Happy New Year?

Here's a wish to you for a Happy New Year!

Wait, you say... what makes anybody think it'll be happy, at least for those of us in the wood flooring business? The pundits and corporate leaders in the trade have declared uniformly that 2011 will be a sluggish year for flooring of all kinds (see Floor Covering News dated December 6/13 - http://www.fcnews.net/ ). No particular joy there.

But did you see the copper close today? Copper prices are up 33% for 2010. Other metals prices have been strong too. But copper takes the cake.

So what?, you say. Floors aren't made of copper...

As a former professional trader, I know a few things about copper, and copper trading. Did you know that copper has always been referred to as "the metal with a PhD?" Yes, historically, copper is considered to be the vehicle for the "smart money" forecasts about industrial activity in the coming months. And copper closed the year up 33%!

This is meaningful. Oil closed up as well, gold and silver, other commodities too. But those contracts only have undergraduate degrees. Not copper. Copper has a PhD. Copper knows something.

Maybe copper simply knows that the Chinese are going bonkers industrially. But, everyone knows that! Maybe copper knows that the Chinese industrial juggernaut is going to rub off on the entire world in 2011?


I have another indicator too, a personal one. From many years of supplying and servicing the industrial wood flooring markets (trucks, trains), I have observed that the industrial flooring market turns, up or down, about six months before the general US economy. It's been like clockwork for twenty-five years, through five economic expansions and contractions. And guess what...

That market turned up last August, 2010.

Our commercial and residential wood flooring business turned upward in late November and December, 2010. That other market, the industrial market, is still screaming hot in December, 2010.

Copper, and industrial flooring, and Plantation Hardwood Floors are all shouting, "Happy New Year!"






 

The Christmas Miracle

Much has been written about the Christmas Miracle, that being the birth of the baby Jesus, and related subjects. This is not about THAT Christmas Miracle.

This is about the fact that most of my friends and acquaintances in the wood flooring business are BUSY! The orders are flowing, the factory is humming! Christmas vacations here have been cancelled, or postponed, so we can get the orders out!

We're calling it the Christmas Miracle.

We at Plantation Hardwood Floors hope you're enjoying your own Christmas Miracle, whatever and wherever that may be.

Import Duties - Who Forgot to Close the Back Door?

The Federal Trade Commission, or whatever alphabet soup agency is driving this bus, proceeded to authorize the formal investigation and imposition of two kinds of import duties on Chinese engineered wood flooring. If the intent was to stop the importation of subsidized flooring, it looks to be a failure already.

If I understand this situation properly - and who knows if anyone understands this situation properly? - imports from China after February or March, the date being not specific, will carry the import duties. Imports prior to that date come in at current rates (that is, duty-free).

So, importers and Chinese manufacturers defending their massive market share in the U.S. have until February or March to do whatever they're going to do. And what would that be? BUILD INVENTORY, of course! This office hears talk of hundreds, if not thousands, of containers of Chinese engineered flooring being prepared for shipment to North America, immediately. The thinking goes, so I'm told, that one year's worth of inventory stashed in the U.S. will protect the business while alternate factories are being set up in Vietnam, Malaysia, and/or Indonesia. These alternate countries already have flooring production infrastructure, and are not threatened with U.S. import duties.

So what's been accomplished? Besides severely annoying the Chinese govenment and some large American enterprises, it's probably not hard to conclude that cheap flooring not only has not been eliminated, but is probably here to stay, from many now-diversified Asian sources. Good news for many, including for Indochina and Southeast Asia producers, and for low-priced, deal-seeking American property owners; not so good news for the coalition of companies that brought the action to begin with, and all other domestic parties facing international competition for the scarce wood flooring buyer.

Well then, how about some more positive, and somewhat related news? We closed a deal to provide U.S.-produced custom wood flooring to a project in China... too bad it's not thousands of containers, or else we could claim to have single-handedly offset the apparent bungling of this trade action.

At least, we've deposited some yuan in our account at Bank of America...and we appreciate the business!

Anti-dumping?

Here's an update on the anti-dumping action against Chinese engineered flooring, posted today, November 15, 2010.

Follow this link:  http://ia.ita.doc.gov/download/factsheets/factsheet-prc-mlwf-init-20101112.pdf

Still Mired in the Sludge of the 2010 Economy

Time is getting away from me again! But maybe it's because my life is full. Full of mostly great things. The family is doing well. One son about to graduate from film school with his Masters degree, another recently engaged to be married to a great young woman whom his mother and I really like. How good is that!

The high-end wood flooring business remains mired in the sludge of the 2010 economy. Meanwhile, I've been thinking about and looking around, sort of, for a fresh banking relationship. The prospective new bankers ask me the oddest questions now (not like the old days, when a decent credit score and a signature delivered the keys to the kingdom!). These bankers want to know what industry we're in! When they discover we're in the building industry, the light goes out of their eyes. I never thought I would encounter a banker with an "industry filter" in place.

But, it's okay. We don't really need a banker anyway. And I'll confess I'm bemused by the situation in banking nowadays. The Obama administration's Treasury department is shoveling liquidity into the economy, with plaintive statements about funding small businesses to get some job growth. But who do they shovel the funding to? They shovel it to the collection of entities that expressly will not fund small businesses...the banks!

If you ask a banker about this, he will protest loudly that his bank wants to lend. Just not to you.

Is anyone following the current sleeper activity in Washington, DC about indicting Chinese engineered wood flooring manufacturers and importers with dumping product into the U.S. at below cost, or with Chinese government subsidies? Yes, this is happening right now. And while Plantation has no Chinese products, it potentially affects us, and everybody in our business, one way or another.

Most people I speak with in this business are simply unaware of this potentially major disruptive influence on our business. The bigger boys in the wood flooring business (Armstrong, Anderson, Nydree, etc.) have filed an anti-dumping complaint with the FTC. My understanding is that the complaint has been accepted, is being validated, and a decision as to whether to investigate formally is due very soon, as in early December.

The potential here is that Chinese wood flooring imports may soon be dutied at levels that bring their costing way, way up! This of course, would be bad news for the general American consumer, who has been trained to believe that wood flooring is always cheap, really cheap. But it would be absolutely devastating news for importers and companies who are completely dependent on imported Chinese flooring at rock bottom pricing (can you say, Lumber Liquidators?).

The additional interesting news is that, if I have this right, any duties eventually levied will be retroactive to the formal investigation date. Think about that. The Feds may eventually decide on a duty rate, say, eighteen months from now, and announce it at that time. All imports since December, 2010 would be levied at that rate! That means all importers would owe the government massive amounts of money, covering their imports from the retroactive date.

Another complication: if the Feds decide to formalize this action, importers will be required to post a bond that guarantees they will pay whatever duties they owe, in whatever amount they owe, which they don't know and cannot know. Try writing and pricing that bond.

For a businessman, all this presents a big-time problem. What to do? Nothing? Everything?

I may be overthinking this subject, but I see this as a potential sea change in the wood flooring business. The NWFA has all the info. Plus, if you care to pursue it, there is a website link: http://www.usfloorparity.org/   Stay tuned.

Oh, by the way. We have an FSC-certified manufacturing facility with a California, USA address. Anybody need some local manufacturing to defend your brand while the Feds take their sweet time ruining your business, and while you're busy visiting new flooring mills in Vietnam? We'll be happy to take your call.

While we're waiting for the flood of calls from importers needing contract manufacturing, we'll be pursuing our newest initiative: custom finishing. The idea itself isn't new... but it is new to us. We have exceptional finishing capability and know-how, and have been using those assets in our own branded products. Now, we're willing to spread the wealth, and the orders are starting to flow in. We have perhaps the only flat line UV roll coat finishing machine "for hire" on the U.S. West Coast. Our finishing machine is set up in such a way that we can and will do short-runs, meaning low or no-minimum lots. This is important, since it means we will take your 2000sf order at a reasonable price, rather than insisting on a minimum 20,000sf order just to flip the switch.

At Plantation, there are several other initiatives too - ranging from a new specialty product utilizing some amazing technology, to new pathways to reaching and informing customers about the joys of customized wood flooring. More, later.

Summer Movie Fare: "Dinner for Schmucks"

We saw the Paramount movie "Dinner for Schmucks" over the past weekend.  The movie’s actually not bad, even given the title. (Interestingly, the word “schmucks” was not spoken in the movie itself.) Steve Carell and the other actors are very good, and the dialogue is pretty funny. The concept is a little warped, but hey... it's Hollywood.

You may recall from earlier blogging that we were commissioned by Paramount to produce an intricate parquet floor for the set of this film. Naturally, then, you can expect we hooped and hollered over our "Hollywood" parquet floor The parquet floor filmed very well, and is quite visible during many of the dining room scenes, which take place in the second half of the movie.

I had a particularly good time because I was on the set for the filming of several of the scenes in the show, and recognized all the setups and action. Even though the movie gives the sense that action is going on all the time, and that there are relatively few people in each scene, the fact is that the set is jammed with people and equipment just outside the view of the cameras. The actors spend a little time acting, and then much of their on-set time standing around chatting with each other, getting something to eat (I met Carell at the snacks table), taking a nap, or going over lines. But not actually acting in a scene.

When scenes are being shot, the individual takes don't last very long; and they get done over and over. For example, one scene about one-half second long in the movie shows a mouse being dropped into a bucket - if you see the film, you'll recognize this scene. The actual shooting of that mouse being dropped into a bucket involved two cameras, an intricate lighting setup, a half-dozen people looking down into the bucket, and was acted out three or four different times, just during the time I was watching.

Pretty interesting stuff - that would give an efficiency expert nightmares.

Paramount has called us on two additional projects. We'll keep you posted on this "glamour" side of our business!

Something New, Something Old

It's July already. I guess we stay busy, and the time flies by. In that flying-by time, there's always something new. And everytime there's something new, something else turns old.

New:  a week spent on the East Coast earlier this month - New York, and Boston. New York was again fun in the summertime, although I got to suffer along with the entire Eastern seaboard in the well-reported heat wave. I of course was traveling on business, and the business side of New York for us was suffering from stormy weather also. Certain things I thought were true were in fact not true, and certain things were said that revealed that untruth. But these are issues that arise in every business, including ours.

I proceeded to Boston, where the treading was much, much easier. We were privileged to be invited to participate in the annual "post-NeoCon" Boston party sponsored by Jim Burke's Allegheny Flooring - targeted to those professionals in the flooring trade that opted out of traveling to Chicago for the real NeoCon show. "Those professionals" are further described as about 400 architects and interior designers in the New England area, attending this Thursday afternoon and evening extravaganza. Plantation had a modest display of flooring for the troops, and happily met what seemed like all 400 of those professionals!

New things push previous new things into the now-old things category.

One old thing is the maturation of the subject I wrote about here many months ago - the making of hardwood flooring by prison labor. My thesis has been that the state and federal govenments should not be supporting manufacturing in prisons of products that compete with products produced in the private sector by tax-paying, mortgage-paying, family-supporting citizens. It is galling to think that I cannot hire additional workers, or worse, that I have to lay off my workers, while prisoners supported by the state do the same work in their prison workplaces, subsidized by you and me.

Anyway, while I was all exercised over this subject, I did what all red-blooded Americans are advised to do: I wrote to my Senators! My Senators are the California Senators, namely Barbara Boxer and Dianne Feinstein. And guess what! They answered me!

Barbara Boxer's office sent a letter that said "Dear Citizen..." and proceeded to tell me how much she appreciated my letter, went on to mention all the things she is doing to help me, the poor, put-upon citizen suffering from the policies of George Bush; and of yes, how she is fighting for the environment. Not a hint of response to my specific concern - just a form letter. Pretty much a joke, and I hate to say it - pretty much what I expected.

"DiFi," on the other hand, wrote me a real letter, signed by the Senator herself. Turns out the prison labor situation is the focus of one of her committee assignments in the Senate, and she promised in her letter to remember my concern the next time the committee met. A real response - what a concept! Thank you for listening, DiFi.

Why am I rehashing this subject now? Two things happened recently to bring my thoughts about competing against prison labor back to the forefront of my mind. One was a piece in the Wall Street Journal about prisoners being "laid off" from their "jobs," due to a retraction in demand for the products they make. The accompanying sentiment was sympathy at this unfortunate development, and likened these layoffs to those of the private sector. Of course, we all know it's not the same. Prisoner layoffs don't result in failure to pay the rent, or tightening the food budget, or telling the kids no vacation this year.

But laying off prisoners does have an affect, according to the WSJ article. Prisoners don't like to have nothing to do all day, so the level of prisoner unrest is rising. Prisoners are acting out against their "layoffs." Guards are endangered, lockdowns are more frequent.

Give me a break.

The other event that happened to focus me on this topic is a conversation I had at a recent trade show with an industry executive whose well-known flooring company supports in this prison labor scheme. After I expressed my views on this subject, this executive explained about the marvelous benefits being generated by his company by making their flooring in the prison system; about the monies being sent home to families of the incarcerated, about the funds paid in being used to offset the state costs for maintaining the prisoners, about the restitutions being made to the prisoners' victims, about the savings accounts being established in the prisoners' names for use at the time of their eventual release.

But, significantly, this executive confided the real reason they go to prisons for labor: the fact that the flooring company can find no one outside the prison system who will do the work. That is, the effort needed to make handscraped wood floors is too hard, too much work for too little pay for the good folks in the neighborhood. Prison labor, according to this executive, is their only recourse.

I said instantly, send your work to us in California, and my crews will work night and day to get your jobs done. They need and want the work. Unlike prisoners, they have rent to pay, groceries to buy. They pay taxes, they raise their families.

And they didn't steal your car.

Where've I Been?

I checked the date of my most recent post. December?! That's a long time. You may ask, where've I been since December?

Many places, both literally, and figuratively.

Literally, I've been to Las Vegas for the International Builders Show in January. Then back to Las Vegas in February for the Surfaces trade show. Later, off to Dallas for a round of hospitality designer visits. Back and forth to jobsites and customers in San Francisco. And, during it all, the steady drumbeat of commuting between the factory and offices in Oxnard, and my home in the Bay Area.

Figuratively, though, I've been to even more places since December. First, we tried to create something different, and I thought pretty much fun, at Surfaces. Normally, we would have had the pleasure of paying through the nose for a booth in a dark and remote corner of the convention hall, because after all, we haven't been displaying for two lifetimes, and accordingly, we have poor space selection options. Instead, we decided to set up camp across the strip at the Mirage Resort. We took a suite on the penthouse floor, and stocked the place with food, drink, and product displays and literature. We invited suppliers, old friends, and some of the people we hoped will become new friends. Instead of standing for eight hours in an exhibit booth, we sat on couches. We snacked, sipped, and chatted - a lot - and until the wee hours. It was great! We'll do it again.

Another figurative place I've been was the experience of collaborating with the design community in Dallas. Some of our new designs are meeting enthusiastic professional acceptance. I was delighted to learn we have earned a business place at the table in the buzzing Dubai/Abu Dhabi arena, with the help of our friends immersed in the design business there. We also have been awarded a Caribbean foothold, which should lead to many more overseas resort-style projects in the coming years. Plus, we've just entered the production phase of a Dallas-designed wood floor for a nameplate hotel project.

As stimulating as these experiences have been, I'm most pleased about something else: the new and energetic expansion we have taken on for the whole company.

Strategically-speaking, Plantation is a "product-driven" enterprise. We aim to design and manufacture the best wood floor available anywhere on the planet, and sell it to whomever wants one, anywhere. Our strategy is not about certain customer groups, or certain technologies, or certain distribution channels. We're all about the Plantation product - the best wood floor we can possibly make!

And we've done pretty well at that. Our plank floor, with its high quality and fully-customizable woods, colors, and finishes, is well-received by the high-end design and contracting communities. Our handmade and prefinished parquet floor designs are popular with designers, builders, and consumers alike.

But the requirement for our company to remain relevant is tied up in innovation. Accordingly, we are engaged daily in product innovation - new colors, new finishes, new shapes, and new design ideas in wood flooring, and all under one roof. One of the joys of owning our factory is the ability to put new ideas into motion under our own strict control and timing. When we, or our customers, want to know what's going on, we simply walk around the premises, and we can see exactly what's going on.

But in additon to product innovation, we are also involved in process innovation. We are testing, upgrading, and modifying the way we produce our customized floors. We are already the specialists in making short production runs - creating for our customers the ultimate in flexibility of choice and timing for their orders.

But during our process innovation, we have discovered something more. Our acts of process innovation are leading to additional, and unexpected, product innovations. For example, one of the floor finishes we developed has led to a product innovation for commercial applications that we didn't have before. Another process innovation is reducing lead times for our customized products by half! And, a killer side-effect: a lower cost of production for these new products! When you are a product-driven company, as we are, this is truly exciting stuff!

Now, what to do about it all? Well, this is where the new and energetic expansion of the company comes in. We have developed two entire new wood floor product lines! And we have a new national sales manager, coming to us from a large and well-known national flooring company. He is busily recruiting and training our national sales force, and we're plotting thirty new markets for new products. Our first big foray into this new marketing rollout is the HD Expo in Las Vegas starting May 19. All our friends will be there, and we can't wait to show off!

So - you may ask, where have I been since December? Now you know!