Wood Cuts: The past year brought more demand in hardwoods, and that meant more challenges - March 2021
By Michael Martin
A year ago, life changed dramatically. A new, highly contagious and deadly virus was identified by the World Health Organization, and it was spreading at an alarming rate around the world. Quickly, global air travel was restricted, schools closed and many businesses shut down as the world grappled with how to respond to the growing pandemic.
It was a bleak start to 2020, and many companies in the wood flooring industry struggled. Manufacturing facilities shut down, distributors ceased operations, retailers closed their doors, and contractors across the country had jobs canceled as citizens took the advice of the Centers for Disease Control and Prevention to isolate themselves and shelter in place.
Just a year later, things look a lot different.
BUSINESS IS GOOD
Yes, the pandemic is still an issue, but business is booming throughout the entire wood flooring supply chain, and many National Wood Flooring Association (NWFA) member companies are reporting that 2020 was their best year ever, despite the first few months of uncertainty.
“Our sales are double where they were a year ago,” says Peter Connor, owner of WD Flooring in Laona, Wisconsin. Even better, Connor anticipates a similar outcome for the rest of 2021, saying, “We expect sales to be double last year’s, provided we can find the human resources to fill orders, as well as source the raw material.” Connor’s sentiments are shared pretty much throughout the entire wood flooring supply chain.
David Williams, vice president at Horizon Forest Products, a flooring distributor with 20 locations in Maryland, Virginia, North Carolina, South Carolina and Texas, says Horizon is seeing increased demand each month, with demand outpacing supply. It has been a challenge to maintain inventories of certain products, he says, because many of their contractor customers “are now scheduling out six to eight weeks.”
That is certainly the case for contractor Mike Somodean, owner of MSCS Inc. in Roswell, Georgia, who says, “Even though we had a shaky start [in 2020] due to a few cancellations, things are back on track now, with four to five weeks of work scheduled and a good amount of leads coming in.” While the workflow is good, Somodean admits that, while not as bad as other areas of the country, supply shortages have been an issue. He says, “We are having to secure orders way ahead of time to make sure we don’t have to delay a project because of the material not being available.” And even when supplies are plentiful, having the time and resources to complete the work is a challenge, too. He shares that his company is currently getting more work opportunities than it can handle.
Scott Jenkins, a contractor located in Ottawa, Ontario and owner of Jenkins Hardwood Flooring, says things are much the same for our neighbors to the north. Jenkins shared that at this time of year, he is usually booking jobs a month or two ahead of time, but he is currently booked more than four months out. “I expect 2021 to be one of my better years,” he says. Still, even with the busy schedule, Jenkins has had to turn down work. “There was a demand for instant jobs with some people wanting things done the following week upon the first phone call,” which just was not possible, he says. Turning down that work was difficult, but Jenkins believes that the clients he worked with during 2020 and 2021 will be his greater resource for future referrals. “With so many clients working from home, I got to know them more than ever before, and they got to know me for more than just a person who is doing their floor,” he says. “There was definitely a more personal connection.”
Companies throughout the entire supply chain agree that the overwhelming demand for wood flooring is a residual effect of the lockdowns many regions experienced. “The redistribution of consumer spending away from travel and entertainment into … home remodeling and buying new homes” has been a driving factor, says Neil Poland, president of Mullican Flooring, a hardwood manufacturer headquartered in Johnson City, Tennessee. Poland indicates that sales for his company are ahead of last year by double digits.
DELAYS & SHORTAGES ARISE
Business is much the same for manufacturer Maxwell Hardwood Flooring in Monticello, Arkansas. President Tommy Maxwell shares that “money is being spent on new homes and remodeling,” and, as a result, business is up double digits from last year for his company as well. Still, “we only make so much flooring per day,” he adds, “so when demand is high, there are some challenges.” In addition to production capacity limitations, Maxwell shares that lumber supplies have been tightening for six months, making it difficult to source raw materials. For his part, though, Maxwell has been able to build lumber inventory and has increased truckloads to its distributors across the board.
In Rochester, New York, president and owner of Installers Warehouse, Craig Dupra, says his flooring distribution company is experiencing “lots of delays and shortages” but still expects business to be up double digits this year. “Last January was strong,” he says, “but this year is even better. After being stuck at home for months on end in some cases, discretionary spending is now being invested in flooring upgrades like real wood.” The good news, says Dupra, is that “fake wood always reveals itself as fake. You can’t catch the LVT pattern on a sample board, but you can see it in a house, and once seen, it can’t be unseen.”
Sales are up year over year for Denver, Colorado-based Palo Duro Hardwoods, as well. The distributor reports that the usual seasonal downsizing in the winter months for the mountain region has been nonexistent so far this year, which is a sign that contractors in their area are busier than ever. “Our contractor partners are reporting increased business both in the new build market, as well as in the remodel sector,” says Marc Schulz, vice president for both Palo Duro and Lägler North America. Schulz further confirms supply shortages across the supply chain, not just for wood but also for “certain stain colors due to pigment shortages.”
Personnel shortages are an issue, too. “When it comes to the human element, there are issues with freight, ranging from delays to personnel shortages,” he says. “This seems to be a common problem faced by many of our partners in the industry, but we are doing what we can to be prepared and educating our customers about what to expect with lead times and availability.”
The issue is much the same across the country. Rick Holden, chief operating officer with distributor Derr Flooring Company in Willow Grove, Pennsylvania, reports that supply issues are a major problem. “A shortage of lumber here in the United States has created a backlog,” he explains. “We cannot get enough flooring to fill backorders and build inventory.”
On the retail side, Mike Hart, vice president of Ambassador Floor Company in St. Louis, Missouri, says inventory is a challenge, as well. “With consolidation of manufacturers and changes in distribution, we have seen a number of out-of-stock items and long lead times from sources.” Still, Hart states that business was good throughout 2020 and continues to be strong in 2021 so far.
Dan Natkin, vice president with Mannington Mills in Salem, New Jersey, mentions supply issues, as well. “U.S. lumber supply is extremely tight,” he shares, “particularly in white oak and hickory. White oak prices are out of control for lumber.” Despite these supply and pricing issues, Natkin states that business is strong. While Mannington initially experienced a sharp drop off in demand during March, April and May, demand rebounded in the summer and throughout the fall. Natkin says, “In the back half of 2020, we experienced a surge in sales as the remodel market came back strongly. This has continued into 2021 and is not showing any signs of abatement.”
In Somerset, Kentucky, Somerset Wood Products vice president of sales and marketing Paul Stringer reports that his company, a manufacturer, is also experiencing high demand. “We have been in a backorder position for more than seven months,” he says, adding that they “are having a hard time getting the backorder volume reduced because, fortunately, demand continues to be strong.” Stringer further reports that sawmills are having supply issues just like the flooring manufacturers, and that trucking is a problem as well since “it’s getting harder to find trucks to transport” products.
To put these backorder issues into perspective, Barbara Titus, vice president of operations and international sales at Middlefield, Ohio-based manufacturer Sheoga Hardwood Flooring and Paneling, shared that her company is closing in on a backlog of 600,000 square feet of material. “Currently, our lead times are very extensive,” she says, “despite increasing manpower and purchasing equipment to help with efficiencies.
Many sawmills reduced their production in 2020, which has limited their ability to respond to the increased demand for raw materials. Despite ramping up production, their supply is far outweighed by the current need. Thus, prices are increasing rapidly and availability is limited.” Titus further reports that demand has remained steady, with sales orders escalating quickly in late third quarter and into the fourth quarter of 2020.
COMING YEAR WILL REMAIN BUSY
That demand is continuing into 2021, as well. As a result, sales are strong both domestically and internationally, with an anticipated double-digit gain in 2021.
Contractors that typically deal with high-end clients have barely noticed the impact of Covid on their businesses. John Lessick, president of Apex Wood Floors in Lombard, Illinois, indicates that “the design community is bumping, so this is fueling a strong demand for our services.” Despite the supply chain being backed up and lead times being longer, Lessick reports that business is good, with lots of good projects on the horizon and a nice backlog of sold projects going into production.
Similarly, in West Park, Florida, Lenny Hall, president and owner of Endurance Floor Company, says business in 2020 was higher in both dollars and square foot volume, with a significant uptick in high-value jobs. He expects that trend will continue into 2021, with business up about 30% overall. He does, however, acknowledge there are challenges to be met. “Plywood is nearly double from a year ago,” he says, and PPE acquisition is a constant challenge.
Kansas City, Missouri-based contractor, Mike Totta, owner of Totta Hardwoods, reports sales are up a whopping 52% from this time last year. “We’re busier that we have ever been,” he says. He cites high demand as being the primary catalyst for his company’s phenomenal growth, but also acknowledges he was fortunate the Midwest remained open for the most part while contractors in other areas of the country were forced to shut down.
Avi’s Hardwood Floors owner, Avi Hadad, based in San Pablo, California, has been fortunate, as well. “The money is there for my type of clients,” he shares. “They have not lost income or jobs. The only thing different is that their money cannot be spent on things like flying, vacations, dining out, movies, etc., so the money is being spent on their homes.” Last year was busy, he said, and he expects the same for 2021.
In Scottsdale, Arizona, Blackhawk Floors owner, Jason Elquest, finds similar reasons for the growth his contracting company experienced in 2020. “People are at home and saving money on many things such as eating out and traveling,” he explains. “This allows for more funds to be applied to home improvements, which is where they are spending the bulk of their time.” While Elquest expects business to grow in 2021, as well, he expressed concern that demand for services would exceed his ability to meet it. “The biggest impact [on my business] has been finding apprentices and laborers. Many people we interviewed said that they were making almost as much money staying at home.” It is a concern shared across the entire supply chain.
“The biggest issue we have is getting people to work,” says Jessica Hickman Fresch, marketing and sales director for Allegheny Mountain Hardwood Flooring based in Emlenton, Pennsylvania. “This was a problem before Covid, but with the added incentive from the government to not work, it’s almost impossible to get new hires to show up to work.” Still, Hickman Fresch says business is good. Sales were up double digits in 2020, with November and December sales almost double what they were in the previous year, and 2021 is looking even better yet. “If demand continues as it has been,” she adds, “we could have a 20% to 50% increase in sales for the year.”
Across the entire supply chain, sales were much better than anticipated at the beginning of 2020, but even more encouraging is that everyone anticipates 2021 will be even better. Perhaps the best summary of this belief comes from Hickman Fresch. When asked what is selling best in her market, her response was, “Anything in stock.”
Copyright 2021 Floor Focus