By Steven Feldman
A recent article in the Wall Street Journal included vinylflooring as one of the top 20 products imported from China in 2017. According to the article, vinyl flooring, in the 13th spot, accounted for $1.78 billion in import value and the top 20 products collectively listed accounted for $75 billion in import value. This obviously makes flooring a target as President Trump seeks to generate tariff revenue on $505 billion in exports China sends to the U.S.
Some businesses have supported the tariffs, but others have said tariffs would hurt their profits or lead to higher prices for customers. The White House says China represents a fundamental threat to the U.S. that needs to be countered, even at the cost of pain to the U.S. economy.
Within the flooring industry, Mohawk Industries recently came out in support of tariffs, citing its significant investment in domestic manufacturing. “In the past four years Mohawk has invested in eight plants to the tune of at least $650 million,” said Brian Carson, president. “The United States is a very important market, and we invest heavily here in technology and jobs to develop world-class products for our customers and consumers.”
It has been argued that the proposed tariffs will lead to American job losses. “That is nonsensical,” Carson said. “Flooring is not an impulse purchase. Jobs will not be lost as a result of the proposed tariffs. Quite the contrary, when we create demand in the marketplace for new and innovative products and services, jobs are created for consumers, jobs are created for retailers, jobs are created for distributors and jobs are created for manufacturing. The thought that buying offshore somehow creates jobs here just does not pass the logic test.”
Carson said all Mohawk is seeking is a level playing field. “We believe that investing in domestic manufacturing technology creates more enduring value for the consumers and dealers than simply building warehouses. I recognize that there may be some products that don’t make sense to make domestically. LVT is not one of them. I believe there are many companies sourcing products not because it’s necessary, but because it’s easy. Investing in assets andinnovation to make the products where consumers experience real differentiation over the long term is good for our customers, dealers, consumers, employees—everyone in the supply chain.”
This is not to say Mohawk is anti-import. Quite the contrary, Carson said. “Mohawk is the world’s largest flooring company and the most global flooring company. We obviously believe in global trade and international markets. We source products; sourcing is a very important part of what we do to augment our manufacturing capabilities. We partner with incredibly high-quality suppliers. But we also know not all companies and countries provide a level playing field for global trade. And when we see that, we fight for change in all the markets. North America is obviously an important market, and we are going to fight for what’s right here, just as we are going to fight in all markets.”
A level playing field is what drives innovation, Carson said, not just in flooring but all products. “I wish more companies would invest in hard surface technologies in North America. I think it would be great for the industry. It puts manufacturers on their A game. Good and fair competition is fundamentally good for our industry and always good for consumers.”
But does a level playing field necessarily benefit the consumer? After all, there is significant innovation coming from China, as evidenced by recent product introductions from companies such as USFloors, Shaw, Karndean, Raskin, Wellmade, EarthWerks, Metroflor, Novalis and many others. “Broadly speaking, I think a level playing field benefits the flooring industry because it ensures fair competition, and fair competition promotes investment,” Carson said. “When you can compete on your merits, people will invest behind the ideas and innovate products, creating jobs in the communities where we live, work and play.”
Carson cited engineered wood as a category that today is primarily imported from China and has suffered in the innovation department. “It’s hard to believe, but there was a time when engineered wood was new. At some point, all products mature, and this category devolved to largely imported product with little differentiation. Long-term value deteriorated for everyone, including the distributor, the dealer, the manufacturer and ultimately, the consumer. What keeps product vibrant is more constant innovation. Mohawk is always committed to innovating new products, features and benefits. If there is no manufacturer that will do it, how does the product stay unique as it matures?”
It has been argued by many economists thatthe proposed tariffs will increase cost to the consumer. Since the tariffs cannot be fully absorbed by the supply chain, the tariffs will be passed on, in part, to the consumer, who will pay higher prices for flooring products. “I don't subscribe to that,” Carson said. “When the industry thinks about what the American consumer will be paying for flooring, it can’t be isolated to simply product costs. We think about the entire supply chain cost, including transportation, the cost of inventory, warehousing, logistics and freight and when the entire supply chain cost is taken into account, the American consumer actually benefits from domestically manufactured flooring products.”
Carson also addressed the notion that the proposed tariffs will lead to fewer and less innovative choices for the American consumer. Mohawk takes a different view, believing it would help some manufacturers compete in other areas of the world. “We know that when we own our assets and we can apply our new ideas, technology and our experience-based know-how, we are able to differentiate and innovate for our local consumers in a way that is unmatched,” Carson said. “Moreover, our stewardship and control of our domestically produced product sustainability and our corporate responsibility to the communities we serve is second to none and world-class by any standard.”