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Report
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Europe
Changes in European flooring sector
The European flooring sector is going through a major
period of change, and is also a good indicator of what is
happening in the wider European timber industry.
It's a valuable source of information on the latest economic
and fashion trends, and one of the few sectors where it is
possible to analyse directly the competitive position of
wood in relation to non-wood materials.
On this last issue, the flooring sector clearly demonstrates
how technological innovation in other material sectors
continues to put enormous pressure on wood's market
position. It shows how the European wood sector is
fighting back with initiatives focusing heavily on high
product quality and strong environmental performance.
It also shows how the European wood sector is responding
to weak and negative growth in domestic markets by
targeting export markets in other parts of the world,
notably China. In doing so, it is seeking to exploit its
particular strengths in the fields of design, technical
innovation, product quality, and environmental
performance.
More positive news for wood flooring in Europe
The Board of Directors of FEP, the European wood
flooring association, met recently to discuss the market
situation and recent economic indicators. There was some
positive news: the latest Economic Sentiment Indicator of
the EC continued its upward trend, increasing sharply both
in the euro area and in the EU.
In October 2013, the indicator rose for the sixth successive
month in both regions, marking a two-year high in the EU
(Chart 1).
Information provided by individual country
representatives at the meeting indicated wide variations in
market conditions at country level. However, overall they
suggested that production fell further in the first half of
2013. Market conditions have also remained difficult in
the second half of the year. Only slow recovery is
expected in 2014.
The situation in individual European markets is as follows:
• Austria - harsh weather conditions in Austria led
to a 2% decline in wood flooring consumption in
the first half of 2013 compared to the same period
in 2012.
• Belgium: wood flooring consumption contracted
by more than 5% year-on-year in the first six
months of 2013. However there are some early
signs of economic improvement.
• Denmark: after a stable first quarter, wood
flooring sales have been declining in recent
months. Sales in the first six months of 2013
were 4% behind the same period in 2012.
• Finland: wood flooring consumption decreased
by 3% in the first half of 2013 compared to the
same period in 2012.
• France: wood flooring sales in the first half of
2013 were 10% less than the same period in
2012. French manufacturers blame weak
consumer confidence and lack of political action
to solve underlying economic issues such as
declining competitiveness and high debt.
• Germany: wood flooring sales in the first half of
2013 were similar to the same period the previous
year. Prospects are improving as the construction
sector is now performing well. The number of
building permits issued has been rising this year.
• Italy: after a poor year in 2012, wood flooring
sales fell a further 11% in the first six months of
2013 compared to the same period in 2012. The
Italian woodworking industries as a whole are
going through an extremely difficult time, losing
up to 25% of sales this year. Italian
manufacturers are losing competitiveness, partly
due to high taxes and labour costs. Imported
products have also benefited from a more
favourable EUR/USD exchange rate.
• The Netherlands: having fallen heavily in
previous years, the wood flooring market has
stabilised at a low level. Sales in the first half of
2013 were similar to the same period in 2012.
The renovation market is now performing well
but this has not yet led to a significant rebound in
wood flooring demand.
• Norway: although construction of new buildings
has weakened slightly this year, demand for
wood flooring has been growing slowly this year.
Sales in the first half of 2013 are estimated to
21 ITTO TTM Report 17:22 16- 30 November 2013
have been 2% higher than the same period in
2012.
• Spain: there‟s still no sign of any improvement
in the Spanish market for wood flooring. Sales
were down a further 10% in the first half of 2013
compared to the same period in 2012.
• Sweden: wood flooring sales were 3% down in
the first six months of 2013 compared to the same
period in 2012.
• Switzerland: wood flooring sales were slow in
the first quarter of 2013, but recovered well in the
spring. Sales for the first half of 2013 were 2%
higher than the same period the previous year.
However manufacturers claim the market is
increasingly flooded by products ¡°of dubious
quality¡± which is undermining the image of real
wood flooring.
Slow recovery forecast in the UK wood flooring sector
In the absence of a large domestic wood floor
manufacturing sector, the UK is not represented at the FEP
meetings.
However it is a large consuming market for imported
wood flooring. Insights into recent trends and future
prospects in the market are provided in a new report by
AMA Research entitled ¡°Wood and Laminate
Floorcoverings Market Report ¨C UK 2013-2017 Analysis¡±.
According to the report, in 2012 the wood flooring sector
(solid wood, engineered wood and laminates) accounted
for 16% value share of the total UK floor coverings sector,
estimated to be worth some £1.7 billion. At around £284
million in 2012, market value has risen marginally since
the low of £281 million in 2011. However, market value
last year was still 26% lower than the peak of £385 million
achieved in 2007.
The report suggests that sales of wood laminates fell by
30% in value terms 2007-2011. However sales of
laminates were still worth around £166 million in 2012
and accounted for 58% of the total UK wood flooring
market. Wood laminates remain one of the most popular
products in the DIY flooring sector.
In recent years, there has been a shift in focus from cutprice,
bargain-basement laminated wood flooring products
to higher-quality products. Sales of higher-margin and
more desirable products have helped to offset some of the
decline in DIY flooring sales in recent years.
There are indications that the UK laminate market has now
„stabilised‟, with suppliers reporting a rise in sales during
2013 for the first time in many years.
In 2012, sales of solid and engineered wood floors in the
UK were worth £104 million. Although still holding a
smaller share of the overall UK market, these products
have outperformed laminates in the UK in recent years.
Solid and engineered wood flooring is more focused on
the middle to upper sectors of the market which has been
less volatile than the low end of the market. Sales of solid
and engineered wood flooring declined 16% in the 2007 to
2011 period and the market returned to growth in 2012.
The report notes that imports dominate the UK wood floor
coverings market, with the value of imports reaching a
seven-year peak in 2010 before falling again 2011-12.
China remains the key source country, accounting for over
half (53%) of imports, in value terms, in 2012.
The contract sector accounts for around 44% of the market
for wood floors in the UK. This sector has been less
volatile than the domestic sector since the start of the
recession.
The contract sector recovered well in 2012 when it was
estimated to be worth around £124 million. The domestic
sector accounts for an estimated 56% value share of the
total UK wood floors market and was worth £160 million
in 2012.
Looking ahead, the total value of the UK wood flooring
market is expected to rise by 1% in 2013 to reach £286
million. The market is forecast to experience 1-2% annual
sales growth between 2013 and 2016 when value is
expected to reach around £305 million. That is still 21%
below the pre-recession peak of £385 million in 2007.
Growth in the domestic sector continues to be constrained
by the slow pace of recovery in the housing sector.
However demand should be positively influenced by
government incentives aimed at stimulating home buying
and housing output.
Recovery for key commercial sectors is likely to be
moderate, at best, in the short to medium term. Rising
demand from commercial buyers will be offset, to some
extent, by lower demand in the public sector.
European laminate producers report on new-season
fashion trends
According to the Association of European Producers of
Laminate Flooring (EPLF), manufacturers are preparing
for the 2014 laminate flooring season with a range of
creative decoration ideas. The wood look is still very
dominant and there continues to be a strong fashion for
longer and wider plank sizes.
Oak continues to dominate wood decors with its almost
inexhaustible decorative potential. Yet floors with the
appearance of delicately-grained ash or elm, or rich
softwoods such as spruce and larch, are also rapidly
gaining in popularity. In general, demand for decor that
resembles elegant wood varieties is on the rise.
Dark colours have seen a slight decline, with the
collections of European manufacturers instead presenting
a varied spectrum of natural grey and beige tones ¨C a trend
that originated in the field of interior decor and which is
now being adopted by the laminate flooring sector. A
considerable amount of wood decor in the laminate sector
no longer appears in its "natural" version, but rather with a
discreet white or grey haze.
Laminate producers have also invested heavily in so-called
¡°synchronisation technology¡± which matches surface
structures with the relevant decor image. This allows
production of rustic boards which not only look authentic
but also feel like the real thing.
Modern synchro-pore printing enables the authentic
transfer of a wide variety of surface structures, from fine
veins and pores to deep, distinctive knots.
Building on this technology, the rustic "used look"
remains the key theme in European laminate flooring
ranges. This appears in several varieties of commercial
products, from construction timber styles with imitation
cement traces, to laminate flooring that feels brushed,
planed or freshly sanded.
This rustic nature particularly comes into its own in the
new rural-style wooden floorboard collections, which are
increasingly being offered in longer and wider floorboard
sizes.
European laminates industry emphasise premium
quality in product promotion
Members of the EPLF are to being encouraged to use an
assertive new slogan - 'Quality and Innovation made in
Europe' - as a common foundation for their marketing
efforts. The new slogan highlights the various core values
that EPLF believes are inherent to European laminate
flooring products.
According to EPLF, these values are ¡°certified quality,
mature technology, excellent usage characteristics, ecofriendliness,
and products that are pleasing to the eye and
the touch ¨C combined with ever new and creative
designs¡±.
According to Volkmar Halbe, Chairman of the EPLF's
Market and Image Committee, "among wholesalers, the
EPLF registered trademark has already established itself
as a mark of quality in laminate flooring. The new slogan
now conveys a clear statement of quality to the customer.
The same quality implied by the label is what you'll find
inside the product. We are the world's quality and
technology leaders. That's our USP. The new slogan
enables EPLF members to communicate this pithily and
effectively."
The slogan is intended to identify the quality of EPLF
members, especially in the growing export markets outside
Europe.
Volkmar Halbe says ¡°in some foreign markets, especially
China, more and more products are appearing that
purport to satisfy load classes specified by the EN-13329
standard ¨C but testing proves that this is not the case.
Cheap imitations put the reputation of the whole laminate
flooring industry at risk. We simply will not tolerate this.
The EPLF is actively working to counter fake labelling.
We hope that the new logo will help to support legal
action taken by our members in cases of fake labelling by
third parties.¡±
European laminate flooring producers target Chinese
domestic market
Much of the dialogue in the European wood flooring
sector in recent years has focused on the rising tide of
competition from Chinese manufacturers in their domestic
markets. However, judging by recent reports from the
EPLF, there is a growing focus by European
manufacturers seeking to capture a larger share of the
Chinese market.
Europe‟s flooring manufacturers have recognised that their
domestic markets are unlikely ever to recover the ground
lost during the recession. Future opportunities for market
development are now seen as heavily concentrated in other
regions.
China is seen as a particularly attractive target. US market
research organisation Catalina Research estimate that total
flooring sales throughout China amounted to 3.9 billion
m2 in 2011 and forecast that demand for new floors will
increase by 149 to 177 million m2 per year at least until
2025.
In addition to the growth of China‟s overall market,
European manufacturers reckon that there is significant
potential for high-end laminated products to capture more
market share. According to Catalina Research, in 2011
laminate flooring made up just 4% of China‟s market (156
million m2), with solid wood and bamboo floors
accounting for 4% (156 million m2).
This compares to tiles, which represented a massive 75%
(2.93 billion m2) of all flooring products sold in China in
2011, carpets with 9% (351 million m2), and elastic floors
with 5% (195 million m2).
Several years ago laminate flooring began to be
manufactured in China, causing the import market for
European manufacturers to collapse. In 2012 China
produced 28% of the world's laminate flooring, moving
into the top spot for the first time (with Germany
accounting for 27%).
However, European manufacturers report that sales of
their branded products in China also began to recover in
2012. Imports into China and Hong Kong of high-quality,
specialist brand-name goods manufactured by European
companies once again exceeded 3 million m², after having
fallen to 2.3 million m2 in 2011.
Several European manufacturers, such as Pergo, Skema
and Unilin, are already active on the Chinese market, and
they could soon be joined by other names.
European manufacturers believe the high-end segment of
the Chinese market offers particular potential for
European-made quality laminate flooring. European
manufacturers are seeking to position themselves
unambiguously in the premium segment, for example
through widespread of their new slogan (see above).
EPLF believes there is a growing demand in China for
genuine European-made flooring which is subject to strict
EU norms, meeting very high standards of product quality,
sustainability and eco-friendliness. According to Volkmar
Halbe, Chairman of the EPLF's Market and Image
Committee, ¡°because Chinese customers are increasingly
demanding these qualities, Chinese manufacturers will
quickly attempt to catch up. But the EPLF is convinced
that European manufacturers, with their production
expertise, are well positioned to maintain the lead over
Chinese competitors¡±.
Particular efforts are being made to influence interior
designers for commercial premises and affluent private
clients in China. For example, according to Raffaele
Ferrara of Italian manufacturer Skema, "interior designers
are focusing on Western style and importing European
tastes into the Chinese market. Grey and beige decors, in
vogue in Europe for the past couple of years, are also
doing very well in Chinese cities. In general, light and mid
tones are very popular, while walnut and smoked oak are
the dark decors of choice. Recently we have also seen a
rise in demand for high-quality synchro-pore finishes.
Formats are changing too: in addition to standard boards
the Chinese market is slowly but steadily acquiring a taste
for long board and tile formats."
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