According to statistics released by NOFMA, the Wood Flooring Manufacturers Association, shipments of strip wood flooring totaled 627.5 million board feet in 2002 -- marking yet another year in which shipments outstripped the previous year. That's not to say that 2001 -- with shipments of 579.6 million board feet -- wasn't a respectable year, particularly when you factor in the effects of the Sept. 11 terrorist attacks.
However, the 2002 tally shows an incredible 8 percent increase over 2001. The 2002 figure reflects the highest modern-day strip wood flooring shipment total since 1966, when 654 million board feet were shipped.
Prior to 1966, when wood flooring was basically the only game in town for new home construction due to federal mandates, the industry peaked at an annual shipment of 1.2 billion board feet. At the other end of the spectrum was the all-time low of 75 million board feet recorded in the recession year of 1982.
Ironically, just as in 1982, our industry and country were considered to be in the dead center of a recession last year. And yet, 2002 reflects an impressive 8 percent increase over the previous year, whereas 1982 logged the worst annual shipment figure ever recorded by our industry. Without question, the most recent recession began in 2001, hung around for all of 2002, and has continued its assault during the first quarter of 2003.
There were dramatic differences between the two recessions in question. For instance, current interest rates are at historical lows not seen in the past 40 years. On the flip side, 1982 saw double-digit mortgage interest rates and credit card rates of nearly 20 percent. Twenty years ago, the hardwood flooring industry was in retreat mode and just trying to stay alive.
In contrast, today's industry leaders have no concept of retreat. Instead, they've chosen to take charge of our destiny. The wood flooring segment continues to ride a wave of growth. For us, the tide is still in even though other floor covering entities remain adrift at sea.
Potential buyouts and consolidations remain in the wings. Rumor has it that Shaw Industries is awaiting the outcome of the bankruptcy litigation embroiling Armstrong World Industries with the possible intent of purchasing this formidable industry player in order to acquire the Bruce, Hartco and Robbins hardwood divisions. Fact or fiction? Time will tell.
In Canada, Boa-Franc (Mirage Hardwood) has opened another plant to meet the demands of their customer base and fuel the introduction of their engineered hardwood floor lines throughout North America. Mannington recently introduced an eye-catching engineered line that captures the distinctive look of hand-scraped craftsmanship that was developed by the pioneers of the hardwood flooring industry.
Hasn't someone told these adventurous lads about the recession? And if someone has, thank God that they refuse to listen.
Only time will tell if robust growth potential remains on the horizon for the industry's wood floor segment. That said, I would consider the following factors to be among our strengths, presuming that economic conditions remain unchanged for the remainder of 2003.
Although new home construction as a whole has been moderately hit, entry-level housing starts remain relatively solid thanks to favorable interest rates. Multi-family units, such as apartments, will begin to flourish among consumers unwilling to take the plunge into a 30-year mortgage.
Our industry needs to focus on converting some of our basic hardwood flooring products for availability at cost-effective marketing positions, while allowing for an acceptable margin of return to the dealer/contractor for servicing the builder accounts. Builders still subscribe to the notion that "commodity" floor coverings will adequately serve the purpose of marketing their homes to potential buyers.
We will never experience our potential in this area until we aggressively pursue it. Obviously, this requires the manufacturer to come up with inspired pricing programs that can be passed on to the distributor and on to the dealer/contractor who, in turn, can pass the savings on to the builder.
Though the remodel/replacement market is widely considered a shoo-in for our industry, we still need to continue to encourage the already-started romance between product and consumer. Homeowners who once considered moving instead of improving still need reinforcement regarding the added value that hardwood flooring products bring to the net worth of their treasured home investment.
Hardwood floors still remain a desired amenity in both new construction and the replacement market. Boosting one's home equity via improvements looks like a wise investment compared to investing in a still-ailing stock market.
Cost vs. Value
We must also continue to accentuate the "timeless" value of hardwood flooring rather than focus on the initial cost of the investment. When you compare the unit cost of hardwood flooring over a period of 30 years or longer, our products at any level are capable of still working for the homeowner while alternative floor coverings have long been retired. Proper care and maintenance is all that's necessary to make that dream of wood floor longevity a reality. Hardwood flooring products may cost just a little more in the beginning but, in reality, they truly cost a lot less in the end.
In conclusion, Wood or Wood Knot will always continue to keep you apprised of how far we have come since the recessionary nadir of 1982. But it is totally up to you as to how far we can go on improving our performance in the future.