U.S. Manufacturing: Retailer and A&D perspectives - Aug/Sep 19
By Jessica Chevalier
Last year, this report, with a focus on issues surrounding the domestic production of flooring, spoke with manufacturers, which reported investing in American manufacturing not as a simple appeal to patriotism but because it is good business for the manufacturer, the supply chain, the end-user, and the economies, large and small, touched by these transactions. The question at hand in this report is whether those benefits are well-communicated and valued by buyers of flooring, both residential and commercial.
The answer turns out to be highly complex. While “Made in America” is something of a heart-warmer, it is a fairly vapid claim without any explanation of what lies behind it, and therefore isn’t typically a significant factor in flooring selection. On the residential side, the issue is further complicated by the fact that retail sales associates (RSAs) are leery of going long with American-made pitches because domestic options are limited in certain flooring categories, particularly rigid core LVT, which is wildly popular right now.
But what if customers-both residential and commercial-understood the value of “Made in America” in real terms: in quality; in fair-wage American jobs created; in communities bolstered; in products created and sourced with transparency; in forests regenerated and materials recycled; in environmental protections enacted; and in carbon not emitted via long overseas journeys? While “Made in America,” on its face, is a claim so familiar and ubiquitous that the meaning behind the term has faded into irrelevance, would the actual facts that lie behind that claim make a different argument?
The insights provided by the retailers and interior architects interviewed here should prove useful in assisting domestic flooring manufacturers in crafting and positioning their messaging. Overall, a “Made in the USA” sticker is not enough to clinch a sale, but an elaboration on the implications and benefits, large and small, that come along with that claim may win minds, which are much more important than hearts when it comes to flooring sales.
Rigid core flooring is an invention of the Chinese, and, currently, over 90% of rigid LVT sold in the U.S. market is made in Asia. As this category is the primary growth engine of the residential market, it has likely impacted the discussion at hand. After all, if momentum is propelling an imported product, it drives the focus away from country of origin-at least for a time.
However, Shaw (and its Coretec brand), Mannington and Mohawk are all in the process of constructing rigid core facilities on U.S. soil, which means that more domestic-made product will be available. Once the consumer has comparable U.S.-made options in rigid LVT, we’ll see if country of origin becomes more of a factor.
CONSUMER STYLE RULES
Consider the average middle-class consumer, who has saved her money for months or even years and is finally ready to purchase a new floor for her kitchen. It’s a big decision and a long-term commitment, so she reserves a lot of time for research. In fact, recent industry research has indicated that the decision-making process averages four months. She searches Instagram and Houzz in the evenings after her kids are in bed and finds styles and colors that she likes. She visits online retailer sites to get a feel for where she can get the products and how much they will cost. She shares the information she’s acquired with her spouse and brings him around to her way of thinking. Together, they visit several local stores: a couple of independent retailers and a few big boxes. Eventually, she finds exactly what she’s looking for. But then she notices that her dream floor is made in China, and, all things equal, she’d rather buy American-made. Is she going to toss the whole search out and start again, honing in on domestic-made product only; go with a second choice; or compromise on the origin and go with the choice she loves now and knows she will love for years to come? Unless a well-trained RSA can bridge the gap and make a compelling argument for the domestically made product, she will most likely go with her first choice.
The specialty flooring retailers with whom we spoke estimate that between 5% and 20% of consumers enquire about American-made in their search for flooring. However, even when they do make this inquiry, domestic manufacturing is rarely a guiding parameter in their purchasing decisions.
Why? There are many reasons, but, first and foremost, because style and cost rule. Says Charlie Weighman of Floor Covering Brokers in Traverse City, Michigan, “For the majority of consumers, it still comes down to two things: first being look and style and second being price. Most clients would prefer to buy American-made products; however, they don’t want to pay [substantially more] to do so.” This may feel like a very sobering statistic, but the fact is that the industry has long known that flooring sales are driven by style, and, in fact, the domestic industry has very effectively moved toward being a style-oriented industry through innovations in technology.
However, there are other factors impacting sales as well. Performance, of course, plays an important role in the consumers’ decision. And Weighman notes, “I would even say I have more customers concerned about products’ green qualities, such as VOC content, off-gassing, formaldehyde and sustainable qualities than about country of origin. You would think that sustainable products and American-made would go hand in hand, but that is not always the case.”
Andrew Robrish of Massachusetts-based AJ Rose adds, “We got a lot of questions after the Lumber Liquidators exposé on 60 Minutes, and that’s still on the consumers’ mind. But I think it’s more about the healthiness of the product-not whether it is made in the U.S.”
Harry Tishler of Indiana’s Tish Flooring reports that he always says yes to point-of-purchase merchandising materials that promote domestic production when offered but notes, “All our RSAs are pro-American-made products, as are we as a company, but we don’t want to over-promote a product because it is domestically made at the expense of something that the customer might like. And, to be frank, we place a higher priority on the credibility and reputation of the supplier, as well as our history with them. If we know through experience that [the distributor] will have what we need in stock, offer quick delivery and stand behind us in product-related claims, we will prioritize that distributor’s products, whether or not they are American made. We would prefer to buy all American, but we have to focus on our supplier relationships with those who are going to give us good service and support.”
Do consumers and end-users truly have the opportunity to make a fact-based decision about the origin of their products? Some do, and some don’t. It is important to remember that both consumers and commercial end-users are many steps removed from flooring manufacturers, and, in both cases, the values of the seller or specifier will be transmitted to the ultimate decision-maker through the sales process.
As those within the industry well know, the vast majority of consumers have no knowledge of where flooring comes from. They haven’t heard of Dalton, Georgia, and they certainly don’t know that it is the center of the carpet world, producing the bulk of the world’s broadloom. They aren’t aware of the proliferation of ceramic manufacturing on U.S. soil. And the origins of both vinyl and laminate are likely as mysterious as that of the Loch Ness monster. They may relate area rugs to the Middle East and connect hardwood to a species, thereby gaining some insight about its origins, but that’s likely the extent of it.
Furthermore, both retailers and specifiers are winnowing options for the consumer, which means that, in a very real sense, they are the first-line decision makers. Certainly the end-users’ demand dictates what products they select, but retailers and specifiers are, no doubt, making decisions about the landscape of products that the consumer is offered, and, as such, their priorities become the consumer’s priorities.
The fact is, it may not even occur to some consumers to enquire about the origins of their flooring unless the RSA draws attention to it. And the same is true on the commercial side. Therefore, an RSA or interior architect who prioritizes domestic production is a great boon to their domestic manufacturer partners. Effective education at the RSA and specifier level is imperative if domestic manufacturers want their U.S.-made claims to carry weight.
The consumers’ ultimate indifference to country of origin in relation to flooring shouldn’t come as a real surprise when you consider their relative blindness to another closely related factor: brand. Tishler reports that consumers do online searches for words like “rigid core,” “solid” and “waterproof” frequently but rarely query for specific brand names. Consumers have little brand awareness with regard to flooring, so domestic manufacturers hoping to benefit from aligning their name with “American made” may see little benefit in the long run. If a consumer doesn’t remember a brand name, they certainly won’t remember the benefits that come along with it, so the “Made in America” message bears repeating often-at every consumer interaction with the brand, if possible.
Furthermore, flooring retailers report that consumers see the local brand-the store brand-as more impactful to their experience than the manufacturer brand, and that also minimizes the importance of country of origin in the buying process. “By the time they get to us, it would be rare that they don’t have a lot of information already,” says Tishler. “I would say that the thing they are tuning into is experience. They know that flooring retailers carry a lot of the same products-flooring brands aren’t differentiating retailers-so they are tuning into comfort level. And they have already researched this through the website or Yelp reviews. They are first trying to get a sense for the company they will be working with.” After all, the local brand-the retailer-is the one with which they will be interacting and contacting should problems occur. If the retailer stands behind its products like a good retailer should, ultimately the flooring brand-or its origins-never really come into play.
And once they have found a store with which they have a good rapport, the consumer settles in not to start a conversation about flooring but to continue one that started long before they stepped foot inside any brick-and-mortar location. What does that mean? It means that consumers have, to some extent, already started down a particular path when they visit a store. They aren’t the blank canvas consumers of pre-Internet days. They are gathering information, but they are also bearing opinions. And once they have honed-in on a particular product category or product, factors like “Made in America” do not carry the same weight as they would have early on in the process.
CONSUMERS: GAPS & GLOBALITY
Rigid core LVT is a Chinese innovation, and as of yet there is no significant production of the material stateside. With rigid core and other LVT products functioning as the growth engine of the industry right now, these products must be imported to meet demand, which renders American-made a moot point in many retail sales. Consumers who desire rigid core LVT don’t have much in the way of U.S.-made options.
Denny Lauterbach, owner of Floor Covering Brokers, points to rigid core products as a gap in the American offering, noting that he was really happy when Mannington moved production of flexible LVT to the U.S. a few years back. He and other retailers are hopeful about the commencement of rigid core production on U.S. soil but also understand that such a move isn’t so much a matter of demand as it is logistics.
“There are a bunch of reasons why it is so much less expensive to make resilient products elsewhere,” says Tishler. “It is a matter of macroeconomics, but it sure would be nice because of demand if we were able to say it was U.S. made.”
AJ Rose’s Robrish notes that there are “big holes” in the U.S. product offering. He adds, “There are very limited choices in American-made that are fashionable and hit the price points we need.”
Lauterbach points to another concern: the true picture of what “American made” actually means today. The International Trade Commission dictates that “all or substantially all” of a product must be U.S.-made for it to be labeled as such, but some believe that leaves a great deal of grey area. “Honestly, it’s becoming like automobiles,” says Lauterbach. “The content is so mixed that I don’t know that anybody expects anything to be 100% American-made anymore. If it is assembled here, it’s highly likely that there is a component from somewhere else.” If a consumer questions the real merit of the “Made in the USA” claim, this certainly weakens its value proposition.
“Sadly,” Lauterbach continues, “some of the product is a higher quality that is coming in from China because their machinery is newer and their factories are state-of-the-art. Some of what is being built in the U.S. is on older equipment and not as precise, so I don’t think from a quality standpoint that there is a big advantage to U.S. made.”
A look at product claims has been revealing for Tishler. “Products manufactured elsewhere aren’t noticeably higher in claims rates,” he says. “It might also be that we are selective about who we are doing business with. We don’t buy any second-quality merchandise. We only work with reputable and established distribution channels.”
However, Lauterbach points out that there is a real disadvantage to imported products if problems do arise. He notes, “If there is a failure [with imported products], then all of the stock that they have in the U.S. may have the same issues.”
THE COMMERCIAL END-USER PERSPECTIVE
On the commercial side, awareness of country of origin in relation to flooring varies from sector to sector. The General Services Administration, which oversees government sector projects, requires American-made products be used, flooring included. And in the education and healthcare sectors, some districts and organizations have specific guidelines or mandates related to a preference for American-made.
However, many designers queried reported that American-made isn’t even on many end-users’ radars. “For us here at Bergmeyer, specifying American-made flooring products is not a request or a project requirement that we see,” says senior interior designer Krista Easterly with Bergmeyer, a Boston, Massachusetts-based design firm. “A lot of our projects are retail prototypes. We need a lot of product, quickly and for the right price. Unfortunately, the oversees manufacturers can typically meet the requirements fast and cheaper than American-made.”
Kelly Callahan, K-12 studio principal for VMDO, shares Easterly’s experience. She says, “I don’t have any experience with owners requesting or valuing American-made flooring products. Healthy-low VOC and no-wax or chemical cleaning needed-and high-performing-long-lasting, durable, cleanable-are the two priorities for us and our clients.”
And Angela Hinton of AMH Design notes that, in some instances, she actually leans away from American-made. “I tend to work with the same few clients repeatedly, and none of them have requested or prioritized U.S.-made flooring at all,” Hinton notes. “I predominantly specify tile, and routinely specify Italian-made tile because I believe it to be better designed than U.S.-made.” After all, the Italians have long been leaders in the category and are the source for most of the equipment used to make tile.
The good news, however, according to Jane Hallinan, a LEED green associate focused on workplace strategies for Perkins Eastman, is that, whether or not customers are requesting American-made flooring, in her experience, it is often being specified. “The carpet and luxury vinyl tile that we specify is almost always produced stateside,” she points out. “We’re using Shaw, Mohawk, Tarkett, Interface.” In fact, Hallinan reports that the majority of what her firm specifies is American-made product.
COMMERCIAL END-USER: AVAILABILITY WINS
While education designer Brandon Biniker of Fanning Howey prefers to use American-made products, he notes, “It’s not a priority for me to use American-made if the client doesn’t specifically come right out and ask for it.”
However, Biniker does initiate discussions about U.S. production in relation to its greater ease of availability. He says, “If a client selects or chooses products that I know are coming from oversees and I highlight issues that could potentially occur, there is a tendency to talk at length about selecting U.S. products in lieu of foreign. Buying products from Europe or anywhere oversees can be problematic from a lead time point-of-view. I have to expect and warn clients that foreign-made products will obviously take much longer to ship from oversees, but there is also the inevitable delay through customs or ‘rough seas’ or shipping delays that affect projects now more than ever.”
Overall, Biniker reports that about half of the end-users he works with initiate a discussion about American-made products, and less than half prioritize American-made in their purchasing decisions, but there are some districts that utilize only U.S.-made products. When Biniker’s school district clients do prioritize domestically made products, the factors most important in the decision are guaranteed quality of goods followed by availability, environmental benefits, and boosting the U.S. economy.
Similarly, Hallinan reports that U.S. manufacturers’ greatest selling point may be based on convenience. “U.S.-made is not something that clients are specifically asking for, but they are fine with it,” the designer reports. “It’s not a selling point. It mostly comes down to the fact that U.S.-made is a good option because all projects across all markets are becoming faster, and all the big carpet manufacturers are somewhat local, so we are able to get the flooring faster. This is very helpful because there is less construction time [for new builds] today, and in renovations, it’s a high priority to minimize disruption with less construction time as well.” Hallinan notes that even if U.S. manufacturers are importing some products from manufacturing facilities elsewhere, they typically stock in high quantities.
However, Hallinan and Biniker agree that U.S.-made doesn’t necessarily equate to better-made. Hallinan notes, “Sometimes the E.U. has stricter off-gassing regulations for products, which means, from a health and safety standpoint, they are better.”
Hallinan also points out that the universal nature of technology today levels the playing field considerably. “Being U.S.-made doesn’t make a product inherently better,” the designer says. “Anyone can make anything to be on-par today. All LVT manufacturers are starting to produce wearlayers that are equally strong, and we all know that there is nothing truly indestructible. We judge what makes a product better based more on material properties and what’s really in it, not where it’s made or who it’s made by. We work with trusted manufacturers, but that doesn’t stop us from learning about others. There are a lot of smaller, niche companies making good products today. You have to stay open-minded about what’s out there.” Hallinan reports that American-made products do typically have the advantage of being less expensive.
Biniker isn’t as sure about that, “There is a huge difference between made in the USA and assembled in the USA, which clients need to understand,” adds Biniker. “Prices are much lower for products assembled in the USA because parts are cheap and coming from oversees. All USA-made products meet strict manufacturing standards and are typically more in price, but that’s not to say you can’t reap benefits of tax breaks, lower shipping costs, and market the buy USA/American-made mantra.”
Biniker does believe that U.S. flooring manufacturers have been steadily narrowing the quality gap. “Although European products seem better-made, U.S. producers are recognizing market conditions and stepping up their game to compete in a global market,” he says. “Generally, U.S. products will be higher in price, but the quality is now there to back the claim for pricing.”
COMMERCIAL END-USER: DEVIL IN THE DETAILS
As on the retail side, designers are keenly aware of the fact that “American-made” is a term with wiggle room, and the details of the claim make a significant difference, both in what values it actually embodies and in how the claim resonates with both A&D and end-user clients.
For Hallinan, “Made in America” would carry much greater influence if it embodied triple-bottom-line-style guarantees about the manufacturer’s practices as well as the product’s origins and afterlife. “We are glad when a product is made in the U.S.,” says Hallinan, “but we also want to know about sustainability in the harvesting of raw materials and take-back programs after its useful life-and we want to know that post-life products aren’t shipped off to be someone else’s problem. ‘Made in America’ should also be about giving back to the community. That is more compelling than simply country of origin. Sometimes manufacturers in the U.S. treat their workers better, but that isn’t always a given.”
While it may seem cumbersome to package and communicate such a broad range of statements as part of a “Made in America” claim, doing so would certainly prove more meaningful to consumers, both residential and commercial.
Yes, we may be an information-rich, or even an information-overwhelmed, culture, but that makes it all the more important for manufacturers to cut through the marketing fog with quantifiable, factual claims, rather than leaning on phrases crafted to appeal more to the consumers’ emotion than their logic.
Interestingly, while one may assume that the Lumber Liquidators Chinese laminate formaldehyde scandal and tariffs on Chinese-made flooring would, at least, raise awareness about the benefits of U.S. made, retailers report that neither has had too much of an enduring impact on pushing consumers toward American-made.
“For us, Lumber Liquidators wasn’t much more than a blip,” says Tishler. “Consumers were scared of laminate-but not necessarily only Chinese laminate. I wouldn’t say that it has had an ongoing impact.”
Lauterbach adds, “Consumers will go with [Chinese made] if you dispel their concerns. This hasn’t really slowed purchasing from China.” In fact, some consumers believe purchasing from China is actually safer than before the scandal since it is presumably under more scrutiny.
As for tariffs, Robrish reports that while manufacturers are absorbing some of the added cost, AJ Rose has repriced its products as well. “If there were more American options, we would go with those,” he notes.
Copyright 2019 Floor Focus
Related Topics:Mohawk Industries, Mannington Mills, Interface, Shaw Industries Group, Inc., Tarkett, Lumber Liquidators