Deborah Hardin, vice president of sales, US Floors.

By Steven Feldman
Denver—The dropoff in new home construction has had a severe impact on hardwood flooring suppliers, but that didn’t stop exhibitors from coming out in near record numbers for the National Wood Flooring Asssocition’s 22nd annual Education Conference and Wood Flooring Expo here earlier this month.

With 321 suppliers showcasing their wares to just over 3,500 attendees, the count was just under the 342 companies who exhibited last year in Baltimore. “This is the only show that deals exclusively in wood flooring,” said Ed Korszak, executive director. “This is a very specialized, very motivated market. In fact, we had one exhibitor tell us that last year he did a quarter of his sales for the year at this show.”

As for the state of the industry, Korscak noted that he was hearing from many suppliers that more wood is moving out the door, but suppliers are pocketing fewer dollars. “It seems volume is up but profitability is down,” he said. “The cost of raw materials are going up and finished product prices are stabilizing, so profitability is suffering.”

Why do suppliers say they exhibit at the NWFA expo? Many reasons. For Pinnacle Interior Elements, the company launched in the late 1990s by former Triangle Pacific executive Mike Kearins, it has all to do with the attendee. “This show’s target community is different than Surfaces,” he said. “It has proved extremely important in seeking out the traditional hardwood flooring contractor and the design community associated with it.”

The attendee is also important to companies like Boa Franc, which markets the Mirage brand of hardwood flooring. According to Chris Thompson, vice president of sales, not only does the company exhibit to show its products, but it also puts a premium on gaining feedback from attendees. “We want find out what’s important to them and get new ideas,” he said.

That sentiment was echoed by Roger Guay, director of customer and strategic development for Canadian manufacturer Mercier. “Because this show is strictly focused on hardwood, it is a great platform to validate and fine tune some future product intros we have in the pipeline by talking to a few select attendees,” he said.

Guay added that Mercier also seeks to build on the momentum generated from new product launches at Surfaces, something to which Brian Greenwell, vice president of sales and marketing for Mullican, also attested. “This is a good opportunity to see most of our customers over a two-day period,” he said. “We have four new product groups we introduced at Surfaces that we want to expose to people who did not make it to Las Vegas. This is a different group of attendees.”

The NWFA event can also serve to gain exposure for some smaller suppliers or those beginning to establish themselves in the wood flooring business. Take US Floors, for example, which counts Natural Cork among its brands. Keith Ritter, national sales manager, noted that while the company was basically testing the waters, it realize to be a major player in the hardwood flooring business it needs to have a presence at the show. “We are still considered a small company, so we try to get as much exposure as we can,” he said. “We’re here to tout the green project we are pushing.”

Aside from the trade show, NWFA offers an array of benefits for its members. In illustration, Mirage’s Thompson cited technical support and training programs. “There are NWFA-certified inspectors, so in the event there is a sticky claim that is going to litigation, you have access to experts,” he said. “Then there’s industry training at the installer level. Technical support is available for retail salespeople all the way up to manufacturers. They state industry positions and standards, which is important to all manufacturers. It gives you a very credible third-party reference point on technical issues and installation-related issues.”

Going green

The green movement seems to be on the minds of every supplier these days, and there are various ways in which they choose to participate. All recognize that the environmental push, at one time limited to the commercial market, has extended to residential. Of course, a company like US Floors prides itself on selling naturally sustainable products like cork and bamboo, but its environmental efforts extend to its wood business. “We make an effort to bring our products from managed forests, whether they are certified or not. We are very aware of that when we make product selections,” said Deborah Hardin, vice president of sales.

Product selection from environmentally responsible forests seems to be catching on with executives at most hardwood flooring companies. Here’s a sampling of what they are saying:

1. Pinnacle: “We are working with all our suppliers to make sure all the wood they are buying, logs or lumber, are coming from professionally managed forestlands, where there is a sustainable long-term development program for the forests,” Kearins said.

2. Mirage: “We are a member of the Forest Stewardship Council,” said Luc Robitaille, vice president of marketing. “We are establishing a chain of custody that enables us to purchase FSC-certified wood and transform it into hardwood flooring that is FSC certified.”

3 Mercier: “We have the assurance in writing by our external suppliers that our raw materials were compliant with responsible forest management,” Guay said. “We are not big on buzzwords like Forest Stewardship Council. Rather, we make sure our business partners are responsible.”

But the green effort goes beyond responsible harvesting. Mirage, for example, uses its wood chips in two ways: as a source of power for its kilns, and what it doesn’t use as a power source, it sells to other manufacturers for HDF and MDF boards. In addition, Robitaille said the inner core on its lock product is 80% recycled.

Mullican’s Greenwell cited Tobacco Barn Pine as one green product marketed by the company. “It is pine beans and studs that have been reclaimed from the old tobacco barns in the Carolinas,” he said. “We mill it into flooring and then handsculpt it.”

The “chain of custody” to which Robitaille referred is also being embraced by other suppliers. At Lauzon, a fully integrated manufacturer, David Lauzon, president, noted that chain of custody will be achieved for his two factories this year, and next up will be certification of its forests.

Meantime, John Salvador, product manager, wood, Hoboken Floors, said the distributor’s green focus would be on the adhesive side as it is establishing a chain of custody for FSC certification.

How’s business?

Despite the aforementioned slowdown in the builder market, most suppliers with whom FCNews spoke were not singing the blues. Take Mullican, for example. Greenwell said the company was up about 8 % over first quarter 2006. “But it was very tough. It doesn’t feel good. Prices are very low, and our distributors are feeling the pain of the slowdown in new home construction.” He attributes Mullican’s success to simply working very hard at selling its products, and “having products people want.”

Mullican’s challenge these days lies in its unfinished business, which represents about 40% of its volume. The issue, Greenwell noted, is there seems no bottom in the pricing. “That’s a tough business right now,” he said.

Mullican wasn‘t the only supplier that posted good numbers in the first quarter. US Floors’ Hardin said March was the highest grossing month in company history. There are reasons. “By going straight to the trade, our pricing is more competitive,” she said. “Also, we have more bamboo and cork offerings in terms of pattern, color and design than any of our competitors. Finally, we hired regional managers and a direct sales team.”

Mirage is also enjoying success thus far in 2007, up mid single digits from first-quarter 2006, Thompson said. “Our customer base is diverse, so we are not dependent on just one channel. We’ve seen good growth out of different areas in the U.S. and Canada. Robitaille added that the continuation of strong marketing and branding efforts, coupled with the successful Surfaces debut of the Mirage Lock system, is also fueling growth.

Mercier is also up from last year and over budget, according to Guay. The growth seems to be a result of aggression more so than organic. “We have been adding quality distributors and retailers in Canada and the U.S., and that has paid off,” he said. “We are very encouraged by this but not satisfied.”

Going forward, Guay believes the key to Mercier’s success lies in encouraging its retailers to sell the high-quality, higher-tier products. “Many dealers are tempted by cheaper Chinese imports,” he said. “But it comes with smaller reward. The challenge is communication. How do you reach out and deliver the message?”

Over at Pinnacle, Kearins noted that the company has been able to maintain 2006 numbers despite the slowdown in builder business. “We’ve been lucky in that we have been preparing for a major push into the residential replacement market with our Innovation merchandising and dealer development program,” he said. The display showcases 96 SKUs in about 17 square feet of floor space. “This has allowed us to get our full product line into our dealers, where in the past we could only get three or four of our product lines into that same retailer.”

Lauzon was also flat for the first quarter but is picking up share in Canada. “We have a lot of new product and invest a lot in marketing,” David Lauzon said. “We are working to create more value for our distributor so they can change the way they serve the market. We invest a lot of money in innovation and service.”