December 22, 2009
Johnson City Press
By Jeff Keeling

“We were hoping this was going to help us,” Poland said of Mullican’s four-year plan to shift its business mix from products aimed at new construction to those targeting the remodeling market. “It’s obviously a combination of being lucky and smart.”

Local leaders on hand for the announcement were more effusive in their praise. Johnson City Mayor Jane Myron lauded Mullican’s employees, and its leadership team “for its excellent foresight and strategic planning in these difficult times.”

Congressman Phil Roe, R-1st, pointed to the plant’s employees, “because without a quality product, you wouldn’t be in business.”

Roe said the announcement provides a pleasant contrast to the dominant economic news.

“It is wonderful to see, in a down economy, when the country’s struggling ... that you all are doing a marvelous job here in providing jobs and negotiating in a very difficult time.”

The strategic change that resulted in Tuesday’s news began just a year or two after Mullican began production in the former Gordon’s Furniture plant on University Parkway in 2003 (the 24-year-old company moved its headquarters here in 2000). Poland said the new line is helping buffer the company from the pain of the housing downturn.

“Our industry and many of our customers are down in excess of 30 percent,” Poland said.

“We do not see much of a bounce in the new construction market next year. We see that holding where it is at it relates to our business, but we do feel like we are poised to experience an increase in the remodeling segment next year.”

Poland said the new pre-finished line is not a case of transferring capacity from another plant. Mullican’s facilities in Norton, Va., Holland, N.Y., and Ronceverte, W.Va., will continue producing unfinished flooring, but a greater percentage of that will undergo finishing in Johnson City before being shipped.

“The other plants will remain staffed as they are,” he said.

The new housing market began to turn in some parts of the country as early as 2004, Poland said, and that prompted Mullican’s strategic shift. It took a long time, he said, but the company’s penetration of the remodeling segment has progressed to the point of needing the extra capacity for pre-finished flooring.

“With new housing completions bottoming, remodeling has become an important option, and we have to add equipment and production capacity to meet the demand,” Poland said.

Mullican’s top brass knows the new construction market is on life support. What they don’t know, Poland said, is just how much vitality the remodeling business will ultimately exhibit.

“There’s not a lot of good data as it relates to that, but we’re hoping for a positive upside surprise,” he said.

More importantly, he said, pre-finished flooring produces higher revenues than equivalent volumes of unfinished product. And even in the new construction market, Poland said, many national homebuilding companies are turning more and more to pre-finished floors, leaving unfinished producers to fight for the much-smaller custom building market.

How quickly Mullican brings on an expected 50 additional employees after the first 25 start early next year will hinge on the sales force’s ability to keep increasing demand for the pre-finished offerings that number in the hundreds. Poland said that could be influenced both by the home-remodeling market and a possible increase in finishing out of partially completed new homes that saw their construction grind to a halt when the housing market imploded.

“We’re hoping that consumer confidence upticks a little and we get a good bounce.”