One on One With Michel Giannuzzi - April 2010
Interview by Kemp Harr
It’s been two and a half years since Michel Giannuzzi took the position
of CEO for Tarkett S.A., and he’s been extremely busy reorganizing this global leader in hard surface flooring. Headquartered in Paris, Tarkett’s global revenue in 2008 exceeded $3 billion, making it the third largest flooring manufacturer in the world. And although ceramic tile and carpet are the two leading flooring surfaces used around the world, Tarkett has chosen to focus on the remaining four sectors—resilient (vinyl and linoleum), wood, laminate and rubber.
Today this privately owned company—its ownership is a 50-50 split between the Deconinck family and private equity firm Kohlberg Kravis & Roberts—is a global leader in sustainable flooring and sports surfaces, with 30% of its revenue coming from North America.
When Giannuzzi took the helm, the company had a commercial and a residential division. But now, under his direction, the company has split the flooring business into three geographical divisions and one worldwide sports division, each with its own president. Jeff Buttitta, formerly the head of Johnsonite, serves as the president of the North American flooring division. We were recently given an opportunity to sit down with Giannuzzi and talk about the company’s strategy.
Q. What drove the decision to reorganize?
A. The customers in each of the countries we serve have different tastes and needs and the styling and design trends are also much different. This structure gives each division the autonomy to drive their own design, manufacturing, sales and marketing efforts to develop the right solutions for the customer. You have to have people who are connected to the local environment and culture. Each president must really know his market. The goal is to shorten the distance between the organization and the customer.
Q. So what is the role of the headquarters in France?
A. We share the best practices and synergies between the divisions and focus on growth analysis for both organic and M&A opportunities. We also help establish the company’s mission and its core values.
Q. What are those?
A. Our mission is to be the leader in creating innovative solutions that generate value for our customers in a sustainable manner. And we have five core values. First and foremost, focus on the customer. Secondly, we are a global company with a diverse range of cultural differences, so we need to celebrate team spirit. Thirdly, now that we’ve decentralized our organization, we need to empower our people. Fourth, we focus on respect and integrity. We’ve been in business for over 120 years and we believe we should conduct business in an honorable manner. And lastly, we are committed to being good stewards of the environment.
Q. What other changes have you been working on?
A. We’ve been working on streamlining our identity with a coherent brand strategy for North America. We’re moving from a house of brands to a branded house. As we move forward, Johnsonite will be our commercial brand, and Tarkett will be our residential brand. Both brands will carry the same new tagline—The Ultimate Flooring Experience. All of the other brands will be relegated to category or product names. This change sounds simple, but it requires a lot of integration, so we’ve been very careful in the process. It not only affects our people internally but also our customers throughout the channel.
Q. How has the economic recession affected Tarkett?
A. As you know, this slowdown has been global in nature. We’re using this time to hire the right team and get them trained. But we also haven’t backed off of our growth strategy. Last year we invested 175 million euros in acquisitions and internal growth. In South America, we bought Fademac, the leading resilient flooring producer in Brazil. We have a very strong balance sheet and we could invest up to $600 million for the right set of opportunities.
Q. How do you identify the right growth opportunity?
A. We have three basic criteria for acquisitions. Any opportunity we consider must expand our geographical reach, or complement our current portfolio of products by picking up the pieces of the jigsaw puzzle we don’t have, or it must consolidate our operations. At the end of the day, it has to create value for our customers. We will also grow organically and through new innovations. At Domotex this year, we signed a global agreement with Välinge on its new powder technology, which could create a whole new flooring category. We have also increased our R&D budget by 25% this year because we feel there’s plenty of room for new innovations in the flooring business.
Q. You say that your mission is to enhance the quality of life for your customer. Who is your customer?
A. That’s an interesting question. We work directly with a whole set of customers in the channel, but always with the end user in mind. It could be the architect, designer, contractor, distributor or retailer. We also interface with the end user to ensure our innovation strategies consider their future needs. We believe that floors have a measurable impact on how people experience the places in which they live, work and play.
Q. What’s your outlook for business in 2010 and beyond?
A. Globally, the recovery will take a long time. The public deficits that have been created to stimulate recovery will have to be repaid and this will take some time. I believe 2010 will be a transition year—the commercial sector will continue to decline, but residential will tick up, so overall business will be flat. We think growth will come in 2011. But we won’t see 2008 levels of business for at least another four or five years.
Q. Tell us a little about yourself.
A. My life is simple. I focus in two areas—work and family. I have four boys that range in age from 19 to 11 and we are very active in sports. In summer we like to water ski and in the winter we downhill ski. I also like to run for exercise but struggle to find time for this with all my travel.
Q. How far do you run?
A. About 25 miles a week.
Q. Your English is very good, but you grew up in France?
A. Yes, I grew up, studied and worked for most of my life in France but I also spent some time at Harvard Business School and I’ve lived abroad in Japan and in Scotland. You may find this interesting, but with all the languages involved in managing this global company, we have selected English as the common language for our global meetings at Tarkett.
Copyright 2010 Floor Focus