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Chart 10 Hardwood purchases by end-use market (Total: $1,824.3 million) 0.20% Hardwood flooring market exports value and volume (in millions) 180 150 120 90 60 30 0 10.5% Chart 11 $137.8 8.8% 62.9 4.1% 58.9% 17.5% $142.7 64.5 Market sales $102.7 Residential builder $319.3 million Residential replacement $1,075.0 million Manufactured housing $3.1 million Commercial new construction $191.6 million Commercial replacement $160.5 million Transportation $74.8 million 2007 2008 2009 2010 2011 48.3 Square feet $130.7(R) 56.8(R) Source: Catalina Research $136.9 59.1 R=Revised Source: Catalina Research Chart 12 Hardwood flooring market average value per square foot $3.00 $2.50 $2.00 $1.50 $0.0 Chart 13 Hardwood flooring market imports value and volume (in millions) 800 700 600 500 400 300 200 100 0 $313.6(R) $2.21 $2.23(R) 2007 2008 2009 2010 2011 R=Revised Source: Catalina Research 152.2 $572.8(R) 258.3 $1.87(R) $1.98(R) $1.99 $489.9(R) 282.4 2007 2008 2009 2010 2011 Market sales Square feet R=Revised Source: Catalina Research $632.0(R) 330.9(R) July 23/30, 2012 $702.3 371.4
July 23/30, 2012 Wood 15 Perspective Top industry executives Dan Natkin, director of wood and laminate business, Mannington Mills; Jim Gould, president of the Floor Covering Institute; Michael Martin, CEO of the National Wood Flooring Association (NWFA); Don Finkell, CEO, Anderson Hardwood Floors; Harry Bogner, senior vice president of hardwood, Unilin Flooring; Milton Goodwin, vice president product management, wood Armstrong; Kevin Thompson, hardwood category manager at Shaw; and Neil Poland, president, Mullican Flooring, talk about the state of the hardwood industry and where the areas of opportunity can be found. Poland: The greatest challenge for us as a manufacturer is the increasing demand for variety from consumers, builders and interior designers. What are the bright spots in the hardwood industry? Natkin: There are early signs that new home construction is slightly on the rise; big builders are slightly bullish but still fragile. Gould: I think the brightest spots in hardwood fl ooring have been the improvements in product quality and installation methods. Eliminating formaldehyde and reducing VOCs is also being addressed. Martin: A bright spot in the industry is that we’re seeing the fi rst real gains that we’ve seen in the past fi ve years. Finkell: We’re starting to see some markets (mid-Atlantic, south-west, mid-west) experience improvement. Another bright spot is we have historically low mortgage rates (down to less than 5 percent.) Bogner: Consumers are continuing to demand products with a strong price/value relationship. Our company’s leading-edge manufacturing technologies will continue to enable our Mohawk and Columbia brands to offer stunning products at a competitive price. Thompson: I think we’re in a very conservative growth mode. I have seen a couple of industry projections that show a very gradual, modest increase, maybe 5 percent or less over the next three to fi ve years. Poland: One bright spot is the increased demand for maple, hickory, and, in general, species other than oak. A second bright spot is handsculpted and other surface textures are experiencing signifi cant growth within the wood segment. What was the biggest challenge for hardwood sales growth over the past year? Natkin: Price is at an all-time low for hardwood, raw material is an infl ationary profi t. There isn’t the ability to leverage a price increase because of excess capacity and increased competition. Gould: The biggest challenge to sales growth is the economy. Wood flooring is considered a longterm investment and when the economy is not stable or people are not secure in their jobs, they don’t want to make that long term investment. Commoditization is an industry challenge, not necessarily a challenge limited to hardwood. Martin: Raw material shortages. Since lumber prices were so low, many forest owners chose not to harvest, so that led to raw material shortages. In addition, Lacey affected imports, which have dropped in recent years. TOMORROW ’ S SUCCESS begins today. Finkell: The rest of this year will continue to be diffi cult but we expect to see improvement next year. I think, to me, it’s still all about foreclosures. One positive we’re seeing is foreclosures getting processed, so I think until they work through the foreclosures and get those incredibly cheap houses out of market, I don’t see how housing can recover. Bogner: In response to the economic turbulence of the past few years, those consumers who were worried by the unfamiliar economic dip, many times, continued during 2011, to simply purchase the cheapest fl ooring they could fi nd, just to get something on the fl oor. Goodwin: The biggest challenge continues to be a decline in total volume due to the decline in the housing industry. There are a lot of players vying for a smaller pie. That puts pressure on pricing. Thompson: Continued slow growth in new home construction — that has been the biggest challenge. Also, economic uncertainty. Gasoline prices have come down, but I think all the key indicators from an economic standpoint continue to affect all of fl oor covering and with hardwood being the largest ticket item of all fl oor covering options, it makes it the one that may have suffered the most. Mohawk understands the demands of your business. We offer all the tools you need to differentiate your store, increase your traffic, and grow your sales. As the most recognized flooring brand in the industry, you can count on Mohawk to help you succeed...today. MohawkFlooring.com/retailers CARPET | HARDWOOD | LAMINATE | TILE | AREA RUGS
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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 12 and 13: 12 Wood July 23/30, 2012 Hardwood g
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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