AHF Products and American OEM Leaders Discuss Acquisitions and Opportunities

In August, AHF Products announced the acquisition of certain assets of American OEM. Founded by Don Finkell in 2013 and headquartered in Burns, Tennessee, American OEM manufactures hardwood flooring and markets its products under the Raintree™, Hearthwood™, and Emily Morrow Home® brands, as well as private label. AHF Products is based in Mountville, Pennsylvania, with manufacturing operations across the United States and Cambodia. The company has more than 2,400 employees, and its brands include names such as Bruce® and Hartco®.

Hardwood Floors spoke with Finkell and Brian Carson, chief executive officer and president of AHF Products, about the acquisition and their insights on the current state of the wood flooring industry.

 

 

Why is this acquisition a good fit?

Brian Carson

Carson: It’s a hand-in-glove fit. At AHF, we’ve been investing a lot in the hardwood industry,  looking at the kind of brands with a product line that would be additive and customers that would be additive. With a management team led by Don that has proven that they can conceive products that consumers want to buy and the trade can make a lot of money selling, American OEM was at the top of the list. We thought it was an excellent move for our distributor and retail partners to continue to bring innovation under these brands. Each
company has its own strengths, and I think we are stronger together with our marketing, our product development, our brands, and our manufacturing capabilities.

Don Finkell

Finkell: AHF Products has a history in the wood flooring business that goes back more than 100 years. I felt like AHF had an interest in growing it, so it would be a good fit. I have known Brian for a long time, and at this time in my life where I am thinking about the future, it was attractive to me to be able to step back a little bit from the total responsibility of running a business. I have grandchildren that I haven’t seen as much as I would like to. I have a passion for the business, but it’s not a passion for every aspect of the business. I enjoy product and innovation. Brian’s created a way for me to continue to do that, but still maybe accomplish some personal objectives.

How will this acquisition boost the reach of American OEM’s products?

Finkell: When we first started American OEM, it was to be an answer to Chinese OEM because there are a lot of customers in America that want to have their own brand. Then we saw the need to add Hearthwood, which my daughter, Allie, created; Raintree, which Allie and I created together; and then Emily created her brand as a high-end, high-style brand, so we are covering various parts of the market. When you create these things, it’s kind of like your children. You want them to go off, get a good job, and be successful. AHF hopefully is going to accelerate those and make them stronger and better, both for the company that makes them and the customers that buy them. Because you can’t do anything without the customer, and the customer has to be successful.

“When people move into a new home, that likely means they leave a home. Somebody else buys that home, and within
six months, they remodel. Remodeling is propelled by low interest rates, which also propels new home construction and people moving around from one place to the other. I think wood is going to benefit from all of that because it is the aspirational choice, and it’s an authentic material.”
— Don Finkell, American OEM

Photo Courtesy of NWFA

What do the mergers and acquisitions we’ve seen over the last year mean for the wood flooring industry as a whole?

Carson: If you think about what happened when we bought LM Flooring, we grew the plant in Cambodia from 10 million square feet two years ago to be 55 million square feet next year. Those are all things we are producing and designing, and our distributors and retailers are selling. We have the biggest launch in LM’s history as we speak, we recently launched the Tmbr. brand, and none of that would have happened without that acquisition. We are looking to grow the American OEM business. We want the brands to have their own distinct flavor, but now they have a bigger toolbox to work with to develop those products. I think it has been great for the industry that we are breathing life into the wood flooring category, to the benefit of the trade as well.

In what ways have you handled challenges the industry has experienced this year, such as labor shortages and supply chain constraints?

Carson: Demand is good everywhere for the products, but there’s a shortage of materials, there’s a shortage of labor, and there’s a shortage of freight. We bought raw materials during the downturn during COVID, and we expanded our capacities. Demand for flooring, furniture, truck bedding, and pallets are through the roof, and not as many trees are getting cut, so the materials are hard to come by, and they’re really expensive, and they’re continuing to get more expensive. I see that improving in time, but I think that’s going to be with us for a while. There’s a shortage of drivers in the U.S., and domestic freight is the bright side of freight when you compare it to ocean freight. Freight is going to get better probably sometime next year. I don’t think freight is going to where it used to be out of Asia. I would envision the labor situation getting better as we get into next year, the materials and freight being somewhat better, but I don’t view any of them going back to normal next year.

Do you see the home improvement boom heading for a decline anytime soon?

Carson: It’s going to stay strong. Things always kind of ebb and flow a little bit from month to month or quarter to quarter, but there’s a shortage of new homes in the U.S. right now. Single-family homes are the power alley of hardwood flooring. Residential flooring, whether it’s new home construction or remodel, is going to be phenomenally strong. Within that, hardwood is going to be strong. Despite what’s happened to hardwood the last three or four years with SPC, hardwood is growing very strongly this year, and we expect it’s going to continue to grow for the next five years.

Finkell: I think you are going to continue to see people wanting to upgrade their interior environment just because they’ve looked at it for too long – they’re sick of it. I see that as benefitting hardwood floors because it is the aspirational flooring choice. Every study shows that. When people move into a new home, that likely means they leave a home. Somebody else buys that home, and within six months, they remodel. Remodeling is propelled by low interest rates, which also propels new home construction and people moving around from one place to the other. I think wood is going to benefit from all of that because it is the aspirational choice, and it’s an authentic material.

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