Floor Covering Weekly October 27, 2014 : Page 1
Vol. 63 No. 20 A Hearst Business Publication October 27, 2014 $4 New WFCA chair Paul Johnson: Values drive success F LOOR C OVERING W EEKLY The Industry’s Business News & Information Resource 6 World Marketplace Imports outpace exports, LVT still leads the way By Stuart Hirschhorn The U.S. continues to import products at a higher rate than it exports as demand here grows for products like luxury vinyl tile (LVT) and foreign market needs slow. U.S. exports, however, have increased in value as price and demand increase for hard surface. Luxury vinyl tile (LVT) has led floor covering sales growth in the last few years and con-tinues to do so when it comes to imports as well. The vinyl sheet and floor tile sector led overall import gains in the first half of 2014. During 2014, U.S. LVT square feet sales are estimated to increase by about 17.5 percent. Chinese manufacturers are expected to benefit from the growth in U.S. LVT demand for the rest of 2014 and into 2015 since the LVT plants being built in the Unites States will not be fully operational until the second half of 2015 or beyond. Wood flooring dollar imports are also increasing sharply this year as average import prices rose. Wood flooring import prices are increasing along with lumber costs, Lacey Act com-pliance and other wood flooring legislation that restricts supply as well as the International Trade Commission (ITC) actions to raise tariffs on wood flooring sourced from China. Continued on page 18 several international events, said there has been a strong interest from exhibi-tors from all over the For more than 25 years, Domotex has been world: 85 percent of the gathering place for the global flooring them from outside industry and it remains the largest event of its of Germany and kind. Held next year Jan. 17-20 in Hannover, with attendees rep-Germany, Domotex remains committed to resenting more than Dr. Jochen Köckler putting the world’s newest and most inno-100 countries. But the most vative products center stage and to directly important part of all, said Köckler, is that connecting buyers and sellers. Dr. Jochen Köckler, who is a member of the 90 percent of attendees are the top decision Board at Deutsche Messe and is responsible for Continued on page 4 Domotex hosts the world of flooring EarthWerks succeeds with global approach By Brittany Walsh [Corpus Christi, Texas] Since its inception more than 30 years ago, EarthWerks has been manufacturing luxury vinyl tile (LVT) prod-ucts overseas. Initially starting production in Taiwan, where much of the original technology was developed, and eventually expanding into Korea and Japan, also early adopters, Earth-Werks has relied on the experience, quality and trust it has formed with international produc-tion partners to succeed and grow. According to Jonathan Train, vice president of Earthwerks, the company’s manu-Jonathan Train facturing facilities abroad have focused predominantly on hard surface products. And because of their many years of experience manufacturing LVT, more overseas workers have the necessary expertise to handle production. Continued on page 18 Periodical Surfaces East arrives in Miami 19 For breaking news updated each business day, visit us online at www.fcw1.com
Imports outpace exports, LVT still leads the way
The U.S. continues to import products at a higher rate than it exports as demand here grows for products like luxury vinyl tile (LVT) and foreign market needs slow. U.S. exports, however, have increased in value as price and demand increase for hard surface.
Luxury vinyl tile (LVT) has led floor covering sales growth in the last few years and continues to do so when it comes to imports as well. The vinyl sheet and floor tile sector led overall import gains in the first half of 2014.
During 2014, U.S. LVT square feet sales are estimated to increase by about 17.5 percent. Chinese manufacturers are expected to benefit from the growth in U.S. LVT demand for the rest of 2014 and into 2015 since the LVT plants being built in the Unites States will not be fully operational until the second half of 2015 or beyond.
Wood flooring dollar imports are also increasing sharply this year as average import prices rose. Wood flooring import prices are increasing along with lumber costs, Lacey Act compliance and other wood flooring legislation that restricts supply as well as the International Trade Commission (ITC) actions to raise tariffs on wood flooring sourced from China.
Carpet and area rug imports in dollars and square feet also rose as consumers turned to Indian and Turkish rug makers to cover their hard surface flooring.
But for ceramic tile, imports turned sluggish in the first half of 2014 along with the slowdown in U.S. home building. Import shipments also leveled off as U.S. production increased.
Ceramic tile, however, is also the only floor coverings sector to see a sharp increase in U.S. shipments during 2014. It seems that the investment in domestic ceramic tile production capacity by U.S. based and foreign based companies is paying off. The output from the new facilities is also better able to compete with foreign made ceramic tile.
The dollar value of exports of resilient and wood flooring increased thus far this year. Wood flooring exports increased in dollars as average export prices increased by 21.9 percent as lumber prices rose. Resilient flooring dollar exports also increased at relatively sharp rates in the first half of 2014 as manufacturers increased their reliance on higher value products. This can be seen in the 15.7 percent increase in average export prices. In the first half of 2014 resilient flooring export shipments increased at the strongest rate to customers located in Mexico, Japan, and Western Europe.
Most of the other industry sectors experienced a drop in U.S. shipments resulting in an estimated 2.2 percent decrease in U.S. square foot floor coverings plant shipments. Meanwhile, U.S. floor coverings square foot imports increased by 8 percent in the first half of 2014. Foreign-based manufacturers continued to increase their share of U.S. sales.
Overall, U.S. manufacturers have reduced their reliance on export shipments in recent years. This reflects the slowdown in economic growth in key foreign markets. The weakness in export shipments primarily reflects the decline in sales to Canadian customers, who represent more than 60 percent of total U.S. dollar exports. In 2013, exports to Canada declined in all industry sectors in dollars with the most significant decline in the carpet and area rug sector. To show the importance of these sales, carpet and rug shipments to Canada accounted for 46 percent of total U.S. floor coverings exports in 2013. Carpet and area rug exports to Canadian customers continued to drop in the first half of 2014.
A look back at 2013
In 2013, import shipments rose sharply for ceramic tile, vinyl sheet and floor tile, and wood flooring. Import shipments benefited from the recovery in domestic demand for these floor coverings sectors. In fact, ceramic tile, vinyl sheet and floor tile, and wood flooring led the recovery in U.S. floor coverings sales (shipments minus exports plus imports) for 2013. The growth in import shipments for these product lines resulted in total imports outpacing U.S. shipments causing foreign sourced products to continue to make inroads in the U.S. floor coverings market.
In 2013, total U.S. floor coverings imports increased by 13.1 percent in dollars and 11.3 percent in square feet. At the same time, U.S. domestic shipments increased only 3 percent in dollars and 1.6 percent in square feet. As a result, imports captured 33.4 percent of total U.S. dollar sales and 37.5 percent of total square foot sales. This is up from 25.5 percent and 28 percent, respectively, in 2007. In the ceramic tile, vinyl sheet and floor tile, and wood flooring sectors import penetration levels were above the industry average.
Shipments from Chinese manufacturers led the gains in 2013, with a 16.2 percent gain in dollars for import shipments. This pushed the Chinese manufacturers’ share of total U.S. floor coverings sales to 13.2 percent, up from only 4.9 percent in 2007. The sharpest gain in Chinese import shipments was in the vinyl sheet and floor tile sector as Chinese manufacturers supplied the growing U.S. demand for luxury vinyl tile. Chinese manufacturers are the leading group of suppliers of LVT in the United States accounting for more than half of total LVT sold.
Domotex hosts the world of flooring
Dr. Jochen Köckler
For more than 25 years, Domotex has been the gathering place for the global flooring industry and it remains the largest event of its kind. Held next year Jan. 17-20 in Hannover, Germany, Domotex remains committed to putting the world’s newest and most innovative products center stage and to directly connecting buyers and sellers.
Dr. Jochen Köckler, who is a member of the Board at Deutsche Messe and is responsible for several international events, said there has been a strong interest from exhibitors from all over the world: 85 percent of them from outside of Germany and with attendees representing more than 100 countries.
But the most important part of all, said Köckler, is that 90 percent of attendees are the top decision makers for their businesses. “All the biggest retailers worldwide are here and that is why our exhibiting companies are coming, to find the world market for flooring at Domotex.”
Domotex also provides something that no other format offers, said Köckler – the opportunity to meet face to face. “Despite all these digital and virtual shows, we still have a need to meet each other, to look people in the eye,” he said.
Something else you can only get at a trade show, he said. “If you are part of the flooring business you need to see what the main trends are. Here you have the possibility to see the 20 producers of a product so you can compare in one place.”
It also lets you assess how your own suppliers are doing, whether they are bigger or smaller than last year. “That all happens at a trade show,” he said.
At the heart of what Domotex offers is a platform for all the newest innovations the industry offers. To that end, Domotex has developed its Innovations@Domotex program, now in its second year. “Our strategy is to create a trade show where all the innovations you can expect for the future will be on display,” said Köckler. “People would like to taste and smell and see the new products in a way that is not possible on your screen or smart phone.”
While attendees can see the selected products even before they get to the show, there are also dedicated areas throughout the event that highlight all the latest innovations in flooring. “We like to underline the uniqueness of Domotex in this area,” said Köckler.
The show also makes use of technology, not only to present those new products online, but to help attendees navigate the show itself – it is, after all the flooring industry’s largest fairgrounds in the world.
“Domotex,” said Köckler, “promises to be as meaningful to today’s buyers and sellers as always. There is no other place where we have this possibility.”
The top 10 countries represented at Domotex are: Turkey, Belgium, India, China, Netherlands, Iran, Italy, Egypt, Switzerland and the United States. Those countries represent everything from carpet to the more traditional handmade rugs, from hardwood to laminate, and from vinyl to luxury vinyl tile (LVT), plus a host of installation products and services as well as machinery and equipment.
Read the full article at http://bt.e-ditionsbyfry.com/article/Domotex+hosts+the+world+of+flooring/1842165/230217/article.html.
EarthWerks succeeds with global approach
[CORPUS CHRISTI, TEXAS] Since its inception more than 30 years ago, EarthWerks has been manufacturing luxury vinyl tile (LVT) products overseas. Initially starting production in Taiwan, where much of the original technology was developed, and eventually expanding into Korea and Japan, also early adopters, Earth- Werks has relied on the experience, quality and trust it has formed with international production partners to succeed and grow.
According to Jonathan Train, vice president of Earthwerks, the company’s manufacturing facilities abroad have focused predominantly on hard surface products. And because of their many years of experience manufacturing LVT, more overseas workers have the necessary expertise to handle production.
“The techniques for extrusion and hot press methods were developed and refined in Taiwan, as well as the best quality wearlayers from companies such as Formosa,” Train said. “[Korea and Japan] are especially strong with 3mm products, which are used for heavy commercial applications. They created much of the automated, continuous production line. EarthWerks LVT has been manufacturing in Korea for over 20 years.”
Train explained that because Taiwan, Korea, China and Japan were the forerunners of technological advancements in flooring, the most technology, know-how and capacity still exists overseas, as more than half of all LVT sold in the U.S. is imported. “What the U.S. factories plan to have will be a great supplement to worldwide capacity. We see LVT business almost doubling in the next seven years, and the capacity in the U.S. will help meet that demand,” he said. “But most of the capacity for the increased demand in the future will continue to originate overseas.”
In a category where technology continues to evolve, Train noted that it’s important to offer multiple options in the production process. This ranges from smaller, more flexible production runs allowing for more unique designs to large production runs for basic everyday designs and methods. Because while there are multiple ways to make quality LVT, he said, each method has its own set of advantages and disadvantages.
“Whether they are heavy commercial use, residential use or different edge treatments, embossing types, or even installation types like loose lay, click or glue down, all of these methods factor into which production method is used,” Train said. “We set up production in various places, depending on what products we are trying to develop.”
Strong relationships the key to quality
And with every new production facility EarthWerks sets up, the Train family is intimately involved in the process. As a third generation executive in the family- owned business, Train explained that company expansion overseas is a personal investment of time, work and feet on the ground. “We have longstanding relationships to ensure adequate capacity, as well as the quality standards our customers demand. Furthermore, we maintain very deep stock in Texas, to support our distributor network,” he said.
For EarthWerks, strong relationships with its partners overseas are critical to the company’s success. “Most flooring suppliers have good intentions and want to provide quality products to their customers. Anyone who has been in the business longer than 10 years realizes that not everything goes according to plan,” said Train. “We have all faced issues such as these at some point. When those times occur for us, the strength of the relationships we have comes through both with our customers and with our suppliers.”
Being a third generation business, Earth- Werks has learned to value relationships at every level from its employees and customers to its upstream suppliers. “Our oldest LVT factory is also run and managed by a third generation family, and when we work with them it is as if we are working with our own family. We have relied on good rapport and close relationships to carry us this far in the industry, and we hope that it will continue to carry us forward many decades into the future. Many who join our company find these situations very unique, but that is simply our method for running a successful business.”
And it’s through these strong relationships that EarthWerks is able to guarantee its specific standards are met. To ensure the best quality, Train said, it starts by having the proper procedures in place and making sure those procedures are followed.
“Proper quality is not one single step; it is hundreds of tiny steps,” he added. “We make sure every level of the supply chain and production knows what the current standards are, and we continuously review them. What is important for us is that everyone is working toward the same goal, not only at the factory but in our master distribution point in Texas, as well as throughout our dealer and distributor network. We want to be sure everyone is trying to provide the best product to the customer. Should we come across a problem, we try to work as one unit to address it. Once we find the root of the situation, we look to fix it. We then ask everyone to do their fair shares to do whatever it takes to repair the issue. It has always been our mentality to treat the customer as we would like to be treated if we were in the same position.”
Moving forward in an ever-crowding marketplace, EarthWerks believes the best way to remain relevant is through a varied mix of design as well as staying at the forefront of technology.
“Our innovation, along with the quality of our designs and our ability to understand having the right supply of LVT products, is what separates us from the others,” said Train. “LVT has changed rapidly over the last few years, so many new companies have entered the market. As the competition raises the bar, some of these companies will end up exiting LVT. At Earth- Werks, ‘We Are LVT.’ We have been at the forefront of the resilient flooring industry for decades, and we plan to be here for many more decades to come.”