Article Number : 955 |
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| Date | 4/3/2006 2:37:22 PM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=955 |
| Abstract | By Steven Feldman Lancaster, Pa.—Armstrong on March 15 made strides to increase its leadership position in the hardwood flooring segment with the acquisitions of Capella Wood Floors and HomerWood for cash along with the announcement of a manufacturing joint venture in China... |
| Article | By Steven Feldman Lancaster, Pa.—Armstrong on March 15 made strides to increase its leadership position in the hardwood flooring segment with the acquisitions of Capella Wood Floors and HomerWood for cash along with the announcement of a manufacturing joint venture in China. Speaking exclusively to Floor Covering News, Frank Ready, president of Armstrong Flooring Products Americas, believes these transactions display the company’s dedication to supremacy in the hard surface industry. “We see wood as a strong growth category. In the engineered segment, we were always chasing capacity to support next quarter’s demand. Our facilities did a great job of expanding within their existing footprint. However, if we are to continue investment in new products and take advantage of a growth market, we needed to significantly expand our capacity. These acquisitions provide us the capacity needed to be the leader in the market.” Each transaction fills a need. Capella, “provides us immediate capacity to support the growth demands of the engineered market and adds to our portfolio of brands.” Armstrong is particularly interested in Capella’s 3/4-in., 7-ply, engineered product. “That’s its point of differentiation in the marketplace and a product we previously did not offer. We think there is an opportunity where we can grow with that.” The HomerWood purchase aligns with Armstrong’s strategy to compete across the full spectrum of products—good, better, best and premium. “HomerWood gives us a running start in the premium segment, where we were not participating to the degree we thought we could,” Ready said. “HomerWood has done a good job focusing on non-oak, handscraped, distressed, character-grade, wide-width product. It’s carved a nice niche in the premium segment, which will only grow.” Both the Capella and HomerWood brands will remain in the marketplace and join Armstrong’s three other key wood monikers —Bruce, Robbins and Armstrong Hardwood Flooring by Hartco. Ready noted there is an opportunity to expand Capella’s retail presence. “It’s not a mature brand and has been around about six years.” According to Capella, sales growth has exceeded 24% each of the past two years. Vicksburg, Miss.-based Capella will operate as a fourth manufacturing facility within the Armstrong footprint. Given that Armstrong’s three facilities in the U.S. are currently running at full capacity on the engineered side, the manufacture of some products will shift to the Capella plant, which has been running at approximately one-third of its overall capacity. HomerWood, located in Titusville, Pa., will operate as a completely separate entity. Both Capella and HomerWood will maintain their own sales force, and existing management teams will remain in place for the foreseeable future, Ready said. As for distribution, Armstrong is keeping the status quo for now. “The distributors that have had both lines have done a great job of developing their marketplace and driving growth,” Ready said. “But where there are gaps or a chance to upgrade, we’d consider leveraging our existing network.” He admitted there are more gaps in HomerWood that need to be filled. As for the 50/50 Chinese joint venture, a factory currently under construction, slated to be completed later this year, is also designed to provide Armstrong with additional capacity to support the growing demand in the engineered segment. “It gives us access to sliced face and exotic manufacturing capability,” Ready said. Nature, the company with which Armstrong is partnering, is a leading hardwood flooring provider serving the domestic China market. “We have an existing relationship having sourced product for years,” Ready concluded. “We will continue to source from other Chinese companies where it makes the most sense.” Armstrong operates 41 plants in 12 countries and has approximately 14,900 employees worldwide. In 2005, Armstrong’s net sales totaled more than $3 billion. |