A Product Has Grown Up - Structural changes trail decline in sales: EPLF consolidates activities

The EPLF (European Producers of Laminate Flooring Association, Bielefeld/Germany) characterizes the year 2001 as an unusually turbulent year for the laminate flooring industry – in particular due to these landmark events: the dramatic slide of the stock market and the resulting recession of the world economy; the political events in the months after September 11th; a drop in turnover in Germany – the largest European market for laminate flooring; and insolvencies in the industry. In this context structural changes were made, specifically regarding intercontinental trade. At the same time the EPLF focused its activities on core competences such as marketing (“laminate flooring of the 2nd generation“, improved market information), technology (work on ISO-standards and impact sound research) and the expansion of international relations.

Following the giant leap development took in 2000 (quantity increased more than 50% compared to 1999) sales in the largest European market – Germany – in 2001 were marked by a significant setback. The association estimates – supported by a survey among members in the first days of January – show a decline of about 16 %. The chairman of the EPLF, Ulrich Windmöller, chairman of the board of the Witex AG (Augustdorf/Deutschland) comments: “These figures have to be looked at from different angles. In our company we have noticed that the sales volume in the specialized retail sector has not changed very much. Yet, home diy-chains were very careful with advertisement in the first six months. If I calculated the number of pallets needed for each of those advertising campaigns per store, I would have a large figure for volume we are missing. The setback most likely took place in the lowest price segment“.

A year ago Windmöller noted: “For our trading partners laminate flooring turned from a frequency supplier to a margin maker. Those days are gone when certain groups in retail tried to achieve frequency through dumping”. The current development seems to underline his thesis – as well as the correctness of the sales figures that were determined a year ago. In view of a strong increase given in the last published figure comparison for Germany for the years 1999/2000, there was a heated discussion among experts in 2001 in how far and due to which correlations these statistics may be blurred. The suspicion arose that national OEM business may enter the supply chain into export and that in fact national sales figures and the actual national market supply at the consumer level may be disparate. Commenting on this discussion, EPLF managing director Peter H. Meyer says that experts nevertheless are certain that this statistically not determinable blurriness is under five percent of the national sales figure.

Development of market figures according to sales regions

At this year’s Domotex the EPLF will again report on the development of the market, as it did for the first time in the previous year. Since the final figures for this internal quarterly sales report system for 2001 will not be available before February, an estimate for the whole year 2001 has been established. It is free from regional seasonal cycles and is based on the hard facts of the first three quarters. This projection was presented to all members for evaluation in the beginning of January and was corrected accordingly.
The results of the estimation speak for themselves: The 20 member companies sold 252 mil.m² of laminate flooring elements worldwide (previous year: 20 members sold 247 mil.m²), reflecting a change of approximately plus 2%. This keeps the share of the European production in the world market totalling 363 mil.m² (351 mil.m²) stable at 69% (69%). Due to the globalisation of the laminate flooring market EPLF members increasingly support or have shares in production sites outside of Europe. These sites are not registered within the sales report system of the association and hence the association does not see these figures as an indicator for a declining influence of its members, but as a sign for occurring structural changes in the intercontinental trading of merchandise.

It is no big surprise that Europe still represents the largest market for EPLF members: 170 mil.m² (167.3 mil.m²) of the produced quantity is sold to Western European countries. With an estimated West European market total of 200 mil.m² (200 mil.m²) this represents a market share of 85% (84%). Eastern Europe consumes a total of 35 mil.m² (32 mil.m²), of which 28 mil.m² (26.4) were supplied by EPLF members, corresponding to a market share of 85% (84%). The Asia/Pacific-region reached a total consumption of 68 mil.m² (65), in which the share of the European production of the EPLF-members declined to 18 mil.m² (23.7), corresponding to a market share of 26.5% (36.5%). Despite the crisis following September 11th, North America could increase its consumption up to 55 mil.m² (50 mil.m²), of which the European production of the EPLF-members could grow its share to 32 mil.m² (27.1 mil.m²), meaning a market share of 58% (54%). Other markets reached 5 mil.m² (2.5 mil.m²), of which the European production of the EPLF-members won a total of 4 mil.m² (2.5 mil.m²), corresponding to a market share of 80% (63%). The top group in Western Europe stayed the same, but with regards to the sales of the EPLF-members there was one change of positions. Although decreasing to a consumption of 50 mil.m² of EPLF-production (60.7) Germany stays the strongest national market, closely followed by the U.K. with a dynamically growing consumption of 42.5 mil.m² (25.9 mil.m²). With only slightly growing consumption of 23.5 mil.m² (23.0 mil.m²) France becomes third, and The Netherlands with a declining consumption of 10.5 mil.m² (12.7 mil.m²) score fourth.

Inside the EPLF only minor changes took place in 2001: among the regular members (the producers of laminate flooring) the companies Alloc AS (Lyngdal/Norwayn) and Poliface SA of the Sonae-Group (Maia/Portugal) were added and DecoLam and Vesterby left due to merger / going out of business. Thus the number of regular members remained stable at 20, representing ten different European countries of origin.

Among the suppliers of the laminate industry, the extraordinary members, membership has become more sought-after. Six new companies have joined, without a single member leaving: BASF AG BU Glues and Impregnating (Ludwigshafen/Germany), DSM Melamine (Sittard/The Netherlands), Homag Holzverarbeitungssysteme AG (Schopfloch/Germany), Hans Schmid Kunststoffverarbeitung KG (Gronau/Germany), Solutia Germany GmbH & Co. KG (Frankfurt am Main/Germany), as well as Vits-Maschinenbau GmbH (Langenfeld/Germany). The number of extraordinary members therefore comes to 22, plus 5 sponsoring members (Institutes and public figures).

The newly established relations with the supply industry were put to use by the marketing committee, to cement the foundation of market information. The ascertained sales figures, qualitatively expanded by a biannual opinion-barometer of the members, can now be compared with the capacity extrapolations from the circle of fellow member machine manufacturers. Ralf Eisermann (akzenta Paneele + Profile Kaisersesch / Germany), EPLF member of the board and chairman of the marketing committee attributes to this procedure higher security for prognosis: “In future our figures will be based on three formats: Actual numbers, opinions, and capacities – those present as well as those planned. This results in a broad basis of information for decision-relevant market information for our members and thus is a true service of a well-lead industry association“.

At the regular annual assembly of the EPLF last spring on the site of Meister-Leisten (Rüthen-Meiste/Germany) one topic was central: 10 years of marketing of laminate flooring were the occasion for Richard A. Kille, expert and critical observer of the industry, to examine today’s products and compare them to those from ten years ago. He summarizes: “As any other product, laminate flooring went through a ‘teething’ phase in its first years. Now this is behind us and today we can honestly say: the second generation of laminate flooring has arrived!” Laminate flooring today is better than ever. It is innovative and powerful, offering customers the safety of purchasing a quality product. Yet, Kille continues, today’s clients are “better informed, they do no longer believe everything they are being told by advertising”. The advising retailer has to be better informed to meet up with customer needs; the market can not be overtaxed with exaggerated advertising claims. In terms of technology, laminate flooring has reached a high level of development, even though there is still room for improvements. An integrative approach of marketing, encompassing technology and sales, will be necessary in the future.

With this Kille hinted at the other topic that currently plays a big role in the industry (in addition to the installation without glue) – “noise reduction” or, more specifically, “reduced impact sound”. Considering the confusion inherent in the terms and the oversimplified and improper use of those terms in some advertisements, the board of the EPLF decided at their extraordinary assembly in Munich last autumn to assign the highest priority to solving this dilemma. EPLF vice president Didier Stumpf (Alsapan S.A., Dinsheim / France) and the chairman of the technical committee, Bengt Almqvist (Perstorp Flooring AB, Trelleborg/Sweden), were able to win over representatives of two German and one French institute, to outline the problem and offer different, at times competing solutions to measuring and displaying impact sound.

In the subsequent panel discussion the experts were joined by the chairman of the Gütegemeinschaft Laminatfußboden e.V., Volker Kettler (Witex AG, Augustdorf / Germany) and all agreed on one point: sound is a multidimensional phenomenon which can not be grasped with a simple approach often used by advertising such as “loud = bad and quiet = good”. The meeting led to the assembly of a new working group, which has a budget for research and the task to develop a draft for a guideline until spring 2002, which can be turned into an industrial technical rule.

Continued work on a global standard for laminate flooring within the framework of the ISO – where the EPLF is competently represented by the Swedish flooring specialist Peter Ringö – is a logical step in the work on standards the association began with initiating the EN 13329, which is leaving its first positive traces. These activities are joined by intensive work on international relations.

This is the motto under which the measures of the association in its public appearances can increasingly be placed: In addition to the annual presentation at the Domotex there has been intensive work on press relations at the National Floor Show in Harrogate (UK) and the Batimat in Paris (France). In Beijing (China) the EPLF appeared as a non-material sponsor of the “Floor Coverings“ (September,
4th – 6th), accompanied by a broad public relations campaign in Asian trade magazines and supported with a lecture on “EN 13329” at the parallel occurring laminate-symposium, which got enthusiastic feedback. Still to come in January: the EPLF will appear at the “Surfaces“ in Las Vegas (USA) to improve its contacts with the North American trade press and the national producers association NALFA with an “International Evening“. Then continuing with the German contingent to exhibit at the China Floor in Shanghai (March 26th - 28th, 2002) – originally an idea of the EPLF – which will also be presented there.

All in all the year 2001 was a year of many challenges – in the market and in the industry. Some were mastered, others remain tasks for the future. On the basis of many new and constructive impulses the EPLF is able to look into the future with optimism.