Vails Gate, N.Y.—In an unprecedented move within the flooring industry, two leading companies—Mannington Mills and Tarkett—have come together to take advantage of existing VCT capacity by forming a manufacturing-only joint venture company. Called Vails Gate Manufacturing, Inc., the 50/50 JV has its own board of directors—two from each company—along with a plant manager and the employees who work at the manufacturing facility. It will not have a sales and marketing force.

Both Mannington and Tarkett stressed this is purely a manufacturing joint venture to produce some of each company’s standard line vinyl composition tile. “The objective of this is to take advantage of existing capacity within the industry and produce VCT at the lowest possible cost,” said Ulf Mattsson, Tarkett’s president and CEO. “We view this as a strong alliance, combining the strength of two industry leaders.”

While this type of venture is unique to the industry, this one had been in the making for a couple of years, noted Tom Davis, Mannington’s president and CEO. “We’ve had a supply agreement with Tarkett and it was very successful. This led us to talking about a JV.” “We contacted Mannington about making some tile for them,” explained Mattsson, “and it worked so well we recognized that a joint venture was in both of our best interests. “There is a lot of capacity for VCT that is not being utilized,” he added, “This deal just made sense in that Mannington needed a little more than its facilities could produce and we had some extra capacity.”

The Vails Gate manufacturing facility had belonged to Tarkett prior to the JV. To make the deal possible, Mannington purchased 50% of the assets. “It’s a winwin situation,” Davis said. “One that will allow both companies to grow and thrive. This venture is an innovative solution that allows both companies to maximize manufacturing potential.” He noted that initially the plant will product “common or standard line products” offered by each company. “While they are the commodity type of VCT products, we both have slightly different looks and that will remain. Right now, the plan is to keep it simple. Eventually, we both may want to expand to more advanced designs.”

Mattsson added, while the products will be slightly different, “like they are today,” the processes in making them are similar. Plus the facility is “very flexible so that it can accommodate both our needs.” Both recognized the significance of forming the JV but noted it does not necessarily point to a sign of things to come. “It is unique in the floor covering industry,” said Davis, “but it is something that is done in other industries. Whether it will be done more in this industry, who knows. But, if you do something and it works, chances are it will be copied.”

“In other industries,” said Mattsson, “it is common, especially in cost competitive, slow growth segments.” He pointed to a JV of Ford and Volkswagon in which they have teamed up to produce buses at a common factory. Each still sells and markets its products separately but, in this case, the product is manufactured at the same plant. “When it makes sense to do,” he concluded, “it is a good thing because not only do both companies win, the industry wins as well. Maybe by the fact that we are doing it will give confidence to others in the industry to look into a similar situation.”