Thursday, February 25, 2010

Meet Ruud Steenvoorden, Newest Floor Covering Institute Consultant

I’m pleased to introduce Ruud Steenvoorden, the newest consultant to join the Floor Covering Institute consulting team.  Ruud was born in The Netherlands but now lives in South Africa after a 35 year career with Fetim. B.V.  Fetim is one of the largest wood flooring providers in Europe with channels to retail, commercial and DIY chains.

Ruud began with Fetim in 1975 and actually grew up in the business, starting as a trainee and eventually becoming the Director of Corporate Buying responsible primarily for Fetim’s hardwood flooring products. He has conducted business in China, Indonesia, Hong Kong, and across Europe and has been responsible for wood flooring production from logs to showrooms. His business experience includes mergers and acquisitions, international product sourcing, channel distribution, marketing and much more. He speaks four languages: Dutch, English, German and French.

From 2005 to 2009, Ruud was also vice-president of the European Federation of Parquet Importers (EFPI), a Brussels based association of European importers of engineered and solid wood flooring.

In 2006, after more than 30 years with Fetim, Ruud and his wife “retired” to their summer home in South Africa.  There he continued to manage the strategic side of Fetim’s wood flooring business and began to transition into independent consulting with, Steenvoorden Consultancy. We are thrilled to have him on the team at the Floor Covering Institute. In this interview I think you will find his experience not only impressive but interesting.


SN: Ruud, how did you and Jim Gould become acquainted?

RS: Although we have many common acquaintances, Jim and I did not meet until the SINO US EUROPE Wood Flooring Summit in Shanghai last year. Thomas Baert of China Floors suggested that I would make a good addition to the Institute. I was very delighted with this idea and immediately accepted Jim's invitation. I have the feeling I have entered a completely new world that is very challenging. Now I am part of this prestigious group at the Floor Covering Institute, and like my peers there, I am passionate about the floor covering industry.

SN: What do you like most about this industry?

RS: It is an incredibly big market, worldwide, and the changing trends are very challenging. If you look back ten years you see the changes and I can only say you have to stay awake in order to be able to follow it. I am not only talking about the products but also the facts around it like changing laws and the environment.


SN: You spent over 30 years at Fetim, tell me how you got started in this long career.

RS: Believe it or not, I started at Fetim as a trainee before the company included flooring in their product line. The company was an importer/distributor of wood construction materials mainly in the Dutch area which is where I was born (the Netherlands). I studied wood technology in the early years then learned to design products, find the raw materials and suppliers, get the products manufactured to specification, marketed and distributed.

We learned that commodity products were popular with the customers but didn’t provide enough profit to grow a business so we invested in innovation. Fetim actually was one of the first companies in our industry to have a separate division dedicated to creating new products and product groups. We then split Fetim into two divisions; retail and commercial, and I sourced and marketed for both.

SN: What part did you play in getting Fetim into flooring, specifically laminate?

RS: This is a great story of how relationships and ideas can combine to make great things happen.  In 1986, when we entered the flooring business, carpet was 85% of the market. By 1988 Pergo was just introducing laminate in Europe. Fetim was keen to have a laminate product so I visited my counterpart at Kaindl, who at the time produced particle board and HPL shelving, among other things, but not laminate flooring. They were also looking to diversify and he showed me a Pergo panel. I asked him whether he would be interested to make such products and he said that he was considering it but did not have the courage as yet. I asked him, “if I gave you an order for 100,000 m2 would you consider purchasing the necessary machinery?”  He answered “yes!”.  It was one of my best deals ever and it took only a few minutes. Kaindl, who belongs to the huge Kronospan Group, was the pioneer in their group and later all their factories started to produce laminated flooring. The product became a big success in the Fetim Group and still today Fetim is the main player in this field in the Benelux area (Belgium, Netherlands and Luxembourg).

SN: It’s an interesting coincidence that you sparked the growth of laminate in Europe and Jim did the same in the U.S. when he introduced Pergo. Do you find you have other things in common?  

RS: I think that Jim and I both look further than just the product itself; in fact both of us have a high level view of the total product groups in general. We try to focus more on continuity and the long term strategic approach. I think on a long term basis and take the necessary steps for achieving that.  I say it’s “the continuous drop that finally makes the hole in the stone!”

SN:  What was your experience in the early years doing business in China?

RS: When China became the low cost provider to the world during the 1990's they had a policy to create work in the rural areas and wood flooring factories were set up in the highly forested North east sections of China. It was the business of many Chinese delegations, arriving in groups of 10-15 each time, to ensure that workers were working. By the end of the 1990’s those factories were producing 3-ply engineered flooring and also solid white oak flooring.

But it was not simple. I saw beautiful factories with absolutely top machinery from Germany and Italy, capable of producing a very nice product. However,  just having the machines is no guarantee of success. Management, raw material and staff training were needed to build up a steady product and even after that was realized, a lot of personal guidance from the buyer was needed to keep the quality on a stable level. In fact, buyers like me had to control the production process from the log to the final product. But is was worth going through the process although it was not always well understood by my management. It was the hard way.

After successfully surviving the early challenges, we started marketing solid wood flooring, branded SOLIDFLOOR (r), for the whole European market. We developed our own products, manufactured them in China and became the market leader for imported wood floors in Europe. Fetim is still the market leader today


SN: Did you play a part in the marketing as well as the sourcing and distribution?

RS: Yes. You cannot only be partly active in either purchasing or marketing. you should be able to overlook the whole field of the product line between factory and final consumer, only then you can translate opportunities to both sales' and purchasing sides.

SN: You are co-moderating China’s wood flooring summit with Jim next month.  Why do you think this is important?

RS: It is an initiative to bring parties involved in wood flooring together to discuss topics and general points of improvement required by the global industry. This greatly appealed to my approach to the industry.  My slogan has always been: better to talk with each other than talk about each other. Both EFPI and the summit have proven that it can work when competitors sit at the same table, because at the end of the day, nobody can do it alone.

SN: It sounds like you are very happy to begin a new adventure.

RS: Yes! Now I am going to concentrate my activities on The Floor Covering Institute. I will go to Shanghai in March as moderator of the US-SINO-EU summit together with Jim, with only one goal: bring a long life to the flooring business!

Welcome to the team Ruud!  If you would like to send Ruud a welcome comment, place a post below or send him an email, ruud@steenvoorden.com.

Susan

Tuesday, February 23, 2010

What's Happening at the Floor Covering Institute?


I can’t believe it’s almost March 2010!  In my past life as a flooring retailer, March was always one of our busiest months and it seems the same is true now. People often ask me what types of things the consultants work on but because they are independent business owners I don’t always know what everyone is doing. I checked in with several of them and this is what they reported. Besides being busy, I find the diversity interesting and hope you will too.


Lew Migliore – expert in technical flooring standards and claims


It seems that no grass will grow under Lew's feet with his speaking events on top of an already busy schedule. Here are just some highlights. Next week he addresses the Floor Covering Installation Contractors Association speaking on recent claims and how they could have been avoided.  The following week he addresses the National Facilities Managers and Technology conference in Baltimore speaking on "The Importance of Proper Carpet Selection and Specification." In April he will participate in a joint INSTALL/UBC Floor Covering Leadership Conference in Las Vegas designed to give contractors and manufacturers hands-on information to keep their business flowing. With others he is currently rewriting the Carpet Inspection Reference Guide and his company will soon roll out a new carpet protector product that they co-developed.

David Wootton – expert in business practices and troubleshooting

David is putting his years of business management expertise to work in both Europe and the U.S. right now. He is advising an Eastern European company on how to organize their business within Europe and helping a U.S. company to secure investment financing. He is often contacted by companies looking for key people and he is presently involved in recruiting for a large U.S. flooring company.



Christine Whittemore – expert in social marketing and marketing to women in retail

In April, Christine will participate at Columbia University’s (her alma mater) BRITE ’10 conference in NYC where bright minds and big thinkers from business, technology, media and marketing gather to discuss how technology and innovation are transforming the ways that they build and sustain great brands. It is this kind of knowledge that Christine uses to help flooring retailers such as Big Bobs Flooring Outlets of America, which she recently addressed as keynote speaker at their annual meeting. She spoke about the importance of delivering a memorable and consistent retail experience, both in-store and digitally. Her interview with e-Floors magazine (their debut issue) was just published where she spoke on the use of digital technology to strengthen relationships with customers and the habits of the flooring consumer of tomorrow. The nuances of selling flooring to women is not just an area of expertise for Christine but it is a passion that Floor Daily captured in their recent interview with her. I highly recommend that you read her highlights of this interview, or listen at FloorDaily.net.

Stuart Hirschhorn - expert analyzer of the global flooring industry

Stuart reports that he is working on the Catalina Laminate Flooring Report and seeing a growing competition from and increasing array of "click" installed flooring.  He will soon start work on the Stone Product Report and the March 2010 Quarterly Update to the Catalina Report on Floor Covering.  As you can see here, flooring is just one of many related topics that Stuart and Catalina analyze and report.


Christopher Ramey – expert in branding and retail in the affluent realm

In addition to consulting with clients who range from inside and outside of the flooring industry, Chris is a popular keynote speaker, speech writer and coach and has recently devoted significant time to sharing his insights with a variety of people including the Palm Beach Chamber of Commerce, The Commonwealth Institute and Young Professionals in Yachting, as well as teaching at Indian River State College.  He just spent a couple days with a private equity firm interested in investing in the flooring industry. He says that regardless of whether you’re in floor covering, the financial world, yachting or serving the wealthiest individuals in the world, the insights are more impactful when they come from a broad and informed perspective. A new article by Chris was just published in the 2010 edition of LUX magazine, another will appear in the Spring issue of .IT, the magazine for Italy-America Chamber of Commerce – Southeast and he just finished a new column for Floor Covering Weekly.


Jim Gould – expert in market development, international trade and distribution channels


Jim recently observed that it seems every one of his clients has a synergistic relationship with another that they don’t know exists. Recognizing those synergies is what he does best.  He just returned from Surfaces where his client, New Zealand wool growers, successfully launched the new Just Shorn wool brand with the International Design Guild, a division of CCA. He is now working on phase two of that project.   He is also organizing, and will moderate, the third annual International Wood Flooring Summit as part of Domotex asia CHINAFLOOR in Shanghai in a few weeks. The international Domotex exhibitions are his clients and one or the other is always at some stage of planning or execution.  At home he is helping both Chinese and European manufacturers expand their markets into the U.S., and counseling a domestic manufacturer who wants to expand overseas. He is developing a Far East sourcing and logistics strategy for a  large U.S. company.  And like most of the consultants, he is always writing and publishing.

Meanwhile, back at the ranch....we have two new members joining the Institute this month and next. Later this week you will meet Ruud Steenvoorden an international wood business expert who will join Jim in China and co-moderate the International Wood Flooring Summit.  And next month you will meet Donato Pampo, of the Ceramic Tile and Stone Consultants, Inc (CTaSC).

I hope you found this summary of what's happening enlightening and maybe it will put some of what we do into perspective. Thank you for reading.

Susan

Susan is the Director of Communications for the Floor Covering Institute, a fancy name for "she who does whatever needs to be done."

Thursday, February 18, 2010

Understanding Opportunities in China

Christine B. WhittemoreIn China Has Awakened. Are You Ready? I mentioned that I plan on sharing with you digital resources to help better understand global opportunities. My focus, for now, is China.

Understanding Opportunities in China: AccessAsia


In this post, I introduce you to AccessAsia and Malcolm Moore.

AccessAsia


AccessAsia provides market intelligence to companies wanting to do business in Greater China and Southeast Asia. From their About Us section, they are based in the UK, Malaysia and China and have been in business since 1997. They've also worked with an impressive roster of companies.

AccessAsiaTheir resources section offers at-a-glance a map of Greater China and Southeast Asia. Click on any country - for example China - and you have a snapshot of the country and some vital links.

The links section captures links to newspapers & media, travel sites, culture, business services, governments and stock exchanges.

Finally, check out the Weekly Update. AdAge describes it as "a snarky weekly update reflecting relevant business, economic and political issues."

Malcolm Moore

Malcolm Moore is the UK's Daily Telegraph correspondent in Shanghai since July 2008 and writes about his experiences in China. His perspectives are fresh, entertaining and insightful. "Chinese man living in airport returns home" is his latest Daily Telegraph article from 2/12/10.

Also check out his Top 7 Chinese Whispers of 2009. Note the references here and in the other China relates resources to "Haibao" - the official blue World Expo 2010 Shanghai China mascot [who reminds me a bit of Gumby...]. Those of you headed to Shanghai for DOMOTEX asia/ChinaFloors may have the opportunity to get up close and personal with Haibao! If so, please do send a picture.

Would you let me know what you think of these two resources?

If you have others, I'd love to share them here in this space.

~ Christine

Christine B. Whittemore
Chief Simplifier, Simple Marketing Now
cbwhittemore@simplemarketingnow.com

Tuesday, February 16, 2010

Flooring Companies: It's Time for your Annual Check-Up and Spring Cleaning

I believe the year starts when Surfaces is over and manufacturers have announced their plans for the coming year and introduced their new collections. Domotex, Surfaces and manufacturers’ road shows are over and it’s time to push ahead with 2010. However now is also the time to check your company’s health, perform the annual check-up and do some spring cleaning. This applies to all channels in the industry be they manufacturer, distributor or retailer.

By now most of you should be well along in the process of creating new budgets for 2010 but for those who may have just completed your audit or are still in the process here are a few suggestions I hope you find helpful.

The Physical: Examine Your Statements and Set a New Budget

Review your income statement for 2009 and compare it with 2008.
  • On a line by line basis compare the number for 2009 with 2008 and make sure you can explain the difference better or worse. This will enable you to keep doing what’s working and fix what needs improving.
  • Calculate your average selling price and determine why it has changed since the previous year. Was it caused by a change in the product mix (maybe people trading down in view of the difficult economic situation) or did it increase as a result of some new better margin products you began selling?
  • Compare the difference between total sales for ‘09 versus ‘08. Is the difference new customers, customers lost, or simply a change in volumes sold?
Regarding the cost of sales, manufacturers should compare labor and material costs on a “per thousand square feet” basis to highlight differences that need explanation. With distributors and retailers it’s a case of analyzing your margins. Did you have price increases from your suppliers you could not pass on or did you take advantage of any promotions?

Next, take a look at fixed overhead costs, the biggest portion of which is usually salaries and related costs. Calculate total overheads as a percentage of sales and explain the change. If it is higher maybe you should have reduced staffing levels.

Compare 2009's actual with the 2010 budget.
  • Determine if the 2010 budget is realistic. The most important questions to answer are: “How much does the market need to improve for the budget to be realistic?” and  “Is it achievable given present market conditions?” If the answers are “A LOT” and “NO” then your business could be in trouble because your budget is showing what you would like to achieve versus what is realistic.
  • Do the same comparisons as detailed in the income statement section and this will highlight the magnitude of the task. Having reviewed many budgets over the years it has always amazed me how often the first quarter of a new year is forecast to be so much better than the last quarter of the previous year. Businesses rarely turn around that quickly, especially in today’s economy.
If my comments apply to your budget then revise it so that you come up with a realistic achievable target. It’s okay to have a budget that is a stretch but not one that requires a miracle!

Compare working capital in 2009 with 2008.

This is all about cash flow by which all companies ultimately succeed or fail. I am referring to receivables, payables and inventory and their impact on cash utilization.
  • Receivables. The best method to measure receivables is to calculate the number of days sales outstanding (DSO) at the end of the year, or any period for that matter, and see how it compares to the previous period and your published terms. Keep a very close watch on receivables and remember that banks do not sell flooring (at least not yet) so you should not be lending money. Do not be afraid to put customers on hold if they are delinquent. It probably takes more than $10,000 in sales to recover a bad debt of $1,000.
  • Payables. It would not be ethical to suggest that you “drag your feet” when paying bills but be aware of discounts available and give those suppliers preference. Always make sure the value of the discount exceeds the interest payable if your business is operating on borrowed money.
  • Inventory. Inventories are an especially challenging and sensitive area. Think of your inventory as a big box of dollar bills because that is exactly what it is. It is very easy to be seduced by attractive pricing on bulk purchases but this will probably mean you have to fund this inventory for a significant period by paying for it before you sell it and this can put a strain on cash flow. Purchases from overseas pose a similar problem given shipping times and volumes involved.
So that completes your company’s physical. Spend a day on the exercises outlined above. I am sure you will find it very worthwhile. If you are a member of senior management it’s easy to gain access to these figures, but whatever your “pecking order," you should be able to see the numbers that directly affect your area of responsibility. Sales people can analyze sales by customer and reps and manufacturing people can look at the product mix of items produced to highlight the profitability, or lack thereof, of various products.

Finally, I want to talk about your Balance Sheet and that brings us to . . . .

Spring Cleaning: Review and Revalue Inventory and Receivables

In the same way we can fool ourselves with an over ambitious budget, it is all too easy to fool ourselves with the value of the inventory and the “collectability” of receivables.

Although your inventory may be correctly valued based on the original purchase price you must ask yourself “What can I sell it for today?” If it has been in your inventory for more than a year chances are it's worth less than your inventory listing shows. In the floor covering business, moldings are a prime suspect as are samples, displays and accessories. Do the exercise and spring clean your balance sheet by correctly valuing your inventory.

The same principle applies to receivables. If an invoice is unpaid after 90 days it is usually because there is a query surrounding it. Again, as part of your spring cleaning, get the old accounts cleaned up, resolve queries, and write off what is not collectible so your balance sheet accurately reflects what you can reasonably expect to collect.

After your physical your spring cleaning can now get underway.

I am not trying to teach you to suck eggs but merely pointing out the need to be realistic and having been in the flooring industry for more than 20 years I know it is not as easy as I may make it seem. It is however important because I do not see 2010 being significantly better than 2009.Please read my blog post from October which gave my thoughts about future trends in our industry: Wootton Takes a Look at the Future of Our Industry

If I can be of help to you let me know and similarly if you disagree with anything I have written I would love to hear from you.

As always, if you have, thanks for reading this.

David

David Wootton is President of The Wootton Group, an independent flooring consultancy, and a member of the Floor Covering Institute. He is past executive officer of both Columbia Flooring and Harris-Tarkett.

Thursday, February 11, 2010

Are Floor Covering Sales on Schedule for a Spring Recovery?

Stuart HirschhornFLOOR COVERING STATISTICAL TRENDS AND OUTLOOK
Stuart Hirschhorn is a member of the Floor Covering Institute and Director of Research of Catalina Research, Inc. which provides in-depth market research on the floor covering industry.

Last week as I walked through Surfaces, the U.S. flooring show in Las Vegas, I heard many optimistic comments about the future of the U.S. floor coverings industry. A number of vendors even mentioned that sales were good in January (or maybe sales were better than they thought they would be). This attitude is in-line with my outlook for the floor coverings industry posted here last month (Catalina Says Floor Covering Sales Expected to Begin Recovery in 2010). As I stated then, the recovery of floor covering sales will depend upon the returning health of the residential replacement and remodeling market, since the builder market remains weak and nonresidential building construction spending continues to decline at an accelerating rate. I also indicated that the recovery should begin in the spring of 2010.

Key factors in the health of the residential replacement and remodeling market are employment levels, personal income growth, and the pace and pricing of existing home sales. Rising employment levels will add confidence to buy, increasing incomes will give consumers the ability to buy, and an upturn in existing home sales and selling prices will give homeowners a reason to invest in their home.

If the recovery is on schedule, these determinants of demand should be showing improvement. So let’s see how they performed in the fourth quarter of 2009 and in early 2010:

Employment: U.S. civilian employment continued to decline at about 3.7% in the fourth quarter of 2009. However, the drop narrowed to 2.6% in January 2010. This slight improvement may have contributed to a rise in the consumer confidence index in early January.

Personal Income: Strengthening gains in personal income in the fourth quarter may have also contributed to growing consumer confidence. Real personal income rose 1.8% in the fourth quarter of 2009, versus only a 1.1% gain over the first three quarters of 2009.

Existing Home Sales and Prices: The most important trend for the floor coverings industry has been the turnaround in existing home sales and existing home prices. In the fourth quarter of 2009, existing home sales increased by 26.2% over the same period in 2008. This compares to a 1.2% decline over the first three quarters of 2009. More importantly, average home prices seemed to have turned the corner. In December 2009, the average value per existing home sold rose by 3.6%. This may be the most important number to floor covering manufacturers and retailers and is a key sign that we are on schedule for a turnaround in the spring of 2010.

On a more anecdotal basis, I have been looking for a townhouse in South Florida for my first-time home-buyer daughter. I thought it would be easy to buy a townhouse in the Delray Beach/Boynton Beach area for around $150,000, since this location is in one of the worst housing markets in the country. However, our experience was just the opposite. My daughter and I wanted to see 11 properties the first weekend of looking. By the end of our first day, however, six of the 11 units had been sold, and all the properties we did see needed some type of flooring (especially carpeting).

I expect you will be seeing these home-buyers by this spring. Please let me know when they start showing up!

Stuart

Tuesday, February 9, 2010

International Summit to Address Global Wood and Laminate Flooring Issues

Jim Gould, President of Floor Covering InstituteLeaders and stewards of the world's wood and laminate flooring industries will converge in Shanghai next month to discuss critically important issues impacting wood based flooring markets around the world. The 2010 International Wood Flooring Summit (IWFS) will be unlike any other in the world and is open to anyone attending Domotex's annual Asian floor covering industry event, DOMOTEX asia/CHINAFLOOR. Nowhere else in the world can you drop in and listen to so many thought leaders from so many parts of the world discussing global topics that affect your industry.The goal of the IWFS is to increase communication among international markets and industry leaders in order to better understand governmental regulations, standards and environmental issues central to our industry. Last year, Ed Korczak, CEO of the U.S. National Wood Flooring Association, and I represented the U.S. at a similar Domotex event which was covered well by our media. This article by Floor Biz, Wood Summit: Industry Groups Join Forces for Common Goals, is a good indicator of the kinds of topics the 2010 summit will tackle.

This year, I have been asked to moderate an expanded summit with a broader perspective and wider range of participants. Along with last year's participants, which included the China National Forestry Product Industry Association (CNFPIA), I have invited Bill Dearing of the North American Laminate Floor Association (NALFA) and his European counterpart from the European Producers of Laminate Flooring (EPLF), as well as wood flooring association representatives from South America, Canada, Africa, Malaysia and Indonesia. Mark Elwell, board member of the U.S. based National Wood Flooring Association, will attend as will members of the The European Federation of Parquet Importers based in Belgium, and other timber trade organizations.

The Europeans will be asked to present on their Forest Law Enforcement, Governance and Trade (FLEGT) initiative - their version of the U.S. Lacey Act. Some say that the EU’s legislation will be more cumbersome, requiring third party verification of legally logged trees. Others say that the clear cut certification is much easier than the subjective “due care” standards of the U.S. Lacey Act.

Sometimes just hearing a global perspective is an eye opener and that was the case for me last year when Ed Korczak and I presented on the U.S. Lacey Act Amendments which had recently gone into effect. Ed gave an excellent explanation of the law and how it would impact the wood flooring business in the United States. In my naiveté, I was surprised when the reaction from Asian and European members was anger and confusion. Many viewed the act not as a way to support efforts to control illegal logging but rather as a protectionist movement that created trade barriers to keep foreign manufacturers out of the U.S. market. This prompted me to write the research paper, Continuing Wood Trade Under the Lacey Act Amendments, which has been used as a basis of training by several U.S. and international companies. I am sure that the conversation will continue this year.

The bottom line is that the world is no longer waiting for good consciences to determine good acts. Governments and NGOs are acting in concert resulting in new standards to protect our planet. New requirements are permeating the industry at every level. Current and pending legislation will impact the wood flooring industry from forest to consumer. Changing standards and scrutiny will continue as public sentiment grows.

The International Wood Summit will be held Wednesday, March 24th from 3-5 p.m. during Domotex asia/CHINAFLOOR which runs from March 23-25. I applaud their effort to provide our industry with a forum to discuss these issues and coordinate our efforts around the world.

I hope some of you will join me at the summit in Shanghai - it's free and open to the industry. If you cannot make it to Shanghai, and even if you can, I would greatly appreciate your comments here to let me know what issues you feel are critical to address - I am finalizing the agenda now. You can also contact me for more details about the event.

I hope to hear from you soon!

Jim

Jim Gould, president and founder of the Floor Covering Institute
jgould@FloorCoveringInstitute.com