By Sarah Zimmerman
When you talk resilient flooring these days, the subject requires two separate conversations. Commercial business has been upholding the category with “moderately profitable” numbers in 2007, increasing sales by low-single digits. On the other hand, the residential picture is not as pretty with sources reporting a high single-digit to low double-digit percentage drop from 2006.

When the dust clears, the overall resilient flooring category is expected to see a 3% decline in sales, as has been the case in recent years. According to FCNews’ research and leading manufacturers, the negative numbers are primarily attributed to the current economic drought in the housing market, though an increase in material costs also lends itself to the weak year.

So where does this leave the segment; what’s driving sales, and is there sun on the resilient horizon?

Though leading mills do not expect a breakthrough year in 2008, future thoughts remain positive noting a constant and growing commercial demand and increased residential interest driven by natural looks.

“This year has been spent recovering,” said Dennis Jarosz, senior vice president of sales and marketing for Congoleum. “It’s the tale of the second half.” He said Congoleum’s sales were slightly off the first half of 2007, but year to date it’s seen higher average sales than last year.

Jarosz explained consumers are continually looking for advancements, and resilient is the only category that is limited only by technology. “We are putting a tremendous effort toward looking at new materials and technologies to look different and/or perform better.” He noted wood as an example, stating there will always be a market for wood flooring, so why not focus on making a visually equal resilient plank with durability, installation and cost-efficiency only afforded to this category?

DuraCeramic and FlorEver Plus are driving the category in the residential and commercial segments, respectively, for Congoleum. “DuraCeramic is unstoppable. It has experienced double-digit growth this year,” Jarosz said.

Over at Armstrong, it’s much the same story. The company maintained its numbers were off residentially in the high-single digits, where commercially it has been unaffected this year. Allen Cubell, vice president of product management, residential resilient, blamed the residential decline on the “builder and remodeler one-two punch, which we don’t typically get.” He noted sheet was affected more than luxury vinyl tile (LVT), where he pointed to StrataMax as “one of the most significant launches of the decade.”

Aside from the poor housing market, material inflation continues to weaken the dollar as China and India are increasingly providing textiles and products, Cubell noted. “The tunnel is getting longer,” and residentially, Armstrong’s fix is product mix. “How do we upsell? Upgrade. All of our recent introductions are trade-up stories. We continue to upgrade our products, which, in turn, helps everyone.”

“Thankfully,” Armstrong’s level of commercial construction activity held up, said Dominic Rice, vice president of product management, commercial resilient. “We’ve continued unaffected due to constant market demands.”

Rice said Armstrong commercial fills three main areas: health, education and retail. He explained an increase in age and enrollment has left the health and education industries with strong flooring demands, though retail softened slightly as it is linked to housing. He also noted increased use of LVT in new venues, such as grocery stores, as a positive for the segment. “Retail’s drive is competition between chains. A good shopping experience includes a store’s look and its finishes—floor covering.”

The company’s greatest challenge and achievement for the future, according to Rice, is the continued escalation of raw material costs to the industry. “We will continue to manage and recover cost increases through the year and anticipate commercial business construction to grow.”

Exclusively commercial

Since LG Floors is strictly engaged in the commercial market, it is not feeling the full effects of the residential slowdown, reported Harry Brownett, vice president of sales and marketing. “In fact, we are seeing a growing number of inquiries from residential distributors and retailers about our commercial products.”

The company’s LVT and luxury sheet sales grew at double-digit rates, he said. “LVT is growing because customers are looking for well-designed alternatives to high-priced natural woods, and we’re seeing a crossover business from commercial consumers who had been using laminate.”

Looking to the future, Brownett noted the segment’s biggest achievement is probably related to environmental issues. He said resilient flooring has long trailed carpet and other categories in producing environmentally preferred products, and “green building is not longer just a popular fad but has achieved critical mass and become a mainstream component of the U.S. building market.” He noted the category is complying by “manufacturing products with both post-consumer and post-industrial recycled content by certifying and designing products with an eye toward adding value to a LEED scorecard.”

Brownett agreed future success depends on the emergence of new technologies. “Once technology reaches the stage where it performs equally or better and costs equally or less, we may see dramatic change in the resilient flooring market. The future cost of oil is likely to have a major influence over the destiny of alternative plastics.”

Kim Holm, Mannington’s president of residential business, described the first half of 2007 as challenging. He said the company’s residential business was off approximately 10% to 12% from 2006, but commercially up 2% to 5%. He, like others, blamed not only the housing crash but also rising costs of raw materials. “Our challenge this year is the market is not only going down, but at the same time costs are on the rise.”

However, Holm remains hopeful for next year, predicting a rise in retail business as well as the builder market. “Builders are starting to go back to vinyl rather than wood, and technology has gotten so good, producing so many realistic alternatives, customers are finally preferring resilient again.”

Pierre Lefort, vice president and general manager of Nafco by Tarkett, said business started to slide in the third quarter last year, reflecting a decline in activity that continued into 2007. However, Nafco did not report a bad year stating several advantages: The LVT category is very well received; 100% of Nafco’s products are made in the U.S., and its PermaStone collection continues to be strong due to its remarkably realistic looks.

A future focus on the environment was again noted as a topic to keep on top of by Lefort. “As compared to the 1970s where the trend came and went, we feel this time the focus on green issues is here to stay.”

Don Evans, vice president of sales and marketing for EarthWerks, said its business is up overall, but following suit, commercial is up by much higher percentage points than residential. He felt the heavier commercial products with a lot of style and color, as well as natural looks in stones and slates drove sales this year.

In the trenches, he reported, “sheet goods seem to be having a tough time.” But, a rise in LVT is helping the segment. “LVT seems to be growing with everyone this year because of flexibility and style, ease of repair and maintenance. It is a bright spot in resilient.”

Going forward, Evans said, “EarthWerks has the most natural looks of woods, stones and slates. Flexibility, the green movement and ease of installation, replacement and maintenance positively affect our product choices today and in the future.”

Like most, Mario Allard, director of product management, vinyl for Domco pinpointed the category’s downward slope beginning in quarter three of ’06, making quarter one and two of this year dismal in comparison.

The company has found, though, that advances in the industry are allowing mills to offer products with new and exciting features such as advanced patterns, styles, versatility, glueless installation and more. “We find both dealers and consumers recognize the value of a product and make products that address their needs.” He listed FiberFloor as the product that continues to gain share in tough economic times.