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12 Wood July 23/30, 2012 Hardwood grows despite economy, housing market By Mallory Cruise The hardwood industry experienced a slight sales growth in 2011, with hardwood dollar sales rising 4.3 percent to $1.82 billion from $1.74 billion in 2010, according to Catalina Research. Industry executives said that there are a number of reasons for the increase in sales, and while they are hopeful that the market will continue to experience growth, many said that they have realistic expectations for the second half of this year, noting that there needs to be improvement in certain areas of the economy in order for hardwood sales to see significant growth. “The hardwood business is in early recovery and its growth is highly dependent on the economy and the building market,” explained Dan Natkin, director of wood and laminate business, Mannington. Industry executives said that other factors fueling growth are an increase in consumer confidence and lower housing prices. “Pent up demand is a contributing factor. People lived with the flooring they had while the economy was in turmoil,” explained Michael Martin, CEO, National Wood Flooring Association (NWFA). “Now that consumers are more optimistic, they are making the purchases they had been putting off. In addition, small gains in the housing market will have an impact on wood flooring as well.” Don Finkell, CEO of Anderson Hardwood, agreed. “The general economy has been the biggest factor influencing the hardwood market, there aren’t enough buyers going into stores. We are going to continue to try to add value to our hardwood products and offer lower prices because we see more price competition in the market place,” he said. According to Harry Bogner, senior vice president of hardwood at Unilin (a Mohawk Industries Company), “During 2011, the industry as a whole faced the challenges of slow to flat recovery in new home and replacement/remodel sales as well as increased raw material and energy prices. This resulted in the flat-to-slow industry growth rates that experts had predicted.” In order to meet pressures brought on by the economy, Unilin launched new products in 2011. “Mohawk and Columbia fared better than the overall hardwood industry during 2011. We entered 2011 with the right mix of competitively priced products for each of the different audiences that our brands target,” Bogner added. Mannington’s Natkin said that ultimately it comes down to price versus raw material. “We’re starting to see an increase in price on the raw material side. Builders, in order to qualify people into homes, are going to 2011 key points Hardwood sales increased 4.3 percent in 2011 to $1,824.3 million from $1,749.1 in 2010 and hardwood square-foot sales increased 4.1 percent to 919 million, from 882.8 million in 2010. While hardwood imports grew by 29 percent from 2009 to 2010, industry executives said that growth is beginning to slow down. Imports for 2011 were up 11.1 percent in dollar sales to $702.3 million and up 12.2 percent in square foot sales to 371.4 million. Hardwood flooring exports were up 4.7 percent in dollar sales in 2011 to $136.9 million and up 4 percent in square foot sales to 59.1 million. Hardwood average price per square foot rose 0.5 percent last year to $1.99 from $1.98 in 2010. The category experienced a bigger jump in 2010 when it went up from $1.87 in 2009. Catalina reported that the average hardwood pricing per square foot continues to rise despite low lumber prices. Hard surface products, in general, have been experiencing overall market share growth taken from wall-to-wall carpet. Ceramic tile, vinyl sheet and floor tile and wood flooring have all seen market share gain. Wood flooring’s 2011 market share rose 0.2 percent in dollar sales to 10.2 percent of the flooring market. Note: Wood flooring sales include hardwood, softwood and bamboo flooring as well as solid and engineered and unfinished and finished products.
July 23/30, 2012 Wood 13 Chart 9 Hardwood flooring market value and volume (in millions) 2,700 2,325 1,950 1,575 1,200 825 450 2007 2008 2009 2010 2011 $2,184.2(R) 989.0 $2,101.6(R) 944.5 $1,505.9(R) 803.4 $1,749.1(R) 882.8 $1,824.3 919.0 Market sales Square feet R=Revised Source: Catalina Research of visuals is good for the industry however we need a significant increase in demand,” said Poland. Import growth slows Hardwood flooring also witnessed an increase in imports over the past year, though not at the rapid pace of previous years. Import sales were up 11.1 percent to $702.3 million and up 12.2 percent in square foot sales to 371.4 million. Goodwin at Armstrong explained that an increase in costs and decrease in available materials has had a negative impact on import sales. While imports remain a viable part of the wood market, industry executives have noted a renewed interest in Made in America products. “There is a growing passion amongst consumers, encouraged by today’s media, of made in the U.S.A. We’ve been talking with distributors and retailers about the amount of working capital that they have to tie up in imported goods, causing long lead times. We encouraged them to look at products, like those offered by Shaw, that can be serviced immediately and don’t have to tie up so much working capital and inventory,” said Kevin Thompson, hardwood category manager at Shaw. FCW less expensive product. The days of putting 2,000 square feet of hardwood in the home are gone because it’s the difference between qualifying for a mortgage and not qualifying for a mortgage. On the remodel side, it is still a little weak but there are spurts of growth. Remodel is critical because wood floors are what people aspire to but sit back on until equity in the home grows,” he explained. Milton Goodwin, vice president product management, wood, at Armstrong, agreed saying that any growth in sales is dependent on new home construction and as that improves so will hardwood sales. But, Finkell also pointed to overcapacity as another issue facing the industry “The laws of supply and demand cause prices to go down,” he said. Even given the challenges facing the hardwood sector, Jim Gould, president of the Floor Covering Institute, pointed out that this category is one of the few product segments that is seeing growth. “There is a combination of factors attributing to hardwood market growth. There is an improvement with the wood floor itself, the consumer wants a natural product,” Gould said. “Hardwood is holding its own or gaining market share against other categories, which is what is most important.” Philip Key, vice president of sales and marketing at CFS, said he believes that hardwood options are more expansive today than they were before the recession, benefiting the consumer and encouraging growth. “Smart companies really looked at their product offering and enhanced it, so today’s homeowners who are ready to purchase a hardwood floor have great options to choose from that they didn’t necessarily have before the recession,” he said. In fact, Mullican Flooring has upped its product offering considerably, according to Mullican president Neil Poland. He said that while expansions in product offerings are an advantage , there needs to be a growth in consumer confidence when it comes to spending. “We are manufacturing 100 percent more styles and colors (SKUS) versus 2007 therefore it is very challenging to control production costs, sampling costs and marketing expenses. Overall the diversification To make the best flooring, we employ the best technology. Our eyes. With decades of experience, our wood flooring experts have the most highly trained eyes in the industry. Because of them, only the finest quality boards make it into a Mirage box. And your showroom. Our commitment to perfection is what keeps you voting us #1 in quality year after year. MIRAGE PREFINISHED HARDWOOD FLOORS
Page 1: Vol. 61 No. 14 A Hearst Business Pu
Page 4 and 5: 4 Table 1 U.S. floor covering marke
Page 6 and 7: 6 marketWise July 23/30, 2012 Who s
Page 8 and 9: 8 Carpet & Area Rugs July 23/30, 20
Page 10 and 11: 10 Carpet & Area Rugs July 23/30, 2
Page 14 and 15: Chart 10 Hardwood purchases by end-
Page 16 and 17: 16 Tile & Stone Tile & stone inch a
Page 18 and 19: 18 Tile & Stone July 23/30, 2012 Pe
Page 20 and 21: 20 Resilient July 23/30, 2012 Vinyl
Page 22 and 23: 22 Resilient July 23/30, 2012 Persp
Page 24 and 25: Marketplace Next up in FCW August 2
Page 26: Randy Me ritt By Kimberly Gavin ple

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