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QFloors: All about service and simplicity

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Steven Feldman

 

From left: Trent, Chad and Chris Ogden with Ron Cluff.

Springdale, Utah—Twenty years after its launch, QFloors has become the second-largest flooring-specific business management software provider in the industry. With a customer list that now numbers around 1,100, QFloors has more than doubled its base in the last seven years because it helps the flooring retailer become more profitable every single day.

How? First, it’s the B2B management component, which saves retailers time and effort in maintaining their product catalogs. Then, there are the job-costing modules. “People tell us all the time, ‘I never knew whether I was making money or losing money on a job,’” said Chad Ogden, president and CEO. “With QFloors, retailers can see the job costs before they quote the customer. Then there’s the use tax calculation, which the off-the-shelf systems do not offer. Usually retailers are paying more sales tax than they should be, or paying their taxes too soon, or charging their customer too much.”

Benchmarking is another key component of the QFloors proposition. In fact, Trent Ogden, CFO, noted how he brought industry averages to one users conference and compared them with each attendee’s financials. “We found the attendees’ net profit, or their EBITDA, was 2.6% higher than the industry average. So, our average dealer makes more money by implementing our system.”

There are a bunch of flooring-specific software companies out there, but QFloors said it sets itself apart in two areas: customer service and ease of use. “I have had multiple people who have come from other industries using all kinds of software say, ‘This is the best customer support department we’ve ever dealt with,’” Ogden said. “It’s the way we answer the phone, the responsiveness. We’ve heard that over and over again.”

Ease of use is also a competitive advantage since a retailer’s fear of technology is the biggest obstacle to automation. QFloors said it conquers that barrier. “We basically have done in five screens what most people are doing in 50 or 60 screens,” Ogden said. “If you can do the same thing with the same features—but with fewer mouse clicks, fewer windows and less typing, you can do your job more efficiently, and it’s easier to train people. That’s why we can convert somebody in one week.”

He added that QFloors can also help a retailer easily produce a financial statement. “That’s not true with any other software.”

The field is ripe for growth, Ogden said, because in his estimation only 33% of flooring retailers—about 4,000—are using industry-specific software. About 6,000 are using generic programs like QuickBooks, and many are still using nothing at all.

What are some of the advantages of using flooring-specific software? The aforementioned B2B, for one. Then, there are the inventory modules. “Floor covering-specific software features square feet, square yards, cartons,” he said. “You’re not going to get that in QuickBooks. Also, job costing is more efficient. We can track labor rates and salespeople commissions.”

Ogden said the proof is in the pudding. “We’ve shown that people who are using QFloors are more profitable because everybody’s job is streamlined to make fewer mistakes, to do things faster, knowing the cost of the job before you sell it, not losing your inventory, plus the time savings with B2B. You put all that together and it equals about 2% to 3% net profit. A dealer doing $1 million a year can realize between $20,000 and $30,000 a year in greater profitability.”

Barb Clements, owner of Al’s Carpets in Rockford, Ill., is one retailer who attests to the benefits. “I wouldn’t be in business today if I didn’t have QFloors,” she said. “You don’t know if you’re winning or losing, and when you’re losing you can fix things. I know people who thought they were winning and went out of business because they were broke. It is OK to be in the negative, but you have to fix it. When QFloors did that [benchmarking]—what we should be paying for rent, etc.—my daughter said, ‘Mom, this is too much health insurance and too much rent.’ My kids got their own health insurance and we got our rent lowered. I should have done this years ago.”

We’ll Floor U, Hampton Bays, N.Y., was an early adopter of the QFloors software, coming on board nearly from day one. Diane Cullen, sales professional, said, “This integrates the whole business from the ordering to the warehouse receiving to the accounting. It streamlines the business and saves tons of time. It even organizes your inventory. It’s just a full package.”

QFloors also takes the fear out of technology for retailers by virtue of an extensive training program that begins with its new customer care department. “When we make a sale, this department will call that person and get them going,” Ogden said. “We walk them through every procedure. That’s the sole goal of this department. We also have free training videos they can watch online along with unlimited phone support. We don’t charge them for that, unlike our competitors.”

That phone support can be just as effective as an on-site visit, Ogden said. “We connect with them on our computer, so we can see their monitor and talk them through any issues. Most of our small dealers do it that way.”

JB Woodward Floors in Riverside, Calif., has been in business for 58 years, the last seven as QFloors users. Kim Wollman, co-owner, cited the simplicity of the software as well as the customer service as two hallmarks. “QFloors is so user friendly,” she said. “The whole process from an invoice to your purchase order is so simple. It makes my job easy to the point where I can move on to other things.”

Wollman also said the accounting aspect of the software has made a huge difference in the business. “Before we were doing all our own accounting and had to wait for our accountant at the end of the year to see those numbers. Now, we can see them whenever we want.”

She also said the pricing is more than fair for all QFloors offers, citing the customer support and training. “Also, it’s so easy to teach; there is not a steep learning curve.”

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Three key reasons to attend the 2020 Flooring Markets

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

 

Market Maker Events’ Lori Kisner encourages dealers to bring managers/salespeople to the regional trade shows.

With 2019 coming to a close and people all over the country winding down for the year, Market Maker Events is ramping up its efforts to get set for the 2020 Flooring Markets—Jan. 7-8 in Atlanta; Jan. 9-10 in Arlington, Texas; and Feb. 13-14 in Biloxi, Miss.

In support of the event, the organizer of the regional flooring events has partnered with FloorForce, a premier marketing agency specializing in the flooring industry, to create The Playbook: a free sales kit offered exclusively to 2020 Flooring Markets attendees. The Playbook, sponsored by FCNews, contains everything attendees need to sell more flooring, including marketing tips, strategies, tactics and so much more.

According to Lori Kisner, managing partner, the 2020 Flooring Markets are shaping up to be the group’s largest and most attended conventions yet. “Attendees will have access to more brands and representatives than ever before,” she said. “Because the 2020 Flooring Markets are going to be the biggest yet, we recommend that attendees, especially flooring retailers, don’t travel alone. Between the marketing presentations offered by FloorForce and the endless products to explore, there’s just not enough time for one person to experience everything the Flooring Markets have to offer.”

Following are three reasons why flooring retailers should bring their sales and marketing team to the 2020 markets:

Two minds are better than one. If you’re the owner of a flooring business, you likely wear a lot of hats around the office. When it comes time to attend the Flooring Markets, consider bringing along some- one who can dedicate their time to the digital marketing presentations. This will free up your time, allowing you to meet with more brand representatives and discover new flooring products for your business.

“It’s also a good idea to bring a sales or marketing employee with you because they spend the most time working with your customers and, in-turn, have a better understanding of what those customers actually want,” Kisner explained. “Armed with a clear understanding of consumer behavior, your sales or marketing employee will be able to draw clear takeaways from our market that will help you grow your business in 2020 and beyond.”

Manufacturers bring their A-game. Flooring brands and manufacturers support the regional Flooring Markets, because it gives them the opportunity to show off their latest and greatest products. “There is no better place for your sales and marketing team to learn about the newest flooring trends,” Kisner explained. “Manufacturers will be eager to show off their new products, and your team will be able to ask them questions directly, enabling them to sell those new products more effectively.”

Once-in-a-lifetime opportunities. In addition to partnering with FloorForce to produce The Playbook, FloorForce will also attend the 2020 markets to provide tech talks and one-on-one consultations with flooring retailers to help them sell more flooring. Having direct access to one of the most advanced digital marketing agencies in the industry will give Flooring Market attendees invaluable tools to grow their businesses.

If you haven’t registered for any of the Flooring Markets, now’s your chance. Pre-register for free using promo code: “FCNews” to attend. Our 2020 markets give you the chance to scope out the latest products, and as an added bonus your sales and marketing team will be able to utilize The Playbook to sell more flooring in 2020 and beyond.

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Resilient: Suppliers call a draw on domestic vs. imports

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Lindsay Gonzalez

 

The benefits and shortcomings of domestically produced resilient flooring vs. imported are often used to determine which flooring is the better product. However, it would be unfair to deem one source of production superior over the other, resilient suppliers say, especially considering the fact that a healthy mix of domestic and imported product is an effective way to keep up with the consumer’s ever-growing demand for resilient products.

FCNews polled a handful of manufacturers to get their take on the advantages and disadvantages of producing resilient flooring domestically and overseas. Following are excerpts of what they had to say.

Domestic

Armstrong Flooring has six U.S. plants, including this one in Lancaster, Pa.

Advantages
Shorter lead times. 
Manufacturing close to the market can provide faster delivery, according to David Morgan, executive vice president of operations, Shaw Floors. But, that’s not all. “Having design, engineering, production and service collaborating in close proximity to one another enhances the opportunity for innovation,” he said. “Furthermore, with our internally produced products, we’re able to completely understand the material chemistry and physical product attributes down to the ingredient level.”

U.S. jobs and quality control. Domestic production opens the doors for more jobs for U.S. citizens, said Chris Dillon, vice president of sales and marketing, SLCC. “There are several advantages from a consumer as well as an economic advantage when it comes to domestic production,” he added. “The quality control can also be localized. When you buy domestic, you know exactly where it is coming from and whom to hold accountable for any issues.”

Faster reaction time. “U.S. production gives Mohawk the advantage of reacting to the customer’s needs efficiently and timely—to deliver the products she wants when she wants them,” said Joey Faircloth, senior vice president of manufacturing, Mohawk Industries. “Add in natural resources, low energy costs, low transportation costs (due to our IVC plant having easy interstate access) and a very capable workforce—manufacturing here oftentimes makes the most sense.”

Patriotism. There’s a certain patriotic advantage to domestic production, according to Doug Ankney, vice president, resilient manufacturing, Armstrong Flooring. “For some consumers and businesses, it’s important to buy products manufactured in the USA because it’s a means of supporting local economies.”

Close to raw materials. For Armstrong Flooring, domestic production puts the company in close proximity to raw materials such as limestone. “Locating production close to both raw materials and end markets has both economic and sustainability benefits because it reduces transportation costs and the related environmental impact,” Ankney added.

Disadvantages
Cost issues. In some instances, domestic resilient products are unable to compete with imports on pricing, manufacturers say. “Some projects are driven almost entirely by initial cost, which impacts price competitiveness, especially for less durable LVT constructions with lighter wear layers,” said Adrienne Roseman, director of LVT, Tarkett North America. “This can hinder the ability to produce these entry-level products domestically.”

Less flexibility. Domestic production often comes with less flexibility as well as higher minimum order quantities, higher labor costs and longer development time, according to Michael Raskin, CEO, Raskin Industries.

 

IMPORTS

Cali Bamboo sources its Moso bamboo from within the Zhejiang Province of China.

Advantages
Consistency, reliability. Manufacturing product globally can help companies provide customers with consistent service. That’s according to Jenne Ross, director of marketing, Karndean Designflooring. “For Karndean Designflooring, because we are a global entity with businesses in the U.S., UK and Australia/New Zealand, having a global supply chain is advantageous for our business and our customers because this allows us to offer products with universal consistency and reliability.”

Significant capacity. With the large growth of LVT, WPC and SPC-type products, capacity is an important factor in production. “WPC and SPC products were originally developed in China creating significant capacity there,” Shaw Floors’ Morgan explained. “While manufacturing in the U.S. is taking place, getting new facilities online simply cannot happen at a pace that comes close to meeting market demand. Thus, imports are particularly important in the LVT flooring sector where U.S. production is significantly below in-country demand.”

Sustainable sourcing. For Cali Brands, sourcing its Moso bamboo from within the Zhejiang Province of Southeast China is a move that is not only sustainable but also reduces environmental impact and transportation costs. “Most of the world’s bamboo is concentrated in this region, making it the most sustainable place to harvest, process and manufacture bamboo products,” said Alex Brodkin, Cali’s senior manager of product management and innovation. “These efficiencies in the supply chain bring customers high-quality products at better prices. Cali relies on a third-party agency to visit manufacturing sites regularly and ensure all quality control processes are being followed properly.”

Flexibility. Overseas production, noted Thomas Baert, president, CFL, provides a certain level of flexibility not found in the U.S. “Contrary to the general perception, the higher end and more innovative products are often made overseas since they require a certain flexibility in manufacturing, which is hard to realize on fully automated machines typically used in U.S. manufacturing.”

Cost savings. Despite the tariffs and duties, importing LVT from China, Korea or Southeast Asia can have significant cost savings for companies. That’s according to Tommy Junker, LVF business unit manager, Swiff-Train. “The LVT market is so saturated that if you aren’t the lowest in price, you must differentiate yourself with custom designs and unique features, which for the most part are only offered outside of the U.S.”

Disadvantages
Longer lead times. Some manufacturers say longer lead times can pose challenges when importing resilient product. “Because of long lead times during transport, imported goods can pose challenges and unpredictability with inventory control and operating expenses,” Tarkett’s Roseman said. “This certainly impacts everyone involved in the project and can add expense and complexity to the business model for manufacturers and sales channels.”

Hard to keep up. With a lower price of entry overseas new resilient factories are frequently created, which can create confusion in the marketplace. “There are so many resilient factories overseas that it is hard to keep up,” SLCC’s Dillon said. “It seems that almost every day a new one is opening. Vetting these companies are not always easy, and I have seen some U.S. companies get burned by importing from factories that have a lower price, but much inferior quality.”

 

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Carpet: Significant innovations enrich category in 2019

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Ken Ryan

 

Behind every great carpet is an innovation that went into the design and engineering of the product to create something unique and different. In a year in which carpet sales were lagging, there was no decline in the area of innovation as carpet mills delivered pioneering dyeing processes, enhanced twisting technologies and other performance-enhancing methods to the market.

  1. ANDERSON TUFTEX
    About the product: AT Carpet Stain + Soil Remover is a newly rebranded carpet stain and soil remover that is approved for use on stain-resistant carpets and rugs. The range of products covered encompass wool, water-safe fabrics such as clothing and furniture, and automobile upholstery. AT Carpet Stain + Soil Remover is Cradle to Cradle certified.
  2. DIXIE HOME
    About the innovation: As the residential space trends toward polyester, Dixie Home’s goal to offer a great value in a product that delivered great durability drove the development of its EnVision66 program. “We started with nylon 66, the best fiber in carpet,” said T.M. Nuckols, president, residential division, The Dixie Group. “We designed a collection of mid-weight cut piles, patterns and loops, which hit a value price point and shared the same color palette.”
  3. ENGINEERED FLOORS
    About the innovation: DW Select by Dream Weaver is notable for its twist multiplier (twistX) technology that uses a 3- ply yarn as opposed to the more traditional 2-ply. The third ply secures the twist and adds to the bundle density size of the yarn, thus providing enhanced performance along with enriched style and design. DW Select will launch with 13 products but may grow to 20.
  4. FOSS FLOORS
    About the product: Grizzly Grass is a new construction that mimics artificial grass but eliminates the negatives associated with tufted grass constructions. Most artificial grass installations are exposed to extreme conditions and are prone to zipper, lose tufts, fray, delaminate and degrade. Foss Floors seeks to eliminate these negatives with Grizzly Grass, which is available in both broadloom and tiles. It also features DuraLock technology, which bonds all fibers in place without the use of latex or other chemicals.
  5. KARASTAN
    About the products: Ideal Vision is a SmartStrand carpet that features blended multicolor yarns with enhanced color clarity and maximum color performance. Natural tones are intermingled with pops of greens, blues, gold and burgundy for numerous design possibilities. Magnetic Allure: The plush tonal accent color yarn of this carpet seems to react to its surroundings, changing slightly depending on the backdrop.
  6. MOHAWK
    About the innovation: ColorMax is a new dyeing process providing blended colorations, high color clarity, enhanced color saturation and maximum color performance. “ColorMax brings multi-coloration to a new level because it blends vivid and rich colors into amazing shades that set your home apart,” said Jamie Wellborn, vice president of residential carpet product development.
  7. PHENIX
    About the product: Modern Contours was a culmination of innovative products, technologies and merchandising that generated excitement through 2019. Modern Contours’ merchandising blends patterns and textures in fashion-inspired palettes along with coordinating LVT styles to showcase a full flooring solution. Modern Contours features Phenix’s SureSoftSD fiber for comfort underfoot.
  8. PHILADELPHIA COMMERCIAL
    About the product: Shape of Color, Philadelphia Commercial’s newest carpet collection, is engineered to perform in high-traffic applications. It includes two styles offering design versatility—Block by Block and Line by Line. Block by Block has bold contrasting colors, saturated tonal hues and neutrals that encourage the uninhibited use of color. Line by Line features a subtle color palette and sophisticated linear pattern.
  9. SHAW FLOORS
    About the innovation: After investing a year in research, design and digital, the Anso Colorwall was reimagined in 2019 as “Color That Speaks to You.” This featured updated colors housed in a new, modern merchandising display, coupled with a digital presence for a simplified carpet shopping experience. The display unveiled 60 new “novel solids” with a subtle hint of color variation, tonal textures in 60 warm neutrals and 18 new accents offering a pop of color.
  10. SOUTHWIND
    About the product: Classic Traditions is a solution-dyed polyester that provides an upscale look at a value price. New to the fold is a highly styled line of level cut and loop carpets designed in Southwind’s So Soft solution-dyed PET fiber featuring a 1/10-gauge construction. These carpets are fashioned in combinations of solid and barber pole yarns.
  11. STANTON
    About the innovation: As customers continue to gravitate to lush carpet in solid and patterned looks, Stanton’s new fiber innovations set the stage for an ultra-soft experience. Pattern goods continue to be a creative focus for Stanton. “We believe our next hot look will be livable statement pieces in your home,” said Christine Zampaglione, senior director of marketing.
  12. TARKETT
    About the innovations: In the soft surface category, Tarkett has introduced new fiber innovations, including a finer denier, solution-dyed nylon. This fiber is approximately 30% smaller than traditional commercial-grade nylons, thus reducing the potential for crush and wear while not sacrificing aesthetics.

 

 

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Marketing online: Proven ways to generate more leads

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Lindsay Gonzalez

 

Positive reviews can help dealers improve their search engine placement.

As the world’s digital landscape continues to expand, many flooring consumers are starting their journey to purchase online. It is crucial now more than ever that flooring dealers are actively working to generate as well as convert leads online.

FCNews asked several industry experts for their top tips on generating leads.

Focus on existing customers. One of the most inexpensive ways to generate leads is by keeping in touch with your past customers. That’s according to Jim Armstrong, FCNews columnist and president/founder of Flooring Success Systems. “Your past customers are the only people on the planet who have proven they’ll give you money in exchange for flooring,” he explained. “Don’t invest thousands of dollars chasing cold leads online if you haven’t implemented a system to communicate regularly with the people who have already bought from you.”

Communication with previous customers open two channels for leads—repeat business and referrals. John Weller, co-founder and chief innovative officer of FloorForce, suggested flooring dealers contact their customers a few days after a project has been completed to get feedback.

“See if they have any friends or family who may need help with their floors,” Weller explained. “If they say yes, you’ll have a much easier sale on your hands than a typical lead. After all, referrals account for more than 60% of flooring sales. Even if the client does not have an immediate referral, your phone call will leave a positive impression and keep your company at the top of their mind.”

Master your website. A flooring dealer’s website is crucial to generating online leads. However, in order to collect those leads, a website must have the right forms and tools to reel in the consumer. “If a customer comes into your store and your salesperson doesn’t ask for the order prior to her leaving, your business is in trouble,” Jay Flynn, vice president of Creating Your Space (CYS), explained. “The same holds true for your website, but the ‘order’ is the request from the consumer to engage with your business.”

This, Flynn continued, can be in the form of product information, booking an appointment, requesting samples or pricing, an easy “click-to-call” button, etc. In terms of product information, dealers should show product they actually carry in the store. “They also want to see what that product will look like on the floor—even better, on their floor,” Flynn added. “They get this from car dealers, furniture dealers and other big-ticket items. You need to provide the experience they expect.”

In addition to product catalogs, FloorForce’s Weller suggested dealer websites have useful video content as well as augmented reality and live chat options. “Augmented reality visualization is becoming a key feature on flooring websites and has proven to keep consumers on a website longer,” he explained. “Also, more consumers are opting for live chat and texting over phone calls and email. The more communication channels you offer your customers, the more likely they are to connect with you.”

Create brand recognition. Lead generation can be influenced by brand recognition, according to Jason Goldberg, CEO of Retail Lead Management (RLM) and owner and CEO of America’s Floor Source. To increase this recognition among consumers, Goldberg suggested dealers look into both traditional and digital forms of advertising.

“For example, I recognize your brand because I’ve seen your wrapped trucks in my neighborhood,” Goldberg noted. “I’ve seen your yard signs; I’ve heard your radio commercials and seen your TV commercials; I’ve seen your Facebook and Instagram social posts, etc. When I do a [Google] search and you show up in the results, the brand recognition is based on everything you are doing, not just digitally.”

Regardless of the type of advertising, experts stress the messaging needs to align with the dealer’s business. “Your digital marketing—whether it is display ads on Facebook, your Google My Business listing, directory ads or Google Search Ads—needs to be specific and custom to your business,” CYS’s Flynn said. “Your brand, your products, your target markets and custom landing pages must be aligned with your offers and ads. Using and paying for generic offers not specific to your business are not going to optimize your results and build your brand, which is the key to long- term success.”

Be where your customers are. With the plethora of digital platforms available today, it is important for flooring dealers to have a presence where their customers usually interact. According to Doug Regner, vice president of sales – home service industry, Podium, local businesses have an upper hand when it comes to SEO. This can help get their businesses in front of consumers.

“Simply managing your presence and reputation on a few sites will allow you to show up at the top of search results,” Regner said. “These days, that starts with optimizing your presence on Google and Facebook. Then do the same on relevant, industry-specific channels and implement a few website best practices to ensure your online presence is just as significant and impactful as it is in person and offline.”

Be consistent. While it might be tempting to change offers and messages for every “Hallmark” holiday, Flynn warned against it. “Consistency of message and a focus on driving what your business value is—this could be low price, great inventory, range of products and services, proven value in the market or one of multiple others—will drive the best results,” he explained. “Making changes just to change will have an adverse effect on consumers recognition of your brand and, therefore, on your sales.”

Convert leads to customers. While generating leads is a key point to growing business, dealers must be able to convert those leads into paying customers. To do this, Regner suggested dealers make themselves readily available to prospective customers.

“All call-to-action on your website or business page needs to be crystal clear,” Podium’s Regner explained. “Whether it’s a ‘Get a Free Quote Today!’ or ‘Schedule an Appointment,’ your customers need to know what to do to engage with your business. Other great and modern ways to convert online leads into in-person customers is to encourage two-way messaging by adding a text-to-chat solution to your website, as well as including a phone number or textable link to your Google and Facebook listings.”

To truly grow a business, Weller explained that dealers need to be ready the second those leads come in. “A full 50% of sales go to the company that responds first, so having a plan in place to quickly interact with customers is increasingly critical as an increasing number of consumers shop online.”

What’s more, Weller explained that being ready means understanding today’s customer. “Many customers will reach out with much more information and higher expectations than they had in the past. Listen for signs that they are ready to move quickly—because if they are ready and you are not, they will likely take their business elsewhere.”

Manage leads. A crucial part of converting leads is first properly managing them, according to RLM’s Goldberg. “I don’t care how many leads you generate; if you don’t have a way to manage those leads to a sale with full visibility in that process, you are just wasting money. This is where software, such as Retail Lead Management, comes into play.”

Get reviews. An important part of generating leads is appearing at the top of a consumer’s online search. One way to improve your business’ placement is with positive reviews, according to Regner.

“Review frequency, quantity and rating can (and will) help you show up on top when customers are searching,” he added. “If you want to show up at the top of the local online search, make sure to always ask for reviews in person, then send an invite, collect customer reviews after every interaction and respond to reviews and feed- back in a timely fashion.”

Don’t buy leads. While it may seem easy to purchase leads from different websites, Flooring Success Systems’ Armstrong strongly warns against doing so. “You have to be very careful where you buy your leads. Home Advisor sells the same lead to several flooring dealers. This is really great for Home Advisor, but not so much for dealers who have to fight over these leads. I spoke with a dealer not long ago who spent $70,000 over the course of a year buying online leads. It mostly attracted price shoppers who wasted hours of his time, and then bought from someone else. He didn’t come close to breaking even.”

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Ceramic: Producers push innovation as consumption falls

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Megan Salzano

 

Daltile’s Panoramic Porcelain Surfaces suit the growing demand for slab-style countertops.

As was predicted this time last year, consumption of ceramic tile in 2019 is lower than that of the previous year. The downward trend began in 2018, and the residential ceramic business slowed for the first three quarters of 2019. Many ceramic leaders agree that by the end of 2019 the category will have remained flat or declined by approximately 3% in both volume and dollar sales.

Gianni Mattioli, executive vice president, Dal-Tile Corporation, noted, however, the buildup of inventory, especially from China, during the last quarter of 2018 in anticipation of higher tariffs scheduled for January 1, 2019.

The housing market remains a steady meter against which to gauge the health of ceramic, and numerous factors including housing starts, new home sales/pricing and mortgage rates have impacted consumption.

New construction starts declined 11% in October to a seasonally adjusted annual rate of $696.3 billion, according to Dodge Data & Analytics. This is the third consecutive monthly drop in construction starts. Through the first 10 months of the year, total construction starts were 4% lower than in the same period of 2018. The October statistics pushed the Dodge Index down to 147 compared to 166 in September.

That trend is expected to continue. Dodge Data & Analytics predicts total U.S. construction starts will slip to $776 billion in 2020, a 4% decline from 2019 estimated levels. “The recovery in construction starts that began during 2010 in the aftermath of the Great Recession is coming to an end,” said Richard Branch, chief economist, Dodge Data & Analytics.

Donato Grosser, industry consultant, noted the conservative nature of builders today as a possible influence on starts. “Housing starts went down about 70% in the recession. Fifty percent of the builders went out of business because they were over expended during that time. Today, most of the larger businesses have a much higher percentage of the business than they had before, but they are also much more conservative.”

Raj Shah, president, MSI, noted a slowdown in new home sales as well. “This is directly attributable to an increase in mortgage rates during this time frame,” he explained. “In addition, we have seen a reduction in the size of homes built.”

Greg Mather, president of Crossville, also pointed to the affordability of housing in general. “The high cost of new home building is limiting residential construction and homeownership levels,” he said.

Ongoing challenges
In addition to changes in the housing market, ceramic has been impacted by various other factors—namely ongoing trade wars/ antidumping legislation, installation woes and the encroachment of resilient flooring.

The ongoing volatility caused by the trade wars, section 301 and the anti-dumping case against ceramic tile have significantly impacted demand. “In terms of the political climate when it comes to ceramic tile, one word comes to mind—tariffs,” said Mara Heras, vice president of marketing, Emser Tile. “Clearly, the tariffs and anti-dumping actions have impacted both the suppliers and manufacturers as well as the entire supply chain and final customers.”

In November, after receiving a petition from a coalition of eight U.S. tile producers claiming injury earlier this year, the U.S. Commerce Department made a preliminary determination that Chinese exporters had dumped ceramic tile in the U.S. market at less-than-fair value. The department has imposed preliminary duties ranging from 114.49% to 356.02% but is scheduled to announce its final determination by March 23, 2020. This is on top of the current Section 301 tariffs imposed on ceramic tile. Imports of ceramic tile from China were valued at an estimated $481.3 million in 2018, according to the U.S. Commerce Department.

While some suppliers argue consumers will benefit from the superior quality, design and service domestic manufacturers can provide, others note the impact on consumer, distributor and retailer confidence that could lead to a reduction in investments in marketing and innovation. Regardless, uncertainty is still the name of the game.

Isla Tiles’ Pietra Mediterranea collection features a variety of tile sizes with a mix of textures.

The struggle to find qualified labor and the resulting growth of installation costs is, however, the biggest challenge faced by the category to date. And no significant solution has yet to be implemented. What’s more, the rising costs have pushed some consumers to the lower end of the market and toward products such as LVT. “Labor pressure has created an opportunity for ‘easy-to-install’ resilient flooring,” Emser’s Heras explained.

Crossville’s Mather pointed out that ceramic has been impacted less than wood or carpet. “Nonetheless, we have lost placement,” he said. “I would expect tile’s position to improve over time as the growth of LVT slows.”

To combat this shift, Heras said manufacturers are looking at ways to “impact the labor challenges and drive better understanding of the total lifecycle cost of ownership for LVT as compared to tile and stone and the impact tile has on property values vs. the inexpensive substitute.”

MSI’s Shah added that LVT and ceramic can co- exist in today’s market. “There are many opportunities for ceramic tile for which LVT cannot be used. This includes any sort of surface that has a finish (i.e., polished, etc.), the wall and out- doors. It’s a matter of figuring out what works best for the consumers’ need.”

Opportunities
In an effort to combat ongoing difficulties, innovation is slated to grow in 2020, according to suppliers. The technological advancements needed to move that innovation forward have already been implemented. “During the last few years, technological advances in decoration and sizes have totally transformed the ceramic tile industry with the quality and variety of products that are now being offered,” Dal-Tile’s Mattioli explained. “Manufacturers now have the ability to offer greater realism, more sophisticated designs, new sizes, shapes and thicknesses and increased performance.”

The ceramic category has embraced these new possibilities and is experiencing growth outside traditional flooring. Wall products, countertops and outdoor pavers, for example, have served as key growth segments.

Gauged porcelain panels, Crossville’s Mather said, are proving to be a good solution on both walls and floors. “They provide the opportunity for fewer grout joints, tile-over-tile installation, as well an attractive alternative to more expensive large-format natural stones,” he said.

The desire to coordinate visuals and advancements in technology has allowed porcelain countertops to grow in demand as well. “With more fabricators able to install porcelain slabs it is becoming more accessible for consumers,” MSI’s Shah said. “There is a huge market for porcelain slabs. Over 80% of consumers would like to have a white marble countertop, but due to technical characteristics and price are not able to have it in their homes. Porcelain slabs solve this problem.”

There is also a multi-billion-dollar market for decks and pavers, according to Shah. “It’s a matter of marketing this product to consumers,” he said.

When it comes to opportunity, it’s not always about starting from scratch, Heras added. “It is always good to have tried-and-true styles in the line, but constant evolution and advancements can make even the classic looks more updated with unique textures and finishes.”

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FCNews exclusive interview: NAFCD executive board members hash out key issues

NAFCD 2020 executive board, from left: Shane Richmond, Fishman Flooring Solutions; Kyle Gorny, Blakely Products; Dunn Rasbury, A&M Supply; and Steve McKenna, McKenna Distribution.
NAFCD 2020 executive board, from left: Shane Richmond, Fishman Flooring Solutions; Kyle Gorny, Blakely Products; Dunn Rasbury, A&M Supply; and Steve McKenna, McKenna Distribution.

New Orleans—Scores of flooring industry distribution representatives gathered here recently to participate in the 2019 North American Association of Floor Covering Distributors annual conference (NAFCD). Topics of discussion ranged from continued industry consolidation, emerging demographics, economic challenges and a changing retail landscape.

During the conference, FCNews managing editor Reginald Tucker sat down with Steve McKenna, president, McKenna Distribution (NAFCD immediate-past president); Dunn Rasbury, director of flooring, A&M Supply (incoming NAFCD president); Shane Richmond, vice president of Mid-Atlantic Sales for Fishman Flooring Solutions (NAFCD president-elect); and Kyle Gorny, outside sales, Blakely Products (NAFCD vice president), to hear their thoughts on key issues impacting distribution.

Following are excerpts of that conversation:

Q: The 2019 NAFCD conference broke a few records. What stands out most in your mind?  

Steve McKenna: Probably the attendance of the show as well as the fact we have never sold out the show before—until 2019. In fact, I think we had to turn down 24 booth requests. To turn away that many potential vendors tells you the show is drawing attention and gaining momentum. Also, we had 44 first-time total exhibitors when you count NAFCD along with NBMDA, which includes 30 first-time exhibitors on the flooring side.

Shane Richmond: That demonstrates the value the trade show brings to our vendor partners certainly. They know they’re getting a solid return on their investment to come here to spend with the distribution community.

Q: Steve, this is your last convention as president. What were some of the highlights during your tenure?

McKenna: I would love to take credit for some things personally; however, I feel as president in a large way we are just helping to facilitate trying to work with Smith Bucklin [NAFCD management], which does an extremely professional job. The strength of the board and the executive committee make it a very easy role to fill. It’s more of a team/industry-wide effort.

Q: Dunn, as you look forward to transitioning to the role of NAFCD president for 2020, what are some of the initiatives on your agenda?

Dunn Rasbury: We have a lot of smart, energetic people in this industry and in particular on this board. It’s just a matter of tapping into those talents and creating value for the industry as a whole. That’s what we’re here for—to make flooring distribution better. If we accomplish anything that does that, I think we’ve done our job. So whether we just augment or help the things that are already out there, i.e., create new projects, it’s about making our business better from top to bottom.

Q: What are some of the challenges you’re facing in your respective markets?

Kyle Gorny: Labor is definitely an issue in Michigan as well as all over the place, I’m sure. In our market, the union halls are trying to develop certified training for installers.

Rasbury: I think it goes beyond the mechanics in the industry. It’s tough to find truck drivers, salespeople, inside salespeople, back office people, etc. With a labor market this tight, it’s really hard to put the right people in the right place all the time. If we can help companies facilitate that with training or programs we do, that’s the key. It’s essential to what we do as managers as well as members on the NAFCD board.

Richmond: For us, trying to find a way to continue to grow our business on top of the people problems is a challenge. Specifically, trying to grow our business in the more mature markets where housing and commercial are not growing the way they’ve been growing in the past. How do we, as a distributor, to continue to find ways to add value. If the market is not growing, then we need to find a way to grow market share. But we’re fortunate in that we trade a good bit in the South, where we’ve seen positive numbers. But we also trade in Baltimore, Washington, D.C., Cleveland and Erie, etc. It’s also about helping our customers find new ways to do business and strengthen them.

Q: What are some of the key end-use sectors in your area, and how are they performing?

Richmond: For us, it’s across the board. Because we trade in the Southeast, our residential and new construction continues to move the needle in those markets. Until very recently, multi-family has been a huge driver. As we look to move into next year, we’re looking at a potential slowdown, we’re seeing the markets become a little more balanced rather than commercial or residential going crazy.

Gorny: Detroit is rebuilding and has been for the past few years. A lot of multi-family housing projects and new construction is going on there, so we have been trying to take advantage of that situation.

McKenna: Western Canada is in a slump right now. There’s not a lot of new construction, or multi-family activity, happening right now. But there is a little bit of commercial activity. It’s only now just starting to trickle back up. but it’s starting from a very low point.

Q: To what do you attribute that slump in your market?

McKenna: It’s the entire economic outlook. In Western Canada, it’s a very resource-driven economy. Oil prices, for example, has fallen; we’ve also had some government changes that have not been very favorable. The Canadian government doesn’t necessarily invest in infrastructure spending or provide the same type of stimulus activities that you see in the U.S. We see a very different side of the coin. We also trade in the Midwestern U.S. where we see, in some cases, situations where we can’t get inventory fast enough vs. in Canada, where we should perhaps ship this inventory down to the U.S.

Q: From a product category perspective, we’ve seen a lot of introductions in waterproof, rigid core, SPC and, now, wood-rigid hybrids (wood veneers on top of rigid cores). What do you think? Too much too fast?

McKenna: The traditional hard surface categories are always going to be there. I don’t think you’ll see any one of those categories die completely. I don’t think ceramic tile and hardwood flooring are ever going to be completely out of the equation. I don’t think either that vinyl floors are going to go away completely; I’m quite sure they will still be there in 50 years in some capacity. However, what we’re seeing is a much faster pace of product life cycle. So, what used to be a 10-year cycle before something really became mainstream is now perhaps a one-year cycle. What’s going to be interesting to see in the next few years is does that mean in two years we’re not selling SPC at all? (That’s entirely possible. When something grows that quickly it could also die that quickly.)  We might be at this show in 10 years talking about the time when the industry was all SPC but now it’s something completely different.

The other interesting thing is we’re trading down dollars. At convention I had a conversation with a wood manufacturer who now has an SPC line; their concern is they used to sell to a customer one container of wood, which would generate X margin dollars. Now, in order to equal that margin, they have to sell the same customer 10 containers of SPC. Which means that customer has to print 10 times the amount of invoices, ship 10 times the amount of product and have potentially 10 times the amount of risk with each transaction because now you’re exponentially increasing your number of transactions and not increasing your number of dollars. So there is some risk there.

It’s one thing to jump into these exciting markets because the rate of growth can potentially be really quick, but there’s also potentially a downside to that.

Rasbury: I also think the growth of that market also fostered a couple of things we see on the trade show floor here. People are trying to figure what that next thing is, but I don’t think they have a plan for what that next thing is. A lot of this wood on an SPC core is just that—let’s slap something on this core and see how it works. We’re not seeing real traction there. We’re also seeing a lot of herringbone and designs that’s a very small part of the market, but people are looking for that next segment, and it’s almost like they’re force- feeding new products even though there’s not a market for it just yet.

Richmond: To that point, we also run the risk that—because of the dominance of SPC and the newer technologies people are pushing out—something else that gets introduced that’s new and exciting might get lost in the growth of SPC. Everyone is seeing so much in that product line and there’s so much opportunity there that there may be another technology that hits right now that doesn’t get traction because there’s no room for it in the market.

Q: In his keynote speech to attendees, Alan Beaulieu (ITR president) provided a generally optimistic outlook for the flooring industry over the next few years. In your view, what’s the biggest threat to traditional distribution? Conversely, what’s the strongest advantage of traditional distribution?

McKenna: The easy answer to the threat is the disruption of online and the big boxes. But I believe those mediums have been around long enough now that we’ve proven there’s still very much a need for distribution. While certain demographics might be comfortable buying a floor online, there’s still some who are not comfortable with that transaction. I think there’s always going to be a need for a retail store—although the percentage may fluctuate over time.

I think the advantage of distribution is, regardless of how somebody buys something, they still need to have the inventory on hand and be able to ship it to the customer at some point. There’s still a demand for what we do; it’s just that it might be a moving target in terms of how much demand there is for it at a certain time. It’s really up to us to manage our businesses accordingly.

Rasbury: The main question, in my mind, is can companies that are in traditional distribution keep up with the rate of change as being demanded by the market right now? Whether that’s fulfillment, technology, customer-facing issues…we all work for companies that have been around for a while and might not be as nimble as we would like to be, particularly in certain technology areas and other things that are moving so rapidly. And when you have that innovation curve that’s so steep right now, a lot of times it’s just hard for companies with a management system to react as fast we need to. We do run the risk of being left behind in certain situations or lose a customer base or vendor base just because our rate of change is too slow.

Richmond: I think the biggest threat to traditional distribution business are traditional distributors. If we’re not investing in our business or changing fast enough, we run the risk of being left behind because we’re no longer relevant. On the technology side, there are things consumers get used to: everybody wants to check inventory online, find out when it will be at your house, etc. I call it the Amazon effect; Even though they don’t trade in our business, the consumers and the people we sell so still expect that. We get held to these standards that maybe we’re not able to keep up with.

Gorny: I still believe traditional distributors provide a great asset given our knowledge. Customers today still need that knowledge.

***

(For more coverage of the 2019 NAFCD convention, please see the Nov. 25/Dec. 2 edition of FCNews.)

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Greenbuild 2019 showcases sustainable flooring

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Megan Salzano

 

Amy Costello, Armstrong’s sustainability manager, illustrates the six pillars of sustainability.

Atlanta—Known for showcasing the latest trends and technologies shaping the development of green buildings, cities and communities, the 2019 Greenbuild International Conference and Expo, held here Nov. 19-22 at the LEED Gold Georgia World Congress Center, brought professionals in architecture, construction, engineering, planning and interior design to mingle with 300 exhibitors from across the green building sector. Those exhibitors showcased leading products for the sustainable building industry, including new developments in flooring.

“The Greenbuild experience is an opportunity to bring leaders together to share and explore new ways sustainable design, construction and operations can improve our quality of life,” said Kim Heavner, vice president of conferences and events at the U.S. Green Building Council (USGBC). “At this year’s conference, attendees, exhibitors and speakers will play an important role in shaping the future of green buildings, cities and communities.”

Flooring’s part in the sustainability story of the future is vast and everlasting, and this year’s flooring exhibitors came to the show with that notion in mind. Mohawk Industries, for example, framed its presence around the overarching theme of “Sustainability is Second Nature,” which was designed to drive home the manufacturer’s total commitment to creating a “believe in better” culture across all divisions.

“We’re looking at the holisticness of sustainability; not just the individuality of the components,” George Bandy Jr., Mohawk’s chief sustainability officer, told FCNews. “We’re trying to create more transparency, more Declare labels and more information that will make things easier for our customers to understand. We don’t want to make this complex. We want to be inclusive because we have an opportunity to influence consumers. We’re looking at both sides of the fence—commercial and residential—and coming up with solutions that make a lot of sense for Mohawk. That’s what makes Mohawk a little bit different. It’s not ‘and/or,’ it’s a combination of everything in that particular process.”

Mohawk products featured at this year’s expo were focused on both social and environmental sustainability. The company showed Owls, designed by Jason McLennan in collaboration with Mohawk Group. The line is designed to capture the essence of the North American birds of prey through color and patterning. This biophilic commercial carpet plank offers two, 12 x 36-inch patterns inspired by the mottled shades of black, brown, tan and gray in the plumage of owls as they lift into the air. Owls meets the requirements of Living Product Petal Certification and is produced in Glasgow, Va., at Mohawk Group’s Living Site.

The company also featured Air.o, a hypoallergenic Unified Soft Flooring (USF) that is completely recyclable at the end of its life; Relaxing Floors, a 12 x 36-inch carpet plank collection designed by 13&9 in collaboration with Fractals Research and Mohawk Group based on fractal patterning found in nature; and EverStrand, which is created through Continuum—a process that allows Mohawk to recycle reclaimed PET plastic bottles into the polyester fiber used to produce soft and durable residential carpet.

Shaw Industries highlighted the sustainability focuses of the company’s Patcraft, Shaw Contract and Shaw Floors Builder Group brands. It brought to the forefront best practices and lessons learned in specific sectors—including affordable housing, healthcare, multi-family and residential housing. “Our real focus as a brand is how our products and processes impact people,” Susan Farris, vice president sustainability and corporate communications, told FCNews. “And we are focusing on material health, healthcare, healthy acoustics and an apartment of the future. Understanding across a broad sector—from commercial through multi-family and builder—how our products and processes impact people and how we can connect those.”

In terms of product, the company unveiled a test installation of a new trade show carpet product: Comfor3t. Made with 60%-80% recycled content (depending on the color), the company said Comfor3t reduces the use of virgin materials by possessing the ability to incorporate both post-consumer and post-industrial recycled content. The product can be reused multiple times, and once it’s ready for replacement it is 100% recyclable. It is Cradle to Cradle Certified Bronze having been assessed for material health, material reuse, renewable energy/carbon management, water stewardship and social fairness. It will officially launch in 2020.

The conference also provided an opportunity for various Shaw brands to showcase their sustainability efforts, including Shaw Contract’s 2 Degrees sustainability journal; Patcraft’s sustainability-themed Idea Book; and Healthy Home market insights from the Shaw Floors team. For the third year in a row, Shaw also hosted an Education Lab as part of the annual conference and expo. Shaw offered five CEU-credit approved education sessions in its Education Lab. The sold-out sessions provided fresh thinking and continuing education opportunities for nearly 500 participants.

Mohawk’s Owls commercial carpet plank points to biophilia with its mottled shades of black, brown, tan and gray in the plumage of owls as they lift into the air.

Armstrong Flooring took to the event to discuss its products’ relationship to what it calls the “six pillars of sustainable flooring.” Those pillars include bio- philia, lighting, acoustics, indoor air quality, life-cycle thinking and safety. “We have also launched HPD’s for all our commercial products that are available,” Amy Costello, Armstrong’s sustainability manager, told FCNews. “That’s a look at our contribution from more of a technical standpoint, but we’ve listened to our customers and we’ve joined the HPD collaboration. We’re also doing our second-generation environmental product declarations. We’re really looking at those environmental impacts and using that to guide product development.”

The company showcased three new products on the show floor. Rejuvenations Restore, for example, is a vinyl sheet flooring constructed with a comfort base layer to help reduce foot and leg fatigue and joint impact. It was designed for healthcare facilities where caregivers spend long shifts on their feet. Restore is also said to help control sound transmission and surface-generated noise to maintain privacy and create a soothing space.

The company also featured BBT, its PVC-free, bio-based flooring. BBT is made primarily of locally quarried limestone as well as rapidly renewable plant ingredients. Its sustainability attributes are further enhanced with the addition of Diamond 10 Technology coating, which allows for a significant reduction in maintenance compared to the traditional VCT polishing regimen. This is said to lead to as much as a 50% carbon footprint reduction over the life of a building. The company’s Safety Zone Sheet and Tile, which provides enhanced traction for an added measure of safety in healthcare, educational and retail facilities, was also showcased.

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NAFCD: Industry foresees prosperity despite threats

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Reginald Tucker

 

Alan Beaulieu, president of ITR Economics, provided an optimistic outlook for the U.S. economy moving forward.

New Orleans—Despite ongoing labor shortages among truck drivers and installers alike; the negative impact of tariffs on Chinese imports; continued consolidation across the industry; and the economic uncertainty surrounding the upcoming election year, the outlook for the floor covering distribution channel remains bright.

That was the prevailing message that emerged from the North American Association of Floor Covering Distributors (NAFCD) convention, held in conjunction with the North American Building Material Distribution Association conference (NBMDA) here earlier this month.

“What you do is of paramount importance to the growth of the economy,” said Alan Beaulieu, president of ITR Economics, in his opening remarks to NAFCD attendees. “It’s about you and what you’re going to do—not about what Washington is going to do.”

Beaulieu, a return speaker to the NAFCD conference who is renown for his uncannily accurate economic forecasts, stressed the importance of keeping things in perspective despite the upcoming U.S. Presidential Election in 2020. “Whatever party is in power has little to do with the economy,” he said, citing a 2016 study showing that since President Truman there is no correlation between the party in power and economic activity. “The average rate of growth in GDP is virtually the same for both parties. I want all of you to vote in 2020—just understand that it makes no difference.”

While Beaulieu does not foresee a “big sea change on the horizon,” he warns of a softening economy in the first half of the new year. “We’re going to be heading toward two consecutive quarters of negative industrial production as we head into 2020,” he said, noting that GDP has been slowing down since September of 2018. “U.S. industrial production goes negative (-1.2%), but the downturn is not going to last for long. You need to be ready for the upturn. On the residential side, we’re already seeing an uptick. 2020 is going to be a good year for you as well as 2021.”

He cited one potential blemish, however. “In 2022, there will be a big recession that’s going to impact housing. Don’t get silly with all the money you’re going to make in 2021. My advice: buy new equipment, fleet, buildings, vacation homes, etc., because the EBIDTA will be reduced. If you’re going to sell your business, do not do it in 2021. Your earnings will get crushed.”

Citing a complex formula that looks at the relationship between key leading indicators (i.e., retail sales, purchasing managers index, single-family housing starts, J.P. Morgan Global PMI and total industrial capacity utilization among them), Beaulieu said he believes conditions are ripe for distributors and retailers to prosper over the long haul. At the same time, he advises against using the stock market as a yardstick for economic growth. “The downturn in industrial production hasn’t really caught the attention of a lot of people because the stock market is doing well,” he said. “But that’s not a reliable measurement of the health of the economy. The reality is the stock market can go up while the economy goes down, and vice versa. These are two different things.”

The NAFCD 2019 convention featured 30 first-time exhibitors. Pictured is Tony Markarian of Austria-based Boden Floor.

With all the uncertainty surrounding the economy, Beaulieu still encouraged distributors to invest while the get- ting is good. “If you need more equipment, new products, training, new facility, etc., fix that now because you’re going to need it because you’re about to get busy,” he told attendees. He also encouraged managers to find the “Bassett Hounds” in their respective organizations—those things they have been doing for a long time but haven’t been productive. “Find the things that you’re wasting time and money on and eliminate them. This also applies to people in your organization who are no longer productive. You need to adapt; otherwise, you’re part of the problem.”

Then there’s the issue of tariffs—the proverbial thorn in the side of many floor covering distributors and retailers alike. Beaulieu cited research that shows exports have been declining since February 2019. “One of the reasons is the strong U.S. dollar, but it’s also because of a soft global market and our retaliatory tariffs against China,” he explained. “The tariffs have hurt a number of industries. Some people have benefited; for others it has been painful—it depends on who you are. The bottom-line impact is it has slowed down the economy. Exports to China have dropped like a stone; imports are also going to continue to decline.”

It’s an issue affecting many distributors in the industry. “To be honest, it’s kind of a mess right now,” said Dunn Rasbury, incoming NAFCD president and director of flooring for A&M Supply, Marietta, Ga. “On the surface lower costs would appear to be a good thing. However, both me and my vendors own a good deal of material at a much higher cost. This will make pricing strategy challenging at least in the near term. Looking at it from a positive viewpoint, the lower cost basis may make the category more attractive to a broader base of consumers.”

Beaulieu advised patience in seeking a resolution. Until the two countries can agree on how to roll back the tariffs, he suggested looking at new supply chains or new products. “In America’s negotiations with the Chinese it sounds like it’s going well, but underneath there are big problems that have not been solved yet. We want access to their markets, and we’re going to put retaliatory tariffs on them to enforce that. But China is a sovereign nation, and they won’t be told how to act.”

Looking beyond the short to medium term, Beaulieu is optimistic. “I’m really excited about the next decade—it’s going to be phenomenal for everyone people who are 22-30 years old. It’s going to be the decade of the millennial.”

 

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Cali’s vinyl exemption a win for the industry

Nov. 25/Dec. 2, 2019: Volume 35, Issue 11

By Ken Ryan

 

Cali CEO Doug Jackson said the company’s associates got the ball rolling by writing letters to their local congressman.

The U.S. Trade Representative’s (USTR) decision to grant Cali Bamboo’s exclusion from 25% tariffs on LVT-related products employing a click system could potentially save the U.S. flooring industry hundreds of millions of dollars, according to some estimates.

“We’re delighted our efforts paid off,” Doug Jackson, CEO of Cali Bamboo, told FCNews. “This is good news for our industry, but namely good news for the customer who will maintain access to a high-quality product at a viable price.”

Jackson estimates that “well over 50%” of the LVT family of products are covered by this tariff exclusion. Note: Loose lay and glue-down LVT are not covered. The vinyl tariff exclusions apply until Aug. 7, 2020; at that point Cali would reapply. The company said it anticipates a similar outcome—unless the trade situation changes before then.

The exclusion concerns Section 301 tariffs for select types of luxury vinyl plank flooring. According to Cali, the products granted exclusions include:

•Floor coverings of polyvinyl chloride, presented in the form of tiles or planks designed to snap together during installation (described in statistical reporting as number 3918.10.1000).

•Vinyl floor tiles of polymers of vinyl chloride, designed to click together during installation, each measuring 4.7mm or more but not over 8mm in thickness, 18cm or more but not over 23cm in width and 120cm or more but not over 182cm in length (described in statistical reporting number 3918.10.1000).

•Vinyl floor tiles of polymers of vinyl chloride, designed to click together during installation, measuring 7mm in thickness, 18cm or more but not over 19cm in width and 120cm or more but not over 125cm in length (described in statistical reporting number 3918.10.1000).

Additionally, Cali was granted exclusions for:

•Standard wood moldings made of oak (described in statistical reporting number 4409.29.4100).

•Engineered flooring (oak) consisting of a 1.2mm thick oak veneer top layer, 5.8mm stone-plastic composite core and a 2mm polyethylene backing, such as flooring coated with aluminum oxide, measuring not over 191cm long by 19cm wide by 0.9cm thick (described in statistical reporting number 4412.99.5105). This includes Cali’s Geowood oak flooring.

Cali achieved the exemption through a grass-roots effort and collaboration with its local U.S. representative. Jackson said his company approached the congressman in June and together appealed to U.S. Trade Rep. Robert Lighthizer.

That Cali was successful when other, more established flooring companies were not is a testament to the diligent work on the part of Cali’s team, which took part in a letter-writing campaign, addressing its concerns to Scott Peters, U.S. Rep. for California’s 52nd congressional district. “The lion’s share of our associates all wrote letters,” Jackson recalled. “We got in front of the right people.”

Rep. Peters took up Cali’s cause, and with assistance from The Ridge Policy Group, a top government relations firm in Washington, D.C., ultimately got in front of the USTR’s Lighthizer. “[Rep. Peters] got a significant number of emails from Cali, and he pushed it forward,” Jackson said. “I have to give him a lot of credit, as he is the one who carried our torch.”

An unintended consequence of Cali’s exemption is that it covered the entire industry for click LVT—not just its products. “We were under the impression it was company specific,” he said. “When we learned the code was industry specific, we were elated.”

Industry reaction
Flooring leaders mostly hailed the USTR decision to rescind the tariff on certain click LVT products but note that confusion still lingers. “As an industry we need stability and clarity,” said Thomas Baert, president of FirmFit and CFL Flooring. “The exemption is good news, but it still creates uncertainty regarding what happens after August 2020.”

Tim Baucom, president of Shaw Floors, said the Shaw team has worked diligently to understand exactly what this exemption means and how the exclusions will be executed. “While there are still some unknowns that we are working through, we notified our customers on Nov. 15, 2019, that we will remove the tariff-related adjustments from their pricing.”

Flooring dealers, some of whom have benefited by the tariff hikes, nevertheless are seeking a resolution to this ongoing trade tiff. “Hopefully this temporary relief on our wholesale cost will stick as part of the trade deal the U.S. and China are working toward,” said Craig Phillips, president of Akron, Ohio-based Carpet Country and Barrington Carpet & Flooring Design. “Most of our vinyl products are positively affected by this exemption. We have seen actual price decreases from [one of our suppliers] already.”

A public docket that lists all the granted, denied and pending requests for this particular tariff can be seen online at exclusions.ustr.gov/s/docket?docketNumber=USTR-2019-0005.