Hicksville, N.Y.—Soaring energy and health costs have forced manufacturers in all flooring categories to raise prices, but an explosion at a production facility of a key raw material supplier to the resilient industry has put additional pressures on mills. In late April, the Formosa Plastics plant in Illiopolis, Ill., was destroyed during the night shift. The explosion, which is still under investigation by the U.S Environmental Protection Agency (EPA), the U.S. Chemical Safety and Hazard Board (CSB) and others, killed five workers, injured seven and destroyed almost 75% of the facility.

In numerous news reports the following day, Sheriff Neil Williamson of the Sangamon County Sheriff’s Department in Springfield, Ill., which is approximately 20 miles west of Illiopolis, said, “the chemicals vinyl chloride, vinyl acetate were being mixed and something set off an explosion. We don’t know what.” The blast was so massive it forced the roughly 1,000 residents to be evacuated, shut down a large section of Interstate 72, rattled windows up to a mile away and kept firefighters busy for days trying to get the fire out. In fact, residents within a half-mile of the plant were not allowed to immediately return home due to the fire burning for a couple of days and, investigators were kept from entering the damaged plant because the remaining structure was unstable.

Formosa is a privately held company that is part of the Formosa Plastics Groups of Taiwan, a $15 global enterprise. Its U.S. operations are comprised of four chemical manufacturing subsidiaries, including the Illiopolis facility. The company is a full service manufacturer and supplier of plastic resins and petrochemcials and include chemical and petrochemcial manufacturing, natur al gas drilling and poly vinyl chloride (PVC) downstream processing. Key Supplier The Illiopolis facility was responsible for supplying a number of the industry’s resilient manufacturers with PVC resins, a key raw material in the making of many of today’s most popular floors.

So much so, that in its most recent Securities & Exchange (SEC) Commission filing, Armstrong World Industries said the resin goes into products that generated first quarter sales of $167 million or 20% of its total sales of $845 million. They also account for 55% of its resilient flooring sales, which were $304.1 million. While Armstrong was a major customer with Formosa, other resilient companies did business with the chemical conglomerate and, as a result, the entire category has been forced to sure up supplies as prices quickly skyrocketed soon after the explosion. Russ Russell, a consultant to Flextile and a veteran to the resilient industry, warned shortly after the tragedy it will disrupt the supply of resin to the flooring mills, and “the industry should expect sharp price increases as resin costs have already jumped 25%.”

Allen Cubell, vice president of residential resilient sheet for Armstrong, noted, “While we have been successful in securing alternate raw materials without any impact on service or supply and are well positioned for both the short- and long-term, costs have been affected.” Dominic Rice, Armstrong’s general manager of commercial tile and sheet, added, the company has taken “aggressive cost cutting initiatives and every attempt has been made to minimize the impact these price trends have had on both Armstrong and our customers in terms of increased costs.”

Despite these measures by Armstrong and other companies, the fact remains that energy, transportation and other costs-of-doing-business-expenses, such as healthcare, have continued to rise and when the Formosa catastrophe is added to mix, manufacturers have been left with no choice but to announce price hikes. This will be the second round of increases in recent months as mills have battled to control costs in the face of increasing price pressures. New Prices Effective with shipments on July 1, prices on selected residential and commercial Armstrong sheet products will go up 4% to 6%.

At Mannington, Kim Holm, president of residential business, said the mill will be implementing a 4% to 6% price hike on selected residential and commercial products. In Mannington’s case, the new residential prices go into effect on July 5; commercial’s new rates have been in effect since June 1. He noted the Formosa disaster “did not have as much of a direct impact on us as it did other manufacturers, but we have certainly felt the ripple effect of supply being down and prices going up.” But, Holm said, Formosa was just the icing on the cake in terms of the pricing pressures resilient companies have had to face.

“Additionally, increases in both oil and natural gas have unfavorable impacted energy and transportation costs. So, after a thorough review of current market conditions, we have found the economic impact is great enough to necessitate a price increase. “It’s not something we take lightly,” he added, “but we believe our distributor and retail partners, as well as consumers, will continue to view us as a competitive product and a good value.”

Jan Lembregts, president of Tarkett Residential, announced that effective July 1 the company will also institute a 4% to 6% price increase on select residential products. In a separate announcement, he said the increase will not take effect on the company’s new Fiber-Floor offering until Sept. 1. “In recent months,” Lembregts explained, “we have absorbed increases because our efficiencies within the entire manufacturing and supply chains have enabled us to offset them. However, we can no longer shoulder these added costs alone and must adjust our pricing accordingly. “However,” he added, “we do not expect this to impact the excitement we see in the market for our products, especially our new Infinity line and Fiber-Floor.

In fact, since its launch in January, we have seen tremendous enthusiasm for FiberFloor and are confident distributors, dealers and consumers will continue to support the brand.” At Tarkett’s Domco subsidiary, Stephan Guidon, vice president of sales and marketing, said the company has tried to keep prices stable, but as of Aug. 1 it will be forced to hike rates from 2% to 6% on selected products. “With the recent price increases for raw materials, freight charges and energy, we have no choice but to pass along these added costs to our customers.” Officials from all companies stressed the current volatility in prices will not impact their core goals, which, as Armstrong’s Rice said, is to “provide our customers with superior products and timely service.” —Matthew Spieler