Getting better with age - Rfloorcovering news THE 30TH ANNIVERSARY ISSUE - Congoleum.com
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floorcoveringnews N E W S PA P E R volume 31/number 3 I www.floorcoveringnews.net I the industry’s preferred publication I July 18/25, 2016 I $2.00 THE 30 TH ANNIVERSARY ISSUE Getting better with age
14 I July 18/25, 2016 fcnews 30 (x2) acquisitions & mergers YEAR COMPANY DIVISION ACQUISITION/MERGER 1986 Burlington Masland Carpet Formation of largest carpet mill with $651 million in annual sales. 1987 Shaw Industries West Point Pepperell Began wave of purchasing activity; consolidated the industry; created first billion-dollar mill; carpet and rug division gave Shaw Cabin Crafts and Stratton brands. 1988 Beaulieu of America Conquest Carpet Mills Enabled company to get into the polypropylene business in a big way through downstream integration. Armstrong American Olean Expanded ceramic tile business. 1989 Shaw Industries Armstrong’s carpet division Gained Evans & Black brand; added 5% market share, resulting in 20% stake in soft surface, 3 times the size of nearest competitor. 1990 Beaulieu of America Coronet Carpets Largest acquisition in the carpet business to date; gave company Canadian presence. Domco Azrock Domco expanded distributor network in U.S.; Azrock increased international presence. Queen Carpet Patcraft Mills Put mill squarely into the commercial market. 1992 Shaw Industries Salem Carpet Mills Boosted Shaw’s domestic carpet share to approximately 31%. Congoleum Amtico Synergies via merger included joint promotion of both lines and sharing of showroom space. Royalty Carpet Mills PacifiCrest Mills Put Royalty in the design/specification market. 1993 Mohawk Horizon Industries Became eighth-largest mill with $630 million in sales. Mohawk Fieldcrest Cannon Acquired Karastan and Bigelow brands; positioned company as second largest mill with sales of more than $830 million. Dixie Group Carriage Industries Acquired industry’s largest supplier to the manufactured housing business. Dixie Group Masland Carpets Added $50 million in sales; gave company foothold in higher-end residential business. Interface Prince Street, Bentley Mills Enhanced leading position in commercial arena; diversified product mix. Mohawk Aladdin Mills Highest amount—$450 million—paid for carpet mill; merger gives Lorberbaum family 42% of Mohawk’s outstanding common stock 1994 Domco Nafco $97 million purchase bolstered luxury vinyl tile portfolio. Queen Carpet Tuftex Purchase of $14 million California mill boosted Queen’s annual sales to $565 million. Western FCA AFA Formed World Floor Covering Association, brought Chris Davis into the industry. 1995 Mohawk Galaxy Carpet Mills $200 million purchase enhanced position at mid-level price points. Dal-Tile American Olean Merger brought together largest tile manufacturers in U.S., creating estimated capacity of nearly 450 million square feet. 1996 Mohawk Diamond Rug & Carpet $60 million transaction added lower-priced residential carpet to the mix. Tarkett Domco Merger created second-largest hard surface manufacturer in North America with $500 million in sales. 1998 Mohawk World Carpets Acquisition of $430 million company put Mohawk at $2.5 billion in sales. Mohawk Image Industries Put company in recycled polyester fiber business, turning plastic bottles into yarn used to manufacture carpet. Shaw Industries Queen Carpet Added $800 million in sales and four brands to its portfolio: Queen, Tuftex, Patcraft and Designweave. Armstrong Triangle Pacific Diversified Armstrong’s product portfolio; became No. 1 hardwood flooring producer, adding well-recognized Bruce brand. Armstrong DLW Regained position of world’s top resilient flooring producer with acquisition of German linoleum tile and sheet company. Beaulieu of America Columbus Mills Added credibility to Beaulieu Commercial within the A&D community; eventually folded into Coronet. Beaulieu of America Marglen Industries Gave company entrée into the recycled polyester carpet business. Beaulieu of America Peerless Carpet Gave company a dominant position in the Canadian carpet market. Dixie Group Multitex Corp. Globaltex division had major presence in the big boxes; added $85 million in sales. 1999 Collins & Aikman Monterey, Crossley Combination of three carpet mills resulted in eventual formation of Tandus, one of the leading commercial manufacturers. 2000 Hanley-Wood Surfaces World Floor Covering Association secures its financial future via $40 million sale, plus 25-year annual annuity. Berkshire Hathaway Shaw Industries Allowed Shaw to focus on long-term goals rather than month-to-month. Beaulieu LDBrinkman Purchase of industry’s largest distributor put mill in the hard surface business. Dixie Group Fabrica Enhanced position at the upper end of the market. Mohawk Durkan Patterned Carpets Purchase of $110 million company put it squarely in the hospitality sector. Carpet Co-op of America Flooring America Company is renamed CCA Global Partners; became dominant retail group with roughly 2,000 stores under its umbrella. 2001 Mohawk Dal-Tile Vaulted to the top spot among U.S. flooring manufacturers after $1.63 billion purchase. 2003 Mohawk Lees Carpet Acquisition of $250 million commercial broadloom and tile mill broadened contract business. 2005 Mohawk Unilin Company gains domestic manufacturing via new, state-of-the-art facility in North Carolina as well as licensing rights to Uniclic locking system and Quick•Step brand. Shaw Industries Synthetic Industries Purchase of backing manufacturer continued push to be 100% vertically integrated and having total control of its own products. Shaw Industries Honeywell’s fiber division Gained Anso and Zeftron brands; acquired 50% stake in Evergreen Nylon Recycling facility (eventually acquiring full ownership). 2006 Mohawk Propex Purchase of secondary backing plant, coupled with 2005 purchase of Wayn-Tex, fulfills most product mix requirements. Tarkett Johnsonite Gained more commercial market leverage as well as access to Johnsonite’s extensive product portfolio, including rubber flooring. 2007 Shaw Industries Anderson Hardwood Floors Positioned Shaw among top three hardwood suppliers, gaining a line with hallmarks of innovation, styling and quality. Mohawk Columbia Acquisition of key supplier, which included four plants, enabled company to manufacture wood rather than just market and sell it. 2009 Mohawk Wear-Dated Gained one of top three consumer fiber brands, which carries 63% aided recall awareness among target audience. 2011 DreamWeaver Catalina Alliance combines brand recognition of Catalina’s Stainmaster products with value inherent in Dream Weaver’s PET. 2012 Mannington Amtico Acquisition expands Mannington’s global market reach as well as the scope of its domestic manufacturing capabilities. Tarkett Tandus Purchase puts Tarkett into the commercial carpet business in North America and Asia Pacific. Mohawk Pergo Largest flooring manufacturer adds most recognized laminate flooring brand in U.S. and Europe to its portfolio for $150 million. 2013 Mohawk Marazzi $1.5 billion acquisition gives Mohawk total annual tile revenues of $2.75 billion, making it the world leader in the category. 2014 Haines CMH Space Purchase gives flooring’s No. 1 distributor annual sales of more than $500 million. All Tile Carpet Cushion & Supplies Acquisition vaults All-Tile to fourth-largest distributor with combined sales of $150 million; allows distributor to provide for below the floor. Dixie Group Atlas Adds high-end manufacturer to commercial carpet portfolio that includes Masland Contract. 2015 Mohawk IVC $1.9 billion purchase of fastest growing manufacturer of LVT in Europe positions Mohawk to meet rapidly growing U.S. market. Lexmark Northwest Carpets Strengthens Lexmark’s position in the hospitality market.
30 I July 18/25, 2016 fcnews January the stories Mannington Mills acquires Linwood Manufacturing Co., putting it into the hardwood flooring and 1986 veneering product businesses. The new division will operate under the Mannington Wood Floors moniker. February Felt-backed vinyl flooring and vinyl asbestos floor How Stainmaster became After Joe Maffett resigns as president of World Carpets, John Shaheen is named to tile are among several products that will be affected by the EPA’s plan the industry’s No. 1 brand to phase out asbestos. succeed him. rolling all across America on the Congoleum and Tarkett By Tom McAndrews, former president, DuPont Flooring Division celebrate their same day in early September. As here is the story of out the U.S. The group included the trucks were cruising, a press 100-year anniversaries. T Stainmaster, a story that encompasses the vision, the energy and the courage that consultants with experience from P&G and BBDO. They had spent their year studying every conference in New York’s Pierre Hotel gave the flooring media a confidential preview, followed April propelled those who took mas- facet of marketing, advertising, days later by a similar presenta- Robert Van sive risks to make it more than a promotion (both retail and tion to all of America’s leading Buren is technical improvement in the national) and quality assurance. TV programs and networks named performance of carpet. It is the They had studied many product (“The Today Show,” “Good president and CEO of Azrock. story of how the name came to features, most “feeding” off the Morning America,” CNN, etc.) be—a $10,000 “blind” purchase and America’s leading newspa- The first NWFA from a Philadelphia attorney; of pers (New York Times, Wall Street convention attracts 170 attendees. the men and women who saw Journal, AP, etc.) and magazines. May the chance for a major market The first TV commercial—the Ralph Boe is named breakthrough with, at the time, a “Ricky Plane” commercial, pro- president of Horizon readily available chemical to be duced by the “Pepsi Team” at Industries succeeding Peter Spirer, upgraded by DuPont’s labs; to BBDO—aired during the second who remains turn a short-term product advan- inning of the American League chairman tage into an enduring brand suc- playoffs a week later. This his- and CEO. cess. It is the story of researchers toric commercial began a nation- June like Armand Zanato and Bob al advertising campaign, the size Tarkett unveils Lifetime Inlaid Flooring, billed as Shellenbarger who, with a and intensity of which had never easier to install than strategic planner on my staff— been seen before in the flooring traditional inlaids, hitting Chris Rielly—conceived the first industry—or since. the market with a sense of something The $10-mil- lifetime wear and that would be big- lion budget was product defect warranty. July ger than a product quickly increased LDBrinkman, the Burlington Industries improvement, sig- to $20 million as nation’s largest flooring acquires 92% of Masland, nificant as it was. the telephone distributor, sells its forming the largest carpet carpet and floor In the early fall lines at DuPont mill with $651 million in of 1985, Rielly headquarters in products operation to sales. Two months later, U.K.-based Crowther Frank Greenberg brought Zanato to Wilmington, Del., for $57 million. becomes chairman and the flooring divi- went into melt- CEO of Burlington. sion’s management down. Thousands to present his of calls were com- awareness of this ing from across stain-resist discov- the land asking ery for carpets—a about DuPont’s September technology previ- product break- General Felt Industries ously used by the through in carpet. purchases Color Tile, apparel industry as a dye-resist established Antron trade name. Axtell, my chief lieutenant, which operates slightly under 700 floor covering agent. Unbeknownst to both of The marriage of the newfound and my management team retail stores throughout the researchers, Zanato and stain resist and the finding of consisting of Koepcke, Koch, the U.S. Shellenbarger, but known to this group proved to be an explo- McLaughlin, Stucklik, Carna- Rielly, was the existence of a sive combination. vale, Baucom, DeMirjian, Culley, An NAFCD survey October confidential six-man marketing In November, 1985, I gave Jones, Johnson and Smith assist- shows an increasing The Tile Council of number of carpet mills America launches a team headed by Bruce Koepcke, the go-ahead to make the mar- ed by the army of retail special- are bypassing campaign to promote under the direction of Bob riage and instructed his team to ists of TMG, were crisscrossing distributors American-made tile. Axtell, that had been studying proceed as rapidly as possible to the United States with their for contract the various instruments and commercialization. Exhaustive “swizzle stick” POP promotion sales. methods of consumer advertis- pre-market testing under the displays and their bundles of co- November ing that could stimulate demand strictest secrecy covenants with op advertising funds to further Fieldcrest Cannon, for DuPont’s carpet products; a four leading carpet mills was ini- fuel the marketing blitz. parent company of project that had a pre-authorized tiated. These covert mill tests Within weeks, sales to car- Karastan, agrees to budget of $10 million if the right led, six months later, to a pet mill customers were expo- acquire Bigelow-Sanford. combination of product and moment of decision. nentially exceeding all forecasts, General Electric opportunity could be found. The decision was “go!” Eight and in a truly startling effort, December sells Coronet Monsanto launches Wear- In a truly secret undertaking more mills were added in the DuPont’s manufacturing organi- Industries to CI Dated Gold Label stain- Holdings, headed by that had only six members of my summer of 1986 based on zation began building multi- resistant carpet. former World Carpets senior management fully in the DuPont’s fiber capacity and million-dollar expansions, Armstrong enters the president Joe Maffett. know, the stain-resist technolo- anticipated demand. An intricate working 24/7, breaking all ceramic business via the gy was married to the findings of but massive rollout plan was records of similar construction Mannington’s new Allusions is acquisition of this covert marketing group, orchestrated so thousands of to serve this new demand. billed as offering “dimensional Summitville Tiles. layering” designed to create which had conducted year-long trucks carrying rolls of the new The most senior manage- FCICA offe offers a beginners’ luster and depth. consumer test studies through- certified product would be Continued on page 91 installation school.
32 I July 18/25, 2016 fcnews the stories 1987 February 3M introduces Scotchgard Stain Release, a system the company claims is the first in the industry to March offer combined Abbey Carpet announces soil and stain plans to open 200-plus protection for franchised floor covering carpet. showrooms within the stores of national department store chain Montgomery Ward. The April company says it is the The latest hardwood first time independent trends, according carpet dealers can to the NWFA, are lighter establish shops within finishes and more this type of national chain. narrow widths. May Tarkett launches its 12- foot-wide Lifetime Inlaid flooring system to minimize seams. The mills that Shaw Industries gradually acquired over time made Dave Cicchinelli sense from a strategic standpoint. The purchases not only increased is named the company’s market share, but also added new capabilities. president of Carpetland USA. Dean McKinney is tapped to lead Flex, the industry’s first consumer credit Pepperell purchase was the program. July Collins & Aikman pegs shot heard around the world Charles Eitel as By Bob Shaw, chairman and CEO, Engineered Floors president of its floor covering division. f you go back to 1987 [when I any significant degree. We had a I was president and CEO of Shaw Industries], we basically had a lot of risk capitalists raiding bunch of mills doing between $100 million and $300 million. Ultimately, aside from the textile mills because they had increasing market share, we were large sums of money in their trust looking for consolidation of a department. Pepperell was under mature industry. As much as we siege and had to raise cash. It was wanted to consolidate, DuPont consolidating back into the textile wanted to keep it separated. And business and the WestPoint (car- only when you get large enough October pet) division was something it can you backward integrate into PermaGrain offers the could sell because it was not core the yarn business and extrude industry’s first acrylic- to its business. Bob Shaw your own fiber. We needed to do impregnated product, Tupelo Wood Plank, said Cabin Crafts was our target; it that to compete with the Allieds, to combine color had a good name. That basically to get the growth patterns Wall Monsantos and DuPonts. consistency with moved Shaw Industries into the Street demands. If you asked me 30 years ago November performance. upper end of the carpet industry. I knew very simply there could where consolidation would end David Hartman is named Swedish Up until that time, Shaw had just only be two types of companies: and how many major mills there vice president of company Kährs been a low-cost commodity pro- those that would be acquiring and would be today, I would have told marketing for sets up shop in Mannington’s ducer. those that would be acquired. And you there would be a leader, a California with resilient Throughout all the acquisi- there was no chance Shaw strong second, a weaker third and Ulf Kähr as president. division. tions we made, we never Industries would ever be acquired. a bunch of also-rans. All you have approached mills; they We believed we were the low-cost to do is look at the automotive December approached us. The following year producer, and in a commodities industry. Before the Japanese The Retail Floorcovering Institute changes Armstrong came to us with Evans business the low-cost producer is came in, you had General Motors, its name to the & Black. Armstrong had the always the winner. And no matter you had Ford as the strong com- American asbestos problems and was look- what we advertise, we are in a petitor and Chrysler was the dis- Floorcovering Association. ing to spin off all it could beyond commodities business. tant third. And No. 1 makes three Dennis Draeger is its core business. Like Pepperell, it The consolidation continued times as much money as No. 2 and Armstrong’s new group was consolidating back into its for a few reasons. First, by making No. 3 combined, and that was vice president of resilient. core business. acquisitions you advertise you are about the case in the carpet indus- New divisional vice The reality is there is nothing in the market for more acquisi- try. We were always the low-cost presidents of sales and unique about our industry. As tions. And you have to be able to producer and had done more marketing at Shaw: Randy any industry matures, as it gets afford it. We were the only public backward integrating. We bought Merritt for Philadelphia closer to the GNP, there will company, so we had access to pub- Honeywell and extrusion from Carpets and Don Whitfield always be consolidation, and it’s lic money that others did not. Beaulieu. The more backward for Cabin Crafts. always the stronger buying the Second, there were too many bor- integrating you do, the more Congoleum takes the weaker. And a fast-growing, pub- derline successful carpet mills— added value you generate. The wraps off Triumph, which lic company must get into acqui- those having value, but not gener- more added value, the greater features a high-gloss sitions as well as grow internally ating enough money to grow to capability of controlling the profit. urethane finish.
34 I July 18/25, 2016 fcnews January the stories Frederick Berman, chairman of Benj. Berman, passes away at age 78. 1988 February Dorsett Carpet Mills becomes the first Horizon Industries, like the mythical American carpet manufacturer to extrude its own BCF nylon. phoenix, literally rose from the ashes Roger Hunt is named March executive director By Peter Spirer, CEO of MaxWoods when heated, dispersed water and extinguished Jim Trawick is of the Flex the flames. Both developments came within a year the new president of ack in 1972, a company rose from a disaster of TCA’s misfortune. B consumer Domco’s U.S. division. credit program. to become a storybook success. Forced to discontinue shipping failing carpet Dorsett Carpet Horizon Industries was named for the tiles, TCA sold its tile cutting equipment to a mills becomes the uncanny ability to look way beyond where you can startup venture in the commercial sector called first American carpet see, to find a place of wonder called the horizon. Interface. We changed TCA’s name as well. The manufacturer to Originally, the company was TCA, Tile Company of only things remaining were our building and a develop and extrude its own BCF nylon, the America. Within three years it had become an ash large tax loss to carry forward. The newly named company claims. heap of failed dreams. This little enterprise made company, Horizon Industries, was based on an the first carpet tiles in the U.S., 12 x 12 nylon shag indeterminate future but a very real philosophy. May squares with attached foam rubber cushion. In a word, this philosophy was “dare.” Odyssey acquires J.P. Merchandised as Carpet As the smallest of the Stevens carpet group. in a Carton, every more than 300 carpet Don Finkell is appointed Sears, Montgomery Wards mills of the time (1972), president of Anderson and JC Penney store in Horizon needed to be Hardwood Floors. America sold them. For a noticed. Barwick Carpets, World Carpets appoints year or two TCA squares then the industry’s largest June Bill Waters vice were a retail sensation. manufacturer, had just Congoleum launches president of marketing And then the bottom introduced cut and loop Marathon, its first heavy for all divisions. fell out. technology, made with duty inlaid sheet, marking its entrance The Federal Trade newly designed electron- into the commercial Commission (FTC) decid- ic scroll pattern tufting sheet goods market. ed to check the compli- machines. Desperate for ance of the carpet indus- success, we decided to try with recently enacted roll the dice and buy one regulations passed by of these machines. We Congress, requiring all felt sure that the beautiful August home textiles to pass cut and loop designs Carpet One introduces a the Textile Flammability would stand out among national real estate program, a sales Act. Lawyers from the the pedestrian, base- training plan and its own FTC’s Compliance section grade cut piles, level loop credit card. descended on north tweeds, polyester “splush- Georgia carpet mills, pick- es” and shags. After all the ing up samples and testing turmoil with TCA we Monterrey Carpets is purchased by Larry Jones them to see if they passed the methenamine pill opted to roll the dice to regain lost time. and Kevin Allen. test, the standard established for determining the In hindsight, our act of desperation was the burn spread of a high energy ignitor (the pill) on perfect stroke. We needed a major breakthrough Armstrong announces plans to purchase all outstanding home textiles, including carpet. Few, if any, did. and we got it. Beau Rivage, Horizon’s first product shares of American Olean The industry was in deep doodoo. introduction, was a big hit. With the bravado capital stock from National Lacking the technology to slow the spread or springing from success, we followed up with October Gypsum. extinguish the burning pill, the carpet industry Mystique, Sabra, Le Plaid, Le Mans and Stanton Carpets was a sitting duck, and failures were found from American Folkweave. The more daring our acquires Carpet Distributors of America. the largest manufacturers to the smallest. TCA, designing became, the faster the business grew. being in the latter category and easily identified As it turned out, consumers were starved for Changes at LDBrinkman: Jeff Sills is by its red, white and blue boxes in every chain innovation. When they discovered it they named senior store in every state, was the company the FTC responded enthusiastically. We even made a vice president deemed easiest to prosecute and least able to remarkable pattern (which didn’t sell) based of sales and defend itself. Within a year or so following its on the hippy era LOVE design. Then we intro- marketing; Mike march through Georgia, the FTC lawyers forced duced the industry’s first line of printed animal Klingele is us to recall 15 months of production. When the skin patterns, a blockbuster called Safari. appointed president of the West Coast division. goods was returned, it was sent to the Dalton We had our failures. Sampling a product with December dump to be destroyed by burning. Thus, did TCA little or no financial recovery is risky business. We The Chicago Merchandise DuPont signs a letter of perish in the flames. learned to manage risk by seeking the opinions Mart cancels its retail intent to purchase Note: TCA’s legal defense had to be abandoned of dealers before launching, and then sampling residential market for Hercules’ olefin carpet January, citing a shift in fiber business. The move when it became financially unable to continue the only a small percentage of our customers to test focus to designer/ will more than double fight. Two prodigious events followed: The reaction before going full blast. specifier. DuPont’s olefin fiber large companies whose carpets failed to pass the By 1980 we had passed Barwick in size and capacity. “pill test” banded together and sued the FTC, using were among the top 10 carpet mills. In 1983 we Milliken improves its TCA’s exact claim, namely that Congress had not went public, and in 1992 we became successful Capture given the Federal Trade Commission the authority Mohawk’s first acquisition. Our high-risk philoso- dry carpet cleaner. to recall. TCA’s lawyer, Dick Gimer, was retained phy hadn’t changed, but we did manage to slip in by these major mills to press the case. He won, some commodity products to pay the light bill. hands down. Secondly, latex chemists developed a Moral of the story: Follow your instincts sure cure for extinguishing the methenamine pill, unless (or until) they lead you up a blind alley. a chemical known as aluminum trihydrate, which, Then, throw the Hail Mary pass.
42 I July 18/25, 2016 fcnews January the stories Bob Van Buren is named president and CEO of Azrock while continuing in his role as 1992 president and CEO of Domco. February American carpet mills have been ordered by the How Carpet One blossomed Canadian Department of National Revenue’s customs and excise branch into the premier retail group to pay anti-dumping duties between 5.3% and 5.5% on By Steven Feldman together and have some prod- in, and they all said yes.” March all product sold into ucts together.” The premise presented to More than 2,500 retail- Canada. ers, contractors and (Reprinted from the Carpet One It was a different time back these 11 retailers was relatively designers attend Expo Shaw’s purchase of 25th anniversary issue, published then. “Home centers were just simple. Running a successful East ’92, an industry Salem Carpet Mills will by FCNews in 2009.) becoming a factor. The industry carpet store was likened to an tradeshow put on by push the company over was fragmented. There were equilateral triangle with the Floor Covering News at the $1 billion mark in he vision was to build a co- 400 mills. At the time $200 mil- three sides consisting of buying, the Meadowlands Convention Center in New Jersey. annual sales and give it a market share of approximately 31%. T operative where floor cov- ering retailers could achieve the same market advan- lion was a huge mill. The mar- ket share of the largest mill was just 2%. So I think we saw an management and marketing. On the marketing side was direct mail, television, radio and print. tages as the national chains. The opportunity.” Under buying was purchasing mission was to formu- more competitively late a plan that would and private labeling. combine marketing Management centered May with buying power and on all facets of training. BASF files for a patent management tools. The “From day one, we that will allow it to result was Carpet One. believed strongly that if recycle carpet made with nylon 6 by depolymerizing It was 1984 when we only focused on the fiber into reusable Howard Brodsky and buying we weren’t caprolactam, its Alan Greenberg, friends going to help anybody,” original monomer. from their days as influ- Brodsky said. “If all we ential members of the did was management, Retail Floorcovering then we couldn’t get Institute (RFI), began the margins we want- thinking about what ed. We knew we had to would formally be leverage all three— July launched as Carpet Co- including marketing— Carpet One starts Carpet op of America. Their together. All three had One University, a target was aggressive at to be working together comprehensive training the outset but rather modest in Brodsky and Greenberg simultaneously.” ‘ program that tours the hindsight: 330 retailers. Not in began to do their homework. country in an effort to educate and their wildest dreams could they First, they met with each other The early days motivate have ever imagined a meeting and started listing things that Sandy Mishkin, the only presi- salespeople. August with 11 other retailers in would be part of the concept. dent Carpet One has ever known Mohawk purchases Horizon January 2005 spawning inar- Next, they looked at other and one of the industry’s greatest ’ Fabrica starts listing Industries for $86.5 guably the most powerful retail organizations that had some negotiators, was a key compo- square-foot prices next million. With combined flooring entity, a group that col- similarities. nent from the start, convincing to square-yard prices sales of approximately $630 million, Mohawk lectively sells more than $4 bil- Then they started talking to the mills to sign on. It wasn’t in an effort to end consumer confusion becomes the industry’s lion annually. experts from other industries easy. Many of the mills did not about price and second largest carpet mill. The story is one for the like Larry Zehfuss, CEO of the see a group of dealers getting quantity needed. The industry debates the Harvard Business merits of fiber companies’ School: How to build a strategy of selling what would normally be successful co-op. The At the time $200 million was a story is also an unlikely October branded fibers to mills as one. Greenberg had left huge mill. The market share of unbranded goods. DuPont’s Partnership for his family business, Tile the largest mill was just 2%. So I Carpet Reclamation is Town, to launch Sun launched. This network of Carpet in St. Louis. think we saw an opportunity. companies will work Brodsky’s Dean’s Carpet together to collect and —Howard Brodsky distribute post-consumer in Manchester, N.H., Co-founder, chairman and co-CEO, Carpet One carpet products. was the typical All- Lees Carpets launches American dealer. But together, ServiStar hardware co-op. “We together as positive for them. So Lees for Life, which November they were as good as it spent an afternoon in Butler, Carpet One did what anyone features a patented The industry blasts the gets. “Alan and I built a great Pa., trying to understand the would do—it phoned a process that allows CBS Network after fea- friendship,” Brodsky told idea of a co-op. We came away friend. “The original mills were products to resist turing a segment con- FCNews. “We were both presi- with the feeling that this would personal, close friends, and stains for the life of cerning the carpet. dents of RFI. Then we were co- be a great concept for us.” that’s who sold us,” Brodsky said. the effects of carpet and IAQ, stemmed from chairs of the Billion Dollar From there Brodsky and “Doug Foster of Salem and Don December Anderson Labs reports Carpet Sale. That was the first Greenberg started to formalize Mercer of Mohawk were the Congoleum and Amtico that have been denounced event we did together, and we the business plan. “We put our early supporters. We wanted to merge with Roger Marcus by the industry and other knew a lot of dealers around the concept together and invited 11 get some private-label lines and named president and CEO. experts. country. After that was success- people to Atlanta, friends we a better discount than what was The flooring industry’s Hoechst unveils Trevira ful, we started strategizing: knew from different parts of the being offered to the market. We Hall of Fame is One, an all-polyester What would happen if we got a country, and all we had was a were able to get a pretty wide- announced with carpet system that is completely recyclable. group that would buy together, flip chart of the concept. We ranging collection that we 11 people named as market together, advertise asked them if they wanted to be branded Carpet One.” inaugural members.
44 I July 18/25, 2016 fcnews January the stories The 65-store chain Carpeteria is expanding its Western regional presence by opening 1993 stores in Arizona, Colorado and Texas. How Tarkett took aim at Circle A GOAL WAS TO PROVE ITSELF AS AN ALTERNATIVE TO ARMSTRONG March THROUGH PRODUCT DEVELOPMENT AND MARKETING Mohawk purchases American Rug Craftsmen for $20 million. like I did. I got a lot of hell, but I By Ingvar Backhamre, former CEO, Tarkett Inc. A storm that dumps learned from it. 24 inches of snow causes t was 1981 when I left that there was no one in the We developed products April DuPont introduces three branded fibers— the roofs of more than 50 carpet mills within a 30-mile radius of Dalton to collapse. Most mills I Sweden, the country I called home throughout my entire life, to become CEO of North industry who had read any of these studies. But we knew about it. We followed all the where we could prove they were better than Armstrong’s. That’s because we could never follow Stainmaster Plus, are back to full operation American operations for the Armstrong in their strategy. studies about asbestos. I felt we MasterLife and Grand 10 days newly formed Tarkett, Inc. could not continue to produceThey spent tons of money in Luxura—that will be used after the Tarkett had just acquired with asbestos when workers onconsumer advertising. If we by only 18 mills. The storm hit. GAF’s worldwide flooring busi- tried to copy them it would have the floor could get sick. So this company also announced ness for $56.6 million because decision was the right thing been suicide for our company. the formation of the DuPont MasterStore we needed a distribution net- We did, however, do enough from both a strategy and moral concept with the ultimate May work in the U.S. The company point of view. consumer advertising to keep goal of having between Tarkett goes head-to-head was so badly managed in both Without any question, ourthe distributors somewhat 2,000 and 3,000 locations. with Armstrong’s Corlon the U.S. and Europe, and we best product development was happy. line. Ingvar Backhamre, Tarkett’s president and were the only company in the non-asbestos. Carl Sempier (the Instead, we chose to spend CEO, debuts a gun-slinging world willing to purchase both former CEO of Mannington) our money in trade advertising. cowboy outfit in making businesses. They could not sell said to me at one point, “YouWe had more trade advertising June the announcement. their European business; we than Armstrong, Mannington or saved the entire industry from Mohawk signs an were the only one willing to take Congoleum. It was through complete disaster.” If I did not agreement for $140 million with it on because we knew how to trade advertising where we chal- take action in the asbestos area, Fieldcrest Cannon to correct it. lenged Armstrong. things would have continued as purchase its Karastan Their strategy in the U.S. was they were for another five to We were specific. We chal- Bigelow carpet unit. July a complete disaster. They had no lenged them one area at a time. eight years. I can’t imagine how Karastan’s $236 million unique products. The profes- much more damage would have The only way to do it right is to Kentile Floors will no in annual sales will longer produce residential sionally installed segment was been done. As of September have credible, independent, fair push Mohawk ahead of resilient flooring. the most important business. 1981, we did not produce withtesting. No Mickey Mouse test- Beaulieu into the No. 2 spot among carpet But it was not a priority for GAF. asbestos. ing. And after that you must mills with $835 million. They did not spend on product Then I studied Armstrong.keep referring to those tests. August Shaw continues its development and had no mar- How does a disaster company What Armstrong didn’t expansion in the U.K., by keting strategy. They could not like GAF compete? Armstrong purchasing Abingdon develop a marketing strategy was great in many areas, Carpets. Combined with because they didn’t have the but I particularly its recent acquisition of products. What they would do is applaud their mar- Kosset Carpets, Shaw is give distributors a 3% discount. keting strategy. September considered to be the George Lorch is elected largest seller of carpet in That is a stupid strategy. One weakness: president and CEO of the U.K. When I took over, I had to They had not Armstrong World Mannington changes at change everything. The first developed enough Industries, replacing the top: Scott Smith, thing I did was analyze our com- new products in the William Adams, who chairman and CEO, has petitors. At the time, Armstrong last seven years. So we remains chairman. resigned after 18 years was by far the largest manufac- put a lot of resources with the company. Tony turer of vinyl in North into product October Kelly, COO, will assume Smith’s CEO duties. America—and the world—and development. The EPA is unable to we were the largest in Europe We took our Ingvar Backhamne independently replicate the Meanwhile, Keith finding of Anderson Campbell has been and second largest in the world. best man from president & CEO, Laboratories concerning named executive vice As such, we had no interest in E u r o p e , Tarkett, Inc. carpet emitting toxic fumes. president and Ed Duncan positioning ourselves against brought him senior vice president of Shaw’s much anticipated marketing. Mannington or Congoleum. We over and invest- TrustMark retail wanted to position ourselves as ed in product development. program hits the street the alternative to Armstrong, a I had meetings every other with an initial offering November very fine company that I have week in Whitehall. I guided of 150 residential styles. Ed Weaver, chairman and always respected. the team product by prod- The mill sets a goal of CEO of Diamond Rug & 2,500 U.S. retailers to My only way of accomplish- uct, and what I expected Carpet Mills, dies of a buy into the full- heart attack at age 48. ing that goal was to generate them to develop. If you disclosure program. some good attention. Everyone challenge people they will Charles Eitel is new CEO was neglecting us. GAF had no respond. of Interface. December power. Everything they were I traveled more than my Mohawk’s purchase of selling was on discount. So the competitors. I knew where we Aladdin Mills for $386.5 first area where I really made were weak and where we were million sets an industry record as the highest noise was with asbestos. strong. Customers will tell you, amount paid for a mill The interesting thing is sev- and I wanted to know. I visited acquisition. The purchase eral analyses in the market about retailers who we had business will push Mohawk’s asbestos were all from the U.S. I with and those who we did not. annual sales to more than had a problem understanding No one traveled in the market $1.3 billion.
fcnews July 18/25, 2016 I 45 know was that I re-hired the mar- knew American law keting director I as well as my com- had fired. He was petitors. They said bluffed into giving we will take you to a proposal to that court. I said you major distributor. could do that, but if That distributor you want to get rid of went back to his my ads, the best way current vendor. is to convince me I’m Word leaked out wrong. Then I will and distributors drop my ads and lost confidence apologize. If you and didn’t want to can’t do that then it is invest. none of your busi- The most ness. Then I would important things ask if they had in- about being a man- house lawyers. I told ufacturer are R&D them in-house and marketing. If lawyers are not the best in the Armstrong product after prod- focus on marketing. Stupid. And up with Tarkett. My first you don’t have the products, and marketplace. I had Rudy uct, the press asked if I was will- when it comes to distribution, if thought was are they serious or you can’t copy the market leader Guiliani as my lawyer. This was ing to meet Armstrong. Where? you lose a distributor you can- are they going to go back to because of economies of sale, before he became mayor of New I suggested the O.K. Corral not wait one year to appoint their present vendor and press you must be better in some key York. He is a wonderful man. because that is the best-known another. What happens with a them for concessions. So I was areas. For us, eliminating Rudy and I speak the same lan- Western. Life is too short. That dealer base? They go to some- dragging my feet. Eventually I asbestos was critical. guage. So the very last meeting I Clint Eastwood ad may have one else. said, “I cannot legally terminate I moved back to Sweden in had with them they offered me a been a little provocative, but it Another issue I remember: five distributors in your area 2013 after 32 years in the U.S. We compromise. I turned this down. was just another way to have a There was a big distributor in and give the line to you.” He said stayed much longer than I had Armstrong is a very fine com- little fun. the U.S. who handled vinyl for a he was still interested. Then I planned. I love the United States, pany. They would not have been competitor. He came to me and knew he was just playing us. but it is nice to be home again the biggest in the world if they Passing the torch said they were thinking of lining When I left Tarkett they had with old friends and family. were not very good in many I retired from Tarkett in areas. In my ads I never said they 1997, and the company has were bad. I just said in some struggled to achieve the level of areas we were better. For us to be success we enjoyed in the 16 trusted by the retailers, we need- years I served as CEO. I am ed to prove we had several prod- often asked why. I would say I ucts better than Armstrong’s. We was very independent within got so many more retailers Tarkett. I was not only CEO for because of those ads. Tarkett Inc., but I was executive Everyone thought we were vice president for the whole going after Armstrong. That was group for more than 10 years. If not true. We were just out to you take the market strategy in position ourselves as an alterna- U.S., I did it by myself. We went tive to Armstrong. You must from a losing company in North have a very simple message for America to become the most the market. So we never tried to important company profit-wise badmouth them. We never tried within Tarkett worldwide. to say they had bad products. We I did it very differently than just tried to say in some areas we Europe. Their consumer busi- were better. We had no hard ness in Europe was not good. feelings toward Armstrong. They They were selling vinyl as a were the best in the industry. commodity business based on One of those products was thickness. My boss came over Lifetime Inlaid Flooring, which from Europe and asked me we positioned against their suc- about the thickness of some cessful Solarian line. It was a dif- products. I said it was irrelevant. ferent kind of inlaid, and it was He was mad at me. Everyone 12 feet wide where we eliminat- talked about thickness. It was ed most seams. If there was one stupidity. problem with Solarian it was The management from seams. Our product was also bet- Europe after me messed things ter in wear tests. It beat Solarian up. Do you think they wanted to by far. ask for advice from the previous People also remember the boss? They didn’t understand trade ad I once ran with me how it works in America. wearing a black cowboy outfit Everyone here got it right: holding a couple of guns where I Armstrong, Mannington, challenged Armstrong to “make Congoleum, us. We stressed it my day.” You know, we must even more with our product have some fun, too. I found the development. Europe focused flooring business boring. They on construction. It was like hav- were no fun. When I challenged ing an engineer come in to
46 I July 18/25, 2016 fcnews the stories 1994 February An estimated 29,000 people turn out for Surfaces ’94, officially marking it as the industry’s national show. A new “floating floor” lands in U.S. Italy’s Abet Laminati debuts a high-pressure decorative laminate to the U.S. builder market. April Domco buys National Flooring Products Co. (NAFCO) to bolster its residential tile business. May Color Tile, the nation’s largest specialty retailer, has added carpet to its product mix as soft surface sales are greatly June outpacing the rest of the Dixie Yarns will purchase industry. Patrick Carpet Mills. Primarily a high-end commercial mill, the West Coast company had sales of approximately $20 million in 1993. Queen Carpet acquires Tuftex Industries, the July Recycling is the buzz word at NeoCon ’94 as the Coming to America: second purchase of a West Coast mill in a week. A&D community starts showing a big interest in environmentally friendly The Pergo phenomenon Diamond, Dixie, options. Interface, Mohawk, By Jim Gould, president, Floor Covering Institute Queen and Shaw are among the carpet mills n the 1980s, in the small for foreign manufacturers. In I Maxim acquires GCO Carpet subpoenaed by the U.S. Outlets for an estimated Swedish town of Perstorp short order, Misco had a new Justice Department in a $10.5 million. The purchase federal antitrust probe. Village, a laminate countertop product and DSI had a new gives Maxim access to the cash-and-carry business. manufacturer began experi- client. menting with laminate that Pergo’s president, Lars von August could be used for flooring. Kantzow, had only recently been Pergo laminate is now From its production facility hired away from Cricket Lighter, available in the U.S. The in Trelleborg, Sweden, Pergo was a division of Gillette (formerly a national rollout of its revolutionary floor is launched into Austria, Germany, division of the Swedish Match being led by France and Scandinavia, where it Co.) where he had proven his Color Tile September was an immediate hit. ability to capture market share and Carpet Chris Davis is named With momentum behind it with a new product. As we dis- One. executive director and and looking to broaden its mar- cussed his challenges, it became Lars von Kantzow CEO of the Western Floor ket, Pergo took the product to evident he was committed to Covering Association in Domotex Germany, Europe’s understanding the industry and It took awhile to organize all preparation of its merger with the American largest floor covering show. That doing whatever it took to make the pieces before the launch. To Floorcovering is where, in 1992, Paul Murfin Pergo succeed. To head up U.S. guarantee sales and recruit dis- Association. (now CEO of IVC) and I stum- marketing and advertising, Lars tributors, one-year exclusive October Close to 200 installers from bled upon the Pergo exhibit. hired Bill Dearing, previously agreements were signed with Industry mourns the around the country come to Paul and I were at the show look- director of U.S. sales at Cricket Alan Greenberg for Carpet One passing of Harry Saul, Kansas City, Mo., for the ing for new wood suppliers for and currently president of the and Larry Nagle for Color Tile. founder of Queen Carpet first-ever convention of the Misco Shawnee, my Midwest North American Laminate With retailers in place, Lars and philanthropist. International Certified He was 85. Floorcovering Installers distribution company. Pergo Flooring Association. Other recruited a network of the best Association (CFI). piqued our interest. The members of his Cricket team wholesale distributors in installed planks looked like eagerly rejoined their leader. America. Without established wood but something about it Timing for a new product in competitors in the market, November Western Solutions, a was different. Little did we know the market could not have been enhanced profit margins for dis- division of E.T.C. Carpet then how the chance discovery better. Consumers and retailers tributors and retailers sweet- Mills, is the first carpet would change our lives and the were tired of the same products ened the proposition. Prices and manufacturer in the U.S. industry. with their worn appearance and margins held firm while the con- to say it will make all its We learned that Pergo could maintenance problems; retailer sumer benefited from a new products out of not launch in the U.S. market and distributor profit margins product with improved perform- December recyclable nylon fibers. had been squeezed to a mini- ance. Mohawk purchases because it lacked the infrastruc- Galaxy Carpet Mills from ture: warehousing, logistics, mum as flooring categories When Pergo launched in the Peerless Carpet Corp. sales force and internal opera- became commoditized. U.S., Misco was the first distrib- for $42.4 million. tions. Ironically, two years earli- Everyone was ready for some- utor and my company DSI was er I had created Distribution thing new; Pergo had the prod- the machine behind the curtain Services Inc. (DSI), specifically uct and the management, DSI taking orders, warehousing and to handle logistics in America covered their logistics stateside. processing claims. Everyone
‘ fcnews July 18/25, 2016 I 47 ’ dialing 1-800-PERGO reached a DSI/Misco As one very close to the operations of earlier DPL products. original distributors. employee who Competitors introduced While today the DIY market answered, “Thank you of Pergo, I watched Lars von Kantzow beveled edges, embossed-in-reg- represents more than 60% of for calling Pergo.” orchestrate sales, advertising, marketing ister designs and glueless instal- laminate sales, back then the Orders shipped from lation systems. The family that decision to sell to big boxes was DSI’s Pergo inventory and operations with wizardry. controlled Perstorp chose not to questioned and criticized. to distributors across immediately respond by invest- Today, Pergo lives on as a divi- the country, and —Jim Gould, ing in new equipment, and sion of Mohawk Industries president, Floor Covering Institute Carpet One and Color Pergo fell behind as a conse- joined by its once archrival, Tile exceeded every- inate what had become an Harvard School of Business. quence. A decision to sell direct- Unilin. Lars von Kantzow is the one’s—except Lars’— entirely new flooring category. Competition introduced less ly to Home Depot in hopes of CEO of the highly successful expectations. Post mortem: The fate of expensive direct pressure lami- keeping competitors out of that Nomaco, the world’s largest pro- Customer satisfac- such a highly successful compa- nate (DPL), overcoming limita- channel broke the support and ducer of synthetic bottle stop- tion and service were ny could be a case study at the tions in design and performance confidence of many of Pergo’s pers for wine. paramount to Pergo. The company flew in as many pallets as nec- essary to fill orders when a SKU sold out. If an installer did not follow the installation instructions, and sub- sequently caused a failure, Pergo supplied new material free of charge. Since 80% of claims were installation related, Pergo started training installers. Later, certified installers were required or the warranty was voided upon installation. Most importantly, Lars understood how to build a brand in a brand-starved industry. Inheriting a name that was more reminiscent of spaghetti sauce than flooring, the company gam- bled millions in a sustained, multi-year advertising cam- paign, wisely spending $10 mil- lion a year in shelter magazines, industry press and general pro- motions. The impact was equal to some corporations spending in excess of $25 million per year. Paid advertising was enhanced by consumers enthusiastically telling their friends about their exciting new floor. Word of mouth spread the news more effectively than purchased advertising, an early example of “peer reviews.” A simple retail display with a high heel and a challenge to con- sumers to try to dent the floor effectively demonstrated the Pergo story. Mrs. Consumer watched in amazement as the salesperson calculated the cost of the project with a magic marker on the Pergo plank then easily wiped the board clean. Smokers watched a demo of a lighted cigarette that did not mark the floor. As one very close to the oper- ations of Pergo, I watched Lars orchestrate sales, advertising, marketing and operations with wizardry. By 1996, Pergo began to manufacture flooring in Garner, N.C., continued to dom-
48 I July 18/25, 2016 fcnews January the stories Industry stalwart M.B. “Bud” Seretean is app- pointed chairman of The Maxim Group, succeeding 1995 Richard Kaplan. Jeff Lorberbaum is named president and February COO of Mohawk Karastan becomes the Industries while first licensee of the retaining his new Wools of responsibilities as New Zealand president brand. and CEO of the Aladdin division. April Stanton Carpet purchases Royal Dutch Carpet Mills. May Minnesota forms the Carpet Recycling Program, CA-RE through United Recycling. This is the forerunner to the industry’s Carpet America Recovery Effort founded in 2002. Shell Oil enters How Armstrong’s ‘Quest’ for floor space June Countertop heavyweight Wilsonart announces its the flooring industry with a new fiber paved the way for laminates entry into the flooring named Corterra. The industry with a branded company says the poly By Reginald Tucker ates and consumers alike. of the Quest merchandising pro- line of laminate flooring. trimethylene terephthalate “The idea was to give the gram. With Armstrong-branded (PTT) polymer exhibits the t was really about pre- specialty retailer permission to resilient flooring products and best characteristics of nylon and polyester. July “I senting fashion to the floor covering retailer at a time when many companies feel more comfortable about being in the interior fashion business,” said Qualls, who for 17 signature collections gaining more prominence within home centers, the company needed a were not really doing it. That years managed the residential way to address the rising chan- Perstorp, maker of Pergo was the mindset driving that and commercial flooring brand nel conflict caused by the unrest laminate flooring, announces it will break whole system.” strategies at Armstrong. As she that was brewing among inde- ground on a manufactur- That’s according to Sherry explained: “Everyone at pendent specialty retailers who ing plant in Raleigh, N.C. Qualls, a former advertising and Armstrong felt it was really struggled to compete head-to- August Wunda Weve is acquired marketing executive with important that we didn’t differ- head with the big boxes on the Kentile, at one time the by World Carpets. The Armstrong World most well-known brand of purchase comes as Industries, reflecting on resilient floors, ceases Wunda Weve filed for operations. the concept behind the Chapter 11 bankruptcy “Cotton’s Future in Floor protection. development of the Covering” is a one-day infamous Quest seminar held in Dalton by resilient floor covering Cotton Inc. as the merchandising system organization makes a push that Armstrong official- to bring the fiber back to ly launched in 1995. the industry. October Primarily devised as a Armstrong sells its Carpet One enters the American Olean tile wholesale business with means to squeeze com- division to Dal-Tile the opening of Distribution peting hard surface International. One in Dalton. products off the show- room floor, observers say it actually resulted November Dick McAdams, founder of in more space being Georgia Carpet Outlets devoted to laminate The quest display system with all its (GCO), has stepped down flooring, then an up and components. as president and CEO. He coming category. will continue to serve as Massive and bold in its pres- entiate between resilient and same branded products. chairman and remain on December board of Maxim, GCO’s entation, the Quest display laminate flooring as much as we “Yes, that was a very impor- Armstrong unveils Quest, parent company. claimed to be the first such sys- wanted to reinforce the fact that tant strategy, obviously,” Qualls the most comprehensive LDBrinkman, the tem to utilize large-scale, free- we were giving customers a vari- recalled. “There were a number program in company standing samples and the first of ety of choices in a display system of products, especially lami- industry’s largest history, to roughly 1,000 its kind to incorporate actual that was beautiful as well as nates, that were finding their distributor and retail distributor, has thrown its guests in Orlando, Fla. hat into the laminate ring room-scene photography on the functional. The goal was to take way into the big box retail loca- by becoming the exclusive reverse side of those samples. an elevated approach to the tra- tions. In those days it was very The management group wholesaler of Fibo-Trespo that purchased JPS The system was also built on a ditional retail presentation.” important to Armstrong to in its 34-market territory. Carpet Corp. from JPS Fibo would ultimately good/better/best platform that But that was only part of the make sure there was a very Textile renames the become Alloc. appealed to retail sales associ- reason behind the development clear differentiation, and one of company Gulistan.
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