January 1, 2020, marked the first anniversary of AHF Products’ split from Armstrong Flooring, and the business has made great strides to improve its market position.
“What a first year it’s been,” said Brian Carson, president and CEO, AHF Products, from the company’s solid hardwood manufacturing facility in Beverly, W.V. The plant recently celebrated an 85,000-s.f. expansion to improve the flow of distribution and has the potential to create many new jobs over the next 10 years.
The move is one of many AHF has spearheaded to take back market share in hardwood through a focus on improving quality, increasing capacity and agility.
“It’s no secret that the wood category is not growing like it used to be—nothing’s growing like it was with SPC now,” Carson said. “We and our distributors have to grow in a market that’s not growing, and we’re not going to do it by the traditional way of just spoon-feeding products. We’re doing that now as a result of a different approach.”
The company launched more than 30 collections in 2019, which was twice as much as the two previous years, thanks to more collaboration with its distributor customers. In 2020, the company is also investing in large-scale trade show booths to help their customers display products for their collections of time-honored brands: Bruce, Hartco, Robbins, LM Flooring, and Homerwood.
“It really is a difference in philosophy,” Carson said. “I could develop a new set of collections for 2020, in a bubble, where we create displays and merchandising, and we give them to our distributor and our partners, and we say go sell. And then we whiff, and we missed the mark. For 2020, our distributors sat here, and we’re assembled the lines together of what would go into the merchandising systems—and in some cases what’s in the merchandising system in the Northeast is not going to be the same that’s in the merchandising system in the Midwest. Even though it’s a nation launch, it’s got a regional flavor to it.”
AHF is the leader in hardwood flooring with $450 million in revenue, owning about 13% market share, employing 2,250 employees, and producing 158 million square feet of flooring annually. The company continues to invest in capacity, with plans to grow from 206 million s.f. to 230 million s.f. this year. Six plants operate in the United States with a combined capacity of 170 million square feet. They include solid wood plants in Beverly, W.V.; West Plains, Mo.; and Warren, Ark.; engineered wood plants in Somerset, Ky.; and a solid and engineered wood plant in Titusville, Pa. The company also owns a plant in Shanghai, and in 2019 acquired LM Flooring, a global manufacturer and marketer of hardwood flooring products, in Sihanoukville, Cambodia.
The LM acquisition was enticing for several reasons. First, the purchase gave AHF distribution through Europe, Canada, Asia and Australia. “That came with an international business that we aim to grow,” Carson said.
Second, the plant has unique manufacturing capabilities. Unlike in America where flooring is rotary hardwood, Cambodia produces sawn and sliced-faced products, which to the end consumer has the look of solid wood with the benefits of an engineered structure.
“They are manufacturing hardwood that we just can’t make in America,” Carson said. This includes sliced and sawn face visuals in long lengths, all of which are in high demand. “Plus these products are fully duty and tariff-free.”
The Cambodia plant will run at a rate of 60 million s.f. of capacity by the end of 2020.
The company planned expansions to the Cambodian plant even during its negotiations to purchase it. By the time the acquisition was completed, AHF had purchased land next door to double the size of the plant along with equipment. “If it didn’t work out, we would wind up owning a plot of land in Cambodia,” Carson said.
Today, AHF is the only American-owned company manufacturing in Cambodia. Most manufacturers there are Chinese owned who are looking to avoid the tariff situation.
In the United States, distribution was another area that required improvement. Historically, the company had just one warehouse in Dickson, Tenn., which meant product had to be shipped from all the plants and then shipped back out to the rest of the country.
“It was a lot of excess freight and movement in there,” Carson said. “We’ve added warehousing at a number of our plants so that the product made in the plants can be shipped from the plants.”
The team also took a close look at manufacturing. At the Beverly, W.V., hardwood plant, which celebrates 30 years this year, Plant Manager Blaine Emery has helped transform how the company is approaching its business. A true advocate for sustainable forestry, he owns a 40-acre tract of timber in Virginia.
“We used to have all of our lumber purchasing centralized, so as a plant manager, I wasn’t involved in purchasing a lumber at all. Now, for AHF, I’m responsible for all the lumber purchasing comes in. What that has done is allowed me to get to know and build relationships with my lumber suppliers predominantly in the Appalachian region, near our West Virginia plant.”
By getting to know the businesses that take care of AHF, Emery said he can better build relationships and get involved in like backward integration. “As the biggest consumer of timber in the state, it’s important that we know where it’s coming from and how it’s managed,” he added.
The company also added product development at the local plants, which combines insight from what customers want to what the plant is able to product, hastening the speed that products can go to market.
“We’re doing more collaboration with partners than ever,” said Wendy Booker, vice president, marketing and product development. “We’re offering regional designs, 25 to 50% reduction in launch timelines, fast color modifications to guarantee satisfaction, responsiveness to geographic preferences on structures on consumer-oriented messaging.”
At the end of the day, by connecting production, marketing and the customer, better products are produced.
“You can run a business as selling what you make, as opposed to looking at the world from the eyes of the customer downstream saying, I want to make what the customers want. It’s not typical for a plant to go look on the other side and say, what is the market? What are the trends in the market?”