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Solid Ground: State of the Wood Flooring Industry 2014

Kim Wahlgren Headshot
photo of a tree

photo of a tree

 

"The market is finally rebounding from the deep recession." That's a direct quote (and typical answer) from one of the distributors answering this year's HF State of the Industry survey, which we conducted online in January. The quote demonstrates just how deep and painful the recession was for the wood flooring industry, given that the official bottom of the Great Recession happened almost exactly five years ago, when the Dow Jones Industrial Average hit its rock bottom of 6,594.44 on March 9, 2009 (as of press time for this issue in mid-March, the Dow was around the 16,000 mark).

Comparing other statistics from then and now illustrate just how far the economy has come. Total housing starts in 2009 were 553,900, while in 2013 they had rebounded to 926,800, still buoyed by historically low interest rates but nowhere near the 2005 peak of 2,068,100 (a chart showing housing starts can be found on page 68). In 2009, an astounding 83 percent of wood flooring distributors said their business had decreased compared with the previous year; this year more than 86 percent said their business had increased. The median square footage sold by wood flooring distributors surveyed in 2009 was a paltry 392,000; the median for distributors answering our survey this year had more than doubled to 950,000.

Beyond the statistics, intangibles demonstrate the solid ground for the industry in 2014. The mood at the Surfaces trade show in January was markedly more positive than it had been in recent memory, and the show floor was busy. Instead of a steady stream of news about businesses closing, companies are expanding or adding workers or both, and there is a continual stream of new job openings posted on the HF website.

To see all the good news from our 2014 survey, in which we asked wood flooring manufacturers, distributors and contractors how their businesses are faring and much more, turn the page.

 

In January an online survey was sent to all NWFA-member wood flooring manufacturers. Here are the results.

 

2013 Results*

Manufacturers say their sales (in dollar volume) in 2013 were…

Hf0414 Housepie1

Last year:

  • 12% up dramatically
  • 35% up somewhat
  • 39% about the same
  • 12% down somewhat
  • 4% down dramatically

Raw Material Costs

Manufacturers say the prices they paid for raw materials in 2013…

Hf0414 Housepie2

 

2013 Prices

Manufacturers say wood flooring prices in 2013…

Hf0414 Housepie3

Last year:

  • 4% increased dramatically
  • 35% increased somewhat
  • 42% stayed the same
  • 19% decreased somewhat

Future Pricing*

Manufacturers expect prices in 2014 to…

Hf0414 Housepie4

* Numbers may not add up to 100 percent due to rounding.

 

2014 Predictions

Manufacturers think business in 2014 will be…

Hf0414 Housepie5

Last year:

  • 89% somewhat better
  • 12% stay the same
 

Lumber/Flooring Prices Since 2002

Hf0414 Chart1 Hf0414 Chart2

 

The Biggest Threats*

Wood flooring manufacturers answered that their biggest threat is:

Hf0414 Housepie6

Last year:

  • 42% the economy
  • 23% political climate
  • 12% other
  • 12% competing Asian manufacturers
  • 8% competing American and Canadian manufacturers
  • 4% competing floor coverings

* Numbers may not add up to 100 percent due to rounding.

Lacey Opinions

Do you agree or disagree with the Lacey Act?

Hf0414 Housepie7

 

2013 Changes

  • 4% Reduced production
  • 46% Increased it
  • 25% Reduced staff
  • 39% Increased staff
  • 18% Reduced marketing/advertising
  • 54% Increased it
  • 21% Reduced # of SKUs
  • 43% Increased SKUs

Should LEED Change?

Should the LEED green building program recognize other wood flooring certifications besides FSC?

Hf0414 Housepie8

 

In January, distributors filled out surveys about their business in 2013. Approximately 90% of wood flooring distributors who responded said they specialize in wood flooring; 10% were general floor covering distributors.

2013 Sales

Distributors say the dollar value of their wood flooring sales in 2013...

Hf0414 Housepie9

Last year:

  • 68% increased
  • 19% stayed the same
  • 13% decreased

Changes in 2013

  • 3% Reduced staff
  • 48% Increased staff
  • 10% Reduced the # of lines carried
  • 55% Increased the #
  • 7% Reduced marketing/advertising
  • 45% Increased it

Species Sold

Hf0414 Housepie10

Last year:

  • 37% red oak
  • 24% white oak
  • 14% other domestics (including pine)
  • 10% maple
  • 5% birch
  • 5% other imported species
  • 4% Brazilian cherry
  • 1% American cherry
  • 1% bamboo

What They Sold

Hf0414 Housepie11

Last year:

  • 37% unfinished solid
  • 42% prefinished engineered
  • 19% prefinished solid
  • 2% unfinished engineered

How they sell:

31% of distributors said they had sold some products online in 2013.

Exotic shift?

Five years ago distributors answering our survey said 19% of their sales were exotics. This year those combined numbers totaled only 6%.

 

Finish Sold

Hf0414 Housepie12

Last year:

  • 40% water-based
  • 39% oil-modified
  • 3% conversion varnish
  • 1% moisture cure
  • 1% wax
  • 10% oil (such as tung oil)
  • 7% other

What is the biggest threat to your business? Distributors said:

  • 34% The economy
  • 21% Competing floor coverings
  • 17% Manufacturers selling direct
  • 10% Big-box stores
  • 10% Other
  • 7% Government regulation

Threatened by Liquidators

We asked distributors if their business had been affected by liquidators (such as Lumber Liquidators). They said:

Hf0414 Housepie13

"Their high advertising budget promotes uneducated customers putting a higher value on price over quality, which often leads to disappointing results."

2014 Outlook*

What is the outlook for 2014? Distributors answered:

Hf0414 Housepie14

*None answered "somewhat worse" or "dramatically worse."

* Numbers may not add up to 100 percent due to rounding.

 

Regarding big boxes:

72% said their business had been affected by big box stores such as Home Depot and Lowe's

28% said it had not

(Last year 61% of distributors said big boxes had affected their businesses.)

 

 

In January, contractors filled out surveys about their business in 2013. Approximately 94% of them said they specialize in wood flooring; 6% deal with general floor coverings.

Species Installed*

Hf0414 Housepie15

Last year:

  • 44% red oak
  • 23% white oak
  • 11% other domestics
  • 11% maple
  • 4% Brazilian cherry
  • 3% other imported species
  • 3% bamboo
  • 2% pine

Finish Used

Hf0414 Housepie16

Last year:

  • 42% oil-modified
  • 45% water-based
  • 5% conversion varnish
  • 1% wax
  • 1% moisture cure
  • 4% other
  • 2% oil (such as tung oil)

Biggest Challenges

What is the single most important issue affecting your business specifically?

Hf0414 Housepie17

Last year:

  • 53% increased competition/lowball pricing
  • 24% lack of demand
  • 12% government regulations
  • 11% lack of competent workers
  • 2% other

2013 Sales

Contractors say the dollar value of their wood flooring sales in 2013...

Hf0414 Housepie18

Last year:

  • 35% increased
  • 38% stayed the same
  • 27% decreased

* Numbers may not add up to 100 percent due to rounding.

Where They Buy

(more than one answer possible)

  • 86% of contractors said they buy wood flooring and related products from a specialty wood flooring distributor.
  • 32% buy from a general floor covering distibutor
  • 30% buy direct from a manufacturer
  • 17% buy from a big-box retailer
  • 6% buy from Internet-only retailers

Looking at Liquidators

We asked contractors if their business had been affected by liquidators (such as Lumber Liquidators). They said:

Hf0414 Housepie19

"I am always optimistic, otherwise I would not be in this industry."

"People often want to compare prices of the premium product with [liquidators] … they do not offer customer education, and yet most consumers do not find this out till it is too late."

They Install ...

Hf0414 Housepie20

Last year:

  • 59% unfinished solid
  • 19% prefinished solid
  • 18% prefinished engineered
  • 4% unfinished engineered

2014 Outlook*

Hf0414 Housepie21

* Numbers may not add up to 100 percent due to rounding.

Building vs. Remodeling

Hf0414 Housepie22

Last year:

  • 77% remodeling
  • 23% new home construction

Install vs. Sand/Finish

Hf0414 Housepie23

Last year:

  • 52% wood flooring installation
  • 48% sanding/finishing/refinishing

 

Construction Types

Hf0414 Housepie24

Last year:

  • 42% basement
  • 31% slab
  • 27% crawl space

 

 

Housing Data

Hf0414 Chart3

 

 

Hf0414 Chart4

 

 

Hf0414 Chart5

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