Brian Carson (left) and Don Finkell
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Brian Carson (left) and Don Finkell
For American OEM’s part, founder Don Finkell was looking to take some of the larger responsibilities off his shoulders in order to focus on what he loves most about the business: product innovation.
"My innovations have not been in distribution or new ways to sell stuff, it's always been around product,” Finkell says. “It's what I enjoy doing. The last couple of years have been difficult with COVID and everything else, and now you've got trade problems, you've got raw material shortages and that's a lot to deal with. AHF has got a lot of resources to put behind what we're doing. So it just seemed like a good time to do it.”
AHF Products, meanwhile, was on a search for more product innovation and ideas, and was well aware of Finkell and his team’s reputation for both, says AHF President and CEO Brian Carson.
American OEM had numerous product ideas they wanted to bring to the market, but with factors like the current state of supply chains, such endeavors today cost “an immense amount of money,” Carson says.
“So this was a unique circumstance where they had wonderful ideas ready to go, and they could benefit with some financial resources to invest in those ideas, and we were looking for ideas that we could invest behind to grow the business,” Carson says. “So it was a perfect match."
The acquisition—announced last week—included all of American OEM’s brands, among them Emily Morrow Home, Hearthwood and Raintree. Raintree—a wood on SPC product Finkell developed with his daughter and executive VP, Allie Finkell—is a new category for AHF’s portfolio. "As much wood as we've launched, and as deep as we've gotten into that category, we did not have wood on SPC,” Carson says. “And this came with an established brand, established distribution and something that we can grow."
The purchase of American OEM did not include a veneer plant previously owned by the company that AHF did not think was essential to the business.
The purchase did include American OEM’s plant in Only, Tenn., which AHF plans to utilize to bolster its domestic manufacturing capacity. It is AHF’s eighth flooring plant worldwide and also includes a 360-degree waterproof technology. The American OEM plant is also unique in that it uses prison labor, paying prisoners civilian wages to work at the plant, Finkell says. Currently, the plant is running at about one third of its full capacity, and there are plans to increase its production.
“There are probably some tweaks to give it either some new capabilities or maybe more efficiency,” Finkell says. “We look forward to having some new eyes on it. But largely the plant has been built to handle quite a bit more than it's currently doing, so the immediate goal is just to run more through it."
AHF’s model with its many brands—which also include Bruce, Robbins, LM Flooring, HomerWood, Capella and tmbr—has been to make all its manufacturing resources available to each, but also maintain the distinct feel of each brand.
"As we're bringing the OEM brands in, Don's going to have the responsibility for growing those brands and growing those distributors, but he's no longer restricted to the Tennessee plant; he can use any and all of the plants we have to do things that create value for the customer,” Carson says. “So the selling, the product development, the marketing, that kind of stuff will remain distinct. But things like accounting, we'll do that as one business.”
Carson says it was important to bring the American OEM team in through the acquisition in order to keep its brands distinct. They have already begun collaborating on new products.
"I think you'll see some stuff come out this fall and certainly at Surfaces that's going to be pretty impressive,” Carson says. "It's collaborative, but it's not homogenized."
The purchase of American OEM comes at a time when demand in the residential flooring industry is strong, Carson adds.
“It's no secret wood has been impacted by vinyl over the last couple of years, but wood's going to grow this year, whether it's engineered wood or solid wood, and our business is fantastic right now,” he says.
Carson expects that demand to continue as a shortage of single family homes leads to more building and, especially in suburban America, more wood flooring. There’s also been a continued shift away from China, Carson says.
"I do think supply chains closer to home are going to be more important than ever,” Carson says. “Whether it's made in America or made close by America, or made outside of China. Because whether you're talking about freight, lead times, tariffs, duties, countervailing duties, there's just a lot to doing business in China right now."
Adding American OEM’s capacity helps AHF in that regard. Supply, however, remains an issue for the industry.
"I've never seen a time when it was easier to get an order and harder to make a shipment,” Finkell says. “And most of that's around raw material supply. For us, we don't have a labor shortage, but all of our suppliers have a labor shortage, so on the engineered side, plywood has gone through the roof. It's dramatically higher than it was 18 months ago. Veneer is still maybe not as much of an increase as what you see in lumber, but still in short supply."
But with the new partnership, both companies expect to become stronger together.
"We believe in hardwood, that's why we're making this investment and putting the businesses together,” Carson says. “Set aside the machinery and all that, these are people businesses, and the OEM team, these guys have been doing it a long, long time and are tremendously capable and inventive in what they're doing on top of that. So we're investing in talent, brain power, plants, everything to grow this category."
