Posted on

Made in the USA: Mills step up domestic efforts

April 29/May 6, 2019: Volume 34, Issue 24

By Ken Ryan

 

In 2018, 264,000 new manufacturing jobs were added in the U.S., representing the highest number of new workers since 1988. As a percent of the total workforce, manufacturing rose for the first time since 1984. Clearly, manufacturing in the U.S. has seen an uptick, and in its own small way the flooring industry is doing its part. The flooring industry’s major manufacturers are investing millions and—in some cases—billions of dollars in new domestic manufacturing to contribute to the onshoring trend.

Some flooring executives said the 10% tariff levied against Chinese imports by the Trump administration had little impact on domestic production—at least so far—because there is little capacity in place. However, others said the tariffs helped the justification for capital and the urgency to manufacture domestically. That has been the case at Mannington, which has invested heavily in domestic manufacturing over the last several years. “Those investments have worked out well for Mannington and for our customers and are performing very well,” said Russell Grizzle, president and CEO, Mannington Mills. “We plan to continue this trend across all products. The most immediate is the startup of the new rigid core LVT plant in the next few months.” In the last few years Grizzle said the company added over 400 jobs in the U.S.

In the past four years, Mohawk Industries has invested in eight plants to the tune of at least $700 million. Just as impressive, 90% of what the company produces is being sold here at home. From South Carolina to Washington, Mohawk operates manufacturing facilities representing every category of product, including carpet, hardwood, vinyl, ceramic and resilient. In all, it employs more than 20,000 U.S. employees.

In recent years, Shaw has invested more than $1.5 billion in its U.S. operations, including expansion and modernization efforts throughout the Southeast and across a wide variety of flooring categories such as resilient, carpet and hardwood. At the same time, it has hired more than 600 associates over the past year. “The benefits of manufacturing close to the customer include a deep understanding of customer preference, quicker turnaround time and greater opportunities for innovation,” said Tim Baucom, president. “Superior innovation comes from having design, engineering, manufacturing and other functions in close proximity to one another.”

Baucom said Shaw’s agility in the current market has allowed it to increase not only production, but also create increasingly high-skilled employment opportunities in local communities.

Domestic manufacturing is nothing new at Armstrong Flooring. As senior vice president Dominic Rice pointed out, U.S. production is part of the company’s DNA, which started 150 years ago. In recent years, Armstrong Flooring has emphasized the wide range of resilient flooring that it manufactures domestically through a “Made in USA” initiative with online campaigns and designations on its website, in product literature, and even emblazoned on the floor of its booth at Surfaces. “For the most part, we manufacture product in the same market where it is sold, so most of what we manufacture in North America is sold here,” Rice said.

Armstrong Flooring manufactures a wide range of resilient flooring in the U.S., including Vivero and Natural Creations LVT in Lancaster, Pa., American Personality 12 LVT, made in Stillwater, Okla., and Alterna engineered tile in Kankakee, Ill. It also manufactures VCT, its BBT bio-based flooring and vinyl sheet domestically.

The advantages of domestic manufacturing allow companies like Mannington to control its own destiny. “If we manufacture locally, it is easier to plan and meet the demands of our customers in both service and design,” Grizzle said. “We prefer to invest more in state-of-the-art equipment that is flexible to these demands rather than long supply chains and inventory that can quickly become obsolete with changes in the marketplace.”

Manufacturing in the U.S. also gives companies greater product control, improved lead times and the ability to rapidly integrate customer feedback into the product design and development cycle. “Domestic manufacturing puts us in close proximity to raw materials, such as the limestone that is a key ingredient in a number of our products,” Rice said. “Locating production close to both raw materials and end markets reduces transportation costs and the related environmental impact.”

The increase in domestic pro- duction among flooring manufacturers comes amidst a shortage in skilled labor that has negatively impacted every industry. To help drive innovation in both product and processes, Armstrong started an engineering leadership development program that recruits graduates from engineering colleges and gives them an opportunity to work in multiple roles, departments and locations in their first few years. “This provides them with a valuable overview of our company,” Rice said. “In the communities where we operate manufacturing facilities, we have a legacy as a long-time employer, offering internal development resources and opportunities for leaders to advance their careers in a global company.”

Baucom noted that as technology and manufacturing sophistication continue to evolve, this fast-changing landscape requires innovative workers. To that end, Shaw is taking steps to “ensure the workforce of the future is ready to meet any challenges and create innovative solutions for our company.”

As well, Mohawk has been actively hiring skilled individuals for highly automated jobs at its various plants. “The technical expertise required for most of our new plants is at an associate engineer level,” said Tom Lape, president of Mohawk Residential. “So, we are expanding the right type of employment.”

Posted on

Made in the USA: Domestic firms tout homegrown advantages

April 29/May 6, 2019: Volume 34, Issue 24

 

American manufacturing isn’t just sought after because of the quality and patriotic value, but also because of the delivery time frames. When companies don’t source from overseas, pricing and response time benefit. To that end, the Made in USA movement continues to be important to the flooring industry as major manufacturers move more production to the U.S. or expand existing operations, while dealers actively display their American-made products or promote their many benefits.


Anderson Tuftex
Anderson Tuftex’s quality hardwoods and carpets represent what the brand stands for—history, stability, legacy, craftsmanship and timeless beauty. Hand crafting products in the U.S.—from the East Coast to the West Coast—is part of this vision.

A/T’s American-made hardwoods have been brought to life in South Carolina since 1946. Every board is hand scraped and hand stained by skilled craftsmen. Since 1969, the brand’s carpets have been made in Southern California and stood out for color and design. The company understands how important it is to provide good jobs to local communities in the United States.

The results are seen in every board of hardwood and every cone of yarn. Anderson Tuftex recognizes that choosing a floor is a tough decision. To that end, it begins with the best materials to create floors that its customers can be confident about purchasing.

In addition, by manufacturing in the United States, Anderson Tuftex can uphold the highest quality standards and be better stewards of the planet by focusing on sustainability. Its products are Cradle to Cradle certified, which verifies safe, recyclable or reusable ingredients across material health, material reutilization, renewable energy, water stewardship and social fairness. In addition, Greenguard certification ensures A/T products meet design specifications for indoor air quality.

Anderson Tuftex does more than just create timeless, beautiful floors. It is committed to being transparent about the products are sourced, designed, manufactured and verified responsibly to better serve customers, the community and our planet.

 

DriTac
Owned and operated in the U.S., DriTac Flooring Products has exhibited more than 60 years of American craftsmanship and leadership. DriTac manufactures premium-grade adhesives, underlayment and installation solutions for the wood and resilient floor covering industries in commercial and residential construction. The company remains committed to providing its valued customer base with dependable, innovative and eco-friendly flooring products, and it takes great pride in stating that its flooring installation solutions are Made in the USA.

DriTac understands that America’s communal and economic well-being sustains the company, its customers and the overall business environment. DriTac strives to make a difference in America and throughout the world. Its commitment and appreciation are evident in its work with groups such as Homes for our Troops, for which DriTac is honored to provide materials for specially adapted homes built for American veterans.

Ensuring DriTac’s flooring installation solutions are manufactured entirely in the U.S., and helping to create strong, safe foundations for American homes and businesses will always be a driving force in DriTac’s mission.

 

Engineered Floors
Made in America isn’t just a marketing phrase to Engineered Floors, it’s a commitment to Dalton—the community that has given so much to EF. In 2013, Engineered Floors broke ground on the first phase of the “SAM” plant; since then the facility has gone through multiple stages of growth. Today the plant is on its seventh phase of expansion.

“We are currently expanding to make room for new twisting and heat-setting machines,” said Rob Neal, plant manager. “We are also adding space for yarn warehousing. The facility’s walls, on the west side, are made to be moved easily for further growth. The expansion is expected to increase SAM’s workforce by approximately 20%.”

Additionally, EF’s new modular plant, which began production in early 2018, covers 535,000 square feet. However, the plant can easily double its square footage. “We believe it will have one of the largest capacities in the U.S.,” said James Lesslie, president of commercial.

Engineered Floors builds facilities with expansion and growth as a priority. That’s not just growth for EF, but for the surrounding communities as well. As Bob Shaw, founder and CEO stated, “We have serious capital dollars in Dalton. We’re prepared and ready to take on projects that are worth-while.”

 

Foss Floors
Founded in 1952, Foss Floors is a leading, American textile manufacturer producing some of the most versatile product offerings for the flooring industry. Foss products range from area rugs, broadloom carpet and modular options such as carpet tiles and planks in a wide range of styles and colors that are built for enduring performance—indoors and out.

Foss Floors has invested heavily in some of the most mod- ern manufacturing facilities in the world and produces flooring in three plants located in North Georgia. State-of-the-art equipment enables Foss to provide patterns that were previously impossible for non-tufted carpet products. Exclusive Duralock technology eliminates the need for secondary backing and will never fray or unravel. All of Foss Floors carpet tiles and planks feature the company’s exclusive self-stick technology. These products can be installed over virtually any surface, including carpet.

Foss Floors’ DuraKnit technology provides unmatched performance characteristics for traditional install over pad and will never wrinkle or “zipper.” The recently launched line of Grizzly Grass products is revolutionizing the synthetic grass market with exclusive constructions that dry fast and are weatherproof.

All Foss Floors products now feature the Foss Lifetime Warranty, and all Foss Floors carpet collections are made in the U.S. from 100% PET fiber made from recycled post-consumer plastic bottles. From the homeowner to the business owner and do-it-yourselfer, Foss Floors offers some of most versatile flooring collections available today.


Mohawk
As the world’s largest flooring manufacturer, Mohawk brings quality flooring to families around the globe, but its roots are solidly planted in America. This is where it got its start more than 140 years ago, and this is where it continues to get its inspiration, ingenuity and drive.

Mohawk’s real competitive edge comes down to the quality of its people. Mohawk employs more than 20,000 U.S. employees who come to work every day determined to create the best American-made products with persistence, innovation, cutting-edge technology and good old-fashioned hard work. From South Carolina to Washington, Mohawk operates manufacturing facilities representing every category of product, including carpet, hardwood, vinyl, ceramic and resilient.

In each of these communities, Mohawk makes an impact on a daily basis. It is dedicated to innovation, which ensures employees and retailers that they are making and selling products that consumers want. Mohawk, its employees and its retailers support the American economy, local businesses and worthwhile organizations and causes such as joining Susan G. Komen in the fight against breast cancer. Mohawk is committed to making communities around the nation a better place in which to live by making its products and processes more sustainable.

Mohawk invests in communities like Melbourne, Ark., where it has expanded its plant to be the only one in the country capable of producing both solid and engineered prefinished hardwood flooring with larger dimensions and more characteristic styling.

Mohawk and its employees are proof that the American spirit of the entrepreneur and the generosity of the American heart are alive and well. At Mohawk, “Made in the USA” is more than a slogan. It’s a proud way of life.

 

Raskin Industries
It has been three years since Raskin Industries launched FloorNation, its first foray into domestic LVT production. And the phthalate-free, virgin vinyl flooring has played to rave reviews from both distributors and retailers.

“Having product made in the USA offers some significant selling points,” said Michael Raskin, president. “We have
the ability to deliver hundreds of thousands of square feet in less than three weeks without the need to stock in a distributor’s warehouse.”

In addition, FloorNation is absolved from any tariff or environmental issues that can plague some imported products. “The pricing is more stable,” Raskin explained. “Plus, China is cracking down on some factories for environmental issues that do not exist with our domestic product.”

FloorNation is offered in three lines, all bearing patriotic themes: Freedom is 2.5mm thick with a 12- mil wear layer in a 7 x 48 format with unique embossing; Pride includes two collections that feature 3mm, 20-mil wear layer constructions in a 7 x 48 format, distinguished by varying textures, along with tiles; and Glory is a 4mm fiberglass sheet that can be loose laid or glued down. All products feature the company’s G88 advanced coating system. A FloorNation rigid product is set to launch in the third quarter in the line’s best-selling colors.

Raskin said FloorNation provides traditional looks that are reliable sellers and follow the latest color trends with variations of grays and multicolors with gray mixed tones. “It is about having product that works with the interior finishes so the designer can pick up the color of the floor to work with the room.”

With a domestically made product, Raskin feels his customers will have faster turns and thus won’t have to keep as much inventory. “We do a good job with our imported lines, but no one can say they are 100% certain [it will arrive in time], so this increases the chances of getting more commercial jobs.”

The domestic production of FloorNation has made a huge difference for T&L Distributing in Houston, improving the company’s ability to service customers on a timely basis. “The product is being built in Ohio, and they are carrying product in Ohio,” a spokesperson said. “I can have the product in one to two weeks as opposed to eight to 10 weeks [if imported]. That is huge for my business.”

 

Shaw Floors
As a both a customer- and consumer-centric manufacturer, Shaw Industries seeks to consistently meet and exceed the needs of both those audiences. This means continuously driving innovation forward, focusing on high levels of style and design, quality and efficiency to create the best products for its customers.

Upgrading and expanding its existing facilities to incorporate the latest, state-of-the-art technology and processes allows Shaw to continue growing with consumer trends and manufacturing needs. Over the past few years, Shaw has invested more than $1.5 billion in its U.S. operations—including expansion and modernization efforts throughout the Southeast—and across a wide variety of flooring categories including resilient, carpet and hardwood.

Shaw seeks to streamline its domestic manufacturing processes as well. Shaw’s combined heat and power (CHP) plant at its fiber production facility in Columbia, S.C., has allowed the company to produce energy equal to taking almost 5,500 passenger vehicles from the road each year while allowing it to operate efficiently and invest resources in innovation to meet customer demands.

At Shaw, people are at the heart of its business and allow the company to continue creating its expansive portfolio of industry-leading products. The talented and diverse 22,000 individuals working for Shaw are passionate about creating products that are the foundation for consumers’ homes.

Shaw understands it has a responsibility to contribute to economic prosperity in the communities in which it operates. Shaw’s investments in domestic manufacturing have created hundreds of new jobs. The company will continue to grow, working to ensure its people thrive and its processes evolve.

Tarkett North America
Tarkett North America now offers both soft and resilient surfaces for every room of the home, making sure homeowners have healthy, practical and beautiful flooring solutions that coordinate flawlessly from one space to the next.

From weekend DIY projects with easy installation to whole-house carpet replacements, Tarkett offers all the flooring needs for a busy household. Consumers will find waterproof options designed around the needs of bathrooms, kitchens and laundry rooms as well as soft, luxurious carpets that provide cushion and warmth everywhere else.

Tarkett’s residential carpets (formerly branded Lexmark) are designed and manufactured in Dalton, Ga., to keep quality high, carbon emissions low and local economies strong. Browse the entire pattern and color offering at lexmarkcarpet.com, or find resilient solutions at tarkettna.com.

No story about Tarkett is complete without the mention of its sustainability. Since 2010, Tarkett has been designing its resilient and soft surface products so that they contribute to better indoor air quality, and many of those products now have ratings that are 10 to 100 times below the strictest total volatile organic compound (TVOC) standards in the world.

In 2001, Tarkett began removing ortho-phthalates from its products—and by 2013, it had eliminated them from all of its purchasing.

By 2020, Tarkett expects 100% of its raw materials to be third-party assessed for health and planet impacts. Today, the company is at 95%.

Posted on

Made in the USA: Effects of policies on reshoring activity

April 29/May 6, 2019: Volume 34, Issue 24

By Reginald Tucker

 

Some of the key economic policies instituted by the Trump Administration were designed to reduce the tax and regulatory burden on U. S. corporations to create an environment that would attract (or retain) investment in domestic manufacturing.

This change would improve the absolute ROI on U.S. investment, motivating and enabling all U.S. companies to grow faster by investing at home. At the same time, the U.S. ROI would be improved vs. offshore investments, leveling the playing field with some of our primary trading partners—namely China—by encouraging U.S. manufacturers to take advantage of lower taxes by reinvesting in their stateside operations. The changes would also encourage those companies who already produce outside the U.S. (or are planning to do so) to “reshore” those operations and bolster their domestic capacity and, by extension, American jobs.

FCNews recently caught up with Harry Moser, founder and president of the Reshoring Initiative, and an authority on all things concerning domestic manufacturing, to discuss these issues. More importantly, to find out if the stated objectives are meeting the intended goals.

Following are excerpts of that conversation:

Is there a direct correlation to the number of manufacturing jobs coming back to the U.S. and the Trump Administration’s policies on taxation, trade and tariffs?

There’s a direct correlation between these government actions and the reshoring trends. The lower tax rate—specifically taking it down from 35% to 21%—makes the return on investment in a U.S. facility much more competitive than it was before. Also, the immediate expensing of capital equipment helps companies finance the investments. In the past, suppliers had to depreciate any new equipment they purchased over the course of seven years, basically for tax purposes. Now, they can write off the equipment in the same year in which they made the investment. This includes a factory, machine tools, a steel mill—whatever. This helps reduce their tax in the current year because they have all that depreciation. However, it hurts suppliers in the second year/third year because they don’t have those years of depreciation. It shifts those write-offs forward to the year in which those expenditures are made. This definitely motivates business owners to invest in capital now.

Research shows the U.S. economy saw a bump in 2017 as a result of the tax cuts. Has that spilled over into 2018?

In 2017 we had 170,000 (announced) manufacturing jobs come back to the U.S. But in 2018 the responding number was 145,000—down 14.7% from the year before. However, it’s still the second highest number of manufacturing jobs reshored, and it’s two or three times the average of the last 10 years, excluding 2017.

To what do you attribute the lower number in 2018 compared to 2017?

We believe it’s because of the uncertainty caused by the trade war with China and all the issues with the tariffs. It’s a lot of back and forth. Companies don’t know what’s going to happen with the supply chain or the market. Therefore, the easiest thing for them to do is stay in a holding pattern. But it’s all relative; if we didn’t have such a huge year in 2017, we would be bragging about 2018, because it’s up a lot from 2016.

Looking at the various manufacturing sectors, what industry was most impacted in 2018?

Most of the falloff in the reshoring numbers—specifically two-thirds—was in the auto- motive category. So if you look at the number of companies announcing reshoring jobs and/or foreign direct investment (FDI)—they’re up 35% from 2017 to 2018. But we didn’t have as many of the big gains when, for example, Nissan or Toyota puts in a whole new assembly plant. Announcements such as these typically result in the reshoring of 3,000-5,000 positions, not including the smaller, local suppliers who add anywhere between 500 and 1,000 jobs to support the additional capacity. Most industries were OK, but the transportation equipment number was off substantially.

Do you expect to see companies continuing to reinvest?

We saw a decent rise in capital expenditures, but now it’s tailing off a little bit. Again, that’s due to all the uncertainty surrounding the China tariffs—the aluminum and steel tariffs and the threat of automotive tariffs.

Is this strategy sustainable?

President Trump keeps bringing up new stuff—I think he has too many balls in the air. If he had just stuck to, ‘Hey, we’re going to fix the trade deficit’ and maybe left all our trading parts alone and just focused on China—and perhaps gotten all of the other countries to help him—I think he’d be in a much better position today than having put aluminum and steel tariffs on our allies and threatening them with various actions. I think the reshoring numbers and FDI numbers would be much better if he had done that.

Where do we stand today on trade with China?

The Chinese trade surplus with the U.S. is about $400 billion a year in their favor in terms of goods. By comparison, the Chinese trade surplus with the world is about the same number. So when you boil it down, China is “trade-neutral” (or trade balanced) in aggregate with the rest of the world, but it has a $400 billion a year trade surplus with the U.S. That represents about half of our total goods trade deficit.

When you look at the numbers, you might say, “Damn, it looks like China is intentionally beating up the U.S., shipping us its exports (toys, clothing, refrigerators, electronics, TVs, cell phones, etc.). Either they have focused on the U.S. or we’ve been totally negligent in not producing the things we should have been making but did not.

Why has there been this imbalance for so long?

Economics. Fifteen years ago, Chinese wages were about 3% of the U.S. level. Which means it costs substantially less to produce there. Also the Chinese government was very flexible to support investment by domestic and foreign firms. At the same time, the U.S. has set itself up as the dumping ground for imports by having a currency that is 20% overvalued and no value added tax.

We seem to be at a standstill in terms of a long-term resolution.

Trump is looking at that same data and has every right to bitch and say, ‘This isn’t fair and we have to fix this.’ I support his efforts in this regard, but I would have been much more focused on getting the allies on board; I would have negotiated with China in private before- hand and given them a chance to agree “voluntarily” instead of beating them up in public, because if they agree to anything now they’re losing face—and the Chinese don’t like to lose face.

Some of the companies that import from China began stockpiling inventories in advance of the tariffs with the fear a second round of tariffs would be forthcoming. This goes against the grain of the flooring industry model, which primarily functions on a “just-in-time inventory system.” What happens if there are no additional tariffs?

If it goes to 25%, you will have the inventory. But if it doesn’t you’ll want to get rid of it as fast as you can. Sounds like a good time for me to negotiate for flooring for my condo.

In the flooring industry, many companies that were primarily sourcing from China have partnered with manufacturers in other Asian countries in the wake of the tariffs. Are you seeing this across other sectors?

There has been a series of articles about work flooding out of China, with most of it going to Southeast Asia to places like Vietnam, Cambodia, Indonesia, Malaysia, India.

Is it just a matter of time, then, before Vietnam becomes the new China and we’re dealing with the same issues?

That’s unlikely. Vietnam has about 96 million people compared to China’s population of 1.3 billion. Also, Chinese wages were rising 10-15% a year for the last 15-20 years. There are different dynamics in other parts of Southeast Asia. You don’t have to move too much work out of China to flood Vietnam with business. There are simply not enough workers in Vietnam to take the flood of work and not see the same wage growth patterns we’re seeing in China. So, five years from now, you might have to leave Vietnam. And by that time maybe Cambodia has gotten too expensive to produce. So now where do you go when that happens? India? (Has significant issues.) Africa? (I don’t see that.) Why go through a cycle like that every five years? Instead, we suggest U.S. companies do the math and find out the savings they will realize by coming back to the U.S.

But with high wages in the U.S., it’s not really cheaper to make products in the States.

It’s not that the U.S. is the best place in general to produce, but it is, in many cases, the best place to make products that are going to be sold here in the U.S. market. For example, U.S. companies are much more competitive selling flooring in the U.S. than they would be exporting to China, Germany, etc., because they don’t have to deal with duties, freight charges, inventory and so forth. U.S. manufacturing can be 15% more expensive than Chinese and still be the better choice for supplying the U.S. market.

Part of the challenge for companies that import is the high value of the U.S. dollar compared to other currencies. How do we address this issue?

We calculate that for every 1% improvement in U.S. suppliers’ costs vs. manufacturing off-shore, about 150,000 manufacturing jobs come back to the U.S. One of the simplest ways of achieving that is to bring down the value of the dollar. There’s a program called the Market Access Charge, which would charge anyone who wants to store money here—not to buy companies or hire people—a quarter percent to move the money into the U.S. That would motivate companies to move their money to Germany, Switzerland or maybe China, for example, which would lower the value of the dollar and raise the value of those other currencies. That, in turn, would make us more competitive. It would also make the U.S. a better place to build a factory—even if it doesn’t make us as good a place to be a bank. But the fact is, we need factories more than we need additional banks.

Interest rates play a role in that equation as well.

Lower interest rates are good for investment, and they’re also good for keeping the value of the dollar down. With a higher dollar value, U.S. bonds pay a higher amount and people think the dollar is going to keep going higher and higher. Then, billions of offshore dollars flood into the U.S. to get the higher interest rate and appreciation, and that keeps the cost of manufacturing in the U.S. uncompetitive vs. the rest of the world. One way to get the dollar down is to get the interest rates down again.

 

Posted on

Cork, bamboo intros sport new looks, sizes

April 29/May 6, 2019: Volume 34, Issue 24

By Megan Salzano

 

Cork and bamboo flooring options are the go-to eco-friendly options for consumers who deem sustainability an important part of their buying decision. Both categories fit well into the overall green story, and manufacturers agree they should be marketed as such. However, the product categories have also undergone a recent evolution with new technologies allowing for on-trend visuals and sizes sure to captivate consumers.

Following are recent product introductions that boast trending design features.

Amorim
Amorim’s Wise marks the first generation of flooring with an Amorim identity. Wise features a rigid core made of cork and recycled materials. The product was launched in a collection of 62 cork and wood visuals. It is PVC-free with all the benefits of a low thickness waterproof solution. The reinforced dimensional stability means it requires minimum subfloor preparation. Wise can be installed in both residential and commercial spaces alike.

 

Bamboo Hardwoods
The Symphony collection is a rigid core SPC with a strand-woven bamboo wear layer. It measures 5 inches wide, 72 inches long and 1⁄4 of an inch thick and features a 1.2mm wear layer. It can be glued down or installed as a floating floor. It is water resistant and withstands up to 72 hours of topical water spills.

 

Cali Bamboo
Nine new floors are now available in the company’s Eco-Engineered bamboo flooring collection. The new floors are the company’s first wide-plank engineered flooring styles with click-lock milling, ideal for gluedown or floating installations. Planks measure 72 7⁄8 inches long, 5 5⁄16 inches wide and 9⁄16 of an inch thick. The new styles feature an extra thick wear layer of fossilized bamboo over a sustainable core of cross-constructed eucalyptus. Planks are protected by a 13-coat durability sealing system, shielding them from pet claws, high heels and other forms of wear and tear.

 

USFloors
Natural Bamboo’s Muse Strand is ideal for homes located in a wide range of climates. The engineered locking construction pro- vides extreme dimensional stability. Muse Strand’s design features distressed and chiseled surfaces, hand-sculpted scraping and wire-brushed enhanced grains and fashion-forward stains and washes. The 5-inch and 5 1⁄2-inch planks are designed to add tailored sophistication while the 2 1⁄2-inch strip conveys a retro look.

 

Torlys
CorkWood Designer is designed to emphasize the true essence and beauty of hardwood. The line, which is FSC certified, features extra-long and wide planks in contemporary, on-trend colors. It includes a 3mm top layer, a polyurethane finish said to be equivalent to top-rated AC4 laminate, sealed edges for increased water resistance and CorkPlus attached underlayment with Microban antimicrobial protection.

 

WE Cork
The Timeless collection is a glueless floating floor system with traditional and unique shades and patterns. It is available in tiles or planks with a micro-bevel profile and comes with Unilin locking system. Timeless tiles and planks are finished with Greenshield and are suitable for light commercial or residential use. Tiles measure 24 x 17 1⁄2 x 7⁄16. Planks measure 35 1⁄2 x 7 1⁄2 x 7⁄16.

 

Wellmade Performance Flooring
Wellmade HDPC waterproof bamboo couples the performance virtues of rigid core flooring technology with real bamboo wear layer veneers. The product features Wellmade’s HDPC waterproof technology, a moisture protection system that seals out both topical and sub-surface moisture while boasting a 100% waterproof HDPC core. With attached pad, the bamboo flooring is 8.3mm thick x 7.48 inches wide x 72.83 inches long and features the Uniclic locking system. Colors range from traditional carbonized to multi-color and character-driven glazing options.

Posted on

RFMS conference helps users dive deeper

April 29/May 6, 2019: Volume 34, Issue 24

By Lindsay Baillie

 

Dallas—RFMS recently welcomed many of its top retail partners here for its 2019 Owner & Education Conference. The three-day event provided something for virtually every attendee with eight owner- and management-specific workshops that provided a macro view of the industry as well as 64 hands-on workshops to help users dive deeper into the software and its apps.

“Our goal is to help owners understand where technology is going as well as what we feel we can do to provide those resources to them,” Terry Wheat, president of RFMS, told FCNews. “We want them to be able to get a higher-level view of what they need to be thinking about as they plan the next three, five, 10 years in their businesses because things have changed unbelievably in the last five to 10 years.”

Part of that higher-level view consisted of owner workshops focusing on several topics such as exit strategies, the state of the industry, areas of RFMS that produce the most profit and hitting targets with business intelligence and benchmarking.

At the micro level, flooring store estimators, RSAs, designers, office managers, accountants, project managers, warehouse employees and owners all had the opportunity to get a better idea how the RFMS software works. Hands-on workshops included advanced order entry, strategies for sales reports, understanding RFMS Mobile and Measure Mobile apps, Measure for Windows and going paperless—to name a few.

“We have about 250 attendees who will get training in very specific areas of the software,” Wheat explained. “We have really tried to build specific curriculums that will help users who are actually pushing buttons every day to know better how to do it.”

RFMS users, such as Sha Reason, owner/president, After Five Floors, Powder Springs, Ga., enjoyed the conference’s format. “I’ve used RFMS software for about 20 years, but we just doubled down over the past couple of months and bought into more of the modules, more of the processes they have available,” he explained. “I want to get my team trained on those modules and learn more about the Business Insights [plat- form] as well as all the technology that's coming out and the new apps they have available.”

Wheat explained how RFMS is focused on building more mobile apps in 2019. “Over the next five years you’re not going to see very many people wanting to sit at a desktop and working,” he said. “They’re going to want to be able to work from a mobile position and particularly those of us whose businesses require going into the home to close the deal. Statistics show that if you leave the home without closing the deal your opportunity to close it goes down 50% the minute you walk out of the home. We’re trying to build more mobile applications that will let our database be much more efficient with a mobile device.”

Keith Urbom, sales consultant, Ernie’s in Ceresco, Ceresco, Neb., is excited to incorporate the new mobile apps into his day-to-day operations. “I will be managing our [flooring] department in our store in a few months, and there are some things on the agenda that I want to get our store up to speed on when I take over that transition,” he explained. “I’ve been familiar with RFMS for two years, and what I’m really excited about are all the mobile apps they’re talking about and how everything's going in that direction.”

Leigh Bakhtiari, president, City Carpet Carpet One, San Rafael, Calif., is hoping RFMS’ new tools will help her attract millennial employees. “RFMS is such an intense program and every owner uses it differently through different modules,” she said. “I’m always looking for best practices. It’s great for us to share ideas with other dealers from other areas who use the same software.”

Business Insights

One of RFMS’ more recent projects is Business Insights, which is a platform for RFMS users to benchmark their store’s metrics against others in the industry. In order to gain access to this data, an RFMS user must agree to anonymously share his or her store’s metrics with the software company. The tool is meant to provide flooring dealers with accurate and specific benchmarking data.

“We presently have 10% of our client base that are sharing their data which represents about 675 profit centers or stores,” Wheat explained. “We have $1.5 billion worth of annual revenue that’s being reported on, and it’s amazing what the [research] is saying. The information we’re getting and what we’re going to be able to show our client base as a benchmark is going to be just unbelievably valuable to them over the next few years. We’re able to drill down into product categories and things of that nature.”

Dealers such as Reason see value in the new tool. “We set up Business Insights a couple of months ago, but we’re working on moving our data around so it is comparable to other users,” he explained. “Consulting firms we’ve used in the past want us to be able to have the data because you want to compare yourself to another flooring company, not just the Ace Hardware down the road.”

Posted on

First-quarter report: Consumer, government spending propel growth

April 29/May 6, 2019: Volume 34, Issue 24

By Reginald Tucker

 

A newly released report from the U.S. Department of Commerce’s Bureau of Economic Analysis shows real gross domestic product (GDP) increased at an annual rate of 3.2% in the first quarter of 2019, surpassing many economists’ expectations. To put things in perspective, GDP grew 2.2% in the fourth quarter of 2018.

The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures, private inventory investment, exports, state and local government spending, and nonresidential fixed investment. However, imports—which are a subtraction in the calculation of GDP—decreased. These contributions were partly offset by a decrease in residential investment.

“Usually when you look at the GDP performance of any year, the first quarter is typically the weakest,” said Alison Kosik, business anchor and correspondent at CNN. “But this happens to be the strongest first quarter that we’ve seen in six years.”

Following is a closer look at specific elements of the report.

Current dollar GDP increased 3.8%, or $197.6 billion, in the first quarter to $21.06 trillion. In the fourth quarter, current-dollar GDP increased 4.1%, or $206.9 billion.

The price index for gross domestic purchases increased 0.8% in the first quarter compared with an increase of 1.7% in the fourth quarter. The personal consumption expenditures price index increased 0.6% compared with an increase of 1.5%. Excluding food and energy prices, the personal consumption expenditures price index increased 1.3% compared with an increase of 1.8%.

Current-dollar personal income increased $147.2 billion in the first quarter compared with an increase of $229 billion in the fourth quarter of 2018. Meanwhile, disposable personal income increased $116 billion, or 3% compared with an increase of $222.9 billion, or 5.8%, in the fourth quarter of 2018. By comparison, real disposable personal income increased 2.4%.

Personal savings reached $1.11 trillion in the first quarter compared with $1.07 trillion in the fourth quarter of 2018. Furthermore, the personal saving rate, which represents personal savings as a percentage of disposable personal income, was 7% in the first quarter compared to 6.8% in the fourth quarter.

Role of housing in GDP

Housing’s share of GDP continued a downward trend—more evidence of the lack of housing supply caused and affected by ongoing housing affordability issues, noted Robert Dietz, chief economist with the National Association of Home Builders (NAHB).

Research shows housing’s share of GDP fell to 14.7%. The home building and remodeling component (residential fixed investment) made a fifth consecutive negative contribution to GDP growth and declined to just under 3.2% of GDP.

According to Dietz, housing-related activities contribute to GDP in two basic ways. The first is through residential fixed investment (RFI), which essentially is the measure of the home building, multifamily development and remodeling contributions to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees.

The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by renters and owners’ imputed rent—an estimate of how much it would cost to rent owner-occupied units—and utility payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach, because without this measure, increases in homeownership would result in declines for GDP.

For the first quarter, housing services was 11.5% of the economy or $2.18 trillion on seasonally adjusted annual basis. Taken together, housing’s share of GDP was 14.7% for the quarter, Dietz noted.

Historically, RFI has averaged roughly 5% of GDP while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. These shares tend to vary over the business cycle, Dietz noted.

Regarding the flooring space, the consensus among many dealers polled by FCNews indeed showed a measurable uptick in purchasing activity late in the first quarter after somewhat of a slow start to the year.

“After record sales year last year, I was planning on low, single-digit growth in 2019,” said Craig Phillips, president, Barrington Carpet, Akron, Ohio. “But we will end the quarter up about 9%. Thus, the year so far has exceeded my expectations. Our growth is being driven by commercial and multi-family segments.”

Posted on

Reviews are mixed on the true impact of tax law changes

April 29/May 6, 2019: Volume 34, Issue 24

By Ken Ryan

 

The Tax Cuts and Jobs Act (TCJA) that became law in 2018 was intended to benefit corporations as well as small business, including many specialty floor covering dealers. However, year one produced a decidedly mixed bag for retailers. Some dealers who spoke to FCNews said they were unsure as to what extent the tax changes had on their businesses, citing mass confusion in the new law. A few said the tax cut they received was offset by external impacts such as supplier price increases or having to pay more in accounting fees because of the level of complexity created by the tax law.

The IRS estimated that nearly 8 million LLCs requested extensions this year along with a record 14.6 million individuals. According to dealers, the TCJA was anything but simplified even if some of them ultimately did benefit.

“I do know that businesses making less than $157,000 qualify for a 20% deduction if filing as single, but I don’t think it’s clear who qualifies for that break,” said Olga Robertson, president of FCA Network, which oversees dozens of independent retailers. “Accountants are still trying to figure that out, so everyone is in a wait-and-see mode. According to the IRS, they paid out 2% less in refunds ($5.3 billion) but most people forgot about the money they were able to keep throughout the year—so it’s pretty much a wash. Washington did a bad job selling this to the American people. The tax cut created a negative loop for this administration.”

Steve Weisberg, president of Crest Flooring in Allentown, Pa., thought the new tax law would free up money for business owners like him to invest in equipment and hire employees. “Almost immediately after that we had three or four price increases on soft surface, two on cushion and the tariff on hard surfaces,” Weisberg recalled. “So whatever savings the new tax law gave us was eaten up trying to keep up with all the price increases. Not to forget the nearly 35% increase in gasoline.”

How retailers fared had a lot to do with their location. In tax- friendly Florida, retailers found more favorable conditions even though it was difficult to measure in some instances. So said John Taylor, owner of Taylor Carpet One Floor & Home, Fort Myers, Fla. “I believe the tax cuts absolutely spurred people to spend, which in effect has helped business. The savings for many businesspeople I know on their personal taxes was significant and therefore more disposable income out there for all of us to go after. I have also heard numerous people say they were getting refunds, which also adds to the disposable income. Time will tell how it all plays out.”

Mike Foulk, owner of Foulk’s Flooring America, Meadville, Pa., has noticed a definite trend in consumers selecting better products producing higher tickets, but he stopped short of linking it directly to the tax incentive plan. “We have put money directly back into our building and equipment that, without the incentive, might not have been available.”

In Oklahoma, the tax break helped Flooring America OKC, according to Bobby Merideth, owner. “If nothing else, it motivated people to spend. That, in turn, starts the engine of our economy. We did see increases in transportation expenses, but that is a result of demand outpacing supply.”

If residing in a high-tax state like New York, however, dealers might be singing a different tune. “Honestly, I have noticed a large amount of people—not just customers—who have been surprised by their taxes and who owe this year due to changes in the amount the government was withholding,” said Ben Case, owner of The Carpet Collection, Lockport, N.Y. “I believe this has limited the return of pent-up demand.”

Adam Joss, co-owner of the Vertical Connection Carpet One in Columbia, Md., said his business has not benefited from the change in the tax code. “Living in a high-tax state, it seems to have done more harm than good,” he said. “We have heard prospects state that they’re putting their projects on hold as their refund wasn’t what they expected. Business taxes flow through to personal so [the tax law] is complicated.”

Carlton Billingsley, co-owner of Floors and More, Benton, Ark., called the corporate tax code “very complicated and cumbersome” for small businesses. However, he applauds the efforts of government leaders to continue to invest in small businesses. That being said, he feels the 2018 tax bill did not provide positive impact to its business. “We continue to see taxes, insurance and other overhead costs grow.”

 

 

 

Posted on

Not ‘if’ but ‘how’ it’s Made in America

Distinction is key among millennials, Gen Z consumers

April 29/May 6, 2019: Volume 34, Issue 24

By Megan Salzano

 

Marketing to millennials is nothing new and Gen Z is even getting its turn in the sun. Research shows younger generations are poised to take control of billions of dollars of spending power in the very near future.

This year, millennials and Gen Z will form the largest population cohort and control or influence hundreds of billions of dollars in household spending. While older millennials are key targets for the flooring industry, as they age into homeownership and renovation, Gen Z also holds major influence. Research shows Gen Z alone spends $44 billion a year and influences an additional $600 billion in household spending, according to research firm Mintel.

So, how important is the “Made in America” label to these two generations? Moreover, does the movement influence their purchasing decisions? According to The AIMsights Group, an international marketing consulting firm, while price remains the key factor in the purchasing decision, the label may also be too broad for this socially conscious group.

“The geographic expanse of ‘Made in America’ is generally too big,” said Marsha Everton, principal, AIMsights. “Consumers like that L.L. Bean and Burt’s Bees are direct from Maine—as well as being committed to the greater good and socially responsible along many dimensions. They like that Crossville tiles are sustainably manufactured in Tennessee while offering innovative designs.”

To that end, Everton adds, “Locally Made,” with a very specific source identified, has become more important than the “Made in America” slogan. “In addition to trusting our neighbors to a make a safe, good quality product, there is the opportunity to support the local economy—and it gives us a story to tell. ‘Locally Made’ delivers an experience with the product,” she explained.

When marketing product in or beyond the local market, it’s important to be specific about where the product was made and to tell stories about the brand, company and people—and how the greater good is served. “The millennials are especially interested in these health, wellness, sustainability and social good factors. They strongly believe that they will individually have to be the change agents that deliver a greater good—that government cannot, or will not, provide the leadership.”

When it comes specifically to that Made in America label, what the group has found is that it may mean consumers can trust the quality and safety of the product—with safety being the most important factor, Everton explained. “With their interest in health and wellness, these consumers want to know that they and their families (including their pets) will be safe as they use the products. They want to know exactly who made the product, with what materials or ingredients, with what labor practices, with what impact on the environment and with what contribution to the greater good. So, it’s not about ‘Made in America,’ it’s about ‘How it is Made in America.’”

Posted on

Coverings 2019: Premier tile and stone event going strong after 30 years

April 15/22, 2019: Volume 34, Issue 23

By Steven Feldman

 

Orlando, Fla.—Against the backdrop of a slowing ceramic tile market, a sold-out Coverings celebrated its 30th anniversary here April 9-12 with 1,100 exhibitors from more than 40 countries showing their latest and greatest in response to a variety of trends.

At 480,000 square feet, Coverings is ranked as the 35th largest trade show in the U.S., according to Trade Show magazine. That’s up 3% from 2018, said Jennifer Hoff, whose company, Taffy Event Strategies, has been managing the show for the past three years. To put that in perspective, Surfaces, the flooring industry’s premier event, is ranked 42nd in terms of exhibit space. The good news is Coverings continues to grow despite U.S. ceramic tile consumption more or less stalling in 2018, increasing just 1.5% to 3.11 billion square feet, according to the Tile Council of North America (TCNA). Consumption increased at least 5.1% in each of the three prior years.

Eric Astrachan, executive director, TCNA, pegged the U.S. ceramic tile industry at $3.69 billion, up just 0.4% from 2017. Imports grew as a portion of the market from 68.8% to 70.7%, an increase of 4.7%. On a dollar basis, Italy remained the largest exporter to the U.S. in 2018, comprising 30.9% of U.S. imports. China was second with a 27.3% share and Spain was third with a 15.6% share. In terms of square footage, China remained the largest exporter of ceramic tile to the U.S. with a 31.5% share. Next is Mexico with a 17.3% share, its lowest percentage since 2006. This despite the peso’s significant decline vs. the U.S. dollar over the last five years, losing nearly half of its value. Italy was the third-largest exporter of tile to the U.S. in 2018, making up 16.4% of U.S. imports.

What is impacting ceramic tile in the U.S.? For one, acronyms, namely LVT, WPC and SPC. The waterproof/rigid core revolution has impacted every category of flooring, and ceramic is not immune to that competitive pressure.

But it’s more than just the competition from LVT. Donato Grosser, consultant for Ceramic Tiles of Italy, acknowledged that Italian imports of ceramic tile to the U.S. in 2018 was down about 7% in dollars and square footage. “Ceramic tile in general has been down,” he said. “As for Italian tile, there is a lot of com- petition from Chinese, Spanish and Brazilian manufacturers, particularly the Spanish over the last couple of years; for some reason their FOB prices went down from $15 per square meter to $12 per square meter. We don’t know how this can happen so abruptly, but you have a situation where their products are cheaper than even the Chinese.”

Grosser also identified large companies like MSI, Bedrosians and Emser—all of which are very heavily invested in China. “They also import from other countries, but they buy mostly from China. And they offer good service, the product they sell is good and comparable to everything. So the price is not the only thing; otherwise, Brazil would have a much larger share of the market.”

Despite all of this, Hoff noted that Coverings attendance was trending ahead of last year with the hope that 26,000 people would make the trip to Orlando. Attendees run the gamut from architects and designers to fabricators and contractors to distributors and retailers.

Following are some of the key trends FCNews spotted at Coverings:

Classic polished marbles, sometimes mixed with retro elements
Matt Kahny with Ideology from American Olean.

Reflective tiles
Vetri collection from Refin

Patchwork tiles Opus collection from Casalgrande Pagana

Wood-look tile for indoor/ outdoor applications
Primewood from Sant’Agostino

Ceramic wallpaper by virtue of high-resolution digital printing technology
Kontinua collection from Casalgrande Pagana

More refined wood looks
Coby McDougal, director of non-slab sales, MSI, showcasing Caldera.

Geometric-inspired looks
Rhombix, Hexagono and Georama from MSI

Black and white retro looks Retro Revival from MSI

AT THE TILE OF SPAIN PAVILION...

Color is back in a huge way; pink was especially prevalent at many Tile of Spain booths.

Art deco and art nouveau, both geometrics and florals and organics both in small, repetitive patterns and super-size graphics.

Marble looks feature more aggressive veining with greater variation.

Squares are coming back, both on their own and in pairings with rectangles.

 

Posted on

Retail Education: Top merchandising tips to make a lasting impression

April 15/22, 2019: Volume 34, Issue 23

By Lindsay Baillie

 

Properly merchandising product can assist flooring dealers and RSAs in selling their best products while also instilling confidence in the consumer. For example, flooring displayed at the front of a store is guaranteed to catch the consumer’s eyes while a product in the back corner may never get any attention.

Following are several merchandising tips from top flooring retailers across the United States.

Keep your showroom up to date. Savvy retailers say a good-looking showroom with various styles can help build a customer’s trust and push her to see the store as both fashionable and knowledgeable.

“Having a uniform showroom is often a challenge in our industry,” said Missy Montgomery, showroom manager, Montgomery’s CarpetsPlus Color Tile, Venice, Fla. “We can carry many different products, but the key is to not saturate the showroom. We have our showroom laid out in sections such as wood, carpet, tile, LVP, area rugs, commercial, etc.”

Display the right products. As new flooring continues to enter the market, determining which products to display can be taxing. “Every square inch is money,” Montgomeryexplained. “Go through your showroom on a minimum of a semi-annual basis and allocate the dollars to the racks. Not moving the product? It is time to switch it up.”

Nick Freadreacea, president, The Flooring Gallery, Louisville, Ky., urges dealers to remember that in most cases less is more. “The first thing most stores need to do is eliminate all the displays and sampling that are not producing sales for them. Each year, we measure every product and display for their return per square foot. If something is not performing, we move it out. Larger aisles and a comfortable shopping environment are more important than having non-producing displays.”

How these products are displayed are also important. For example, Carlton Billingsley, owner, Floors & More, Benton, Ark., suggested higher-end products should reflect and demand a higher price in merchandising. “FCA Network has cherry wood displays for our higher end products, black metal frames for the mid-level products and stacker/white boards for the builder business,” he explained. “Showcase the product you want to sell in larger samples, room scenes, photos of finished projects, etc., so the consumer knows this product is important to you and maybe it should be to them, too.”

Once a dealer has selected a product and the ideal display vehicle, now it’s time to consider showroom placement. Most dealers suggest focusing on the most important items by featuring them more prominently. “Give those items the largest sample possible and place them in the most visible areas,” Freadreacea said. “Picture your showroom as a store in a mall, and they always put the items they want to feature on endcaps or in the best lighting.”

At Carpet Gallery of Akron and Quality Carpet & Flooring, higher-end products are the stars of the retail floor—and it shows. “Place some of your best products right by the front door so [customers] can see them when they first enter,” said Robert Gaither, owner. “We then like to mix in some better products with the mid-range and economy products after that. I don’t like to lead people to the far corner of the showroom to show them the economy material. Doing that might embarrass them if that is all they can afford.”

Solicit employee input. Beyond stocking stellar product, it’s important to get the opinions of different team members. “A great idea is always developed by a team member who works the floor daily,” Billingsley stated. Designers who frequent the showroom also provide valuable feedback. “We will ask their opinion of a certain merchandise product.”

Join a buying group. Several flooring dealers tout the many benefits of aligning with a buying group—one of which includes assistance with merchandising. “Joining [FCA Network] and listening to them makes merchandising easy and gives me the time to concentrate on other aspects of running the business such as selling, advertising and managing the staff,” said Bill Graybeal, owner, Graybeal’s Carpet Plus, Logansport, Ind.

The ability to private label in a buying group also helps with merchandising. “This helps us to look more uniform and professional,” Montgomery stated. “They see the quality from the moment they enter the door—from the products on the floor, displays a clean showroom and the knowledge and friendliness of the salesperson. If you can give them all those things, they see the value of doing business with you.”

Partner with the right supplier. For many dealers, manufacturers and their sales representatives can help make crucial decisions about what products to display and how they should be merchandised on the floor. “Merchandising products is picking the right manufacturers and using their expertise and choosing their displays,” Graybeal said. “FCA [Network] is also a great resource in helping us merchandise the different categories effectively. Their core product displays also make it easy.”

Retailers believe it’s also crucial to have manufacturers that will stand behind a dealer if a circumstance arises. “You need the best behind you, and if they are not get rid of the product,” Montgomery stated. “Another key is having the sales representatives on your side. I personally invest time and have relationships with them because it takes both of us to sell a product. This can also help when it comes time to order a rack and negotiate a price for the rack.”

Aim high. When it comes to showing a customer product, some retailers it makes sense to accentuate their most expensive flooring options first. “You will never insult anyone by showing them the best,” Carpet Gallery of Akron and Quality Carpet & Floorings’ Gaither said. “By exposing her to the best and explaining why they are the best, the customer may want to upgrade by herself. During our showroom tour she will be exposed to the other products as well and can usually see the difference in the quality/price relationship.”

Visit the competition.Beyond looking at their own showrooms, dealers should take a moment to explore neighboring flooring stores. This way you can see how you stack up against competitors. As Billingsley explains: “Be open to being different and not the same flooring store. If you go to five stores 30 miles from your location, do they all look the same? How will the customer remember your showroom?”