Article Number : 3104 |
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| Date | 3/21/2008 7:34:16 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=3104 |
| Abstract | By Sarah Zimmerman Stay aggressive. Diversify products. Go green. These were the focal points of top hardwood mills as the category comes off yet another down year... |
| Article | By Sarah Zimmerman Stay aggressive. Diversify products. Go green. These were the focal points of top hardwood mills as the category comes off yet another down year. Offset by continued slowdown in the housing sector, significant hits to new home construction, credit issues, lack of consumer confidence and an overall economic slump, executives reported an 11% to 14% drop in units last year from 2006—barely holding its billion-unit mark at 1.02 square feet. And, executives are not estimating a turnaround anytime soon, predicting this year will mirror last and stating 2009 is still a question mark. “This was a very challenging year for the industry,” explained Frank Ready, president and CEO of Armstrong Floor Products, who noted the well-publicized housing downturn had a dramatic affect on wood shipments. “In addition, during the second half of 2007, we saw a slowdown in consumer spending in remodel/replacement, which affected retail business. And we see more of the same, if not worse, this year.” In agreement was Luc Robitaille, vice president of marketing for Mirage. “This year is certainly going to be difficult because every day seems to bring on new challenges that were unforeseen even the day before. It will be quite a ride.” However, mills maintained an in-control attitude, doing everything possible to get a cut of the market that’s still being shopped. “While we can’t control market conditions, we can impact our business by remaining aggressive,” Ready said. Trends hold true Some tried and true trends emerged last year and look to continue growing market share in 2008—exotics, wide planks, the distressed look and sustainable products. “The general consensus seems to be alternative species—including exotics—as well as lower volume domestic species—such as walnut and hickory—gained market share, along with specialty products such as wider-width planks and handscraped,” noted Timm Locke, executive vice president of The Wood Flooring Manufacturers Association (NOFMA). “While unfinished oak retained its position as the most prevalent product, we believe it has lost market share to prefinished solid, engineered and some of these less common species.” He noted this along with reclaimed flooring in a wide range of species will be top-notch in ’08. Robitaille agreed, stating high-end, exotics and the “worn look” were all good bets last year. “Exotics and the worn look seem to be the ‘in’ thing right now, and the high-end market is always there regardless of the economy.” He noted these fads will continue in this year with less emphasis on the distressed look and more attention on an “old world style.” Kevin Thompson, hardwood product category manager for Shaw Industries, said the company focused on authentic handscraped and technologically advanced products in 2007, which he said will continue to be hot this year. He also pointed to environmentally friendly products and reclaimed looks as trendsetters in ’08. Kim Holm, president of Mannington’s residential business, agreed technology was behind yesterday and today’s stand-out products—high-end and unique visuals. “There is an explosion of options for the consumer—whether it’s exotics or rustic handscraped visuals. The trend is at both ends of that spectrum, and today’s technology allows us to take any species and turn it into a spectacular floor.” Along the same line, Armstrong’s Ready said while oak still makes up about 60% of the company’s overall business, it has seen growth in “domestic exotics—walnut, maple, pecan and hickory.” He also pointed to some other areas of interest in ’07, noting locking hardwood on the engineered side as a major highlight. Entering 2008 Ed Korczak, executive director of the National Wood Flooring Association (NWFA) said this year the hardwood category will not see any upturn, but maybe by mid-2009 “things will start to shift. However, there is a light at the end of the tunnel because people are always going to want hardwood floors.” This remained the attitude of most three months into the year. Ready added 2008 will be another tough market and 2009 is still a question mark. He said the key will be rightsizing the inventory of existing and new homes that are on the market. “When that segment begins to correct itself, we will see recovery.” He agreed, consumers like hardwood, but said they are smarter and more calculating about their purchases today, which is why one has to offer a broad selection of products, greater performance and high quality. NOFMA’s Locke continued, “The current state of the market (shrinking demand coupled with depressed pricing) remains a major concern for producers.” He said to that end, NOFMA is hosting a summit to look, in particular, at the issues affecting unfinished solid producers in Nashville at the end of April, “and we hope some strategic initiatives to help the industry will be the result.” Holm pointed to consolidation and the environment as key players in the coming year. “While we anticipate the economy will continue to slump, we see the industry headed toward further consolidation, with larger companies acquiring smaller ones to round out or expand their product offerings.” In addition, he said the focus will be on more environmentally sensitive manufacturing and corporate responsibility. “Everyone’s got some kind of green message, but consumers are becoming more educated about that subject so companies who aren’t doing something meaningful and real will be called out.” Shaw’s Thompson shadowed Holm’s two points, also naming consolidation and the environment as focal points this year. “With rising costs and a slowdown in the economy, there is bound to be industry- wide consolidation. There will continue to be innovations and further developments of environmentally responsible products in ’08.” Robitaille looked to the year as one of opportunity, also placing sustainability as a prevalent issue in the future. “This year will be one of changes that will create a whole lot of opportunities for the future—the only thing we don’t know is exactly what those opportunities will be. However, the whole sustainability issue will become more and more present as consumers want to know they are buying products from responsible companies.” |