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floorcoveringnews volume 31/number 1 I fcnews.net I the publication more retailers prefer I June 27, 2016 I $2.00

IN THIS ISSUE

Scoring Flooring

Industry Stats for 2015 Total industry sales (in billions of dollars)

(in billions of square feet)

$20.457 4.4% $19.599

18.526 20.457 16.734

$18.915 $17.380

16.980

3.2%

17.639

17.956

18.526

$17.919

By the numbers FCNews’ annual Statistical Issue defines the flooring industry in 2015 in terms of dollars and units sold.

3.2%* 4.7%*

Carpet/Rugs .....................18 Resilient ..........................22 Wood ...............................30 Laminate .........................36 Ceramic ...........................40

-13.8%* 2011

Carpet

Commercial Increased activity in key end-use sectors such as corporate and healthcare is driving greater demand for carpet tile and LVT products. PAGE 44

Wood

2011

2012

2013 Rugs Laminate

2014 Resilient Rubber

2012

2013

2015 Tile

2014

2015

Carpet/Rugs

Resilient

Tile

Wood

Laminate

Rubber

*Represents 2014–15 percentage change

he flooring industry in 2015 continued its recovery from the prolonged recession. While growth rates pale in comparison to the mid2000s heydays, the industry last year saw increases of 4.4% in dollars and 3.2% in volume. This comes on the heels of 3.6% growth in dollars and 1.8% in volume in 2014 compared to the respective 5.5% and 3.8% growth rates in 2013. Perhaps more significant is total indus-

T

try sales surpassed the $20 billion mark for the first time since 2007, and volume is at its highest level since 2008. Why has the growth been slow and steady and not more robust? For one, housing has not led the recovery from the recession and is actually lagging the economy. Also, in past recoveries there has always been a period of strong economic growth before it settles into normal growth mode. That has not happened with this recovery. When the dust settled, floor covering sales in 2015 totaled $20.457 billion and 18.526 billion square feet. While these numbers are well off 2006 highs of $24.715 billion and 26.36 billion square feet of flooring sold in the U.S., these figures represent the sixth consecutive year of dollar growth and fourth straight year of volume increases. On an even more positive note, the average price per

square foot of all flooring was $1.11 in 2015, up about two cents from 2014 and about four cents from 2013. The average selling price is also up significantly from $0.98 in 2010 and $0.94 in 2006. To put things in further perspective, floor covering sales in 2015 hit the highest level since 2007’s $22.337 billion and are up 26.4% from 2009, when the industry bottomed out at $16.189 billion. The good news doesn’t end there. As mentioned previously, more floor covering was sold last year in the U.S. than in any year since 2008. Unit growth is up 10.5% from 2011’s low point. (Editor’s note: FCNews does not include stone flooring in its aggregate total, nor does it include ceramic wall tile. In addition, rubber flooring numbers include sheet, tile, accessories and cove base.) Also for the fourth consecu-

tive year, every floor covering category showed growth in dollars and all but laminate flooring in units with the resilient category continuing to be the locomotive powering the industry and luxury vinyl tile the catalyst for this explosive growth. In 2015, resilient posted the largest percentage gain of any flooring category, rising 13.9% to $2.724 billion from $2.392 billion in 2014. Since 2010, the category has increased a stunning 58.2% and is now at its dollar high point in history. Resilient now accounts for 13.3% of the total flooring market in dollars and 17% in volume after a 17% rise in units to 3.145 billion square feet. In 2014, resilient held a 12.2% market share, which was up from 11.9% in 2013, 11.2% in 2012 and 10.8% in 2008. Interestingly, its market share in volume had stayed around 15% Continued on page 12

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4 I June 27, 2016

floorcoveringnews

my take

michael blick president/ceo [email protected]

Crunching the numbers

steven feldman publisher/editorial director [email protected]

elcome to our annual statistical report, the issue that is singlehandedly responsible for taking a couple of years off our lives. The information provided within these pages is not to be taken lightly; a lot of time, effort, research and conversations go into ascertaining what we believe to be the industry’s best snapshot of the floor covering market for 2015. This year, as I have done over the past few years, I became entrenched in determining the size and scope of the resilient market: sheet vs. LVT, import vs. domestic, etc. I had my reasons. LVT is anecdotally growing at a clip I have not seen since the early days of laminate, and I wanted to see for myself the rate of speed at which the category was expanding. At the same time, I wanted to see how this phenomenon was impacting other resilient segments such as sheet and VCT. There is really only one way to uncover the facts and come as close to the actual numbers as possible. That’s to get on the phone and speak with every resilient supplier that is doing any appreciable business in this country. With the promise that the information would only be used to compile aggregate numbers and they would remain confidential, just about every

W

supplier was forthcoming. Only a handful of people were unable to provide relative exact numbers, but in those cases they were able to drive us to the ballpark. Now here’s where the challenge lies for me. When everything was said and done, I felt the need to check and recheck the numbers. Why? Because I really couldn’t believe resilient grew about 14% in dollars and 17% in volume. I honestly questioned whether we could publish that kind of growth. Of course, it was driven by LVT. Residentially, we found a whopping growth rate of 38.6% in dollars and 68.3% in volume. The growth was not as pronounced commercially, where the category grew about 12.7% in dollars and 13.5% in volume. Those numbers are still a little hard to swallow, but upon further review they make sense. First, you have to look at the white hot WPC category. It only broke onto the scene in 2013, gained some momentum in 2014 and took off like a rocket in 2015. Products like COREtec from USFloors and Floorte from Shaw could have accounted for about $200 million alone. And these products take more share from other categories such as laminate than they do from traditional LVT. No. 2, traditional LVT as a category

continues to grow. And No. 3, I am thinking that some of the LVT manufacturers reported as residential may find their way into some Main Street commercial applications since much of that is sold through the specialty retail channel. A few more observations: The resilient category has grown $1 billion in the last five years, which equates to a gain of 58%. At the same time, volume has increased 38%. That substantiates the claim that better products are being sold. Despite some impressive technological advances in sheet vinyl, here is where the more expensive LVT has thrived. Back in 2006, sheet vinyl represented 59% of the category, or $1.4 billion. Today we see sheet vinyl as a business accounting for somewhere between $800 million and $825 million or about 30% of the resilient market. The decline is also seen in VCT, where in 2006 FCNews estimated sales to be about $450 million, an amount that dipped to $410 million in 2010. Last year, research reveals the category was somewhere in the neighborhood of $310 million to $325 million.

dustin aaronson associate publisher/ advertising director [email protected]

editorial reginald tucker managing editor [email protected]

ken ryan senior editor [email protected]

jenna lippin contributing editor social media strategist [email protected]

art/production frank notarbartolo art/production director [email protected]

sales associate nadia ramlakhan [email protected]

founder albert wahnon 1920-2011

Steven Feldman

Getting social with fcnews

correspondents jana pollack k.j. quinn

columns jim augustus armstrong lisbeth calandrino david romano scott perron bart basi fcica

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6 I June 27, 2016

educating the industry

Which regulatory issue concerns you the most

The desire to reclassify subcontractor installers as employees should be the biggest concern to every flooring retailer. Overtime proposals, minimum wage hikes and affordable healthcare, to name a few, all get compounded if we’re forced to add subcontractors and their helpers as employees. The impact this has on any small or medium size business is enough to put even the most astute business owner out of business entirely. —Casey Dillabaugh, Dillabaugh’s Flooring America Boise, Idaho

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Challenges One drag on economic growth is the plight of the small private Opportunities homebuilder sector, which has A key market indicator is been slow to recover. During employment, specifically job cre- recessionary years, many of these ation. Currently, 2.8 jobs are builders were wiped out. The being created for every house result is an increasing monopoly built in the United States. More of larger public builders and importantly, the current jobs-tosomewhat restricted housing suphousing ratio is far ply nationwide. higher than the Another metric long-term equilibrithat bears watching is AL’S COLUMN under/overvaluation of um level of 1.06 jobs-to-1.0 homes. the housing market, Research shows which is determined housing demand is via an examination of curgrowing more than 2.5 times the rent mortgage cost-to-household rate of housing supply, resulting income ratios relative to the in the rapid depletion of dislong-term norm. Based on these tressed housing and continued relationships, housing in the positive price pressures. United States is expected to By the end of 2016, we become overvalued by 2017, with expect the U.S. housing market the potential to become dangerwill be 1.3% under built. And by ously overvalued by 2019 if cur2018, under supply is expected to rent trends persist. Affordability reach 2.7%, or 3.73 million relative to the economy will need homes. Despite strong price to be monitored carefully—at appreciation in most markets least on a quarterly basis—to during the past 24 months, understand the best land buy/sell undervaluation of housing is still and development decisions evident in many markets due to a across the country. continuation of record low mortBased upon the most recent gage costs and increasing houseeconomic, socio-economic and hold incomes. demographic conditions and With 2.8 million jobs created forecasts for the United States, during the past 12 months, the we expect to see stable to strong economic expansion continues to land purchase and housing fuel strong demand for new development opportunities. housing. Job growth is forecast to Careful quarterly monitoring of remain strong throughout 2016 affordability issues will be cruand remain positive through cial in the planning and develop2021, although some softening is ment of housing sites throughexpected. out the nation. Statistics show virtually all For more on this report, visit realestateeconomics.com sectors of the U.S. economy grew Mark Boud is senior vice president of Metrostudy, which compiles comprehensive quarterly information on the U.S. housing market, including relevant economic forecasts. He will be a speaker at The International Surface Event on Tuesday, Jan. 17, 2017, from 9 a.m. to 10:30 a.m.

Flooring dealers are burdened by a number of regulatory issues, including the Department of Labor’s recent reclassification of independent contractor vs. employee.

The Affordable Care Act, which should be renamed. Its ramifications are making it very prohibitive to continue to offer good healthcare. —Steve Weisberg, Crest Flooring Allentown, Pa.

I would say the Affordable Health Care Act is still one of the biggest concerns we have. You want the best possible care for your team but the cost makes it very hard for every person and the company. It is the one thing that affects take-home pay for everyone, from the single mom to full-family coverage. —Nick Freadreacea, The Flooring Gallery, Louisville, Ky.

No doubt the regulatory issue causing me the most concern is the Affordable Health Care Act. We were led to believe we could keep our existing plans a few years back. Now, after facing an 18% increase in 2016, we are being told to be on the lookout for the largest increases to date in 2017. We take pride in having in-house installers and sales associates and offering good benefits. It is becoming more difficult with our industry facing shortages of qualified craftsmen and unfair regulations. —Bill Zeigler, Charles F. Zeigler & Sons Hanover, Pa.

July 13-15 Carpet One Summer convention, Gaylord Texan Resort & Convention Center, Grapevine, Texas. Contact: 314.506.0000; ccaglobalpartners.com

July 13-16 Atlanta International Area Rug Market AmericasMart, Atlanta. Contact: 800.ATLMART; americasmart.com Aug. 3-5 CFI Annual convention, Marriott Grapevine Courtyard/TownePlace Suites Facility, Dallas. Contact: 817.251.9095; cfinstaller.org

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during the past 12 months, with the exception of mining and manufacturing. Growth has been especially robust in education and healthcare, professional and business services, trade, leisure and construction. The public sector— typically the last job category to recover—is now adding jobs, contributing to what has largely been a private-sector economic recovery. Conversely, tumbling oil prices have had a negative impact on the petroleum industry.

July 11-13 Flooring America Summer convention, Gaylord Texan Resort & Convention Center, Grapevine, Texas. Contact: 314.506.0000; ccaglobalpartners.com



BY MARK BOUD

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( CALENDAR )

(RETAILERS REACT)

Keeping an eye on key market metrics usinesses that are dependent on the health of the new home construction market, the real estate industry and consumer spending overall require solid, quantitative information and intelligent forecasting to position themselves to take advantage of potential growth opportunities. In this Q2 2016 Residential Economic Report, we provide a summary that will enable readers to quickly understand both the opportunities and challenges in the housing market and provide insight on various key economic indicators.

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What concerns me the most is a potential minimum wage hike to $15 per hour. I believe this would raise the cost of nearly everything while not boosting the local and national economies as some might think. Disposable income—which is the kind that is needed when it comes to purchasing flooring—would be negatively impacted if people have to start paying $9.99 for Happy Meals and a lot more for their groceries. —Eric Langan, Carpetland USA (The Langan Group) Davenport, Iowa

Sept. 21 Alan Greenberg Memorial Charity Golf Tournament Benefiting the Floor Covering Industry Foundation (FCIF) Barnsley Gardens, Ga. Contact: Paula Holt at 800.466.6984, ext. 1101; alangreenbergfcif.com

Oct. 4-6 FCICA Mid-Year Meeting Las Vegas, Nev. Green Valley Ranch Resort, Spa & Casino Contact: 248.661.5015 fcica.com/events/mid-year-meeting Oct. 5-7 Greenbuild International conference, Los Angeles Convention Center, Los Angeles. Contact: 866.606.7765; greenbuildexpo.org Nov. 1-3 NAFCD Annual meeting, Hyatt Regency Chicago, Chicago. Contact: 800.383.3091; distributorconvention.org

( REMEMBER WHEN...) In the summer of 2004, 3M and Bissell announced a new partnership introducing the Bissell Pro-Heat Pro-Tech Deep Cleaning System with Scotchgard protection. The system marked the first time consumers could restore mill-type Scotchgard protection to a carpet using an at-home system. Pictured is Jim Stevens of 3M demonstrating the system at the Carpet One summer convention in Nashville. Today Stevens is global sales manager, protective materials, 3M.

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June 27, 2016 I 7

Mannington recreates Surfaces experience—virtually SALEM, N.J.—In what the company is calling an industry first, Mannington Mills is using 360degree photography technology from Virtually Anywhere to showcase its new product introductions. This virtual tour was done at the Mannington booth at Surfaces in January and captured the new products showcased in its 9,000-square-foot space using this new technology. While the exhibition only ran for three days, Mannington is using the BoothView360 tool to extend the investment it made in the show, providing a new sales tool that helps engage customers in a new way. The BoothView360 virtual booth features all the displays that were on the show floor and is enhanced with embedded hotspot links, intuitive navigation, downloadable brochures and a digital photo gallery cov-

American OEM backs NWFA green initiative ST. LOUIS—American OEM, a private-label hardwood flooring supplier, has joined the National Wood Flooring Association’s Responsible Procurement Program (RPP). The program is a joint initiative between leading environmental groups and wood flooring manufacturers committed to producing products obtained from environmentally and socially responsible sources. “It is gratifying to see the progress that has been made since the NWFA RPP was originally conceived,” said Don Finkell, president of American OEM. “Recent changes with the U.S. Green Building Council’s LEED program now allow recognition of RPP as does the National Association of Home Builders’ (NAHB) green building standard. These are significant enhancements to the marketing of American-made wood flooring.” RPP has been accepted into the 2015 edition of NAHB’s ICC/ASHRAE 700 National Green Building Standard (NGBS), the only residential green building rating system approved by ANSI as an American National Standard. Certification to this green building standard provides a credible pathway for the design and construction of sustainable residential buildings, with the goal of minimizing their environmental footprint. Participating manufacturers commit to continuous progress within the RPP framework.

ering the 100-year history of the company. Betsy Amoroso, senior director of corporate communications for Mannington, said this digital marketing tool helps sustain and enhance the company’s trade show investment for the remainder of the year. “We are always looking for innovative ways to tell the Mannington story; this certainly fits that description.” Virtually Anywhere creates fully immersive, 360-degree rotating tours that give the perception of being at the show but with the advantages of digital

Mannington’s ‘virtual’ Surfaces booth featured all of the displays presented in its space on the show floor.

technology and online browsing. The company’s BoothView360 converts a one-time exhibit into a year-round virtual booth using interactive, 360-degree photography and state-of-the-art software. “[Mannington’s] exhibit at the Surfaces event provided a perfect opportunity for BoothView360—navigating multiple rooms and product lines, and embedding links to product information,” said Carrington Weems, founder of Virtually

Anywhere. By his count, the company has created more than 10,000 interactive virtual tours spanning 18 years of service for a variety of clientele including universities, hospitals and businesses. BoothView360 assists compa-

nies investing heavily in one-time events such as trade shows where they usually see their exhibits torn down after a few days. Visit virtually-anywhere.com/ portfolio/mannington/ to view the company’s virtual space.

8 I June 27, 2016

( IN THE NEWS ) WFCA acquires fcB2B DALTON—The World Floor Covering Association (WFCA) has purchased the Floor Covering Business To Business Association (fcB2B) and all of its assets. The decision was made June 3 at an off-site meeting of the WFCA board of directors, which voted unanimously in favor of the acquisition. “The WFCA has been a visionary supporter and financial backer of fcB2B since conception,” said Scott Humphrey, CEO, WFCA. “Placing ourselves 100% behind a next-generation initiative that will streamline business transactions— thereby increasing efficiencies and reducing costs—was a logical next step for us.” Humphrey affirmed that technology is one of the six pillars on which WFCA’s foundation stands, adding fcB2B is a key component of that pillar. “We recognize that our member constituents will not be able to compete and thrive in the 21st century business landscape without the proper tools to streamline transactions and keep pace with the market. FcB2B is poised to change how we do business, and the WFCA stands squarely behind this initiative.”

Loxcreen adds personnel MISSISSAUGA, ONTARIO, CANADA—Loxcreen Flooring Group has added three new people to its U.S. sales division. James Roberts joins Loxcreen’s pro sales team as U.S. ceramic industry specialist. In this role he will be tasked with building and strengthening relationships while leading the sales efforts in the growth and development of Loxcreen’s Prova line of waterproofing shower products, tile underlayment systems and tile trims. Roberts brings more than 20 years of experience in sales and has worked for many companies within the ceramic and adhesives sector, including Mapei, BASF and DAP. Mark Derr is the new territory manager for south central states covering Texas, Oklahoma, Arkansas, Louisiana, Kansas and Missouri. Kendall Leak, a 40-year veteran, was named territory manager for the Western states: California, Nevada, Utah, Colorado, Arizona and New Mexico.

Pergo revamps website DALLAS—Pergo, now a Mohawk brand, has launched a new website. The goal, according to Paij Thorn-Brooks, vice president of brand marketing, laminate and hardwood, Mohawk North America is to take the brand’s award-winning digital presence to the next level. “Our new Pergo website makes shopping for one of the world’s leading and most trusted flooring brands easier than ever before,” ThornBrooks said. “As a marketing-savvy brand, we understand the importance of a strong web presence in today’s digital shopping age. It is our mission to create a world-class digital presence for the Pergo brand to foster increased sales.” The new, user-friendly website is designed to facilitate the conversion from online browser to buyer. For example, a key feature of the new site is the ‘buy now’ button, which brings the consumer to the respective product page of a retail partner’s website.

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New distributor targets Mid-Atlantic Floorco to compete by being ‘fast and flexible’

laminate and luxury vinyl tile/plank. The company will also distribute carpet pad 15 vehicles. “If someone said, ‘I and has plans to offer ceramic. “We’ll operate By Ken Ryan have to get to 100 places tomorrow,’ I have every product there is,” Conley said. He is well aware that Floorco NEW YORK—Flooring distribution has could do it,” Conley noted. Floorco Distribution is currently in Distribution operates in the same market seen major consolidation in recent years with mergers and acquisitions far out- the soft launch phase of its operation but as Haines, by far the industry’s largest disstripping the number of new entrants expects to ramp up quickly in the coming tributor; and Elias Wilf, a top 20 wholeinto the market. However, Floorco sees a months. The wholesaler does business saler with a 100-year legacy. Rather than try to compete head to head with the path to market that it believes can goliaths, Floorco Distribution is lookwork effectively—next-day delivery ing to capitalize on being nimble and and a merchandising mix entailing and offering fast service. Conley 75% private label, which generally pointed out that former wholesale allows for higher profit margins. stalwarts Bayard Sales and Superior Under industry veteran Ron Products are no longer serving the Conley, who will serve as president, Mid-Atlantic region, adding: “So Floorco Distribution recently began maybe there is room for us.” selling to a five-state territory—all Floorco Distribution plans to of Maryland; Virginia down to inventory every product it samples Richmond; all of Delaware, New and merchandises. “Our goal is to proJersey north through Monmouth Country; and Pennsylvania through Floorco, headquartered in Baltimore, is launching a vide reliable, next-day delivery on all State College. Down the road, the distribution arm targeting the Mid-Atlantic region. products we carry,” Conley stated. “We are extremely excited to be one company expects to expand its distribution presence to other states. with several major manufacturers who of the very few companies to offer this At launch, Conley said Floorco would sell the products under the Meridian pri- advantage.” Floorco is a privately owned global service 1,980 flooring dealers encompass- vate label brand. In addition, Floorco caring those five states. The distributor guar- ries Beauflor, Bostik and Sika, and it sourcing products and services provider antees next-day delivery if an order is sources from select manufacturers in headquartered in Baltimore with manuplaced by 4 p.m. the previous day. The Asia. Its overall mix is approximately 75% facturing operations in Asia. In addition to Floorco Distribution, the company products are stocked in two warehouses hard surface, 25% soft. in Baltimore County totaling 85,000 The Meridian brand will feature all operates two other separate divisions— square feet. The company currently owns flooring categories from a variety of car- Flagship Sourcing and Floorco five trucks but has enough drivers to pet and hardwood suppliers as well as Commercial.

Beaulieu restructuring prepares for ‘next phase’ DALTON—Beaulieu America has announced a new restructuring as part of its plan to prepare for “the next phase of growth” for the business. Four new senior management positions have been created over the past few weeks. Michael Pollard, the son-in-law of founder Carl Bouckaert, was recently named president. He will lead the development and execution of the company’s revised long-term strategy. Next, Stan Bouckaert has moved from his position as director of hard surfaces to senior vice president of special projects. In this role, he will provide counsel on Beaulieu’s new business strategy to identify and capitalize on new opportunities for growth. Mike Hoffman has been named COO, responsible for all manufacturing and distribution operations. Finally, Steve

Hillis, president of Beaulieu Commercial, will also assume responsibility for the residential side of the business. In his expanded capacity as president of flooring, Hillis will be tasked with leading all sales activities, resources and reporting for both commercial and residential functions. “This is a very important and exciting time for our company as we revisit the way we operate to ensure we are best positioned for current and future success,” Hillis explained. Karel Vercruyssen and Del Land will continue with their respective functions as CEO and CFO of Beaulieu America. “The board of directors and I have put a lot of time, thought and energy into these leadership changes to ensure we have the

right people in place who are committed to the long-term success of Beaulieu America,” Vercruyssen said. In a related move, Kevin Biedermann, who had served as executive vice president at Beaulieu America since July 2015, has left the company to pursue other interests. This latest restructuring comes on the heels of the company’s recently announced plans to trim about 6% to 8% of its workforce—or about 320 people— over the next few months (FCNews, May 9/16). According to Beaulieu, the actions are being taken to improve efficiencies across the company’s various product lines while enabling the organization to leverage emerging opportunities in the flooring industry.

( SNAPSHOT) AJ Rose Carpets and Flooring named Armstrong Gold Elite winner LANCASTER, PA.—Armstrong Flooring recently recognized AJ Rose Carpets and Flooring as its 2015 Gold Elite Retailer of the Year. AJ Rose, with Massachusetts locations in Burlington, Natick and Saugus, has been in business since 1977. “Being an Elite dealer has provided us with a launching pad to be the leader in hard surface in our region,” said AJ Boyajian, left, co-owner, who is shown accpting the award along with his brother, John, also a co-owner, from Paul Serene of Armstrong Flooring. “Partnering with Armstrong Flooring has allowed us to provide our customers with exceptional products at great pricing, all backed with outstanding service.” Long Island Paneling, Ceilings & Floors, with mulktiple locations on Long Island, was named Silver Elite winner, while The Floor Store, in Richmond, Calif., was named Bronze Elite winner for 2015.

10 I June 27, 2016

( IN THE NEWS ) Domotex asia/ChinaFloor’s international audience grows SHANGHAI–The numbers have been tabulated and the 18th edition of Domotex asia/ChinaFloor totaled 50,398 visitors, including 11,963 international visitors representing 15 countries. According to show organizers, South Korea sent the most international attendees, representing 13.3% of the total. The U.S. was second, accounting for 9.5% of attendance, and Japan was third at 7.9%. The total number of visitors increased 9.3%, and visitors who stated their intention to revisit the show in 2017 hit an all-time high of 88.5%, 8% more than 2016. International exhibitors occupied 25.5% of the total exhibiting space, an increase of 10.5% from the previous event. Of this group, 90.6% stated their intention to exhibit at the 2017 show.

Elof Hansson, Ribadao form partnership NORCROSS, GA.— Elof Hansson and Ribadao Lumber have formed a partnership for the American and European markets. Under the terms of the agreement, the companies will join resources, collaborate on production and operate a network of shared warehouses, combined sales and territory management efforts. “Combining forces with Elof Hansson allows us the opportunity to develop a larger flooring market than we have been currently serving,” said Pedro Tavares, president of Ribadao. The two companies are developing a line of engineered flooring manufactured in Portugal that will expand the current offering to include solid South American exotics, solid African exotics, wide-plank engineered European oaks, domestic and exotic engineered flooring and plywood products.

Texan Floor Service joins Fuse Alliance LAGUNA NIGUEL, CALIF.—Fuse Alliance recently added Texan Floor Service, an employeeowned flooring company specializing in a wide range of commercial flooring market segments in the Houston area, as its newest dealer partner. With the addition of this member, the Fuse Alliance network has grown to 84 professional flooring partners in more than 150 locations throughout the United States and Canada. “Texan Floor Service brings a wealth of experience and knowledge to our network, and we are thrilled to have them as part of our organization,” said Geoff Gordon, executive director at Fuse Alliance. “It’s an exciting time for us as we continue to build our network with commercial flooring companies of this caliber and expand our reach throughout the United States.”

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Gilford-Johnson fortifies leadership JEFFERSONVILLE, IND.—Scott Roy, president and CEO of Gilford-Johnson Flooring, has created a new senior leadership team to further enhance integration efforts for the combined company and focus on growing the business going forward. The new team members are as follows: Melinda McChesney will continue to serve in her position as president, Southeast division. However, her role has shifted away from day-to-day managerial duties to concentrate on the Gartman Systems software conversion. She will also be heavily involved in transitioning the Tarkett/Johnsonite relationship to other senior leaders. Scott Shanks becomes senior vice president, finance and administration. Sandra Webb will report directly to Shanks as vice president, finance, Southeast division. Rob Purkins has been appointed to the position of senior vice president, products and marketing. He brings years of experience in flooring, leading product management and marketing functions. Jodie Doyle will continue to report to

Purkins as vice president, human resources. In this product management. Both capacity, he will lead the will relinquish their direct human resources, legal and sales supervision responsibilistrategy functions for the ties. combined company. Nik Burdett holds the “I’m very confident that newly created position of senwith this strong leadership ior vice president, sales. A seateam we are utilizing the right Scott Roy soned industry leader, Burdett people to lead within Gilfordwill be responsible for the entire sales Johnson and are now poised to operate team from Indiana and Ohio down to one unified company effectively,” Roy South Florida. His previous sales service stated. responsibilities will move to David Dobbs Since he first assumed his position in going forward. February, the process of integrating the Dobbs becomes senior vice presi- old Gilford-Flooring with Johnson dent, sales service, pur- Wholesale Floors has been Roy’s primary chasing and inventory. focus. The new senior leadership team In this position, he will allows him to concentrate more on the lead the multi-faceted issues involved in running the business aspects of sales support while other senior leaders increase their from order entry to inventory receiving. ownership of the integration process. All sales service centers will report up As part of the changes, Roy himself through Dobbs, as will the purchasing will oversee all of the company’s actividepartment for all products/suppliers. ties, directing its strategic focus and drivHe will also lead inventory control and ing Gilford-Johnson’s growth in its key claims. markets. The combined operations team Lastly, Christopher Nelson has been will report directly to him, as will the named vice president, strategy and members of the senior leadership group.

Lumber Liquidators agrees to new binding mandate WASHINGTON, D.C.—The U.S. Consumer steps” to boost compliance and reestab- potential settlement to resolve a securiProduct Safety Commission (CPSC) lish trust. The CPSC said the company ties class-action lawsuit brought by sharerecently announced that Lumber would not be able to sell, dispose or trans- holders. Liquidators has agreed to not Lumber Liquidators also sell any of its existing inventory spent millions of dollars to settle of Chinese-made laminate floora lawsuit filed by the California ing products. Air Resources Board (CARB), Lumber Liquidators has apart from tightening its complistruggled to convince customers ance policy on product sourcing that its flooring is safe after CBS’ and ramping up marketing “60 Minutes” aired a report efforts. showing the company sold Lumber Liquidators said it Chinese-made laminate floorwould continue its voluntary ing containing levels of program to test for formaldeLumber Liquidators plans to continue its voluntary formaldehyde that did not comhyde emissions in consumers’ formaldehyde emissions testing program for consumers. ply with California’s health and homes. Where an elevated level safety standards. of formaldehyde is detected, The retailer said previously it has not fer the inventory in the future without the Lumber Liquidators has agreed to prosold its Chinese-sourced laminate since commission’s approval. vide the required remediation for conMay 2015 and it has taken “meaningful The agreement with CPSC follows a sumers.

( SNAPSHOT) Mohawk teams with Fox’s ‘Home Free’ as official flooring sponsor CALHOUN, GA.—As the official flooring sponsor of “Home Free,” Mohawk Industries will welcome home the families of heroes in the second season of Fox’s hit reality show hosted by expert professional contractor Mike Holmes. Each week, Holmes presents contestants with tasks designed to test their knowledge and DIY skills. Couples with the best work move forward, while those with sub-par performances must face elimination. Participants compete to win a dream home for their personal heroes and $100,000 for themselves. Pictured are Tim Tebow, left, former NFL quarterback and sports analyst, and Holmes.

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Scoring Flooring Continued from page 1

for seven consecutive years until leaping to 17% in 2015. That suggests resilient’s average price point has increased by virtue of the migration from felt to fiberglass sheet, along with the transition from residential/commercial sheet and vinyl composition tile (VCT) to LVT. FCNews research reveals just how much LVT is driving category growth. Sales have gone from nearly $750 million in 2012 to $948 million in 2013, $1.142 billion in 2014 and $1.451 billion in 2015. That represents respective gains of 26.4%, 20.5% and 27.1%. More telling, LVT sales have nearly doubled in three years. It also carries with it a premium price tag as it comprises 53.2% of the category’s dollars but only 33.6% of its volume. To illustrate its growth, those numbers were 47.7% and 26.4% in 2014; 43% and 22.3% in 2013 and 37.4% and 20.6%, respectively, in 2012. LVT increased significantly in both residential and commercial markets—dollars and square feet—in 2015. Residential LVT saw a 68.3% increase in square footage from 451.5 million in 2014 to 760 million, making up 71.8% of the LVT market. This number was 55.2% a year ago, but the big increase can be attributed to the WPC bandwagon, which, to this point, is almost exclusively residential. The commercial market rose from 257 million square feet to 297.2 million, a 13.5% increase. While residential brought in more dollars— $874.1 million—last year, commercial LVT still performed well, posting a 12.7% increase, rising from $511.25 million in 2014 to $576.4 million in ‘15. The versatility of LVT—tile or plank—makes it an ideal solution for any number of residential, commercial and project-oriented applications. This multi-tasking ability has allowed LVT to migrate into builder, multi-family and residential-remodeling applications. The large space in which LVT operates, in turn, has afforded manufacturers the means of introducing differentiated product across a wider front, ebbing the march toward commoditization. Originally, LVT became popular as a water-resistant, hard surface product ideal for mainly kitchens and sometimes spaces such as a laundry room. In the past, LVT would not be considered for bedrooms or other larger living spaces

the home. throughout However, this perception has changed in recent years. Manufacturers that specialize in LVT have observed growing acceptance in the category. Jonathan Train, president and CEO of EarthWerks, which has been making LVT for four decades, said LVT is taking market share from other flooring categories in both residential and commercial segments. “With the tremendous detail in design and performance attributes we are able to incorporate into LVT, it has become a strong competitor for all hard surface options. The ease of installation, durability and overall styling has catapulted this category to find a home in all sectors.” Michael Raskin, president and CEO of Raskin Gorilla Floors, said LVT no longer has to be “sold.” Customers and end users are seeking out the product instead of having it presented to them by salespeople as an option. “More people are using it and asking for it right off the bat. You don’t have to educate people about it anymore.” Also driving the category are its floating options, be it non-skid backings, click or self-stick strips. However, traditional glue down is still a large part of the market because of the lower price points in addition to the commercial market’s reservations about using a floating product. As LVT grows, it is taking share from other resilient categories, especially VCT, but sheet vinyl as well. Sheet vinyl—both residential and commercial—has grown only 2.8% in the last two years, going from $791 million in 2013 to $813.5 million in 2015. Residential has led the way here, but if not for the rebound in new home construction and manufactured housing, sheet vinyl would be down. The commercial market has taken the bigger hit, declining 13.9% in dollars from $254.24 million in 2013 to $219 million in 2014. The category was only down slightly in 2015, 1.4% to be exact. Sheet remains the volume leader in residential resilient sales with 55.1% of the market, down from 60.2% in 2014, but comprises only 38.9% in dollars, down from 43.2% in 2014. “For residential products, sheet vinyl is still viable because it has unmatched value and properties that other products can’t mimic,” said Jamey Block, Armstrong’s vice president of

Industry market share

2015

($20.457 billion) Laminate 5.6%

(18.526 billion square feet)

Rubber 2.7%

Laminate 5.6% Rubber 1.3%

(2.8% in 2014)

(6% in 2014)

Wood 4.4%

(5.8% in 2014)

(1.3% in 2014)

(4.3% in 2014)

Wood 10.1%

Tile 11.9%

(9.9% in 2014)

(11.2% in 2014)

Carpet 43.4%

Tile 12.7%

Resilient 16.8%

(44.9% in 2014)

(12.1% in 2014)

Carpet & Rugs 60%

(15.1% in 2014)

(62.1% in 2014)

Resilient 13.3% (12.2% in 2014)

Rugs 12.2% (12.3% in 2014)

($16.221 billion)

2010

Rubber 3%

Laminate 6.9%

(16.625 billion square feet) Wood 4%

Laminate 6.1% Rubber 1.3%

Tile 8.1%

Wood 9.5%

Carpet 48.3%

Tile 8.8%

Resilient 14.3%

Carpet/Rugs 66.2%

Resilient 10.6%

Rugs 12.9%

($24.715 billion) Laminate 5.6%

2006

(26.36 billion square feet)

Rubber 2%

Laminate 4%

Wood 9.2%

Tile 10%

Tile 9.9%

Carpet 50.9%

Resilient 9.6%

Rubber 0.8%

Wood 4.4%

Resilient 14.1%

Carpet/Rugs 66.8%

Rugs 12.7%

product management for resilient. “It still has a strong position in kitchens, bathrooms and utilitarian applications in the home—basements, mudrooms, workout rooms, etc.” Paul Murfin, CEO, IVC US, said sheet remains strong in multi- and single-family builder markets. “That is where a lot of the growth was. There are still viable segments in the retail part of the business as [sheet] is still the best value floor covering in the industry. I think it’s just the upper end of sheet that faces some challenges relative to the lower end of LVT.” As the overall flooring market pivots toward hard surfaces, resilient flooring is poised to reap a sizable portion of that shift because of its sheer size and for offering an incredible value through price and dura-

bility. That value proposition is further buttressed by the numerous design options that are available in different constructions. It all adds up to an exceptional product that provides residential and commercial customers with an ideal flooring solution that doesn’t break the budget. Carpet Despite an improving housing market, the U.S. carpet industry ended 2015 virtually flat, with overall sales barely edging higher while volume fell. Overall, carpet sales in 2015 rose 0.7% to $8.870 billion compared with $8.809 billion in 2014. Volume (carpet and rugs), however, fell 1% to 11.09 billion square feet from 11.21 billion square feet in 2014. Residential carpet sales fell by

an estimated 2% in 2015, while units inched up 1.5%. Conversely, commercial sales increased about 2% while units were down 1% in 2015 vs. 2014. For the second year in a row, commercial carpet outpaced residential carpet, led by the rise of modular formats, which continue to make inroads into multiple commercial applications. Interestingly, carpet tile has yet to penetrate the residential segment and carpet executives said they see no reason that will change anytime soon. The long-term shift from carpet to hard surfaces has accelerated faster than most executives predicted; the tangible evidence can be found in the shift in overall market share as well as the space allotContinued on page 14

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Scoring Flooring Continued from page 12

ted to hard surfaces in retail showrooms. Carpet today represents more than 43% of the overall flooring market—still the highest percentage but declining year over year. In 2009, for example, carpet was 48% of the market. When combined with rugs, soft surface commands just north of 50% of the overall flooring market. Compare that to 2006, when carpet and area rugs commanded a 63.6% share of the overall flooring industry. Shaw and Mohawk continue to be the driving forces in bringing soft, luxurious carpet to the market that earn praise for their style, performance and durability. Fast-growing Engineered Floors has taken market share at the commodity level with PET products that have quickly gained acceptance in the multi-channel segment and builder markets. For the second year in a row the U.S. rug business outperformed carpet, growing an estimated 4% in 2015. Rugs are in a unique spot, having benefited by the growth of hard surfaces; as a result, dealers are increasingly pairing hard surface sales with rugs. Manufacturers are also seizing opportunities in socalled custom rugs programs, which continue to gain steam. Wood While the new home construction sector did not reach the lofty highs that many analysts were expecting last year, the modest movement was more than enough to help lift sales of hardwood flooring to a respectable level in 2015. FCNews research shows the segment generated $2.059 billion in 2015, a 6% jump over the year prior, with volume totaling 815 million square feet, a 5.8% uptick over 2014. The slower volume growth rate compared to the rate of increase in value reflected the impact of higher raw material costs that manufacturers had to absorb over the past two years. Industry watchers cite the lingering effect of protracted winters which negatively impacts harvesting, along with price increases instituted by many of the major Canadian manufacturers who must also compensate for unfavorable exchange rates. But for most industry observers, it was the slowerthan-expected housing market that kept growth in check. According to the National Association of Home Builders,

housing starts reached 1.11 million units in 2015. That translates into a 10.8% increase over 2014. “We expected new construction to be much stronger than it was last year,” said Dick Quinlan, senior director of hardwood products at Mohawk. “We felt strongly that construction would grow by about 14%.” Nonetheless, the hardwood flooring sector grew to represent 10.1% of total flooring sales in terms of dollars in 2015; compared to five years ago, the hardwood flooring category accounted for 9.8% of total sales and just over 4% in terms of volume. More significantly, the wood flooring category in 2015 represented the third-largest hard surface category—in terms of dollars— behind resilient and ceramic tile, respectively. Within the hardwood flooring sector, industry observers are seeing increased growth on the engineered side of the business vs. solid. What was characterized as a 50-50% split just two years ago, analysts say engineered now represents about 54% of the business. “Clearly the engineered segment is driving the most growth,” said Dan Natkin, senior director, residential products, Mannington. Along with that shift, he added, is the trend toward wider, longer products. Strong end-use consumption was only part of the reason behind hardwood’s performance in 2015. A return to stability in terms of raw material pricing also helped suppliers rein in lumber costs and better forecast their production needs. This represents a departure from the 2013–14 period when lumber pricing fluctuations forced large-scale changes in pricing. Ceramic tile Ceramic tile sales were exceptionally strong in 2015, its sixth consecutive year of growth. Led by gains in the construction and housing markets, and buttressed by low interest rates and an improving employment picture, industry experts estimated sales increased 9.8% to $2.61 billion with volume up 9.9% over 2014 to 2.19 billion. That compares to a 6.2% dollar increase in 2014. The biggest change was in volume, which gained a tepid 0.5% in 2014. Out of the last five years, only 2013’s 12.9% increase bested the 9.9% gain seen in 2015. Ceramic tile now constitutes 12.7% of the overall flooring market in terms of dollars

and owns an 11.9% share of volume. The category has been picking up share in recent years as ceramic commanded 11.8% of flooring dollars two years ago and 11.2% in volume. Five years ago ceramic only had an 8.65% share of dollars and 8.05% share of volume. Led by Mohawk/Daltile, there has been a surge in new investments in domestic production, which has contributed to the growth in consumption of U.S.-produced tile. In fact, according to the Tile Council of North America, 2015 was a record year for U.S. manufacturers as an all-time high of 857.2 million square feet of ceramic tile were shipped domestically. Perhaps more than any other category, ceramic’s success is tied to the housing market. And in 2015, there was good news on many fronts—an increase in housing starts for both single- and multi-family housing, and an increase in commercial spending on new construction and remodel work. Since 2010 single-family homes have grown larger while multi-family dwellings continue to shrink. Since ceramic tile represents a greater percentage of the flooring used in a singlefamily home than a multi-family home, this is expected to have a positive impact on the ceramic tile category going forward, experts say. Tile demand in the com-

Total industry sales (in dollars)

2015

Commercial (specified and Main Street)

32.8%

Residential 67.2%

2014 2010 Commercial (specified and Main Street)

34.4%

Residential 65.6% Commercial (specified and Main Street)

30.1%

mercial market grew in 2015, with strong activity found in hospitality and assisted-living healthcare facilities that are taking inspiration from residential designs. Executives note that tile fashions have improved markedly in the last few years and consumers have reacted by using ceramic products more extensively in their

Residential 69.9%

projects with wood looks, wall tile and decorative accents leading the charge. Laminate A sizeable falloff in shipments from China coupled with intensified competition from LVT, WPC and other engineered flooring products wasn’t

( METHODOLOGY) he statistics presented in this study were derived from an extensive research project undertaken by Floor Covering News. Figures were gathered from a variety of sources to develop the most plausible and credible results at the time of publishing. Within every category, Floor Covering News held numerous private conversations with high-ranking executives from many of the industry’s leading mills, groups and associations about the overall industry and their respective segment(s) of business. While these discussions were off-therecord and confidential, the information gleaned from them was incorporated into the research to help arrive at the final figures. Other sources included, but were not limited to, published government records (both U.S. and foreign sources); filings from public companies; extensive and confidential interviews with top officials from all

T

levels of the supply chain; historical trends and data; reports published by associations along with private conversations with directors; and previously published reports and stories in FCNews and other credible media sources. Some of the data came from sources such as the U.S. Department of Commerce and other federal agencies. Info was also gathered from foreign agencies and respected international groups affiliated with the flooring industry. Data available from U.S. industry associations and groups were also used as part of the evaluation process. These include the National Wood Flooring Association, North American Laminate Flooring Association, Carpet & Rug Institute, Tile Council of North America and others. These numbers do not include sundries or installation but represent goods sold at the key point of sale, meaning products that are private

labeled from one mill to another are not counted twice. Also, in the case of the ceramic tile category, only sales of floor covering are included, which account for between 75% and 80% of the segment’s revenues and volume (the rest comes from wall tiles). In the case of rubber flooring, sheet, tile and accessories are included, such as wall base and stair treads. In some cases, percentages may not total 100 due to rounding. Unless noted otherwise, all graphs and charts were derived from FCNews’ research. FCNews does not claim the numbers presented here to be exact and final. Governmental and company data is often revised—sometimes by more than 5% and as much as five years after being first published. That said, these figures do represent what FCNews believes to be the best and most accurate account of what the floor covering industry accomplished in 2015 in terms of sales, volume and other pertinent information.

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16 I June 27, 2016

Industry sales (in billions of dollars)

(in billions of square feet)

2015 2014

2010

2015 2014

.87 7 4 1 $8 $2.49$2.72 $2.6 2.059 1.137 .560 08 01 2 $ $ $ $8.8 2.4 .39 2.38 943 135 0 5 $ $2 $ $1. $1. .54 .83 99 22 7 9 $ $7 $20 $1.7 $1.42 1.53 $1.112 487 $ $. Resilient Rugs Carpet

Tile Rubber

Wood

Scoring Flooring Continued from page 14

enough to derail laminate flooring sales growth in 2015. FCNews research shows laminate flooring sales reached $1.137 billion in 2015, a mild uptick from $1.135 billion in 2014. Volume, however,

Laminate

declined 3% to approximately 1.034 billion square feet. Industry analysts attribute the falloff, which translates into roughly 30 million square feet of product, to the elimination of some Chinese-made laminate flooring imports that did not comply with CARB-2 federal regulations.

98 45 0 5 11.0 3.1 2.19 0.81 1.034 .244

Carpet & Rugs Wood

Taking all the major floor covering categories into account, that puts laminate flooring at 5.6% of the total flooring market—down slightly from 5.8% in terms of dollars compared to 2014, but down in volume compared to 6% last year. To put things in the proper perspective, the laminate

1 11.2 .688 1.99 770 66 3 2 . 1.0 .23

Resilient Laminate

2010

1 11.0 2.37 1.35 667 .01 18 . 1 .2

Tile Rubber

flooring category accounted for 6.5% of dollars and 5.5% in terms of volume in 2009. So while it only generates about half of what the hardwood flooring category produces in terms of dollars, the volume of laminate flooring sold exceeded that of hardwood by more than 200 million square feet.

Much of that volume, industry analysts note, is generated by the residential replacement market. Some experts say this key end-use sector represents nearly 90% of category sales. “Clearly residential replacement is where this product fits, and it’s where most of the installations occur,” said Jeff

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June 27, 2016 I 17

Total hard surface sales 2015

2010

2006

$9.09 billion

$6.287 billion

$8.994 billion

12.5%

29.9%

2015: 44.4% of total industry sales

22.7%

28.7% 6.2%

Francis, hard surfaces laminate category manager, Shaw Industries. At the same time, industry observers report increased activity in the new home construction sector as more builders look to laminate as an entry-level product. FCNews research reveals the builder segment accounted for roughly 8% of laminate flooring sales last year—up 4% from just a few years ago. “Residential replacement is still the dominant category by far, but we’ve seen solid movement in new construction,” said Brian Parker, director, product management, residential tile, Armstrong. Another factor contributing to laminate flooring’s consistent performance on the sales side is the proliferation of entry-level products at home centers and mass merchants combined with higher-end, step-up options available via specialty retailers. Industry experts also provide evidence that specialty retailers are having success with private-label laminate flooring programs supported by the nation’s leading buying groups and retail chains. While many concede that home centers, mass merchants and big boxes continue to drive the bulk of category sales, as much as 70% in 2015, FCNews research shows, specialty retailers actually grew their share of the laminate business over the past few years. “We see the home center/mass merchants as the dominant category in terms of volume,” said Derek Welbourn, CEO of Inhaus. “However, they are limited by the selection they carry. “High quality and diverse product mix is still much stronger with specialty retail.” Technological advances in laminate (i.e., thicker cores, enhanced surface textures, etc.) are also providing high-margin opportunities for retailers.

2010: 38.8% of total industry sales

2006: 36.4% of total industry sales

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18 I June 27, 2016

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Category maintains dominant market position Broadloom cedes share to modular tile in commercial By Ken Ryan

espite an improving housing market, the U.S. carpet industry ended 2015 virtually flat with overall sales barely edging higher while total volume fell. FCNews research shows carpet sales rose 0.7% to $8.87 billion last year compared to $8.809 billion in 2014. However, total volume—which includes carpet and area rugs—fell 1% to 11.09 billion square feet from 11.21 billion square feet in 2014. Residential carpet sales fell by an estimated 2% in 2015, while units inched up 1.5%. Conversely, commercial sales increased about 2% while units were down 1% year over year. Despite the drop-off in total volume, the category—carpet and area rugs combined—still represents the greatest share of total flooring dollars, or 43.4%, and an even larger share of total industry sales in terms of volume (60%). Compared to five years ago, the carpet and rugs category accounted for 47.9% of industry sales and 66.6% of total volume. Industry observers say the pent-up demand that analysts were expecting in the housing market did not materialize despite what appeared to be a more favorable economy and improving conditions. While both existing and new home sales were slightly up in 2015, the numbers weren’t as robust as predicted, especially new home sales. “Last year started out slow and got stronger as the year went on,” said Ralph Grogan, CEO, Bentley Mills, which continues to outperform market averages.

D

“Most people were happy to see some growth but were certainly expecting to see a little more.” Moreover, experts say, there was a continued migration to hard surfaces in 2015, which adversely affected broadloom sales but not area rug sales, necessarily. At the end of the day, carpet still commands a dominant bulk of industry sales. Trey Thames, vice president of residential marketing and product for Shaw management Industries, offered this perspective: “If you pegged carpet to GDP [gross domestic product], we’d be right there.” GDP in the U.S. ticked up 1.4% in the fourth quarter of 2015, indicative of a slowgrowth economy still feeling the effects of a deep recession, analysts say. While no one is expecting double-digit increases to return, most experts believe carpet will continue to grow slowly even in the face of a continual shift to hard surfaces. Residential activity The residential segment continues to operate as a bifurcated market, with the high end (above $10 a square yard) and commodity end ($5 and below) doing well. Comparatively, the middle ground—particularly in the $6–$10 price range, did not fare as well. Industry observers say the prevalence of PET has driven the move toward commoditization, which accelerated in 2015 as some products experienced 20% declines in prices year over year. In short, this shift to more commoditized product has taken tens of millions of dollars

out of the industry, according to some executives. Some blame an overcapacity of polyester filament, with too much polyester entering the market, particularly in the multi-family builder segment— a market that has been moving away from nylon base grades. In 2015, builder and multi-family segments outperformed remodel. As a result, revenues were down more than volume. While polyester has become the dominant face fiber in residential carpet, there are signs the industry may be nearing a saturation point with polyester even as it continues to take share from nylon. In some instances, retailers have dialed back their polyester programs, industry watchers say. The carpet industry, led by

Carpet/rug fiber market share* 2015 Overall Other 2%

Triexta

13% Polypropylene

11%

Nylon 37% Polyester

37%

*face yarn only, based on quantity

Residential Other 2%

Triexta

17% Nylon 27%

Polypropylene

7%

Polyester

47%

2010 Overall Other 1% Triexta 8% Polypropylene 16%

Polyester 22%

Nylon 53%

Note: Triexta was a new category in 2010

Carpet sales by end use (in dollars) Main Street 8.7% New residential 7.4%

2015 Commercial 36.2%

Other 1.0%

2010

Residential replacement 46.7%

Commercial 36%

Residential 64%

Shaw and Mohawk, has launched major programs to fortify positions in the upper end of the market. Luxurious, ultra-soft fibers continue to play an important role at the higher end. “Anyone who says the soft trend is over is delusional,” said Tom Lape, president of Mohawk Residential. “The soft business is very good. If you can make a softer product that is engineered properly, the consumer will always choose that product.” While carpet tile has achieved great success on the commercial side, it has not made any strides in residential segments, save for highly niche areas such as urban lofts—and only then in small spaces—or some basements. “While a lot of people are making attempts at it, carpet tile is just not selling on the residential side,” one executive told FCNews. Commercial activity The commercial carpet segment outperformed residential for the second year in a row, on the order of 1.5% to 2%. The commercial carpet sector, which makes up more than 44% of the overall carpet market, totaled $3.943 billion in sales in 2015, FCNews research shows. Of that total, specified commercial represented $3.26 billion in sales with Main Street accounting for $684 million. [Note: For years a large percentage of mills considered level loop polypropylene a Main Street product, mostly installed in rental space/tenant improvement and low-end apartments and basements. Today, much of this business has been lost to low-end polyester cut piles. These cut pile sales are reported as residential, not Main Street. As well, some mills break out Main Street from their specified business; others do not.] Within commercial, average price points are climbing in large part because of the shift from broadloom to carpet tile. Experts

agree that while carpet tile’s price points have come down in recent years, the seismic shift in market share has been able to offset the impact of declining prices. Carpet tile continues to find a home in commercial settings and is now being marketed in many different shapes and combined with LVT, another hot product in commercial. As such, carpet tile is eating into broadloom’s territory just as LVT is taking share from broadloom in commercial. Corporate profits are always a good leading economic indicator of business conditions and activity in the commercial sector. Since before the recession, corporate profits have fallen, which has put pressure on budgets. In some cases, projects have been put on hold or scuttled. In other cases, manufacturers have been forced to value-engineer their products to meet budget parameters. For example, let’s say a product is specified at $25 a yard, in line with the initial budget. As cost overruns occur mid-project, the project manager goes back to the supplier and negotiates a price down to $18 a yard. The vendor is forced to re-engineer the product, perhaps using a less expensive yarn system or a lower face weight to take cost out of the product. “In a lot of cases there is pressure on budgets,” Grogan said, noting that the value-engineering trend began after the recession and has accelerated in the last two years. “Mills that are nimble or operate efficiently can capitalize on this trend. Unfortunately, there was a lot of that in 2015.” Not all specified commercial projects face the same budgetary pressures and constraints, however. Senior living project budgets, citing one example, have generally held up better than some of the corporate budgets, industry watchers say. Continued on page 20

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20 I June 27, 2016

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Area rugs For the second year in a row the U.S. rug business outperformed carpet, growing an estimated 4% in 2015, FCNews research reveals. Interestingly, rugs have benefited by the surge in hard surfaces as rugs are often sold as an add-on to hardwood flooring or LVT. The population of custom rug programs is another unique benefit to the rug players. Over the last two years the custom rug segment has grown appreciably, creating more than just a niche business for mills (i.e., Shaw’s Cut-A-Rug program, which provides retailers with an opportunity to offer rugs without having to invest too heavily in inventory). Many executives expect the custom rug program will continue to evolve as more flooring dealers take advantage of this profitable add-on opportunity. Carpet decline? Not so fast The market share shift from soft goods to hard surfaces is not a recent phenomenon. In fact, it has been going on for nearly 20 years—it’s just that the rate of change has been slow to date.

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Total carpet sales

Total area rug sales

(in billions of dollars)

(in billions of dollars)

$8.307

$8.430 $8.696

$8.808

$8.870 $2.309 $2.16 $2.253

2.401

Total carpet and area rug volume (in billions of square feet)

$2.497

10.81

0.7%*

10.84

11.06

11.21

11.09

4%* -1%*

2011 2012

2013

2014

2015

2011 2012

2013

2014

2015

2011

2012

2013

2014

2015

*Represents 2014-15 change

And while the migration to hard surfaces has accelerated somewhat in recent years, largely due to the success of LVT, carpet remains a very viable product. What often gets overlooked when talking about the growing popularity of hard surfaces is the fact that carpet still maintains a dominant share of the overall business. And, from a functional standpoint, the product is a relatively inexpensive way to upgrade living quarters. Furthermore, the variety of colors, stain resistance and more

recently the continued penetration of softer polyester fibers has renewed interest in carpet. Yes, hard surfaces have made significant inroads in remodeling but the response by the carpet industry has been strong. In short, carpet manufacturers believe today’s products are simply better than those of yesteryear. In fact, technological innovation in carpet has outpaced anything seen in the previous 10 to 20 years, and that is expected to continue as mills invest in new technology.

How carpet was sold in 2015

OEM & Other direct 7%

Other retailers (incl. internet Home 18% centers 11%

Mohawk, for example, is building new fiber Specialty retail technology into its 35% SmartStrand product to enhance its style and Contractors design while adding value. (builders & The company is developing commercial) natural dye fibers with space 29% dye to mix and match for a multicolor look. Mohawk’s EverStrand uses Continuum, a patented process that takes premium PET of definition than a standard cutfrom the highest-grade polymer, loop machine and varies the denstrengthens the fiber and sity in a single piece of carpet. removes dirt-attracting residue There is also the continued with a multi-step purification sys- advancement in built-in stain tem. protection technology as reflectSmaller mills such as Phenix ed in products such as and Lexmark are making signifi- Stainmaster PetProtect and cant inroads as well. Lexmark’s Shaw’s LifeGuard and Life LCL (loop, cut, loop) technology Happens collection. According creates almost three-dimension- to the company, carpet made al looks. Its products are created with LifeGuard is easier to install with tufting equipment that cre- and maintain and looks better ates patterns with a higher level longer.

Soft surface market share (by volume)

2015 Hard surface 40% Carpet & Rugs 60%

2010

Hard surface 34% Carpet & Rugs 66%

carpet

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June 27, 2016 I 21

CRI updates critical installation standards DALTON—In 2015, the Carpet and Rug Institute (CRI) convened industry leaders to update standards in carpet installation for both residential and commercial use. Regarded as the industry’s gold standard resource for commercial and residential carpet installation, the CRI 104 (commercial) and 105 (residential) standards provide installers, retailers, specification writers and building owners with detailed principles and guidelines for carpet installation. “Over the past 20 years, we’ve seen a flood of new carpet products, materials and technologies in the market,” said Joe Yarbrough, CRI president. “Carpet installers need updated guidance to ensure customers fully benefit from these advances and receive high-quality installation.” Developed by a team of industry leaders, these changes address innovations that require new approaches to carpet installation, particularly planning and subfloor preparation. To update CRI’s carpet installation standards, industry leaders drew upon practical experience, research and information obtained from carpet manufacturers, retailers, installers, customers, testing laboratories and other experts. Woody Belflower, technical support manager, carpet, Shaw Industries and task force chair for CRI, said the new standards were five years in the making. “With all the new innovations in the marketplace, it was time to upgrade. We needed a good refreshing to be current with what all of us are doing. If you don’t do anything, you become stagnant.” CRI’s refreshed standards emphasize proper planning, preparation and testing of subflooring to ensure high-quality commercial and residential carpet installation. The organization worked on the new installation standards with representatives from 10 carpet mills. According to a CRI spokesman, industry leaders worked together to enhance flooring’s most widely regarded standards to ensure installers, retailers and builders have the best guidelines for commercial and residential carpet planning and installation. “If it doesn’t start right, it will not finish right,” the spokesman said. “This

is an industry that supports all parties working together for the common goal of customer satisfaction, starting at the [point] of the sale through the finished installation.” CRI believes proper carpet installation is critical to the overall quality and life of the carpet. Best installation practices have evolved as new products enter the marketplace, such as innovative carpet backing systems that require installers to

emphasize subfloor preparation. The updated standards are also formatted in an easyto-read document. Representing more than 25 years of information gathering and installation expertise, CRI’s 104 and 105 carpet installation standards are the only carpet installation standards created and supported by the industry. The new CRI standards are available in a printed manual form or as a free download. The electronic version has been downloaded over 15,000 times, CRI stated.

For the first time in five years, the Carpet and Rug Institute presented new standards in the way residential and commercial carpet should be installed.

resilient

22 I June 27, 2016

fcnews

LVT creates tidal wave of sales as vinyl remains Multi-family, residential remodel cited as top segments; WPC becomes important player By Jenna Lippin

he crest of the resilient category’s wave will seemingly not fall. The segment continues to post significant gains, with 2015’s performance perhaps the most impressive yet. Innovation combined with an upswing in some commercial markets and

T

steady residential activity have delivered increases for both sheet and luxury vinyl tile. The resilient upswing remains impressive with a percentage gain of 13.9% in dollars from 2014, rising from $2.392 billion to $2.724 billion. Last year’s sales also represent a 23.5% increase from 2013’s $2.206 billion and a 33.9% rise

from 2012. To put things in the proper perspective, the category is up a striking $1 billion in the last five years (total resilient sales in 2010 came in at $1.722 billion). In contrast to the change from 2013 to 2014, square footage for resilient was up a monumental 15.5% from 2.688 billion square feet two years

Total resilient sales (in billions of dollars)

(in billions of square feet) $2.724

$2.392 $1.931

$2.035 $2.206

2.35

2.43

2.59

2.688

3.145

13.9%* 17%*

$.487 $.504

2011 2012

3.7%*

$.514

2013

*Represents 2014–15 change

$.524

2014

$.540 2015 =Resilient

.222

.225

2011 2012

.227

.233

2013

2014

4.7%*

.244 2015

=Rubber sheet and tile flooring, cove base, accessories

ago to 3.145 billion in 2015. Considerable gains in the category can be attributed to several factors, particularly the growth of the sub-category often referred to as WPC/composites/rigid-core products. In total, LVT overall took up 35.6% of residential volume last year with sheet commanding 55.1%. Tile, which is basically the peel-and-stick product sold through the home center channel along with product that is less robust than LVT, captured 9.3%. Residential LVT raked in $874.1 million in 2015, which accounts for 56.9% of overall residential resilient sales. According to industry executives, multi-family and residential remodel were the markets that drove the category’s unprecedented growth. In comparison to 2014, when residential LVT sales checked in at $630.5 million, a dollar increase of 38.6% was posted. “For 2015 we felt there was much steadier business at retail,” said Kurt Denman, vice

president, sales and marketing, Congoleum. “This seemed to be consumer confidence driven along with the recovering housing market. The combination of those two things made people willing to cut loose a few dollars. The other part of that is the shift from soft to hard surface; LVT is really benefitting most from that movement.” Russ Rogg, president and CEO of Metroflor, agreed. “The driving force for 2015 was multi-family,” he said. “We do a lot of business there with some of our more entry-level dry back/glue down LVT specifications and with a fair amount of our Konecto [click] products. We did more in 2015 with just standard retail, residential remodel and replacement business. These are products sold through [specialty retail].” The shift from soft to hard surface in the multi-family channel was also cited as a growth factor by Dan Natkin, senior director of residential products, Mannington. “This growth has definitely been a

fcnews

June 27, 2016 I 23

the shining star large contributor both in rental and owned properties. Multifamily overall has been a tremendous area of growth. LVT has played very well there.” Jamey Block, vice president of product management for resilient at Armstrong Flooring, said the growth in multi-family and manufactured homes was “disproportionate. The strength in the multi-family new construction segment was partially offset by a weak general remodel market. As the market becomes more dynamic, we expect to see higher design in the residential market with builders and property management more focused on aesthetics.” Other LVT manufacturers that specialize in the product have observed growing acceptance and sale surges in the subcategory across the board. Jonathan Train, president and CEO of EarthWerks, which has been making LVT for four decades, said LVT is taking market share from other flooring categories in both residential and commercial segments. “With the tremendous detail in design and performance attributes we are able to incorporate into LVT, it has become a strong competitor for all hard surface options. The ease of installation, durability and overall styling has catapulted this category to find a home in all sectors.” Michael Raskin, president and CEO of Raskin Gorilla Floors, said LVT no longer has to be “sold.” Customers and end users are seeking out the product instead of having it presented to them by salespeople as an option. “The market for LVT is growing. More people are using it and asking for it off the bat. You don’t have to educate people about it anymore. When I first started I never imagined people would ask for LVT. It has taken on a life of its own. I think we’re in for a nice, long ride.” Installation On the installation side of LVT, dry back or glue down remains the method of choice, capturing 55.3% of the market, albeit down from 66.3% two years ago in terms of dollars. It is a less expensive product than click, evidenced by glue down’s 62.4% share in terms of volume. Click, however, is moving positively as it grew from about 26% in 2014 to 40.8% last year. WPC, which some estimate to have approached $200 million in 2015, is a big driver of that shift.

Loose lay accounted for 3.9% of residential LVT sales in 2015. “[Entry level] products particularly for multi-family and builder segments tend to focus primarily on glue-down LVT because that market is [valuedriven],” Congoleum’s Denman explained. “We’ve seen growth in click, which tends to be more in residential, especially residential remodel. We are seeing some real growth in the multi-family use of click because they are better products not just at the openContinued on page 24

Resilient imports by country of origin (by dollar value)

Sheet

Tile Canada 19.5%

Others 4.5%

China 28.9%

Others 7.7%

Taiwan 3.3%

China 76.7% Korea 15.5%

Japan 2.7% U.K. 5.7%

Korea 12.2%

Belgium 18.3%

Germany 5%

resilient

24 I June 27, 2016

fcnews

Resilient sales by product type Residential (in dollars)

Commercial (in dollars)

(in volume) Residential tile 4.2%

Residential tile 9.3%

(in volume)

VCT 26.3%

Sheet 38.9%

Sheet 18.2%

Sheet 55.1% LVT 35.6%

LVT 56.9%

Resilient Continued from page 23

ing price level but also at the next step up with options like 12 mil offerings. At the value end it’s always glue down because there is a worry about shrinking there and [glue down] is considered a more stable product. You can’t put a click installation system on an entry-level product because it is so thin the stability and integrity would be compromised.”

Metroflor’s Rogg said 2015 was the year the company finally “saw the needle shift a little more from the usual 50/50 split in dry back/glue down vs. our Grip Strip or Clic. It moved toward floating at 55% and dry back at 45%. I think that’s because our click business grew and we also began to see later in the year benefits of the launch of our Engage Genesis [rigid core] product. This is the first year we saw floating LVT overtake dry back.”

Linoleum 5.1%

Linoleum 6.9%

According to Raskin, many customers are simply more comfortable with traditional glue down, especially when they have qualified installers familiar with the method available for the job. “I would say with the more conservative customers, if they have good installers, they’ll always push to glue it down. It is, in my opinion, the most proven product out there that has stood the test of time. [However], click is still growing on the residential side.”

LVT 48.6%

Domestic vs. imports Similar to 2014, executives reported U.S. production has yet to affect the market shift in domestic vs. imported products. In addition, the level of comfort with Asian expertise in creating resilient products remains for those companies that still produce overseas. The overall consensus seems to support a surge in domestic popularity with shorter lead times and more trusted goods, but that has yet to occur. “Hardly any of the domestic

VCT 52.4%

LVT 29.4% Sheet 13.1%

production last year was up and running,” said Paul Murfin, CEO, IVC US. “You really saw no impact of domestic production on the U.S. market in 2015. I think in 2016 as domestic production starts to come on stream the market will continue to grow substantially to the point where it will absorb U.S. capacity.” Murfin’s sentiments were supported by FCNews research, which revealed 78.7% of the $1.451 billion LVT market is imported, a number that stood

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June 27, 2016 I 25

at 78.1% in 2014. Raskin surmised much of LVT is still imported from Asia. Several manufacturers are currently operating like Raskin with product coming from both overseas and sites at home. This mix gives an edge in meeting customer needs in terms of quality, lead times and brand trust thanks to the Made in the USA label. “The majority [of LVT] is still from overseas and will be until multiple factories are up and running here—then you’ll see more of a shift,” he noted. “Dry-back value products from China are still a major market. The days of offering higher-priced products out of China are dwindling. Over time it’s going to be more difficult. Our plan is to be diversified. We’ve stuck to a formula: value from China, technology from Korea, now service and pride from the USA.” EarthWerks’ Train noted the element of trust that lies in Asian factories’ expertise. “So much of the knowledge and experience in LVT was created in Asia, and Asia still has the bulk of the capacity and understanding of these products. U.S. production will continue to gain strength, but [some expect] it to be less than half of the capacity needed to service the market. For all of the different performance and styling options available in LVT there lies a variety of corresponding production needs. There is no ‘one-stop shop’ for fulfilling all

Resilient tile vs. LVT vs. sheet market share (in dollars)

Sheet 32.9%* Tile 13.8%**

LVT 53.3%

(in square feet)

Sheet 43.3%* Tile 23.1%** LVT 33.6%

*Sheet numbers include linoleum **Tile numbers include VCT and resilient tile

of these attributes in one place.” Sheet report Sheet vinyl, with both residential and commercial markets combined, was up 7.6% in dollars in 2015 thanks to gains on the residential side from $537 million in both 2013 and 2014 to $597.5 million last year. Commercial sheet was down 1.4% in dollars, dropping from $219 million two years ago to $216 million last year. At least the decline is not as significant when compared to the previous year, where commercial sheet fell from $254.24 million to $219 million.

In terms of volLVT ume, residential By origin By installation method accounts for a substantial majority of ($1.451 billion) sheet’s total share at 73.4%. This is due to a greater variance of Click product mix in the 29.4% Dryback/ Import commercial market gluedown Domestic 78.7% 65.8% with VCT and LVT 21.3% Floating holding significant 4.8% parts of the overall pie—52.4% and 29.4%, respectively. Overall, commercial sheet checked in at 132.2 million square feet. value and properties that other kitchens, bathrooms and utili“For residential products, products can’t mimic,” tarian applications in the sheet vinyl is still a viable prod- Armstrong’s Block said. “It still home—basements, mudrooms, uct because it has unmatched has a strong position in Continued on page 28

resilient

28 I June 27, 2016

Resilient Continued from page 25

workout rooms, etc.” IVC’s Murfin said sheet was also strong in multi- and singlefamily builder markets. “That is where a lot of the growth was. There are still viable segments in the retail part of the business as [sheet] is still the best value floor covering in the industry. I think it’s just the upper end of sheet that faces some challenges relative to the lower end of LVT.” Sheet is also affected by the shortage of experienced, knowledgeable installers as the process for rolling out and lay-

ing down the product takes a certain level of expertise. “Many skilled installers who are immigrants left the U.S. during the economic downturn due to lack of work here,” Congoleum’s Denman explained. “The implications of this were very real for more complicated installations and can work against sheet product. But with the shortage there can be a benefit at the other end of the business with LVT. It doesn’t require the same level of skill.” In terms of sheet construction, by most accounts fiberglass continues to grow. According to industry figures, residential fiberglass sheet took

Product origin

fcnews

LVT

(in terms of dollars)

Sheet Import 78.7%

Import 56%

Domestic 44%

home $362.5 million last year, which is 60.7% of residential sheet overall. Compare this to five years ago, when fiberglass represented only $205 million

Import 42%

Domestic 21.3%

• All linoleum is imported • All VCT is domestic • About 80% of commercial sheet is imported • About 75% of residential sheet is domestic

in sales. In terms of volume, fiberglass commanded 725 million square feet, or 61.4% of residential sheet volume. “Glass is continuing to take

Domestic 58%

share and grow in relative terms to the total market,” Mannington’s Natkin said. “But there are still pockets of the country that prefer felt, particularly in markets where we’ve seen more availability of experienced installers. It is getting harder and harder to find installers who know how to seam a floor for sheet vinyl. Price is definitely a factor in addition to performance; glass performs extremely well in a thicker product. But when you start getting thinner in an effort to get a value product, glass doesn’t perform as well as a felt counterpart [with a similar thickness].” Commercial The commercial side of the business brought in $1.1884 billion last year, with LVT continuing to take share in the contract market as well. However, while LVT commanded a 48.5% share of commercial resilient dollars, it only captured 29.4% in volume, illustrating its position as the highest priced commercial vinyl product. At the other end of the spectrum, VCT commanded more than half of commercial resilient volume at 52.4%, or 529 million square feet of the total commercial volume of 1.01 billion square feet, but that translated to $313 million, or only 26.3% of dollars. Metroflor’s Rogg cited education as one specific sector that is starting to specify LVT where it would have traditionally chosen VCT. “A lot of folks are looking at the value of LVT over VCT. The up-front cost of LVT products are more expensive but life-cycle costs like care and maintenance are causing a lot of school districts to look at greater up-front investments knowing the life is more effective in the long run. I think [VCT is] beginning to feel the pinch and it is going to get even worse.” He noted an advantage in LVT over VCT lies in design options as well. “You can do so much more with LVT from a

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June 27, 2016 I 29

Residential sheet construction (by volume)

(in terms of dollars) Other 8.2%

Other 11.5% Felt 27.9%

Felt 30.4%

Fiberglass 60.6%

Fiberglass 61.4%

design perspective. You can make the environment feel richer and more aesthetically pleasing with LVT than you ever could with VCT.” As previously noted, with commercial sheet down 1.4% in dollars last year its volume dropped from 15% of the commercial market in 2014 to 13.1% last year. LVT rose from 25.3% to 29.4%. “LVT continues to take share from all categories,” said David Sheehan, vice president, commercial hard surface, Mannington Commercial. “Not much commercial sheet is sold outside of healthcare but LVT benefited in all segments—retail, healthcare, hospitality and education.” In terms of general activity in the 2015 commercial market overall, Sheehan cited healthcare and retail as the two main driving sectors with hospitality and education contributing to activity as well. Rogg also mentioned retail as well as hospitality, noting Metroflor “did not see great gains in corporate or on the education front. Hospitality and retail was where we saw strong business.” The WPC shakeup Several executives on the resilient side of the industry described WPC—or composites, rigid core, etc.—as “disruptive.” While most companies are taking a “wait-andsee” approach to determine just how influential the new subcategory is, composite products are certainly making noise no matter how you look at it. Many consider it a tradeup LVT option (think “best” in a good/better/best system) or a viable alternative to laminate where water is a concern. “Up through last year, before everyone jumped into the pool, [WPC] was playing more as a trade-up to traditional LVT or a trade over from laminate,” Congoleum’s Denman explained. “With everyone in the pool now, you’re going to see companies competing at all price points so

it won’t just be a trade up; it will be ‘trade across’ at price points from traditional LVT.” Natkin said Mannington considers composites an addi-

tional LVT option. “In a complete LVT program there will be a range that includes a thin glue down, a slightly thicker glue down and then a move up into click LVT and click rigid core. [WPC] is a natural extension of the LVT product category in and of itself. People are trying to make it its own category but it really isn’t. Residentially it is absolutely taking share as a high growth category within the upper end of LVT. Commercially I think it has less play today mostly because the locking systems and construc-

tion aren’t designed to handle heavy rolling loads.” Raskin believes WPC—led by USFloors’ COREtec—has affected the residential glue down market specifically in addition to “traditional” vinyl click product formats. “But this has taken off faster than vinyl click for sure,” he noted. “[USFloors] did a good job marketing [COREtec] and they definitely did a nice job differentiating it. You’re going to have this kind of product as a subcategory of LVT but it will fall in the class of engineered LVT, which in my eyes is anything that’s different than dry back. And that’s where the

market is going.” While several players are still catching on in the WPC arena, Rogg said the category “represented significant growth” in 2015. “I think it has been one of the most revolutionary products to hit the LVT industry in a long time— maybe ever. Clearly it has legs. We’re bullish on the category; it’s going to be very big. We look at it as an extension of our LVT portfolio. It was 3% of our overall business last year because we are just getting started. I would guess by the end of 2016 it will be 10% of our business, maybe even more.”

wood

30 I June 27, 2016

fcnews

New formats, pent-up demand drive revenues in 2015 By Reginald Tucker

he U.S. hardwood flooring market continued on its upward trajectory in 2015, although the rate of growth slowed slightly over the course of the year. FCNews research shows the segment generated $2.059 billion in 2015, a 6% jump over 2014.

T

That’s a tad lower than the 7% growth rate achieved in 2013, when the category hit the $1.816 billion mark. 2015’s sales figures also represent the first time since 2008 that the category eclipsed the $2 billion mark. In terms of volume, 2015 hardwood flooring shipments totaled 815 million square feet,

a 5.8% uptick over the year prior. By comparison, hardwood flooring volume grew roughly 6% over the 2013–14 period. Analysts say this correlation of greater dollar-to-volume growth reflected higher raw material prices incurred by manufacturers over the corresponding period. That 815 million square feet marked the category’s highest

Total wood sales (in billions of dollars)

(in billions of square feet)

$2.059

$1.943 $1.570 $1.640

.770

$1.816

.652

.685

.726

5.8%*

6%*

2011 2012

2013

*Represents 2014-15 change

2014

2015

.815

2011 2012

2013

2014

2015

volume since 2008. On the downside, hardwood flooring sales are still off significantly from 2006—19.7% in dollars and By species 29.7% in volume. Bamboo Other exotics Looking at the bigger 2% 5% Maple picture, the hardwood floor7% Brazilian ing sector grew to represent cherry 2% 10.1% of total flooring sales Other in terms of dollars but just domestics (includes 4.4% with respect to volhickory, birch) ume. Compared to five 19% White oak years ago, the hardwood 28% flooring category accounted for 9.8% of total sales and Red oak 37% roughly 4% in terms of volume. More significantly, the wood flooring category in 2015 represented the thirdBy construction largest hard surface catego(in dollars) ry—in terms of dollars— behind resilient and ceramic, respectively. However, wood comes in fourth place with respect to total hard surface square footage Engineered Solid shipped, trailing resilient, 54% 46% ceramic tile and (surprise) laminate. One of the primary drivers for growth in the hardwood flooring sector was the increase in engineered proBy finish type duction and consumption, (in dollars) as evidenced by the wide range of new formats and construction types available. These run the gamut from wider widths (6 inches or Unfinished more) to longer boards (6 46% feet or longer). “Engineered Prefinished products are leading the 54% growth due to their broad style and design options,” said Brian Greenwell, vice president of sales and marketing, Mullican Flooring. “This growth in engineered is such as a ½-inch engineered directly aligned with the option, professional installers rebound in residential construc- and contractors have a product tion, along with increased resi- they can still nail down to the dential remodeling [activity].” substrate. While it didn’t match the “The fatest growing formats high double-digit increases gen- appeared to be 3⁄8- and 1⁄2-inch erated by new home construc- engineered tongue and groove,” tion demand, the residential said Jamann Stepp, director of remodel/replacement business marketing and product manageperformed well nonetheless, ment, USFloors. “Solid 3⁄4-inch is representing roughly 30% of still viable, but only in certain wood flooring activity in 2015. geographic areas.” Industry observers say the This growing preference for trend correlates precisely to the longer planks and wider widths shifting ratio of engineered to is paving the way for a deeper solids, particularly in markets utilization of engineered hardtypically accustomed to solid wood, thanks to the aesthetic strip. FCNews research confirms flexibility of the product, notes the engineered category now Drew Hash, vice president of represents roughly 55% of cate- hardwood, Shaw Floors. Also, gory activity—up from a 50-50 “engineered products tend to be split just a few years ago. This easier to install, which is appealshift is especially evident in ing to the growing number of markets such as the Northeast, do-it-yourself consumers.” which is traditionally a strongHash said Shaw in particular hold for solids. But with the enjoyed “tremendous success” advent of alternative formats, Continued on page 32

How wood is sold

wood

Wood Continued from page 30

last year with its engineered hardwood offering as reflected in a $40 million capital investment in its South Pittsburg, Tenn., manufacturing facility. According to Shaw, the investment adds more than 60% capacity to the existing hardwood manufacturing facility. With this wholesale shift to engineered products, industry observers are seeing markets traditionally accustomed to solids beginning to make the switch. “As you start to move around the country, we are seeing some markets that had previously used engineered flooring and have started to expand into some of the newer categories such as wider/longer products,” said Dick Quinlan, senior director of hardwood products at Mohawk, which also markets the Columbia Flooring and Quick-Step brands. “Installers and contractors are being more aggressive in taking on new styles and designs, including wire-brushed and scraped products. They have been growing very nicely for us in the builder market.” Indeed, the new home con-

struction arena in the U.S. in 2015 contributed to an environment that was conducive to greater hardwood flooring consumption, even though prospects for the overall builder market were lower than many analysts’ expectations. According to the National Association of Home Builders (NAHB), nationwide housing starts reached 1.11 million units in 2015, a 10.8% increase over 2014. Within that sector, singlefamily starts posted a robust gain of 10.4% to 715,000 units. Still, many analysts were hoping for more robust increases. “We felt strongly that construction would grow by about 14%, mostly based on what many of the pundits were projecting at the beginning of 2015,” Quinlan told FCNews. “It’s still growing a lot better than it has over the past few years—just not as strong as we expected.” Mitigating factors The acceptance of expanded hardwood flooring formats among key end-use sectors was not the only factor that drove the hardwood flooring business in 2015. Industry observers also point to a return to raw materi-

fcnews

Wood consumption Solid vs. engineered 85%

Percentage of Consumption

32 I June 27, 2016

90%

82%

by region

72%

65%

63%

28%

37%

35%

15%

18% 10%

Northeast Southeast Midwest

Solid als pricing stability last year, following a tumultuous period in 2014 whereby manufacturers incurred significant increases in lumber costs. Supplier say raw materials were less available at that time, which drove a lot of price increases, particularly on the solid side of the business. “For the first time in several

Pacific Northwest

Southwest

West Coast

Engineered

years, we did not see any massive swings, up or down, in our core lumber and veneer raw materials,” Shaw’s Hash said. That sentiment was echoed by other major suppliers, Mannington included. “In 2015 raw materials were less of an issue; there was not quite the same pressure we saw in 2014,”

said Dan Natkin, senior director, residential products. Instead, he said the company had to contend with pricing pressures brought on by an influx of imported, lower-priced product from China. “This tends to have a deflationary effect on pricing.” For some hardwood flooring

fcnews manufacturers, especially those based north of the U.S. border, there was no relief from fluctuations in raw material costs. In fact, several suppliers were not only negatively impacted by escalating lumber prices, but an unfavorable currency exchange rate further pinched profit margins. “The change in the exchange rate negatively impacted us by reducing our profitability,” said Yves Myrand, vice president of sales and marketing, Lauzon Hardwood Flooring. That pretty much mirrored the experience Mirage Hardwood Floors faced in 2015, according to Brad Williams, vice president of sales and marketing. Specifically, he said doubledigit increases in lumber costs—coupled with higher demand for wider products— put pressure on manufacturers’ raw material yields last year. Impact of onshoring Economists have documented the mass exodus of hundreds of thousands of manufacturing jobs from America to China as well as other countries as a result of drastic cost-saving initiatives and fierce competition. But in recent years, industry observers have seen an incremental return of those same jobs back to America as domestic companies reevaluate the cost-benefit equation of outsourcing production. This phenomenon, often referred to as “onshoring”or “reshoring” is taking place across a diverse range of markets and industries, including hardwood flooring. “I think this is definitely happening, and for varied reasons,” said Don Finkell, president of American OEM, a private-label supplier to the domestic hardwood flooring market. “First, there are cost increases tied to labor in China as well as other costs of doing business in that country. However, the price of the Chinese product does not bear this out. Most people agree that the price of Chinese-made wood flooring keeps going down. Perhaps some of this is because of the devaluation of the Chinese currency and the slower growth in their national economy.” But the bigger reason for onshoring, Finkell argues, is the uncertainty surrounding some Chinese-made goods. Among the primary factors at play here: “First, and most dramatic, is last year’s CBS ‘60 Minutes’ report on high levels of formaldehyde in Chinese-made laminate sold by Lumber Liquidators. The result of this publicity collapsed

June 27, 2016 I 33

the Lumber Liquidators’ stock price and generated a lot of class-action lawsuits from their customers. It is an understatement to say other retailers do not want those problems to visit their door. As a result, they are more careful about their flooring purchases from China. In addition, consumers are more aware of where their purchases are coming from. This gives impetus for American-made goods.” The second issue, Finkell noted, also stems from Lumber Liquidators but it involves the U.S. Lacey Act. The U.S. Justice Department raided Lumber Continued on page 34

Wood flooring sales (by channel of distribution)

Wood imports by country of origin (at landed duty value)

Direct 6.8% Other retail 6.2% Contractors (wood flooring, commercial, builder)

Southeast Asia 5.6%

Others 12.5%

Brazil 5.6%

24.7%

Canada 9.5% Home centers 27.6%

Floor covering stores 34.7%

China 66.8%

Source: International Trade Commission

34 I June 27, 2016

Wood Continued from page 33

Liquidators’ Toano, Va., headquarters in September 2013 in search of potential violations of the Lacey Act after the results of an undercover investigation conducted by the Environmental Investigation Agency was made public. The ensuing investigation by the Justice Department, conducted with Lumber Liquidators’ cooperation, ended in a criminal consent decree against Lumber Liquidators and fines in excess of $13 million. Another consequence of the settlement, Finkell said, is Lumber Liquidators’ sourcing is going to be closely monitored for at least five years. “The result is that major companies need to be more careful in verifying the legality of their Chinese wood sources. This is more complicated than you might think since a large portion of Chinese wood products are estimated to come from illegal or unverified sources. This uncertainty does not affect the consumer as much as it affects the executives who are responsible for sourcing wood floors who will be the ones to face the consequences for Lacey viola-

wood tions. More of them are decid- manufacturers, he added. ing that they do not need to take Rise of domestic exotics In line with the scale back in the risk.” The final factor is the some imported species—particretroactive nature of the ITC Antidumping petition. Initial rates for Chinese imported multi(in dollars) Main Street layered wood floors was 2% in the 5% range. Last year Contract the duty retroactively Commercial 9% reset at 13.74% for all covNew ered wood flooring residential imported between Dec. 1, 30% 2012, and Nov. 30, 2013. Importers were sent a bill for about 8% of the value Residential replacement of their imports from cov59% ered suppliers during that 12-month period. This year the Department of Commerce is calculating the duty rate for the next 12-month period, Dec. 1, 2013, ularly from Southeast Asia and to Nov. 30, 2014. “No one parts of South America—indusknows at this point what the try analysts point to a correrate will turn out to be,” Finkell sponding rise in the production said. “It is an uncertainty that of domestic exotics in the U.S. more importers would like to market. Specifically, demand avoid if they can find an alterna- for homegrown exotic species such as hickory, walnut and tive.” any These factors, in addition to maple—essentially a growing Made in America American species other than sentiment among American oak—has been skyrocketing in consumers, are combining to recent years. “The true exotics that were make a better market opportunity for domestic wood flooring popular several years ago (tiger-

fcnews wood, cumaru, jatgoba, etc.) are not in demand as they were, say, six to eight years ago, USFloor’s Stepp said. “Today’s consumer seems to prefer slightly rustics to distressed visuals.” and Distributors retailers credit the overall trend toward traditional, time-worn looks in home decor. In addition, broad changes in the overall economy also impacted sales of exotic hardwood floors, according to industry executives. During the heyday for exotics in America (roughly 10–12 years ago), there was a solid supply chain in place and importers were very aggressive with their pricing. But the economic crash in 2008 had a chilling effect on the exotic market. “Customers started buying less product in the wood business,” Mohawk’s Quinlan said. “The crash changed the market significantly.” At the same time, Quinlan noted, the Lacey Act was coming into play. This put additional pressure on exotic hardwood importers and marketers who

Wood sales by end use

were now charged with the responsibility of ensuring that their suppliers and agents across the chain complied with new regulations pertaining to sourcing. As a result, “the market got smaller for some of the Brazilian and South American suppliers at large,” he explained. “When their markets suddenly dropped 30, 40 or 50%, they went out of business.” In response to the shift from tropical species to domestic exotics, many hardwood flooring manufacturers have adjusted their product mix accordingly. “We do have some exotics in our line, such as Brazilian cherry, but we really don’t promote them heavily because consumers are moving away from the red tones,” Mullican Flooring’s Greenwell said. Other suppliers are responding accordingly. At Mohawk, for example, the focus is on introductions that highlight maple and hickory as well as walnut looks in an engineered format. “This has allowed us to introduce some new species that have more of a tropical look but are domestically grown and produced,” Quinlan said.

laminate

36 I June 27, 2016

fcnews

U.S., European sales rise, Chinese imports decline By Reginald Tucker

.S. laminate flooring sales held steady in 2015 despite a sizeable falloff in imported shipments—particularly from China—coupled with intensified competition from LVT, WPC and other engineered flooring products. FCNews research shows laminate flooring sales reached $1.137 billion in 2015, a slight uptick from $1.135 billion in 2015. With respect to volume, however, shipments were estimated to have dipped to 1.034 billion square feet, a 3% decline over the 1.066 billion square feet delivered at the first point of sale in 2014. In the grand scheme of things, that puts the category at 5.6% of the total flooring market—down slightly from 5.8% in

U

Laminate sales by origin (in volume)

Domestic 59% Import 41%

terms of dollars compared to 2014, but down in volume compared to 6% last year. Compared to 2009, the laminate flooring category represented 6.5% of the industry in terms of dollars and 5.5% with respect to volume. The significant falloff in volume last year, which translates into roughly 30 million square feet of product, was primarily due to the elimination of some Chinese-made laminate flooring imports that did not comply with CARB-2 federal regula-

tions. Specifically, adhesives incorporated in many of these products—which were sold through major home center chains, mass merchants and other outlets in the U.S. market—were found to contain excessive levels of formaldehyde—a known carcinogen— according to a widely watched CBS “60 Minutes” report that first aired in 2015. Worse, the expose disclosed a practice whereby some mills purposely mislabeled shipments as being CARB-2 compliant, when video footage and audio statements clearly showed this was not the case. A subsequent episode that followed in February this year showed the tested formaldehyde levels in some of the products were significantly higher than the maximums allowed under the California Air Resources Board’s Airborne Toxic Control Measure (ATCM) 93120 Title 17, California Code of Regulations, Phase 2 requirements for composite, woodbased products. The initial incident, which kicked off a backlash from consumers, retailers and distributors alike, served as more than just a black eye on certain segments of the category; the end result was a tangible effect on production and distribution of the product in the United States during 2015. According to Bill Dearing, executive director of the North American Laminate Flooring Association (NALFA), the decline in importation from China was palpable and swift. By his count, the pullback in non-CARB 2-compliant laminate flooring imports from China could have been as high as 5% of total volume shipped at the first point of distribution, which would put the decline in shipments at more than 53 million square feet. By his count, that would

Total laminate sales (in billions of dollars) $1.094

1.02

2011

2012

2013

2014

have pulled the total volume number down even further to 1.013 billion square feet. Within this dark cloud, some observers see a silver lining. “I believe that, more properly, the ‘bad year’ pertained to bad products from certain manufacturers in China who allegedly falselabeled their products,” Dearing stated. Conversely, many NALFA-member companies sought to reframe the message, turning an unfortunate development into an opportunity to shine a spotlight on those companies that are playing by the rules. As Dearing explained, NALFA-certified products must pass 10 rigorous tests conducted by an independent third-party laboratory, including meeting or exceeding CARB Phase 2 emission standards, to be approved to carry the NALFA certification seal. Furthermore, laminate flooring products bearing this seal must undergo laboratory testing that affirms compliance with applicable federal and state regulations pertaining to formaldehyde content. “This seal serves as verification that a product will provide the retailer and consumer a safe flooring option,” he said.

(by volume) Warehouse clubs 4% (includes Sam’s Club, Costco)

HOME CENTERS

1.066

1.034

2011

2015

2012

2013

2014

2015

*Represents 2014–15 change

(in dollars)

Residential replacement 87%

1.06

-3%*

Laminate sales by channel

Commercial 2%

1.04

1.1%*

Laminate sales by end use New residential 8% Main Street 3%

$1.137

$1.135

$1.109 $1.123

(in billions of square feet)

Lumber Liquidators 14%

Other 6% (includes IKEA, Floor & Decor, other liquidators, misc.)

Home Depot 23% Lowe’s 17%

Specialty retail 30%

Tale of two markets This might very well explain why those companies that voluntarily report to NALFA—or who are card-carrying NALFA members—report having a completely different experience in 2015. While some Chinese imports declined anywhere from 3% to 5%, many NALFA members with manufacturing operations in the U.S., Canada and Europe reported doubledigit increases last year. Roger Farabee, senior vice president of marketing for Mohawk Hard Surfaces/Unilin North America, said he has not seen any data showing any decline whatsoever among European importers. “So that means [the decreases] came out of Chinese imports; those are the products that took a hit. Luckily the domestic industry and the better European imports did not see any negative impact.” Other industry observers agree with this assessment. “We think the [“60 Minutes”] report had a dramatic effect on Chinese imports, but not the category in general,” said Jeff Francis, hard surfaces laminate category manager, Shaw Industries, which is also a NALFA member that offers products carrying the

Laminate imports by country of origin Austria 5% Others* 8%

Canada 10%

China 64%

Germany 13%

* Includes Chile, Switzerland, Belgium, Brazil, Spain, Hong Kong

Menard 6%

Source: International Trade Commission

CARB-2 compliant seal. “As a domestic manufacturer, this has been good for us in 2015.” Dan Natkin, senior director, residential products, Mannington—which also markets laminate flooring products that carry the NALFA seal— believes the damage was primarily limited to non-compliant floors from China. “I don’t think the ‘60 Minutes’ story hit the category in [general], although it had a profound impact at Lumber Liquidators,” he said. “Ultimately, I don’t think it’s going to impact the category because we’ve already seen a shift back toward non-Chinese produced laminate flooring. There are a lot of phenomenal options both domestically produced and made in Europe that comply with—or exceed—the CARB standard.” Interestingly, the formaldehyde/composite wood product issue is not a new phenomenon. According to Derek Welbourn, CEO of Inhaus, the matter has been effectively managed in Europe for many years. As an example, he cited how Ikea— the well-known modular furniture purveyor—emerged as an early pioneer in the use of lowformaldehyde material for building products. “From a technical perspective, it is very simple: Don’t use formaldehyde glue when making your products,” he explained. “This has been a standard in Europe an in our factory since its inception.” Similarly, when California first announced plans to issue new standards for composite wood products, Welbourn said Inhaus reviewed those standards and found it surpassed the benchmark. At the end of the day—at Continued on page 38

laminate

Laminate Continued from page 36

least in the mid-term aftermath of the “60 Minutes” report and the subsequent findings—the market hasn’t altogether turned its back on the laminate sector. “I don’t believe retailers will give pause about supporting the category,” said Brian Parker, director, product management, resilient tile, Armstrong. “However, retailers will give pause to the brands that they carry and offer as consumers will continue to be concerned about purchasing little-known or unknown brands.” Mohawk’s Farabee agrees, adding that it boils down to dispelling untruths and misperceptions. He believes most American consumers can distinguish between a few “bad actors” and the laminate flooring industry as a whole. “I think there’s still education that needs to be done,” he said. “But we’ve worked very hard, both as Mohawk Industries and also as participants in NALFA, to talk about the quality of our products, the steps we go through to ensure the safety of our products—not only being CARB compliant but also doing thirdparty testing that is more rigor-

ous and goes beyond what is required to ensure there are no issues with our products in regards to overall safety and indoor air quality. That’s what all the better manufacturers have been focusing on, and I think we need to continue that.” End-use market activity When the first laminate floors were introduced to the U.S. market just a little over 20 years ago, residential replacement seemed like an ideal fit given the product’s relative ease of installation, broad availability and accessible price points. Not much has changed in this regard as the sector represents nearly 90% of category sales, FCNews research shows. “Clearly residential replacement is where this product fits, and it’s where most of the installations occur,” Shaw’s Francis said. Armstrong’s Parker agrees, referring to residential replacement as “the dominant category by far.” At the same time, he has seen what he describes as “solid movement” in new home construction. (FCNews research showed the builder segment accounted for roughly 8% of laminate flooring sales last

year—up 4% from just a few years ago.) Industry observers point to gradual acceptance by new homeowners and builder contractors alike. “That’s probably the largest single area of growth right now Mannington’s Natkin said. “The product has always existed in the multi-family environment, but singlefamily new home construction is a rapidly growing area.” Broader economic indicators support the growth of this sector. According to the U.S. Department of Commerce, more than 8.34 million singlefamily permits were issued in 2015—an 18% increase over 2014. Looking at housing permits in general (single- and multi-family), new permits issued in 2015 exceeded 14.1 million units—an increase of 11.7% over the previous year. Channel dynamics Given laminate’s stronghold in the residential replacement sector, it should come as no surprise that—from a channel perspective—home centers and mass merchants continue to

fcnews

Five-year average selling price (per square foot) $1.10

(in dollars)

38 I June 27, 2016

$1.09

$1.07 $1.06

$1.06 $1.05

2010

2011

2012

drive the bulk of category sales, as much as 70%, FCNews research shows. These big box, warehouse-style outlets, which include the likes of Home Depot, Lowe’s, Floor & Décor and others, have combined to keep the specialty retail segment from building its share of laminate flooring sales beyond 25% to 30%. “Home centers, along with a combination of multi-location, national retailers still represent a decent size of the market,” Mohawk’s Farabee said, adding declines that outlets like Lumber Liquidators experienced last year didn’t move the needle appreciably. “Specialty retail, in particular the independent retailer, is by far the smallest segment selling

2013

2014

2015

laminate flooring today.” Interestingly, industry observers are seeing movement in other emerging channels. “Direct to consumer is growing, although it is hard to segment this data as many of the home centers and retailers service this market via online sales,” Inhaus’ Welbourn said. “It is an important area of growth, but there are still challenges shipping pallets of heavy goods direct.” Travis Bass, executive vice president of sales and marketing for Swiss Krono, also sees ecommerce gaining ground as it pertains to laminate flooring sales. “Specialty retail seems to have stabilized with a basic percentage of consumers willing to pay for expertise, knowledge and services.”

ceramic

40 I June 27, 2016

fcnews

Housing drives sixth straight year of increases By Ken Ryan

he U.S. ceramic tile market turned in a stellar performance in 2015, its sixth consecutive year of growth. Led by gains in the construction and housing markets, and buttressed by low interest rates and an improving employment picture, industry experts estimated sales increased 9.8% to $2.613 billion, with volume up 9.9% over 2014 to 2.187 billion. That compares to a 6.2% increase in sales from 2013 to 2014. The biggest change was in volume, which gained a tepid 0.5% in 2014. Out of the last five years, only 2013’s 12.9% volume increase bested the 9.9% gain seen in 2015. To put things in perspective, the ceramic tile category was the third-largest sector in terms of dollars, representing 12.7% of all flooring. In terms of volume, ceramic tile represented 11.9% of total industry sales, trailing only carpet and rugs (60%) and resilient (16.8%). Industry observers cited increased domestic capacity as the primary contributor to the growth in consumption of U.S.produced tile. In fact, according to The Tile Council of North America, 2015 was a record year for U.S. manufacturers as an alltime high of 857.2 million square feet of ceramic tile was shipped domestically. Domestic production is expected to rise over the next few years as U.S. companies continue to break ground on new U.S.

T

facilities. In 2015, Dal-Tile, the industry’s largest player, began manufacturing product from the 1.4-million-square-foot ceramic tile plant in Dickson, Tenn. Several other manufacturers are also in the process of adding domestic capacity. Bob Baldocchi, chief marketing officer and vice president of sales support for Emser Tile, said the gains in volume were made up by a combination of unit growth and average selling price growth, with the two factors split approximately 50/50 in terms of impact. While hard surfaces have taken market share from soft goods, ceramic tile as a category outpaced other hard surfaces by 5% to 8% in 2015. Baldocchi cited several key factors driving this trend, including improved consumer confidence thanks to a national increase in home values and perceived stability in the economy. Meanwhile, the downward slide in oil prices had a negative impact in regional markets such as Houston, where consumers are reliant on the health of this industry. However, from a broader, national perspective, lower prices at the pump had a positive impact on consumer spending capabilities. Other factors contributing to growth included an increase in housing starts for both single- and multi-family housing as well as a rise in commercial spending on new construction and remodel work, Baldocchi added.

Total ceramic sales (in billions of dollars) $2.241 $2.38 $1.814 $1.938

(in billions of square feet)

$2.613 1.68

1.76

1.98

1.99

9.8%*

2011 2012

2013

2014

2015

2.19

9.9%*

2011 2012

2013

2014

2015

(Wall tiles not included)

*Represents 2014–15 change

Residential Housing starts and new home sales play a particularly important role in the ceramic category. In 2015 new home starts increased for the sixth consecutive year, reaching their highest annual level since 2007. The 1.11 million units started in 2015 represented a 10.8% increase from the previous year. Additionally, new single-family home sales rose for the fourth straight year, climbing 14.5% vs. 2014, or an increase of 501,000 units. Another component of the housing market that showed favorable metrics was foreclosures. Often a major indicator of the residential market’s health, foreclosures in 2015 fell for the fifth straight year to their lowest

annual total since 2006. The 1.08 million foreclosure filings on U.S. properties in 2015 represented a 3% decline from 2014 but a 62.3% decline from the peak foreclosure year of 2010. Experts noted that new home sales are seeing better elasticity in consumers’ ability to upgrade features in the home, which bodes well for ceramic tile. “Flooring is a key benefactor in this trend,” Baldocchi explained. “Competition for fashion-conscious consumers is causing all sectors—including multi-family, manufactured housing builders, new production homebuilders and others— to upgrade their base or include upgraded features in their offer-

ing. Often this included better ceramic products.” Changes in formats, looks and applications are influencing product sales. In ceramic tile, wood looks, wall tile and decorative accents are generating the greatest activity, observers say. In addition, products once seen mainly in commercial applications such as large formats—those greater than 24 inches—contemporary looks and colors are now commonly done in production build, custom homes and are being sold though residential retail outlets. As the housing market continues to improve, executives expect demand will favorably impact ceramic tile growth. Continued on page 42

Percentage share of U.S. imports (by square feet)

Source: U.S. Dept. of Commerce

ceramic

42 I June 27, 2016

Ceramic Continued from page 40

Within the new residential construction segment, it is estimated that approximately 75% of sales are in single-family units with the remainder in the multifamily category. “We are projecting that the growth in singlefamily home construction is expected to continue to outpace the growth in multi-family over the next couple of years,” said Jason Roshel, senior director, product strategy at Dal-Tile. “Additionally, the trend since 2010 has been that single-family homes continue to get bigger while multi-family homes con-

tinue to shrink. Since ceramic tile represents a greater percentage of the flooring used in a single-family home than a multi-family home, this will have a positive impact on the ceramic tile category.” There are those who suggest the ceramic tile market would have achieved even greater gains were it not for the uncertainty that still exists among consumers regarding the overall state of the economy. These executives note the industry tends to follow economic trends such as housing recovery, interest rate fluctuation, credit availability, commercial market recovery and

consumer confidence in order to gauge how well the market is bouncing back. While there has been an uptick in the overall economy, it is still not as robust as some would like. Commercial Tile demand in the commercial market continues to grow, according to experts who cited hospitality, assistedliving healthcare facilities and retail sectors in particular. The hospitality sector led in all categories in terms of commercial sales growth, with demand for value-priced products remaining strong. In healthcare, the aging pop-

fcnews

Ceramic sales by origin (by volume)

Ceramic sales by end use (in dollars) Other 1%

Import 68.7%

Domestic 31.3%

Commercial 21% New residential 20%

Main Street 11%

Residential replacement 47%

ulation continues to fuel growth. In terms of design, many facilities are striving to create an atmosphere that’s more home-like or similar to

high-end hospitality settings. These types of design choices allow patients to feel more comfortable compared to a more traditional, clinical environment. Also driving growth in this category is the increasing development of extended stay rooms where patients’ family members can reside during long stays. With respect to retail, activity has been fueled in part by increased activity in the residential building sector. “We are seeing more commercial spaces, especially in the hospitality and healthcare segments, taking inspiration from residential designs, making public spaces more home-like,” Dal-Tile’s Roshel said. “On the opposite side, residential areas are utilizing more traditionally commercial styles, including large-format sizing and clean lines in design.” Imports vs. exports While imports comprised 68.7% of the U.S. market in volume through 2015, U.S.-produced tile has made significant inroads over the last decade. As recently as 2006 imports comprised 82.4% of the market; the 68.7% mark was unchanged over 2014. According to the Tile Council of North America (TCNA), China regained the position as largest exporter in square feet to the U.S. in 2015, supplanting Mexico. China’s share of U.S. imports was 29%, followed by Mexico with a 27% share of imports and Italy with an 18.5% share. Spain and Turkey rounded out the top five with a 7.2% and 4.6% share of imports, respectively. Italy remained the largest exporter to the U.S. on a dollar basis in 2015, comprising 34.6% of U.S. imports. China was second with a 26% share and Mexico was third at 14.3%. Industry observers note that the product’s value is calculated at point of entry into the U.S. In other words, it is recorded when it lands on U.S. soil. To that end, much of ceramic tile’s increase was attributed to suppliers beefing up their inventory levels and not reaching first point of sale.

44 I June 27, 2016

commercial

fcnews

LVT, carpet tile fuel growth as corporate reigns By K.J. Quinn

improving gradually economy combined with a rise in permits for building renovations, chiefly in the corporate office sector, contributed to an increase of 3% to 5% in the commercial flooring arena in 2015, FCNews research shows. True to form, the carpet category remained king as sales reached roughly $3.95 billion despite the ongoing encroachment of hard surfaces on carpet’s turf. Estimates indicate that as much as 80% of carpet sales were generated by specified contract market with the remainder coming from Main Street applications. Within the soft surface segment, modular tile has emerged as the pacesetter, growing at a 10% clip year over year and now commanding about 55% of soft surface sales. Among the primary drivers contributing to the success of carpet tile, industry watchers say, is the product’s portability and assortment of sizes, colors and textures. Plus, the A&D

A

community craves the product’s sustainability as it is much easier to take up and recycle than broadloom. “The styling for carpet tile continues to improve,” said Ralph Grogan, president and CEO, Bentley Mills. “Some of the long-term holdouts were law firms and accounting firms, and even they are switching to carpet tile for the same reason everyone else: ease of installation and recyclability.” Experts estimate that broadloom still represents about 56% of soft surface volume. In high-end applications—where broadloom is often considered the better solution because of its ability to create custom looks and finishes—innovation is enabling modular carpet to expand. “We came to NeoCon last year with a heavy weight, highend, luxurious product not common to [carpet] tile,” noted Mike Gallman, senior vice president of product management, Mohawk. “We [brought] some innovation to our cutting and tufting processes to be able to do that.”

Commercial market share ($6.732 billion)

By segment

Laminate 0.8% Wood 3.4%

Hospitality 13% Retail 12%

Corporate 45%

Education 14%

By category Rubber 8.3%

Ceramic 11.2% Carpet 58.6%

Vinyl 17.7%

Healthcare 16%

Hard surface activity Although carpet maintains a dominant share of the commercial market, several hard surfaces categories have been growing at a faster rate than carpet in some sectors. Observers say sustainability concerns have turned into a selling point as more flooring producers list environmental and health data

to help make products transparent and verifiable. Case in point: Armstrong provides a broad portfolio of sustainable hard surfaces such as VCT featuring high recycled content, Bio-Floor (BBT), linoleum sheet and tile goods. “Our investment in our luxury flooring plant in Lancaster, Pa., will yield product with recycled content as we phase our launch into commercial,” said Dominic Rice, senior vice president, North America commercial, Armstrong Flooring. “Further, with domestic production we reduce our environmental footprint related to transportation for delivery and reclamation of the product.” Resilient, a stalwart category in the commercial arena, generated $1.188 billion in commercial sales, FCNews research shows. LVT is now 29.4% of the commercial market, while sheet is now just 13.1% of the commercial market, down 1.4% in dollars in 2015. “LVT continues to be the fastest growing product across a broad array of commercial segments,” said David Sheehan, vice president, commercial hard surface, Mannington. “Both the aesthetic and performance properties of commercial LVT provide the end user the perfect price and performance value.” While LVT is the headliner, other hard surfaces are carving a niche in various segments. For instance, sheet goods retain a strong position in healthcare, where it is predominantly used in operating and emergency rooms. “We still see VCT from a volume standpoint as the largest [hard surface] category,” said Jeff Krejsa, senior vice president at Tarkett, noting its strong per-

formance characteristics make it suitable for hospitals, schools and retail environments. “LVT has taken over from a dollar standpoint and has grown significantly.” With respect to ceramic tile, analysts estimate that between 70% and 75% of category sales can be attributed to specified contract. While statistics are hard to pin down because distribution is fragmented, ceramic trails only vinyl as the leading commercial hard surface, tallying an estimated $750 million in 2015. Rubber remains a workhorse product for healthcare and education settings, although the category exhibited a modest sales hike last year according to industry estimates. Linoleum remains a viable choice for these environments with sales reportedly picking up in the second half of 2015. “Linoleum is a value proposition sale that makes economic sense in facilities that demand low cost of ownership and high durability,” said Denis Darragh, general manager, North America, Forbo Flooring. “As a result, it has a very strong and growing presence in education and healthcare and a solid position in retail.” Approximately 85% of linoleum sales are derived from specified contract, experts said, although Main Street remains a growth opportunity. Rounding out the hard surface categories are hardwood and laminate, which collectively combined to represent roughly 4.2% of the total commercial flooring business, FCNews research found. Hardwood accounted for nearly four times as much revenue as laminate and was typically specified for

fcnews

supreme higher-end applications. Laminate, meanwhile, has primarily been relegated to retail spaces with light foot traffic. Observers point to shortcomings related to performance as a reason for the lack of large-scale specifications. “I think laminates are declining because of their susceptibility to moisture,” said Jack Ganley, president, Mannington Commercial. “There is a lot of new construction in retail, and laminates are being used less.” Corporate office The office sector remains the largest of the five major commercial markets, representing about 45% of flooring sales, FCNews research shows. Carpet tile emerged as the top flooring choice for office interiors, boasting 55% to 60% market share. “The modular nature of carpet tiles allows for more flexibility in design and installation methods,” said Betsey Friedman, workplace designer, CallisonRTKL Architects, New York. “Organizations are constantly changing, and carpet tiles can be arranged to quickly reconfigure a space.” Modular carpet, however, is not the optimum solution for all workplace spaces. For example, LVT is increasingly being specified in entryways, hallways, cafeterias and lunch rooms due to maintenance requirements. Furthermore, the functionality and design versatility of other hard surface products, namely rubber and linoleum, are leading to specifications in some areas. “I think you are seeing some increased variation in flooring types used in the office—probably a little more hard surfaces,” said John Stephens, vice president of marketing at Shaw Contract Group. As the workplace becomes more collaborative and open, flooring is playing a larger role in office design, experts say. “A sense of place is increasingly important to all individuals,” Stephens added. “And now more than ever employers are prioritizing workspaces that fit the lifestyles and enhance the productivity of their employees.” To that end, more companies are creating environments that provide flexibility and choices for how and where to work. “Contemporary offices are complex spaces that now support a multi-demographic, multi-ethnic and multi-disci-

June 27, 2016 I 45

workforce,” Chip plined DeGrace, executive creative director, Interface, explained. “The most effective offices support business success by providing specific environments for specific people and their specific activities.” Hospitality Hospitality is fast becoming a more lucrative sector as hotel brands are continuing to invest millions of dollars to renovate existing locations and build new properties. “In terms of design, many facilities are striving to create an atmosphere that’s more like home,” said Danielle Hunsicker, general manager,

commercial sales, Dal-Tile. In terms of product type, broadloom remains the preferred option for guest rooms, hallways and some public areas, designers say. Proponents say the product is considered a luxury item, offering design capabilities that are not easily duplicated in carpet tile. However, increased options in colors, textures and formats—such as planks, hexagon shapes and larger sizes—are helping carpet tile expand at a faster rate than broadloom. “[Carpet tile] can uniquely provide a design language to support any design criteria,” Interface’s DeGrace said. “It can support a need for hard

Commercial carpet by product type ($3.943 billion)

Carpet tile 54.6%

Broadloom 45.4%

surface, soft surface and even plush material.” Hard surfaces such as resilient offerings are used in

(2.308 billion square feet)

Carpet tile 44.1%

Broadloom 55.9%

low-end and mid-range applications while hardwood, porcelain and ceramic are preferred Continued on page 46

commercial

46 I June 27, 2016

Commercial Continued from page 45

for more luxurious settings due to their durability and natural visuals. An increasing blend of soft and hard surfaces are specified in these spaces as hotels attempt to incorporate residential design with high-performance, easy-to-maintain products capable of standing up to heavy traffic demands. With a wealth of selections from which to choose, designers find that combining both types of flooring creates practical solutions for building owners. “It’s early in the trend, but we are seeing [a movement] toward the use of hard surfaces, specifically LVT, in both public spaces and guest rooms,” Mannington’s Ganley said. Education This sector continues to flourish as college environments are being redesigned to attract more students while public schools are seeing increased investments from local and state governments to accommodate growing enrollment numbers. The two segments that make up the education sector— grades K to 12 and colleges/universities—have distinct needs when it comes to flooring. In higher learning environments, flooring specs run the gamut due to the vast amount of varied spaces on campus, ranging from dormitories, athletic facilities and classrooms to administrative offices and retail stores. For example, modular carpet is expanding coverage into classrooms and administrative offices while resilient, linoleum, ceramic and wood are found in common areas such as corridors, entryways and classrooms. Flooring choices in K to 12 are more utilitarian in scope, specifiers say, as public school systems are more budget sensitive. Carpet and resilient are often utilized for adding warmth and comfort underfoot in classrooms, media centers, offices and collaborative learning spaces. VCT remains a valued product for these applications as well thanks to its durability and low installed cost in addition to its designs. “We’re also seeing a lot of rubber being used in K to 12,” said Natalie Jones, vice president of brand development, Mannington. Healthcare Beyond meeting infection control standards, the primary aim in healthcare design is to help improve patient care and

enhance medical outcomes. To that end, many facilities are striving to create environments that are more comfortable. “When you have a senior housing development it’s more like assisted living where spaces are becoming more hospitality driven,” Krejsa explained. “So you’re seeing looks that are softer and keep in touch with a residential space.” The sector maintains a broad flooring need as healthcare is spread across assisted living facilities, hospitals/clinics and medical office buildings. For instance, resilient, rubber and linoleum flooring

its sound control and hygienic properties. Retail With online shopping expected to double over the next three years, there is more pressure on brick-and-mortar businesses to enhance the consumer shopping experience. The emphasis on aesthetics and branding is providing specifiers with more latitude for flooring choices in their efforts to help retailers boost store traffic while differentiating shopping environments from competitors. “That’s where flexibility or customization comes into play,” Krejsa

Commercial hard surface market share in dollars ($2.789 billion) Laminate 2%

Rubber 20.1%

Wood 8.1%

Vinyl 42.7%

Ceramic 27.1%

are valued for their durability, maintenance and hygienic and slip-resistant attributes. On the other hand, low-density carpet and ceramic, porcelain and terrazzo are specified for hallways to make it easier to maneuver rolling equipment and mobile aids. Then there’s LVT, which is reportedly gaining traction in waiting rooms and outpatient areas at the expense of VCT and sheet vinyl. “We’re seeing LVT being more accepted in parts of healthcare such as elder care and ambulatory [applications],” Krejsa added. Assisted and senior living communities show the most promise for growth, observers say, driven largely by an aging population. For these applications, designers are fusing form and function to create environments designed for comfort, convenience and safety. “We also see it as a growth area for broadloom as well as LVT and carpet tile,” Mannington’s Ganley said. Modular carpet is specifically considered an appropriate choice in these spaces due to

said. Many names in retail are making sustainability or authenticity of materials a major component of their store design concepts. To that end, there is pent-up demand for natural materials and textures, or a natural theme for design concepts found at specialty retail and F&D chains. “Activity in this segment has been strong in recent years, fueled in part by increased activity in the residential building sector,” Hunsicker observed. With new homes comes interior design needs, the thinking goes. This opens up opportunities for flooring in general. “Retail is still a combination of carpet and hard surfaces,” Ganley added. “But I think LVT is replacing wood and in some instances porcelain as well [due to] ease of installation, cost and easy maintenance.” Indeed, the segment is a mixed bag. Ceramic and carpet are often specified in high-end spaces while resilient and rubber flooring are considered ideal choices in other public areas. VCT has traditionally fared well in retail stores, although the

product is losing ground to LVT in some applications. “Retail is one [segment] that is rapidly becoming an LVT market,” Mohawk’s Gallman said. “But you’re also seeing a lot of carpet tile. Sometimes it’s mixed; they’ll use soft goods for areas like apparel and hard surfaces in areas with other goods.” Main Street opportunities Unlike the typical commercial segment, Main Street is fragmented with many different venues requiring a diverse product assortment. For many manufacturers, that represents a golden opportunity to fill a niche in the marketplace. At the same time, servicing the Main Street sector—which often consists of small retail spaces, doctor’s offices, hair salons and boutiques—requires that retailers develop the necessary technical product knowledge to respond to clients’ expectations and needs with the correct specifications. “Commercial environments require high-performance products that will withstand foot traffic,” said Quentin Quathamer, commercial brand and marketing manager for Shaw’s Philadelphia Commercial division. “The Main Street commercial market is very diverse, and Shaw provides a wide array of choices to meet those varied end-user needs.” Quathamer cited Shaw’s 5th & Main LVT collection as a good example of a fashionable product engineered to withstand the rigors of any commercial environment—including New York City’s Grand Central Station, where it was first installed. Today it is found in commercial areas such as churches, boutiques, barber shops, banks, schools and hospitals—150 styles and colors in all. As is the case with the residential sector, luxury vinyl tile has found a home in Main Street. In fact, notes Keith Wiethe, channel manager, Main Street, Mannington, LVT is on the verge of taking over the segment on the strength of its easy installation, striking visuals, flexibility and durability that lends itself to so many commercial applications. “There will be a changing of the guard where LVT will be the chosen product, and we expect this growth to continue for the next few years,” he said. If LVT is choice No. 1, carpet tile is 1A in Main Street applications. According to Chris Post, director of sales operations, Aladdin Commercial/Mohawk Industries, the company expects

fcnews double-digit growth in Main Street, with a 25% growth rate in carpet tile—a subcategory that is often be paired with LVT for maximum flexibility. “Carpet tile and LVT work together because probably every application will have both of those products,” Post explained. In yet another pairing, Mohawk is adding LVT and resilient sheet to its existing Aladdin Commercial Display. Mohawk is also launching resilient sheet manufactured through IVC via the Visionary Collection. The line features five soft, organic visuals that are textile-inspired along with natural wood grain looks that create a warm and comforting environment, Mohawk stated. The collection is constructed for light commercial and residential spaces and offers excellent performance, durability as well as resistance to wearing and staining by virtue of the company’s M-Force enhanced urethane finish. Post said Mohawk will sample these in rack cards to go in its commercial display and in architect folders along with room scene photography to show how well the product coordinates with its carpet tile and broadloom products. Another new entry is EnviroStrand, a 100% solutiondyed PET fiber made with Mohawk’s Continuum process that uses the highest grade FDAapproved PET bottle resins and requires less energy to produce. Among its many benefits, Post said, EnviroStrand SD has a Class I rating for improved flammability and smoke density. Mannington plans to implement a new premium product it believes will open new end use applications within the channel. “Primarily we have effectively communicated our Quantum Guard HP message, and schools are now seeing the benefits of reduced long-term life cycle costs compared to other resilient products,” Wiethe said. “Interestingly, we actually have seen residential interest in our commercial LVT products. Most of that boils down to visuals.” Mannington is capitalizing on Main Street growth through its Madison, Ga., manufacturing facility, which has been expanded three times with the potential for additional space. “Our Amtico acquisition brought us 50 years of manufacturing experience—and there is no substitution for experience,” Wiethe said. “Our combination of manufacturing expertise and our domestic facility will provide us the opportunity to continue to lead.”

LANDING STATESIDE IS A BEAUTIFUL THING. NOW PRODUCING AMERICAN-MADE FLOORING. CUSHION VINYL | PURE VINYL PLANKS + TILES | LAMINATE

Beauflor.com © 2016, Beauflor USA, LLC

48 I June 27, 2016

social media

fcnews

Mobile usage soars, Facebook maintains appeal By Jenna Lippin

eople are spending more time immersed in Google, Facebook and iMessage, among other apps. That’s according to comScore’s Cross Platform Future in Focus 2016 study, which shows more than half the time spent on social media in 2015 was via smartphone apps. “The smartphone app is the dominant platform in the U.S., now accounting for 61% of all social media time spent, up [8%] from last year,” the study showed. Those numbers make sense as U.S. smartphone penetration hit 79% at the end of last year, according to the study. This marks significant growth from just 2%, in 2005. In fact, in the past three years a quarter of the mobile phone market made the

P

switch from feature phone to smartphone, the study said. What’s more, penetration has increased across every age demographic with millennials ages 18 to 24 topping off at 94%. Surprisingly, Android operating systems (used on Samsung phones) seized 53% of smartphone share last year with iOS (for Apple devices) coming in second place at 43%. In terms of Internet usage overall, social networking accounts for one in every five minutes spent online. “The strength of this category, along with email and [instant messaging], highlights that one of digital’s primary functions is for communication—now more so than ever with the rise of mobile,” the study notes. The report also finds millennials ages 18 to 24 regularly use

several social networks, but Facebook still takes the lead in engagement and audience size. For users 35 and over, Facebook is also the No.1 social network in engagement and size, but users spend much less time on other networks, although there is a slightly higher engagement on LinkedIn. So, just how much time does the average person spend on Facebook? According to comScore, Facebook accounts for one in every six minutes spent online, and more than one in five minutes spent on mobile. In Q4 2015, Facebook captured 13.8% of total digital media time. The social networking app accounted for 16.2% of time spent on smartphones. According to the study: “Facebook is the [No. 1] digital media property by time spent.

While it maintains an impressive double-digit market share of desktop time spent, it really shines on mobile platforms where its four core apps each contribute a meaningful share of engagement.” According to the Pew Research Center’s “Mobile Messaging and Social Media 2015” report, Facebook remains the most popular social network with 72% of online adults being Facebook users. Furthemore, Facebook continues to have the most engaged users—70% log on daily, including 43% who do so several times a day. Over the past four years, almost all of the major social media platforms consistently tracked in Pew Research surveys (i.e., Facebook, Twitter, Instagram, LinkedIn, Pinterest) have seen a significant increase

2015’s leading social media stats • 890 million people log into Facebook daily • 72% of Internet browsers use Facebook • 62% of the entire adult population uses Facebook • 77% of Facebook users are women • 82% of online adults ages 18 to 29 use Facebook, along with 79% of those ages 30 to 49; 64% of those ages 50 to 64 and 48% of those 65 and older • 72% of Internet users who are on Facebook live in suburban areas • 93% of Facebook users say they are Facebook friends with family members other than parents or children

• 58% say they are connected to work colleagues • 39% say they are connected to people they have never met in person • 36% say they are Facebook friends with their neighbors • Facebook has more than 1.393 billion monthly active users • Canada has the most active Facebook users • There are 157 million daily users in the U.S. and Canada • There are 253 million daily active users in Asia • There are over 217 million active daily users in Europe • The average time spent on Facebook per user per day is 21 minutes • On average, 350 million photos are uploaded daily to Facebook

• Twitter has 320 million active monthly users • There are 66 million monthly active Twitter users in the U.S. • 80% of active Twitter users access the network via mobile device • 79% of Twitter accounts are from outside the U.S. • There are 1 billion unique visits per month to websites that share embedded tweets • The average number of Twitter followers is 208 • The average Twitter user spends 170 minutes per month on the network • 11.3 million Twitter users in the U.S are in the 25-to-34 age range • The ideal tweet contains an image and is 20 to 40 characters max

• More than 67% of users are likely to buy from brands they follow • Twitter is the second-most used social network by B2B marketers with a rate of 85% • Nearly 34% of marketers have been able to generate successful leads thanks to Twitter • 25% of money spent on Twitter advertising is dedicated to mobile • Promoted tweets can boost offline sales by up to 29% • Only 20 Fortune 500 companies actually engage with their customers on Facebook, while 83% have a presence on Twitter • 78% of people who complain to a brand via Twitter expect a response within an hour

• Instagram now has more than 400 million users • More than 80 million photos are uploaded to Instagram every day • In total, more than 40 billion photos and videos have been uploaded to Instagram since it launched in 2010 • There are 3.5 billion Instagram Likes per day • 90% of Instagram users are younger than 35 • More than 32% of U.S. companies with 100 or more employees will engage in some form of Instagram marketing • More than 77 million people in the U.S. access their Instagram accounts at least once per month, a number that represents nearly 28% of the total U.S. population

• 75% of Instagram users are outside of the U.S. • The most followed brand is National Geographic • 48.8% of brands are on Instagram; this is predicted to rise to 70.7% by 2017 • Engagement with brands on Instagram is 10 times higher than Facebook, 54 times higher than Pinterest and 84 times higher than Twitter • Posts that include another handle gain 56% more engagement • Posts with at least one hashtag gain 12.6% more engagement • Posts with a location receive 79% more engagement

• More than half of U.S. women between the ages of 18 and 54 have signed up for Pinterest • 176 million Pinterest accounts have been registered • Only 100 million Pinterest accounts are active each month • The best day to pin is Saturday • 66% of content users pin comes from brand websites • More than 80% of the pins seen are re-pins

• Tutorial, guide, DIY and recipe pins have a 42% higher click rate than other types of pins • 75% of everyday Pinterest traffic occurs through mobile • Pins with prices get 36% more likes • The 10 most re-pinned words on Pinterest are: recipe, chicken, minutes, bake, cake, cheese, cut, bottle, step and mix

• LinkedIn has 400 million members • Only 100 million LinkedIn members access the site on a monthly basis • 47% of users access the network via mobile • LinkedIn gets two new members per second • More than 1 million members have published content on LinkedIn • The average CEO has 930 LinkedIn connections

• More than 3 million companies have created LinkedIn accounts • Only 17% of small businesses in the U.S. use LinkedIn • Adding a professional user photo makes a LinkedIn user 14 times more likely to be found on the network • There were 37 billion LinkedIn member page views in Q4 2015 • 44,000 mobile job applications are completed on LinkedIn daily

in the proportion of U.S. adults who use them. But some have witnessed faster growth than others. The proportion of online adults who use Pinterest and Instagram has doubled since Pew first started tracking social media platform adoption in 2012. Research shows 31% of online adults use Pinterest (up from 15% in 2012), while 28% use Instagram (up from 13%). Although there haven’t been changes in overall usage on Facebook, Pinterest, Instagram or Twitter from the fall of 2014 to the spring of 2015, some social networks experienced increases in user engagement. Most notably, the proportion of daily users on the major social networks has increased significantly from 2014. Today, 59% of Instagram users visit the platform daily while 35% check out the app several times a day. The former figure reflects a 10-point increase from September 2014 when 49% of Instagram users reported visiting the site on a daily basis. Similarly, the proportion of Pinterest users who visit the platform daily increased from 17% in September 2014 to 27% in April 2015. The proportion of daily users on LinkedIn increased from 13% to 22% over the same time period. When it comes to digital marketing, many flooring retailers have followed the formula employed by successful manufacturers by expanding their online presence. Web-savvy marketers know that most online ads are connected to a page that allows users to buy product featured in the marketing campaign, and consumers are responding accordingly. In fact, by Q4 2015 total digital commerce had grown to account for 15% of discretionary dollars spent by consumers—an all-time record, according to comScore. “Digital’s commerce share appears to be accelerating in recent years due to the impact of mobile,” the study states. In Q4 2015 total digital commerce surpassed $90 billion, its highest total ever. M-commerce saw significant activity in 2015 with an increase of 56%, gaining a larger share of retail dollars when compared with desktop e-commerce and traditional brickand-mortar stores. E-commerce—digital commerce on desktop—was relegated to 8% growth in 2015 as users demonstate a preference for mobile.

fcnews

June 27, 2016 I 49

floorcoveringnews fcnews.net

BUSINESS OPPORTUNITIES

Nadia Ramlakhan

[email protected] Call: 516.932.7860 Fax: 516.932.7639

Ju n e 2 7

BUSINESS OPPORTUNITIES

WE HELP DEALERS

Private labels, specialty mills & etc. Call us now at 800-228-4632 www.carpetbroker.com

1 CENT/SF FLOORING ESTIMATING Fast & Accurate - Callidus Takeoffs commercialflooringestimating.com

BITTERROOT VALLEY, MT FLOORING STORE FOR SALE

Small Retail Store for sale in Montana's beautiful Bitterroot Valley Contact Dallas for more details: [email protected]

CLOSEOUTS WE BUY IT ALL!

Midwest retailer buying closeout inventories of laminate, tile, carpet, hardwood, stone 1ST & 2NDS Email your inventory to: [email protected] 816-761-1777 X 10

BUSINESS FOR SALE

Owner ready to retire. Located in the heart of Ruby Valley in Sheridan, Montana. Complete floor covering store with window treatments. Contact Conn or Laurie at 406.842.5631 after 6 p.m.

CAREER OPPORTUNITIES

FOR A QUOTE CONTACT

Floor Covering News 550 W. Old Country Rd. Suite 204 Hicksville, NY 11801

CAREER OPPORTUNITIES

KITCHEN & BATH DESIGNER

Looking for a change? New company getting into Kitchen & Bath Design. Serving Northern Illinois for over 50 years. Person must have 20/20 or kitchen pro computer experience. Competitive Salary & Benefits. Please send resumes and inquiries to [email protected]

CAREER OPPORTUNITIES

RETAIL SALES REP

Mill Creek Carpet & Tile Company, a strong regional industry leader is looking for additional ambitious and high-energy Sales Reps in several of our Oklahoma and Kansas locations. The person that earns this opportunity must be: • One with at least three years of proven sales results in a carpet & tile retail environment. • A true sales professional who fully understands the carpet industry and the effective steps of selling and serving the customer. • A person with a strong flair for design • A person ready to put forth the effort required to achieve high quality sales and the $50,000 to $60,000 income that can be achieved. There are some excellent reasons for becoming part of the Mill Creek Carpet & Tile Team. • The opportunity to join an organization currently achieving significant growth • A competitive benefits package (Medical/Dental Plan, Short-Term & Long-Term Disability, Life Insurance, Vision Plan, & 401K Retirement Savings Plan) along with an outstanding base & commission program • A superb team of people with which to work If you are one of the best at what you do, have at least three years of proven sales success, and are ready to work with the best of the industry, please respond to this post or email [email protected] or call 918-693-7300 *An Equal Opportunity Employer*

CAREER OPPORTUNITIES

OUTSIDE SALES REPRESENTATIVES

Naturally Aged Flooring is looking for several motivated Outside Sales Representatives to grow and maintain our current customer base. The qualified candidate should have three years minimum experience as a manufacturer or distributor representative in the hardwood flooring industry. Knowledge of local retailers and wholesalers is a huge plus. We are in need of representation in MN, WI, IL, MI, IN, KY, TN, NY, PA, NJ, MD, DE, WV, and VA For over 30 years, Naturally Aged Flooring has serviced retail and wholesale flooring accounts across the US and Canada. Our company is built on a commitment to gain market share through professional representation and unsurpassed customer service. We offer a competitive base salary plus commission, car allowance, company provided iphone and ipad, travel expenses and benefits. Please submit your resume to Mike at [email protected]

SALES DIVISION MANAGER

Dalton Carpet One Floor and Home has been serving Northeast Georgia for more than 36 years. DCO employees bring vision, accountability, passion, and integrity to their position. Serving as the Athens Sales Division Manager helps the overall functionality of the organization by leading and assisting the sales staff, which includes retail, outside, and interior design group. Position reports directly to General Sales Manager and is responsible for supervising the overall sales efforts of the division to improve sales volume, gross margin, and overall profitability. One will be successful in this position by: designing and implementing a new sales training program for all sales persons; coaching, counseling, and mentoring the design and sales staff; representing sales needs and trends to Merchandising and Marketing; and acting as a resource for residential sales in delivering consistent service and proper selling techniques. Requirements Include: -Successful track record of setting, managing, and achieving a $10M budget -Proven history of being a servant leader helping sales associates achieve their goals and objectives -A successful track record of recruiting, hiring, and managing a flooring sales force for a minimum of 5 years -Progressive sales leadership a plus, including roles managing employees Please send your resume to JR Allred at [email protected]

RETAILS SALES POSITION NORTH OF CHICAGO

Serving Northern Illinois for over 50 years. Family owned business is growing. Have a Design Background? Home Furnishing Experience? Love working with people? Then we want to talk to you. Competitive Salary & Benefits. Please send resumes and inquiries to [email protected]

CAREER OPPORTUNITIES

DIRECTOR OF SALES

Dynamic and growing full service flooring installation company seeks Director of Sales to help company achieve goal of dramatic growth over next 5 years and beyond. Position reports directly to ownership and is responsible for orchestrating the overall sales efforts of the organization to meet agreed upon gross sales and net margin goals for the entire company. A successful individual will do this by setting the sales policies and strategy for the company, leading and managing the overall sales efforts of the organization through Regional Sales Managers, and creating training and development programs for the growth and development of the sales staff. Aggressive salary and benefits package commensurate with experience. Minimum 5 years experience in the flooring industry required, preferably with demonstrated progressive sales leadership roles including experience managing employees remotely. Bachelor's degree or an equivalent combination of experience and training required. Contact: [email protected]

INSTALLERS WANTED

Jones Tile Inc. is looking to hire both experienced and in-experienced commercial VCT installers. We primarily do work for the worlds largest retailer. Our job scope includes both demolition and installation of VCT, PVC, pharmacy carpet, and entry tile. Our crews work all across the US. Jones Tile Inc. currently has about 20 crews and is constantly looking to expand our workforce. Contact: Kyla McDonald 573-346-3862

PHENIX FLOORING IS GROWING AND IS SEEKING CANDIDATES FOR A TERRITORY MANAGER POSITION Territory: State of New Mexico and West Texas. This is an excellent opportunity for a knowledgeable, experienced Floorcoverings Sales Professional to align with a rapidly growing manufacturer in an established territory. Phenix is a privately owned company based in Dalton Georgia which specializes in the manufacturing and distribution of residential carpet to the nation’s top retailers. Benefits include: •Health, Life, and Disability Insurance •401K with Company Match •Paid Vacation Compensation: •Base Salary plus Commissions •Paid Business Expenses Interested Candidates may apply via e-mail to [email protected] or by fax: 706-279-8284 Phenix Flooring is an Equal Opportunity Employer

50 I June 27, 2016

CAREER OPPORTUNITIES

floorcoveringnews classifieds

CAREER OPPORTUNITIES

CAREER OPPORTUNITIES

TERRITORY SALES REPRESENTATIVE

MARKETPLACE

fcnews MARKETPLACE

Job Description: Provenza Floors, Inc., has been creating innovative, stylish and unsurpassed quality hardwood floors, both custom and running line, for over 33 years. Provenza is currently hiring full time Territory Sales Representatives throughout several U.S. markets. The Territory Sales Representative is responsible for achieving sales goals and executing sales plans within an assigned sales territory. The Territory Sales Representative will be expected to constantly prospect and secure new business to help generate sales growth as well as increase the existing customer base volume. Benefits: • Full health benefits • 401K • Paid Vacation

Compensation: • Base salary plus commission *Earning potential $100,000 plus after 1 year • All business related expenses paid monthly • Company provided smart phone with service included

Responsibilities: • Design an action plan to successfully create new business and build client relationships • Responsible for achieving company sales targets and update management with the status of accounts • Maintain a professional, ethical, and positive disposition as a primary representative of Provenza in the community • Regularly attend client meetings, trade shows, networking events, conferences, and any other flooring related functions • Integrate sales efforts with other organized marketing activities (promotions, advertising, exhibitions, telemarketing, social media marketing, etc.) Requirements: • 3+ years previous experience working in a sales role and/or as a business development representative, preferably outside sales and in the flooring industry • Bachelor’s degree (BS/BA) from a four-year college or university or related work experience preferred but not required • Industry knowledge or the ability to seek knowledge if new to the industry • Able to work in a fast paced environment with a demonstrated ability to multi-task according with the tasks of the job • Proven ability in creating new business and strong client relationships Keywords: sales, business development, flooring, growth, relationships Please email: [email protected]

OUTSIDE SALES REPRESENTATIVES

FERMA FLOORING is a growing importer and national distributor for hardwood (solid &engineered), bamboo, laminate and luxury vinyl flooring based in New Jersey. We are looking for Sales Representatives covering territories of New York, Philadelphia, PA and Delaware for B2B sales. Related knowledge and experiences are required. Please fax resume to 732-225-5290 or email to [email protected] or [email protected]

OUTSIDE SALES REP

Flooring America by CarpetSmart, a strong regional industry leader is looking for a proven business-to-business sales rep. This person will offer carpet, tile, flooring etc. to professional residential and light commercial contractors throughout the Northwest Arkansas Market. Industry experience is not required but very helpful. The person that earns this opportunity must be: •One with at least three years of proven sales results in a business-to-business environment that includes frequent, on-going orders. •A true sales professional who fully understands the strategy, tactics, and operations of successful sales •A person ready to put forth the effort required to achieve high quality sales and the six-figure income that can be earned within the first 15 to 18 months. There are some excellent reasons for becoming part of the Flooring America by CarpetSmart team. •The opportunity to join an organization currently achieving company-wide organic growth of approximately 90 percent. •A competitive benefits package (Medical/Dental Plan, Short-Term & Long-Term Disability, Life Insurance, Vision Plan, & 401K Retirement Savings Plan •Local travel only •A business-casual environment If you are one of the best at what you do, have at least three years of proven sales success, and are ready to work with the best of the industry, please respond to this post or email [email protected] or call (479) 750-0117 *An Equal Opportunity Employer*

WE BUY USED CARPET CUTTING MACHINES 407.509.3030

floorcoveringnews classifieds

fcnews CAREER OPPORTUNITIES

CAREER OPPORTUNITIES

CAREER OPPORTUNITIES

EXPERIENCED BUILDER SALES REP – TULSA OK

CAREER OPPORTUNITIES

CAREER OPPORTUNITIES

RETAIL SALES REP

Flooring America by CarpetSmart, a strong regional industry leader is looking for additional ambitious and high-energy Sales Reps in Northwest Arkansas. The person that earns this opportunity must be: • One with at least three years of proven sales results in a carpet & tile retail environment. • A true sales professional who fully understands the carpet industry and the effective steps of selling and serving the customer. • A person with a strong flair for design • A person ready to put forth the effort required to achieve high quality sales and the $50,000 to $60,000 income that can be achieved. There are some excellent reasons for becoming part of the Flooring America by CarpetSmart team. • The opportunity to join an organization currently achieving significant growth • A competitive benefits package (Medical/Dental Plan, Short-Term & Long-Term Disability, Life Insurance, Vision Plan, & 401K Retirement Savings Plan) along with an outstanding base & commission program • A superb team of people with which to work If you are one of the best at what you do, have at least three years of proven sales success, and are ready to work with the best of the industry, please respond to this post or email [email protected] or call (479) 750-0117 *An Equal Opportunity Employer*

Mill Creek Carpet & Tile, and industry leader and one of the country’s top twenty five carpet and tile companies, is seeking an Experienced Builder Sales Rep for our Tulsa market. The qualified applicant should have: •A minimum of three years of experience selling flooring products to residential contractors •A reputation for outstanding customer relations •High level of honesty and integrity •A strong desire to do what is necessary to earn a very high level of compensation Mill Creek is ready to offer the right applicant: •A very competitive commission program including a draw •Existing solid accounts (From our best Rep who is retiring) •An Aetna benefits package including medical, dental, disability, and life insurance, effective 1st of month following 30 days of employment •A 401K Retirement Savings Plan that includes a 50% Match on the first 2% of contributions •A great team with which to work where you will work hard but also have fun

SALES OPPORTUNITY: ACCOUNT MGR, LONG ISLAND, NY

If you are one of the best at what you do and are ready to work with the best of the industry, please call Jack Rodden at 918.693.7300 or send an e-mail to [email protected] to learn more. All applications will be kept in strict confidence. *An Equal Opportunity Employer*

Excellent opportunity with established importer/distributor w/complete hard/soft surfaces to grow our existing Long Island territory. Base plus commission. Complete benefit package + 401k Email resume/salary history to: [email protected] & refer to box #430

FLOORING BUYER

KEY ACCOUNT MANAGER

Chicago based closeout/discount retailer seeks a Buyer who specializes in hard surface floor coverings (tile, hardwood, vinyl, laminate, etc.) for our growing chain. Must be creative at finding unique and desirable products at incredible values both domestically and overseas, negotiate great deals, develop structure, and make wise decisions. Must have excellent communication and organizational skills, thrive in an entrepreneurial environment, have the ability to expand job responsibilities, suggests improvements, and collaborate with others to generate ideas and improve processes. Send resume to [email protected].

Excellent opportunity with Leading Import Flooring Manufacturer of Laminate, LVT, WPC for experienced key account sales manager to cover both established and new wholesale distribution markets. Candidates should have significant experience working with or for US distribution management and sales reps in the hard surface flooring category (5+ years preferred) and be willing to travel the US market. Salary, bonus opportunity, and expenses covered. Qualified candidates should submit resume, including cover letter to: [email protected]

R A R E

June 27, 2016 I 51

GENERAL MANAGER

Dynamic and growing full service flooring installation company adding a Retail Cash and Carry division. Seeking General Manager to help achieve 3-7 stores in next 5+ years. Position reports directly to ownership and is responsible for all Retail Operations and Financial Performance. Aggressive Salary, Bonus and Benefits package commensurate with experience. Successful Flooring and Multi Store Retail Experience required. Please contact Patrick at [email protected]

O P P O R T U N I T Y

Tile importer seeks large-quantity buyers for first-quality Turkish travertine and limestone at prices well below market value. Opportunity exists as a result of large retailer being unable to take delivery on more than 200,000 square feet of tile due to freight issue. Product inventoried in California and Texas in various sizes and finishes. Photos of all products are available. For more information, contact GreenTek Industries at 201.452.1242 or email Stephan Lerman at [email protected]. Product

Size

Finish

Sq. ft.

Product

Size

Finish

Sq. ft.

3,078

Noce Noce Rustic Noce Standard Vein Cut

1x2 18 x 18 12 x 24

Brick mosaic Honed and Filled Polished

54 1,888 304

3,960

Desert Gold Premium

18 x 18

Honed and Filled

5,920

Philadelphia Standard Philadelphia Standard Philadelphia Standard

18 x 18 18 x 18 Antique Pattern

Brushed and Chiseled Honed and filled Brushed, Chiseled, Partially Filled

3,072 6,016 16,744

Scabos Standard Scabos Standard

18 x 18 Antique Pattern

Brushed and Chiseled Brushed, Chiseled, Partially Filled

1,536 22,048

Silver

1x2

Brick mosaic

54

Turkish Carrara Turkish Carrara White

Pattern 12 x 24

Polished Polished

54 684

Lava Standard Lava Standard Lava Standard

18 x 18 8 x 16 Antique Pattern

Brushed and Chiseled Brushed and Chiseled Brushed, Chiseled, Partially Filled

4,096 156 19,864

12 x 24

Honed

1,444

Travertine Beige Standard Vein Cut

12 x 24

Polished

Classic Beige / Ledge Stone

8 x 16

Bengali Beige Standard Bengali Beige Standard Bengali Beige Standard Bengali Beige Standard Bengali Beige Standard

12 x 12 16 x 24 18 x 18 8 x 16 Antique Pattern

Honed and Filled Brushed and Chiseled Brushed and Chiseled Brushed and Chiseled Brushed, Chiseled, Partially Filled

9,660 5,408 4,096 1,521 27,040

Meandros Gold Standard Meandros Walnut Standard

Antique Pattern Antique Pattern

Brushed, Chiseled, Partially Filled Brushed, Chiseled, Unfilled 14,976

15,028

Rustic Mina Rustic Mina Rustic Mina Rustic Mina

12 x 24 18 x 18 18 x 18 Antique Pattern

Various finishes Honed and Filled Brushed and Chiseled Brushed, Chiseled, Partially Filled 38,844

608 3,072 5,120

Navona Ivory Standard Navona Ivory Standard Navona Ivory Standard

8 x 16 16 x 16 16 x 24

Brushed and Chiseled Brushed and Chiseled Brushed and Chiseled

1,014 432 260

Limestone Jerusalem Bone