By Matthew Spieler
Calhoun, Ga.—“During difficult times you have to show your commitment to the market,” said Juan Flores, president of The Faus Group. “We are at a very important junction in the U.S. market and now is the time to position ourselves so we will be able to jump at the opportunities that present themselves when things start to get better.”

Two years into the laminate manufacturer’s strategy to work with independent distributors and specialty retailers, Flores said the company has spent the last six to 12 months aggressively positioning itself so when the economy turns upward, “we will be able to offer our customers the products they want for their markets and superior service from trained, knowledgeable people.”

Some of the initiatives Faus has undertaken in the last year include:

• The start of a $20 million expansion of its U.S. manufacturing facility here (FCNews, Sept. 3/10), which will not only double its capacity when completed during the first quarter of 2008, but also allow the company to produce nearly all its products in America.

• A new senior management team headed up by Ken Freedman as director of sales and Steve Ehrlich, director of product development, marketing and merchandising.

• A bevy of new, high-end products “that take laminate flooring to a new level of realism.”

• Award-winning merchandising for its Fausfloor Gallery display, which took home the gold during last year’s In-Store Marketing Expo.

“Internally and externally we revamped and renewed our commitment to the market, our customers and the industry with a winning strategy for North America,” Flores explained. “Put together, this will make us more effective and competitive while allowing our customers to make more profits.”

The one thing Faus has not done, he stressed, is reduce quality and performance of its products. If nothing else, the company has enhanced its offerings by fully utilizing its portfolio of proprietary technologies to create high-end products. “We have not shifted from the high end. We’ve actually enhanced it to allow our customers more selling opportunities.”

Factory expansion

It all starts with Faus expanding its U.S. manufacturing capabilities. Flores said this significantly helps the company become more competitive without lowering its standards of quality.

Prior to this, many of its products came from Faus’ factory in Gandia, Spain. By “mirroring” everything done in Spain as well as incorporating the latest computer technology, the company can not only improve its efficiencies to keep costs down by being able to produce upwards of 60% of its North American needs, it helps “fight against the U.S. dollar/Euro imbalance—which is terrible—plus eliminates the freight costs and duties you pay for bringing in product.”

In expanding its one-year-old facility here, Faus is showing its commitment to the American market by incorporating the newest equipment and computer technology, some of which is exclusive to Faus. In fact, Flores said a new computer monitoring system “that checks every aspect of the plank” was installed here first and will soon be installed in the factory in Spain.

This cost saving is not only a benefit to Faus, he noted. “It will benefit distributors and retailers because it allows the company to offer a broader range of products at price points that provide profits.”

Management change

In order to ensure Faus got the message Flores and the rest of the ownership team wanted, especially to the specialty retail segment where it has committed its future, the company needed to make sure it had the right management team in place.

“Two years ago we made the commitment to move into the specialty retail channel and we now have a more mature view and realize certain elements that are necessary to make us a player, Flores explained. “Part of this was our organization. We needed to elevate a notch in management.”

That’s where Freedman and Ehrlich come in. The former Hoboken executives not only “have a clear vision of where we want to be and how we want to do it,” but each brings a wealth of knowledge about the distribution side of the business. In addition, they bring manufacturing and retail, primarily buying group, experience with them.

Together with the three other key members of the Faus management team—Kimberly Hefner, inside sales manager; Julie Akins, marketing manager, and Jane McDonald, merchandising manager—“we are a team that has a great focus on retailers and distributors,” Flores added. “And that is the direction we want.”

Higher-end focus

While Faus is making itself a more efficient company in the U.S., it is still maintaining its high-end status. Actually, it is moving even higher as among its new offerings is the Cosmopolitan collection. What will eventually be a 17-SKU line next year, Cosmopolitan not only takes the look, feel and sound of laminate flooring to another level, it allows the mill to offer a five-tiered price-point strategy.

Faus’ new pricing plan is interesting because its so-called “entry” line, Essentials, actually retails at a price point equal to or greater than what some other companies’ high-end product sells for—$3.50 a square foot. At the other end of the spectrum is Cosmopolitan, which has a suggested retail price of $5.50 a square foot.

Flores said this strategy is similar to what car companies like BMW are doing. It is offering a wider choice of cars but each one still carries the high-end bells and whistles consumers expect from a car with a BMW logo on it.

For example, at 8mm Essentials is constructed in the same manner as Cosmopolitan with an HDF core featuring Faus’ proprietary Aqua Resist, DPL backing, HDF locking and wax oil emulsion edge impregnation. It also has the company’s exclusive microbeveling technique and JointGuard protection and comes with a 30-year warranty.

Faus’ production process is set up as a series of small individual lines, meaning it can make upwards of 20 products at one time, “allowing us to be more flexible,” Flores said. Ehrlich added this is what also allows the mill to offer its high-end price strategy. “We have the ability to move products through their evolutionary market life cycles. Many may still be solid sellers, but they are not the newest, hottest thing going. So we have the ability to take a style from our Masterpieces collection (which retails between $4 and $4.50 a square foot) and move them to Essentials as they become less trendy without sacrificing quality and design.”

With the introduction of Cosmopolitan—which features Faus’ thickest and best acoustical underlayment at 2.3mm pre-attached, its thickest core board at 11.5mm and a number of looks being offered for the first time in the laminate category—along with additions to its Really Exotics, Masterpieces, Classic American and Essentials collections, between this fall and Surfaces, Faus will offer a total of 120 SKUs.

Some of the new looks include Roman travertines in a large-format rectangle, micro-bevel grouting, bleached/whitewashed woods, dual-glossed painted concrete, the first two-species—oak and cherry—parquet in the same pattern but with different textures and much more.

And, Faus is showing laminate’s environmental nature by not only offering the look of hard-to-find and now, in some cases, illegal wood species, it is allowing consumers to walk on “woods” that cannot be used as flooring. These species are either too soft, simply cannot be made into a standard plank or there is not enough of a supply to satisfy demand. For example, Spanish Olive and pear wood, both being offered in three SKUs.

“Not only are they a different wood visual,” Ehrlich said, “they show how unlimited laminate can be compared to the real thing by taking a new species than can’t be done in real wood.” And, with the logging industry under fire around the world there are going to be more and more species that will only be available as a laminate.

He added what makes Faus visuals so realistic are not just its patented embossed-in-register technology, “the wood visuals are real wood and not digitally made. We actually cut strips of the real thing to photograph.”

Next steps

Faus understands not all products fit all markets. So the company is actively working with its new Design Advisory Board (see sidebar on page 14) and distributors to formulate regional programs. About 10% of the line will be formatted to fit particular areas of the country—still using Faus’ five-tiered pricing system—so dealers will be able to offer more of what their customers are seeking.

In addition, the company is making a push into buying groups and will launch a private-label collection with a major group early next year. As well, last month Faus officials attended their first meeting of the National Floorcovering Alliance as a core vendor.

Speaking of growth, Flores noted the company currently has 2,500 displays in the market and plans to reach 3,000 by the end of the year. He said the ultimate goal is 5,000 as Faus wants to keep it to a select group of quality dealers. “We don’t want to be everywhere for everybody. We have quality products and want only quality dealers. Plus, we want to bring meaningful value to our retail partners. Let’s face it, not everyone can be a Mercedes dealer.”