Hardwood is the aspirational flooring of choice for the American homeowner, and, yet, over the last decade, lookalike products have taken share by innovating around performance benefits, particularly cutting into the lower end of the hardwood market. Today, hardwood is taking some cues from its competitors-looking at how innovation can make it more appealing to the consumer and focusing on messaging that emphasizes its authenticity and inherently sustainable characteristics, particularly in contrast to vinyl flooring products. Ultimately, hardwood is a good investment for the homeowner in terms of value, health and wellness, and the environment. “Hardwood is the only flooring type that has been proven to increase the value of a home, pay back the cost of remodel, and it’s not the equivalent of putting down a couple hundred thousand plastic straws on the floor,” says Dan Natkin, CEO and managing director for Bauwerk/Boen in North America. “We talk about microplastics and look at the East Palestine, Ohio derailment and vinyl chloride spill. We hear about hundreds of containers being detained at ports because of the PVC stream coming out of China’s forced labor camps. Hardwood is good for the environment, the home and home value.” As for business in 2022, most hardwood manufacturers report that it was a year full of challenges but, ultimately, a decent year for business, with demand strong in the first half and trailing off in the second. That being said, while many manufacturers came out even or ahead in terms of dollars in 2022, it is not the same story for units, as price increases were put in place to offset rising raw material costs. In addition, it’s yet unclear what was truly driving first half demand: true demand, pent-up demand, pull-forward demand, or replace demand. “For a while, whatever a single-family builder could get to cover their floor, they got,” reports David Moore, senior product director of wood for Mohawk.
VOLITILITY Between the lingering chaos of Covid, the growing preference for non-Chinese sourcing and the challenges wrought by Russia’s war on Ukraine, 2022 was a year of toil for the hardwood industry, in which supply chains were disrupted and energy rates destabilized. However, one anticipated upheaval that did not cause the struggles it was expected to for many U.S. hardwood manufacturers was the deselection of Russian-sourced Baltic birch, a preferred core wood for many engineered hardwood producers. While the geopolitical pressures wrought by Russia’s attack on Ukraine and the subsequent elimination of the material from supply chains did not cause the chaos it may have, it did create some low-grade competition for alternative supplies. “When we look at domestically produced products, the main source for core wood was Russia,” explains Moore. “That’s where a lot of non-face material was sourced from. In terms of getting birch out of Russia, those supply chains locked down, and people aren’t wanting to buy from there any longer.” “We use Baltic birch for our engineered cores, and some of that may have historically come from Russia, but it also came from Poland and other areas as well,” explains Paul Stringer, interim CEO of Somerset. “We have had no trouble getting Baltic birch from non-Russian sources. However, we are looking at alternative sources and testing them, should we need them in the future.” Another challenge for some manufacturers was maintaining supply when demand was high, which flipped to a reverse problem as demand slowed: excess supply. That dynamic was made more complicated by the fact that the over-supply was generated during a period when material costs were particularly high, which necessitates that the product ultimately be sold at a higher cost. “In the first half of 2022, we were living in a world of tremendous order buildup, so we were focused on filling backorders,” says Sean Brennan, president at Kährs Americas. “Demand was high with wholesale distributors and dealers, as well as on project and multifamily work.” So far this year, the roller coaster of supply chain challenges-which impacted both availability and cost-has eased to some degree, and that has hardwood manufacturers feeling optimistic. “There is definitely more stability now compared to 2022,” notes John Hammel, senior director of hardwood and laminate for Mannington. “Material costs are more stable, and freight costs are more predictable.” While raw material costs are more constant, most remain at a higher rate than they were priced pre-pandemic, and some have yet to move significantly from 2022 rates. “Right now, there are two different stories-domestic and foreign,” explains Natkin. “Domestically, similar to demand, raw material prices skyrocketed, then went down as fast as they went up. Right now, we are beginning to see raw materials like red and white oak creeping back up from unsustainable lows, but we will not see the level of volatility of the prior two years. Regarding imported materials, they have stabilized but at a higher level, particularly European white oak. The impacts of the Russian war took some white oak off the market, and that is keeping the price artificially high.” Of course, costs aren’t only impacted by raw materials but also by transportation. “Come September and October,” says Brennan, “we saw raw material costs stabilize. Transportation costs remained high, but the container flow and port flow became easier. In Q4, raw material prices began to stabilize, but there were wholesalers and suppliers with a lot of inventory, so there was a lot of market price volatility based on the realities of the world, as well as people dumping products and turning inventory. What is true market price right now? It’s hard to say. Pricing is all over the place.” Several of the manufacturers with whom we spoke report that those inventory over-supplies are largely worked through or nearly worked through. Adds Wade Bondrowski, director of sales USA for Mercier, “I would say that pricing has stabilized at a slight decrease, but with gas and diesel prices remaining high, it’s a push.” And, as is evident in nearly every aspect of American life and business, the labor shortage continues to play a role. “We are still seeing the lack of workforce, not necessarily internally, but with veneer suppliers, mills and logging,” reports Renee Tester, vice president of marketing, ecommerce and digital for QEP. “That’s still an obstacle but improving,” “It’s been feast to famine, a roller coaster ride,” concludes Natkin of the last year of business. “Explosive growth, cooling last summer and the start of a return in 2023. This year will be the tale of two halves: sluggish in first half, improving in second. But we are seeing that improvement begin now.” China Engineered Flooring and Oak Hardwod Flooring
LOOKS STILL WIN While the hardwood industry has always leaned into innovation to enhance its products, currently there is significant enthusiasm for what can be done to improve the performance of the product and, thereby, capitalize on its desirability in the market. And, interestingly, the category is finding inspiration in those factors that set its lookalike competitors apart. “The hardwood industry’s message, first and foremost, must be that wood is the product preferred by the consumer,” says Moore. “How do we set ourselves apart? We have taken style and design and are trickling those attributes down to more economical platforms. That’s the big way that we see products land. Innovation drove the creation of laminate and LVT to solve the problems of hardwood, and now the hardwood industry needs to drive that while still being a hardwood product.” Increasingly, manufacturers are looking at how new processes and constructions can increase their durability and scratch-, dent- and water resistance. Different players are achieving these goal in different ways, but what’s most important, perhaps, is the fact that they are finding success in the endeavor, and, indeed, going to market with the same sorts of performance stories that have helped competing products take marketshare. That being said, the category is also leaning into its greatest attributes around aesthetics and authenticity. The look of the moment is clean. In line with the biophilia trend impacting both commercial and residential interiors, as well as the focus on wellness driven by the Covid pandemic, hardwood aesthetics are going natural with finishes that accent-not hide-the inherent qualities of the wood. Colorings are natural and subtle. Similarly, finishes continue to move towards a more natural, matte look. White oak is still a fan favorite, though other species are making headway, as well, such as walnut and ash. “There are approximately twice as many red oak trees than white oak trees growing in the U.S. Based on availability, price and the ability to shift the look of red oak to mimic the colors of white oak through a staining technology that is gaining popularity, the use of red oak is growing,” reports Michael Martin, CEO of the National Wood Flooring Association (NWFA). In addition, some interviewees note that cuts such as rift sawn and quarter sawn are gaining traction. In terms of formats, Kyle McAllister, category manager for hardwood and laminate at Shaw, says, “Consumers are desiring wider and longer products. This is a huge focal point for us. How do we get wider and longer and still maintain stability?” Conversely, there is also a need for more standard lengths and widths for residential remodel customers. “One emerging need from the market is elevated styling at a smaller plank size,” says Moore. “For a long time, it was longer and wider, driven by new home construction with open floor plans. But there are tons of homes without open floor plans-homes built in the ’90s or 2000s that people are remodeling now, and they need modern products to fit their homes.”
THE MANUFACTURERS Over the course of the last year, AHF’s hardwood team has focused on innovation around performance, such as its densified hardwood products, which are six times more dent resistant and four times more scratch resistant than standard products, according to the firm. The company reports that in tests against solid wood, engineered wood, SPC and laminate, its densified wood is more dent resistant than any product category and equal to or better in scratch resistance as well. The company is also continuing to innovate around water resistance. Its Hartco HydroBlok, Bruce Hydropel and Raintree Waterproof Wood (with an SPC core)-all introduced to the market prior to 2022-offered improved performance against water damage. All of AHF’s solid hardwood is manufactured in the U.S., and the company has two engineered wood plants in the States as well. In addition, it has production in Cambodia and sources globally as needed. AHF makes the vast majority of its plywood inhouse with production in every plant. The company explains that one of its strategies in development is to collaborate with its partners from the very beginning, on both the product and marketing elements, with Brian Parker, vice president of product management, noting that these partners “aren’t surprised when we bring a new product to them. By that time, they are well versed in it and, paired with a strong point-of-sale story, this has the RSA trained to make an easy sale.” AHF’s commercial hardwood line is now housed under the Parterre brand, which was vinyl-only when acquired in 2021. The company offers a good-better-best story there with better visuals, longer and wider formats, better attributes and heftier warranties as the products ascend the spectrum. In addition, the company’s acquisition of Armstrong assets last summer yielded a more robust offering for the commercial team representing that portfolio of products. While managing the ups and downs of 2022, Mannington believes it was able to bring some meaningful innovation to market through its TimberPlus product, which is more scratch-, dent- and water-resistant than standard hardwood, as well as continuing to launch high-styled products. TimberPlus features a European white oak visual and a dry-locking system that eases installation. Mannington’s hardwood products, all engineered, are sourced from Asia and Central America, having sold its own production facilities in 2020. The large majority of its products serve the residential channel’s independent specialty retailers and builders. Mannington notes an old-is-new-again trend in the current market. This year, it launched a handcrafted product called Chateau, which features an ultra-matte finish. Every plank is stained individually by the Central American team, and that is something the company hopes to emphasize more in its talking points, moving ahead. Last May, Switzerland-based Boen, part of the Bauwerk Group, acquired Somerset, which had been privately held by Steve Merrick. (Merrick continues to sell unfinished hardwood flooring under his new company, Merrick Group.) Stringer, longtime marketing leader for Somerset, was promoted to interim CEO, while Natkin added Somerset’s sales and marketing responsibilities to his list. Somerset is running independently-and the two brands will remain separate long term-but Natkin reports that, over time, the two will progressively unite corporately, sharing capabilities in product manufacturing and operations, with Stringer reporting that Boen’s ownership “will help us develop and expand our product line in ways we could never have before.” This includes the development of products longer and wider than Somerset was able to create previously, as well as more treatments and lower-gloss offerings. And on the Boen side, the Somerset acquisition adds the opportunity for solid offerings to its previous engineered-only portfolio. “We have a nice synergy with Boen,” explains Stringer, “as more than 95% of its products are on white oak, so that helps us with raw material sourcing, which will allow Somerset to be more reactive to white oak demand as needed. However, hickory is also a popular species that we sell. We are just weeks away from introducing an entire line of hickory products in our Character collection that are very nice. We’ll also be looking at more wirebrushing and other treatments, as well, as we expand our product offering. We are refreshing our line in 2023 more aggressively than we have the last three to five years.” Adds Natkin, “[Market] activity is centered on white oak, but we are seeing people get a little tired of that-it’s 82 flavors of white oak. Our first launch from Somerset is hickory with updated visuals with new colors, and it’s getting a strong reaction from distributors.” Boen’s hardwood goes through two-step distribution to retail. The company’s commercial business primarily targets sports floors, such as basketball courts, yoga studios and activity rooms; the company has a contract with YMCAs. Some of the company’s standard offering is also used in traditional commercial specification; currently, it is providing product for a hotel in Mexico City. Somerset’s products are manufactured in Somerset, Kentucky and Crossville, Tennessee. There are plans for expansion still in the early stages, and these will likely include expanding its existing footprints to add capacity, new structures and new machinery. Boen’s production footprint, in addition to its recently acquired Somerset facilities, consists of three plants in Lithuania, Croatia and Switzerland. As for product news, Boen recently introduced a multifamily product that features a 5G locking system and has a European aesthetic. The company also expanded into Texas, where it had not had representation previously. In 2022, Shaw was largely focused on managing the significant supply constraints it faced while serving the customer with its domestic products and maintaining its supply chain. However, it also managed to bring several new collections to market: Anderson Tuftex’s Revival Walnut, which is an engineered American walnut product available in both plank and herringbone formats, and Grand Estate, an engineered white oak product that features an oil rub finish. Both are out in the market now and are exceeding expectations. Shaw manufactures products in three U.S. factories-one in Tennessee and two in South Carolina. However, several of the company’s recent launches have been imported from Asia, which offers accessibility to different veneers and more species than U.S. manufacturing. “You have to have diversity to fulfill the consumer,” says McAllister. Shaw services the commercial channel, retailers, builders and home centers, and reports that it has seen the strongest activity in the independent retailer and builder segments as of late. Mohawk’s hardwood team spent much of 2022 working through the year’s challenges. “For a while, the entire supply chain was challenging from an availability and cost perspective,” says Moore. “That was a really big focus during Covid, and we have seen that open up. As logistics costs come down, we have been able to share the savings.” At this point in time, one of the challenges for hardwood manufacturers is filling the varied needs of the hardwood market. “We have a broad range of clients,” says Moore, “many regions with different build styling, design, floorplans, types of housing. We have to make sure we have portfolios for all of those.” Mohawk has also been focused on bringing products to market that fill the needs of those remodeling older homes, both aesthetically and format-wise. One of Mohawk’s goals is to drive innovation around hardwood and thereby make it more competitive with vinyl products that win sales with their performance stories. With the company’s UltraWood product-which has increased resistance to water, soil and staining-it is doing just that, while also offering a real wood visual, which means no repeats and authenticity in appearance and underfoot. UltraWood is produced domestically in Danville, Virginia, while the company’s traditional engineered hardwood, under the TecWood brand, is sourced from overseas. UltraWood services the specialty retailer, builder and multifamily channels, and also has some presence in home centers. TecWood is a specialty retailer, builder and multifamily product. Mohawk’s hardwood products are sometimes used in light commercial settings, but the company does not have a commercial-specific offering. In February of this year, Mullican introduced a new 3/4” prefinished solid collection called Nordic Naturals. This is the company’s largest 3/4” solid introduction in the last five years. Additionally, it introduced herringbone and several new decors to its Castillian Engineered collection and has significantly expanded its sawn engineered production for both prefinished and unfinished products. The company also reports that it has been able to execute new stain techniques on certain species that previously had color hue limitations. Mulllican operates four manufacturing plants in the U.S., located in Ronceverte West Virginia; Holland, New York; Norton, Virginia; and Johnson City, Tennessee. In 2022, Mirage made major investments in its Canadian and U.S. plants to support new products and capacity for future hardwood needs. The company has two plants in Quebec, one in Ontario and two in Virginia. Mirage serves the retail and renovation markets, as well as small and custom homebuilders, and reports that it is seeing activity in both businesses. The company has products for commercial application, though this accounts for a small percentage of business overall. The family-owned company focuses on hardwood and is known for its quality products. Cali entered the market as a bamboo provider and remains the largest importer of bamboo to the U.S. However, the company has been steadily diversifying into other product categories, including hardwood, via sourcing, over the course of the last several years, and it no longer leads with its bamboo products. The company’s wood goes to market with a good, better, best story, and it leans into its California casual vibe with its hardwood aesthetics. Its new hardwood releases are the Barrel collection, at an entry-level price point, and the Whiskey and Wine collection, a step up. At the top of the ladder is Meritage, introduced last year. All three collections feature a 2mm face atop a cross-ply core. In January, Nydree introduced a magnetic hardwood product called Gravitate. Though there are some magnetic hardwood products in Europe, the company believes it is the first to introduce one within the U.S. market. The system features a magnetized underlayment, paired with planks that have a thin metal sheet on the back; Gravitate is available on any species or colors that Nydree offers. The system can be used in residential or commercial installations, offering benefits around ease and speed of installation, as well as opportunity for repairability. The company notes that Gravitate is well suited to raised access flooring systems. Nydree’s full portfolio is engineered, and the company’s products are made commercial grade via acrylic infusion, a process the company has been innovating for decades. Nydree serves both the commercial and residential markets with its products, with around 95% of business on the commercial side. The segments that the company targets most often are high-end corporate, hospitality, higher education and public space, including professional sporting venues. On the commercial side, Nydree’s hardwood goes to market through independent sales agents with specific territories. On the residential side, the company partners with A&D, builders and installers directly. Nydree reports that business has been steady, with slight growth in 2022, but notes that it is slightly different from many other industry hardwood players because of its commercial focus. The company has its production in Karthaus, Pennsylvania and offices in Lynchburg, Virginia. QEP relaunched its Harris branding and strategy in 2022 and had some successful product launches, as well. These include Pinnacle, a wide-plank product targeting designers under the Naturally Aged Flooring brand, and the expansion of Watercraft, under the Harris brand, which targets a more mid-range customer. Both are showing favorable results in the mainstreet market, as well. Everything under the Harris brand is made in Johnson City, Tennessee, while 15 items in the Naturally Aged Flooring collection are made in Johnson City and the rest are sourced from Asian partners. The company reports that it has looked into expanding the products it makes domestically, but due to raw material availability, this isn’t feasible in some cases. QEP does not have a commercial hardwood line, but it does have business development managers in the field working with hotel and retail stores to create custom products, suited specifically to their needs. In addition, some of its standard line products carry light commercial ratings. QEP hardwood goes direct to retail, through distribution and to home centers, and all three channels have been active for the firm, though direct-to-retail and home centers have been strongest. Headquartered in Quebec, Mercier has been in the wood flooring business for more than 40 years. In May 2022, ownership of the business passed to Sébastien Mercier and Jean-Philippe Dumas, sons of siblings Richard Mercier and Marielle Mercier, respectively. Mercier sells both residential and commercial hardwoods to the U.S. market through distribution partners. The company’s commercial product features a urethane finish and carries an extensive warranty. That being said, the company has seen the commercial side of the business shrink in relation to its residential business, which is strong both in new construction and retail remodel. The company recently upgraded its premium product finish, which now reveals the grain more effectively and is more affordable than it was previously. The finish is available on 95% of Mercier’s line and is being campaigned currently. Mercier reports that it had a tremendous 2022, even though the last quarter slowed. Maxwell produces its hardwood products in Monticello and Warren, Arkansas. The company’s products go to market via two-step distribution. Around 20% of the company’s products end up in commercial specification. The company, which is owned by Tommy Maxwell, reports that the first half of 2022 was very strong, while the second half was sluggish. Maxwell sells both solid and engineered hardwood. Välinge launched wood flooring products to the U.S. market two years ago and, at Surfaces 2023, announced that, moving forward, sister brands Välinge and Bjelin will merge, with the Välinge brand representing the intellectual property side of the business and Bjelin as the brand name for the product side of the business. The firm has operations in Sweden and Croatia. In addition, over the course of the last year, the company introduced its Hardened Wood Floors in walnut, ash and European white oak. The products carry a class 33 commercial durability rating. Creation of the product includes several Välinge technologies, yielding a product with three times the strength of standard engineered wood. At Surfaces, the company expanded the offering’s available widths and believes the product fills a need for wood visuals with an authentic character in the commercial market. The company reports that it was isolated to some extent from the worst of the raw material shortages in 2022 because of its vertical integration. While the company does not own its own forests, it does have a forestry agreement with the Croatian government. The company takes a multichannel approach to market. When it launched its wood line, it went through distribution and has now worked up to full North American distribution on the retail side. But in the middle of last year, it began to develop a different network-building out its own sales team for A&D and working with different agency groups, too. Kährs spent the first nine months of 2022 fulfilling a significant order buildup and managing challenges around pricing. “As a European producer with factories in Finland and Sweden an operations in Poland, due to the war in Ukraine, we thought there would be more impact to production and availability than there was,” the company reports. “Ultimately, we changed some routes, and that made deliveries to the U.S. a little more challenging, but not terribly. Of course, while we’ve had more stability in the last six months, we’ve also had a decrease in demand to some extent. We had planned for a slowdown this year, budgeted that in, and in the first quarter, we will exceed what we budgeted. So that is some positive development.” Kährs reports that, as white oak from Russia became undesirable, that drove some business towards Kährs and its supply of white oak from Western Europe, elevating sales. The company, which operates in both the residential and commercial markets, found success in the multifamily market with its revitalized Life collection that features a wood veneer on an HDF board with a commercial warranty and waterproof features. Kährs’ products go to market through traditional distribution in some areas and direct in others. It does not serve the home center channel. The company has made an effort to target a younger generation of customer, leveraging its history and sustainability stories. Lauzon, based in Quebec, is vertically integrated from tree to product and, interestingly, was permitted to stay open throughout the pandemic because of its wood pellet business, which was considered essential. The company sells both branded and private label products, and, amid Covid, reports that customers seeking private labeled product were, due to container issues, forced to turn to more locally sourced products, which played in the company’s favor. While Lauzon is vertically integrated, it is not exempt from raw material challenges, supplementing the wood that it grows as market trends create preference for certain wood species and aesthetics. For instance, white oak does not grow in large quantities in Quebec, so the company must source a portion of its white oak material. Sixty-five percent of the company’s offering is solid, priced from entry level to higher end. Ninety percent of the company’s products are produced within a few hundred miles of Montreal in multiple plants. And 90% of its products are sold in Canada and the U.S., with exports to Europe. In Canada, Lauzon’s products go direct to the independent retailer. In the U.S., the company uses a combination of distribution and direct. The company has products carrying light commercial warranties, and, when specifying commercial jobs, analyzes the specific situation closely to ensure a successful installation long term.
NWFA UPDATE In 2023, the NWFA published environmental product declarations (EPDs) for both solid wood floors and engineered wood floors. Supported by third-party scientific data, both show that wood flooring has fewer environmental impacts than any other flooring product, according to the NWFA. In addition, the organization launched its Engineered Wood Flooring Refinishable Program, which identifies engineered wood floors that have wearlayers thick enough to be sanded and refinished, differentiating them from look-alike products and engineered wood floors that cannot be refinished. To qualify, wearlayer thicknesses must meet minimum requirements. These vary depending on the product being evaluated but range from 3/32” to 4/32” (2.5mm to 3.2mm). To date, 16 North American manufacturers have signed on for participation, including Maxwell, Lauzon, Mullican and Somerset.
Over the course of the last year, the NWFA revised and significantly expanded its wood species technical manual. The new manual includes information about more than 40 wood species used to make wood flooring. The group reports that it continues to see significant engagement with its online university, which now has 300+ courses, all lasting ten to 20 minutes, with a testing component. The platform has more than 13,000 users, and more than 145,000 courses have been completed. CEO Martin reports, “One of the most significant stories [for the hardwood industry right now] is the formation of the Real American Hardwood Coalition (RAHC). It is a voluntary industry-wide domestic promotion initiative developed to inspire and educate consumers about the uses and benefits of real wood products and to dispel some of the mistruths about look-alike products. The RAHC includes 30+ national, state and regional hardwood groups, representing more than 2,100 companies from all hardwood producing states. A consumer-focused website has been launched (realamericanhardwood.com), and initial meetings have taken place with the Magnolia Network in an effort to align resources and reach consumers at the start of their buying journeys.” See the Woodcuts article from the Floor Focus April 2023 issue for more details.
Related Topics: Crossville, Mohawk Industries, NWFA Expo, Tuftex, Lumber Liquidators, Armstrong Flooring, AHF Products, Parterre Flooring Systems, Anderson Tuftex, Shaw Industries Group, Inc., Mannington Mills, Mirage Floors
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