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Wood: Wide-width surge fuels sales upgrade opportunities

October 9/16, 2017: Volume 32, Issue 9

By Reginald Tucker

 

Screen Shot 2017-10-17 at 10.08.26 AMThe growing popularity of wide-width/long-length planks reflects consumer demand for hardwood floors that add depth and character to living spaces, design experts say. What this means for retailers is many of these wider/longer products—which, by their very nature, entail greater use of the raw material—retail in the high-middle to upper end of the register. This has the dual effect of driving more consumers into retail stores in search of these trendy products while giving floor covering dealers an opportunity to improve their margins.

“By and large, the market has moved to longer, wider product—that’s where most of the growth has been in engineered hardwood,” said David Holt, senior vice president, builder and multi-family, Mohawk Industries. “That’s primarily what we’re making out of our Melbourne plant. With our capabilities, we’re able to do different things to the wood, from colorization to fuming to surface texturing.”

The recent investments Mohawk has made across its hardwood manufacturing operations aim to address emerging consumer demands for stylish, trendy products, including collections featuring longer/wider boards. Mohawk’s research shows more consumers are seeking floors with larger dimensions to conform with a broader interior design trend toward open floor plans. Another benefit of this trend is it opens the door to premium products that further differentiate Mohawk from commodity wood flooring producers.

“The wider/longer boards are really growing in popularity,” said Lew Grass, owner, All About Flooring, Taylors, S.C., which sells the Mohawk brand. “I really like the distressed looks in Mohawk hardwood, be it the hand-scraped or the wirebrushed look; those are the things that decorators are drawn to.”

Suppliers across the board are rolling out products that key on the wider/longer trend. Shaw Floors, for instance, recently added a number of new products in its signature Epic Plus collection of wide, long-length planks featuring its Stabilitek core, which is built for high performance and lasting durability. The company’s Epic Plus Extreme Nature line boasts the longest, widest hardwood planks made in the U.S. Each plank is designed in a large-scale format: 9¼ inches long by 82½ inches wide by ½ inches thick.

In the exclusive Extreme Nature collection, Shaw offers three species in four textures, including Landmark Maple, Landmark Walnut, Landmark Hickory and Landmark Hickory Scraped. “Consumers are searching for a hardwood floor that will bring continuity to their large, open interiors,” said Drew Hash, vice president, hard surface product and category management.

Mohawk and Shaw are not the only companies betting big on wider and longer. Mirage recently launched new board lengths up to 82 inches. The new lengths represent an average increase of 25% for Mirage Engineered 5-inch and 6½-inch widths.

“The trend toward longer boards continues,” said Brad Williams, vice president of sales and marketing at Boa-Franc, maker of the Mirage brand. “Increasing our board lengths—up to 82 inches now—supports that trend.”

Other prominent brands, including Mannington, are building on their existing product lines with wider, longer products. Case in point is the company’s new Norweigian oak product, a 61⁄3-inch-wide, engineered, wire-brushed, dual-stained floor featuring a matte finish. “The trend toward wider plank visuals lends itself to engineered given the enhanced stability of the product,” said Dan Natkin, vice president, wood and laminate.

Other noteworthy wide- plank offerings include: Uniboard’s 75⁄8-inch-wide floor from its Heritage collection, which, according to Daniel Seguin, senior director, business development, “features colors and styles designed for the U.S. consumer.”

Screen Shot 2017-10-17 at 10.08.34 AMOther examples: Johnson Hardwood’s signature Alehouse   and English Pub offerings, both available in a 7 1⁄2-inch-wide format. “Wider widths are definitely gaining in popularity,” said Bill Schollmeyer, CEO.

Then there are brand new products such as Mullican Flooring’s Wexford, a Euro-sawn offering in a 7 5⁄8-inch-wide format, and Ribadao’s Agus, a whopping 10-inch-wide, 95-inch-long product featuring a wire-brushed face and two-tone colorations. Another head turner is Mercier’s Fjord, which comes in a variety of widths and lengths to suit the consumer’s personal style. Available in both engineered and solid formats, the line is marked by gray hues combined with brown undertones and the natural golden color of white oak.

The wide range of wide-width floors on the market gives retailers virtually endless options from which to choose. When combined with unique species, surface treatments and colorations, those choices increase exponentially. Such is the case with the Covelo Canyon collection, a 6-inch-wide product, from Hemisphere Imports. “Most products in this range come in at about $6.99 per square foot, so we’re right in that sweet spot,” said Tom Karol, president. “With this product, we’re giving retailers something that offers above-average margins.”

Armstrong also offers retailers a variety of trendy products that fit the wide-width bill. Among them: Woodland Relics, Artisan Collective and Rustic Restorations. “We strive to bring our customers products that offer great design and performance,” said Christopher Moore, wood product manager.

Ultra high-end opportunities
Naturally, wide-width hardwood flooring products lend themselves to trade-up opportunities far beyond the high-middle of the market into the upper-end stratosphere. It’s comfortable territory for companies such as DuChâteau, which eschews the lower end of the market. The San Diego-based producer of wide-plank, oil-finished European oak products has its eye keenly on upscale, high-profit offerings in the $13-$25 range.

“We’re committed to quality design and aesthetics,” said Mitch Tagle, DuChâteau’s CEO and co-founder. “The DuChâteau brand focuses on European wood flooring with a hard wax oil finish. The brand has a European aesthetic—starting with the name, of course. It’s a look that’s exclusive to DuChâteau.

“We’re not the cheapest out there, and we don’t want to get into that category. We have the brand recognition, and people appreciate the quality of our products because of that.”

HF Design is another company specializing in distressed European oak products targeting that upper echelon. Like DuChâteau, Provenza, et. al, HF prides itself on staying out of the entry-level fray.

“The value we bring to our partners is based on turnkey marketing and merchandising combined with fresh new styles in hardwood flooring to help retailers stay ahead of the trend curve,” said Alex Shaoulpour, president. “We make sure we always use the finest quality materials while being fashion-forward and eco-friendly.”

Another supplier specializing in the stylish wide-width European oak look is USFloors, with its popular Castle Combe line. According to Jamann Stepp, director of marketing and product management, the product is gaining traction in the new home construction market, especially the mid to upper end.

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NWFA Wood Floor of the Year contest accepting applications

 

NWFA new 2013 (4-C) 2St. Louis—The National Wood Flooring Association (NWFA) recently opened the application process for the 28th annual Wood Floor of the Year contest. Recognized as the “Academy Awards” of the wood flooring industry, this competition celebrates innovation and quality craftsmanship in wood floor installations.

“Over the years, we have had the honor of presenting more than 200 awards to the artists and craftsmen behind these incredible floors,” said Michael Martin, president and CEO. “We are looking forward to showcasing these remarkable floors once again during our 2018 Expo in Tampa.”

This year’s awards will include the following categories:

  • Best Restoration/Makeover: Entries in this category include all types of restorations, repairs or refinishes, in either a residential or commercial application. Applications can include jobsite finished, manufacturer finished, solid or engineered wood flooring.
  • Best Color & Finish Application: Entries in this category include jobsite-applied applications of dyes, reactive colorants, layered colors and faux finishing.
  • Best Circular/Curved Application: Entries in this category include any circular shape within a flooring system, such as circles, ovals, curves and bent material. Applications can include jobsite finished, manufacturer finished, solid or engineered wood flooring.
  • Best Parquet/Inlay Application: Entries in this category include any parquet pattern, medallion, marquetry or intarsia inlay. CNC and laser cut applications are acceptable, but must be identified.
  • Best Textured Wood Application: Entries in this category may include scraped, wire-brushed, distressed or any surface that is not traditional flat. Applications can include jobsite finished, manufacturer finished, solid or engineered wood flooring.

NWFA also will recognize the Members’ Choice Award. All entries submitted will be eligible to receive this award, which will be presented to the floor that receives the popular vote among NWFA members.

New this year, a Best of Social Media award will be featured. The floors will be featured on NWFA’s social channels, allowing followers to share, like and comment on their favorite. The floor receiving the most engagement will receive this award.

The NWFA has updated the submission period to Oct. 1-Nov. 30. This will provide adequate time for the judging process and time to correspond with winners prior to the public reveal at the NWFA Expo in Tampa, Fla., April 11-14, 2018.

For more information and to submit an entry, visit nwfa.org/wfoy.

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Hardwood: State of the industry—Housing sector, engineered sales drive revenues

March 27/April 3, 2017: Volume 31, Issue 21

By Reginald Tucker

 

Screen Shot 2017-03-31 at 10.18.34 AMBy most accounts, 2016 was a respectable year for North American hardwood flooring manufacturers. Anecdotal information combined with preliminary estimates show the category grew between 5.5% to 6% in 2016, with volume increasing roughly 5%. That would put sales at the first point of distribution somewhere between $2.17 billion and $2.2 billion in sales with volume in the range of 860-880 million square feet.

While manufacturer estimates vary widely, suppliers are in general agreement on several points: Strong end-use sectors combined with high-performing sub-categories and innovative formats within the hardwood flooring sector are sustaining revenues.

“Primarily new home construction and residential replacement are the sectors driving the most growth for hardwood,” said Dan Natkin, vice president, wood and laminate, Mannington. “The category continued to increase in 2016, albeit at a slightly slower pace—3%-4% over the prior year.”

Other major manufacturers were also conservative in their estimates. “Last year was a fairly good year in hardwood sales with the category up by low- to mid-single digits,” said Christopher Moore, wood product manager, Armstrong Floors. “While the new home construction sector did not reach the lofty highs that many expected, a modest movement helped to lift sales of hardwood flooring to a respectable level in 2016.”

Some estimates were much more aggressive. Mohawk, which also counts the Quick-Step wood line among its brand assets, believes the prefinished hardwood flooring market grew close to 10% in 2016 vs. 2015. “The majority of this growth was driven by the new construction market, both in single-family and high rises,” said Roger Farabee, senior vice president, wood and laminate. “Remodel grew as well but at a slower rate. Commercial had the lowest growth and remains a very small part of the overall hardwood market.”

Within the prefinished segment, suppliers saw particularly brisk activity on the engineered side of the business. Indeed, in 2015 the industry saw a continued shift in the ratio of engineered to solid production. In fact, more manufacturers are developing engineered products that mimic the thickness of solid but offer the performance attributes of engineered. (Lauzon’s new Organik series, which features the company’s innovative Pure Genius anti-microbial technology, is a case in point.)

The trend toward wider plank visuals lends itself to engineered given their enhanced stability, experts say. Natkin estimates engineered will represent 60% of the hardwood market within the next two years—up from about 50% today.”

Screen Shot 2017-03-31 at 10.18.27 AMThe continued shift from solid to engineered is increasingly evident, experts say, especially as imports continue to take market share from domestic manufacturers. Brad Williams, vice president of sales and marketing for Boa-Franc, makers of the Mirage brand, cited several reasons why these thicker engineered products continue to increase their share. “With the builder market using wood subfloors, their goal is to make a flush transition with ceramic floors in the kitchen, bathroom, etc. As ceramic tiles trend larger and thicker, it’s a nice option to have the same in hardwood—wider and thicker. There is also the renovation market where flooring ripped out was ¾ inches thick. It makes for an easier renovation as the heights for doors and cabinetry were done based on ¾- inch thickness.”

For some buyers, it boils down to personal preference. As Michael Barnett, wood product manager, Armstrong, explains: “Innovation continues to happen across both structures and, of course, engineered offers opportunities for design innovation combined with its installation flexibility. While solid wood continues to be a coveted choice for homebuyers, certain looks, lengths and widths can be achieved with engineered that either do not exist with solid or are more challenging to produce. Engineered hardwood floors are also better suited than solid in certain installation applications, such as basements.”

The ongoing migration to engineered hardwood is reflected in the investments major manufacturers are making in the segment. Shaw Floors, for instance, completed the expansion of its hardwood flooring manufacturing facility in South Pittsburg, Tenn., specifically to meet the growing demand for its engineered hardwood flooring products. According to Vance Bell, chairman and CEO, the $40 million investment adds more than 60% capacity to the existing hardwood manufacturing facility. “The expansion of our South Pittsburg engineered hardwood facility is a prime example of our continued investment in new product development and advanced manufacturing practices. Hardwood is important to Shaw’s business growth strategy.”

Shaw is not the only company heavily investing in engineered production. Last summer Mullican Flooring announced plans to invest $15 million in equipment, buildings and working capital to expand its manufacturing operations via the acquisition of a 126,000-square-foot warehouse in Johnson City, Tenn. This latest expansion, which marks Mullican Flooring’s fourth major growth initiative in Johnson City during the past 16 years, will provide extra capacity as well as raw material and finished product storage space to meet increased manufacturing needs.

In that same vein, Wickham Hardwood has invested more than $7 million in a new, state-of-the-art engineered flooring line. The game plan over the mid to long term, according to Paul Rezuke, vice president, residential sales, USA, is to align its engineered offerings with its solid products.

Pricing stability
Screen Shot 2017-03-31 at 10.18.14 AMAnother factor that has positively impacted U.S. hardwood flooring manufacturers is the continued stabilization of raw material costs. In 2013 and into 2014, skyrocketing lumber costs negatively impacted margins for many suppliers—including Canadian companies—and forced several market leaders to raise prices. But manufacturers report the raw material pricing stability they experienced in late 2015 has carried over to much of 2016.

“There is great pricing stability at the moment,” Boa-Franc’s Williams said. “We believe the demand from overseas has softened with North American suppliers, which creates more of a need to supply the local market here in North America, so pricing is holding steady. At the same time, inventories throughout the pipeline are at good, balanced levels—which also contributes to stable prices.”

For Mohawk, lumber pricing stabilized overall in 2016—a trend that, according to Farabee, seems to be holding steady so far in 2017. “But this could change if demand for certain species (e.g. white oak) outstrips supply.”

That’s a real concern for some suppliers. Mannington’s Natkin says raw material prices are still high but have been stable through the first quarter of 2017. Certain species, such as hickory, walnut and white oak, he said, are showing modest inflation. “But it is generally under control for the time being.”

Stiff competition
While hardwood suppliers are keeping a close eye on raw material costs, they are also watching the rising popularity of competing hard surface products, particularly those that are doing a much better job of replicating natural materials such as wood. WPC, LVT and, yes, laminate all fall into this category.

Wood suppliers agree some of their products could be ceding market share to these competitive categories. “For the first time in my career, I can definitively say some of these categories have taken share within certain segments from hardwood,” Natkin said. “Particularly in new home construction, both single- and multi-family units.”

Others are not as concerned. Armstrong’s Moore believes that as long as hardwood itself is desirable, there will continue to be a proliferation of wood looks, whether in resilient, tile or laminate. “While hardwood is challenged by some look-alike products, we believe genuine hardwood flooring will continue to be desired by homeowners because of its natural beauty, enduring quality and durability. This is an investment that lasts for years and offers timeless style.”

Screen Shot 2017-03-31 at 10.18.48 AMMohawk’s Farabee agreed, adding: “Hardwood remains the top aspirational hard surface flooring product, and we don’t see that changing anytime soon. While the other categories have done a better job imitating wood, many customers don’t want an imitation; they want the real thing. No other product will ever be able to duplicate the 100% custom, unique look obtained with every hardwood floor that is installed.”

Williams believes some wood products—especially those on the lower end of the price spectrum—have ceded some market share to competing categories, but he thinks that pressure is coming primarily from builder and residential renovation markets, which tend to be more cost conscious. On the whole, though, he has not seen any dramatic market share shift from a numbers point of view to substantiate and support this increase is coming at the expense of wood.

Mitigating factors
Beyond pricing/raw material costs and competitive pressures (both within the category and externally), suppliers identified other issues that stand to impact hardwood’s growth. These range from global competition to changing retail dynamics right here at home.

“Imports continue to be unfairly dumped at low prices,” Natkin said, adding this is an issue primarily with engineered hardwood. “Despite the ITC actions, there is rampant circumvention and the U.S. government has failed to act on any of it.”

For Armstrong, one of the issues in the hardwood industry right now seems to be private-label imports. “At the entry level, where the growth rates are highest, most of the competitive landscape is dominated by imports, which keep margins thin,” Barnett said.

Mirage’s Williams also expects to see an increase in imports as well as additional pressure from “look-alike products” from other categories. But he also thinks home centers and large retailers are getting bigger and taking market share from the smaller independents. “Private-label programs also continue to take market share.”

Outlook for remainder of 2017
Despite these pressures, many suppliers are optimistic hardwood will continue to hold its own as a category. They cite, among other things, continued investment in manufacturing and innovation as well as strong demand among consumers and end users.

“The housing market will continue to strengthen, although single-family starts and completions remain more than 20% lower than the historical average,” said Neil Poland, president Mullican Flooring. He expects to see growth in the 4%-5% range for 2017. “Engineered flooring will lead this growth as housing grows more rapidly in Sun Belt markets.”

Others are more bullish with their projections. “We are confident that—if interest rates remain constant and the U.S. economy continues to be positive—growth will be in the 6% to 10% range,” Wickham Hardwood’s Rezuke said. “Our opportunities will derive from our increased expansion in the U.S. market, along with successful implementation of new products.”

Shaw also expects to see growth in the 6%-8% range for 2017, based on trends it is seeing in the new home construction market. “We will continue to outpace the growth of the flooring market,” said Drew Hash, vice president, hard surfaces. “Our wide breadth of categories and consistent standard of quality supports that outlook.”

 

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ITC votes in favor of U.S. petitioners

HICKSVILLE, N.Y.—One year after a group of U.S. engineered wood flooring manufacturers filed a federal unfair trade petition against Chinese imports, the International Trade Commission (ITC) voted to uphold the antidumping and countervailing duties set by the Department of Commerce (DOC) last month.

The result of this action means imports from all but one Chinese manufacturer—Zhejiang Yuhua Timber Co.—are not only subject to the DOC rates, they may have to pay additional fees a year or more later as the duties can be retroactively adjusted for as long as the government feels harm is being done to U.S. manufacturers. Continue reading ITC votes in favor of U.S. petitioners

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CAHP comments on ITC ruling

WASHINGTON—The U.S. International Trade Commission  (ITC) this morning issued a final affirmative determination in the unfair trade investigations of multilayered (engineered) wood flooring from China. Continue reading CAHP comments on ITC ruling

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AFCJF disappointed by ITC’s affirmation of petition

WASHINGTON—In a statement released by the Alliance for  Free Choice and Jobs in Flooring (AFCJF), the group announced the International Trade Commission (ITC) voted today to affirm the petition on punitive anti-dumping duties on engineered flooring from China. Continue reading AFCJF disappointed by ITC’s affirmation of petition