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Signs indicate solid growth in most sectors next year

December 8/15, 2014; Volume 28/Number 12

Carpet

By K.J. Quinn

Like a mountain climber ascending closer to the summit, 2015 is expected to be the year when carpet finally reaches the heights industry pundits predicted would come soon.

And why not? The AIA Billing Index, multi-family housing starts, single-family new construction forecasts and other key economic reports point to a better year for construction spending in 2015.

A number of industry executives are cautiously optimistic carpet sales will grow 3% to 5% across the board in 2015, with growth varying by end-use sector.

James Lesslie Assistant to the chairman, Engineered Floors

Screen Shot 2014-12-10 at 2.17.50 PMIt’s difficult to predict 2015 specifics. However, we expect growth in hard surface options to continue putting pressure on carpet categories.

The builder and multi-family sectors remained strong during 2014, but residential replacement business overall seemed to be soft. For 2015 to show positive growth, residential replacement volume will need to pick up.

Invista expects another positive year in 2015, with growth coming from key nylon 6,6 programs, such as Stainmaster PetProtect, as well as the expansion of our branded polyester programs. We will continue driving the Stainmaster PetProtect program with an expanded product assortment and continued advertising. This has proven to be a successful approach in meeting a specific consumer need. We will also introduce a refreshed product offering in our TruSoft and Active Family product categories in 2015.

T.M. Nuckols Senior director, product strategy, Invista

Screen Shot 2014-12-10 at 2.17.56 PMIt’s difficult to predict 2015 specifics. However, we expect growth in hard surface options to continue putting pressure on carpet categories.

The builder and multi-family sectors remained strong during 2014, but residential replacement business overall seemed to be soft. For 2015 to show positive growth, residential replacement volume will need to pick up.

Invista expects another positive year in 2015, with growth coming from key nylon 6,6 programs, such as Stainmaster PetProtect, as well as the expansion of our branded polyester programs. We will continue driving the Stainmaster PetProtect program with an expanded product assortment and continued advertising. This has proven to be a successful approach in meeting a specific consumer need. We will also introduce a refreshed product offering in our TruSoft and Active Family product categories in 2015.

Paul Comiskey President, residential sales, The Dixie Group

Screen Shot 2014-12-10 at 2.18.03 PMWe expected 5% to 7% of real growth this year, and we’ve been roughly flat. The industry pundits were all wrong. As we go into next year, I think the carpet market will eventually pop open and we’ll have a good year. A lot of us are thinking maybe 2% to 3% growth.

I think in 2015 you will see the builder and multi-family segments grow faster than the residential sector. What’s interesting on the builder side is seeing if carpet will continue to get its share or lose share to LVT.

The residential business is strong at the high and low ends. The low end is driven by multi-family housing and first-time home ownership and seems to be doing pretty well. People are also updating their houses for sale and market resale seems to be very good.

We’ve been fortunate enough to grow somewhat faster than the industry, and we hope to do that again next year. We are making major investments in the wool side of the business, particularly with the Masland brand. We continue to invest in tufting equipment as we try to provide new and innovative products and develop new markets. In the high-end part of the residential market we’re seeing patterns expand, so investing in new tufting technology will enable us to move into two- and three-color patterns.

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The Dixie Group acquires assets of Burtco Enterprises

Screen Shot 2014-09-25 at 2.11.33 PMChattanooga, Tenn. — The Dixie Group Inc. announced that it has acquired substantially all of the assets of Burtco Enterprises Inc., a provider of Tapistron CYP soft floorcovering and other related carpet products serving the hospitality marketplace.

The Dixie Group is hiring the majority of the employees of Burtco, including its operations, sales and marketing staffs and will continue to operate its tufting facility in Chickamauga, Ga. The operations will continue to be led by Elizabeth Moore, previously CEO of Burtco.

 

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State of the industry: Carpet looks to play catch-up in tough year

September 15/22, 2014; Volume 28/Number 7

By Ken Ryan

Screen Shot 2014-09-24 at 11.17.06 AMThe carpet category grew both in dollars and units virtually every year for 50 years. But the flooring industry was then hit with the worst recession in its history, and since then carpet has been slowly on the mend.

According to carpet executives, by the end of 2014 housing starts will have recovered 70% of 2006 historical highs, with 93% by 2015. The carpet industry has recently rebounded somewhat following a brutal, weather-related slump during the first two months of this year, albeit not as robustly as some had hoped.

“Most of us agree that, on average, the carpet industry in 2014 is up modestly overall after a 2013 that was up 3% to 4% over the previous year,” said Karel Vercryussen, president and CEO, Beaulieu America. “That’s not exactly a cause for celebration, but it’s encouraging in terms of sales and shipments. But, when considering where carpet has been heading these last several years, there is cause for some celebration.”

Tom Lape, president of residential, Mohawk, said there is, in fact, good news out there. “Consumers are coming back, and they are shopping.” He cited some encouraging housing and economic data as well, including existing homes under contract are the highest in 11 months, new home sales are bouncing back and mortgage applications are higher. “Mortgage apps were down double digits early in the first quarter and have bounced back.”

Noting that the residential carpet segment has been playing catch-up following the dismal start to 2014, Shaw president Randy Merritt sees the overall category as “close to flat” at this point. “The average selling price of carpet is down slightly for the first time in several years due to the influx of PET at lower prices and the general weakness in the remodel segment. The winter of 2014 was exceptionally harsh across the country and led to the slow start of the year. We believe this slowed the new home construction process, and we will need a strong finish to the builder business.”

Lape and others talked about a bifurcated market in which the commodity end of the category and the premium side are showing buoyancy while the middle of the market is most challenging.

Overall, James Leslie, assistant to the chairman at Engineered Floors, suggested macro forces favor an upward trend in buying. “There is pent-up demand out there. Even with millennials starting families later and buying homes later, there will be a breakout. The macro forces indicate it is going to happen. We feel we are in the best part of the year right now–September and October.”

Larry Heckman, president of Best Buy Flooring, agreed there is pent-up demand out there, but suspects some of the reluctance on the part of consumers is the result of unsettling events in the Middle East and Eastern Europe. “As soon as we get some [positive] news, we’ll have people spending money and buying. The overall pulse I get is that we’re up as a market.”Screen Shot 2014-09-24 at 11.17.43 AM

In 2008, carpet represented 51.3% of the industry, according to FCNews estimates. By 2011, that number was 47.4%; by 2013 it was 46.9%. No one denies the gains being made by hard surfaces at the expense of soft surfaces, particularly in high-traffic areas in the home where hardwood flooring and LVT are being put down as “easy-to-care-for” alternatives.

“The multi family business is an example of where we are seeing more LVT going in places where carpet used to go,” Merritt said.

T.M. Nuckols, senior director of product strategy at Invista, added that LVT is taking away share from carpet by creating looks at price points previously not available in hard surface offerings.

Fiber

Polyester has grown significantly during the past several years at the expense of other fibers, especially nylon, and executives see that trend continuing.

As well, polyester has evolved from a nice value alternative to nylon to a strategic component of every carpet manufacturer’s overall product offering. Vercryussen said polyester is also shedding its image as the low-price fiber and is steadily closing in on nylon in terms of acceptance driven by improved performance.

Mohawk’s view is that its own triexta fiber and polyester are the growth platforms in today’s market. “Polyester really sets the foundation combo of value and performance,” Lape said. “We believe triexta is at the top of the pyramid for performance characteristics and design and styling, particularly the soft attributes. You can’t get that softness in nylon and polyester.”

Executives agreed that nylon, which still dominates the commercial marketplace, is not going away. “We recognize that even though polyester has come a long way since its introduction, there are still many dealers and consumers who prefer nylon,” Vercryussen said. “We think consumers are more ‘fiber agnostic’ these days, thanks to advances in polyester technology and similar warranties between nylon and polyester carpeting.”

Merritt said excess capacity in PET today is contributing to a very competitive environment. “There is very little staple polyester being sold. The industry is now predominantly filament—nylon, PET and some polypropylene.”

Screen Shot 2014-09-24 at 11.18.33 AMEd Williams, president at Lexmark Carpet, said the surge polyester has enjoyed in recent years may be slowing a bit; and with multi-family as one of the stronger segments, momentum may be swinging back toward nylon, at least in that sector. “In talking to various people there is a lot of work being done in the nylon area on the part of the mills,” Williams said.

Trends and innovations

The soft craze that hit the market a few years ago shows no signs of abating, and manufacturers are seizing that opportunity with ever-softer products that are resonating with consumers who can literally feel the difference. According to Merritt, credit goes to advances in tufting technology, which continues to evolve and produce aesthetically pleasing, stylish patterns. “Carpet is generally a soft product today—softer than ever.”

To meet the growing need for soft, Beaulieu America recently introduced two entries into the popular super-soft category: Bliss Vivid and Bliss Hypnotic. Both products are companion textures made of Tryelle, the super-soft PET filament fiber.

Best Buy’s Heckman said consumers are buying into the ultra-soft trend as long as the product delivers on performance with the latest in designs and colors, such as earth tones, brown grays and tan grays.

Nuckols said while ultra-soft products are hot, there is still a market for products that are soft, but not quite ultra soft.

In the meantime, innovation is the engine that is driving this soft trend.

Mohawk, for example, is reinvesting and expanding its triexta platform with up to 100 launches planned. “Triexta now plays in all levels of the market, all distribution channels,” Lape said. “It was launched in the ‘06 time period, which means it was launched in the face of the biggest downturn ever in flooring. That shows the legs of this product.”

Commercial

The commercial segment is up slightly in dollars in 2014 when compared to 2013, and probably flat to slightly down in units, according to industry executives.Screen Shot 2014-09-24 at 11.18.58 AM

Jack Ganley, president of Mannington Commercial, said 2014 started off sluggish as companies took a wait-and-see approach before releasing dollars for capital projects. This hesitation was largely due to continued economic uncertainty.

Lee Martin, president of Masland Contract, a unit of The Dixie Group, said the overall commercial segment is somewhat more active than 2013 and certainly stronger than 2012. “My feeling is that the commercial segment is up in dollars and probably flat to a small increase in yards,” he said.

Much of the commercial growth is in hospitality and assisted living, although the overall healthcare segment has experienced a slowdown in growth, Ganley said, as that sector waits to fully understand the implications of the implementation of the Affordable Care Act.

“We continue to see moderate growth in both the corporate and retail sectors, along with higher education,” he said. “Publicly funded K-12 and acute care facilities are lagging.”

Ganley said one of the major innovations/trends shaping the market in 2014 is the combination of carpet and hard surfaces. This blend, he said, “can increase long-term appearance retention through the installation of hard surfaces in high-traffic areas of a project, transitioning beautifully to carpet in open areas of a floor plan.”

As modular carpet continues to grow and take share from broadloom—it now represents about 50% of the commercial market—executives said there is increasing interest in different size formats and shapes. Additionally, there is “a fresh interest in innovative yarn processing to create unique textures and visuals,” Ganley said.

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Carpet tile blends style, substance and practicality

May 26/June 2, 2014; Volume 27/Number 28

By Ken Ryan

Screen Shot 2014-06-17 at 11.48.54 AMModular carpet is quickly becoming the go-to choice in commercial applications as specifiers leverage the product’s attractive styling and multiple format options along with ease of installation and maintenance benefits.

According to flooring executives, carpet tile now represents about 60% of the total revenue—and 50% of volume—in the commercial carpet market, a percentage that has only increased in recent years.

“I think the looks today in modular carpet are far superior to what they were a few years ago,” said Dan Frierson, CEO, The Dixie Group. “People have found ways to develop styling that is really attractive; at the upper end of the business, beautiful products is what it is about and I think that can be accomplished with broadloom as well as modular, which gives customers a choice.”

Natalie Jones, vice president, commercial brand development and creative product, Mannington Commercial, said carpet tile is clearly a design element in today’s commercial interiors. “Advancements in tufting technology, unique yarn processing capabilities and the introduction of different size formats are all creating looks we have never seen before. The result is a portfolio of design components with complex textures, rich aesthetics and colors, as well as formats that allow the designer to combine elements in ways that are tailored to the unique needs of each project.”

The functionality and maintenance benefits that modular carpet offers are among the factors that have fueled growth in the corporate, K-12 and higher education markets. But there is also cost to consider; in sectors where budgets are tight, carpet tile has fared well because it is a lower-cost alternative in comparison to products such as marble or tile.

Bill Blackstock, regional vice president of sales in the Americas for Milliken, said designers are elevating the flexibility of modular carpet and creating large patterns—in addition to original carpet design—by using color and strategically placing carpet tile in a space. “Gradations of color with an ombré [shaded or graduated in tone] effect are very popular, as well as expansive patterns, like the argyle design displayed with our recent Inis Mór collection.

“In today’s world, with information readily available on a global scale, design trends are happening quicker than ever, and that is influencing carpet tile trends,” Blackstock continued. “Another great thing about carpet tile is that collections can be easily switched for a different pattern or color, affording designers and end users greater flexibility to update office spaces easily over time.”

The benefits of carpet tile are applicable across all markets. Modular is easier to install than broadloom and requires less space for keeping extra product, which is especially important in challenging projects such as high-rise buildings. The use of carpet tile allows facility managers to easily keep inventory and simply replace individual tiles as needed.

John Stephens, vice president of marketing for Shaw Contract Group, said carpet tile continues to increase its share in sectors like hospitality and healthcare, in large part because of the product’s versatility and multiple format options. The variety of sizes available with modular carpet tile ranges from squares to rectangles, with the most common choices being 24 x 24 and 18 x 36.Screen Shot 2014-06-17 at 11.50.33 AM

“We will continue to play with tile sizes and innovations,” Stephens said. “Our Hexagon tile has been a strong success.”

Jones said she is seeing a great deal of interest in the rectangular plank format; to serve that market opportunity, Mannington will introduce several new collections in the 18 x 36 format. “We also have seen a significant trend back to texture as a key design differentiator—we like to say that ‘texture is the new pattern.’ And there has been a wonderful return to color. Neutrals are warming up and customers are specifying vibrant, saturated colors to pair with those neutrals.”

Todd van der Kruik, vice president of design at Bentley Mills, said the shape of carpet tile allows for the customization of a space in a much faster and direct way.

“The smaller size of modular means it has a mobility that

its clunkier broadloom cousin doesn’t,” van der Kruik said. “This enables easier access to hard-to-reach office space, especially in larger metropolitan areas. When all of these choices are made available with the same surface design, the specifier gains complete control of the environment and can truly design the floor that is right for [that project].”

Executives said yet more reasons for carpet tile’s growth is its ability to coordinate with hybrid resilient flooring in pattern and performance without a need for transition strips in between. There is also the flexibility of backing systems in modular carpet. Products can now be purchased with a cushion backing that quiets the space, adds comfort and saves energy in the building, thereby reducing the environmental footprint.

Innovations

Interface, the leading producer of modular carpet, this year launched interfacehospitality.com, offering the A&D community the opportunity to create unique carpet tile compositions for hospitality projects. A Design Your Floor tool on the website can be used to generate floor layouts with square and plank styles pulled from the complete product portfolio, allowing users to visualize their designs with a few clicks.

Technological advancements have also yielded hybrid or crossover products that blend soft and hard flooring surfaces. Svelte, for example, is the first product from Bolyü’s new category of precision flooring called Level, which is engineered to produce the best features and characteristics of soft and hard flooring surfaces.

In addition, FreeFit’s hi-definition carpet tile (HDCT) is suitable for situations where the familiar and comforting visual of carpet is desired but the water resistance and durability of LVT are required. Also, in environments where allergies and asthma can be an issue, HDCT is a solution because it is composed of virgin vinyl, is antibacterial by design and doesn’t trap particles the way real carpet does.

The popularity, functionality and value of carpet tile has grown to such an extent that retailers like Grigsby’s Carpet Tile & Rug in Tulsa, Okla., have created large, dedicated spaces for commercial flooring, with carpet tile as a centerpiece. “The end user likes the fact that carpet tile is easier to replace,” said David Stover, vice president at Grigsby’s. “Plus, it is not a whole lot more of an investment up front, but you are going to get a lot more life out of it.”

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The Dixie Group acquires Atlas Carpet Mills

dixie-group-acquire-atlas-carpet-fullChattanooga, Tenn.—The Dixie Group announced last week that it will acquire Atlas Carpet Mills, a high-end manufacturer and marketer of commercial flooring in Los Angeles, in an all-cash transaction.

Closing of the acquisition is scheduled for Wed., March 19. Atlas will operate as a separate brand within the Dixie portfolio. Continue reading The Dixie Group acquires Atlas Carpet Mills

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Dixie Group profit, sales jump in third quarter

The_Dixie_GroupChattanooga, Tenn.—The Dixie Group reported third quarter net income of $1.4 million, or $0.11 per share, compared with a net income of $102,000, or $0.01 per share, a year ago.
 The company reported sales of $90.2 million in sales compared with $65.8 million in the third quarter last year. Continue reading Dixie Group profit, sales jump in third quarter

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Masland Contract installs solar water heaters

Masland Contract logoMobile, Ala.—Masland Contract announced it has installed thermosiphon solar water heaters at its Saraland and Atmore, Ala., manufacturing sites.
 The energy-efficient units heat water used in the manufacturing labs, as well as potable water in employee restrooms. Continue reading Masland Contract installs solar water heaters

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Dixie Group completes acquisition of Robertex

The_Dixie_GroupChattanooga, Tenn.—The Dixie Group announced that it has completed the acquisition of Robertex Associates from Bob Rothman. Dixie has retained Rothman’s services under a five-year contract. In commenting on the acquisition, Daniel Frierson, Dixie’s chairman and CEO, stated, “The acquisition allows Dixie to further extend its leadership position in servicing the wool markets with the addition of the Robertex and Carousel product lines. Continue reading Dixie Group completes acquisition of Robertex

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Manufacturers debut offerings for spring season

By Jenna Lippin

Volume 26/Number 22; March 18/25, 2013

While we are only a few months into this year, there already is a renewed sense of optimism. Surfaces has quickly come and gone, but this does not mean opportunities are over for manufacturers to showcase new goods. Some are revamping existing lines while others are unveiling brand new designs. Continue reading Manufacturers debut offerings for spring season