The gambler: Don Finkell’s combination of calculated risks and happy accidents led to product successes
- 1 The gambler: Don Finkell’s combination of calculated risks and happy accidents led to product successes
- 1.1 What he remembers about the industry in 1986…
- 1.2 Q&A
- 1.3 How do you remember the wood flooring industry in 1986?
- 1.4 The product was not attainable to the masses at that time, correct?
- 1.5 Who were the players in wood flooring?
- 1.6 So there were no imports back then?
- 1.7 What was the first sea change you saw in the industry?
- 1.8 How did the hardwood flooring industry begin to grow from there?
- 1.9 What about the creation of the rustic visual?
- 1.10 When you look at the last 35 years, what have been some of the biggest challenges for the wood flooring industry?
- 1.11 Competing against the waterproof aspect and the visuals of SPC and rigid?
- 1.12 What about the influx of cheaper Chinese imports?
- 1.13 Has lumber supply been a big challenge over the years?
- 1.14 What about coming out of recession? Wasn’t supply difficult?
- 1.15 What could this industry have done better over the last 35 years when it comes to hardwood?
- 1.16 What was the best decision you’ve made in 35 years?
- 1.17 What’s your one mulligan?
- 1.18 What’s your favorite story to tell anecdotally?
What he remembers about the industry in 1986…
“I was at Anderson and had been there two years. They had to make up a position for me—vice president of administration. I started in the woods with the log buyer, crews, timber and talked to loggers. I got an understanding of what were good trees, what were bad trees, what you’re looking for, how not to get swindled—because, at that time, I couldn’t tell one tree from another. I became president of the company in 1988.”
How do you remember the wood flooring industry in 1986?
It was less corporate. You had some colorful characters in the business. The further you got back into the woods, the more colorful we got. We had issues with formaldehyde regulations, and the glue was one of them. We finally have eliminated that completely but that took more than 30 years.
The product was not attainable to the masses at that time, correct?
Correct, because it was more expensive relative to other products. Anderson was making a 9 x 9 block that was sold mostly in the Northeast. Back in the ’60s, it was so inexpensive that FHA would cover a mortgage. Then, in the late ’60s, carpet got approved for that.
Wood flooring went from 22% of the market down to about 2%. When I got to Anderson, wood flooring was at the lowest ebb. It was a 3-ply, half-inch product that was 9 x 9. All three plies were made out of red oak; looking back on it, it was a fairly simple process. The finish was nitrocellulose, which was like lacquer and it had a lot of solvents.
Who were the players in wood flooring?
There were not that many players. I think there were three in the 9 x 9 block business service: Anderson, selling under the brand name of Modern Wood; Bruce, out of Center, Texas, and Sykes; and Higgins—he was the guy who created the landing craft for World War II. Those were all plywood boats. At one point, he had 20,000 employees out of New Orleans but when he died he didn’t have any successors, nor had he created any plan for the company to survive after that.
There was also Harris Wood, Mullican and Somerset, too. But Somerset and Mullican only did solids back then. Anderson’s competition was Hartco in Oneida, Tenn., but at the time they only made the finger block, which was a version of solid—tiny pieces put together with water. We had Sykes and then Bruce was the big one. And, of course, Bruce became part of Triangle Pacific with Hartco, Robbins and Premier.
So there were no imports back then?
We had some from Scandinavia; you had Boen, Ramco and Kährs. Kährs and Boen were the biggest challenges.
What was the first sea change you saw in the industry?
In the mid 1980s, Mannington brought a higher level of marketing. It was around the time of Mannington Gold and they put a warranty on their floors against moisture separation from the slab. Everyone in the businesses at the time disavowed that. If you had moisture problems, we weren’t going to warranty that because we didn’t make the glue. But Mannington went out with this moisture warranty. The big print said “guaranteed against moisture” but when you read the fine print, they were talking about the glue that held it to the slab; it had nothing to do with the surface or what you would consider to be waterproof now. They started eating our lunch.
Overall, the industry became more sophisticated. Wood became main- stream. As it grew in popularity, other companies started bringing a little more to the game in terms of marketing and merchandising at point of purchase. Anderson had the fortunate advantage of being confused with a window company. Sometime in the early ’90s we had a new advertising company and they did some research that showed we had better brand recognition than a very big name in the industry. It didn’t matter that they were recognizing the window company because it just meant consumers had more trust in that brand. I decided we need- ed to do less but better so that we wouldn’t admit, if you will, that we weren’t the window company because Andersen Windows is fabulous at marketing.
How did the hardwood flooring industry begin to grow from there?
There was increasing wealth overall, but we also developed better finishes and colors. When I first started, we had chocolate and vanilla—we had natural and we had a dark—and the dark would take the things that had too much character into the natural. Right before I got to Anderson, they developed a third color we called the “Autumn.” It was a golden color. There wasn’t a lot of choice around that but other companies started adding others following the trend of colors and textures, and gloss became more important.
What about the creation of the rustic visual?
That’s an interesting story. Early on I became interested in FSC-certified product. My friend, Bill Joplin, who has since passed, told me he had a large project with the Gap and they wanted FSC certified. I told him I couldn’t source it but he said there was a way I could do it: “You have to have 70% FSC certified and the other 30% can be of something else. They have a species in South America that they have reforested half of South America with: eucalyptus. And they’re FSC-certified plantations.”
I ended up flying down there with Bill and thought it was a great way to do it. We started out with five layers of core inside, and a face and the back of a domestic species, which at that time met the FSC rules. I showed it to the Gap and they thought it was great. We had to buy FSC maple, too, for the face because they wanted 100% FSC.
I got it from an Indian tribe up in Wisconsin, the Menominees. As the project was going on, the Gap was telling us we weren’t making enough for this massive headquarters. I told them I was making every stick of FSC maple I could get my hands on. I said, “If you really want to increase production, let me put in the part that we’re grading out because it doesn’t meet your standards.” They asked me to come to San
Francisco, lay it out and show them what I was going to do. I brought them there and laid it out on a big conference table. I said, “This is eco-grade. This is the most ecological that you can do. And you guys are influential enough that you could change people’s perception of what is cool.”
I went through and picked out the wood that had characteristics they didn’t like, maybe 12 pieces, and brought them back with me so I could show the graders. We had a group of designers that came in from Southern California sometime after. They said they had never seen anything like it. They asked what I call it and I said, “Eco- grade.” They told me it sounded “economical” and I should call it “rustic” instead.
We introduced the product line in 1997 and called it Mountain Series. We did it in maple, hickory and oak. It was the first rustic to hit the market. The Gap job was in 1996, so it took us a little less than a year to get it all. But it was like a gift from heaven. It sold very well. And we didn’t lower the price; we raised the price. I said, “Charge for it.” We called it “Select.”
When you look at the last 35 years, what have been some of the biggest challenges for the wood flooring industry?
There was certainly a perceived attack from environmentalists. In the early ’90s, it was really important to position yourself as a green company. I don’t know that the average consumer really cared so much. Early on, that was a challenge. But really, when you dug into it, the story was pretty good and the facts were on our side—we just weren’t telling the story very well.
I put together a slideshow in the early 2000s called “Seeking Sustainability” and I went around making that presentation kind of like Al Gore did with global warming. It was a challenge but it didn’t stop business because we went from about 2% of the market to around 14% just a few years ago. Now, it’s 12%. It’s coming down because of the waterproof story that LVT, SPC and rigid core offer. It’s a big challenge today.
Competing against the waterproof aspect and the visuals of SPC and rigid?
Yes. It’s like a transistor. Nobody knew they needed that until somebody came out and offered it to them. WPC somehow morphed into waterproof core. It was some- thing the sales associate could tell people. Pretty soon it took on a life of its own. With wood, we’ve spent 30 years denying every claim on it if you opened it.
What about the influx of cheaper Chinese imports?
At Surfaces 2005, we put a booth together called “Anderson Brings You the World.” I traveled to South America, Indonesia—different places. We started importing things and I had this naive idea that I wouldn’t import anything that was directly competitive to what we made, only to my competitors’ products. It didn’t take long for someone else to import what we made.
By 2007, I had spent enough time in China. In the beginning, people would show me all kinds of stuff. I walked into one Chinese factory in March and they said, “These were the products that you showed us at Surfaces. This is how we make them.” They had copied stuff that fast off of a concept wall that we had. These were not even products in the market, they were only concepts we had. And they already created knock-offs. I said, “Yeah, that’s great. Let me help you make that and bring it in; it will be better financially.”
Has lumber supply been a big challenge over the years?
It hasn’t been until the last eight months and more so in the last four.
What about coming out of recession? Wasn’t supply difficult?
That was more in the solid business, because if you decide you need 25% more product, you’ve got six to eight months before you will actually be able to make more due to the production process. Whereas in the engineered business, you would need more veneer, so you buy logs and you can cut and dry them today. It will take a couple of days to cook them into that, but in a week you have that additional product you can go to market with. In the solid business, if suddenly the market wants more than what is in the pipeline, the only way you get more is to raise prices. Then, if the market wants less, the price drops to the floor. It’s a much gentler curve for engineered.
What could this industry have done better over the last 35 years when it comes to hardwood?
We have no hardwood—not just flooring, wood in general—checkoff program. Like “Beef, it’s what’s for dinner,” “Cotton, the fabric of our lives,” “Pork, the other white meat.” All of those are checkoff programs where the industry pays some fraction, like a tenth of 1% of their sales into a program that then is used to advertise the entire industry. I worked on that for three or four years. I put personal money into it. We could not get the wood group to agree to promote themselves.
What was the best decision you’ve made in 35 years?
To pursue hand-scraped. We had a customer, Virginia Hardwood, out in California. Dave Ferrari owned them. He was a legend there. They came to us and they wanted the hand-scraped floor because they saw that trend happening. They were only doing solids and they had their warehouse guy hand scraping the solids when he wasn’t loading trucks. They were selling it for $20 a foot. They were in an engineered market because everything is a slab there. They said if we could hand scrape and prefinish an engineered floor, it would be a good thing. It was one of those deals when you’re in a meeting and you know you’ve got one shot. We talked about costs for a bit, but I thought if we could get their business, it would be worth it. Dave said, “If you will make that product for us, we’ll take on your line and we’ll sell it for you here in our market.” It was the biggest market in the country at that time and probably still is. We were selling stuff for about $3 a foot then and I said, “What if we could do it for $6 a foot?” I didn’t have any idea whether we could do it for that. He said, “That’d be tremendous.” We shook hands on it. Deciding to take that risk was probably the best decision I’ve ever had in my career.
What’s your one mulligan?
I built a plant in Paraguay when I left Shaw. I left Shaw in 2013 and then I built the plant in Tennessee. I would not have done the plant in Paraguay because I eventually ended up closing it. I remember hearing at the time that it’s not what you decide to do in business that makes you successful, it’s what you decide not to do. That was probably one more thing we didn’t need. We made a hand-scraped, two-plied floor there called Casitablanca, and it turned out to be one of Anderson’s hottest products we launched in 2004. It started off well, but the wood had a reddish color to it and we got to a point when no one wanted any red. As we tried to eliminate the red color, we got into more complex finishes and it was just difficult for them to control it.
Eventually, I solved all of those problems but I had to have American supervision. It was just a difficult thing.
What’s your favorite story to tell anecdotally?
When we were dealing with the aluminum oxide, we had prototypes. Spike Tillman—he and I came through the war together—was running quality control when I ran the plant. Someone contacted him and said they had a sander that would cut off just the finish in the field, so you can refinish your floors without worrying about sanding through. He wanted to demonstrate it. Spike asked me about it and I said let’s try it out with the aluminum oxide. The guy wanted us to lay a small area where he could demonstrate his sander. We laid a 6 x 6 with the aluminum oxide. The guy comes and it’s me and Spike standing there in an old part of the plant because we needed a place that wasn’t going to be in the way. He’s talking and you can tell he’s got this whole pitch down. He runs it across the floor and says, “You can see it has taken the finish…wait a minute. Let’s try that again.” He goes back and he rewinds the pitch, runs it across the floor: “You see it takes the….” The next one, he’s standing on the machine and the other guy is pushing him across the floor. You can’t see where it made any impact. He said, “I don’t know, something must be wrong.” We told him to try it on the other area and the sander took the finish right off. We just started laughing and it showed us this wasn’t something we were just dreaming up; this stuff really does work. The aluminum oxide was the only difference between the two products.