The adhesive story of the decade is without a doubt that of Lumber Liquidators. The billion dollar flooring firm is suffering through the worst that the investment community has to offer, abetted by a tale too complex for the media to convey.
If you haven't been following the story, Lumber Liquidators for the past couple years has been charged by various parties, including stock fund managers, with selling flooring in California that is not compliant with the California Air Resources Board criteria for formaldehyde gas emissions.
The flooring in question is laminate flooring made with MDF, which Lumber Liquidators says accounts for 19 percent of all the flooring it sells. (The largest category of flooring is solid or engineered hardwood, accounting for 43 percent of its $1 billion in sales.)
The challenge is that some of the laminate flooring is manufactured in mills in China. And this flooring may have added formaldehyde, which releases formaldehyde gas once installed - albeit in small amounts, and steadily declining in the first two years. Is this a case of a contractor in China selling product to meet one specification, but delivering something altogether different? Or is it a case of differing testing methods resulting in different results? Either way, at the heart of it is an adhesive, in one of the most eventful consumer products stories of the decade. Lumber Liquidators flooring is in hundreds of thousands of U.S. homes.
This story has been brought to the attention of many media outlets, including Woodworking Network, and most notably, 60 Minutes, which carried an extensive report on it on March 1, including hidden camera interviews in three of the Chinese mills that produce, package and ship laminate flooring to Lumber Liquidator warehouses. Plant managers stated that while the flooring is labeled as CARB-compliant, isn't really compliant. During the report, Lumber Liquidators chairman and founder Tom Sullivan told 60 Minute's Anderson Cooper that the company's flooring is CARB-compliant, and he would look into any claims to the contrary immediately.
For anyone in the wood manufacturing industry, just explaining what our business does and its importance to the economy is tough. Imagine the challenge before it now as Lumber Liquidators attempts to convey to the general public not only what CARB is, but where it applies (currently only in California) and how one tests for compliance (destructive versus non-destructive testing), and even details about the sandwich that makes up a laminate floor.
Perhaps Lumber Liquidators could have done a better job over the past two years in fending off the rising allegations of corporate perfidy. But then again, this is also a story that suffers from both "too much information" and "more than I want to know" problems for the public at large.
A version of this blog also appears at Bill Esler's FranklinConnections blog channel.
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