AHF Products officially debuted as an independent company at The International Surfaces Event (TISE) in Las Vegas after Armstrong Flooring Inc. completed the sale of its wood flooring segment to an affiliate of American Industrial Partners (“AIP”). AHF Products is headquartered in Pennsylvania, at a brand new home in Mountville, with manufacturing operations across the United States and over 1,700 team members in North America.
At the 2019 Wood Flooring Expo in Fort Worth, Hardwood Floors sat down with CEO Brian Carson to learn more about the company’s journey and plans for the future.
Tell me more about American Industrial Partners’ (AIP’s) background, and how do you feel that the company’s portfolio and experience will benefit the hardwood flooring industry?
Carson: American Industrial Partners is our advocate, which means that’s the business that bought or carved out AHF from Armstrong. And they love the wood business. In fact, this is AIP’s third hardwood business that they’ve owned, and they’ve had great success with the first two.
The first one they bought, Northwest Hardwoods, was about 10 years ago. Northwest Hardwoods is one of the largest timber and panel suppliers in the U.S. By coincidence, they’re also one of our biggest lumber providers for solid wood flooring. The team that built that business, including the ex-CEO, is now with AIP, after they sold Northwest. His name is TJ Rosengarth, and he’s my operating partner.
About six or seven years ago, AIP bought Armstrong’s cabinet business, which they still own. It’s called ACPI, and they have grown that business to over a quarter of a billion dollars. When they bought it, it was a hundred million dollars. They also acquired another cabinet company earlier this year.
So while some folks are intimidated by hardwood businesses, AIP understands them intimately. They feel very comfortable, and they’ve demonstrated that they’re prepared to invest in them. Since I and our entire team bring a lot of experience in hardwood flooring, it was a match made in heaven. A primary reason why I and the team are excited are the growth plans that they have in mind, and that’s what we’re going to do. We’re going to grow this thing.
Which brands will AHF carry?
Carson: We have Bruce, which is the industry’s trade and consumer brand, and has been around since 1884. Think about that; manufacturing hardwood for over 130 years. Robbins, which we’re reintroducing into the market this year, that brand was in the wood flooring business in the 1800s as well.
About a decade ago, former ownership shifted away from the Hartco brand to focus on the Armstrong brand. Now, we’re going back to our roots, bringing the Hartco brand back into the market, and will phase out the Armstrong brand over the next couple of years. Our brands of the future are Bruce, Robbins, Hartco, HomerWood, Capella, and T. Morton, and, I think you’ll see us add some brands as we go forward.
Nobody else in the industry has a stable of brands like that, and quite frankly, brands that are as well-known and have as much legacy. That’s a real asset that I think is under leveraged and certainly will be an area of focus and investment moving forward.
How many of the original employees from Armstrong stayed on with AHF?
Carson: We have around 1,700 employees. There are seven manufacturing plants, and that talent moved over with the business. The skill set that we have is unrivaled, our folks have been making and selling these products for decades.
One of the things that attracted me to coming to AHF was the quality of the team that came with the business. The sales management, product team, the operations management, it’s all first class. And I have to tell you, their energy is through the roof. They’ve got a new opportunity to work for a company that will invest in wood flooring and loves wood flooring. It’s what they do.
What type of advancements does AHF plan to make, in terms of manufacturing facilities? And then also in terms of your products?
Carson: We’re already begun making investments in our U.S. plants, which are world-class plants. But, there were some technologies in drying, in scanning, in defecting that we could do better. We’ve already improved those investments, and as a company, we’re only a few months old.
We’re also making investments in at our Somerset, Kentucky, engineered wood flooring plant. We’re going to be making investments to give ourselves sawn and slice-face capabilities. As you know, North American engineered wood plants are primarily rotary type plants and then, sliced and sawn-face gets purchased and resold. We’re going to move to manufacturing our sliced and sawn-face products. You’ll see that sooner, rather than later.
We’re going to breathe a lot of life back into the brands. You’re going to see Bruce more pervasive, more compelling at retail. We needed to partner with a company that wanted to invest in the business, and that’s what we got with AIP, and we’re going to do precisely that.
The industry will benefit from a strong leader in the industry, we’re uniquely positioned to do that.
What is your forecast for the market, short term vs. long term? And then, how do you see AHF growing, in relation to that?
Carson: I think the year got off to a soft start, but that’s an industry thing, and to me, that’s an “it’s partly cloudy out today.” If I look over the long term, the economy is still pretty healthy, and I think that’s going to continue. At some point, you’re going to have an adjustment in the market or a little bit of a pause. But I think, over the long haul, the flooring market is going to continue to see slow growth. I don’t see a bubble or anything like that.
Now, yes, wood flooring has lost share. There’s no question, with the plastic “lookalike” products that are coming into the market. Some of that is the perceived benefits of the other products, but some of those same benefits, such as durability and even water resistance, are or can be benefits of wood.
For example, I’m moving back to Lancaster, Pennsylvania. I’m looking at a house that was built in the 1700s, and the house’s biggest selling feature is the wood flooring that goes back to the 1700s. It’s absurd for the competing products to state, that they have more durable products.
There is no product out there that’s going to add value, age with grace, be able to hold up like a wood floor. And I think we’ve allowed that message, as an industry, to get lost. We have to capture that back, and we have the loudest megaphone, and we’re in the greatest position to do that for our benefit, but also the benefit of the industry.
I think the category is going to be a slower growth category, but heck, behind carpet, I believe it’s still the second largest category. It’s an important category in the U.S. market, and we want to be in it. There’s tremendous opportunity to bring innovation to the wood category with water resistance and indentation resistance. There are some bona fide reasons why people may settle for a less product, other than price point. It may be dog claws scratching, or whatever it is. Those things are solvable, they really are. And as we solve them, we need to remind people that they shouldn’t settle for something.
Think about your house, that’s your single, biggest investment. Now, you could argue that a cubic zirconia ring looks the same as a diamond ring, and maybe it does. But, how would that go over in real life?
Wood is an authentic product; it’s the real deal. And how the industry lost the message that cubic zirconia rings are as good as diamond rings, I think that’s a shame. But we can recapture that message in the industry.
Wood is what people really want. Everything else, you’re settling. If you can address the reasons why people are settling for less, we’re going to do just fine as an industry. And I believe we can do that, and I believe we can grow in the industry, and I believe we can cause the industry to grow again.
So it’s a good segue into my next question. How does AHF plan to do that? How are you going to help educate consumers?
Carson: Some of our brands are the most exposed brands in the industry, that’s one of the best ways to get exposure. The question is, what do people see when they go to make a purchase? With our brands, you’re going to see a much more regional assortment, regional flavor to our product lines. In some products, having a one-size-fits-all across the country works. In wood, that’s not always a winning strategy, because it’s an aspirational product.
You’ll see us differentiate the assortment a little more, to give people exactly what they want in a specific market. And when you couple that with our brand power, I think that’s going to create more genuine interest, back in the retail base. Brands consumers have heard of, with products that have a color and styling palette that they want to buy in their local markets.
Whether it’s a real issue, or a perceived issue (and it’s probably a little bit of both), there is a lot of conversation around waterproof products. To a consumer with a pet, or kids, whether it’ll ever happen or not, there has to be a reassurance factor. We’ve launched a product called Hydropel, which is waterproof, top-down, bottom-up, sideways too – six dimensions of waterproofness And it’s 100 percent hardwood — no plastic in it. There you have a pure, natural wood, yet a waterproof product. What a fantastic innovation that is. And you’ll see that rolling out into the market. So a consumer can get the benefit of authentic wood, without any of the risks.
How will AHF invest in advancing the hardwood flooring industry, overall?
Carson: Industries need leaders, to drive consumer awareness to the product category and create excitement in the product category. One of the best things we can do for ourselves is to reinvigorate the brands, our product line, make investments in our business, and grow.
Also, without the installers and members of the trade who are working with our products, we wouldn’t have a business. At some point, this all boils down to someone selling a floor to the consumer and installing it. We are working hard to solve problems for these folks and making it easier to install. Resulting in fewer call-backs for the installers and making it more profitable for retailers to sell.