Article Number : 2780 |
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| Date | 12/19/2007 9:11:23 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=2780 |
| Abstract | By Louis Iannaco After suffering through one of the worst housing market downturns in recent years and seeing oil prices spin out of control, the carpet industry, like most others, was hit mightily in 2007, not unlike sustaining a body blow from Joe Louis in his prime... |
| Article | By Louis Iannaco After suffering through one of the worst housing market downturns in recent years and seeing oil prices spin out of control, the carpet industry, like most others, was hit mightily in 2007, not unlike sustaining a body blow from Joe Louis in his prime. After making it through the year, what can be done to avoid such tough times in 2008, or is it totally out of their hands? Describe what you see in 2008 economically and product wise in the category. Ralph Boe President and CEO Beaulieu of America The whole flooring business has been weak driven mainly by the downturn in housing both in new homes and in existing homes as well as lower consumer confidence, which is affecting the retail market as well as the new housing market. And, we expect that is going to continue into 2008. Typically, in the past, you’d expect an election year to be an improving year, so we still have some hope, more than anything else, that things will get better by the second half. We had thought things had bottomed out this year, but we are not sure if we’ve seen the bottom yet. And, it’s clearly affecting all surfaces, not just carpet products. In fact, some of the other hard surfaces during the first half of this year had a bigger downturn than carpet did, the higher proportion of it going into new homes or existing homes. On the commercial side, it has been relatively buoyant certainly compared to the residential side and, in particular, the hospitality market has been good. The people we’ve talked to in that category believe it’s going to continue into 2008. The corporate market has been good, particularly on carpet tiles. Tile growth has been extremely strong, especially with companies like Interface, which is 100% in that category, or almost 100%. Its growth has been significant this year. We believe the tile business is going to continue [to be strong], the only down side there would be is if corporate results continue to suffer. That could weaken the commercial market for a time. Right now it is running counter cyclical to residential. Maybe by then things will be improved on the residential side. Hopefully that happens. All these factors affecting oil prices around the world, they aren’t so much supply-and-demand driven as they are being driven by different events. The events in the Mid East and South America are driving prices up more than anything else. We really haven’t seen the total affects yet of these high oil prices. That’s likely to continue to hit us, higher ingredient prices in polypropylene, in nylon, in polyester as well. Right now, at least, polypropylene is seeing the biggest hit in increases relative to the other fibers. If something doesn’t happen to subside those increases, then the mills will no longer be able to continue to absorb these cost increases without passing them on. Jonathan Cohen Vice president of sales Stanton Carpet Corp. All economic data suggests 2008 will be another challenging year to attain significant growth. We understand the dynamics and use it as an opportunity to continue to take share in our channels and to take advantage of opportunities in other areas of the market. We have strategies in place and the responsibility to grow the business and know we have the people in our company who will make it happen. Stanton will continue to add products to categories that have shown great strength and/or promise for the future. Our 2008 Surfaces introductions will be outstanding with very innovative use of texture, edgy transitional styling with a great use of new color combinations. Russell Grizzle Global president, floor covering Milliken & Co. Because our largest markets are in the contract and hospitality area, the downturn in the housing area has not affected us as much as it has other carpet manufacturers. Our commercial business continues to grow. However, we are introducing new products such as Milliken Place and other convergence products that will allow us to participate in new residential market segments we have not initially played. In commercial markets, we anticipate launching products with several innovative aesthetics and technologies to boost our growth. How does/will the company position itself in order to respond to what it sees happening in 2008? Boe: Another issue that hit us maybe more than the other flooring surfaces has been the dry situation here in Georgia; the drought we’ve had has created some problems. Fortunately, in part because the market is down but also because the industry has continued to do a better and better job every year on using less water per square yard of dyeing and finishing, we’ve been able to conserve enough so that we are certainly living within the means which are available to us right now. Basically, we’re hoping to get some more water to take care of the supply side going forward. People are looking to solutions to problems, and, at the same time, making sure that they are getting the best value they can based on price and benefits. I believe those are different things we’ve got to invest in as manufacturers; making sure we’re bringing the right products to market which provides solutions for those issues consumers are raising. Cohen: We implement strategies which will allow us to take share and that means a great and balanced combination of three critical elements: beautiful and saleable product, great service and great people. We will also announce an acquisition that adds another category of differentiated broadloom, enhancing our product line and driving growth. Grizzle: While the carpet market has responded strongly to sustainability, Milliken continues to look at ways to minimize our eco-footprint through practice and innovation rather than buying carbon credits, which have contributed to our carbon negative certification. These efforts include reductions in emissions, water and resource use; increased reliance on green energy, and continuing to achieve zero waste from carpet manufacturing. Our commitment to ‘ecountability’ supports sustainable policies Milliken initiated more than a century ago. We champion sustainability internally and with others around the world. |