. That’s where the technology is, and it’s more difficult to ship rolls than palettes. Most of the sheet vinyl consumed in the U.S. is made here-for us and for others-and that will continue to be true.”

Similarly, he reports that while vinyl tile (VCT) is a product of choice in the U.S., it is less popular around the world, which makes U.S.-based production the logical choice. “There is not a lot of expertise in that product around the world,” he notes.

Expertise in producing vinyl plank, however, is spread globally-in Europe,, North America and Asia, including India. “We believe our Lancaster vinyl plank plant has the economic position to compete with plants around the world,” says Carson. “With freight costs lower, that’s a bigger challenge than when they are higher, but it’s a very efficient plant.” Carson points to the advantage local vinyl plank production offers for AHF’s retail and distributor partners, as they can turn inventory more efficiently and, thereby, avoid the storage and cost of excess inventory as well as the risk of being caught with product with dated aesthetics. The company notes that it will continue to invest it its vinyl plank plant.

“There are others who make vinyl plank in the U.S.,” adds Carson, “and only one or two of us who print our own films. The rest buy films. We can be more responsive to the customer base due to this vertical integration.”

With the acquisition of Crossville in late 2023, AHF added porcelain manufacturing to its portfolio. The company does not manufacturer laminate flooring.

ENGINEERED FLOORS
In Q4 2023, Engineered Floor became the first manufacturer to make digitally printed LVT on U.S. soil. This is a different product than it was sourcing and selling previously, so the company’s strategy is not to backfill inventory, as some manufacturers use U.S. production for, but to create something entirely new to offer the U.S. market.

The new product includes different features and benefits from other LVTs, including a 35-board repeat. The products are priced at the middle to upper end of the LVT market but are very affordable to the U.S. consumer, according to the firm.

The digitally printed products are also click, while the company’s imported LVT product, sourced from Korea and targeting multifamily, is gluedown. The company plans to continue with both programs.

As to whether U.S. labor costs are an impediment to Engineered Floor’s program, Lesslie says, “Labor is not more of a factor in LVT than carpet. There is a labor advantage overseas, so that’s why commodity product is made there.” Lesslie notes that Engineered Floor’s operation utilizes a high level of robotics, which reduces labor costs.

He adds, “Based on the reaction to our new LVT at Surfaces and in the market, we anticipate that we will expand production, just like our soft surface SAM plant, which we’ve expanded six times. We aren’t playing on the cost field but on our home court, and our home court is innovation. We can produce about $200 million worth of LVT here, but production is easily expandable. We’ve invested $1.5 billion of capital in our 15 years of business. Capital is no barrier.”

MANNINGTON
Family-owned Mannington produces residential sheet vinyl, WPC, LVT and laminate as well as commercial LVT, heterogeneous and homogeneous sheet, and rubber tile and base in the U.S. The company’s preference is to produce domestically, unless U.S. production does not make business sense or won’t be successful in some way.

In addition to the advantages domestic production provides Mannington’s customers, the company believes that it also supports the company’s core values-care, do the right thing and control your own destiny-noting that investment in domestic manufacturing benefits the communities where production is based. Further, the company reports that any manufacturing partnerships or practices that run counter to its values are deal-breakers. “Margins are important, but we will not compromise on our principles,” says Sheehan.

He continues, “We are constantly monitoring our key performance indicators. We have established a global supply chain strategy that includes both domestically produced and sourced products. We have moved to a diversified supply chain strategy that allows for us to toggle supply based upon economic factors, geopolitical concerns and legislation.”

NOX
Nox produces gluedown dry-back LVT, Ecolay+ looselay LVT and Ecoclick+ LVT in its Fostoria, Ohio plant. The Ohio plant complements the company’s factories abroad: several in South Korea and one in Ho Chi Minh City, Vietnam. The company is a significant private-label LVT manufacturer.

The company reports that each of its production facilities prioritizes its customers’ needs by optimizing its regional benefits. Vietnam is a large-scale production facility equipped with cutting-edge technology, mainly focused on mass production. South Korea, where the company’s research and design center is located, deals mostly with complex manufacturing processes. The U.S. specializes in the production of high-end products with premium quality, and the company is committed to continuously advancing its automation here in the States.

One of the greatest benefits of having the U.S. factory is that it enables Nox to maintain stable supply. When there was inflation on the freight rate due to prolonged blockage of the Suez Canal, for instance, Nox was able to make on-time deliveries due to its domestic supply.

Nox believes it has differentiated itself from competitors in Asia by expanding its production to the U.S.

As for its own sourcing practices, Nox notes that “the local availability of raw materials is crucial” to manufacturing success, ensuring the level of quality and also ensuring timely delivery of finished product.

NOVALIS
Novalis produces SPC/rigid core products in its Dalton, Georgia plant. “Our decision to open manufacturing in Dalton is reflective of the journey of our brand and our commitment to be closely connected to our customers, says Wu. “This location enables us to better service our customers while also helping to grow and support a community rich in the history of flooring manufacturing.”

In addition, the company sees the large pool of manufacturing talent that the U.S. has to offer as a boon.

Novalis has a goal of becoming a carbon neutral company by 2040, and local availability of raw materials is an important piece of that puzzle. By sourcing locally, the company notes that it not only reduces transportation emissions but also supports local suppliers promoting regional economies and fostering sustainable practices within the community.

Novalis manufactures some of its products across multiple sites, noting “there are many drivers for this, including capacity, cost considerations and timing needs. For instance, we might launch a product out of one factory to meet a specific target date, knowing that production will eventually move to another factory. We are a nimble organization that can pivot quickly when a new need arises.” The company notes that it is constantly analyzing its business and manufacturing locations globally to ensure it is making the highest quality products in the most cost-effective manner, at the highest speed to market.

SHAW
“All our decisions start with the customer and meeting their needs,” says Morgan. “This includes providing a broad portfolio of products to meet their varied design, performance, sustainability and cost parameters.” To this end, the company employs a variety of manufacturing approaches, including manufacturing products itself in the U.S., partnering with other U.S. manufacturers, and working with strategic suppliers around the world.

“With each of those decisions, we look at a number of factors including product quality, manufacturing capacity and capability, innovation, and more,” says Morgan. The company strives to manufacture, as much as possible, in close proximity to the markets it serves to achieve shorter lead and delivery times.

Shaw produces engineered hardwood and modular resilient flooring products in the U.S. and partners with other U.S. manufacturers for solid hardwood, resilient and ceramic tile.

As for anticipating the challenges that will arise, Morgan notes, “We use technology and data to constantly monitor current and emerging situations so we can quickly adapt and respond to potential disruptions. Our goal is ‘know more’ and ‘know before’ an event might impact our customers. As a result, our robust network is prepared to handle everything from severe weather events to fluctuating costs to unexpected changes in the geopolitical business environment.”

Shaw has invested more than $1.5 billion in U.S. manufacturing, including $160 million invested in its resilient manufacturing facility in Ringgold, Georgia since 2019.

CFL
CFL is the largest manufacturer of SPC flooring in the United States and is actively engaged in the onshoring of products. The company has significantly expanded its product offerings to include SPC with cork backing and embossed-in-register texture, providing a more realistic wood floor appearance, and in Q3 2024, the company will have its new Hymmen Jupiter digital print line for LVT up and running.

The company’s U.S. factory enables it to provide mid-range standard SPC lines in the States, which reduces price fluctuations and working capital requirements for its customers. “Striking a balance between local and Asian supply sources is becoming increasingly crucial. It’s not merely a matter of nationalism but a strategic move to ensure stability and mitigate risks associated with overreliance on a single source or geography.”

The company reports that its key emphasis is on being adaptable in response to changing market demands and production requirements. Baert adds, “We are rapidly expanding our manufacturing capabilities, not just in terms of capacity but also in terms of product offering. This will be a key year for made-in-the-U.S. rigid core with the introduction of cutting-edge technologies like direct digital printing, slated to launch later in 2024.”

Copyright 2024 Floor Focus 

Related Topics:Crossville, Novalis Innovative Flooring, Armstrong Flooring, Engineered Floors, LLC, Shaw Industries Group, Inc., Mannington Mills, AHF Products, The International Surface Event (TISE)