The National Wood Flooring Association (NWFA) recently completed its annual Industry Outlook survey. We got the opportunity to sit down with NWFA President and CEO Michael Martin to discuss some of the highlights from that survey and get a sense of what is to come in 2023.
TalkFloor: What is the latest NWFA news?
Michael Martin: In September, we launched our new NWFA engineered wood flooring refinishable standard, which basically requires a certain wearlayer to be there to designate it as refinishable. There’s a logo that can then be carried on the product. This is one of the ways in which we are combatting wood look-alike products that aren’t refinishable, so that the consumer can clearly see the longer life, longer value, the ability to refinish as a value-attribute in purchasing wood over look-alikes. That is rolling out now. It is really designed to give the retailer, the salesperson the opportunity too to be able to easily identify within the samples which floors can be refinished and use that as a selling tool for the consumer. It also gives the consumer something they can see that will at least make them ask the question if they are looking at other products, “This one says it is refinishable. Is this [one]? What does that mean?”
TF: What is the focus of the NWFA Board of Directors going into 2023?
Martin: Coming out of COVID, we’ve been rebuilding the NWFA tradeshow for the last couple of years. We’re anticipating if the economy holds, we’ll be back…we’ve hit normal numbers the last two shows we’ve had, but we’ve done it with innovation around the show. Co-locating with Coverings was one way we did that. Obviously, being in Tampa in April was also drawing on vacation people from the Midwest or the Northeast to try to keep our numbers strong.
Our Fall board meeting is going to be focused on innovation. We’re bringing in an innovation facilitator to talk about the next three to five years and how the marketplace is going to change and how we are going to need to match that. One of the other topics we really need to hit hard is diversity and the fact that many market areas have non-English speaking installation bases. If you are in Texas or California, you are using a Spanish-speaking installation base, and what are we doing to train those folks? How do we ensure that we are able to keep the quality of installation up if we are not training in all of those diverse languages. So, we are going to talk about how we can broaden our scope and then include diversity as part of our mission, moving forward.
TF: What’s your outlook for 2023?
Martin: We just finished our 2023 outlook, which surprisingly was a little more optimistic than I had expected given the situation with inflation, the uncertainty around the election, and the uncertainty around the economic outlook with the Feds continuing to raise interest rates. That creates uncertainty or a caution or a slowdown [where we are] just waiting instead of moving forward on some projects. All in all our membership is pretty happy with the way things look for 2023 based on when they took the survey, which would have been August.
Remodeling work seems to be maintaining itself really well. In older homes on the East Coast and Midwest when you’re renovating a home, it’s typically a solid wood floor that’s being sanded and finished or they’re adding a room to it to match existing flooring. That’s where we’re seeing the market hold steady.
Homebuilding is a challenge in the fact that we need more homes, but there we haven’t been able to meet the numbers that are necessary in the last couple of years. Now, with interest rates rising, we’re seeing that market taper off a little bit and become a little more predictable.
TF: Are supply chain issues still part of the conversation?
Martin: Supply chain issues are going to continue to be a problem. Just from the import side as far as products going back and forth between countries. We are starting to see that even out, but we have folks are still having a hard time getting raw materials. I’ve been told recently there hasn’t been enough people working in forestry to get it out of the forest and not enough people working in mills. During COVID when mills had to put people six feet apart, they basically had to change their whole structure, so there’s been a lot of change that’s slowed down the process of making flooring. Enough time has passed that we are beginning to see that even out and the market come back.
We just saw lumber drop down to pre-COVID level on pricing, so that should help the market—help bring the price back in line. We’re also seeing an evening out between pricing. Because of the import situation and because we are seeing more domestic wood flooring being made, the cost differential between a look-alike and real wood is much less than it has been at different times in the past which of course drives the consumer to choose wood. Because if the pricepoint is close, why wouldn’t you have the real product? I think most people understand the difference and the value.
TF: Lumber prices skyrocketed and forced home prices to increase astronomically. Now, that lumber prices have dropped, how does that impact the value of the new homes that sold during COVID that were priced well over their actual value?
Martin: The thing to think about there is someone who just built a new house isn’t moving out of that house any time soon. Chances are they are making that investment for the long-term. By the time they go to sell it, it’s not going to make that much difference that they paid more on the frontend because of inflation. The market is not going to go back to where it was as far as home sale value. We are seeing maybe a drop-off of 5% to 7% on home prices, but that’s nothing compared to inflation during the COVID period as far as houses almost doubling in value in some cases. Even with 5% off, you are still making a lot of money on existing homes, so I don’t know if that’s really going to be an issue.