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FCNews exclusive: Mohawk Hard Surfaces goes on the offensive

October 24/31, 2016: Volume 31, Number 10
By Reginald Tucker

screen-shot-2016-10-31-at-11-40-11-amTo say that Mohawk Industries has dramatically evolved over the past 20 years would be putting it mildly. Historically perceived as a carpet company, Mohawk has vastly expanded its portfolio of products—through both acquisition and internal expansion—to include a full breadth of hard surface materials. In fact, ceramic is the largest product category in the company’s offering today, and it also maintains leading positions in hardwood, laminate, vinyl, stone and area rugs.

In the 21 years since its merger with Aladdin, the company has grown from under $1 billion to $8.5 billion. And -ince 2013 Mohawk has invested around $5 billion with the goal of delivering product innovations at a better value to its customers.

To execute those objectives and initiatives, Mohawk relies on a seasoned team of flooring industry executives. At the helm is Brian Carson, who serves as president of North American flooring operations with responsibility for all flooring categories with the exception of ceramic—a separate business unit. Carson, a veteran of the wood flooring business, joined Mohawk about 10 years ago—initially taking on hard surface responsibilities and eventually expanding into soft surfaces.

A recent restructuring resulted in the appointment of Gary Lanser to the position of president of Mohawk’s wood and laminate business, which includes distribution of the Quick-Step and Columbia brands. In this capacity, he will drive the development of innovative products while overseeing the construction and start-up of Mohawk’s new engineered wood and laminate plants. Lastly, David Holt, senior vice president, will be responsible for all wood, laminate, resilient and ceramic sold through the Mohawk channel. As well, he has responsibility for all the builder and multi-family sales channels for Mohawk.

FCNews recently sat down with Lanser and Holt to discuss Mohawk’s outlook on the hardwood and laminate flooring sectors in particular and the company’s approach to growing its market share in each of the categories.

Respectively, what do you bring to the table in terms of your leadership skills, experience and insight as you look to further develop and promote Mohawk’s hardwood and laminate offerings?
Gary Lanser:
What I bring is broad-based experience. Over the course of my career I have worked in several industries, including agriculture, industrial fiber and chemicals, and now I’m in the floor covering space. Function-wise, I have experience in research and development, manufacturing, sales, marketing and supply-chain leadership. With that, I bring strong operational, logistics and business leadership skills to the team. With this diverse background, I bring a fresh set of eyes to the business. I have an intellectual curiosity so I ask a lot of questions.
David Holt: I have been in the flooring business for most of my life, with the exception of a 15-year stint in the recycling world, which was still focused around the floor covering business. I’ve held jobs from executive vice president of sales and marketing to CEO and now senior vice president here at Mohawk for the builder/multi-family channel as well as hard surface retail. This involves selling the whole tool box—a strategy that has been very successful for us. I plan on carrying the exact same selling traits over to the retail side as well.

The growing consumer trend toward hard surfaces is well documented. In your transition from a once carpet-only company to a full-line hard surface manufacturer, how has Mohawk evolved over the years to address this trend?
Lanser:
Certainly Mohawk prides itself on innovation as well as our strong brands. These elements combined enable us to offer a basket of products with unique features and consumer appeal that competitors can’t match. Given our logistics and distribution system, we can offer a full array of products that we can deliver to our customers anywhere in the U.S., typically within five business days. More importantly, we are able to tie in all of our floor covering products into a single experience. That has worked very well for Mohawk.
Holt: We are already the world’s largest laminate producer, and we are adding capacity when others are scaling back. In addition to that, we are No. 1 in ceramic. We expect to quickly become No. 1 in wood as well.

Can you talk about—from a strategic standpoint—some of the steps you are taking to build on your capacity in laminates?
Lanser:
We are investing in laminate manufacturing. This will increase our laminate capacity as we continue to grow and extend our leadership position in the category.
Holt: In laminate our innovation and technology exceeds that of our competitors. We have the Uniclic glueless locking system, which is clearly the best installation system in the marketplace. And it allows us to do more with our product to make it more dimensionally stable than our competitors. Plus, it’s all made in North Carolina. Our design, technology and innovation are the best in the industry; that’s why we’re No. 1—not just because of volume.

screen-shot-2016-10-31-at-11-40-28-amAre these innovations and features translating into products on which retailers can make higher margins?
Holt:
Yes, they can make more money with our products. When a retailer buys from us, they know they’re getting a product that’s made in America and backed by Mohawk. They can feel comfortable knowing they’re not going to have an issue like we’ve seen with other laminate importers. We keep our distribution clean, our styling separate between channels, and we’re able to react very quickly to market trends because we manufacture the product. Whereas if you are an importer, it takes a lot of time to do that.
Lanser: We offer products that have innovative features, strong brands, great price and value so retailers can trade up the customers to better-performing products. We offer proprietary technologies across all our product lines—Uniclic, AmorMax, Opulux, Spill Protect 24, GenuEdge. Style, design and performance—that’s how we create as much value for our independent distributors as well as the retailers we service.

As a globally recognized brand, how much emphasis do you place on domestic manufacturing? Does it really matter to the retailer at the end of the day?
Lanser:
The majority of our manufacturing is in the United States, but we also have a large presence in Europe. But obviously there are many advantages to our customers and ourselves in purchasing and supplying domestically produced products. Clearly there’s the speed of supply, excellent service, etc. When you take a look at all that, not only are the retailers and the distributors satisfied, but consumers also feel the same way.
Holt: The Made in the USA label means more today than it ever has with all the press on the various environmental issues out there. We are a large company with a lot of assets, and those assets include people who look into everything from finishes to adhesives that might possibly cause anybody a problem. You’re not going to have that kind of control outside of the U.S. As someone who has run the builder multi-family business for quite some time, I can tell you when you’re dependent upon someone else to control your manufacturing assets, you’re always going to have too much of the ‘bad’ thing and not enough of the ‘good’ thing. That does not equal good service; it amounts to upset customers out in the field. Manufacturing in the U.S. allows us to meet our customers’ needs at the drop of a hat.

Competition is fierce, especially among the more popular hard surface categories. Amidst ever-tighter margins at retail, how is Mohawk working with the specialty retailer to ensure he remains profitable?
Holt:
We’re fortunate to have a host of very high-quality brands. From Pergo, which you’ll find in the big boxes, to Mohawk, etc., we keep those lines separate, and we keep those visuals separate. We’re working harder than ever to give the individual retailer a leg up on the styles we offer. You’ll see a whole lot more of that to come in the future. The products that will be coming out of Mohawk Hard Surfaces in the next 18 months from a styling standpoint will be leading edge in every category. And we’re going to lead with the retailer in all those categories.
Lanser: Mohawk is the undisputed leader in hard surface in terms of design, styling and technology. We truly bring differentiated products to our customers and the marketplace.

Mohawk has grown organically and through acquisition. How do you plan to continue increasing your market share in the hardwood and laminate categories?
Lanser:
We will continue to expand our offering, and it begins with innovation and differentiated product. In addition, we have to make sure we take care of our customers. We have to drive innovation and investment back into our business, and we have to improve the return for our shareholders. As long as we stay true to those tenets we will continue to grow organically as well as take market share. It’s a commitment to our customers, employees and shareholders, and we will continue to drive that tenet of our strategy.
Holt: There are five words that are most important to me in terms of growing sales: technology, innovation, style, design and investment. We have been blessed and fortunate enough to make the investments we’ve made to be able to continue to lead in all these areas. It’s a benefit and a blessing to be a well-run company that has the ability to be able to deliver to customers the things they need.

As you have expanded your portfolio of brands, how has the retail community reacted relative to the brand position of some of your offerings?
Lanser:
Look at our Columbia and Quick-Step brands, for example; they are targeted toward the independent distribution channel. We are committed to our independent distributors; we value the relationship, they value the brand. It’s a combination of that brand plus the products we bring to the market. As far as Pergo goes, it continues to be extremely valued. We will continue to drive the brand and put more products under the Pergo banner.

As part of your growth initiatives, are you putting more marketing resources toward social media?
Lanser:
We are absolutely heavily committed to being the leader in digital marketing, and that includes social media marketing to consumers, especially millennial groups. We are aggressive from a national social standpoint and also a syndicated social standpoint, equipping our retailers with social content so they’re successful in their local marketplaces. From programs like Yelp to Promoboxx, hard surface is central to our social strategy. Anywhere that millenials communicate, we are committed to it. It is the new way, and we will continue to invest strongly in every omni-channel marketing that’s out there.

In closing, what point would you like to stress to your partners in the industry?
Lanser:
We are bullish on this business. We’re investing in the flooring industry and we feel very strong and confident about our products, style and design. We expect you will see a lot of great things coming out of Mohawk, not only our wood and laminate offerings but the entire Mohawk brand as well. Ultimately, the goal is to drive the business forward, spark innovation in the team and encourage creative ideas. It’s really about taking the business and the team to that next level.