Floor Covering Weekly September 15, 2014 : Page 1

Vol. 63 No. 17 A Hearst Business Publication September 15, 2014 $4 2014 Winners 6 F LOOR C OVERING W EEKLY The Industry’s Business News & Information Resource Maier replaces Mangas 3 as Armstrong CEO FCW Exclusive Shaw culture built to last 50 year plan drives strategic vision, mission interview. At Shaw Indus-tries, those values are best reflected in the company’s [Dalton] It’s owned by mission statement: Great one of the most powerful people. Great products. Great companies in the world service. Always. (Berkshire Hathaway), has In fact, it is more than a annual sales of more than $4 mission statement, it guides billion, employs some 23,000 everything the company does people and, yet, if you talk to from customer relationships Shaw Industries’ customers, to associate engagement, the conversation quickly community service, sustain-becomes personal and heart-ability and more. felt. And that’s what makes Noted Bell, “You can’t just Shaw unlike any other com-Vance Bell put it on the board, you can’t pany in the floor covering just say it, you can’t just send out a memo. It is business today. “An organization’s culture has got to start a culture. It’s the way the organization behaves. with values,” Vance Bell, chairman and CEO It’s the way people know how to do things. of Shaw told FCW in a rare and exclusive And you don’t change a culture or don’t build By Amy Joyce Rush customers. In fact, for some one in months. It takes years retailers, the partnership with and years and years. Shaw is more about the rela-“You have to have a sus-tionship than any product. tainable business approach,” “Everybody makes prod-said Bell, adding that every-uct. I don’t know that their thing boils down to, “Driving product is any better than innovation into the business; other product. I think with the protection of and efficient consolidation, it has become use of resources; the engage-a relationship business. When ment of associates, customers I do talk to Randy [Merritt, and communities — because Shaw president], he never you have to have them a part fails to thank us for the busi-of everything you do — and ness. And he doesn’t have to long term financial success. So Randy Merritt because he’s earned it, they’ve everything you see us doing is going to fall into those overriding categories.” earned it. If everything becomes equal, they become more equal because of the relation-ship,” said Rich Mandel, co-owner at Sterling Customer relations Shaw’s unique culture is not lost on its Continued on page 4 Ohio Valley brings digital programs, marketing strategies to dealers By Brittany Walsh [Florence, Ind.] Al Hurt, president of Ohio Valley, opened this year’s Flooring Plus con-vention by thanking its customers and voicing optimism about where the market is headed. Hurt said that while 2013 was a tremen-dous year for Ohio Valley and its customers, 2014 has been tougher than expected. “It has still been better than past years before 2013, Mohawk increases freight rates By Amy Joyce Rush [Calhoun] Mohawk will increase its freight rates beginning Sept. 8, according to a July 23 letter sent by Brian Carson, president of Mohawk Flooring, to all customers whose transportation is managed through the Mohawk network. Due to inflationary pressures across the business, including the company’s logis-tics network, Mohawk said it will increase freight rates on residential and commercial carpet and carpet tile shipments a minimum of 3 cents per yard. The company will also implement a minimum delivery charge for any broadloom, carpet cushion and/or hard surface delivery, according to the letter. “The trucking industry across the United States has experienced unusual tightness in both fleet capacity as well as sufficient driv-ers. As a result, carriers are passing on rate increases to Mohawk. Despite our best efforts to offset these higher costs, we can no longer continue to absorb these increases,” said Carson in the letter. In an interview with FCW , Dan Flowers, vice president of logistics, noted, “I’ve worked in the transportation industry for 38 years and these conditions are unprecedented. The tightness with regard to driver shortages is worse than I have ever seen.” In addition to the letter to dealers, a letter was later sent to consolidators, a small per-cent of Mohawk’s business, in August stating that the company will require consolidators to pay an inventory positioning fee of 3 cents per yard on broadloom carpet loaded from any North Georgia Mohawk facility, also beginning with shipments on Sept. 8. Mohawk told FCW that while consolidators represent a small part of the business, this fee helps offset the costs associated with pulling multiple orders from multiple warehouses and consolidating them into one shippable order. Exceptions to the fee, according to the August letter, will be for customers who arrange their shipments via Mohawk Transportation, customers picking up their shipments using their own compa-ny-owned or install vehicles and any full truckload shipment to single customer that exceeds 40,000 pounds. FCW Continued on page 28 Ohio Valley held its annual Flooring Plus convention at the Belterra Casino Resort. Periodical For breaking news updated each business day, visit us online at www.fcw1.com

Shaw culture built to last

Amy Joyce Rush


50 year plan drives strategic vision, mission

It’s owned by one of the most powerful companies in the world (Berkshire Hathaway), has annual sales of more than $4 billion, employs some 23,000 people and, yet, if you talk to Shaw Industries’ customers, the conversation quickly becomes personal and heartfelt. And that’s what makes Shaw unlike any other company in the floor covering business today.

“An organization’s culture has got to start with values,” Vance Bell, chairman and CEO of Shaw told FCW in a rare and exclusive interview. At Shaw Industries, those values are best reflected in the company’s mission statement: Great people. Great products. Great service. Always.

In fact, it is more than a mission statement, it guides everything the company does from customer relationships to associate engagement, community service, sustainability and more.

Noted Bell, “You can’t just put it on the board, you can’t just say it, you can’t just send out a memo. It is a culture. It’s the way the organization behaves. It’s the way people know how to do things. And you don’t change a culture or don’t build one in months. It takes years and years and years.

“You have to have a sustainable business approach,” said Bell, adding that everything boils down to, “Driving innovation into the business; the protection of and efficient use of resources; the engagement of associates, customers and communities — because you have to have them a part of everything you do — and long term financial success. So everything you see us doing is going to fall into those overriding categories.”

Customer relations
Shaw’s unique culture is not lost on its customers. In fact, for some retailers, the partnership with Shaw is more about the relationship than any product.

“Everybody makes product. I don’t know that their product is any better than other product. I think with consolidation, it has become a relationship business. When I do talk to Randy [Merritt, Shaw president], he never fails to thank us for the business. And he doesn’t have to because he’s earned it, they’ve earned it. If everything becomes equal, they become more equal because of the relationship,” said Rich Mandel, co-owner at Sterling Carpet in California.

Mandel said the relationships extend from the top down. “What sets Shaw apart is their culture. I’m not sure I can explain what it is but I get it. We have so many relationships and the culture there — whether it’s Randy on down or Vance on down — it’s sort of something you feel inside. They are easy to do business with. It’s not the mill first, it’s the customer first. That’s why they get the market share,” he said.

Ed Routzon of Guys Flooring in Denver has been affiliated with Shaw for more than 35 years. “Randy and Vance both make themselves visible and approachable which is extremely important in customer development. The people at Shaw make themselves readily available and respond in a timely fashion to our needs. Truly, the difference between Shaw and other major manufacturers is their people.”

Mandel has co-owned his business for 27 years and met Merritt about 25 years ago. “Randy is out there, he knows the people, he knows the kids. He knows as much about my grandchildren as I do. That’s part of the mystique. They out-people everybody,” he said.

Bell said that part of the “People” mission is keeping everybody focused on the customer. “It’s all about what’s best for the customer and then after that, it’s what’s better for the team or the enterprise. Individuals or individual departments or individual plants may have to do something a little different sometimes and it may raise their cost. It might even change their approach, but they do it because it’s what’s best for the customer or what’s best for the enterprise,” he said.

Shaw is known for its excellent execution and that too is part of the culture. Noted Routzon, “The name of our game is ‘unparalleled service.’ Our customers demand that. Shaw helps us deliver.”

Bell said that there is indeed an expectation of excellence at Shaw. “We expect to be the best at whatever we do and we look at continuous improvement all of the time and I think all of that, plus a few other things we talk about, give us a very good execution culture. We deliver for those customers. Whether it’s representation, service, quality, business solutions, whatever it is, we think our organization is a good execution culture — understanding the strategy and then implementing it,” he said.

Tough times
That was made very clear during the recession when the company saw its customers struggling. Bell’s mandate was to support the customer, even when the company itself was forced to make tough decisions internally.

“When things got tough,” said Mandel, “they made it easier to do business with them. I thought Shaw stepped up to the plate. Maybe it cost them more, but by the time things got better, they had earned your business.”

And Shaw had plenty of pain itself, from huge restructurings, layoffs, cutbacks, reduced spending, everything. But, said Bell, “I told everybody here, ‘Do not let our customers feel our pain. They’ve got enough of their own pain,’.” said Bell. “What was incredible was that throughout all that chaos and change, and everything we all went through, our quality, our service and our relationships with customers actually improved. The metrics improved which is kind of amazing,” he added.

Part of it was simply staying present with customers. Said Merritt, “At any point we touched the customer, we didn’t want them to feel the changes we had to make. It’s easy to remember when people treat you right when things are good. The more meaningful relationship is when things are tough, who helped you up? And by golly we were there.”

Retailers, acknowledged Merritt, are the company’s lifeblood. “We’ve got to have them succeed. If they are not successful, we are not going to be successful. So we do need those people to survive and we did anything we could to try to help them get through this,” he said.

It helped during these difficulties to be part of Berkshire Hathaway, where, added Bell, “It’s not about the quarter, not about the year. It’s about how you are creating a sustainable business and a long term business and one with enduring competitive advantages. So we focus on that in good times or bad times.”

Leadership
At Shaw, both Bell and Merritt are quick to give credit to others while shouldering enormous responsibilities themselves. But it’s more than that: Shaw leadership works hard at developing the next line of leadership and presenting opportunities for growth within the organization.

“If you enjoy the people you work with, if you respect the people on your team, if you respect the way the company approaches business and treats people — both associates and customers — and know there is opportunity there and 95 percent of the time promotes from within, that encourages people to stay a long time,” explained Bell. “If you see a business or company that has to hire outside for a lot of their organization for general types of positions, it probably says they’ve failed in their leadership. They failed their people because they have not developed the organization and the individuals for success.”

Merritt said that key to developing talent is listening. “People are willing to engage because they know we are willing to listen. I tell sales people what my mother used to say, ‘There is a reason God gave you two ears and one mouth.’.”

Added Bell, “We’ve got lots of people that can manage the details of the business, but leadership has to be listening to people — listen to customers, listen to associates and suppliers, and communicate and understand what’s going on. It’s part of the job. It’s how you should lead.”

Community service
Part of the Shaw special sauce is its deep involvement in a wide range of service projects both in the local community and nationwide. A recent week of community service was supported by 900 employees who were paid for time spent on the project.

“Certainly we are going to create a better future for our company but we also want to create a better future for the folks that live and work here. And we want to create a better future for our customers,” said Merritt.

Shaw’s comprehensive involvement with organizations like the United Way, St. Jude or the Boys & Girls Club, Bell reminded us, is also part of the business strategy.

“For a business, for better or worse, it’s got to be aligned with its community. They both have to be successful. You can go into any of our communities and usually Shaw people are involved in those organizations and it’s just part of what we do. And we encourage it and we, in many ways, expect it. Many of us have been personally engaged in different community activities and organizations so some of its example and some of its expectations that that’s what it takes to build a sustainable longer term business,” said Bell.

Shaw’s commitment to the St. Jude Children’s Research Hospital is a case in point. Not only has Shaw donated product for all the Dream Homes that are the core of fundraising activity for the hospital, but several Shaw associates were signed up to run in the Memphis marathon last winter and there is a product tie in from both Shaw and Patcraft that donate a portion of proceeds to the organization that gives Shaw customers a way to get involved as well.

“There are so many worthy causes out there but so many of us have seen or been touched by pediatric cancer. We felt like St Jude, with the reputation of the organization and the name power around the country and our support of that, has given our customers a way to be involved in something they can take pride in.”

Read the full article at http://bt.e-ditionsbyfry.com/article/Shaw+culture+built+to+last/1808732/224958/article.html.

Ohio Valley brings digital programs, marketing strategies to dealers

Brittany Walsh


Al Hurt, president of Ohio Valley, opened this year’s Flooring Plus convention by thanking its customers and voicing optimism about where the market is headed.

Hurt said that while 2013 was a tremendous year for Ohio Valley and its customers, 2014 has been tougher than expected. “It has still been better than past years before 2013, but I think we are all ready for some calm and consistency,” he said. “While it has been a slower start than expected, most of our customers have had a good summer and expect a solid rest of the year.”

At the beginning of this year, the Mid-West was hit hard by weather issues and many are continuing to play catch up, said Jeff Garber, vice president of sales and marketing. “Weather was a real setback during the first quarter of this year from 2013 numbers,” he noted. “We couldn’t ship for about a week and then even when we could ship, many of our dealers still couldn’t even open their doors.”

New initiatives
Held here at the Belterra Casino Resort, this year’s annual convention was attended by more than 70 percent of Ohio Valley’s customers, representing about 300 dealers. The company’s goal has been to bring online digital programs and marketing strategies to its dealers. The distributor, which ranked 10th on FCW’s Top 25 Distributor listing in 2013, reported that online participation has increased by more than 15 percent and new introductions to the program will be launched in January 2015.

“Now is the perfect time to think about things and have a gut check to stay the best in your neighborhood,” said Garber.

Added Hurt, “The lifeblood of our company is our flooring dealers, and we want to help you succeed in any way we can. We bring you here because as well as introducing new ideas to you, we welcome any new ideas you may have to help us better serve you.”

Garber turned to FCW’s Statistical Report from Catalina Research to inform attendees about how certain product sectors performed this year and where to focus their future attention.

“While ceramic was one of the fastest growing categories in the country this year, in our Midwestern territory, hardwood sales have continued to do really well. Hard surface is gaining share, where in the past carpet took about 70 to 80 percent of the market, it’s now more like 50,” he explained, adding that LVT also continues to be incredibly profitable for its customers with improving visuals and different installation systems of click, floating and grip strip.

And while hardwood is a strong seller in this region of the country, up 66 percent in floor covering stores this year, value and big box retailers have experienced a 666 percent increase, according to Garber. The key to selling against them, he said, is to expose their weaknesses.

“They are the leading user of imported product, lending their selling strategy to be a low price and low value proposition,” Garber explained. “I encourage you all to Google the complaints of Lumber Liquidators, Home Depot, Lowes and learn their weaknesses. Maybe even buy a carton of their product that you can keep in the back to show the visible difference in the type of product your consumers are getting for that price. As specialty retailers, people trust us to know more than anyone about flooring, we just need to know how to defend against them.”

Guest speakers at this year’s convention included Gary Johnston, marketing communications manager for Stainmaster, and Ralph Boe, chairman of R.J. Boe Enterprise and recently retired CEO of Bealieu of America.

Johnston told dealers here, “The consumers’ opinion and approval is really the only one that matters,” he said. “They are the ultimate permission-givers.”

This year, Ohio Valley proudly touted its official ownership of all its distribution trucks. “We’ve always controlled and owned many of them, but this year we own 100 percent of our trucks. And the benefit of that is to be more flexible for our customers and to be able to serve them better,” said Hurt, adding that Ohio Valley makes sure to stock large quantities of product and is able to provide next-day delivery.

One of the biggest focuses at this year’s Flooring Plus convention was the necessity of mobile device conversion. According to Garber, research shows that 50 percent of local searches are performed on mobile devices.

“We want to do your websites and help you stay current,” Garber said. “If you try to get a website on your smartphone, it needs to re-size itself in order for you to view it and the user experience is not easy. Starting in 2015, we will be providing mobile support in addition to traditional web support. This will be included in the Platinum program, making it another one of the benefits of being a more aligned dealer with us. If you carry our products, we want you to be the best.”

Read the full article at http://bt.e-ditionsbyfry.com/article/Ohio+Valley+brings+digital+programs%2C+marketing+strategies+to+dealers/1808734/224958/article.html.

Mohawk increases freight rates

Amy Joyce Rush


Mohawk will increase its freight rates beginning Sept. 8, according to a July 23 letter sent by Brian Carson, president of Mohawk Flooring, to all customers whose transportation is managed through the Mohawk network.

Due to inflationary pressures across the business, including the company’s logistics network, Mohawk said it will increase freight rates on residential and commercial carpet and carpet tile shipments a minimum of 3 cents per yard. The company will also implement a minimum delivery charge for any broadloom, carpet cushion and/or hard surface delivery, according to the letter.

“The trucking industry across the United States has experienced unusual tightness in both fleet capacity as well as sufficient drivers. As a result, carriers are passing on rate increases to Mohawk. Despite our best efforts to offset these higher costs, we can no longer continue to absorb these increases,” said Carson in the letter.

In an interview with FCW, Dan Flowers, vice president of logistics, noted, “I’ve worked in the transportation industry for 38 years and these conditions are unprecedented. The tightness with regard to driver shortages is worse than I have ever seen.”

In addition to the letter to dealers, a letter was later sent to consolidators, a small percent of Mohawk’s business, in August stating that the company will require consolidators to pay an inventory positioning fee of 3 cents per yard on broadloom carpet loaded from any North Georgia Mohawk facility, also beginning with shipments on Sept. 8.

Mohawk toldFCW that while consolidators represent a small part of the business, this fee helps offset the costs associated with pulling multiple orders from multiple warehouses and consolidating them into one shippable order.

Exceptions to the fee, according to the August letter, will be for customers who arrange their shipments via Mohawk Transportation, customers picking up their shipments using their own company- owned or install vehicles and any full truckload shipment to single customer that exceeds 40,000 pounds.

Read the full article at http://bt.e-ditionsbyfry.com/article/Mohawk+increases+freight+rates/1808735/224958/article.html.

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