Ufuk Altıntop, Hannover Fairs Turkey Deputy General Manager: “Dear speakers, dear guests, welcome to the second edition of ZGF, The Future of Flooring Forum jointly organized by ORSIAD Journal Get Trade Company and Hannover Messe Trade Company! Today we have very valuable speakers here and I’ll intoduce them to you in a moment. Some of you may know, last year we organized the first edition of this forum in the conference room upstairs, but this year we have chosen the lobby of the expo center as our main location. The purpose is to make it easier with better access and present an open to public location. As it works out great here, we will continue to choose this location as our main place for the future fairs, too.
Today we especially would like to thank EGGER company who sponsored this event. As you may all know, the forum’s topic is “Outlook of International Wooden Flooring Industry” and before introducing our distinguished speakers, we would like to thank Mr. Naci Güngör, Member Of The Board Of Directors of Istanbul Wood and Forestry Products Exporters’ Association, who’s here to moderate this forum.
Speakers are;
İsmail Hakkı Yıldız, Member Of The Board Of Directors of Yıldız Entegre Wood Industry and Trade Company,
Ahmet Çetinkaya, Kastamonu Entegre Company Parquet Sales Director,
Peter H. Meyer, Association of European Producers of Laminate Flooring (EPLF) Managing Director & MMFA Multilayer Modular Flooring Association Managing Director,
François Sougnez, Secretary General of the FEP European Federation of the Parquet Industry,
Rick Barrett, NWFA National Wood Flooring Association Representative Member, Midwest Hardwood Co. KG. Export Sales Manager,
Kamil Deniz Özel, EGGER Retail Products GmbH Co.KG. Turkey, Iran & Azerbaijan Sales Manager.
We would like to thank you all for being here! Here today, professionals of the industry will discuss about the future of industry. In fact you have the opportunity to see lots of products in the exhibition area, and be informed about the industry today, but this forum will discuss the future of the sector and analyze the current situation and other issues. To make the long story short, I’ll leave the microphone to Mr. Naci Güngör. Thank you all again and enjoy the forum and the fair!”
Naci Güngör: Thank you very much. As you may all know, today’s subtopics are “Sustainable Production”, “Sustainable Employment” and “The future of the industry”. Turkey becoming one of the world’s leading producers of laminate parquet industry in the recent years, being the third big country in capacity wise as well as the second big regarding market size in the recent years, made the country very important player of the industry. Although domestic manufacturers have very large capacities, foreign players also acted to get market share in Turkey. In this context the year and in a limited short time, we will discuss the future of the industry with our guests here today. Because our time is limited, I further ado and start to ask my questions. Our first question is; What is Sustainable Consumption and Production, and why do we need it? Mr. Meyer, can we start with you?
Peter Meyer: Thank you very much. First of all, I’d like to thank to organizers and trade show company to invite the EPLF to attend to this panel. EPLF stands for European Manufacturers of Laminate Flooring. And worst certain times was, it was not clear for us whether Turkey belongs to Europe or not. But meanwhile, it’s decided and definetely Turkey belongs to Europe, and we are very happy that we have this really strong manufacturer country beneath our members with some very established companies. Let me loose some few words about the term ‘sustainability’ in general. Because it’s very fashionable to use this term right now and I have sometimes the feeling that many people how use this word, are not totally aware what it means. But it’s actually since the 80’s a very clear term. In the 80’s, actually in 86 there was a commission by the United Nations run by the former PM of Norway, Mrs. Brundtland, and this time we have a very clear definition and we should memorize it what sustainability means. Sustainability actually has three pillars. One of these pillars is the economical sustainability and that’s very often forgotten. But this is only one of the three pillars, so economical, environmental and the third is social. These three pillars form the sustainability and the reason why sustainability and sustainable consumption and sustainable production are so important for the future, is simply the fact that we have to keep this planet, this world livable for coming generations. That’s the point and that’s from my POW is whatever we do sustainability is so important. But never forget, it’s not only environmental. Sometimes it’s used only for environment, but it’s also social and economical as well.
Naci Güngör: Second question; What are the present production capacities for (laminate flooring / engineered flooring / solid flooring)? Mr. Meyer, can we continue with you first and then this question will follow other collagues; In the world in general for the last three years What is the capacity utilization rate? (years 2011, 2012, 2013 Europe, Asia and America)
Peter Meyer: We have a stagnating phase for the last three years. Maybe I change the question a little bit and talk about the production first and then mention about capacities. The total production of laminate flooring in 2012, following a survey of the Munksjö company a paper manufacturer and beneath our member amounts to 890 million sqm flooring and as production wise this 890 million sq m broke up in 530 million sqm Europe including Turkey, 90 million sqm in the Americas, meaning north and south, and 270 sqm in Asia so, incudling China and which is of course largest manfucaturer in the world and also in Asia. Is it ok to talk about consumption now?
Naci Güngör: Yes please, go ahead.
Peter Meyer: We have in Europe a consumption of 464 million sqm which is less than the manufacturing comparing 530 million sqm, we have a consumption in the Americas 164 sqm comparing to 90 sqm and we have in Asia consumption of 244 million sqm. These are the sizes so when you ask about capacities and of course capacities is also a matter of definition, what’s a capacity, how many shifts, in general. But at least for Europe, we could say that there’s an over capacity about 100 percent. So the possible theoretical capacity for production is about 100 percent higher than the real manufacturing output from our assumption.
Naci Güngör: What about the engineered flooring for Europe? What can you say, Mr. Francois Sougnez?
Francois Sougnez: Well first of all thank you for inviting FEP, the European Parquet Federation to this forum. We represent the manufacturers of parquet which is defined us a product with top layer of 2.5 mm of real wood. The statistics I have, are based on these type of products which is called parquet which should not be confused with the Turkish term ‘parquet’, which covers more. So for these products, I have some figures about production and consumption we see that in 90’s and the beginning of 2000, the production and consumption follow eachother and we have an explanantional growth until 2007 when we reached record highs of production in European countries of a 100 million sqm and in consumption 112 million sqm. Then came the crisis in 2007, which was floowed by two really difficult years of 2008 and 2009, where both production and consumption lost close to 30 percent. So after the crisis hits, we have a level of 67 million sqm of production in 2008 and a level of consumption of 87 million sqm in 2009. These levels are still the same today and some years we are a little bit up. Sometimes little bit down, but if look at the tendency it’s stabilizing at the very low level. We have also conducted to our first survey of first semester this year, and the picture does not look too bright either. We have few countries reporting positive figures but maybe we’ll talk about these developments in the next questions. But we are only convinced of one thing is that after the crisis, the sun always comes back, so we are ready for the better times.
Naci Güngör: Thank you very much. Mr. Barrett, what do you think how’s the situation in your market? Engineered flooring and for hardwood?
Rick Barrett: Thank you very much. I can only speak for US market, and sitting here and listening to the European figures, it’s uncanny how closed the US market followed the European market. The US market before the crisis could make 111 million sqm flooring per year that was domestically produced enginereed and solid flooring, through 2010 and dropped to 74 million sqm, this year the estimate is that the consumption and production will equal about 83 million sqm. in the US. So we saw the same exact thing that the Europeans are saying, our factories, we had many closed, we don’t have this excess capacity that seems to be problem in the European market, so we are fortunate to run a lot of factories on multiple shifts right now.
Naci Güngör: Thank you so much for this valuable information. Now I’d like to ask a question to Mr. Hakkı Yıldız. Are there any new investments needed in the industry? What would you say considering Turkey?
İsmail Hakkı Yıldız: First of all, I’d like to welcome our guests from Germany, USA and Belgium. Wooden flooring capacity in Turkey has increased significantly in the last 10 years. Our country has become the 4th biggest laminate flooring producer for both reasons as the ratio of the capacity and the amount of production capacity. Of course all of the investments were for the future of our country. Being one of the groups engaged in investment, as to be the representative of our company, I think we need new capacities regarding the future of our country and the importance of our geographical location. Of course, while considering these investments, a good analysis of the logistics and economic advantages must be done. But as a producer I can tell you clearly that Turkey’s installed flooring capacity is not sufficient for the next 10-years or 20-years periods. And therefor, I can say that our company will continue to invest.
Naci Güngör: Thank you so much. Mr. Ahmet Çetinkaya, what are your thoughts on this issue? Does the sector need new investments?
Ahmet Çetinkaya: Considering the fact of figures, together with the investments made in the last year and this year, Turkey’s production capacity has reached 140 million square meters . Currently 55 % of this capacity is currently being used for laminate flooring. Yet there’s an unused proportion of 45 per cent. However, this does not mean that is enough. Turkey is now a significant, big player in the world, and aims to sell and to invest in other countries, including neighbors. Therefore it seems like the remaining capacity will not be enough. At this point, new investments, and the need for investments in the main raw material of hd for flooring, are needed for the future. However, taking a look at the next 10 years, it seems that rapid growth in Turkey in recent years will continue. For this reason, global players in Turkey at the moment, will continue their investments in the future. As to speak for our company, we also are sharing this thought.
Naci Güngör: Thank you. And Mr. Deniz Özel, what would you say about the same subject?
Deniz Kamil Özel: In theory, the current production capacity is more than enough. There’s an excess supply in theory. When we think of Europe, with an installed capacity of about 850 million square meters, the current sales took place around 450 million square meters. Again, the situation in Turkey is not much different. As Mr. Ahmet Çetinkaya also mentioned, companies producing with a full integrated plant today, have a production capacity of 140 million square feet in ideal conditions. In Turkey, including exports and imported products, the sales of wooden flooring is about 85-90 million sqm. In terms of development of the industry, excess capacity is not too much of a good thing, because as the capacity increases, production companies, and market go to a different direction. Increased capacities mean effective operation of the means of production lines, so that we need to make sure the production lines work effectively. For this reason, markets, especially in emerging markets such as Turkey, products with more affordable prices stand out. We, as EGGER company, do not think of any capacity increase in the next period.
Naci Güngör: Thank you very much. Mr. Meyer, how did the industry pass year 2012? And how’s the year 2013 going on with the laminate flooring market the world in general?
Peter Meyer: Do you allow me to add one thought to the question before?
Naci Güngör: Sure, please go ahead.
Peter Meyer: Because it sounded a little bit contradictory. On the one hand, we talk about over capacities 100 percent compared to the actual consumption, on the other hand, talking about the needs on new investments. I think that’s not a contradiction. It has to be pointed out. And it can also be pointed out on your term of sustainability. When we talk about laminate flooring, we must not forget we have a product which has a history about +30 years. It’s not older, and for example next year EPLF will have its 20th year anniversary, and I’m there for 15 years already so I have quite a past, so therefore we can say laminate flooring of today comparing to the laminate flooring 20 years ago, is a totally different product and it needs totally different kind of capacities. We must not only talk about figures when we talk about capacities but we have to talk about the quality of the product coming out, the technology which is applied so it makes a strong difference when you have a production line from 10 years ago, or have a modern production line from today. That’s the one point, and from other point and also we have different fields of investment for laminate flooring. I see for example, a big thing coming with a digital printing. Which is a totally different technology than we were used in the past. And this may become big investments for the players in the industry to invest into these digital printing facilities, that’s also a new field and sustainability again. With this digital printing, you are more capable to adjust to the difference techniques of the market. So another investment which makes sense in the market, so generally over looking capacities. So this was the long answer for the previous question. And when it comes to how things are coming and doing, from our point of view, from our figures, we see that the first two quarters for the year 2013, were more or less stagnating. We noticed a very strong and good development in third quarter, so we expect for the end of the year the slight increase of the market of at least EPLF members and after members have about 50-60 percent of the share of global market everything. These figures are quite representative that’s the view for this year, so we expect something good. For the years to come, honestly I’m not optimist by the profession, but I see that we have a good development for different reasons. One reason is that Europe as such the biggest market for laminate flooring is coming back on stream economy wise. The crisis seems to be over and we expect strong increase in renovation markets as well as new construction, new housing in the next years, not only 2014 but also 2015. So I look very positive in this market, so I am also (-turns to Rick Barrett-) you may confirm ot or not, long term positive about the US. Because I have the feeling the bottom of the valley is somehow reached can only go better. We have new markets, in South America for example, laminate flooring is increasing, we see new oppurtunities in Russia. So all together, I expect the next years, if I may still stay as the directing manager of one of these associations, I’ll see the market reach one billion sqm for sure. I’m sure of that.
Naci Güngör: Are the European producers selling to China now? And what’s your future plans for the Chinese market? As far as the European producers are considered, Mr. Meyer?
Peter Meyer: Our figures are always the output of the European facilities of our members. So when our members have facilities outside, they have for example in the US or they have in China as well, these figures are not included in our association’s figures. Years ago, we had about 20 sqm sales in China ex Europe that was a time about the production capacity in China still expansion phase. There wasn’t really nothing and then it was going fast, so our figures melted down to only 1 million sqm to three or four years ago, and it’s interestingly since 4 years, we see permanently with two digits percentages increasing figures again in exports from Europe to China. And just in a conference some weeks ago, in Kuala Lumpur, a gentleman from the purely consulting company wrote inside of a survey in China, that the middle class Chinese who invest nowadays buy consuming new place new apartments, go for quality and go for interesting designs. And very often them, although they have this something 200 million sqm production inside China, very often they decide for European products because of both, significantly better quality, and also because of a significantly more interesting designs. So that’s interesting that we are able to turn the wave and now export again every year to China with two digit growth.
Naci Güngör: Thank you very much. Mr. Sougnez, what is the lifesycle stage of enginereed flooring or hardwood flooring?
Francois Sougnez: Maybe I’ll also contradict you and come back to the question before. Because I left my last answer by saying that we had view of what was going to happen this year, and I did not expand on that. Maybe it’s interesting for audience to know what’s expecting us this year and future. So the latest figures we have are up until the end of last semester, and I’m happy to hear that other sectors witness an improvement in this first semester, so we hope that will be the same for parquet. But in the first 6 months we have Germany, which reported a flat figure as far as the sales are concerned and only Norway and Switzerland, which is a very traditional market for us, are reporting good figures. All the others expected, well if you compare to the result of first semester to the first semester last year, were negative. And the reason thereof, are for example, really bad weather conditions we had in Europe. So the first 3 months, we had a lot of snow, really hard conditions for construction sector, then was followed by the pretty humid Spring, also construction sector had difficulties to start the works, also the crisis was one of the reasons it did not stop. So for the end of the year, we expect a flat figure and I’m happy to hear maybe some positive developments are coming, and for the future there’s good signs of the European commission and latest forecasts saying that crisis should come to an end pretty soon. What we should not forget that also we follow construction market really closely, and we follow them by 6 months, cause usually by the time we install the parquet in the house, it started 6 months before. Coming back to the second question, lifetime of a parquet, I’d say it’s a really long lasting product. There’s no official figures but you can keep it for decades in your house, you can send it 2 times at least, has a top of 2.5 mm., you can send it, wax it, oil it, again and again, once the flooring is not suitable, you can use it and reuse it or recycle the product, you can burn it for energy when there’s no other possibility anymore. So this is a product of a decades of a lifecycle.
Naci Güngör: Thank you very much. Mr. Barrett, would you like to add something on this subject?
Rick Barrett: I think it’s been covered. The sustainability and lifecycle as everybody recognizes the benefits of that.
Naci Güngör: Mr. Hakkı Yıldız, how did the global crisis happened between 2008 and 2009, influence the sector? What is the cost of the crisis to the sector? What is the present situation? Did the average home size start to decrease after the crisis?
İsmail Hakkı Yıldız: Before answering this question, we need to identify the source of the crisis. Unfortunately this crisis was reflected from the west to the east. It started in finance, and in a way the influence has arrived late in Turkey. The years of 2008, 2009 and even 2010, were a period where the crisis was not perceptible and on the contrary the sales continued to increasea and we had a development period. But in late 2011 and the beginning of 2012, we started to feel the effects of global crisis. And I should say, while witnessing drops in the sales in Turkey, we slowed down instead of running with a rapid. Honestly we were expecting to do better in 2013, but unfortunately, there was still a slowdown in the second half comparing to the first half of 2013. I do not think the cost of this course can be calculated, but the dynamics of Turkey, the advantages of Turkey, allowed us to feel this crisis as little as possible and have less damage. Of course, with this crisis, as you also mentioned, new solutions have been presented, and in order to make the sales continue particularly in the construction industry, small-scale living areas started to being offered. Especially for the last two years, constructions and works that have been made in this sense, relatively enlivened us a little more. But I’m still sad to say that 2013 is slower than 2012. I still hope that for 2014, we will catch up our old speed and quality, meaning the good old days.
Naci Güngör: Thank you. Mr. Ahmet Çetinkaya, as regards the product mix, what are the preferences of the market? Which types of certain product category (direct print, digital print, decor paper overlay coated laminate flooring, hand scraped, v –groove, stone look, registered ) are preferred and how will it shape in the future? What are the trends for decors?
Ahmet Çetinkaya: I also would like contribute some information regarding the the previous question. It’s true that we felt the crisis of 2008 and 2009 a little late. Especially the political stability in Turkey, has provided significant benefits to producers like us. We feel and witness the benefits of this situation for the last 5 years. During the crisis period, anti-dumping as a required and the necessary caution was done because there was an unfair competition from China to Turkey. Consumers still did not have enough awareness for laminate flooring and the situation was not like today. Therefore, the anti-dumping for limiting China, made it possible for domestic producers to act freely and concentrate on quality and producing during those hard times. And this situation has provided many benefits to our sector. I think one of the main reasons why we could achieve such great success is those correct actions. Because after that, we started to look more hopeful about the future. Investments, particularly in the construction sector, provided us with many benefits. This activity continued until 2011. The year 2012 was obviously a difficult year. This difficulty on domestic producers were actually because of sectoral changes. For example, for the first time commercial changes were made in 2012 and neither domestic manufacturers, nor our dealers were ready for those changes. New laws and new regulations on the commercial applications has upset the sector, as a result, the dealers, and the producers fell into an uncertainity mood. Some of them wanted to take this risk quickly, and some hesitated. Therefore 2012 was a little more vague, a year with less action. For this reason, I think the the disturbance caused falls in sales. Our company also took a decision in the favor of observing this process. We have also watched in 2012, but life goes on. And while observing the implications of the new commercial applications, we have created new sales strategies and new structures of dealership and that’s why the year 2013 was challenging for our company. It’s been an important year for both terms of observing our dealers’ development and changes in the market. This year, particularly we have put great importance in training. Both commercial training, and industrial training, and seminars, took place this year within our company and as of today, we can say 2013 has been foreseen by us. 2012 was a year where imported flooring products entered the market with different methods as a reflection of the global crisis. So it was a year with a competition in terms of price. Followed a course almost parallel to each other, because of sale systems, especially at the beginning of the year had a sudden price drops. Of course, besides the changes in the commercial market and perturbations, this change in imported products pushed domestic producers into tough situations. And yet again, appropriate methods were evaluated and developed according to the situation. In 2013, we have developed positions where we act according to the current situation. Currently laminate flooring industry is really very moving and fully controlled sector and a market with desired results. There are currently 10 major players in this sector and six of them are domestic producers with a background of significant investments in their respective fields. Four major producers in Turkey are world wide known and compete globally. I strongly believe that at this point, we have a very successful competition.Because of moving away from price competition now as everyone has seen it in 2013, domestic producers also started to move accordingly. Because we have to come to this point together. At the same time, the vendors in the market who were affected with the situation, began to act this way. Therefore, I believe 2014 as well as the next 4-5 years will be much more successful, and we will love the upcoming years more. And as for the other question, the market knows it better than us. Consumers in Turkey follow Europe very closely by frequent visits to abroad and monitoring the world trends. Currently, as in Europe, there’s a shift towards light colors in the market. Nearly 80 percent of the collection is formed by light colors. Other than that, the interest for upscale products has increases because of the economic data in Turkey income per capita increases with each passing day. As a result, purchases head towards the top group of products with better quality. This goes for domestic producers and at the same time, it also clearly the same for importers. Market is moving towards upscale group of products.
Naci Güngör: Thank you Mr. Çetinkaya. And Mr. Deniz Özel, how was the year 2012 in general? How is the year 2013 as of end October? And what can you tell us about the trends?
Deniz Kamil Özel: 2012 was a very successful year for us, a very good sales process occured regarding the imported products in Turkey. Of course, the key for achieving such great success in sales was our diversified and rich product groups. As of today, we can offer a rich variety of products with different kinds, different thickness, different sizes, different decors, and different surface textures. I believe we’ve answered the needs of our customers with a wide variety. There were some events we observed and with that observance, the market is supposed to capture a little bit of differentiation. And because our product portfolio was accordingly, this situation also reflected in our sales. Despite the fact that there was a crisis situation in Europe, we as EGGER company have achieved a very significant growth rate in Turkey and the in the other markets in which we operate as a group. In our opinion, even though the crisis affected the current demand to a certain extent, in general it has more effects on the lifstyles and the trends. For example, available floor space used in homes has decreased in general. While much larger areas were used for construction in the past, due to urbanization, the average square meter of housing fell, and it is naturally reflected in consumption. The renovation sector in Turkey is currently slow. For us, the construction sector has always been a sector that affect the gross national product. According to the data today, we think that they account for 30 percent of the direct and indirect. When this happened, we had a very parallel to growth with the construction sector in 2012. Any movements of the construction industry are great interest for us since we market the products related and used in the construction industry. As I said, 2012 was a good year for us. As regards for trends, and with a wide range of products, as well as emphasis on R&D… All because EGGER is a highly innovative company. When we look at the history of laminate flooring, laminate flooring was used for the first time in 1977 in Sweden, so today it is a product of 35 years. It has developed itself seriously within 35 years. Developed which areas? First of all, people’s perspective on lamiate flooring has changed. Because people who preferred more natural products like solid and engineered flooring, started to choose these products that are more economical and have rich options. In addition to these facts, of course, tastes have changed with the change in living conditions. We continue our research and development activities. As I said, laminate flooring was used for the first time in 1977, the method of direct printing laminate flooring produced in 1989 and the click system has been introduced in the market in 1996. In 2006, for the first time in Germany, a manufacturing of direct print method was held by EGGER. This is still considered as the latest technology. In 2011, by integrating hdf with cork, new products were developed to improve the quality of life. Today, we continue R & D, while paying special attention to the changing tastes of consumers. Today we observe that especially oak and different varieties of oak and colors are much preferred. Milky white cream and light colors are preferred as well as the full planks instead of choice of two strips or the so-called three-piece strip decors. Because it looks a bit more natural and close to the original material, the products with natural cracks are more popular. We believe the indisputable quality products increase the market share of value-added products in the future. As of today, the sale of products in the market are done with a very vicious cycle, and we plan to create a better market for our consumers by presenting qualified products with different patterns, and different formats in 2014. In order to have more qualified products in the market, and present different products to the consumer’s appreciation, we think manufacturers and traders should be more concentrated on these facts.
Naci Güngör: Thank you so much. Mr. Meyer, will the popularity of product continue in the future? Is there any risk of being substituted by another product of laminated flooring?
Peter Meyer: The danger of substitution is you’ll never know at once, that there will be a substitution. Because that’s the matter of innovation and innovation is someting new and if everybody would know what’s new coming then everybody would know there’s a substitution. But this is of course joking, kidding. Talking seriously, of course there’s always a trend of substitution. And we see at least in the large developed markets like Germany, something’s cooking. We have new product in the market for some years, with very unfavor of the name the LVT’s, the luxury vinyl tiles which is not a good expression, because luxury is something you can not standartized. But after association using standarzation is always a problem but it’s used so much introduced in the market, so it can not be changed anymore. For those who do not know what I mean with the LVT’s is a brief definition, it’s at least the line share of this product is built up with HDF, substraight, same like laminate flooring, but the surface of this product is not a duraplast like we have in laminate, but can be thermo plastic, it can be PVC mostly it’s PVC, but can be laso PP or PT or any other thermo plastic services… This is a presently comparely highly priced product comparing to laminate flooring, but we expect that the prices in the advancing of the manufacturing process will go down. And after many of our members, at least in central Europe, are also manufacturing this product, we see on the top of the market in the high end of the market, a certain, limited substition right now, to say very openly. But also this maybe again contradictory again as I said before, still I see growing sales, laminate flooring but a certain share of this will go to this new product LVT. Started as as we discussed with our EPLF whether we should cover this product with EPLF, last year we found out it’s simply not possible. So we established a new association called MMFA, which is dealing with these products. And our main target at the moment, is to introduce standards for these products as soon as possible, so we don’t have a situation that more or less unregulated market that start some cannibalization product with bad quality. We are caring for these products as well. And I think we’ll be very succesful for very short term because most of the big players of the industry which are not laminate industry also became our member, this companies also who came from PVC flooring mainly like, for example Beaulieu Flooring Solutions from Belgium came to our association last week.
Naci Güngör: Thank you very much. Mr. Barrett, would you like to add something to this issue? Regarding hard flooring vs. Laminate flooring? What are the pros and cons? What about the future of your product?
Rick Barrett: You can see me wanting to ad something here. We are as wood people are encouraged because in the US, the rated which people change residence has slowed behind the crisis. People are staying in their homes longer. And what we are finding is that many of the people are wanting to replace that initial floor that they put in their house. And we are finding that engineered wood flooring has become a second time replacement to many of the laminate floors. Because surveys that NWFA has done, indicate that real wood flooring is genuinly wanted at some point. It just wasn’t available at the price level when people initially put down in the floor.
Naci Güngör: Mr. Francois Sougnez, can we hear you also on the sobject?
Francois Sougnez: I can confirm actually the tendency that was just presented, we also made a study in Europe, that concluded the parquet and real wood is also very much wanted product, bringing a piece of nature to the house is really authentic and we see that others also understood the message really well. So we see now, coming out on the market, in the German speaking markets for example vinyl parquet, are misusing the parquet domination. Because it’s sexy, it makes the products sound good. We have also on the market ceramic parquet, which is also misusing the parquet termination because it’s sexy. So this is a tendency. We, based on this information believe that we have a great product and we can increase market share in Europe which is 5 % in Europe. So hopefully there’s not too much substitution because subsituting 5 percent, there will not be much left.
Naci Güngör: Thank you. Mr Yıldız, we have one last question as we are running out on time. What can you tell us about industry’s problems in general and your sugesstions for solutions?
İsmail Hakkı Yıldız: Tough question. Our industry has many problems, but here I want to express a few of the most important ones. For once is the raw material. It is expressed on every platform, and not a subject with a very easy solution. However, the geography of our country, unfortunately, is a poor area in terms of resources for raw material. One of the first entries of these products is the wood. And of course, various chemicals and the imported raw materials such as decor paper, melamine etc. Factors that have both affects on the cost and as well as the currency we need to use while importing these raw materials. Manufacturers, particularly in Europe have more advantageous conditions than we have in this meaning. They are relatively close to the sources and can buy them cheaper. And also they have Euro currencies. Or American dollars. Also there are the other realities of Turkey. Due to the limited resources as wood or forests, although our state has plantations, and support forest husbandry, it is not easy with our climatic conditions in this location… But on the other hand, there are also advantages of our geography. One could ask the question, with all of these difficulties why investments are still made. Of course, as Turkey, we at least have the possibility to access to these resources. We as investors and manufacturers in Turkey turn these disadvantages to advantages, and sell the raw material to the regions with logistic problems for today. And by this way we find the balance for today. Another problem is the informality. Unfortunately, our country is fighting with this issue. Solving this problem, will definitely help us as the manufacturers. Of course there many more problems of the sector but I believe if these main issues find a solution, Turkey will get bigger in also chipboard production and will have a stronger position in the world industry. We have a strong voice in chipboard sector especially in Europe, as well as in wooden flooring, and hopefully by improving ourselves and raising awareness in consumption and R & D, producing high quality products and delivering trendy products to the market, we will be able to manage the difficult times and achieve better success in the favor of our companies as well as our country.
Naci Güngör: Thank you very much, sir. Dear speakers, ladies and gentlemen, thank you very much for your valuable participation. Hope to see you again next year, thank you!