Hicksville, N.Y.—Sales of resilient flooring this year may not give anyone reason to dance in the streets but, considering the myriad of cost pressures put on the category, initial research by FCNews shows it will surpass last year’s total. While the increase is modest—between 1% and 3%—executives from the major mills point out it is better to be up even if it is a little bit than to be down.

“Overall,” said Dennis Jarosz, Congoleum Corp.’s senior vice president of sales and marketing, “we had planned for sales to be greater than they were, but our year-to-date sales are positive.” Alan Cubell, Armstrong’s vice president of resilient product management, noted “the second half has been stronger than the first as builder business, property management and retail have strengthened.”

The same could be said for the commercial side, added Dominic Rice, Armstrong’s vice president of commercial product management, “There was a slow down of activity in the first four to five months, but it recovered and is not positive. Where we have really experienced growth —and not just Armstrong but the category as a whole—is with the specialty products such as linoleum and luxury vinyl tile (LVT).”

As with all flooring categories, as well as every other industry in the country, the resilient sector has had to struggle with rising prices in energy, raw materials, transportation and health care. With the exception of carpet and rugs, the resilient category has been hit the hardest by raw materials prices increasing due to many of them being oil and gas based.

“Cost increases the past 18 months have seen at an unprecedented level,” said Kim Holm, president of Mannington Mills’ Residential Business. “But, cost pressures have been an industry issue, not just a resilient one.” Jan Lembregts, president of Tarkett Residen tial, not only agreed but added, “This phenomenon is not unique to the floor ing industry alone; production costs are increasing for all manufacturers.”

Taking bird’s eye view on the category as a whole, he added, “the unprecedented growth in the cost of raw materials, energy and transportation had a significant impact on the business, making the task of remaining competitive within out own environment and that of the larger flooring industry quite demanding.”

Jarosz pointed out that since 2004, raw materials and energy costs alone “have amounted to over $30 million in cost increases.” Going down the supply chain, he said that retailers on average have passed the rising costs on to consumer as they, too, have been affected by higher costs to run their operations.

“They’ve had no choice but to pass them on. In addition to the increases in flooring, retailers have seen their operating costs in places such as health care, energy and transportation go up so they have had to raise their selling prices in order to remain viable.” Holm added the price hikes at the consumer level “have been modest.”

Cubell noted that with costs on just about everything in a consumer’s daily life going up, the increase in resilient “has been blunted. There has not bee too much rumbling because not only is it an infrequent purchase, if they have noticed a difference it is not as much as with other products such as milk and gas.”

Though oil prices have stabilized in recent weeks, executives say the volatility of the past 18 months have forced them to adopt daily cost management strategies. “Improving manufacturing and organizational efficiencies is constantly under review,” noted Lembregts.

“The industry needs to streamline supply chain costs so that everyone can still realize a profit while not passing on too many price increases to customers and consumers.” To do this, “we’ve focused on productivity and capabilities,” said Cubell. “We created a transportation management system (TMS) to more effectively utilize our trucks. We’ve also tried to help out customers optimize their freight and shipment costs; make sure their inventory to sell ratios have the right products. Overall having good supply chain management.”

“There’s not one single thing that can be done,” Armstrong’s Rice added. “You’ve got to take a disciplined effort to find things and reduce costs yet still maintain the ability to create new and exciting products and market them properly.” (Editor’s note: Next time, we will continue by explaining areas where mills have tried to get a grip on costs as well as point out some positives that took place in 2005.)

He explained, one area where mills have tried to get a grip on costs is through “longer and solid agreements and partnerships with clients—both on the raw material side and transportation.” Jarosz added, “The purchasing department has expanded its horizons to meet with potential suppliers around the globe. Most of our raw materials used to be produced in North America, today we receive them from Europe, South America and Asia.”

While having to deal with fluctuating costs have taken a great deal of time and energy from companies, resilient mills are quick to note there were a great many positives that took place in 2005. One of the key reasons for this, “Flooring continues to be a great value for the consumer,” said Holm, “and resilient represents still one of the best values in flooring.”

“We continue to promote the incredibly strong price/value proposition of resilient flooring to our channel partners and consumers by reinforcing the category benefits including fashion, performance and value,” said Lembregts.

Innovation is what has made resilient flooring a great value, executives noted as each pointed to one of his company’s products as a testament—Armstrong’s Natural Fusion and Station Square; Congoleum’s DuraCeramic and Xclusive; Mannington’s Realistique with NatureForm Optix and Adura plank, and Tarkett’s latest FiberFloor designs.

In each case, officials said these products helped stimulate interest at the retail and consumer level as the category saw a great deal of exposure. They pointed to the such places as home improvement shows, which have started to highlight flooring more and more. “Continued interest at the consumer level in media coverage has really helped,” said Lembregts, “as evidenced in our success in numerous inclusions in print and televised mediums.”

Innovation and technological advancements will remain high priority, they say, as the additional benefits and features resilient floors offer help keep them competitive. Cubell said beyond style and fashion, other areas of the product are being developed to help bring value. “Making installation easier, including seam sealing. In seam sealing we’ve gone down from a two-step process to one-step, for example.”

“We have continued to develop new products and technologies to place resilient in the forefront of products available for consumer kitchen, bath, basements and utility areas,” Jarosz explained. “Products will continue to look more and more like the ‘real thing,’” Holm added. “We will continue to focus on style and fashion, in addition to some other things that dealers can see at Surfaces.”

Creating a product to meet consumers’ needs in one thing but getting them to buy it is another. “It is critically important that we continue educating consumers about the high quality, performance and design advantages of today’s sheer vinyl products,” said Lembregts.

“As an industry we have made significant strides in changing perceptions about resilient flooring, however, we must continue burnishing the image of the category. We need to entice consumers to return to the category or experience it for the first time. We’re confident that once consumers try our products they will definitely want to use them.”

From an industry perspective, Rice said the passage of the FloorScore certification program (FCNews, May 30/June 6) was a positive action. “It reassure the end user the products are not harmful to indoor air quality are good to have where people live and work. Right now it has more value on the commercial side as eco-friendly is a way of life and not just a trend, but there is no doubt it is a benefit to the residential side as well.”

“There is no doubt there was many challenges in 2005,” Cubell concluded, “but there were a great deal of good things that came out it and with the innovations on the horizon the category should be well positioned for next year.” “We are looking forward to 2006 for many reasons” added Holm, “and anticipate a more stable year than the one we are just finishing, with the business environment being healthy and robust.”