There was a time not that long ago when wood and other hard-surface flooring materials were prohibited in some condominiums and apartment complexes. People were not about to pay good money to live there, only to have their neighbors’ footsteps echo like a tap dance from the floor above.

At the same time, people who could afford to live in high-end condos and apartments wanted upscale interior finishes — including hardwood floors. Clearly, a compromise that would shield downstairs neighbors from the noise was in order.

In truth, sound-reduction systems have been used in South Florida, Los Angeles, New York City and other metropolitan areas for many years — sometimes demanded by building codes, more often by condo and co-op boards. But, as wood flooring has found its way into more multilevel residential and commercial locations, new solutions have evolved to solve the sound-transmission problem.

Solutions

One of the oldest — and most complex — solutions involves installing sleepers in a bed of mastic, with sound-absorbent material installed in the spaces between the sleepers. The wood flooring is then installed over the sleepers.

Simpler solutions include rolls or sheets of foam, cork or other sound-absorbent material installed between the wood floor and the subfloor. In installations over concrete slabs, the sound-absorbent material is often installed above the slab, with a layer of plywood above the material, followed bythe finished floor.

Janos Spitzer of Janos Spitzer Flooring Co. inNew York City, who’s been doing high-end residential work for about 15 years, borrows something from the 20 previous years he spent installing gymnasium and dance floors. In those installations, resilience — not sound control — is the main concern, but the same methods seem to work.

“We’ve never had a problem with the condo or co-op boards with our system,” says Spitzer. “It seems to satisfy their needs.”

Spitzer attaches 3/8-inch rubber pads (the kind often used in gym floor installations) to the bottom of a layer of 1/2- or 3/4-inch plywood, which is then loose-laid over the concrete slab. A second layer of 1/2- or3/4-inch plywood is then laid over the first layer — at a right angle — then glued to and screwed into the first layer. The wood floor is nailed into the plywood subfloor.

Spitzer prefers to put down the thickest subfloor he can — “the more mass you have, the better it will absorb sound” — but notes that aesthetic concerns often dictate a thinner subfloor. “People don’t want to give up alot of vertical space,” he says.

A sound-reduction system like the one Spitzer uses will typically add $3 to$4 per square foot to an installation —and even more if a lot of material is required to level the concrete slab. “To have this work right, the slab has to be as level as you can get it,” he says.

A similar system utilizes a foam or cork pad, which is loose-laid over the subfloor. A double layer of plywood— glued and screwed together at right angles — is then laid over the pad, and the wood floor is nailed into the plywood. To maximize the sound absorption qualities of the system, no metal fastener should penetrate the foam or cork pad, so the fastener should be set to penetrate no farther than the depth of the plywood.

A common and relatively simple foam or cork pad system can be used for either glue-down or floating floors. For a glue-down floor, the pad should be glued to the subfloor, with the wood flooring glued to the pad. In many cases, the same adhesive can be used for both. Some adhesives also have good sound-absorption qualities, so the combination of adhesive and foam or cork can provide fairly significant noise reduction. Fora floating-floor system, the underlayment pad — foam or cork — is loose laid over the subfloor, and the wood flooring is floated above that.

Some underlayment manufacturersalso recommend installation of a”perimeter isolation strip” at thewalls. The isolation strip is designedto prevent impact sounds on the floorfrom being transferred to the wall andinto other rooms.

The cost of these systems can vary,depending on the level of sound-absorption required and on labor costsin different regions. However, most will fall within a range of $1.50 to $3per square foot, installed.

Requirements

In many locales, flooring contractors should be aware that sound-absorption is not merely a nice add-on, but rather a requirement. In California, for example, floors in multilevel buildings are required to meet Impact Insulation Class (IIC) and Sound Transmission Class (STC) codes, with a rating of at least 50. IIC codes refer tothe sound transmitted by impact on the floor — footsteps, for example. STC codes refer to airborne sounds,such as voices. Condo associations may set even higher rating requirements. In fact, says Ann Wicander, president of WE Cork Enterprises,”condo associations in most metropolitan areas are really the strongest force dictating ratings.”

Bob Galgano, director of sales and marketing for Badger Cork, notes that code requirements are more common in western states, while condo associations hold sway in Chicago and Florida.

Sound-reduction has long been a fact of life in places like Miami, NewYork and Los Angeles, according to Eric Buchanan, director of customer service for Natural Cork, “but we’re seeing it develop in places you wouldn’t necessarily expect — like smaller cities in the Midwest.”

There may be many installation solutions that will provide adequate sound-absorption, but building codes or condo association requirements may dictate that flooring contractors provide documentation that the installation meets code. Manufacturers of products specifically designed for flooring underlayment will typically provide that documentation. For example, a contractor who purchases cork that isn’t designed for flooring underlayment may not get the sound absorption he needs — and he certainly won’t get the documentation a condo association might demand.

Beyond the demands of building codes and condo boards, flooring contractors might also find that more one family homes are looking for sound absorption qualities in their floors. If a contractor knows how to provide that sound-absorption, he may find that second-story wood floors are a more attractive option for his customers. And that should remove yet one more place sometimes thought to be off-limits to wood flooring.

The year 2001 was an uncertain one by any account. The nation started the year with a new president and an economy that, after years of unstoppable growth, was shifting down a few gears. As the year continued, that became even more evident as tech companies crumbled and the stock market suffered. Speculation ran rampant that the boom times’ bubble was finally going to burst, and frontpage headlines ran around the world when the president dared utter the “R” word—recession.

The wood flooring industry is far from high-tech, but it enjoyed the boom years nearly as much as the darlings of the NASDAQ. Business was so good for so long that it seemed unfathomable it would end. Fortunately, as 2001 progressed and the tech companies fell, the wood flooring industry didn’t suffer the same fate. By late summer, however, it was evident to many that the booming years were over for now. The industry wasn’t stopping by any means, but for most companies, there was a perceptible slowdown.

Then, on the morning of September 11, life as Americans knew it came to a tragic standstill. The effects were felt thousands of miles away long after the terrorist attacks as the United States became a nation in mourning gripped with fear of the unknown. In that climate, business concerns seemed secondary to a national tragedy. (See “Post-9/11 in NYC” sidebar, page 26.) “You just saw the focus go away from day-to-day work. People were not focused on going out and selling floors, laying floors, talking about new products,” says Wade Verble, national sales manager for Brooklyn, N.Y.-based manufacturer DriTac Adhesive Group. “I can remember being down in Florida holding a meeting, and everybody’s wife was calling because the anthrax scare started in Miami. The wife of one of my customers called and didn’t know whether to get the mail or run.” Ever since, travel has been “absolutely brutal,” he adds.

Brutal or not, people quickly learned to function despite the specter of more attacks. They patiently endured hours of security at airports and cautiously felt safer with each day that passed without more tragedy. Gradually, daily life resumed, although it was widely acknowledged that American life would never be the same.

At Ferndale, Mich.-based distributor Erickson’s Flooring and Supply, Vice President of Sales and Marketing Greg Williams says he feared that after Sept. 11, he would have to write off the rest of the year. “The reality is people came to understand that after September 11, their lives had to go on,” Williams says. “It took about six weeks for them to figure that out, but once they did, a lot of business was conducted as usual. We had a tremendous backlog that accelerated in the fourth quarter.” In Boston,distributor Wood Pro experienced a similar phenomenon. General Manager Tony Benvenuti estimates that business for about three weeks after the attacks was “just destroyed,” but the company experienced a very strong October and November.

That was a relief to thousands of business people who feared the worst for the health of an already tenuous economy. “I was scared to death in September that it would just be a disaster, because the whole week after September 11 shutdown,” says Neil Poland, president of Johnson City, Tenn.-based Mullican Flooring. To his surprise, the company “pulled out a really good month in September, and then in October the momentum was tremendous … I really expected January, February and March to be the worst of this thing for us, and January was great, relatively speaking.”

Uncertain Times

Now, months into 2002, there is little consensus about what the economic state of the wood flooring industry truly is. Some companies are flourishing; others lament a truly difficult year. It may depend on a host of factors, from geographic region to which products are sold. Many companies are struggling to find any rhyme or reason to the seemingly unpredictable swings between sales and slumps. What is acknowledged is a general air of caution about the economy.

“I think it’s kind of an adjustment; we’re doing things kind of differently now,” says John Goss, president of Seattle-based Woodwise/Design Hardwood Products. “People are more careful about how they’re spending their money, more thoughtful about it.” Despite that, Goss is positive about the industry, and in January his company experienced its best month ever. “I’m not seeing a whole lot of negativity out there other than the negative conversation,” he says. “It’s almost like fear is causing more than anything else; the fears can become reality.”

In many regions, a slew of layoffs in high-tech and other well-paying jobs is a tangible factor in a more challenging wood flooring market. In Denver, “We lost jobs right in the heart of the buying power for the good-sized wood flooring jobs,” says Jim Duffey, vice president and general manager at distributor Palo Duro. “We lost jobs with the people who had the ability to buy homes and put 1,000 square feet of wood into them, as opposed to tract homes that may have wood flooring in just the entryway and kitchen,” he explains. Now, a shortage of buyers is combining with too much new home inventory. “Builders built like buyers were never going to stop coming, and never stop coming prequalified and dual-income,” he says. Despite new challenges, the market is still relatively healthy, he explains. “Wood is still a great growth market, but it’s changed. What to do and how to survive and grow now is a lot more demanding than it was three years ago.”

That may take adjustments for an industry somewhat spoiled by years of nearly unstoppable growth. From manufacturers down to contractors, the reality of economic cycles can be difficult to digest.

At Raleigh, N.C.-based Horizon Forest Products, “I just see this big spread between customers who are very busy and those who are searching for work,”says Vice President David Williams, who is also president of the National Wood Flooring Association. Williams sees no distinguishing factors between the two groups. “I think they’re a little bit confused about what’s going on; they’re used to being several weeks behind,” he says.

His customers aren’t the only ones left scratching their heads at the unpredictable swings in business. “It’s confusing even for us as a business,” Williams says, echoing a sentiment shared by many manufacturers and distributors alike as 2002 begins. “One month can be very good, the next slows down, the next takes off—it’s hard to manage a business like that. It’s hard to manage inventory and personnel when you don’t know what’s happening during the month.” Businesses are left with no choice but to ride the waves as best they can and “watch their cash flow very, very carefully,” he says.

Some regions of the country seem untouched by any economic turmoil. “Southern California seems to not be in a recession,” says Steve Taylor, division manager at the San Diego, Calif., branch of Wood Flooring Distributors. “There’s still money moving around and people can afford these things. There’s the desire to have it and the money to buy it.” Wood flooring is a hot item, he says,and the local wood flooring market demonstrates this fact: “It’s been good for all of us. There are more distributors in this town, all bigger than they used to be, and all seem to be doing well, and there are many, many more contractors with more workers,” he says.

Investing at Home

Amid a struggling economy during 2001 and the beginning of 2002, there has been one reliable shining star—the construction industry. Spurred on with help from Alan Greenspan and the Federal Reserve, interest rates are the lowest in decades, helping housing starts remain strong. (See charts on page 44.) That bodes well for an industry as closely tied to new construction as the wood flooring industry is.

“The building industry is probably the only one that hasn’t felt the real crash everybody else has,” says Benvenuti. “Housing starts have still been pretty good, and interest rates have been low. It’s almost free for people to do things for their house.”

General Manager Ron Domkowski at Lincolnshire, Ill.-based manufacturer Powernail Company also points to the housing industry as the key factor. “As far as we can tell, all the turmoil since Sept. 11 has had absolutely no impact,” Domkowski says. “We had the best January in seven years, and we attribute that to the housing industry.” Right now, putting money into a house can be one of the wisest money management decisions made, he points out. “If you look at investments, where can you get a good return on your money. Not even CDs. So what do you do. You invest it back in your home. You’ll get it back in spades when you go to sell your house, so real estate remains a very viable place to put your money while things settle down.”

Even in areas where business has been lackluster, distributors report that “word on the street” looks to see business pick up later in spring and into summer. Those forecasts hinge on some wild cards. One is increasing unemployment; another is the possibility of rising interest rates. Fortunately, it appears that interest rates should remain stable for the near future.

A Crowded Market

If the number of companies entering the market or increasing capacity is any indication of an industry’s health, then it would appear that the wood flooring industry is no less than vibrant. There is a seemingly endless supply of new manufacturers and new capacities at existing producers.

That constant influx can leave some segments of the industry less than vibrant, however. The unfinished strip market is encountering challenges now that the explosive growth of previous years has slowed. Shipment figures from Memphis, Tenn.-based NOFMA, The Wood Flooring Manufacturers Association, revealed that strip shipments for 2001 were up only 3 percent. “Production capacity was up, but the shipments were not up that much,” says Tommy Maxwell of Monticello, Ark.-based Maxwell Hardwood Flooring and also president of NOFMA. “It’s nowhere close to the potential. There’s a lot of untapped capacity out there.”

The increased capacity applies not only to domestic strip producers, but also many other categories of wood flooring. “Brazilian cherry and some of the South American products were really a proprietary product sold as a real upgrade a few years ago,” says Erickson’s Williams. “Now, because of all these manufacturers in the marketplace, they’ve devalued it; they’ve created a commodity product out of Brazilian cherry.”

At Memphis, Tenn.-based Global Market Partners, President Lanny Trottman imports longstrip flooring from Scandinavia. “The thing we’ve seen the most of is products coming in from the Far East, particularly in longstrip,” he says. “When I started this business in ’93, there were really only a handful—maybe five or six companies—bringing longstrip into the U.S. Now there’s maybe 30.” Although he sells his product on the merits of quality, competition is getting “very difficult,” and an influx of European manufacturers is also appearing.

At Surfaces 2002 in January, a walk through the show floor was concrete evidence of the plentitude of newcomers, especially Asian, to the industry. In particular, there seemed to be a new bamboo company around every corner, but companies offering all types of flooring were debuting as well.

“It’s too early to tell whether they’ll be fortunate enough to gain distribution and the confidence of the flooring trade. The biggest problem to entry in this country is gaining distribution,” Poland says. “If they cannot get the confidence of enough distributors, they’re not going to be successful. We’re watching it closely; I think it’s a concern.” It is typically easier for Asian manufacturers to first enter markets in Europe, he explains, where manufacturers have historically been more expensive.

John Pankratz Jr. at distributor Kelly-Goodwin Company based in Tukwila, Wash., agrees that distributors are cautious about taking on a lot of new products from foreign manufacturers. Every distributor has been burned at least once by a supplier that turned out to not be trustworthy, he says. “A lot of these foreign companies don’t offer some of the things the domestic manufacturers offer, like warranties, technical assistance, local representation… those are big selling points; it instills confidence in the product when you know that if you have a problem, it’s going to be taken care of. The foreign manufacturers have a long way to go in that respect,” he explains.

A multitude of manufacturers north of the border also are looking for markets for their products. “I probably get five calls a week from different Canadian manufacturers just trying to move unfinished and prefinished flooring. I don’t know how they all survive,” says distributor Benvenuti.

Faced with distributors who are already saturated with a bevy of manufacturers, new suppliers often try to bypass distribution entirely. That can be a difficult task in an industry traditionally reliant on a network of wood flooring distributors.

Of course, no distributor likes the idea of manufacturers selling direct. At Palo Duro, Duffey also sees the potential for greater harm to the wood flooring industry in general. “The education provided by the network of responsible manufacturers, distributors and good dealers is what keeps the consumer out of the hole and gives overall wood flooring a good name as a quality floor covering,” he says. “We’re an advocate of one thing and one thing only when we’re on a complaint or go in to advise people—all we want is to see a happy consumer. Nobody sells wood flooring more for this industry than a happy consumer.”

There is a perceived threat to quality across all products in the industry, not just wood flooring. There are new manufacturers entering the market for nearly every product category, from adhesives to nailers. Many companies don’t see it as a direct threat, however.

“There’s definitely increased competition, but competition makes you better and stronger,” says Jim Wallick, vice president of sales and marketing at Deer Park, N.Y.-based Mercer Abrasives. “The thing that is a little scary is that people are coming in with inferior products and marketing them as premium products.” With a slowdown in the industry, Wallick feels that buyers will turn to trusted, established companies.

The heightening competition covers all levels of the industry, as well, not just the manufacturing base. “There are many more people entering the industry, from floor installers to smaller distributors to larger distributors. In the recession, I think there will be consolidation at some point at all levels,” Wallick says. “Right now, I see a lot of people going into it, because it’s a growth industry. Then you go through these lean years, and it shakes out a little.”

Trottman agrees, guessing that at some point there will be a “tremendous amount of washout” in the unfinished strip business. Companies with more specialized products will find it easier to compete, he predicts.

Taylor also envisions a point where the industry shakes out to some degree. “The really smart ones are going to survive,” he says. “The big companies will survive, and the smaller companies that make it through will thrive and will have a market for their products, but a bunch won’t.”

Overall, the health of the industry still receives high marks. The question is simply how much it can support. “The hardwood flooring business is still a very good business. People see that in other parts of the industry, and everybody wants to get on and get a small piece of that,” Horizon’s Williams says. “But there’s only so much room on the train; everybody can’t get on at one time.”

The Price is Not Right

One factor where that’s become evident is in pricing. Whether it’s abrasives or longstrip, a flood of manufacturers combined with a general slowing of the industry yields predictable results on price tags. Hardest hit of all is the industry’s bread and butter—the unfinished strip market. Distributors refer to the current pricing on strip flooring with words such as “abysmal,” “a struggle” or just downright “scary.” Especially hard hit are those not carrying the industry’s biggest lines.

At Wood Pro, Benvenuti describes a typical situation: “Even if you sell it [unfinished strip] at 5 percent over your cost, that’s 30 percent too high,” he laments. “Even if you have much better quality products, when you’re talking 50or 75 cents, that’s a lot of money, whether it’s bad or not. People don’t care—on 1,000 feet, that’s maybe $700—the guy will bang it in.” Benvenuti also sees the same phenomenon right now with prefinished flooring. That’s an especially startling development, because prefinished flooring has traditionally been an area with the potential for higher profits.

Manufacturers are just as concerned as their distributors over the unfinished strip situation. “The market has not grown as fast over the last 12 months as it had in previous years; therefore, with all the new production capacities that have been added, the market is much more competitive,” Maxwell says. “Profit margins have been squeezed throughout the industry, especially at the manufacturing level.”

The current price squeeze serves to effectively add insult to injury, as unfinished strip was never a high-profit item to begin with. “One thing that concerns me is that looking at the price of unfinished hardwood flooring over the years, it really doesn’t follow inflation,” Pankratz says. “I look at the last 18 years I’ve been purchasing, and select red and common red aren’t too much higher than when I started in ’85. I was offered common red for under $1.60, and when I first started, it was maybe $1.20.”

At Erickson’s, Williams says pricing is about as low as it has been for about eight years. The competitiveness of the marketplace has increased while the quality of the materials is decreasing, with some manufacturers trying to pass them off as better-grade products. DriTac’s Verble thinks the price crunch will result in increased pressure on research and development to focus on creating products their companies can manufacture at more cost-competitive prices.

At a time of pricing challenges, companies need to think about where they are positioning themselves and which customers they are trying to attract. There will always be a group ready to jump ship for the latest, cheapest product. “There are those individuals who buy on price alone; they will be attracted to the newcomers, because the only way the newcomers can get market share is to buy it,” Powernail’s Domkowski says. “There will always be a market for these lower-cost items.”

At the distributor level, surviving in tough times comes down to one word over and over again. “You can get close to price, but it’s all about service,” says Benvenuti. “I think that’s what will help us with the downturn in the economy—we’re selling to contractors, and they need service.”

Schemes for Success

Through recent years, some companies could operate on near autopilot as the booming industry carried a lot of people along for the ride. With the current softened economy, businesses are having to step their efforts up a notch to even approach recent levels of sales or profits. It’s also giving companies a chance to go back to the drawing board and reexamine their businesses.

“In February, we’ll have one of the strongest months we ever had, but we worked harder at it, too, though,” Global Market’s Trottman says. “We put some promotions in place and did some different things to stimulate the business.” It’s also been an impetus for the company to focus on what lines it carries and why.

Distributors may take several different approaches. Some are choosing to focus on their core business, while others think that diversifying into more types of products will protect them when there’s a slowdown in one product category.

“We need to maintain our fundamental philosophy we’ve had for years, and that is to more or less work hard on doing what we’ve done better,” says Erickson’s Williams. He suggests going back to the grassroots fundamentals that created a successful company to begin with.

At Horizon, Williams says it’s given the company a chance to “regroup a little bit and redefine our role as a distributor; make some adjustments and actually take some new products on. We’ve taken this period to kind of go through our whole business with a fine-tooth comb and figure out what we do and don’t do well.”

A fundamental part of distributors’ success will be how well they partner with quality suppliers. It takes a longtime to establish a trusting relationship between a manufacturer and a distributor, and many companies aren’t willing to jeopardize the relationship by shopping around for the latest and greatest opportunity.

In much of the wood flooring industry today, those vital relationships continue right down from the distributor to the job site. In New York City, Bob Nygaard’s distributorship, Olson Flooring Supply Co., is still going strong despite all the challenges. The success comes down to one main reason. “We take personal pride in discussing things with our customers; we know all our customers personally,” Nygaard says. “It makes a difference. It could be a couple hundred; we know all of them. We make it our business to go visit them on the job sites.”

While companies such as Nygaard’s are continuing winning strategies as usual, others are fortifying their defensive positions, and yet others are looking to take advantage of a business climate that hasn’t been around for quite awhile.

“My strategy is to prepare for an open door or window,” says Woodwise’s Goss. As other companies back off in caution, perhaps dropping certain non-core products, Goss sees the chance to pick up the slack. “Rather than back off and try to just survive, we’re actually trying to grow at this time. If it doesn’t work, all we’re out is the preparation. If it works, we’re ready to step into a busier climate.”

The Big Picture

Despite the economic slowdown, a busier climate in the near future doesn’t seem like much of a stretch. There are many positive factors working in wood flooring’s favor. In fact, recession or not, most people still sound overwhelmingly positive about being in the wood flooring industry.

“There are so many things working for us that are larger than the little economic factors that have stirred things up for all of us in the last six to 12 months,” Duffey says, and most in the industry seem to agree.

One of those factors is the nesting phenomenon much discussed since the Sept. 11 tragedy. People’s tendency to stay at home helps the wood flooring market from several angles. First, as they postpone the hassles and lingering fears now associated with travel, they have more disposable income to put into their houses. Second, as they spend time at home, they’re more likely to consider ripping up old carpeting and upgrading to wood floors.

Wood flooring’s inherent high-end image and quality also work in its favor. As an upgrade-type floor covering, it will always be a product consumers aspire to, just as they would an expensive car or other classy product. As the floor covering market has evolved in recent years, wood flooring has become a standard in almost every home, even if it’s only in the foyer or kitchen. More often, it’s being used in other rooms as well.

“Wood flooring used to be in one room or a small area, but now it’s huge,” says Taylor. “People are doing their whole homes. Contractors are doing well now. When you go out in the morning, the parking lot is full of contractors’ trucks, and they’re nice, new trucks. I never expected to see the things I’m seeing now with hardwood flooring.”

At Sheoga Hardwood Flooring and Paneling in Middlefield, Ohio, Pete Miller echoes those sentiments. “This is our 20th year manufacturing flooring. There are very few years since ’82 that we didn’t exceed the previous year’s sales. We surely have a lot to be thankful for.”