Hardwood Floors February/March 2019

FEB/MAR 2019

HELP HOMEOWNERS COMMIT TO THE FLOOR OF THEIR DREAMS

SQUEAKING, POPPING, AND CRUNCHING ENGINEERED WOOD FLOORS SPORTS FLOORING SUBFLOOR DESIGNS THE ROAD TO THE FINAL FLOOR

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source 3M produces a full line of 3M ™ Floor Sanding Abrasives that takes you on the journey from start to finish. But it doesn’t stop there. With more than 100 years of heritage and innovation, you can trust 3M for all your floor sanding needs, from personal safety and adhesives to masking and abrasives. For performance that will make you and your customers proud, choose 3M.

For professional floor sanding results.

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ADJUST WITH SPEED 2.4 HP motor 24 lbs total weight tool-free wheel adjustment built-in lights low decibel rating

Gecko Star 2.0

Our tool-free wheel adjustment allows for the sanding pressure to be adjusted quickly to adapt to any floor.

Radiator Extension Available

CONNECT WITH US

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ADD ANOTHER PRO TO YOUR TEAM. When you need some advice, get it from someone who’s “been there, done that”. Call one of our expert Contractor Specialists. They’ve got decades of experience doing what you do, and they’re dedicated to sharing what they’ve learned. No fee, no obligation, just answers.

Meet the Contractor Specialists

Toby Merrill, Chicago Our original Contractor Specialist, Toby had more than 23 years’ industry experience before joining DuraSeal®. He is an NWFA Certified Installer, NWFA Certified Sand and Finisher, and is a member of the NWFA Emerging Leaders Council. Toby will soon be opening the DuraSeal Training Center in Chicago.

David Cambra, Denver David brings more than 32 years’ experience as a hardwood flooring professional and business owner to his new role for DuraSeal. After owning his own firm in Northern California, he is now training contractors in the Denver area.

Chuck Balek, Los Angeles Chuck has more than 24 years as a hardwood flooring professional and is NWFA-trained in both advanced installation and Sand and Finish. Gaining experience as an instructor through NWFA training schools, he is now the head Contractor Specialist for our L.A. Training Center.

To connect with one of our contractor specialists, visit us at: duraseal-wb.com | duraseal.com

DuraSeal Quick Coat stain and water-based finishes are certified to GREENGUARD standards for low chemical emissions. To learn more, visit greenguard.org

© DuraSeal DRSL 1041/18

FEATURES

ON THE COVER

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Help Homeowners Commit to the Floor of Their Dreams By Libby Johnston Learn more about NWFA’s new marketing campaign to educate consumers about the benefits and characteristics of real wood floors, and how to properly maintain them.

46

Squeaking, Popping, and Crunching Engineered Wood Floors By Brett Miller Common causes for noisy engineered wood flooring installations.

54

Sports Flooring Subfloor Designs By Daniel Heney Deciding which subfloor system works best for your sports flooring needs is a very important decision.

PUBLISHING PARTNERS

the magazine of the national wood flooring association

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CONTENTS

Chris Zizza | Chairman Michael Martin | CEO Anita Howard | COO Bree Urech-Boyle | CFO Brett Miller | VP, Education & Certification NWFA LEADERSHIP

Industry Insights

18 Government Affairs Make your voice heard.

By Dana Lee Cole

20 Market Matters Rising economic risks for the national housing outlook. 24 Designer Insights Designing with hardwood floors.

By Danushka

Nanayakkara Skillington

PUBLICATION ADVISORY COMMITTEE Julie Russell, Chair & Board Liaison | Glitsa, a division of Rudd Company

By Emily Morrow Finkell

Jason Elquest | Blackhawk Floors Inc. Allie Finkell | American OEM Wood Floors Lenny Hall | Endurance Floor Company Inc. Kevin Mullany | Benchmark Wood Floors Inc. Jim Schumacher | 3M Mike Sundell

Business Best Practices

28 Finance The impact of recent federal tax code

By Mary Jane Pieroni & Stephen J. Lenivy

changes on your business.

32 Sales Savvy The psychology of decision making. 34 Legal Marketing considerations related to the CAN-SPAM Act. 38 Marketing Email marketing best practices.

PUBLICATION TEAM

By Paul Reilly

Stacy Brown | Publisher/Editor | stacy.brown@nwfa.org Brett Miller | Technical Editor | brett.miller@nwfa.org Laura Boyle | Creative Director | laura.boyle@nwfa.org Megan Lhamon | Industry News Editor | megan.lhamon@nwfa.org Katie Schenk | Media Production | katie.schenk@nwfa.org Jodi O’Toole | Web Development | jodi.otoole@nwfa.org

By Matthew E. Misichko

By Katrina Olson

At the Site 50 Subfloor Prep Properly preparing your concrete substrate.

111 Chesterfield Industrial Blvd. Chesterfield, Missouri 63005 P : 800.422.4556 Local : 636.519.9663 F: 636.519.9664 E: news@hardwoodfloorsmag.com W: hardwoodfloorsmag.com

By Andrew Fulkerson

60 Sports Floors The road to the final floor.

By Stacy Brown

64 Tech Talk

By NWFA

Unique subfloor prep challenges.

Regional Instructors

CONTRIBUTING WRITERS Rick Bush Dana Lee Cole Michael Dittmer Jason Elquest Emily Morrow Finkell Andrew Fulkerson Lenny Hall Daniel Heney

66 Health & Safety Focus Focus on power tool safety.

Paul Reilly Danushka Nanayakkara-Skillington Scott Taylor Ben Totta David Williams Chris Zizza

Libby Johnston Stephen Lenivy Megan Lhamon Michael Martin Matthew E. Misichko Brett Miller Katrina Olson Mary Jane Pieroni

By Rick Bush

68 WFOY Winner Spotlight Best Textured Wood Application: WD Flooring By Stacy Brown 70 Sponsored Content A personal investment in your education. By David Williams

Product Focus 82 Subfloors, Subfloor Prep, & Adhesives 90 DOMOTEX USA Exhibitor Showcase

ADVERTISING SALES

Libby White Johnston Media & Advertising Sales libby.johnston@nwfa.org | 337.794.9232

Also in this Issue

6 Chairman’s Cut 8 Wood Stock 72 NWFA Resources 94 New Products 95 Ad Index

Hardwood Floors (Print: ISSN 0897-022X and Online: ISSN 2475-5125) is published on a bi-monthly basis, plus the Annual Industry Guide, by the National Wood Flooring Association and distributed as a membership benefit to its member companies and without charge upon request to qualified individuals throughout the wood flooring industry. Single copy price is $8, annual Industry Guide is $50. Subscriptions: $40/ year (includes 6 issues and Industry Guide) in the U.S. and Canada. Publication office: 111 Chesterfield Industrial Blvd, Chesterfield, MO 63005. Phone: 800.422.4556. Printing office: Walsworth, 306 N. Kansas Ave., Marceline, MO 64658. Printed in the U.S.A. Periodicals Postage is paid at Chesterfield, MO and at additional mailing offices. POSTMASTER: Send address changes to Hardwood Floors, P.O. Box 9147, Lowell, MA 01853. Copyright © 2019 by the National Wood Flooring Association. All rights reserved. Reproduction in whole or in part without written permission is strictly prohibited.

96 Final Coat: CEO’s Message

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EXTREMELY STRONG, DURABLE BOND

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DesignedtoClimb ™ Bostik’s Climb ™ is a specially formulated adhesive designed specifically for the installation of hardwood flooring for vertical applications and for stair tread caps and risers. Climb ™ is easy to gun, but its exceptional wet shear strength will prevent planks from sliding down the wall, even up to 8 1/4 lbs per square foot. Contractors can increase profits by addingwoodwall accents to quotes, and Climb ™ is safer to use for stair treads because of its resistance to slipping and sliding. In addition, it is exceptionally easy to clean fromprefinished hardwood, even after cure. Use Bostik’s Climb ™ to takeyour projects to newheights.

GETVERTICAL Formore information, contact us at: 1-800-726-7845 I www.bostik.com/us

CHAIRMAN’S CUT REAL WOOD. REAL LIFE.

By Chris Zizza Chairman, NWFA

new grassroots campaign for the entire industry, “Real Wood. Real Life.” As part of that, we’ve announced a formal definition of real wood flooring and created an NWFA “Real Wood. Real Life.” logo that can be placed on packaging, marketing materials, websites, and social media channels for real wood products. The campaign also includes a toolkit for our members, the Homeowner’s Guide to Real Wood Floors , and the updatedWoodFloors.Org website. These materials are designed to tell consumers about the benefits of wood flooring, how to choose the right floor, why they should select a professional for the job, and proper maintenance. It walks consumers through various stages of life to show them that wood floors can handle all of their big and small moments, while dispelling some of the myths about wood floors. The NWFA will work to tell the story on the national level, reaching homeowners via media relations and online with WoodFloors.Org. But we also need your help to take the message into your community.

In the NWFA’s 2019 Industry Outlook survey, we heard from our members that growing demand for resilient non-wood/ wood-look floor coverings is one of the top concerns facing manufacturers, distributors, retailers, and contractors. We also know that wood flooring is far and away the “preferred” flooring of the American homeowner (NWFA 2017 Consumer Awareness Research Study). Based on the results of our consumer survey, we were able to learn about homeowners’ perceptions of wood flooring, along with the need to help educate them about the process of selecting a wood floor and maintaining it. There is a big opportunity to directly reach consumers so they can make an informed decision about floor coverings in their home. Do they know the difference between a real wood floor and a wood-look product? And that today’s wood floors can stand up to a family’s busy lifestyle? Who better than the NWFA and our members to be that resource for consumers?The findings of our research were used to inform the strategy for a

The new member toolkit includes new creative materials that can be customized and used on your website, on social media channels, in print publications, or at trade shows. It also has everything you need to communicate with local media and ultimately reach homeowners. All of these items demonstrate you are part of an industrywide effort to promote real wood as the flooring of choice and help to position you as the expert in your community. The “Real Wood. Real Life.” campaign is something all of our members need to get behind, as it directly affects us all. The same way you promote your company over a competitor, it’s time now to promote real wood products. A successful campaign will benefit the wood flooring industry as a whole and calls for broad participation from our members. We hope you find these assets useful and that you will join us in sharing the great story of why wood flooring is the only flooring that can truly last for the life of a home.

Information about this new member benefit will be distributed to all NWFA members in the next few weeks. For more information, contact the NWFA at 800.422.4556, or visit us online at nwfa.org.

hardwood floors www.hardwoodfloorsmag.com

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Wood Stock

Photos courtesy of FlooredAtHome

With degrees in engineering, finance, and business, Josh Tackel and Paul Dobrynin came into the flooring industry in a somewhat unconventional way. Where many flooring professionals are coming into the industry through a family business or with a great desire to work with their hands, Tackel and Dobrynin were motivated by something else. Seeing the difficulties many homeowners were facing while navigating home improvement, Tackel and Dobrynin felt drawn to the flooring industry and wanted to figure out a way to create the best possible experience for customers, so they started their company, FlooredAtHome, in 2014. “We love taking on hard projects, challenging ourselves, and striving to deliver the best possible floors to our customers,” says Tackel. “More

Floored by a New Entryway By Megan Lhamon

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“We could create, by all technical measures, the best possible floor, but if we haven’t made our customers happy, then we haven’t succeeded . ”

importantly though, we strive for our customers’ happiness. We could create, by all technical measures, the best possible floor, but if we haven’t made our customers happy, then we

haven’t succeeded.” FLOOR FOCUS

When FlooredAtHome was initially contacted for this particular job, the customer was looking to have the floors refinished. The customer had just purchased a new home, which had a 2 1/4" straight oak floor throughout, and was unhappy with a squeaking noise in the first- and second- floor hallways. “We didn’t feel like we had enough floor left to refinish, so we suggested reinstalling the necessary areas to fix the problem,” adds Tackel. “Our customer was completely onboard. After suggesting an accent area, the customer did a bit of research on Pinterest and found a layout they loved.” Using 2 1/4" and 3 1/4" red oak, FlooredAtHome nailed and glued down the tricky floor. “The layout of the space was challenging,” shares Tackel. “While the design is very symmetrical, the entrance/hallway did not play by the same rules. The width of the hallway, for example, was not exactly half of the larger space, yet the squares needed to be centered to both.” “It took a bit of finesse to determine the rules we absolutely couldn’t break for the layout and then to work backward to figure out what was possible,” adds Tackel. “Like my daddy always says, ‘Measure 1,000 times and then cut once.’” The floor was stained with Dark Walnut fromDuraSeal and finished with Loba-Wakol 2K Supra.

Using 2 1/4" and 3 1/4" red oak, FlooredAtHome nailed and glued down the tricky floor.

FLOOR FEEDBACK “The best part of our job is getting referrals,” shares Tackel. “Knowing that our customers love their floors, seeing what we were able to accomplish for them, and having the FlooredAtHome name and reputation grow…it is very rewarding.” This customer was among the many who were thrilled with the results. “Having been in constant contact with the customer throughout the project, we knew how happy they were with how everything was coming together,” says Tackel. “The best part, though, was when we were going over the maintenance requirements afterward, and they emphasized that they would do whatever they needed so they could protect their new floors forever.” “This job was incredibly fun, challenging, and rewarding with absolutely fantastic customers. We couldn’t have been happier to work with them, and we hope they will enjoy their floors for a lifetime," says Tackel. g

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Wood Stock

All photos courtesy of Jake Mitchell and Toby Merrill

by Megan Lhamon

adds Mitchell. “I ran into Toby Merrill, Contractor Specialist at DuraSeal, and the lightbulb went off. I wasn’t expecting anything, but before I knew it, Toby was calling to say DuraSeal could donate enough finish to coat all 10,000 square feet of flooring.” “We donated 20 gallons of DuraClear Max,” adds Merrill. “As a friend of Jake and a resident in the McHenry community, it was really cool to play a part in this.” Upon receiving the donation of finish fromDuraSeal, Ridgefield Flooring made a fewminor repairs, buffed and vacuumed the floor, and then rolled out the finish. Initially, Merrill and Mitchell were unsure if the finish would bond and hold up to the abuse of skating. “Toby asked if we did adhesion tests, so I replied that although our team was not very scientific, we could be abusive! The finish survived lots of roller hockey stops,” adds Mitchell. “This was a fun and rewarding project,” says Mitchell. “My hands and arms are still sore from shaking so many gallons of finish.” g

Just for Fun Roller Skating Rink in McHenry, Illinois, has been around since the 1920s — originally beginning as a dance hall. It is recognized as a pillar of the community, and Ridgefield Flooring was quick to get involved when the rink sent out an S.O.S. for repairs after it was vandalized and in danger of closing. “When we saw the message asking for contractors to donate labor and/ or materials, we knew we could help,” shares Jake Mitchell, General Manager of Ridgefield Flooring. “Our company rebuilt the snack bar and made a few other minor fixes.” While Mitchell and his crew were there working, they became good friends with the owner of the rink, Lisa. Additionally, Mitchell’s children began to spend more time there, making their work at the rink feel even more impactful. “While Lisa and I were talking one day, she mentioned that the floors were in dire need of being refreshed,”

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• C&R Flooring announced that President Chris Zizza was awarded the Community Spirit Award – Gold for his work withThe Make a Difference Project at the 2018 Builders and Remodelers Association of Greater Boston (BRAGB) PRISMAwards. • Construction employment grew in 265 out of 358 metro areas, or 74 percent, between November 2017 and November 2018, declined in 45, and was unchanged in 48, according to an analysis of federal employment data released by the Associated General Contractors of America. • Seventy-nine percent of construction firms plan to expand their payrolls in 2019, but an almost equal percentage are worried about their ability to locate and hire qualified workers, according to survey results released by the Associated General Contractors of America and Sage Construction and Real Estate. The findings are detailed in Contractors Remain Confident About Demand, Worried About Labor Supply: The 2019 Construction Hiring and Business Outlook Report at agc.org. CONTRACTOR CORNER

Stephen and Matthew Young, owners of Young Brothers Hardwood in Denver, Colorado, started their business a little more than four years ago. Having been in the industry for four years before that, Stephen knew that starting a company was the best way to achieve his dreams, and Matthew jumped in. “We love owning our own company,” shares Stephen. “We get a lot more say in what we do. That was a big driving force in going solo. I wanted to do parquet and next-level installations.” While they were attending the Advanced Installation hands-on training at NWFA Headquarters in October, Stephen and I sat down to talk about education and a job they were doing where Stephen was able to fulfill his dreams of doing next-level installations. “As business owners, we knew it was necessary to go to hands-on training and earn our NWFA Certifications,” says Stephen. “I get goosebumps being here. I truly love what I do, and I’m so excited to learn unique techniques and skills.” The education has paid off for the Young brothers. “Although we charge more than the average installer, it by no means affects our business,” adds Stephen. “Our customers value our knowledge and trust that we will help them achieve the floor of their dreams.” This job was no exception. “The customer for this job was a builder we work for, but this was for his home,” shares Stephen. “He’s originally from Rhode Island, where parquet is more common, so when I suggested a few different patterns, he was on board.” THISPATTERNIS CHECKEDOFFTHELIST By Megan Lhamon

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Stock

MANUFACTURER MEANDERINGS

Everything was done on a miter saw,” shares Stephen. “We laid it all and then track-sawed it back.” The chevron pattern was installed in the upstairs hallway and master bedroom of the home using the same 5" select white oak that was installed on the main floor of the home. Young Brothers Hardwood used sausages, supported with nails, to install the chevron. As if the 2,200 square feet of flooring wasn’t enough, Young Brothers Hardwood also did two flights of stairs. The floors were all finished with a custom blend of Pallmann’s Magic Oil. The mixed ratio was 2:1, using two neutrals to one white. “Our Pallmann representative joined us on the job to finish the floors,” adds Stephen. “Our customer speaks highly of our commitment to each job and to staying ahead of the curve when it comes to methods used and products available,” he shares. “I loved the freedom of this job,” adds Young. “It’s a type of floor that I’ve wanted to do for a long time. It was definitely a bucket-list- type floor.” g

During the design phase, the customer visited a home where Young Brothers Hardwood had recently installed a Monticello pattern and fell in love. After finalizing design plans and securing the materials they’d need, Young Brothers Hardwood headed to the jobsite, where they milled everything on-site. “We installed the Monticello pattern using full-spread glue- down, supported with nails, in the entryway of the home,” says Stephen. “The pattern consists of thirty 15"x15" tiles, constructed using white oak for the border and walnut in the center. The tile pattern was bordered in aluminum and then walnut.” The main floor of the home was a straight lay installation using 5" select white oak. This section of flooring also was installed using full-spread glue-down and supported with nails. Now to the part Stephen had waited years to do, the chevron pattern. “This was our first time doing chevron, and it was a bit challenging because we didn’t have a table saw to put a sled on.

• Armstrong Flooring Inc. announced that it has completed the previously disclosed sale of its wood flooring segment to an affiliate of American Industrial Partners (AIP). • Bona® US announced that its online training platform, at BonaTraining. com, won Litmos’ 2018 Lenny Award for “Best Customer Training Program.” • WOCA USA announced the appointment of Jesse Sample as Territory Manager. • Q.E.P. Co. Inc. (QEPC) announced that it has signed a partnership/ distribution agreement with the CongoleumCorporation. • Aacer Flooring donated maple flooring to a local school to create a premium hardwood sports floor. • PPG announced that it will implement a 10 percent price increase on all of its industrial coating products globally. • Middle Tennessee Lumber, based in Burns, Tennessee, announced that Jesse Joyce has been appointed President. Larry Cox has been appointed Vice President. • Lauzon Distinctive Hardwood Flooring in Papineauville, Quebec, has earned the NWFA/NOFMA Mill Certification. • Lacrosse Hardwood Flooring announced the completion of its new customer conference and training center.

The Monticello pattern consists of thirty 15"x15" tiles, constructed using white oak for the border and walnut in the center. The chevron pattern was installed in the upstairs hallway and master bedroom of the home using the 5" select white oak.

All photos courtesy of Stephen Young.

the magazine of the national wood flooring association

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• Harris Wood announced the appointment of Crescent Hardwood Supply (Harahan, Louisiana) as the company’s newest distributor. Crescent will be representing the full line of Harris Wood-branded engineered flooring products and accessories throughout the states of Louisiana, Mississippi, Arkansas, southern Alabama, and Florida’s panhandle. • Hoy Lanning Jr. has been promoted to President &CEO of J.J. Haines &Co. He has held numerous executive positions with Haines since January 2014, most recently serving as Executive Vice President-Business Development. • Forest To Floor welcomed Josh Wilbanks as Vice President of Distribution for the North Little Rock, Arkansas, and Memphis, Tennessee, locations. • The North American Association of Floor Covering Distributors (NAFCD) recognized Dunn Rasbury of A&M Supply from Pinellas Park, Florida, as the recipient of the 2018 NAFCD Growth Award. • Horizon Forest Products joined efforts with the Stepping Stones Foundation in Keller, Texas, to help a family of five children headed for foster care live in a home they deserve. The company DISTRIBUTOR DOINGS

At the end of last year, Bast Floors & Staircases was hired to work with the architects for the expansion of the Norton Museum of Art, located in West Palm Beach, Florida. The museum, which was founded in 1941 by Ralph Hubbard Norton and his wife, Elizabeth, houses more than 7,600 works in five curatorial departments, including European, American, Chinese, Contemporary, and Photography.

input regarding the 16,000-square-foot installation,” says Remiah Newton, Vice President of Bast Floors & Staircases. “The best part of my job is interacting with our clients as well as the design/build teams. I thoroughly enjoy working together to create a plan of action and then seeing everything come together from start to finish,” says Newton. The floors were installed with a glue- down application. The flooring on the

In 2013, Norton trustees decided to expand the museum, hiring the renowned London-based architectural firm Foster + Partners to design a new building. The new 59,000-square- foot building, which opened Feb. 9, 2019, was designed to cater to the growing community that visits the museum and, of course, the expanding

collection of art. FLOOR FOCUS

The wood flooring selected for this job was prefinished European white oak. “Our teamworked with the architects on the project to provide

first level of the museum was glued to the slab and

donated nearly $2,500 worth of prefinished flooring and preparation materials.

All photos courtesy of Remiah Newton.

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BY Megan Lhamon

The new 59,000-square-foot building was designed to cater to the growing community that visits the museum and the expanding collection of art. sleeper adjustments to create a flat substrate.” “This job was truly one of a kind. The architects were very satisfied with the result, and we felt very proud to play a part,” says Newton. Reference: norton.org the flooring on the second and third levels of the museumwas glued to the sleeper system. “Because part of the museum included new construction, there were elevation differences between the existing slab and the new slab,” adds Newton. “This required additional preparation and

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GOVERNMENT AFFAIRS INDUSTRY INSIGHTS

MAKE YOUR VOICE HEARD

BigStockPhoto ©

Hardwood Lumber Association meeting (Feb. 4-6), the Appalachian Hardwood Manufacturers Inc. meeting (Feb. 20-24), the Hardwood Manufacturers Association meeting (March 21-23), and the National Wood Flooring Association meeting (May 1-3). Without a doubt, several more will pop up in the coming weeks…and this doesn’t even get into the second half of the year, when we will visit with the National Hardwood Lumber Association and the Western Hardwood Association, to name only a few. If you plan to attend one or more of these meetings, please make it a point to connect with us. As your

behalf of the industry will continue to be fascinating, challenging, and hopefully successful in 2019. The best part of our jobs at the Hardwood Federation is the opportunity to interact with those we represent. Some of you come to us, particularly in September when we hold our annual “fly-in” to D.C. More often, the opportunity to interact with industry leaders comes as the Hardwood Federation hits the road as we attend industry meetings around the country. The first-quarter calendar is already getting full with scheduled attendance at the Lake States Lumber Association meeting ( Jan. 16-19), the Indiana

It’s hard to believe that 2018 is in the books and that we are already well into 2019. Last year flew by for us in Washington, D.C. Advocacy efforts related to international trade, forest fires, and reauthorization of the Farm Bill all started out as priorities and gained intensity as the year progressed. The election cycle seems to be nonstop, and the November results have led to a new dynamic in the U.S. Congress. With Republicans in the White House and the Senate, and Democrats controlling the House, our work on

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By Dana Lee Cole

Your front line experience informs us of what we should be working on at the national level. You can also help us identify issues early…and provide us with the ammunition we need to fight for the industry.

If you are interested in having us speak at one of your events, please let us know that as well by contacting us at hardwood.federation@ hardwoodfederation.com. We welcome your insight and advice. Dana Lee Cole is Executive Director at the Hardwood Federation, a Washington, D.C.- based hardwood industry trade association that represents thousands of hardwood businesses in every state in the U.S. and acts as the industry’s advocacy voice on Capitol Hill. She can be reached at dana. cole@hardwoodfederation.com.

what we should be working on at the national level. You can also help us identify issues early…and provide us with the ammunition we need to fight for the industry.

representatives on federal legislation, it is always helpful to hear from those of you who work with hardwood lumber and products on a daily basis. Your front-line experience informs us of

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the magazine of the national wood flooring association

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INDUSTRY INSIGHTS MARKET MATTERS

RISING ECONOMIC RISKS for the National Outlook

The U.S. economy has shown steady – if unspectacular – growth during the past eight years. Between 2010 and 2017, the economy has grown on average by 2.2 percent. However, this is less than the economy’s 50-year growth rate of 3.5 percent and lags the average annual growth rate in the years between the tech bubble burst (2001) and the Great Recession (which began in 2007). During the past nine years, the economy’s potential rate of growth has been 1.5 percent. This potential, estimated by the federal government, reflects the maximum sustainable rate of economic growth. Although actual gross domestic product (GDP) growth has fallen behind pre-recession rates, it has exceeded the average potential rate during the same period. As a result, actual and potential overall GDP has converged, indicating that the U.S. economy is nearing a national recovery. Even though GDP growth in 2018 is expected to hold steady, partly due to tax cuts, the expectation for 2019 is a deceleration in growth as interest rates rise.

The economic recovery also has been characterized by sustained job growth. As a result of the Great Recession, the number of jobs around the country sank to 94 percent of the total, pre-recession (138.4 million). Since reaching this low point, payroll employment has climbed steadily, rising 8 percent above the peak number of jobs prior to the last recession. Sustained job growth has contributed to a decline in the unemployment rate. After peaking at 10 percent due to the Great Recession, the unemployment rate has steadily fallen, dropping to a historically low rate of 3.7 percent in October, the lowest level since 1969. By these metrics, labor market conditions have normalized. At the same time, continued job growth at its current pace will meet resistance unless more people enter the labor force. In addition, home prices continued to rise in August. This continued home price appreciation reflects broader economic growth and tight inventory across the county. Since house price appreciation has exceeded per capita personal income growth, concerns about homeowner affordability have become serious. In fact, the NAHB/Wells Fargo Housing Opportunity Index, a housing affordability measure, finds that only 56 percent of new and existing home sales were affordable for a typical family in late 2018. This measure of affordability conditions marks a 10-year low. Concerns about housing affordability have been aggravated by the increase in mortgage rates in 2018, which are expected to rise in the coming two years to more than 5 percent. Rising mortgage rates largely reflect the rising rate of the 10-Year Treasury Note, which itself parallels the trend in the federal funds rate. Taken together, it suggests that mortgage rates have been rising because monetary policy has been tightening.

20 hardwood floors www.hardwoodfloorsmag.com

By Danushka Nanayakkara-Skillington

The unemployment rate has steadily fallen, dropping to a historically low rate of 3.7%.

Mortgage rates are expected to increase in the coming two years to more than 5%.

Single-family starts also have been supported by improving economic conditions resulting from lowmortgage rates. However, the rate of growth in single-family production has shown evidence of a general deceleration. As a result of this growth, single-family starts ended 2017 at 852,000, 96 percent above their recession-related low of 434,000 in 2011. At the same time, single-family starts are only 67 percent of the average level during the 2000 to 2003 period, just prior to the excesses of the housing boom. In other words, single-family production has benefited from economic conditions, but its current below-normal level still reflects the steep decline in response to the last recession. Underlying economic fundamentals have strengthened across the states and Washington D.C. (hereafter “states”) since the end of the last recession, but most of the leading growth states are in the western and southern regions of the country. To some degree, the strength of a state’s underlying economic fundamentals informs the extent of the recovery in single-family starts. At the same time, the pace of recovery, a return to the average level of production between 2000 and 2003, also reflects the depth of the contraction in production during the recession.

Only 56% of new and existing home sales were affordable for a typical family in late 2018.

the magazine of the national wood flooring association

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Approximately 20% of states should return

to normal levels of production by 2020.

Rising Economic Risks (Continued)

Although the broad macroeconomic trends, both nationally and across each state, will increasingly govern trends in housing production, the effects of the last recession have not fully faded. All states experienced a steep contraction in single-family building activity. Some states, such as Nevada, Illinois, California, and Georgia, fell greater than the national average when we measure single-family starts relative to normality or the average annual level between 2000 and 2003. These states remain further from returning to that level, in large part due to the depth of their specific decline. In contrast, states such as Wyoming, Louisiana, Alabama, Oklahoma, and Texas, to name a few, did not fall as far, although these states did experience a steep contraction in single-family building activity as well. Partly due to the comparatively shallower decline in response to the recession, the number of single-family starts in these states is closer to normality. However, states such as Idaho and Utah represent states where the decline was steep but the growth has been strong to the point that the number of single-family starts now exceeds their 2000 to 2003 level. This growth from recession-induced

lows reflects the strength of their underlying economies. Relative to normality, all states are expected to move closer to normality by the end of 2020. States across the West and the South will be the leaders, while many lagging states will be concentrated in the Midwest and the Northeast. Despite relatively strong underlying economic fundamentals, states like California continue to lag other states in their single-family production recovery because of the deep decline experienced during the recession. Approximately 20 percent of states should return to normal levels of production by 2020. However, the risk of a recession is rising, and it could soften production after our forecast window. If a recession were to arrive sooner than expected, then it could lower production to levels below our current forecast.

Single-family starts ended 2017 at 852,000, 96% above their recession-related low of 434,000 in 2011.

At the same time, single-family starts are 67% of the average level during the 2000 to 2003 period, just prior to the housing boom.

Danushka Nanayakkara-Skillington is the AVP, Forecasting and Analysis for the National Association of Home Builders (NAHB) in Washington, D.C. She can be reached at dnanayakkara@nahb.org.

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a f l o o r w i t h mo r e . t h e l e x i ng t on s e r i e s By seamlessly blending different colors in plank & pattern options, the Lexington Series creates a strikingly beautiful floor for any room in your home.

Pictured: Lexington Holden Pattern: Herringbone

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INDUSTRY INSIGHTS DESIGNER INSIGHTS

By Emily Morrow Finkell

DESIGNING WITH HARDWOOD FLOORS

Photo courtesy of Emily Morrow Finkell.

clarity, and color change the look and value of the materials with which you are working. Hardwood floors are an organic material that naturally responds to its environment and can change over time. It’s important that designers have realistic expectations in regards to its performance and can explain that to their clients. Historically, hardwood floors were only enjoyed by royals and upper-class individuals because it required intense labor by expert craftsmen who would work on one floor for years. This is why many of the castles you might visit on a trip throughout Europe will still have the original hardwood floors intact. During our trip to Normandy, France, every interior we walked through, both modern and historical, had intricate herringbone and parquetry designed hardwood flooring. This is due to

The CEU-eligible presentation analyzes the use of wood flooring as an element of design so that design professionals can become more familiar with wood floors to properly specify the product that will perform best in their clients' projects. Being able to understand the advantages and maintenance of hardwood floors is part of growing in understanding hardwood flooring. Furthermore, it dives in deeper in helping designers understand both the history and progression of the different types and species of wood floors so that they can specify hardwood floors in the best ways. Finally, the course helps explain how cut affects both the appearance and performance of wood floors. This is where I take off my industry hat and put on my designer hat and compare hardwood in the same light as diamonds, where the cut,

I’ve been in the interior design profession for what feels like a lifetime (nearly 30 years) and in the floor covering industry for more than 15 years. After all that time, it still always takes me by surprise when someone I consider to be experienced asks a question about where they can install hardwood flooring or the type of flooring they should use in specific projects. Recently while traveling in Chinook, Montana, our guide said something that was both profound and witty: “I can explain it to you, but I can’t understand it for you.” What I strive to do for my customers, friends, and the greater design community is to identify what they need to know, pinpoint what they don’t, and help them fully understand. One of the ways I do this is through a presentation I frequently present at designer events titled NWFA: Designing withWood Floors .

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Designing with Hardwood Floors (Continued)

PLAINSAWN involves a series of parallel cuts where the remaining cuts are perpendicular to the first set of cuts, producing wider boards than rift and quartered wood, and the boards will vary in width. Board faces have a cathedral grain pattern containing mostly flat-grain wood with some vertical- grain wood and more variation within and among boards than other cuts.

QUARTERSAWN cuts can produce vibrant ray flecks and a tight wavy grain. The flecks are caused by wood rays, which are life veins of a tree. They run perpendicular to annual growth rings and parallel to the board surface. Wood rays are more pronounced in white oak and appear as white lines that grow vertically from roots to leaves. Quartersawn cuts are when the log is cut in quarters and the remaining cuts are perpendicular to growth rings, producing narrow boards with a vertical grain. Although there’s more waste, the board face has an interesting fleck pattern that contains a tight wavy grain.

finish line, as well as adding aluminum oxide for scratch-resistant surfaces. Another aspect of finishes is that the color possibilities are truly endless; there is something for everyone. The 2019 Essential Trends: Color and Style Forecast for hardwood floors was recently released in the October 2018 issue of Hardwood Floors and further details my thoughts on the colors to watch this year. As in diamonds, the cut of hardwood dictates its appearance. In the 1800s, quartersawn was typically used due to both the fashion and function of the times. Today, many hardwood floors are made from plainsawn cut wood because it is a more efficient cut with less waste. In the design world, I frequently get requests for rift and quartered partially for its look as well as for its cache. Rift and quartered is more efficient today with minimal waste but has a longer production time, which does add to the expense of the product. See the graphics above for additional details on how the different types of cuts affect the appearance of the wood.

behind engineered. Most people want a certain look at a certain price, and engineered hardwood floors allow manufacturers to take a particular cut of hardwood that might come at a premium and make that the featured surface layer of their products. Both solid and engineered floors can be sanded and refinished, but solid offers the opportunity for more numerous times than engineered. The sandability of engineered hardwood floors depends on the thickness of the top veneer layer. Additionally, engineered can be installed above, on, or below grade. Because of its cross-ply construction, engineered floors are more dimensionally stable, allowing for installation on wood or concrete subfloors, which includes basements. Beyond solid and engineered, the options shift to finishing, which includes site finished, where the finish is applied on the jobsite. The other option is factory finished, where the finish is applied at the manufacturing facility. The manufacturing environment for factory-finished products also allows for enhancements like UV lights on the

both the ease and accessibility of the smaller size of the wood used by the craftsman as well as the fact that these herringbone and parquet designs were, and still are, incredibly long-wearing if maintained properly. Currently, we have a very diversified market where we can install on a wood subfloor or concrete slab, opening up more and more homeowners to the possibility of having hardwood floors in their homes. Today’s preferences are for domestic species like white oak, maple, and hickory with waterborne finishes due to increasing EPA VOC regulations. It has reached the point now where it’s expected that the products will be GreenGuard certified, and don’t be surprised for the specifier to ask about the safety of the product. The shift in the marketplace has gone from primarily solid and partially engineered to the reverse due to the versatility and dimensional stability of engineered hardwood floors. There are plusses and minuses of each, but the plusses are now stacked more strongly

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RIFTSAWN is similar to quartersawn with an accentuated vertical grain, but with minimal fleck. The saw angle is adjusted so that fewer cuts are parallel to the wood rays. This cut produces more waste. The cut is made when you quarter the log, and the remaining cuts are made from the center face, working outward. The boards come from a smaller part of the wedge, producing more waste. In rift cut it is hard to produce only wide-width rift, which is why it is sold with quartered. The rift board face has a vertical grain pattern and contains minimal fleck.

LIVESAWN is a combination of plainsawn, quartersawn, and riftsawn where the first cut is made straight through the log at its center. All the remaining cuts are parallel to the first, and this yields very wide boards and produces very little waste. Livesawn allows for more fleck effect, and wider planks show more knot holes and other natural characteristics. It goes without saying that rustic looks come and go in popularity depending on how the rustic look is interpreted. Livesawn produces more knot holes and other character marks like cracks that are smoothed and filled. The result of rustic hardwood is that the natural beauty shows through.

value to the structure, provides excellent insulation, and is durable, long-lasting, hypoallergenic, beautiful, sustainable, and timeless, creating a sense of pride and enjoyment for a life well lived. Emily Morrow Finkell is an interior designer and CEO of EF Floors & Design LLC in Dalton, Georgia, a provider of hardwood floors and home furnishings, and NWFA design contributor. She can be reached at emily@emilymorrowhome.com.

can be a lifetime investment that adds not only beauty but also value to your home. It is the only flooring category that is known for adding to the value of the home rather than adding to the cost, and that’s because it’s the real thing, not a copy of a wood look. The bottom line and the sweetest part of this flooring material is that its advantages and benefits far outweigh any negatives. It adds stability and overall

The performance of hardwood floors always comes as a surprise to nonindustry persons. Hardwood is hygroscopic, meaning that it absorbs or loses moisture based on the surrounding environment, swelling when it gains moisture and shrinking when it loses moisture. Hardwood is a natural material and should be desired more for its natural imperfections than for its perfections. If cared for properly and in areas that aren’t exposed to moisture, hardwood flooring

Photo courtesy of Emily Morrow Finkell.

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BUSINESS BEST PRACTICES FINANCE

The Impact of Recent Federal Tax Code Changes on Your Business By Mary Jane Pieroni & Stephen J. Lenivy

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Due to the complexities of the tax law changes, the following are only summaries of these provisions. Please consult your tax adviser for guidance on applying these reforms to your business. MARGINAL TAX RATES The marginal tax rate is the rate applied to your next dollar of income or deduction. The maximummarginal federal tax rate has been reduced to 21 percent for C Corporations from the previous maximummarginal rate of 35 percent. Fiscal year tax filers may be eligible for a blended rate for the 2017 tax year. Businesses of all sizes, across all industries, have been impacted by the monumental changes to the federal tax code. Tax planning should consider all possibilities to lower your total tax liability effectively.

Four of the most impactful measures from tax reform affecting businesses:

Permanent reduction of the corporate tax rate

1

Expanded availability of cash method accounting for small businesses

2

Limitation of interest expense deductibility

3

CASH VERSUS ACCRUAL METHOD OF ACCOUNTING

Tax reform expands the number of taxpayers eligible to use the overall cash method to calculate taxable income. Under the new law, C Corporations (except for farming businesses and certain qualified personal service corporations) and partnerships that have a C Corporation as a partner may use the cash method of

Expansion of bonus depreciation

4

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