Hicksville, N.Y.—In Part I, FCNews questioned executives regarding some of the reasons being given for the current shortage of rebond cushion. In this part, they continue discussing the various reasons as well as some possible alternatives dealers can take until the situation resolves itself.

“Historically, what happens is, as soon as January hits, our business tends to pretty much go in the tank, so the rebond brokers who have been driving the price up and sitting on trim, all of a sudden are sitting on a lot of trim as the demand drops,” explained Ken Thompsen, vice president of the carpet cushion division of Carpenter Co. “The prices fall in January and February almost every single year. This year, that didn’t happen for a number of different reasons. First of all, urethane foam production in North America to date is down about 18%. While I’m not an expert, I do know that fact. Some of that is due to the fact that there are certain industries that use rebond that are soft, like bedding, for example.

Moving To Asia

“Also,” he added, “a great amount of it is due to the fact that more manufacturing has gone to Asia, and much of that previously utilized a fair amount of urethane foam. So, people who are making dining room seat cushions or neck pillows, or whatever uses urethane foam, it’s now being produced in Asia. They’re not buying the foam here and shipping it, they’re making it there. That is an ongoing long-term effect, not a short-term phenomena. It is something which is likely going to continue and it is impacting the total amount of foam being produced in North America.

“So, it’s reducing the amount of ongoing supply or availability that we had previously,” he continued. “At the same time, you’ve got a similar phenomena going on in Europe with more going to Asia as well. That situation is being exasperated by the fact that the demand for rebond cushion in western Europe, the United Kingdom, Belgiam, the Netherlands, is growing rapidly. The same thing that happened in America in the late ’70s is happening there now. When I got into the business in the mid ’70s, bonded cushion accounted for something less than 20% of the total market. Today, it’s about 87%.”

Europe Switching

For many years in Europe, rubber and synthetic were all anybody used, noted Thompsen. “As recently as five years ago, rebond was less than 5% of the market. All of a sudden, like what happened here in the ’70s, Europe figured out rebond cushion is a tremendous value, less expensive and is a better performer. The demand for bonded there has gone from 5% to 20% of the total market. It’s a matter of meeting the demand. While there’s a short supply of urethane scrap material in Europe, just like here, it’s being sucked up to a greater degree because the demand for bonded cushion is growing there, so less of it is making its way here.

“In an inclining market, which we’ve been in for many months, everyone on the supplyside has a tendency to hold back because they know it is going to be worth more tomorrow than it is today,” he added. “We know that the pipeline fills up, the warehouses fill up, and that everyone is dragging their feet on selling. The one factor nobody knows for sure is, how much is sitting in the pipeline.”

No Ceiling In Sight

“Until the point at which somebody believes the price is near the ceiling,” Thompsen explained, “and a large broker says, ‘I’ve got too much risk involved, too much trim at a high price, I need to start selling some off.’ When somebody does that, and it becomes evident to others, there’s always a move to beat the downward fall and sell off inventory while the price is still high, which causes the market to drop. But that hasn’t happened. In fact, trim prices continue to escalate, partially being fueled by the European shutdown. You’ve got everybody in the market trying to buy and brokers holding back on what they’ve got, and it’s now drying up further because of the shutdown. So, the supply is even less than it has been.”

“The way I see it right now,” noted Steve Stockwell, executive vice president of Foamex, a manufacturer of rebond padding, “is the foamers, the companies pouring the large buns where we get our scrap from, will eventually bring their production back to levels where they were just about nine months ago. They will eventually get back there, but it is a three- or six-month solution period. It could be six to nine months, or it could be six months to a year. That is what I’m looking at right now.

No Going Back

“I don’t see this, the supply of scrap and the cost of scrap returning to where it was nine months ago,” he added. “Do I see the supply of scrap increasing? Yes, but I think at the cost of what the mattress, furniture and the automotive industries are paying for foam, they’re also finding uses for the scrap they used to generate.

“This isn’t going to be a 30- or 90-day dilemma, it’s going to be a little longer,” Stockwell said.

“It’s anybody’s guess as to exactly where everything is going shake out,” said Thompsen. “It has been a terrible ride for the whole cushion industry because, quite candidly, while we have more price increases in a shorter period of time that at any time I’ve seen over the last 20 years, our profits are lower than they have ever been. So, we’ve got retailers out there just swearing they know we are all just gouging them, but the reality is, we are just simply trying to stay afloat.”

Our advice to our customers has been to look for alternative products, noted David Wiatrolik, vice president of sales for Leggett & Platt’s urethane division. “We manufacture fiber and rubber carpet cushion that is readily available. For three months, our position has been to not open or sell new accounts. We have had to allocate bonded cushion to our existing accounts based upon what they have averaged in purchases since the first of the year. Fiber pad is less expensive than bonded cushion but does not have the luxurious feel underfoot. The rubber products are now close in price to the bonded after the many rebond increases.”

Like many other retailers, James Sharp of Sharp Floors in Dallas, is having a hard time believing what the rebond suppliers are telling him. “I’ve been told that most of the scrap pad is being sent to China, but I don’t believe it. [We] try to use alternative pad but our customers just don’t want to pay the price.

“I question the pad companies,” he added. “Have they learned from the oil companies on cutting back production and increasing the price to increase profits? We may never know. And the alternatives don’t equal rebond both in performance and price.”