2022 Executive Forecast: Leaders say demand will continue
Industry leaders are optimistic about the outlook
tTop executives of the flooring industry are forecasting a sales increase between the mid and high single digits in 2022, saying consumer demand for home improvement projects will remain very strong. The projection comes at the end of 2021, which was a record year for many floor dealers. Their optimism comes despite myriad challenges the industry faces: supply chain problems, inflation, labor shortages and lingering COVID-19 variants — issues likely to last well into 2022, but not enough to derail flooring momentum.
Our Executive Forecast 2022 coverage starts here.
By Ken Ryan Despite a slew of obstacles — from resource shortages to inflationary pressures — the flooring industry is poised to grow at mid-to-high single digits by 2022, according to several executives at major manufacturers.
Leaders agree that demand is still very strong, and coupled with a robust construction market and continued pent-up consumer demand for home renovation, the stage is set for another solid year for the flooring industry.
While the same challenges that persisted into 2021 are likely to remain, executives say the positives outweigh the drawbacks.
2022 Executive forecast:
chairman and CEO
BGiven the general trends and fundamentals, I expect good growth in the industry not only in 2022, but for years to come. I expect an increase in the upper middle single digits for the industry – over 5% but not quite 10%. Much of that growth comes from price increases rather than unit growth.
We expect to see some improvement with supply chain issues and commodities, at least from a availability standpoint rather than a pricing standpoint. Prices are still high, but availability of most resources is limited, so you’re lagging behind.
I think in 2022 and beyond there will still be a focus on the home. It will take a while before we are completely normal again, given the variants, and the stay-at-home trend is here to stay.
As for the industry’s biggest challenges, the limited availability of raw materials hurts the service because everything is currently in short supply. That’s the only saving grace, that carpeting isn’t the only commodity in short supply, and people are more patient with it compared to historical standards.
We see domestic production as a huge opportunity. Mannington is well on track with eavesdropping and we could land more if we had the raw materials. We’ve been working really hard on domestic production and love our position in the product mixes and channels we’re in. I’m proud of the fact that we didn’t cut back on product during the pandemic; product design and innovation remain our lifeblood. As such, we have some exciting stuff coming out.
2022 Executive forecast:
chairman, residential sales
WI think 2022 will be a good, solid year for floors. The way we look at it, commercial will be better in 2022 than in ’21. Construction of construction companies and single-family homes will still be very strong, and normally the flooring industry does well when the construction market is strong and people are selling houses and renovating existing houses. And we still think there’s pent-up demand for replacement in retail.
In terms of challenges, resources (both costing and getting them) will still be a challenge – so it’s a double whammy. Labor remains a problem. The carpet factories are very labor intensive, while the LVT and laminate factories are more automated, so there is less impact on labor. You also have labor shortages with drivers. That said, demand will still be solid, which is a good thing.
As for Mohawk, ultimately innovation will win. We have a new product called UltraWood, which has a real wood base and a RevWood chassis that is very innovative. High quality carpet is really smoking. Our Karastan business is really good and we have invested a lot in new tufting capacity and patterns. We are now starting a new laminate factory, building a new LVT facility and in addition we are building another laminate factory which will be ready by the end of 2022 [in Thomasville, N.C.]. Domestic capacity will be king, and we will be much better for it.
With WetProtect, we have the industry’s best waterproof warranty and for customers who have asked for healthier products, we have CleanProtect technology with antimicrobial properties.
2022 Executive forecast:
dThere remains a high demand for home improvement products, especially flooring. Before the pandemic, floors were way behind historical standards and then you add in the pandemic-related demand due to work-from-home and home-schooling. In addition, the construction of new homes has increased sharply.
With the move to homes in the suburbs of the city, the average square meter per home also increases. Innovations in flooring, including LVT, waterproof laminate, and wood, are also increasing the demand from homeowners to renew their floors. All of this leads us to believe that the coming year will be high single digit growth for flooring.
Despite the growth, there will be challenges for all of us. Shipping and logistics issues remain the biggest challenge for the entire industry. Be it containers, shipping space, port unloading options, labor and delivery are all challenges facing the industry right now. We don’t see this getting any easier in the first half of 2022. The industry will be tasked with finding ways to overcome these hurdles to keep up with rising demand.
Inflation and labor are other problems. From electricity, natural gas, trade wars, oil, labor and shipping tariffs, inflation has hit every industry. Floors have not been immune. Virtually every manufacturer, distributor and retailer has made multiple price increases in 2021 and many announcements have been made for early 2022. So far, consumer demand does not appear to be deterred by the increases.
In terms of labor, be it drivers, installers, salespeople, etc., the “Great Layoff” has not spared floors. Finding workers is extremely difficult and the entire industry is working to attract and retain workers.
2022 Executive forecast:
President & CEO
WWe are closing 2021 with strong demand and we want to continue that momentum into 2022. As more people spend time indoors, we’ve seen an increased focus on the home. There is a renewed interest in transforming spaces to accommodate the new ways we live, work and play. This has implications for both the residential and commercial markets. Homeowners have a strong desire and renewed confidence to invest in their homes, and the flooring industry has seen strong and sustainable demand as a result of this growing trend.
Installation labor challenges remain, which puts a limit on both the new construction and renovation markets.
We see some general trends specific to flooring: sustainably strong carpet sales (particularly in the ‘better and best’ segments); waterproof LVT continues to gain market share despite rapid cost inflation; floor specialists are innovative and thriving; Residential landscaping products have tipped and are growing rapidly in key markets, and commercial activity is recovering.
While the demand is high, the supply issues are as challenging as I’ve ever experienced. At the same time, the industry is feeling significant inflationary pressures, driven by three composite areas.
New. 1. The availability of labor is below market demand in manufacturing, transportation and freight forwarding and installation/construction, leading to permanent cost increases. The number of new hires currently does not match the number of established people in these jobs retiring; New. 2. Raw materials are affected by both supply disruptions and rapidly rising costs. While predictable availability is improving, cost pressures are not abating; and No. 3. The global supply chain (sea freight, port, and overland transport via truck or rail) is confused and costs are unprecedented.