Laminate Report 2017: Laminate manufacturers step up their game - Aug/Sep 2017

By Jessica Chevalier

While it appeared, for some time, that the laminate category was destined to fade into oblivion, 2016 and ’17 mark the years in which category leaders made it clear that they won’t go down without a fight. And, to some extent, those efforts have paid off. Though the category isn’t regaining share, it held its ground with a slight gain in revenues in 2016, and there is a noticeable energy that was previously lacking.

Keep in mind, however, that at its marketshare apex in 2009 laminate flooring accounted for 6.2% of the total U.S. flooring market, according to Market Insights. Since then, it has ticked steadily downward in share, accounting for 4.6% in 2016. That’s significant ground lost. “That’s significant ground lost”, and it does take a toll on industry players: in mid-August, Shaw announced that it would close its Ringgold, Georgia, and Lexington, North Carolina laminate manufacturing faciliies, though it will remain in the laminate business, sourcing product from other manufacturers. The closures will take effect in October.

Still, manufacturers of laminate flooring believe that high-end laminate products, with their ever-stronger performance stories and improved aesthetics, offer a good value to consumers. “Laminate is harder than LVT and WPC, resists indentation, is dimensionally stable, offers great scratch resistance and features 97% wood content,” says Dan Natkin, vice president of hardwood and laminate for Mannington Mills. “Once the category solves the moisture issue, we’ll have the whole story.”

REINVIGORATING WITH WATER RESISTANCE
The trait that laminate manufacturers have been working so intently to improve in the product is water resistance, an aspect that has been highlighted by the fact that LVT and WPC, with their vinyl cores, are essentially waterproof. Many laminate manufacturers believe that the need for significant water resistance in the home environment is overstated; however, in light of consumer demand and because, admittedly, some improvement can be made, virtually all laminate manufacturers-and certainly all of the top ones-are rolling out technology to increase resistance to moisture.

Some may wonder why laminate manufacturers don’t simply trade out the HDF core for a waterproof material. “Water resistance comes down to the fact that laminate is wood based,” explains Roger Farabee, senior vice president of laminate and hardwood for Mohawk, which owns Pergo. “If you took a WPC core and put laminate on top, it wouldn’t be laminate anymore. By definition, laminate is a wood-based product with an HDF core. Wood and water don’t mix. When you have prolonged exposure of water to HDF, the edges will curl and that can cause delamination. That is the typical problem that happens to laminate without treatment when exposed to water.” To eliminate the wood core would be to create an altogether new product, one that could not boast the natural characteristics that laminate can.

In addition, Natkin reports, “Pressure has to be used to fuse the laminate layers together. There are people working on new technology to get the melamine layer to bond to something besides HDF, but, as of now, we don’t have the technology to bond that melamine décor layer to, for example, a vinyl core.”

However, Armstrong has come out with a rigid LVT called Pryzm with a melamine top layer. And Eagle Creek, which currently offers water-resistant laminates, reports that it is experimenting with putting a laminate face on a vinyl core. “We have prototypes where we are putting laminate on a WPC core,” says Chris Dillon, vice president of marketing for Eagle Creek. “You can technologically put laminate on top of WPC, but the market isn’t asking for it yet.” Referring to what’s currently on the market, Dillon adds, “Some manufacturers just put a wax seal on their laminate to create water resistance, but ours is much more than that. We put water on top of our product for 24 hours, and it was fine. The crux comes down to the seal. If you get moisture from underneath, however, the products will still have issues. HDF is not waterproof. ”

There are multiple ways in which laminate manufacturers have approached the issue of building water resistance in laminate flooring. Some manufacturers utilize product with a lower swell coreboard to increase the amount of time that the consumer has before they will begin seeing damage to the floor in the presence of moisture. That, according to Farabee, “won’t eliminate the problem. And the other issue is that, depending on the locking system used, moisture can penetrate the joint and get under the floor.” As we all well know, trapped water and the resulting mold problems that can occur are not just inconvenient but also potentially dangerous to human health.

Other manufacturers, including Mohawk, try instead to keep the water atop the floor and away from the core altogether. In Mohawk’s case, this is achieved via the combination of a locking system and a coating that prohibits the penetration of liquids.

“A lot of new technology is emerging to counteract the WPC effect,” says Natkin. “The running joke at Surfaces was that you could fill the entire convention hall with water, and no floors would be damaged. The market right now is waterproof-crazy. But when was the last time your floor was fully flooded? It’s important that it stand up to everyday spills but not that it survive being submerged. The industry has responded with improvements to laminate technology that help it resist everyday challenges. All innovations aim at the same idea.”

By the accounts of some experts in the industry, not all the technologies to increase water resistance in the market work, and there is a risk that the failure of one or more of these may give the category a black eye-the same sort of effect we saw as fallout from the Lumber Liquidators’ formaldehyde controversy. “There has been an increase in imports from Europe, and a fall-off of imports from China, primarily due to the fall-out of Chinese products that were not CARB2 compliant,” says Morgan Hafer, Armstrong’s laminate product manager. “Products that are produced to a high quality-which makes for extremely hard-wearing and durable flooring-are good for the category, regardless of where they are manufactured.”

Interestingly, while LVT and WPC are, in many ways, a thorn in laminate’s side, they have also spurred the category toward bettering itself. “There has been a pretty fundamental awakening around moisture resistance,” explains Travis Bass, executive vice president of sales and marketing for Swiss Krono. “In a way, that has been very good news for the category. Laminate has had a stable market for the past few years, and LVT and WPC have forced us to up our game. We’ve invested in enhanced surface texture. We see the thickness mix moving up. The product is becoming better in response to a more competitive marketplace. Moisture resistance is the next big step. There are many people who don’t care for the environmental impact of a vinyl product, who don’t want plastic floor, who want real wood. Laminate is a safe haven, and moisture resistance is the posture that laminate will occupy for the next few years.”

Right now, as is typical, the new water resistance attributes are primarily offered on premium products, but will likely trickle down to become standard offerings over the course of the next three to five years, estimates Bass.

THE DOMESTIC CONUNDRUM
According to Market Insights, 49% of the laminate consumed in the U.S. market is imported. Travis Bass of Swiss Krono explains that, while China was the primary supplier for years, the fall-out from the Lumber Liquidators’ laminate controversy has shifted much of that production to Europe, which traditionally made commodity product but has moved its focus upward, to some degree, to fill the gap that China left.

“Europe is now picking off high-end products,” says Bass. “And their prices are cheaper. Europe has mega volume complexes, which keeps costs low. For U.S. manufacturers, lead times and inventory control are in our favor, but freight charges are exorbitant. We can ship from Germany to New York more cheaply than we can ship from South Carolina to New York. We have chosen to give up the low-end business to European producers and focus on the nicer.”

CATCHING THE CONSUMER'S EYE
The fact is, however, that the success of even a revolutionary new innovation in the laminate category is dependent on convincing consumers to take a second look. And while most aren’t educated enough about flooring prior to the shopping process to eschew the category on the basis of its real or perceived deficiencies, getting retail sales associates (RSAs) to buy into the new laminates and steer away from the incredibly popular LVT and WPC categories may prove more challenging.

A big part of that fight hinges on differentiating premium laminate from the economy offerings of the box stores. “Lumber Liquidators and the big boxes have cornered the market on the cheap junk, the 6mm, 7mm and 8mm product that you can buy for under a buck a square foot,” says Dillon. “I don’t like doing that. I run the direct-to-retail portion of the business, and we’re medium to high end, in the $1.50/square foot range. Eagle Creek only sells 12mm, and if I expand my line, I will expand to 14mm.”

Farabee also advocates a plan that focuses on real value. “Mohawk’s plan is to better compete with some of the new vinyl and hybrid products out there by making the best looking, most authentic product that we can,” he says. “We’re investing lots of time and money in that. We have advantages over WPC, and we are adding extra features to create a more level playing field wherein customers can decide on their budget and find a look that they prefer within that range. Most other producers are thinking about the impact of categories, such as rigid vinyl, and thinking about how they can compete. Our approach is to make the best and couple that with key features, where we can say to the consumer, ‘These products have comparable overall performance, but there are benefits one over another.’ We can achieve effects that you can’t with PVC. If you take moisture resistance off the table, it comes down to aesthetics, and whether a consumer likes wood or vinyl.”

“Shaw doesn’t anticipate much more than modest growth within the category, but laminate is still holding its own in the market,” says Drew Hash, vice president, hard surfaces category management, for Shaw Industries. “The industry is fully aware of shifting consumer preferences toward high-end laminate products, and we’re confident the market will deliver on these consumer demands.” Currently, Shaw is rolling out additional trend-forward SKUs to its Repel collection of water-resistant laminate.

Laminate has long offered strong performance related to scratch-, dent- and fade-resistance. Adding the water resistance piece rounds out its performance offering to some degree. But in a fashion business like flooring, continual improvement of visuals is also key, especially at the higher end. “The biggest innovations in laminate-both for Shaw and the industry as a whole-will be centered on improving the visuals and performance attributes of the category,” says Hash. “Laminate has come a long way in moisture-resistant technology, and advances will continue to be made in this area to maintain laminate’s viability in the market. Similarly, visuals will continue becoming more detailed to meet consumer demand. Laminate will continue to enhance the beauty and durability of its product offerings to meet consumer expectations. Visuals will keep improving in clarity and realism, following consumer trends. Today, hardwood visuals are highly sought after, and laminate, along with other hard surface categories, will strive to emulate these popular looks.”

In the effort to reinvigorate its laminate offering at market, Mannington is reaching out with a campaign. “We start by going to RSAs,” says Natkin, “and we’re doing lots of education efforts right now centered on the idea ‘Why choose laminate? We have videos on this theme that will be released soon, and we will be hosting webinars as well. As you tell the story, which is best done live, we like to look at products and ask the customer or RSA to pick out which is better looking. Nine times out of ten, they will pick laminate over WPC, and then we talk about its attributes. The majority of domestically sold laminate is made in the U.S., and customers care about buying U.S. made products.” Several manufacturers with whom we spoke reported that we can soon expect to see action from the North American Laminate Flooring Association (NALFA) in this regard as well.

“It’s up to us to sell the attributes of products to the retailer,” says Bass. “As an industry, we have to wake up and do a better job of educating the consumer on a lot of the attributes of laminate, including moisture resistance. I head up the marketing committee for NALFA, and we’re expanding resources there and doing more positive campaigning on behalf of laminate. Many customers are totally dependent on retailers for product information, or they look online. There is a huge difference between the flooring products on the market, and laminate offers a lot of the things that people care about, but those attributes aren’t especially obvious. Laminate is made of pine trees and other renewable resources-it’s a good story. But we don’t trumpet it loudly enough. It is incumbent on us as an industry to do a better job of educating consumers and NALFA is a good opportunity.”

BEYOND RESIDENTIAL REPLACEMENT
By some manufacturers’ accounts, adding water resistance to laminate’s portfolio of performance attributes has increased its appeal in markets beyond the residential remodel, where it has always had the strongest foothold.

“The other big story for laminate-besides innovation in water resistance-is its continued growth with the builder in new home construction, which has recognized the value of the product and the problems it solves,” says Natkin. “We have seen high double-digit growth year over year in this area, particularly with our premium series. The number one call back to builders-both pre- and post-close-is damage to hardwood floors. Laminate is three to four times harder than hardwood, and four to five times more scratch resistant, and builders can get a perfect match if there is damage and need for replacement. Several builders have told us that their one-year quality reports have dramatically increased with the use of laminate because cheap wood floors were a perennial problem.”

Armstrong’s Hafer confirms Natkin’s analysis, adding, “Some industry observers report activity in the new home construction sector as more builders look to laminate as an entry-level product. Residential replacement is still the dominant category. Laminate also is a good choice for some commercial spaces because it looks and feels like traditional hardwood but has the durability attributes necessary for mainstreet businesses. It is one of the anchor products for our mainstreet market development initiative through Elevate, our program to help aligned specialty retailers build business and grow sales. We do recommend that commercial spaces focus on 12mm thick floors for the best performance, and for the best durability we typically recommend an AC4 or AC5 rating for light commercial settings.”

“The key to increasing consumption of laminate products, both residentially and commercially, is to keep innovating,” says Hash. “Manufacturers have to stay attuned to trends in style and design, while continuing to improve upon laminate’s performance story. As with all flooring categories, innovation is the path forward. As manufacturers continue rising to meet consumer expectations, laminate’s design and performance attributes will continue to improve, making it a viable flooring option within multiple business segments.”

In addition to improving performance attributes and keeping up with the best aesthetics in the industry, Bass points out that manufacturers must work to make laminate a more DIY-friendly product. “I joke with my staff that I want to have a box and when the consumer pulls a tab, have the laminate fall out on the floor and install itself. There are ways to make installation easier-maybe create a product that doesn’t need transitions. We are soliciting ideas within our own camp and working on consumer surveys.“

Bass believes that laminate is well suited to the Millennial mindset and that may lead to a boost in use for the category. “I’m kind of excited about the demographics of Millennials, who are urban dwellers and live in mass housing,” he says. “They are an IKEA society, buying stuff that makes sense to their lifestyle, and laminate is a good fit for that. In Europe, where there are lots of people crammed in less space, the usage rate of laminate and panel wood products is a lot higher than here. Laminate is a real staple there. A lot of laminate companies in the E.U. have advertised it as a floor you can take with you, up to three or four times.”

THE DIRECTION OF STYLING
Bass expects the styling of laminate to follow the trends of hardwood. The product, which is good at mimicking the natural material, is going longer and wider, and he anticipates that we will soon see more laminates that offer herringbone and chevron installation options.

Swiss Krono reports that, in addition to wood looks, it does have some tile visuals, and will likely introduce a few more of those into its American Concepts line, which serves specialty retail. Bass adds that Swiss Krono designers are also working on some “cool stuff,” including acid-treated concrete and petrified wood visuals. He points to the fact that laminate allows manufacturers to mimic endangered or prohibitively expensive woods as well, such as acacia.

Mohawk introduced a herringbone look at Surfaces and reports that it has done “okay.” The company also offers tile shapes but says they’ve never been a big part of the market.

Eagle Creek is following a trend from abroad and experimenting with aesthetics that don’t mimic wood or tile. “One of our prototypes features the New York City skyline faintly in the background. Another has a look like exposed brick.”

Summarizing the current market’s aesthetic preferences, Shaw’s Drew Hash says, “From a design perspective, reclaimed and antique wood looks are still popular in laminate; however, consumer preference is trending away from heavily textured visuals in favor of a cleaner, more natural wood look. Laminate, like many hard surface categories, takes its style and design queues from trends in hardwood visuals. As a result, we are seeing an emerging demand for laminate visuals featuring domestic wood species, like white oak, hickory and ash, with low-gloss finishes that highlight the wood’s natural characteristics.”

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