FCNews Special Supplement - NeoCon: Commercial is alive and well Article Number : 2106

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Date	6/29/2007 7:04:53 AM
Written By	LGM & Associates Technical Flooring Services
View this article at:	//floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=2106
Abstract	By Steven Feldman Chicago—If there was any doubt as to the vitality of the commercial market, the congested halls and crowded showrooms of NeoCon put all questions to rest. Architects and designers came armed with projects, and flooring exhibitors took solid leads back to their offices...
Article	By Steven Feldman Chicago—If there was any doubt as to the vitality of the commercial market, the congested halls and crowded showrooms of NeoCon put all questions to rest. Architects and designers came armed with projects, and flooring exhibitors took solid leads back to their offices. Commercial is on a three-year roll with no signs of abatement. And manufacturers are doing everything they can to capitalize. “All commercial markets are active,” said Mark Falanga, senior vice president, Merchandise Mart Properties, the proprietor of NeoCon. “Offices that have held off for a number of years have released spending. And hotels, healthcare, schools, restaurants and government facilities are also spending.” Falanga is seeing more and more companies making capital expenditures channeled toward facilities improvement. “In the end, not only does a company’s facility impact productivity, but it impacts its ability to attract and retain great employees.” Manufacturers are responding with what Falanga believes to be more product introductions than in any prior year. “We had 425 Best of NeoCon entries this year; last year it was 360, and that was a record,” he said. “That is a quantitative barometer.” Other indicators: Pre-registration was up 35% and seminar registration up 66%. While the increase in pre-registration does not necessarily translate into a 35% increase in attendance, it is a strong indication that more people trafficked the show. On the other hand, “seminar registration is a real number because they have to pay money,” Falanga said. “Last year we had 1,600 attend seminars; this year we had 2,600 pre-register.” Exhibitors confirmed the signals were not smoke; they were indeed fire. At the Armstrong space, Dominic Rice, vice president, commercial, told FCNews he could not recollect traffic being this strong. “The caliber of people has been very good,” he said. “There have been browsers, but quite a number of others made an appointment in advance or came with a specific project in mind looking for solutions.” Dan Stone, the new president of Invista Interiors, was equally impressed with traffic in the Antron showroom. “There’s been a constant stream of people coming into the booth,” he said. And Bob Berrier, vice president, commercial, added, “Historically, NeoCon has been an A&D show, but we are seeing a greater influx of end users. We are also seeing a significant increase in various international groups, particularly the Asians. The global influence of design is taking hold.” Dave Caples, president, Milliken, referred to traffic as “phenomenal. It couldn’t have been any better if we tried. Our showroom was more crowded before the show opened this year than at peak times last year.” What’s more, he said the quality of people was strong with tons of projects. “We are seeing immediate results. People are seeing products they like and wanting samples.” Traffic was also classified as phenomenal at the Mannington Commercial showroom, where Jack Ganley, president, said the company had been swamped from start to finish. “It’s better than in recent years,” he said. “Generally, the commercial market is pretty good right now and a lot of design firms are working on projects. They are sending their core people.” It was much of the same at the Shaw showroom, where Tim Baucom, vice president, said it had been almost difficult to keep up. “I think firms are bringing three and four associates as opposed to one or two as in other years. We are seeing a blend of people who want to know the essence of our brand and those looking for specific products.” Joseph Black, a sales rep from vinyl supplier Lonseal, may have summed it up best when he noted that the show had regained that same feel as in the late ’80s and early ’90s, when it was the preeminent show for the A&D community. “It’s the granddaddy of them all once again.” Here’s a review of what some of the flooring manufacturers and suppliers were saying about business, the show and their new introductions: Amtico Business is up 12% year over year, according to Chris McKee, the former Home Depot flooring executive who has been on the job less than a year. What’s more, he is projecting a sales increase of 50% in the second half to “blend out” at 25% for the year. “I attribute that to the general acceptance of LVT in the retail sector of the business, where we are growing about 30% a year, but also to our traditional A&D customer liking the new styles and colors we are coming out with,” he said. “While our competitors are bringing in lower-end imports from China, we are focusing on style, design and performance. The customer seems to be gravitating toward that.” Amtico’s bread and butter these days are retail chains, McKee said, with wood planks and stones still the most popular looks. At NeoCon, Amtico launched the Innovations collection with styling McKee believes is suitable for both residential and commercial settings. Among the nine styles are a fused birch, a stained concrete or leather visual, and a linear, “resimercial” look. McKee was more than pleased with traffic at the booth. “This show has been great,” he said. “I feel like we are shooting fish in a barrel. This is our audience. We are part of every architect’s library. Amtico is the watermark in LVT.” Antron According to Bobby Berrier, vice president, Antron’s presence at NeoCon is designed to show the A&D community what’s new with technology. “They look to us as a trendsetter—we are enabling technology,” he said. “They want to know what’s new from an innovation standpoint. And we are very happy with our story this year.” The story involves the doubling to 200 of the Antron Lumena color line. And Antron is looking to expand from there, Berrier said. “Those colors represent areas that are broader in terms of color spectrum, and deeper and richer in terms of color spaces offered, which is what designers want.” The other key introduction involved Antron yarn effects. “We are combining unique styling fibers with unique technologies so our mill customers can highly design their carpets,” he said. “They can take the pattern and texture they are designing into carpet and make them come to life with unique styling yarns.” Customers are responding. Berrier noted that Antron this year is offering 200 new branded products that will be represented by 16 mills, both records. Innovation is what’s been driving business over the past year, he said. “Our branded business is up substantially, and we attribute that to the adoption of Antron Brilliance and its fiber effects launched last year. It was our first new platform in years.” In illustration, Merino emulates wool; Glimmer represents metallic; and Soie mimics silk. “These are the natural aesthetics designers desire.” Armstrong While everyone is waiting to see who will own Armstrong when NeoCon ’08 rolls around, it’s been business as usual in Lancaster, Pa.—business that is above budget for the first half, according to Rice. Healthcare continues to be very strong (Medintech, Timberline sheet vinyl), driven by changes in demographics. The company is also seeing nice demand in education (Imperial Texture, Rave VCT), which is creating an interesting dichotomy. “You have an aging population driving healthcare and increasing emergence in K-12,” Rice said. “Much of that funding comes from state, and states are in a stronger position today than the early part of the decade.” Retail has also been very good for Armstrong, particularly grocery and discount stores. While VCT is the primary product going into this segment, the company is also seeing a shift toward LVT—“not in the whole store, but to call out a particular section,” Rice said. LVT is also gaining share in what Rice refers to as “specialty retail,” chain stores like The GAP. At NeoCon, Armstrong was focusing on two products: linoleum and commercial hardwood. NatureCote ad dresses linoleum’s longstanding issue—maintenance. “NatureCote provides the option of not needing polish,” Rice said. “That reduces cost and has environmental benefits (using less water and chemicals). In addition, linoleum can be subject to damage from some cleaning products, so NatureCote provides protection in case a maintenance crew uses the wrong cleaning material.” Premier Performance is Armstrong’s new commercial hardwood entry. Formerly known as Pattern Plus, Premier Performance adds a micro bevel and square edges as well as different species and wider-width planks. The line is acrylic impregnated for durability and scratch and dent resistance. “One of the challenges for the A&D community is determining the appropriate hardwood to use commercially,” Rice said. “With Armstrong’s reputation for quality, this brings a sense of confidence and security.” Award Hardwood Flooring This year served as Award’s NeoCon debut, one of the first initiatives set forth by president Dennis Mohn, who came over from Alloc about six months ago. “Showing at NeoCon is the first step in penetrating the commercial market,” he said. “When I got to Award and found out how durable our finish is, I wanted to know why we hadn‘t been doing this commercially. Our product far exceeds the majority of our competitors’ products on the Tabor test.” Mohn said Award should also find favor in the commercial marketplace because it will be taking an environmental position with both its engineered and solid lines. On the engineered side, Award will be touting its HDF core. On the solid side, Mohn said Award utilizes more of the log. “While other manufacturers will just take select, No. 1 common or No. 2 common from a log, we will have a 40/40/20 blend in all solid products,” he said. “All the lumber we buy for this, except walnut, comes from within 150 miles of our plants. And it all comes from managed forests.” Things are looking up for the company, Mohn said. Aside from its commercial efforts, Award has a number of new distributors and some private-label programs “for which we have verbal commitments in place.” FloorFolio Brand spanking new to the marketplace is Responsive Flooring by virtue of an agreement with Dale Tucker and Michael Freedman, the latter having represented LG Floors as its sole U.S. distributor until early this year. According to Freedman, Responsive Flooring is one of the most all-encompassing product lines in the industry today. The grouping includes homogeneous flooring, heterogeneous flooring, safety flooring, sports flooring, LVT, and conductive and static dissipative flooring. “There is a product in this line for every segment.” Manufactured in India by a privately held, $150 million company, Freedman believes a major competitive advantage is that every product in the line has a polyurethane reinforced (PUR) finish. “The only way a manufacturer can do that is if it adds the PUR in the raw material stage of the process,” he said. “We can do this because everything is manufactured at the facility.” Freedman is particularly excited about a textured homogeneous line, which he claims to be unique to the industry. “It never requires a finish, is scratch resistant and can be used in heavy traffic areas with no maintenance.” He also cited a one-of-a-kind homogeneous product with a cushioned backing. “Its anti-fatigue properties make it a fit for healthcare applications, such as a nursing station where comfort underfoot is desired.” He added that many of the products have been redesigned and recolored for the U.S. market. FloorFlolio is the master distributor for Responsive Flooring in North America with product warehoused in Edison, N.J. As of June 1 it became a preferred vendor for StarNet. Halo Floors This Atlanta-based importer of luxury vinyl tile, founded two years ago by former Amtico CEO Mary Docker, is doing just fine, thank you. “Business is excellent and growing fast,” she said, citing healthcare and hospitality as her driving segments with the majority of the business predominantly in wood looks. “LVT wood is becoming standard in many locations.” To what does she attribute her success over the first half of 2007? “We are becoming more well known as people who specify the product once are coming back to do more business,” she said. “We are also doing some high-profile projects.” In illustration, five floors of the Mayo Clinic in Minnesota were recently refurbished with Halo product, all custom. But the competitive advantage for Halo may be its flexibility. “We will do small-run custom and small quantities of just about everything,” Docker said. “In fact, we are doing custom jobs a couple of times a month. We have a good, responsive factory that will turn things around quickly.” Halo can also support global specifications through its alliance with Forbo, which distributes Halo product worldwide. At NeoCon, Halo launched a series of pastel colors predominantly for healthcare, where the designer can not only choose from nine standard and 30 custom colors, but also from three design overlays: fern, dots and cracked ice. Also unveiled and available in September is Artistic Impression, a woodgrain design handpainted by an artist in California that Docker expects to be a hit in hospitality and retail. Johnsonite NeoCon served as the coming out party for Johnsonite’s integrated system of flooring solutions. “In the past there was no way for a designer to efficiently select all its flooring needs,” said Jeff Katz, business manager. “If you are doing an entire hospital, manufacturer X may say, ‘I have this product that will work throughout the facility.’ But is it the best solution for the nursing station? For the hallway? For the patients’ rooms? For the operating rooms? A designer who needs linoleum, homogenous flooring, stair treads, rubber base, contoured wall base, slip-resistant products, rubber flooring, ESD flooring, cove cap and transitions, can now go to one place in an integrated system. And the flooring contractor can order it all at once and have it shipped all at once.” Sharon Folliard, vice president of design and development, added that it not only works on a functional level, but Johnsonite is the only company that has an aesthetic coordination system. “We didn’t just take the Johnsonite and Tarkett lines and put them together. We made changes so they would work together. It’s been an 18-month process.” Johnsonite at NeoCon was also touting its ROI (return on investment) platform where it stresses not only life-cycle costing but the real cost of ownership. “If I’m a building owner, one cost is maintenance, one cost is flexibility—re-use in other spaces,” Folliard said. But what about safety? “If you reduce slip/fall, it saves sick days, workers comp, lawsuits, etc. These are the things that go into the real cost of ownership.” LG Floors The big news here is that the company decided to take control of its own destiny by putting sales and marketing in line with its other vertically integrated systems. “We make all our own raw materials, we manufacture our own print films, we manufacture the flooring, so it only makes sense to align sales and marketing with all of the above,” said Harry Brownett, who came over from Toli about 100 days ago to spearhead the effort. His initial tasks focus on growing market share and adding distribution where it is needed. Next, the company will be taking a good look at its current product portfolio, research additional products that may be available in South Korea and look to put together a working collection of products that are easy for designers to use, where sheet coordinates with tile, stone coordinates with wood, and the line has a rational design strategy, Brownett said. “We hope to have that completed by the first quarter of next year.” Business is up double digits year over year, he said. Driving the business is the LG brand. “Everyone recognizes it,” he said. “And because of that we get an opportunity we may not have gotten with a less recognizable brand. But once we get that opportunity, people are recognizing we have quality products.” LG’s current penetration has been strong in retail with its tile and plank business. At NeoCon, LG was showcasing its environmental platform, Life’s Green, which plays off LG’s Life’s Good story. “We have a good recycled content story to tell,” Brownett said. “In South Korea we are recycling residential sheet vinyl and using it to make raw materials for new flooring. With the exception of Sweden, we are not aware of any other place in the world where this is getting done. We are also developing our green marketing to meet standards set forth by the Green Building Council. We recognize that green products are becoming more essential in all market segments.” Mannington Commercial Business is clicking on both the hard and soft sides, according to Jack Ganley, president, adding that the education market has been strong, and that drives both carpet and hard surface. On the hard surface side, Ganley said its homogenous sheet vinyl is doing extremely well. “We are the only manufacturer in North America making homogenous sheet vinyl. Everyone else is importing it. We use that to our advantage, primarily as it relates to service. Others have longer lead times.” Like almost every other soft surface flooring manufacturer, the carpet tile category has been a shining star. “We’ve experienced double-digit growth in each of last three years,” Ganley said, adding that while some estimate tile to be a third of the soft surface market, “for us it’s about a 50/50 split between tile and broadloom.” This year Mannington came to NeoCon with more than carpet and resilient. The company is turning its attention to commercial wood with the introduction of the Prestigio collection. “We’re finding designers are looking for more sources for hardwood, particularly for high-end corporate, retail and hospitality,” Ganley said. Launched in February, Prestigio, comprised primarily of oaks and maples, is the first of three wood collections with the others expected to come on line by October. “We borrowed from the great technology we have on the residential side of the business, so it has a very high-performance urethane finish suitable for commercial use,” Ganley said. Milliken The story at Milliken is that diversification is driving “more than single-digit growth” over last year, according to Dave Caples, president. “Historically we’ve been involved in the office market, but now we’ve expanded into education, assisted living and government,” he said. “Those are our growth engines. We’re introducing more new products at NeoCon than we have in the last five years combined.” Caples also noted that Milliken has been putting a premium on aesthetics in recent years, and that is paying dividends. “We have always been known for performance but not necessarily for fashion. We are changing that image.” Milliken has a new platform called Convergence that was unveiled in 2006. “We take advanced tufting technologies, newer yarn systems and create patterns and textures that no one else can do,” he said. “It’s something we’ve been working on for the last two years and is really starting to take off.” Caples cited a product dubbed Plan A, an extension of Convergence, as the most exciting introduction at NeoCon. “The offering is so strong we didn’t have a Plan B.” According to Kaye Gosline, creative director, a designer can create floorscapes for clients who are ready for a little color and whimsy, as well as providing rich and inviting options for clients who prefer something more subdued. The cornerstone is a pattern called Pie. “It does everything a designer wants it to do. It offers texture, sophisticated pattern and gradation of color.” Milliken is also introducing a new backing system called B2. “The 2 stands for back to back,” Caples said. It is Milliken’s answer to closed loop and offers both bio-based and recycled content. The promise is that once its life is over it will be recycled into carpet tile. “Its practical life will never be over. It can be recycled an infinite number of times.” As for growth areas, Milliken sees healthcare as a major opportunity as the population ages. “We saw three architectural firms on day one of the show planning assisted living communities,” Caples said. “ Sometimes we go through shows where we don’t see one.” Mohawk Group The massive Mohawk showroom was filled with architects and designers basically every second of NeoCon. Jim McCallum, president, viewed it as a reflection of business. “We’re seeing a continuation of the growth we saw in 2005 and 2006, although things are slowing just a bit,” he said. “Hospitality is on fire, but all segments and brands are clicking on all cylinders.” McCallum sees no end in sight, noting how the leading indicators suggest sustainability. “Architectural billings and non-residential construction starts are trending positive,” he said. “The majority of the business is retrofit, which is more volatile and related to general economic conditions. But there are no real indications the economy is going to turn south in a hurry.” From a product standpoint, the modular tile sector is lights out, while the broadloom business is flat at best, he said. This is a trend that resonated throughout the market. Three reasons: 1. Tile products are being developed at lower price points, which allow them to be competitive in some areas, price wise, with broadloom. 2. The realization in the end-use community that although tile may be more expensive than broadloom, life-cycle cost makes it more economical. 3. Modular tile, which has been very concentrated on the corporate and retail segments, is finding its way into state institutions like federal and state government. “We’re now even seeing tile in healthcare and education, even in hospitality,” McCallum said. “So it is getting wider appeal in terms of market segment.” He added that the Bigelow, Mohawk and Durkan brands are relative neophytes in the modular business. “We have an opportunity to grow in carpet tile because of the immaturity of some of our brands. So we are expecting to outpace the industry in terms of carpet tile growth.” Brands are what drive Mohawk’s business—both in terms of awareness and diversity. “We have the most recognized and respected brands top to bottom,” McCallum said. “We have seven solid brands. Each has very good fits and provides good value propositions at all price points. We can supply all needs.” As well, each brand has its own set of designers to keep the looks fresh and different. Mohawk at NeoCon unveiled a host of new products across all brands. Some highlights: Karastan: The Sensory collection brings wool back into the line, according to Greg Wittlinger, vice president of marketing. The wool/nylon collection was designed in collaboration with designer Shashi Caan. “It’s high end, what Karastan should be.” Bigelow: 24/7 is a series of three carpet tiles—large, medium and small scale—with a recycled backing system. “While we want to differentiate the brand, we want to elevate it in its own element,” Wittlinger said. Mohawk Commercial: The Synergy collection is a collaboration with Ken Wilson, Interior Designer of the Year two years ago. The line was designed with sustainability in mind. “We did not make one strike-off during pattern development,” Wittlinger said. Durkan: Glamrock offers bold, fashionable and edgy styling, a result of the brand’s collaboration with junior designers from different design firms. Large-scale patterns, a heavier face weight and a recycled backing system are other attributes. Mohawk is using its EBcycle backing on all modular brands, “leveraging what we believe to be best recycled backing in the industry,” Wittlinger said. “It’s PVC-free with 35% recycled content. It’s closed-loop recycling without the need to separate face from back.” NeoFloor by Lees One of the more innovative flooring products at NeoCon was NeoFloor, which Lees is positioning as a hard surface alternative to carpet. The hybrid offers a sheet vinyl backing with nylon 6,6 in the face. According to Paul Cleary, vice president, NeoFloor is 10 times denser than anything a carpet manufacturer can tuft or weave. It makes for incredible durability and cleanability, he said, acknowledging the typical applications of healthcare and education settings. “What we’re seeing is that as the aesthetics improve, people are also using it in corporate settings,” he said. “They are putting it in areas where they want the characteristics of carpet but don’t believe it will hold up.” But NeoFloor is more than functional. New this year is Sottsass, a four-pattern line designed by Ettore Sottsass, a 90-year-old Italian designer whose work has been featured at the Design Museum in London. Cleary describes the line as a literal translation of graphic design. NeoFloor, which has been around the eight years under the Lees brand via a licensing arrangement with a European manufacturer, is experiencing double-digit growth every year, Cleary said. “We had a product that was very functional. The design community may not have seen it as aesthetic appropriate, but now with the focus on the design aspect we expect to maintain our growth.” Shaw Contract Over at the Shaw’s 10th floor showroom, Tim Baucom, vice president, was touting the ever-increasing favor of carpet tile, a category many believe now comprises a third of the total soft surface dollars spent on the commercial side. “This is the fastest-growing product of any of the categories,” he said. “We are now even putting carpet tile in areas like healthcare, which has been traditionally hard surface.” What’s driving the category for Shaw? “I think it’s because several years ago we started emphasizing the tileness,” he said. “We used to style it like broadloom and stress functionality. Now we are designing to mix and match, highlighting multiple fabrics. Baucom added that the aesthetics have improved and price points have come down. “It’s probably 30% more economical than five years ago. There are also installation efficiency advantages and perceived environmental benefits because of recyclability.” Baucom noted that Dressed to Kill, the carpet tile launched in 2002, “catapulted us into a true design leadership role.” The sequel, Dressed to Kill 2, just won a Best of NeoCon Gold Award. “It’s something that resonates with designers,” he said. “They are products that could stand out. Dressed to Kill was very linear. Dressed to Kill 2 adds organic patterns, inspired by things like how coy would look in a pond.” At NeoCon, Shaw also launched Texture Study, the follow-up to last year’s Best of NeoCon winner, Silk. “We are trying to bring in more lusters and more styling yarns so we get a little more exploring of fashion,” Baucom said. “You see an influence of construction materials.” Business-wise, Shaw is seeing project-oriented business as robust but “day-in-day-out” business as a bit spotty. In terms of individual segments, healthcare and hospitality are strong, corporate is good and education has been a bit disappointing. Why? “We are not seeing as much refurbishment. There has been more new construction. Districts are not doing both.” Tarkett Commercial The Azrock story, in a word, is color. “The palette of new Azrock colors has received a great reception from our customers,” said Diane Martel, vice president, marketing. Much of this surrounds the Colorworks program that was introduced in 2006, which breaks down colors into four categories: Cosmopolitan—bold and exciting; Contemporary—peaceful, healing blues, greens and grays; Urban–cityscape, minimalistic, concrete whites, blacks and grays, and Natural–warm, homey beiges and browns. The Colorworks program is currently available on homogeneous commercial tile; this year it is added to standard tile and next year to the company’s “plus” categories. Speaking of color, Azrock took home a Best of NeoCon Gold award for Karim Kolors. “We developed a relationship with Karim Rashid, a leading figure in the field of interior design, when he designed our booth last year,” Martel said. “Once we saw the colors he used—like bright green, hot pink and periwinkle—we decided to enter into a stronger relationship.” His 10 colors will go into Solidaire solid vinyl tile, which comes out in September.” Cortina Stone, a vinyl-enhanced tile, is being launched at the end of the month, but Azrock has already sold thousands of cartons to the education and retail segments. Ease of installation and maintenance are its hallmarks. “It has a binder content around 25%, which makes it flexible,” said Gilles de Beaumont, president. “You don’t need a special tool to cut it, so it’s much easier to install. It’s also non-directional, so it can be installed any way. And once installed, you never have to strip the tile; all you have to do is put two coats of polish and spray buff on a regular basis.” As for business, de Beaumont said four of the first five months have been strong. “We are on budget,” he said, adding that there is a relationship between segment strength and time of year. For example, chain store business tends to drive the first quarter. “These stores tend to finish flooring from January to March because business is slower,” he said. “Healthcare is pretty steady year round, then in spring it’s the education segment [as schools break for summer recess].” Wilsonart The high-end laminate company at NeoCon launched its namesake commercial line developed exclusively for this market. According to Curt Thompson, president, it was time to introduce a collection dedicated solely for this segment. “The commercial market wants products that have been built, engineered and styled for their arena,” he said. The grouping offers a number of attributes that make it attractive to the A&D community, such as Wilsonart’s exclusive PermaPlex high pressure laminate, its proprietary X-Wear overlay, a static load rating of 2,500+ psi, low maintenance with no waxing or surface treatments needed, ease of installation, and a recycled content of 56%. Thompson noted that there are currently 20 North American distributors on board to handle Wilsonart Commercial Flooring and more than 300 commercial contractors supporting its products. “This gives us the ability to handle local, regional and national specifications.”