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Laminate: State of the industry—Segment thrives despite impact of WPC, LVT

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

By Reginald Tucker

 

For all the talk about laminate’s demise in the face of intensifying pressure from competing hard surface categories, the now-mature product segment is proving it has staying power. Ongoing innovations in the form of dramatically improved resistance to moisture, ultra-realistic replications of natural materials like wood and stone, and upgrades in surface texture and product performance are keeping the segment in the spotlight.

While the laminate flooring category has certainly ceded some market share to red-hot products such as WPC, SPC and LVT, the fact remains it is still a viable option since its official entry into the U.S. marketplace more than 20 years ago. “As manufacturers, it’s our job to remind people of the incredible benefits laminate flooring offers,” said Roger Farabee, senior vice president, laminate and hardwood, Mohawk Industries. “We’re asking consumers to take another look at the product category and great visuals and performance it offers. They can now have a premium wood look without any compromise. At Mohawk we are still very bullish about the product.”

Farabee is not alone in his assessment of the product’s capabilities. Dan Natkin, vice president, wood and laminate, Mannington, attests to both the category’s long history and reputation for durability, as well as the newfound focus on waterproof attributes. “In some cases, we’ve lost sight of what makes laminate great—phenomenal realism, all bio-based, superior indentation and scratch resistance, and the fact the vast majority is made in the USA. Most laminate is significantly moisture resistant as well, with multiple manufacturers developing new technologies to make the product nearly impervious to liquids.”

Other proponents are bullish on the category’s current position in the marketplace. “I think the laminate flooring industry is in a good place,” said Derek Welbourn, CEO, Inhaus. “It continues to enhance its core value proposition, which is a great-looking floor at a leading price point that won’t let you down on performance. We see continued evolution in terms of design and features that are creating some amazing looks and furthering the value proposition of laminate.”

Travis Bass, executive vice president, Swiss Krono, also sees the laminate flooring category moving toward better visuals, deeper textures and innovative products. This provides an opportunity, he said, to continue educating the consumer—via retail exposure and industry associations such as NALFA—about the benefits of laminate. “It’s a wood-based product with the look and feel of solid hardwood, but with less maintenance and more durability,” he noted. “It’s easier to install and offers a much healthier, sustainable environmental impact than many competing products.”

Despite all these benefits and attributes, the category is not without its challenges. Reported overstatement of the product’s capabilities—something that negatively impacted the segment’s reputation in its early days in the U.S. 20 years ago—is a growing concern for some industry observers. Back then it was about overselling the product’s resistance to dents and scratching, leading some to suggest it was virtually bulletproof. Today, it’s mostly about managing consumer expectations when it comes to claims about moisture resistance.

“I can’t speak for other manufacturers, but Shaw is not going to make claims on a product that could ultimately disappoint the consumer,” said Drew Hash, vice president, hard surface product/category management. “We choose to be more conservative in our approach.”

For executives like Barron Frith, president, CFL North America, the attributes must square with a particular manufacturer’s marketing claims. “We have been big believers in water-resistant laminate since we launched our Atroguard line in 2013. No doubt the water-resistant feature is the future of the laminate category and will leave less space for regular laminates. Many big players are entering this market, at the same time leading everyone to push further marketing claims about being ‘waterproof’ as opposed to ‘water resistant,’ causing confusion about the performance of the product.”

Mohawk’s Farabee also warns against the dangers of misleading consumers about moisture resistance. It’s critical, he noted, to remind dealers that not all products are created equal. “Based on some of the testing we’ve done, some of the products do not live up to the claims they make. The question becomes, does it create significant consumer dissatisfaction and potential blowback for the category? That remains to be seen.”

What Farabee can say for sure is many companies are focusing on how to minimize any visible damage from water incursion at the edge of the products as opposed to the tongue and groove area. “Most of them have been introducing lower-swell coreboards, which will help that problem overtime, but the one we worry about—which is also an issue with floating vinyl—is the majority aren’t doing anything with their joint systems. And while they may have minimized damage through topical moisture on the edges of the plank, you still have moisture penetrating the joints and creating issues under the floor.”

For its part, Mohawk said it has developed products that are far more moisture resistant than laminate floors made many years ago. So much so that “we have personally developed technologies that enable us to make some moisture-resistant claims far beyond what everybody else could. We’ve had these products out in the market for more than two years now, and it has given us a position in the market where we can go head to head with one of the No. 1 attributes that LVT and rigid core have been talking about for the last several years.”

While some companies remain cautious about specious product claims, other major suppliers welcome all the hoopla surrounding waterproof/water-resistant marketing. “We believe it is helpful for the category,” Inhaus’ Welbourn stated. “Ever since the change in core construction from particleboard to high-density fiberboard in the 1990s, laminate has stood up well to moisture. But through new innovations, this feature has been enhanced. However, laminate is still a wood-based product and it’s important that we don’t oversell these features and disappoint consumers. If a company tries to sell a laminate as being impervious to water, we need to ask the question, ‘Can you install it in a shower or a steam room?’ If the answer is no, I would question the waterproof statement.”

Mannington’s Natkin also sees benefits in touting the category’s water-resistant attributes. “Realistically, laminate is already one of the highest performing product categories given its resistance to indentation and scratching, as well as the ease of installation. Water resistance is the icing on the cake.”

CFL is also embracing the renewed focus on the product’s performance attributes. “Water-resistant laminate is far from new for CFL,” Frith stated. “The bulletproof reputation has proven to be a big positive for us since we launched Atroguard more than four years ago. When consumers started shifting toward more waterproof vinyl categories, they did so without really realizing they were accepting a product that was inferior in terms of scratch resistance. No special coatings on vinyl flooring currently on the market come near the performance of a laminate in terms of scratch resistance.”

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Swiss Krono, Kronospan sign long-term agreements with Välinge Innovation

Viken, Sweden—Swiss Krono and Kronospan groups have recently signed long-term agreements with Välinge Innovation, committing to promote Välinge’s 5G technology worldwide. Swiss Krono and Kronospan have both been Välinge licensees since 2005.

“Both Swiss Krono and Kronospan have been early adopters of the 5G technology to offer their customers fast, easy and robust installation and a significant part of their product portfolio is already today offered with 5G Fold Down technology,” said Niclas Håkansson, CEO, Välinge. “We are now pleased to have signed long-term agreements with Swiss Krono and Kronospan groups respectively and see them as valuable partners with the ability to continue to drive forward the most user-friendly locking system on even more markets.”

Välinge’s 5G technology is used today by more than 100 flooring producers around the world. The 5G technology aims to make flooring installations easier and more than 1.5 billion square feet of flooring has already been installed worldwide with 5G/Fold Down locking systems.

“We consider Välinge’s 5G technology as one of the most sought-after locking systems in the market and therefore plan to increase our volumes,” said Max von Tippelskirch, CSCO of the Swiss Krono Group. “We have learned that 5G is highly demanded by professionals as well as DIY-customers on several markets. With this strategic long-term cooperation with Välinge, we will continue to offer high-quality products to our customers, both from a technical and design perspective.”

Wolf Harig, who acted as senior advisor to Kronospan during the negotiations, explained, “This agreement means Kronospan has secured the future license needed to continue with the 5G technology.”

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Executive Forecast: Laminate & Wood—Suppliers dial up innovation to ward off competition

December 5/12, 2016; Volume 31, Number 13         

By Reginald Tucker

No one is expecting the laminate category to generate double-digit growth rates in 2017; after all, it is a fairly mature category in the U.S. On top of that, the segment is facing intense pressure from competing hard surface sectors, including LVT, WPC and, of course, hardwood.

However, don’t expect the segment to roll over in the face of fierce competition from other hard surface categories.

Travis Bass, executive VP, sales and marketing, Swiss Krono
screen-shot-2016-12-16-at-10-24-53-amWhat is your projection for category growth next year?
Flat to +3% growth.

What segments and/or products will fuel this growth?
Innovative laminate products with enhanced surface textures and value-add options.

What is the predicted growth of your company in 2017?
10%- 15%.

What is the “X factor” that will impact business next year?
New home construction and repair/remodel investment driven by increased home values and fueled by a stronger economy.

Where do you see opportunities for next year? Challenges?
Opportunities include non-residential, value-added products and Internet sales. Headwinds will be from domestic capacity coming on stream coupled with a strengthening dollar encouraging cheap imports from Europe.

What are some of your biggest initiatives for 2017?
We are working in collaboration with our affiliated European factories to introduce additional products. Domestically we continue to pursue the highest standards and styles for innovative product development.

 

Roger Farbee, senior VP, laminate & hardwood, Mohawk N.A.
screen-shot-2016-12-16-at-10-24-58-amWhat is your projection for category growth next year?
Approximately 1%-2% in dollar growth. However, we believe domestic manufacturers will grow at a higher rate as more import volume continues to shift to domestic production and as more producers focus on higher-end products.

What segments and/or products will fuel this growth?
Growth is being driven through residential new construction as well as increased remodeling activity. We are seeing laminate products being accepted in both single- and multi-family housing at rates unheard of 10 years ago.

What is the predicted growth of your company in 2017?
We will continue to outpace category growth by offering products with the highest level of realism, style, design and technical superiority in all of the channels in which we participate.

What is the “X factor” that will impact business next year?
There is still significant pent-up remodeling demand that will result in laminate flooring sales if consumers feel they have enough job and income stability to make an investment in their living spaces.

Where do you see opportunities for next year? Challenges?
Today’s highly realistic premium products offer consumers more options without having to compromise. There is also an appealing environmental story around laminate flooring products made in North America.

What are some of your biggest initiatives for 2017?
We are introducing more products using our state-of-the-art Deep Texture technology as well as our revolutionary Moisture Protection technology. These innovations are making customers think differently about what laminate means.

 

Drew Hash, VP, hard surfaces, Shaw Floors
screen-shot-2016-12-16-at-10-25-03-amWhat is your projection for category growth next year?
We continue to expect an increase in housing starts, which could have a growth impact of about 6% to 8% in 2017 for the wood industry.

What segments and/or products will fuel this growth?
Hardwood provides the high-end look that is very compatible with today’s newest home interior styles and trends. As a select choice, our engineered styles provide a range of looks that will help fuel this growth.

What is the predicted growth of your company in 2017?
Shaw Floors will continue to outpace the growth of the flooring market in 2017. Our wide breadth of categories and consistent standard of quality across our products supports this outlook.

What is the “X factor” that will impact business next year?
The “X factors” for business success will continue to be the delivery of a reliable customer experience and unmatched support for our retailers.

Where do you see opportunities for next year? Challenges?
We are continuously looking forward to discover new ways to communicate effectively with our customers and arm our dealers with the right information to tell the story of Shaw’s hardwood products succinctly and clearly.

What are some of your biggest initiatives for 2017?
Anderson will continue to expand in the new home construction market. Additionally, we will focus on delivering the most stylish and high-performing engineered styles available to respond to today’s newest trends.

 

Derek Welbourn. CEO, Inhaus
screen-shot-2016-12-16-at-10-25-07-amWhat is your projection for category growth next year?
We see continued growth for our laminate category at about the pace of U.S. GDP, which is between 2%-2.5%. We estimate the flooring category as a whole will have a higher rate of growth as the housing sector continues to recover.

What segments and/or products will fuel this growth?
In recent years vinyl (LVT in particular) has been growing. This was further expanded by the introduction of WPC. The success of these categories has inspired new innovations with composite products.

What is the predicted growth of your company in 2017?
We feel fortunate to continue to grow our global business. Company wide, our rate of growth is forecast to be in the low double digits. This is also what we expect for our North American division.

What is the “X factor” that will impact business next year?
The major “X factor” in the floor covering business is the rapid evolution of new product categories and the challenges that come with competing with products that didn’t exist previously.

Where do you see opportunities for next year? Challenges?
To us, the challenge and the opportunity are one in the same. It is how to successfully participate in the rapid expansion of composite products. We are investing the creation of an entirely new category of flooring.

What are some of your biggest initiatives for 2017?
Our largest initiative by far is the launch of our flooring line Sono, which is based on our new waterproof product technology that will make its debut at Surfaces.

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Swiss Krono U.S. marketing strategy hinges on investment, branding

March 28/April 4, 2016; Volume 30, Number 20

By Reginald Tucker

Screen Shot 2016-04-01 at 9.41.26 AMU.S. laminate flooring manufacturer Swiss Krono—formerly KronotexUSA—has been quietly going about its business making moves to bolster its position in the North American market. But when all pieces finally come together later this year when the company officially celebrates its 50th anniversary, the fruits of those efforts will be apparent to the marketplace.

First and foremost, new leadership was brought in to help steer Swiss Krono’s business in America with the recent appointment of Zeb Portanova as CEO, U.S. operations. A veteran sales and marketing executive who previously served with Eli Lilly, a global Fortune 500 company, Portanova brings a fresh perspective on consumer marketing research.

“If there’s one thing I’ve been successful at over the years—aside from general management leadership—it is understanding customers,” Portanova said. “I will be focused on ways we can utilize research and development in order to innovate in the flooring space. The goal is to learn more about how we can provide real value for customers in ways that they are not currently getting. The way we’ve done things has been good, but there are always opportunities to get better.”

Then there’s the capital investment component. In recent months, Swiss Krono’s parent company in Europe pledged to invest more than $230 million to support its U.S. operations in the form of a new HDF plant ($215 million) in addition to a new flooring line ($15 million). The HDF facility is expected to be up and running in 2018, with the new flooring line slated to launch in 2017. The expansion will translate into a 30% to 35% increase in its flooring capacity with the number of full-time workers expected to increase from 150 today to approximately 220 full-time employees in two years.

“This is essentially going to allow us to move completely upstream in our channels and really control the supply chain in a way that we haven’t been able to before,” Portanova explained. As it pertains to the impact on Swiss Krono’s retailer and distributor partners, “It’s going to make us that much more competitive and pull us closer to our customers in the marketplace.”

This aggressive pattern of investment reflects Swiss Krono’s commitment to the U.S. market. This latest pledge comes on top of a $30 million investment the manufacturer’s parent company made several years ago to build a melamine resin paper treatment plant in Barnwell, S.C., which started production in 2014. “All of this [supports] our move to be vertically integrated,” said Travis Bass, executive vice president of U.S. sales and marketing. “Heretofore, we had outsourced our HDF production as well as our paper treatment.”

Last but not least is the branding and marketing initiative. On the macro level, the recent name change from KronotexUSA to Swiss Krono is designed to emphasize the parent company’s Swiss manufacturing heritage while giving the Swiss Krono Group a single face and common identity. “As our company matures, we are taking on a much more professional management style which will benefit every type of customer we have,” Bass said.

From a micro perspective, the ongoing development of the American Concepts brand of laminate flooring—made in America using European and North American components—will be paramount moving forward. “We take our position in the specialty retail market very seriously,” Bass added. “We are a one-product company and our intent is to be a full-service, single-product provider to specialty retailers with the American Concepts line.”

At the end of the day, Portanova said, “It’s all about doing things that benefit our customers, whether it’s the retailers, our distributor partners or the actual end users who are buying our products. It’s a really exciting time to be a part of this company.”

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KronotexUSA changes name to Swiss Krono LLC

Screen Shot 2016-02-02 at 5.33.52 PMBarnwell, S.C.—KronotexUSA announced at The International Surface Event the latest of several changes that will provide distributors, retailers and consumers the best innovations and quality in laminate flooring. Effective with Surfaces 2016, KronotexUSA is changing its name to Swiss Krono to reflect the parent company’s and the products’ Swiss heritage in woodworking and precision technology.

“It has been an exciting start for 2016,” said Travis Bass, executive vice president of sales and marketing. “The name change, our new CEO, and the expansion of our plant signal the awakening of a company known as the ‘quiet giant’ of laminate flooring.”

The company is changing its name and logo in all eight countries where it operates to reflect this pooling of expertise, intensifying R&D, and forging of a common identity. According to Ines Kaindl, president of the board of directors of the Swiss Krono Group headquartered in Lucerne, Switzerland, “We want to leverage a strong, uniform brand to spotlight our tradition and history while making a greater international impact. This will enable us to help shape the market’s future.” The group’s member firms in Germany, Poland, Russia and Switzerland unveiled the new corporate design at a shared stand at Domotex 2016.

“This consistent image and our modern, visually striking new logo are giving the Group a single face with a clear profile,” said Max von Tippelskirch, CMO of the Swiss Krono Group. “We are clearly differentiating ourselves from our competitors and strengthening our presence in the global marketplace.”

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Kelley succeeds Voss as president and CEO of Kronotex

Barnwell, S.C. Kronotex USA Holdings announces the forthcoming retirement of Norm Voss as its president and CEO and the appointment of George R. Kelley to those positions effective July 1, 2012.

Voss will remain with the company as a Member of the Board of Directors and continue to be actively involved in future expansion, investment and raw material sourcing activities for the company’s parent, the Swiss Krono Group. Kelley is a former President and CEO of Pergo North America and President and CEO of two specialty metal companies, Bohler Uddeholm Specialty Metals and Zapp USA. Continue reading Kelley succeeds Voss as president and CEO of Kronotex