As domestic manufacturers have begun starting the engines of their new luxury vinyl tile (LVT) facilities here in the U.S., foreign-sourced products continue to hold a large stake in the product category. In fact, according to FCW’s 2014 Statistical Report, Catalina research reported that imports captured 43 percent of total U.S. dollar sales and 65.5 percent total resilient square foot sales.
And as the vinyl category begins to feel more and more price pressures from rising raw material costs, many industry insiders believe that sourced products will continue to remain at a stable influx level due to the value, efficiency and quality of overseas manufacturing facilities.
According to Lindsey Nisbet, who leads marketing and development at EarthWerks, imported LVT currently represents roughly 60 percent of the category. “As the market for LVT continues to increase, the demand will increase. The overseas factories will be a great source for keeping up with this demand, while we expect the ratio to remain relatively the same,” she said.
Nisbet explained that because LVT has mostly developed over the years in the factories of Taiwan, Korea and China, their expertise has allowed the category to become more innovative and expansive — now more than ever.
“LVT sourced overseas takes advantage of the experience and resources that this market offers, allowing for enhanced capacity and ideal quality,” she said.
Gary Keeble, director of marketing at Metroflor, said that the company’s history has been built upon the advantages of manufacturing overseas, specifically in Asia.
“Today, Metroflor utilizes as many as eight different manufacturing facilities across Taiwan, South Korea and China, each specializing in particular product types and possessing unique technologies that we can leverage as we develop new products,” said Keeble. “This diverse capability is a definite competitive advantage, and one that could not be achieved through a single plant or factory, regardless of location.”
He added that some of Asia’s greatest strengths are speed to market along with rapid adaptation of new technologies, benefits that have allowed Metroflor to continue introducing new innovations to market.
“At Metroflor, manufacturing there has enabled us to claim a number of industry firsts and remain pioneers in the marketplace,” Keeble explained. “We were the first to export what is now known as luxury vinyl tile; the first to create a grip strip product; quick to evolve in the floating LVT arena with a click product; and in January, the new Engage Genesis with Isocore technology.”
While Karndean manufacturers its LVT in the Far East, the recent expansion at its headquarters in Export, Pa., is part of the company’s plan to get the right infrastructure in place to grow market share.
“By doubling our warehouse space here in the U.S., we are able to stock more SKUs and go direct to our retail partners,” said Emil Mellow, vice president of marketing at Karndean. “Our products are designed specifically for the U.S. market. Some SKUs are regionalized and because development takes around 18 months, we work hard to keep a step ahead of the trends.”
One main concern with manufacturing LVT overseas is lead time with shipping. The best way to compensate for this, said Nisbet, is to plan.
“At EarthWerks, we have an incredible distributor network and an in-house inventory to allow for constant availability of our products. Staying ahead of the market is key, and we strive to do just that,” she explained.
Competition from cheap products
While price sensitive, entry level, commodity products will continue to be made overseas and imported into the U.S., a higher percentage of LVT consumption will be produced domestically as major manufacturers get their plants up and running.
With the additional production capacity from domestic manufacturers, industry insiders anticipate that import growth will slow once those factories are up and running. But many suppliers believe there will be a transitional period for these new U.S. factories and the impact on imports might not be felt for a few years.
But for now, many manufacturers explained that the value received from imports handily beats out what domestic manufacturers can offer.
“As new domestic production comes on line, it could initially impact the percentage of LVT imports,” said Keeble at Metroflor. “While the level of imports could decline somewhat relative to the rapid growth of the LVT market, I would expect the volume of LVT imports to increase at a greater rate than the percentage in market share.”
And as imports continue to hold an important share of LVT production, Dave Reichwein, CEO of FreeFit said that there is a dichotomy developing between the importers of cheap LVT and the long-term players.
“On the one hand, you have everyone who has cash and can make an international call buying low cost products, putting on a private label brand and selling very, very low cost. Almost all of these products contain organic fillers which can grow bacteria and contribute to dimensional stability problems and tin-based ortho-phthalates which have recently been proven to cause cancer,” he said. “On the other side, you have FreeFit and several other large domestic manufacturers who are in the category for the long-haul and have developed and are manufacturing higher cost controlled formulas backed by real warranties.”
According to Keeble at Metroflor, newcomers to importing LVT from oversea can be challenged by an issue of quality. But for Metroflor, the company utilizes domestic U.S. standards for protocols through Asia to ensure unparalleled product quality.
“Metroflor has infrastructure, offices and factories in Taiwan, South Korea and China, and we utilize our own quality control staff to regularly check quality standards. Additionally, we have a lab in China that pulls product from each of our manufacturing facilities to conduct a separate battery of tests,” he added.
Nisbet at EarthWerks added that from a price perspective, there is a competitive aspect that arises when more players are involved in the category.
“However, EarthWerks has been in the LVT business for over three decades, proving our expertise, experience and trustworthiness in this category,” she said. “It is these attributes that will set the competitors apart while providing quality, unique products that will perform.”