Anyone who has attended Surfaces will not be surprised when they walk into the Sands Expo & Convention Center for the 2008 event to see that Mannington Mills occupies the largest exhibition space on the show floor.

As final preparations for the market were being made, FCNews’ Matthew Spieler, senior executive editor, caught up with Kim Holm, president of Mannington’s residential division, for an exclusive interview about the state of the company, the industry and what can be expected in the coming year.

Give us your overall state of Mannington; how did the company do in 2007 compared to 2006 as well as to the expectations it had going in?

Overall as a company, year-over-year we were down about 6% to 7%, which is worse than we anticipated going into the year. Back in September of 2006 when we were putting together our ’07 plan we thought the builder slowdown would rebound by the second half of the year. Obviously, that didn’t happen.

The industry as a whole was about the same. So I don’t think we lost or gained any share.

What were your best selling products in each category (resilient, wood, laminate and tile) and why do you believe they were the most popular?

In resilient it was Sobella and, surprisingly, Stainmaster. Sobella was a new category for us, and it was well received right away. Stainmaster we’ve had now for four or five years, and while it has always done well, last year was the best.

In laminate it was Revolutions Plank line and Adirondack in our Revolutions Tile offering. The three new products in the Plank collection were exotic species with more dramatic looks than the many monotone styles out there. Adirondack allows consumers who can’t afford real tile to have a realistic tile look in laminate.

In wood it was Inverness, in which each plank has a unique hand sculpted, antique look; no two look alike. The other was Atlantis, which features bold exotic visuals such as Imperial Tigerwood and Acacia in two distinctive looks, including the popular handscraped texture.

And, in porcelain it was Carmel, our first rectified product, with modern looks in modular sizes, and Tempest, which has the popular look of sandstone.

In every case, what’s selling is either the very low or the better products—the mid range has evaporated. I think that is why all these products have done really well for us as they are all upper-end lines.

Mannington is once again going to be the largest company exhibiting at Surfaces. How do you feel about your main competition in each category not being there?

We actually have mixed feelings. The last two to three years with the absence of our largest competitors we’ve been able to spend more time with both existing and potential customers because they have set aside more time for us. They appreciate that we are supporting the market.

We do enjoy the exclusivity, but that said, we still believe there needs to be one national event for the industry. It’s in the best interest of the entire industry to have a strong single event where everyone can gather once a year.

How important is Surfaces to Mannington, and what affect does the market have on the company over the course of the year?

Surfaces remains very important to Mannington for a number of reasons: 1) It serves as an internal deadline for us to get all our new products and programs ready; 2) It energizes our sales force and company as a whole and that’s a great way to kick off the year, and 3) It gives us a chance to get an early response from our customers as they are being exposed to a great many things.

As important as Surfaces is, though, it is not the only convention/market we support as we participate in the buying group conventions and various other markets where flooring plays an important role.

But, Surfaces is clearly the most important of them all and helps create a positive momentum going into the year.

Considering how global the industry has gotten in terms of where product is coming from as well as the number of foreign companies coming to America in recent years, how important is Surfaces to the U.S. retailer and distributor?

With so many companies coming in and out of the country, more than ever it’s important. It’s a one-stop shop and provides the greatest overall value to stay on top of the latest trends and services the industry has to offer.

Plus, Las Vegas is the most cost efficient location to hold this type of market. It’s easy to get to, and there is plenty to do and see after show hours.

What are you bringing to this year’s party in Las Vegas? That is, give us a quick run down of what visitors to your booth can expect to see?

This is a unique year in that we are in the middle of an industry slowdown. But while others may be slowing down, we see this as an opportunity, which is why we are investing in our largest number of introductions in company history—even surpassing last year’s record-breaking launch.

We have a number of new innovations in wood, laminate, LVT and porcelain. In fact, our porcelain introductions are the best ever; they are a must see, especially Serengeti Slate, which will put us on the map. It’s a through body porcelain with dramatic natural slate visuals featuring our exclusive Natural Variation Technology.

The same can be said for our wood, laminate and LVT introductions. Some of the innovations are new for the category, and we feel retailers and distributors will be very pleased with what they see.

Will you have any special promotions or giveaways during the market?

As always, Jay’s Bargain Basement will set up shop. This is the 11th year we are doing it and the attendees love it. It’s the place to go to find great values and get cash rebates on the spot.

If past years are any indication, I would suggest attendees get there early as products tend to sell out quickly.

Mannington’s booth has always been an impressive space that mixed product and fashion and fused all the categories you participate in together, not to mention the relaxing coffee lounge up-stairs. What can we expect to see this year?

It’s the same location and size but we modified it to accommodate the record number of products we are bringing. The coffee bar will still be a part of the booth so dealers can relax and network with each other and Mannington personnel, but the focus will be on the new products. They will be showcased in a very accessible way.

Mannington is once again sponsoring Surfaces educational conference. Why is it such an important event for the company to be involved in? What does Mannington get from this?

We feel this is another way Mannington shows its commitment to the specialty retailer. A well-educated dealer has a better chance of succeeding, especially in this tough business climate. I don’t know what the overall show registration is going to be, but we know already that registration for the education program is up this year compared to last. While the economy has something to do with that as dealers are seeking an edge, the line-up of sessions that Surfaces has scheduled this year is also a factor as the topics fit in with what retailers are seeking.

Let’s talk about the One Mannington program a little. How is it doing? Explain what it is all about? How many retailers do you have enrolled in it?

It continues to be a very strong program for us. There are over 4,000 retailers currently involved. These are dealers who have committed a sizable floor space to Mannington. They support us, and we support them with special programs, rebates and more.

We think of One Mannington dealers as a loyalty club. Similar to a frequent flyer program in that the more you support it, the more you can get from it.

What are some of the newer benefits/incentives to have been added to enhance One Mannington?

This spring and fall we will have a special sales offer to help drive consumer traffic to our One Mannington dealers and will allow them to use 100% of their co-op advertising to support it. This is just another area we have chosen to invest in to help generate business.

In the last year, Shaw and Mohawk both made major acquisitions and moves to bolster their hard surface offerings—for example, buying Anderson and Columbia Flooring, respectively. These moves made them overnight top three players in the category. Have they affected the way Mannington does business?

No. Columbia already had close ties to Mohawk, and Anderson is still operating as Anderson, so it’s been business as usual so far.

The one positive we’ve taken from this is that Shaw and Mohawk made the commitment to invest in domestic wood production, which is something we very much believe in.

Mannington has been a major player in each category for many years and has built solid distribution networks in each. That said, how much help has it been for the company to already be deeply entrenched in every category?

We feel very fortunate. Johnny Campbell had the foresight very early on to get involved with the other flooring categories. We have evolved into a floor covering industry—there are no longer just carpet stores—and Mannington has a great opportunity to be involved in the various segments. It allows us to be objective and offer a bird’s eye view.

Plus, because we are a total flooring company, we do not have a vested interest in just one category so we’re not trying to push Mrs. Consumer to one particular product. We have the ability to give her the product that best meets her family’s lifestyle without worrying which area she chooses it from.

Can Mannington continue to survive and be profitable solely through internal growth or do you feel the company will need to make acquisitions of its own if it wants to remain competitive among the major players?

We can continue to grow internally. We’re large enough (Editor’s note: Mannington’s annual sales are estimated to be approximately $700 million) right now to create scale and compete effectively.

That said, Mannington does have a history of looking for acquisitions. And if the right opportunity came about we’d do it.

The collapse of Hoboken and its subsidiaries had a ripple affect across the industry. How, if any, did it affect Mannington?

We had not been with Hoboken since 2005 so for us and our dealers there has been no immediate impact. But, we do feel it will be a positive for us as it did put a great deal of business up for grabs and we expect our distributors to go in and take market share.

Besides Hoboken and the housing market, the other big story last year was the skyrocketing rise in environmental awareness, especially on the residential side. Mannington has always been a good corporate citizen, both in its communities and in terms of commercial products. What is the company doing to answer the call on the residential side?

Clearly the awareness of green exploded at all levels in 2007. Mannington has always been part of the culture of “do the right thing,” but we are trying to gauge the whole situation in terms of what it means to be green. Right now there are more than a 1,000 ways to claim environmental friendliness, but we want to avoid greenwashing—a phrase you’ll hear often from Mannington is “Actions Speak.”

There have been some premature responses in the market, and we want to avoid that. At Surfaces will we be coming out with a resilient product that has a significant green message with it.

Is this an area you see as the next battleground in terms of where end user spending will be or is this it just a flash in the pan?

I wouldn’t call it either. It’s certainly not a flash in the pan—it’s real and it’s here to stay. And it’s not really a battleground. It’s more like the price of admission. In order to get in, you will need to offer something legitimate—the story will have to be there—because today’s consumer is smarter than ever. Again, that’s where we think our actions will speak for our beliefs.

What is your outlook for the year ahead?

This is going to be another challenging year. The best input we have is the housing slump will bottom out in the third quarter and rebound after that which means 2009 will show signs of improvement.

Despite this, we still feel there are opportunities for business, and we are investing in them to be ready when things do turn around. As an example, in hard surface residential, we feel the industry will be down 5% to 7%, yet we are projecting growth. We think that many of our competitors are not investing in the future like we are, and instead are cutting costs.

For retailers, they need to be focused on the upper end. And they have to make sure they are aligned with the right partners—distributors and manufacturers. Partner with those who will be here when the dust settles because there will be a shakeout in ’08 and you don’t want to get caught in the middle.

Mannington is a 93-year-old company; we’ve weathered many storms, and we’ll be able to manage this one as well.