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Lorberbaum: Optimism abounds in 2018

March 5/12, 2018: Volume 33, Issue 19

 

Long Beach, Calif.—To commemorate Abbey Carpet’s 60th anniversary convention, Jeff Lorberbaum, chairman and CEO of Mohawk Industries, was tapped as the keynote speaker. The selection was most appropriate given that Mohawk was an original supplier to the group.

Lorberbaum told the 500-plus members in attendance to focus on increasing their success, and his first piece of advice was to stop watching the news. “Every day we hear negative stories about how politicians are arguing, calling each other names. They’re focusing on [things] that have almost no impact on us. Guess what? Democracy is a really sloppy process. Don’t let all of the political noise distract you from the good things going on in our country. In every economic cycle there are good years and bad years. We’re currently not just in good years but in the right years. Despite the gloom and doom presented in the media, every day our economy is thriving. The Great Recession has become a distant memory. Our country is in the best shape it has been in for more than a decade. Ignore the bickering you hear in Washington. Private economists are talking about GDP growth of more than 3% this year—the first time we’ve seen that level of expansion in almost forever.”

Lorberbaum also believes the recently enacted tax cuts will add to the economy and boost our economic expansion. “With the new tax law, the average person will take home between $1,000 and $1,500 more in their monthly paycheck this year. No matter how they use the money and what you hear them talking about, all the money is going to benefit our economy. If they spend it they will create greater demand for goods and services. If they put it in the bank, the banks are going to loan more money. If they invest it in the stock market, then the people selling the stocks will have more money and spend it.

“Businesses—including yours—will pay much lower taxes this year. Some will invest it by expanding their businesses. Others will develop new products; some will put automation in; some are raising employee wages and benefits; and some are distributing dividends to their shareholders. It doesn’t matter. Consumers and businesses with more disposable income will create ripples through the economy and drive our growth through every sector, including our own.”

Lorberbaum then addressed the recently passed budget, which he said had to include $400 billion of additional spending this year on both parties’ priorities. “In the short term the higher government spending will further expand the economy and fuel consumption in every building category, including flooring.”

His optimism is shared by many. In fact, The Conference Board’s leading economic indicators have been rising for months and they’re forecasting strong future growth. “Consumer confidence is the highest it has been in two decades as people embrace a more positive view of our future—people just feel safer. They feel more economically secure. They’ve become comfortable making big purchases and taking on more debt. Robust job growth is forecast for all sectors this year as the work force expands and many people return back to the labor market who haven’t worked in years. Weekly unemployment claims are near record lows, which reinforces the growth we all expect. Finally, we’re actually seeing wage growth in the lower-paying jobs in our country, which is good. With inflation limited, the workers will use the higher wages to increase their purchases of everything.”

Lorberbaum turned to the stock market for more evidence of the optimism. “The stock market’s run over the past year has created significant wealth for individuals and inspired greater confidence in the future. Even people who only own stocks in 401(k) plans are seeing their balances rising and are more optimistic. If the recent market drops have undermined your confidence, take a deep breath and look at the bond market where the higher prices suggest growth in our country’s future. If you look outside the U.S., the global market is in the best shape it has been in, with simultaneous acceleration in the U.S., European and Asian economies.”

Then we have the housing market, which should create great opportunities in the years ahead. “By the best estimates, the flooring industry in 2017 grew about 4% and further growth is predicted by everyone this year. Flooring in the past is like the overall economy. As consumers deferred purchases, which resulted in significant pent-up demand that we expect to come through, the demand is translating to greater residential remodeling, with some predicting that 2018 will set a record for home renovation spending. Overall, the real estate industry is the healthiest it has been in 30 years. Interest rates are near historic lows and even when the Feds raise the interest rates in 2018, they will still be historically low.”

The biggest challenge in the real estate market today, he said, has been a shortage of homes for sale. “Rapidly increasing demand will spark new construction as well as remodeling across the country. Remodeling drags at about 60% of the total flooring sales and probably much more for those of you in this room. So increased activity would really benefit you and our industry. Right now, investments in remodeling is being influenced by two major factors. The first is rising home prices, which is building confidence for homeowners to update and address changing lifestyles in their homes and how to make it benefit themselves. New buyers of existing homes will also customize their purchase to suit their own taste. Renewed interest in remodeling is also being spurred by television prompting home renovation on every other show. HGTV and the DIY networks have built franchises around home remodeling and their websites and magazines along with everything else are teaching consumers that updating their floors creates a trendy and refreshed home.”

Lorberbaum also cited new home construction as yet another source for optimism. “As excited as I am about remodeling, I also see growth in new single-family home construction as another sign of a healthy year ahead of us. For years, single-family home construction lagged the historical averages. After the Great Recession, we saw an emphasis on multi-family properties, but the pendulum is now swinging once more to single-family home growth. New construction must accelerate to meet current demands as expanded household formations creates added pressure to the existing market. To meet that demand, the construction industry is finally finding ways to deal with a lack of developed land, as well as taking care of the labor shortage in new ways to build more homes.

“If you take all those factors into consideration, 2018 will be rich in opportunity. The most important fact I want you to take away is that in 2018 consumers have more confidence and are going to spend more money. Together we have to convince them that spending that money in your store on new flooring is the right thing to do.”

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Mohawk’s paradigm shift

Change in laminate brand marketing strategy reflects product’s evolution

February 5/12, 2018: Volume 33, Issue 17

By Reginald Tucker

 

After conducting extensive consumer research, Mohawk has decided to dramatically alter the way it markets its laminate flooring product offerings at retail. In a nutshell, laminate products previously positioned under the “laminate” banner will now be labeled RevWood—although the core construction of the product has not changed. Ditto for the company’s Quick-Step division, which will now market its laminate lines under the NatureTEK banner in a separate marketing initiative.

FCNews looks at the specifics of the respective changes and enhancements:

Same but different
With LVT, WPC and rigid core flooring continuing to nip at laminates’ heels, Mohawk is exploring ways to keep some of the focus on laminate. How? By not referring to the category—which is still based on traditional HDF core plus melamine-infused designer paper construction. The move, according to the company, is designed to make consumers rethink the hardwood category.

“RevWood is for people who desire the beauty of wood floors without compromising performance,” said Gary Lanser, president, Mohawk hardwood and laminate. “The vintage allure and incredible hardwood realism of RevWood Plus looks and stays gorgeous no matter what your family throws at it.”

All in the messaging
Mohawk laminate marketing and promotional collateral, including merchandisers and displays, will now carry the header: “RevWood Plus: Wood Without Compromise.” According to Mohawk, this is designed to correlate to the way some consumers view laminate flooring today.

“In a study we conducted, consumers ranked RevWood and TrueTEK [the new Quick-Step laminate brand] right up there with real wood,” Lanser stated. “In the consumer’s mind, solid wood flooring is still the gold standard, but now you have all these other hybrid products crossing lines. The fact is, whether it’s our real wood products vs. NatureTEK, once it goes down, the customer has no idea which one is real wood vs. a laminate. It’s hard to differentiate just by sight.”

Takes a licking…
According to Lanser, RevWood planks offer impressive, reliable durability that resists stains, scratches and dents and is 100% waterproof. That means spills, accidents and tracked-in stain-makers are kept on the surface for quick, easy cleanup thanks to Uniclic MultiFit technology. RevWood Plus also features All Pet Protection & Warranty covering all pets, all accidents, all the time.

“As a leader in the flooring industry, retailers can trust Mohawk to take our products to the next level in the coming years,” said Karen Mendelsohn, senior vice president of marketing.

 

What’s in a name?
In much the same way that Mohawk-branded laminate flooring is taking on a new identity, the company’s Quick-Step-branded laminate product

s are undergoing a big change. Henceforth, Quick-Step laminate offerings will now fall under the NatureTEK banner. (This is in keeping with the division’s decision to promote its previous Q-Wood offerings as TrueTEK products, and its luxury vinyl products—launched in 2016—as EnduraTEK (formerly Quick-Step LVF).

Billed as the new face of performance in flooring, Quick-Step TEK is built for people with active lifestyles. “From resilient to laminate to engineered hardwood, we have TEK covered,” Lanser said. “Our TEK products are a leap forward in providing customers simplicity in their hard surface purchase journeys along with bringing them what they want.”

Form plus function
Mohawk executives are confident in the ability of its new laminate offerings to not only stand the test of time but also dazzle consumers via realistic visuals.

Quick-Step’s NatureTEK Plus line, which features a waterproof laminate wood construction, combines Mohawk’s patented Uniclic Locking System, GenuEdge beveled technology and innovative HydroSeal coating. So NatureTEK Plus withstands everyday spills and wet mopping while also resisting fading, scratches and stains.

“In 10 years we expect these floors will look the same as they did when they were first installed,” Lanser stated. “The realism of NatureTEK and RevWoods is incredible, and the moisture resistance is incredible. We’ve put down millions of square feet of product; when there are spills the water doesn’t leak through. We’ve done a lot of real-world testing that bears this out.”

First impressions
Distributors on hand for the official rollout of the NatureTEK at Surfaces 2018 were impressed with the realism of the visuals as well as they performance story. They also embraced the new marketing strategy.

“This is good stuff,” said Keith Slobodien, president, Apollo Distributing, a top 20 wholesaler. “Laminate has become secondary to wood in terms of prestige and waterproof capabilities. By focusing on TEK—whether it’s vinyl, wood or laminate—it’s probably a better overall product positioning.”

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How the category leaders help retailers make money

January 22/29, 2018: Volume 33, Issue 16

By Lindsay Baillie

 

The flooring industry’s largest manufacturers are making significant efforts to provide multi-channel solutions for their respective aligned retailers. Both Mohawk and Shaw Floors are listening to retailers and consumers to uncover the best ways to support the independent flooring retailer via product innovation, merchandising, digital marketing and lead generation.

FCNews spoke with Seth Arnold, vice president of residential marketing, Mohawk, and Dan Crutchfield, director, Shaw Flooring Network, Shaw Floors, to uncover what both manufacturers are doing to help their aligned retailers succeed.

 

Product. “In particular with independent retailers, there has been a trend away from soft surface flooring. When we look at developing products in order to stop that trend we have to develop extraordinary features. Take products such as SmartStrand Silk Reserve, for example. If we take the main feature of the category—soft—and maximize it to astonishing levels while providing durability, we’re helping retailers command the highest possible margins even if they are not getting the same square footage.

“We also recently launched Air.o, a hypoallergenic alternative to carpet, which doubles the number of people who would consider soft flooring. This is a gold mine for retailers because when a consumer walks into a showroom she might have her heart set on soft flooring but then feel her only option is hard surface due to respiratory issues. When the retailer can turn that around it increases her likelihood of purchase and allows the retailer to command a trade-up margin.”

Merchandising. “We spent six months talking to consumers about how they shop for wood. We found consumers have very high standards for wood but get completely overwhelmed. Also, the consumer actually simplifies things by thinking of laminate and hardwood as one category. Our new laminate strategy is to merchandise it with a branded collection called RevWood and put it together with our hardwood products. What we’ve seen from consumers is you can provide greater choice with a simpler value proposition that speeds up the decision and allows retailers to make more money on every sale.”

Digital marketing and lead generation. “We’re currently developing digital merchandising lead-generation packages for all of our hero products.  Every retailer that has utilized these tools is coming back asking for more because they’re seeing higher traffic. They’re seeing better qualified leads and they’re driving sales. When you’re visible online and have good content, that is how you get good leads.”

Overall. “The No. 1 thing we’re doing to help ensure the success of all retailers is Omnify. There’s this growing younger demographic that has a bias toward digital. If an average retailer has 25 people walking through their physical front door, there are 1,000 people walking through their digital front door. It seems to me the most important thing Mohawk can do is help improve the close rate on the 1,000 who are looking digitally without giving up the 25 people who are walking through the physical door. I truly believe Mohawk is three to five years ahead of any other flooring brand when it comes to connecting the digital and physical strategy.”

 

Product and merchandising. “Private labels and exclusive product programs—including our most successful collection and display system—have been hallmarks of the Shaw Flooring Network since its inception. Even more important, we are committed to the future of our members with styles, trends and innovations that meet today’s consumer demands. We want to make sure we are designing products, collections and merchandising units that complement

the way consumers want to shop vs. the way our industry has traditionally wanted to sell. We are committed to researching consumer behaviors so we can help our members be successful in today’s marketplace.”

Digital marketing and lead generation. “The world of digital marketing changes rapidly. And, because it is an increasingly important part of the consumer’s purchase process, digital marketing can be a particular source of anxiety for a lot of retailers. The Shaw Flooring Network is committed to helping members, and we offer a complete suite of services. For social media support, we offer a world of content for Facebook, Twitter and Instagram through Promoboxx. We provide easy-to-build, professional flooring websites—complete with product catalogs—and support through Shaw Web Studio. In addition, we help retailers garner positive reviews and maintain their digital reputations through Share It Forward. As digital marketing trends evolve—and they will—we will continue to work with great service providers and internal professionals to offer new and enhanced digital marketing tools and expertise.”

Overall. “Shaw has conducted an extensive amount of proprietary consumer research over the last 12 months. Plus, the company is investing time with key retailers to better understand their challenges, needs and opportunities—and how Shaw can formulate a stronger partnership in helping them achieve success as they define it. Using what we are learning from both the consumer research and our customers, we’re continuing to evaluate our findings to offer meaningful solutions that benefit our valued retail partners. Shaw Flooring Network aligned retailers have already been exposed to some of this data, but that’s only the tip of the iceberg. We’re listening to consumers and learning their motivators and drivers more than we ever have so we can develop strategies around eliminating their headaches. By acknowledging any potential issues head on, we hope to assist our valued retail partners with combatting abandonment and other common concerns that could lead to the loss of a sale, making them savvier to consumer needs and expectations.”

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Mohawk recognized for reducing its environmental impact

Calhoun, Ga.—For the eighth consecutive year, Mohawk Industries has earned recognition as one of Newsweek’s 500 greenest companies in the United States. The company ranked 265 in the 2017 Green Ranking program, which uses key indicators to measure environmental performance of large publicly traded companies that are delivering solid business results while minimizing their environmental impact. The rankings focus heavily on how efficiently businesses manage resources, which is a critical component of corporate sustainability.

“Our commitment to sustainability drives the way we design, innovate and manufacture flooring,” said Brian Carson, president, Mohawk Flooring North America. “We are excited to be recognized yet again as one of Newsweek’s top green companies in the U.S. Mohawk is passionate about corporate sustainability and about extending our leadership role in the flooring industry to reduce our environmental impact. These values are the foundation of our innovations that delight customers, create meaningful jobs and give back to the communities in which we live and operate. Put simply, it allows us to grow our business profitably.”

Mohawk is building a waste-responsible culture on a facility-by-facility basis around the globe, and the results have been significant: 5.5 million plastic bottles recycled annually; 25 million pounds of tires recycled into doormats annually; and 7.1 billion pounds of annual recycled waste.

George Bandy, Mohawk’s vice president of sustainability, noted that the manufacturer continues to make great strides toward expanding its commitment to sustainability. “Across the business, we have taken important and innovative steps to reduce waste, lower water consumption, improve our energy efficiency and recycle resources to produce better products in better ways.”

One model of energy efficiency is Mohawk’s Glasgow, Va.-based facility, which produces commercial carpet tile. Investments like lighting retrofits and replacement of aging boilers and ovens with new, more efficient ones have led to significant reductions in energy consumption in Glasgow.

Throughout North America, Mohawk has fine-tuned its domestic logistics from warehouses to transportation assets. Practices like route optimization and use of renewable fuel are driving sustainability, which is good for business and the environment.

Mohawk has a Zero Landfill (ZLF) program, which began as a pilot in the company’s rug and mat business and has now been implemented at 44 production sites worldwide. The program has led to a 26% reduction in waste intensity since 2010.

“At Mohawk, we talk about a circular economy,” Bandy said. “We believe in broadening our network of technical solutions and keeping materials out of landfills. We do this by manufacturing products with cleaner materials that produce less waste as well as by giving existing materials a longer, more productive life. Through programs and projects that reuse and recycle flooring, we’re shrinking our industry’s environmental footprint.”

The Green Rankings, sponsored by Newsweek in partnership with Corporate Knights, is one of the most recognized environmental performance assessments of the world’s largest publicly traded companies.

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Lorberbaum named to WFCA Hall of Fame

Dalton, Ga.—The World Floor Covering Association (WFCA) has named Jeffrey S. Lorberbaum, chairman and CEO of Mohawk Industries, to the organization’s Hall of Fame. Lorberbaum is the 47th inductee since the Hall of Fame was established in 1992. He will be joining a distinguished list of industry pioneers and leaders, including his parents, Shirley and Alan, who founded Aladdin Mills. Lorberbaum will be honored during a ceremony at The International Surface Event in Las Vegas, Jan. 31.

“I nominated Jeff because his leadership changed the industry while expanding Mohawk into all flooring products to create the largest flooring company in the world with numerous acquisitions, exponential global growth and ground-breaking financial returns for more than 20 years,” said Larry Nagle, WFCA Hall of Fame member, president of N.L. Nagle and founder of the Floor Covering Industry Foundation. “I look forward to honoring his influential impact on our industry and welcoming him into the Hall of Fame.”

After graduating from the University of Denver in 1976, Lorberbaum entered his family business as the company was expanding from bath and area rugs to broadloom carpet. Under his leadership, Aladdin Mills merged with Mohawk Industries in 1994, creating one of the largest flooring manufacturers in the country with revenues of more than $1 billion.

Durimg the remainder of the 1990s, Mohawk led the consolidation of the U.S. carpet and rug industry and began exploring the sale of hard surface products at the end of the decade. Mohawk foresaw the changing of consumer flooring preferences and shifted its strategy to provide all flooring types, which expanded their customers’ revenues and margins.

Mohawk’s acquisition of Dal-Tile in 2002 was the next major step in becoming a total flooring company that manufactured all soft and hard surface products. Dal-Tile’s market share grew rapidly under Lorberbaum with new investments to expand its manufacturing capabilities, sales organization and distribution network. Following multiple European acquisitions during this decade, ceramic has become the largest category within Mohawk’s product portfolio.

Today, Mohawk is one of the largest flooring manufacturers to offer ceramic, stone, carpet, rugs, laminate, wood, sheet vinyl, luxury vinyl tile (LVT) and countertops. While transforming the U.S. business, Lorberbaum built Mohawk into a significant international enterprise with more than 30% of the company’s revenues generated outside the U.S. With 38,000 employees, Mohawk sells products in more than 160 countries around the world with manufacturing operations in 16 nations.

For the WFCA, the combination of Lorberbaum’s leadership of Mohawk into a global flooring powerhouse, his transformative impact on the industry and his lasting influence on how people buy and sell flooring made him a natural choice for the Hall of Fame.

“Mohawk became a member of the WFCA in 2003, and, since then, I’ve had the pleasure of working closely with the company and Jeff,” said Scott Humphrey, CEO, WFCA. “He is a true visionary who has invigorated product innovation, enhanced customer results, shaped countless leaders and revolutionized the flooring industry. Jeff will be a great addition to the Hall of Fame.”

Lorberbaum has received a multitude of awards for his leadership and accomplishments during the course of his career. Recent honors include the 2016 Ernst & Young Lifetime Achievement Award for Entrepreneurship (SE Region); the 2016 Atlanta Business Chronicle Most Admired CEO Award (Manufacturing); the 2017 Leonardo International Prize, presented by the President of Italy for transformative investments in Italian industry; and the 2017 “Let Us Do Good” Award, presented by the Stephen Siller Tunnel to Towers Foundation, for his support of housing for severely wounded veterans.

 

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Wood: Anticipating trends is the key to successful product development

November 27-December 11, 2017: Volume 32, Issue 13

By Reginald Tucker

 

Fashion trends come and go, but hardwood flooring installations are designed to last for many years. For manufacturers, that poses a challenge: How to accurately forecast color/style design trends several years in advance of actual product rollouts?

“The biggest challenge is always developing a product inspired by a home fashion trend that’s too early for the market,” said Joe Amato, vice president, residential styling, Mannington. “A perfect example is the color gray. We followed gray-colored hardwood products for years prior to introducing the color in the United States. As the color family started to become popular in furniture and cabinetry, we knew it was time to launch it in hardwood. The gray story was popular in Europe and Canada well before becoming popular in the States.”

When attempting to accurately forecast hardwood flooring color trends and patterns, many stylists and designers look to take their cues from the fashion industry. But it’s important to remember that one dress doesn’t fit every Betty; with wood flooring, patterns, colors and styles are still largely a function of regional tastes. “Regarding fashion and hardwood trends, it is not so much about design and patterns but more about color,” Amato explained. “A perfect example would be the popularity of warm grays in flooring as well as fashion. Wood flooring trends have a bigger connection to regional trends more so than fashion trends. An example would be areas of the Midwest region still supporting refined rustic looks while sections of the East Coast now moving to urban looks that are not so rustic and have less character.”

The ability to accurately forecast trends goes well beyond shades or stains. “As well as color we follow wood formats, surface texture, wood species and surface gloss, and we try to time the development to the market needs,” Amato said. “You don’t always need to be the first, but you need to be ready to respond when the timing is right.”

Manufacturers across the spectrum are working hard to do just that. Beyond color, suppliers are taking into consideration changing trends relative to product format, i.e., engineered vs. solid. As Michael Bell, general manager, hardwood, Armstrong, explains: “The dynamics are different in solid vs. engineered. In engineered we see much of the growth occurring on the bookends of the market, with significant increases in the opening price point/value engineered products and the best/premium sliced- and sawn-face engineered products. Solid is similarly seeing increased activity on the best/premium side of the market.”

Other executives still see the pendulum tilting toward engineered. “From a product level, we’re seeing continued growth in engineered hardwood sales as the industry shifts in preference from solid to engineered hardwood,” said Drew Hash, vice president, hard surface, Shaw Floors. “This shift is happening for a variety of reasons, namely due to engineered hardwoods’ versatility and enhanced performance story. We also see great opportunity in high-end hardwood products for next year.”

Some manufacturers believe growth will be driven by products that successfully combine innovation in aesthetics and performance, which are the No. 1 and No. 2 factors driving consumer demands for hardwood. “On the design side, we see trends moving away from more rustic to more refined visuals and the continued shift to wider and longer plank sizes,” Armstrong’s Bell noted. “On the performance front, scratching remains the primary concern for consumers shopping for hardwood.”

That’s a trend that suppliers don’t see changing anytime soon. “While we believe the bulk of customers desire the authenticity, permanency and unique beauty of a real hardwood floor, performance factors may drive them toward wood-look flooring options,” Bell added. “At Surfaces 2018 we will be launching a brand new collection of solid hardwood, Appalachian Ridge, with Diamond 10 Technology. We originally applied this proprietary technology with our LVT flooring and have now expanded it to hardwood. By providing enhanced scratch and stain resistance, we are addressing one of the key performance attributes that is important to consumers: durability.”

Hardwood manufacturers point to another trend that stands to impact future product development: The popularity of sawn-faced veneers in the production of engineered floors. “We expect wood flooring will grow at about 6% in 2018, and the continued popularity of wide and long boards will fuel most of that growth,” said Don Finkell, CEO, American OEM. “We’re seeing the continued growth of sliced veneer faces over rotary-peeled veneer faces along with more complex finishing techniques—technologies at which we excel.”

American OEM is not the only company seeing increased demand for sawn-faced product. Mohawk, which recently expanded its Melbourne, Ark., plant, is banking on it. “We have built the largest sawn-faced plant in the United States,” said David Holt, senior vice president, builder and multi-family. “We have also added a brand new cold press to the line. We believe we have come up with a better product that’s more dimensionally stable than other hardwood floors on the market.”

One of the first products to roll off the new lines at the Melbourne plant is Mohawk’s new Vintage Elements collection—an offering that reflects “Old World” styling in a family of six wire-brushed, cerused oak species. Boasting a high-fashion color palette, Vintage Elements comes in a 7-inch-wide, ½-inch-thick format in random lengths up to 6 feet.

Others are also looking to capitalize on the sawn-face craze. Mullican Flooring, known for its innovative approach to manufacturing, has expanded its American-made engineered product line with two new collections, Wexford and Nature. Wexford, a “Euro-sawn” line, combines three traditional North American sawing techniques to create a classic European look. This 1⁄2-inch-thick product is offered in 7-inch widths and random lengths up to 7 feet. The collection’s prefinished version is available in six selections of white oak.

“We have mastered the Euro-sawn cutting technique, which produces a highly desirable look that is gaining prominence throughout the market,” said Pat Oakley, vice president of marketing. “We are proud to integrate this process into our robust Made-in-the-USA portfolio, which offers customers superior materials, shorter wait times, sustainable manufacturing practices, and premier beauty and quality.”

 

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Executive forecast: Industry leaders look forward to robust year ahead

November 27-December 11, 2017: Volume 32, Issue 13

By Ken Ryan

 

Words like “sluggish” and “tepid” to describe growth in the flooring industry are being replaced by “healthy” and “sustainable” as some of flooring’s top executives see an industry that is now accelerating to a respectable cruising speed as we approach 2018. The catalyst driving this momentum is winning products—the still-booming LVT market and across-the-board innovations in other segments.

We expect 2018 will be even better than 2017. Continued GDP expansion, employment growth and rising wages will drive consumer spending. Residential new construction and refurbishment growth is responding to demographics, and lack of housing inventory with mixed use development continues to shine. After a lackluster 2017, commercial should be stronger in 2018 with rising business confidence.

The big unknown for 2018 could be corporate and individual tax reform. This could be an accelerator for all of the above.

In terms of the biggest challenge facing the industry—short and long term—it is adequate supply of qualified installation. Manufacturers are responding with easier-to-install flooring, but attracting and retaining qualified installers must be dealt with on a local basis. In general, the greatest opportunities are for manufacturers to truly understand consumer and end-user needs and requirements, which result in innovations with real solutions. Also, manufacturers need to transparently provide information and tools for consumers to make better flooring decisions.

We continue to invest and spend capital at record rates, [dedicating resources to] new businesses, new manufacturing platforms and new technology. We will continue to expand our revolutionary StrataWorx carpet tile platform with new looks and new installation methods. We are also investing heavily in our key brands with the rollout of the new Anderson Tuftex brand, a new consumer campaign on COREtec and exciting soft and hard surface introductions from Shaw Floors.

As an industry, we must be diligent about changing consumer purchasing habits—the move to digital, her desire for transparency and ease of transaction, and the reputation and integrity of our products. If we acknowledge and understand the consumer, and offer products, services and selling environments that relate, we will continue to prosper.

 

The variables that tend to drive the success of our business—employment and income, the equity markets, inflation, consumer confidence—are in a good place.  Flooring is a discretionary purchase; therefore, [consumer] confidence is important. If you look overall at the market there are a lot of things that are favorable for the consumer. The GDP is now tripping above 3%, so all things collectively are positive for the floor covering business.

What’s driving it? Never has there been more innovation nor excitement than we see today. Every category is being impacted by true product innovation. We think that is weighing in on stimulating the consumer to come into the category. Air.o is just one example of an innovation that is driving industry growth. To be successful innovation has to be understandable—it has to be executable on the retail end, and it has to be promoted.

Our biggest challenge as an industry is standing out in front of a very inundated consumer. Of all the things that keep me up at night it is that flooring [must] stay top of mind. Are we, as manufacturers, doing everything we can to make the product exciting? Are we adding value and making it relevant at a time when that consumer is about to part with $1,000 to $3,000? Are we continuing to excite consumers? (And that starts with first exciting our retail partners.) The charge of the industry is how do we stand out in front with the most innovative products—not just vis-à-vis flooring but vis-à-vis other big-ticket products like electronics or refrigerators with Internet capability.

As a company, we are going to continue to refine and improve our execution in digital marketing and consumer lead generation in conjunction with our retail partners. Most consumers are starting out in the digital universe in their journey. Mohawk wants to be front and center in that process so our retail partners win in that selection process.

Our whole business culture is built on product innovations that are brought to market with exciting stories and opportunities for our retail partners to upsell their customers. As for big initiatives for 2018, you’ll just have to stay tuned for January.

 

Across the industry, we expect to see a continuation of the measured growth we’ve seen this year, with ongoing migration to hard surface flooring and continued robust growth in the LVT/rigid core category. At Armstrong Flooring we are well positioned to capitalize on the market surge in LVT with the recent increase in our domestic LVT production capacity and leading the way with the introduction of revolutionary new products such as our Diamond 10 Technology, rigid core and exclusive Pryzm LVT flooring.

There are tremendous opportunities out there. As one example, we recently repurposed part of our Stillwater, Okla., resilient sheet plant to produce LVT. This increases our domestic LVT production and leads to better capacity utilization for our sheet business.

Ongoing challenges within the industry include recruiting experienced installers and retail associates to help educate the consumer/end users on their purchase decisions.

As our economy heats up, likely increases in raw materials, energy, transportation and operating costs would likely need to be covered with increased pricing. Additionally, the industry is dealing with overcapacity in some product categories.

Our strategy in 2018 is to improve our mix of sales to higher-growth products like LVT and rigid core, while maintaining strong competitive positions in our legacy categories. At Armstrong Flooring, we’re focused on innovation—not just in products themselves—but in the way we do business. Our marketing campaign, “The Floor Is Yours,” goes beyond illustrating the design and performance of our floors and enables us to tell stories that really connect with consumers. We recently launched a new website to inspire homeowners and guide them through the purchase journey, and we will continue to collaborate with our distributor partners and aligned retailers to ensure we are delivering not only exceptional products but also an exceptional experience for our customers.

One initiative in 2018 is our retailer-centric program, Elevate, which helps independent specialty retailers grow their businesses. Elevate offers resources to drive store traffic, maximize the in-store experience and enhance sell-through via an aligned connection with Armstrong Flooring. We will continue to expand that program in 2018.

 

Overall, we anticipate the industry in general—and Mannington specifically—will continue to see good growth in the residential market. We expect to experience a similar pace as we’ve seen over the past 18-24 months: Roughly a 10% increase in single-family starts and a 4%-5% increase in remodeling activity. LVT/WPC will continue to be the stars of the show. There is nothing on the horizon right now that will change the momentum of that category relative to the other categories. All the other product segments are more aligned with the growth curve in remodeling.

Whereas the economy has driven consumer sentiment in the past, today I think the wild card is the political scene. The X Factor, I think, is tax reform and its impact on both spending and investment decisions.

The biggest challenge we face in the industry is the rapid change and shift in consumer preferences. I can’t think of a time the industry has seen such a shift between categories like we’ve seen over the past two to three years. There’s been incredibly rapid growth in LVT coupled with the emergence of WPC as a major category in and of itself. It has literally changed the game overnight, and that continues to evolve. With so much change in the product mix, retailers and consumers alike are finding it confusing. Our greatest opportunity lies in how we, as manufacturers, help them simplify and focus amongst so many choices.

As always, Mannington has an outstanding lineup of new product introductions rolling out at Surfaces. We can’t tell you much more than that—you’ll just have to come to our booth to find out.

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Mohawk to acquire Godfrey Hirst

Screen Shot 2017-11-27 at 10.18.25 AMCalhoun, Ga.—Mohawk Industries has agreed to acquire the Godfrey Hirst Group, which provides broadloom, modular carpet and hard surface products for both residential and commercial applications for markets in Australia and New Zealand.

For Mohawk, which presently operates a comprehensive warehouse and sales network in Australia and New Zealand, the deal further extends its global position and paves the way for the company to distribute Godfrey Hirst’s wood, laminate, LVT, vinyl and carpet products. Godfrey Hirst generated revenues of approximately $334 million in its most recent fiscal year, which ended June 30, 2017.

The transaction is expected to be completed during the first half of 2018, pending customary closing conditions and regulatory approvals.
“Godfrey Hirst’s marketing, manufacturing and distribution leadership will complement our current hard surface distribution and strengthen our portfolio,” said Jeff Lorberbaum, Mohawk’s chairman and CEO. “We will leverage our global flooring resources and talent to support Godfrey Hirst’s outstanding management and accelerate their growth strategies.”

Mohawk’s strategy in Australia and New Zealand, according to Lorberbaum, is to build a leading position in flooring. “Mohawk is using its strong management team and balance sheet to increase its participation in the global flooring market. With Godfrey Hirst, Mohawk will become the leader in flooring products in both Australia and New Zealand with a platform for significant growth.”

Established in 1865, Godfrey Hirst has been owned and operated by the McKendrick family for the last 50 years and will continue to be led by R.G. (Kim) McKendrick, the CEO and chairman.

“This a great opportunity for Godfrey Hirst, our employees, customers and suppliers,” McKendrick said. “Mohawk and Godfrey Hirst share a long history as flooring industry leaders.”

Brian Carson, president of flooring-North America, Mohawk, said that with the impending acquisition, Mohawk’s family of brands has gained greater momentum. “Godfrey Hirst manufactures outstanding products to satisfy all channels and price points and is a perfect complement to Mohawk’s business.”

Carson noted that as a worldwide leader in flooring, Mohawk strives to create innovative products that improve the way people live and work. This move “will allow us to expand upon our worldwide mission to make people’s lives better through innovative products.”

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Pergo flooring featured on ‘Food Quest’ television series

Food Quest SetCalhoun, Ga.—Celebrities and top chefs on “Food Quest,” an original TV series airing on the Food Network and the Cooking Channel, are cooking this season in a fashionable kitchen featuring Pergo laminate flooring.

“We are excited to partner with the Food Network and the Cooking Channel on this project,” said Tina Larson, marketing director for Pergo. “Our laminate flooring has the style and beauty needed for a kitchen being viewed by thousands every week. And the durability of Pergo products can stand up to the action in a kitchen populated for 13 weeks by not only chefs, but also celebrities and busy television production crews.”

Pergo products being used on the set include: Blue Print for the set’s floor and Mediterranean Tile for the set’s backsplash. Blue Print has a concrete look with subtle architectural drawing detail. Mediterranean Tile is a travertine tile style with stamped appliqué for a worn-over-time look inspired by European cafés. Both products feature innovative technology that provides ease of installation and tight-locking joints for added protection.

“Food Quest” first aired on Sept. 23. On each episode, epicurean lifestyle leader Robin Leach and model Kim Alexis travel to visit with the world’s finest chefs. Then the show returns to the Food Quest kitchen studio with chefs like Jason Wilson from Crush in Seattle, Oliver Saucy from Café Maxx and Eduardo Pria of Eduardo de San Angel. In the studio, the chefs share their secrets with their celebrity partners including Hall of Fame basketball player Alonzo Mourning and actors William Forsythe and Al Pacino.

For more information, visit pergo.com.

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Mohawk sustainability VP opens Greenbuild Plenary

 

Mohawks George Bandy opens Greenbuild Plenary 2Calhoun, Ga.—George Bandy, vice president of sustainability for Mohawk Industries, heralded in the Greenbuild Plenary last week as the special session’s opening speaker. Bandy brought energy and inspiration to the main stage of the Boston Convention & Exposition Center, as he offered words on the compelling and unifying nature of the green building movement and talked about Mohawk’s own strides in sustainability.

“When we are here we are ‘all in,’” Bandy said in his speech. “We celebrate together, learn together, commiserate over common challenges and congratulate each other on individual victories. We are a family and bound by a common interest in using the built environment to shape a more sustainable future for everyone.”

Bandy joined a lineup of who’s who in green building which included Mahesh Ramanujam, president and CEO of the U.S. Green Building Council (USGBC); Rick Fedrizzi, chairman and CEO of the International WELL Building Institute (IWBI) and former CEO and founding chair of the USGBC; and the evening’s keynote, former President Bill Clinton.

Presented by USGBC, Greenbuild is the world’s largest conference and expo dedicated to green building. The conference attracts more than 20,000 attendees and 600 exhibitors annually from across the green building sector, spanning commercial and residential professionals, architects, building owners and operators, students, advocates and educators. This year’s theme was “All In.”

“We know that sustainability is a multi-dimensional pursuit,” Bandy explained. “There is no one, right way to approach creating a more prosperous, healthy and sustainable tomorrow. Every perspective matters and every voice is important in this worldwide conversation. We are ‘all in’ this together—one race—the human race.”

This year at Greenbuild was a first for Mohawk Industries at the event, where both residential and commercial divisions shared the spotlight to demonstrate how Mohawk is “All In” when it comes to sustainable flooring. During the three-day expo, Mohawk showcased Air.o, a new residential soft floor covering with unified backing, engineered with just one material making it the only 100% recyclable flooring available to the marketplace. Mohawk’s commercial division, Mohawk Group, highlighted the Lichen carpet plank collection, designed by Living Product Challenge founder Jason F. McLennan as the first floor covering to achieve Living Product Challenge Petal certification.

“[At Mohawk] we know from experience that in order to last in an ever-changing business environment, innovation is the key,” Bandy said. “Being inventive and re-inventive is crucially important for the long-term viability of any company and, on a grander scale, for any movement. Mohawk is pleased and proud to be among the voices sharing in the leadership of this movement—because believing in better is good for everyone.”

Bandy concluded his speech with a heartfelt thank you to fellow Greenbuild attendees, leaders, colleagues, groundbreakers and innovators in 12 different languages.

“It’s an amazing thing that happens when powerful, committed people begin to come ‘all in,’ and make commitments to do what’s right for our future,” he said. “I believe in better, I believe in you, and I believe in being ‘all in.’”

For more information, visit mohawksustainability.com.