Article Number : 1289 |
|
Article Detail |
|
 | |
| Date | 8/24/2006 10:00:42 PM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=1289 |
| Abstract | Fountain Inn, S.C.—Anderson Hardwood Floors has grown as fast as any hardwood flooring manufacturer in the U.S. over the last five years. The company continues to outpace the overall industry, which has posted impressive growth of its own throughout the ’90s and into the 21st century... |
| Article | Fountain Inn, S.C.—Anderson Hardwood Floors has grown as fast as any hardwood flooring manufacturer in the U.S. over the last five years. The company continues to outpace the overall industry, which has posted impressive growth of its own throughout the ’90s and into the 21st century. The secret is anything but, according to Jeff Sills, president, who told Floor Covering News it begins by bringing the right product to market with an emphasis on style, quality and differentiation. Add that to a strong distribution network and a total focus on the specialty retail network, and the formula is in place. Now the company is set to move into a new, 170,000-sq.-ft. facility here. FCNews executive editor and associate publisher Steven Feldman recently caught up with Sills to talk about the past, present and future. FCNews: How much has the business grown in the last five years? • Sills: Sales are up between 300% and 400% from where we were five years ago. And we’re up double digits again over the first half of 2005 vs. what we believe to be the overall industry average of low single-digit growth. FCNews: To what do you attribute this? • Sills: I think there are five factors here: 1. We’ve created several style categories such as rustic, handscraped and handcrafted. When you create categories and you’re the first one out, you become the leader and have a predominant market share. This along with exotics has fueled industry growth over the last five years; 2. We have done a very good job in the last few years bringing retailers on mill tours. We spend more than $1 million a year bringing in about 800 to 1,000 retailers. Distribution also commits about $1 million to the program. They come away with a better idea of the Anderson story. By the time they leave they totally understand our manufacturing process and our commitment to quality. And we teach them how to sell style and fashion; 3. We make sure we are aligned with ‘A’ distributors in all markets; 4. We have a major position with each of the major buying groups. This drives volume. It costs a bit given the rebate structure, but the growth in our business has made it very worthwhile, and 5. We established a Design Council. We listen to what the members say about upcoming design trends. This helps ensure we bring the right products to market. We may lay out 100 different looks and wind up manufacturing 10 or 12. It is very expensive to develop and bring product to market for us as well as our distributors, so the looks have to be right. FCNews: What constitutes an ‘A’ caliber distributor? • Sills: They understand the need to invest in the market with you, and they are willing to underwrite display costs so they can penetrate the market. They do a better job of investing in training and in inventory and accessories, so jobs can be completed in a timely manner. They tend to have better computer systems, better delivery systems, and a better sales force and management teams. FCNews: You have been talking about launching a new image. • Sills: We’re hoping it will happen by Surfaces. It will convey that everything we manufacture is an Anderson product. We will invest in the overall Anderson brand and leverage our other brands by tying them in under the Anderson umbrella. FCNews: China, threat or opportunity? • Sills: Both. It’s a threat in that it is driving down the cost of hardwood, which hurts profitability for everyone. And the consistency of the product leaves much to be desired. Some companies are better than others. I am sure as time goes by they will get better. The problem is, if you don’t have someone over there checking your factories, checking your products as they are being manufactured, you don’t know what you’re getting until it comes off that ship. And if you get bad quality product you are stuck with it. They won’t take it back. China is an opportunity if you invest in resources over there, engineering wise, and get yourself aligned with the right factories. Without the people over there it’s a time bomb waiting to happen. FCNews: Are you doing much importing? • Sills: We are importing 3/4-in. solids and 3/8-in. engineered and exotics from the Far East marketed as Anderson Pacific. And we source exotic species from other countries, bring them into our plants and are finishing them. FCNews: What do you see happening on the raw materials front? • Sills: We’re not buying lumber; we are buying logs. The log pricing does not fluctuate much. The changes we would see would be in freight costs bringing in the logs. FCNews: I was once told that the person who buys the logs is as important as anyone for a wood flooring manufacturer. • Sills: Our log buyer has been working for us since 1960 and has just brought his son into the business. Selecting the right trees is critical to cutting good veneer because you can’t make chicken salad out of chicken poop. You need to know the best quality timber. You need a relationship with the loggers. They need to know what you’re looking for and be willing to cut to your standards. There is only a certain percentage of the trees in a track that will grade out good enough timber to cut for good veneer. We are only buying select logs. FCNews: What do you see happening with pricing? • Sills: On the engineered side, entry-level products are facing price pressures because of Chinese imports. We’re seeing it on handcrafted as well. We do not manufacture our products to compete in the low end of the market. We try to manufacture products that wow the consumer. We are willing to run our products slower down the production line so we can hand detail the planks giving a look a machine simply can’t duplicate. We are committed to making the best quality, best performing product on the market. Our core is oak or harder; the competition uses softwood core. Yes, it is more expensive but it makes a harder product and one the consumer will be happier with as the years go on. Our handscraping is done 100% by hand and no two boards are ever the same, which makes every floor a custom floor. Most competitors use machines to scrape, which gives a very repetitive look. When you lay the products side by side you can notice the difference between a handscraped and a machine-scraped. We go after the wow factor and believe if a consumer falls in love with a floor she will figure out a way to pay for it. FCNews: What would you say are Anderson’s competitive advantages? • Sills: We are: 1. A leader in styling; 2. A leader in innovation; 3. A leader in quality, and 4. Strictly specialty retail and new home construction; we do no business with the home centers FCNews: You keep talking about staying ahead of the competition and the curve. What are you doing to achieve this? • Sills: We invest a lot of money in our Design Council making sure our styling is cutting edge. The Design Council consists of 12 members—seven designers and five Anderson members. We make sure every product we introduce is a winner. FCNews: You had so much going on at Surfaces this year. Can you talk about the highlights? • Sills: The vignette concept was a big hit. Our private area upstairs, where retailers vote on products of the future, was very well received. FCNews: Which Surfaces introductions are having the greatest success? • Sills: Coastal Art. It’s a wirebrushed product enhanced with one color stain to make the grain stand out while the finish is another color. Also, fumed cherry species in Virginia Vintage. FCNews: Talk a little about some of the trends you are seeing. • Sills: Wide plank, lots of character, handscraped, handsculped, exotics, sawn-faced products. We are seeing less oak. We’re also seeing oil-based finished products, which are hot in Europe. That results in almost a zero gloss. We’ve been lowering our gloss levels for years. When companies were introducing 40s, we were introducing 20s. Most products in our line are low gloss. FCNews: What do you lose sleep over at night? • Sills: I worry about the profitability of wood flooring with all the Chinese product coming in. I worry about poor quality of wood flooring coming in from overseas, which can alter consumers’ perception of the category. FCNews: Talk about the decision to move into the new 170,000-sq.-ft. facility here. • Sills: We bring in so many customers for mill tours that we needed a nicer corporate image and nicer training facility. We have grown so fast that we were in need of additional warehousing for finished products plus additional office space. It also gave us enough room to put in an installation training center. We now have 30,000 square feet of office space and 140,000 square feet of warehousing. FCNews: What is next for Anderson? • Sills: Two next-generation products which we will be introducing at Surfaces along with our design center and installation certification center. |