U.S. Flooring Trends Good for Wood

A recent study projects laminate and hardwood flooring will continue to gain market share at the expanse of carpet and vinyl.

By Karen M. Koenig
An abundance of color and design choices, along with realistic texturing and other technological enhancements, have helped make laminate flooring a cost-effective

alternative to traditional hardwood floors.

Photo courtesy of Pergo

Slide over hardwood; there's going to be a new leader in town.

By 2009, U.S. demand for laminate flooring will overtake hardwood, surpassing the long-time favorite by a score of 1.85 billion square feet to 1.45 billion.

According to The Freedonia Group, which conducted the Hard Surface Flooring study, laminate flooring demand is forecast to grow 15 percent per year, compared to an annual growth rate in demand of 4.8 percent for hardwood flooring.

2014 projections also show laminate flooring outpacing hardwood flooring, with demand at 2.95 billion square feet compared to hardwood's 1.80 billion square feet. (See chart below)

Demand includes domestic as well as imported products.

According to Freedonia analyst Tonia Ferrell, the increased demand for laminate flooring can be attributed to its growing familiarity with consumers and builders, lower price point, and improved performance properties, including stain and fade resistance.

Increased style options are another driver of laminate flooring's popularity. With improvements in technology, such as embossed registration and texturing, laminate flooring can provide consumers with a cost-effective method for achieving the look of tiles, ceramics and woodgrains, Ferrell added.

Hardwood Shows Gains

Although laminate flooring can mimic the look of hardwood, most high-end residential and commercial applications still prefer "the real thing," Ferrell said. According to findings by Freedonia, this will help drive hardwood flooring demand's steady growth rate of 4.8 percent annually, through 2009. (See chart at right)

Currently, hardwood flooring holds the biggest share of the non-resilient flooring market, which also includes laminate flooring, ceramic tile, natural stone, bamboo and glass flooring. Hardwood flooring accounted for 42 percent of shipments, by area, in 2004, compared to laminate flooring's 25 percent, according to Freedonia.

Non-Resilient Flooring Supply & Demand

(million square feet)
  1994 1999 2004 2009 2014
Total Hard Surface Flooring Demand 5,910 7,300 8,940 11,700 14,550
(% non-resilient) 26.6 41.6 51.5 59.0 64.9
Non-Resilient Flooring Demand 1,545 3,040 4,605 6,900 9,450
Hardwood Flooring 510 920 1,145 1,450 1,800
Laminate Flooring 10 365 920 1,850 2,900
Other (ceramic tile, stone, etc.) 1,025 1,755 2,540 3,600 4,700
U.S. Non-Resilient Flooring Shipments 1,175 1,925 2,410 3,200 4,200
Hardwood Flooring 510 895 1,010 1,150 1,350
Laminate Flooring - 210 575 1,150 1,850
Other (ceramic tile, stone, etc.) 665 820 825 900 1,000
Demand = domestic plus imports Source: The Freedonia Group

The growth of both the hardwood and laminate flooring segments comes primarily at the expense of carpet and vinyl, Ferrell said, and is being driven by consumers' preferences for high-end, environmentally-responsible products in their homes.

The growth in shipments for both laminate and hardwood flooring reflects this trend.

According to Freedonia, wood flooring shipments are projected to grow from 1.0 billion square feet in 2004 to 1.2 billion square feet by 2009, and improve to 1.4 billion square feet by 2014.

Likewise, shipments of laminate flooring will grow measurably, from 575 million square feet in 2004, to 1.2 billion square feet in 2009, when it will draw even with hardwood flooring, according to Freedonia. By 2014, laminate flooring shipments will leap past hardwood shipments, to 1.9 billion square feet, Freedonia said.

Overall Market Trends

Building on the strength of the record housing growth and remodeling segment, overall demand for non-resilient flooring is projected to continue its 8.4 percent annual growth, reaching 6.9 billion square feet by 2009. Freedonia also projects shipments of non-resilient flooring to increase, 6.9 percent per year between 2004 and 2009.

New Standards on the Horizon for NALFA

Defining what level of performance a laminate floor should be able to deliver to end users, whether it be in a residential or commercial application, is one of the goals behind the development of a unified standard between the North American Laminate Flooring Assn., the European Producers of Laminate Flooring and the International Standards Organization. When finished, it will be the first joint standard in the groups' history.

"We're still in the development stage on it," said NALFA President Bill Dearing, adding that most of the discussion between the groups is revolving around a standardized testing method. "It would still be considered a NALFA standard - a NALFA standard that conforms to ISO."

ANSI approval was awarded in 2003 to NALFA's voluntary standard for residential, commercial and light commercial applications (ANSI LF-01-2003). It specifies basic performance requirements, such as dimensional tolerance and durability, as well as the methodology to perform the tests. Products carrying the NALFA seal of assurance are certified as adhering to the standard.

Currently, the NALFA Web site lists three companies as having earned the seal, although Dearing said he is aware of others that are undergoing the process. The three companies are Mannington, Pergo and Wilsonart.

For more information on NALFA's programs and members, or about laminate flooring specifications, visit www.nalfa.com or e-mail information@nalfa.com.

The residential market continues to be the primary application for hardwood and laminate flooring, Ferrell said. However, she noted, "New [residential] construction is expected to weaken slightly - although it is still going to be healthy - but demand will be restrained from that."

A surging remodeling market, along with a burgeoning non-residential construction market, will compensate for any decline, she added.

"The [overall] increase in construction, has benefitted both hardwood and laminate flooring," said Bill Dearing, president of the North American Laminate Flooring Assn. and manager of market development for Pergo.

"Although hardwood flooring has seen the benefit quicker - because it is more entrenched with builders and the community at large is more familiar with it - I know, personally, that the laminate building business has been increasing dramatically," Dearing added.

Dearing's observation concurs with findings by Freedonia, which also projects growth - albeit a more moderate pace - for both laminate and hardwood flooring products in non-residential markets. According to Ferrell, commercial growth for non-resilient flooring is projected to grow 4.6 percent, per year, between 2004 and 2009.

Laminate Flooring Market

Gains New Ground

By Karen M. Koenig

Strong and steady is the mantra of the North American laminate flooring industry as it finished 2005 with another year of double-digit growth - and high hopes of repeating the trend in 2006.

"We see no reason to expect there to be a significant change," said Bill Dearing, president of the North American Laminate Flooring Assn. and manager of market development for Pergo. "We're predicting the double-digit growth to continue, with no sign of a slowdown and no sign of laminate flooring being replaced [in market share] by another material."

According to research by NALFA, laminate flooring demand rose 13 percent in 2005 over 2004's figure of 851 million square feet, at first purchase. In monetary terms, NALFA figures show laminate flooring increased 9 percent last year over the $1.103 billion sold in 2004.

The long-range outlook for the industry appears to only get brighter.

According to the Hard Surface Flooring study by research firm The Freedonia Group, U.S. demand for laminate wood flooring is expected to double between 2004 and 2009, reaching 1.850 billion square feet. By 2014, this figure is expected to rise an additional 60 percent, to 2.950 billion square feet. (See chart, p. 54.) Shipments of laminate flooring are projected to grow at a similar pace, from 575 million square feet in 2004, to 1.150 billion square feet in 2009, and reaching 1.850 billion in 2014 - surpassing hardwood flooring by 500 million square feet.

According to Freedonia analyst Tonia Ferrell, laminate flooring's growing popularity is due to a number of factors, including durability, stain- and wear-resistance, and low maintenance. In addition, new design and style innovations -such as embossed-in registration - allow laminate flooring to more closely resemble the higher-end look of hardwood, while the availability of abstract designs and patterns also enable consumers to choose flooring that meets their unique needs, she said.

It also is less costly than hardwood, Ferrell added. "Laminate flooring is only expected to get cheaper because of an influx of imports, whereas wood is expected to get more expensive, as in the case of exotic woods or cost of harvesting," she said.

Other Growth Factors

While laminate flooring is often promoted as the "cost-effective alternative" to hardwood floors, the majority of its growth in the market instead has been at the expense of carpet and vinyl, Ferrell said, particularly in the residential market.

With analysts projecting a slowdown in new home construction rates, most agree that any decline in demand will be offset by laminate flooring's growing popularity in the remodeling segment. The recent influx of laminate flooring now available in home centers and low-cost retail outlets is helping to drive sales in this segment, both Dearing and Ferrell said.

Demand for laminate flooring in the commercial market is also on the rise, particularly as builders and architects become more familiar with the product, Dearing said.

"The residential market is still the driver, but the commercial market also is coming along nicely," he added. "Where commercial especially is coming on strong is in the high-pressure applications where there is a lot of wear."

Imports' Effect on the Market

Although sales for laminate flooring have been on the rise, the average price per square foot, at first purchase, has decreased slightly, from $1.29 in 2004, down 5 percent to $1.24 in 2005, Dearing said. Much of this is due to competition from low-cost imports, primarily from countries in Asia and western Europe.

"It's been a pretty aggressive year for importing, with an increase in laminate flooring in low-price outlets, like Costco," Dearing said. "So, for there to only be a nickel difference is pretty cool."

Dearing said he has not heard of any U.S. members of NALFA being unduly affected by low-cost imports. However, the same cannot be said for Uniboard, reportedly Canada's only laminate flooring manufacturer. Last year Uniboard successfully petitioned the Canadian International Trade Tribunal on complaints of "injurious dumping" of certain laminate flooring exported from China and France. The Tribunal found that those products have indeed "caused injury to the domestic industry," and have since levied an anti-dumping duty on the items named in the suit. (For more information, visit the Canadian Border Services agency Web site at www.cbsa-asfc.gc.ca.)

Other News Around the Globe

Shortly on the heels of its successful petition, Uniboard was sold to Pfleiderer AG. The agreement, effective Dec. 1, 2005, combined the engineered wood activities of Pfleiderer and the Kunz Group, which owned Uniboard. According to reports, Pfleiderer plans to invest $21 million in Uniboard's finishing plant, thereby doubling its capacity. Also under consideration is a plan to build a large-scale integrated composite panel and laminate plant in the United States.

  • Unilin recently completed phase one of an $80 million new plant development. It is part of a 1.1-million-square-foot complex being built in Thomasville, NC, and ultimately will employ 330 new workers. Once complete, the new lines' will provide an additional 500-million-square-foot capacity to Unilin's existing 40 million, enabling it to meet 80 percent of the North American demand for the company's Quick-Step product. (See Unilin story in this issue)
  • Unilin Holding NV, parent company of Unilin, was acquired by Mohawk Industries earlier this year. Total value of the acquisition is approximately $2.6 billion.
  • Kronotex recently completed the first phase of its development plans in the United States, with the startup of two laminate flooring lines at its new plant in Barnwell, SC. Phase 2 of the $135 construction plan is expected to be completed in 2007-2008 and will include space for MDF/HDF production, as well as addition melamine lamination and flooring profile lines.
  • Pergo's installation of a new $15 million direct laminating press at its Garner, NC, plant is adding 75 million square feet to its annual capacity. In addition to its laminate flooring line, the company recently launched a hardwood flooring line, which will be sold in Lowe's home centers. In other news, Pergo settled its patent infringement lawsuit against Witex in the United States and also settled any existing litigation with Faus.
  • Primarily known in the flooring market for its laminate lines, BHK launched two new hardwood flooring lines at Surfaces in Las Vegas earlier this month.
  • Columbia Flooring signed an agreement with Laura Ashley to manufacture a line of laminate and hardwood flooring under the Laura Ashley brand name.
Hardwood Flooring Hits

40-Year High

By Rich Christianson

Yet another year of double-digit growth for laminate flooring demand plus increased competition from imported hardwood flooring products could not prevent U.S. hardwood flooring manufacturers from producing their largest annual output since 1966.



Click to enlarge

U.S. strip hardwood flooring shipments reached a 40-year high of 527.2 million square feet in 2005, according to NOFMA: The Wood Flooring Manufacturers Assn. In addition, 2005 marked the 14th consecutive year of growth for hardwood shipments, a string that dates back to Operation Desert Storm and predates laminate flooring's formal market launch. According to NOFMA statistics, since sinking to 153.8 million square feet in 1991, annual U.S. shipments of solid hardwood flooring, both finished and pre-finished, have more than tripled.

The growth rate of domestic shipments has slowed in recent years, though. Whereas total year-to-year shipments of domestic flooring products made with oak, hickory, cherry, maple and other hardwood species, increased at a double-digit clip throughout most of the 1990s, shipments of hardwood flooring grew by just 1.7 percent in 2005. This gain came on the heels of increases of 6.3 percent and 0.9 percent respectively in 2004 and 2003, according to NOFMA.

Timm Locke, executive vice president of NOFMA, said 2005 "was really good" for most of the association's 30 manufacturing members. "The 527 million square feet that was shipped last year is 9 million more than 2004, which was the highest since 1966 when the Federal Housing Administration approved the use of wall-to-wall carpeting in new home construction." The FHA's action was a boon for the carpet industry and a bust for the hardwood flooring industry. The industry suffered steep declines for most of the next 16 years before shipments hit bottom at 57.8 million square feet in 1982.

Looking ahead through 2006, Locke said, "There is continued optimism. The flooring producers and lumber producers are an eternally pessimistic bunch. But for now, they are pretty optimistic about the current economy and the state of the home building and remodeling industries."

A Moving Target

Locke noted that hardwood flooring is extremely price sensitive, based not only on supply and demand dynamics, but also fluctuating lumber prices. "Things change on a weekly basis. One week, shipments might be up, but prices are down. The next week, flooring prices are up, but so are lumber prices. Things never seem to be good enough for people in the flooring industry."

Buchanan Hardwoods of Aliceville, AL, is a case study of the hardwood flooring market's volatile nature. Company President Bill Buchanan said that while his company's new Hasko flooring machine helped it produce and ship 20 percent more product in 2005 without having to add workers, "our overall sales were virtually the same as 2004." Fortunately, Buchanan added, average lumber prices were considerably lower last year. "In 2004, green No. 2 common red oak was selling for about $625 per 1,000 board feet. Last year, it dropped to about $470."

Market Forces

According to the U.S. Department of Commerce, 2.06 million units of housing were started in 2005, an increase of 5.6% from 2004.

Locke said while strong housing activity has benefited domestic hardwood flooring producers, nearly three times more hardwood flooring is used for remodeling projects than in new home construction. "With home values increasing and interest rates low, more people are taking advantage of borrowing against the increased equity of their homes to make them what they would like them to be, whether that means redoing a kitchen or tearing out carpeting and putting in a hardwood floor.

"Studies show that hardwood flooring is the preferred flooring product," Locke said. As for the impact of laminate flooring on his members' businesses, Locke said, "My take is that laminate products, especially wood look-alikes, are taking more market share from linoleum and carpet than hardwood. Laminate flooring might have a greater impact on hardwood at the low end of the market, but on the high end, I think people see the natural beauty of hardwood floors as having a longer-lasting value, plus you can't refinish laminate."

Impact of Imports

Locke said he is hearing more NOFMA members express concern over increased competition from abroad, especially with solid hardwood products imported from Southeast Asia and South America. He added that it is difficult to get a clear handle on import trends because the classification codes used by the U.S. Department of Commerce "are confusing and, in some cases, misleading."

Locke said the U.S. Hardwood Federation, which is comprised of about 30 trade groups, including NOFMA, is lobbying the International Trade Commission to enhance the tracking capability of foreign species and products being imported into the United States. This includes plywood, veneer and flooring.

In addition, the 2-year-old Hardwood Federation has asked the ITC to ensure that imports entering the United States are properly classified into the proper tariff category.

"We have asked the U.S. Customs Bureau to inspect how products are classified from 20 of the biggest flooring manufacturers in Southeast Asia and South America. We found, for example, that some end-matched products that should have a 3.5 percent tariff for solid and an 8 percent tariff for engineered wood plants are being misclassified into categories that have no tariffs.

"We feel there is a need to fix the code system and to make sure the system is properly enforced," Locke said. "Many of these misclassifications might be innocent, but we are prepared to file for an investigation into unfair trade practices of any company that is abusing the system."

Groundbreaking Study in the Works NOFMA has taken the lead on a first-ever, comprehensive U.S. Wood Flooring Market Study. It seeks to uncover detailed information about how much of which types of flooring are used in the United States. The study, being conducted by the Beck Group of Portland, OR, is expected to be completed by the end of March. The estimated $100,000 study is being entirely funded by NOFMA.

"NOFMA is making a significant investment in this study because our members expressed an immediate need for a better understanding of the wood flooring market to help aid investment decisions that are currently made in somewhat of an information vacuum," Locke said. "They really don't know what the U.S. flooring market looks like. No one can tell us how much is unfinished versus pre-finished, how much of each species is used, the impact of imports, the growth of engineered wood flooring over time, and so on."

Locke said the study encompasses domestic flooring producers, distributors and installers. "The goal is for this to be the first of an annual study that captures the big picture and feeds it back to the industry."

Copies of the study will be available to NOFMA members for $500 each and to non-members for $3,000 each. For more information, visit www.nofma.org.

                                                                                                                                                                                           

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