New Stream Capital, a Connecticut-based private equity firm, purchased the assets of Tarkett’s two Johnson City plants, and an Indiana facility, for an undisclosed price.
Tarkett’s 320 or so local employees all received offer sheets Monday to return to work for a company that will go by the name ArborCraft, and also will rely heavily on the Harris Flooring reputation that still exists among wholesale distributors nationwide.
“We’re huge believers in the fact that this can be a stand-alone, domestic manufacturing company,” said New Stream’s Matt Galvez, who will take over as CEO. “We are investing and buying these plants, we’re going to run these plants, and we’re going to rebuild the brand.”
Galvez and Scott Fullerton, who will be ArborCraft’s chief operating officer, both said Monday they see great potential for ArborCraft to gain market share in the pre-finished wood flooring business, where it starts in third place domestically. New Stream will take on the task of trying to improve fortunes at a facility that didn’t turn out to be top priority for Tarkett after the Swedish company purchased it from the Harris family in 1983.
“A lot of their objectives and goals were based on the goals of the parent, not the goals of Harris Wood,” Fullerton said. “Now we’re making decisions that are going to benefit our employees, not maybe another factory in another state or country.”
“All we care about is Harris Wood,” Galvez added. “We don’t care about anything else.”
Galvez said the New Stream investors have found plenty to give them optimism during their due diligence period. They take over an operation with a strong balance sheet and what Galvez called a strong corps of skilled and semi-skilled workers.
“We’ve spent a lot of time here the last three months, and we think the people here are very good. And if they’re allowed to kind of run their business, I think they’ll do real well at it,” Galvez said.
Monday’s announced buyout will include the Johnson City plant on Eddie Williams Road, built for $40 million in 1989, the old Harris plant on East Maple Street, and a related facility in Indiana.
Galvez said a key goal will be to re-establish market share and good relationships with a network of wholesale distributors that despite the rise of Home Depot and other big box competitors still exists today. Allen Harris Jr., who ran the company for decades, established and built many of those relationships in the post-war years.
“We’re hoping to re-establish the Harris Wood brand in the wholesale distribution channel,” Galvez said. “We want to gain a lot of market share in the wholesale channel. We have strong share today in what we call the do-it-yourself channel, the Home Depot channel.”
Despite some predictions that the wholesale channels would be overwhelmed by the Home Depot approach, Galvez said those markets — flooring stores and direct-to-contractor sales — provide plenty of opportunity.
“It’s where the company started, it’s where the company grew to before it was sold, and it stayed in that channel very strong until Depot started to develop and the company migrated and kind of grew with Home Depot,” he said.
The company’s strong employee base, the fact that the Harris name still resonates with people who know wholesale flooring around the country, and the strong balance sheet ArborCraft is starting with give Galvez and Fullerton optimism even in the midst of a difficult housing market.
“This is a great time to build market share,” Galvez said. “The idea is, take that strong balance sheet, build a strong business, get your market share back, and when the market comes back we will be a major part of that happening.”
And with a falling dollar putting pressure on imported products and an industry shift toward “green” practices, ArborCraft will be well-placed to thrive.
“Among the employees here there’s a lot of skill that we could never get just showing up, and given what we’re going to face in the market, I think that’s pretty important,” Galvez said.
“The Harris Wood brand is like Pan Am. It’s a very real brand, and we’re excited to bring it back to life. There’s virtually nobody who’s experienced out there in the wood flooring market that doesn’t know our brand and the whole history of this company.”
A local labor economist who has been close to the Harris family said he believes the new owners can make it work and are wise to capitalize on the tradition.
“I don’t think it’s too late for that,” said Al Spritzer, holder of the Allen and Ruth Harris Chair of Excellence in Business at East Tennessee State University.
“Hardwood flooring is very popular now, and if they have a product out there that is of high quality and they market it appropriately, I think they can expand their market share, because the name is still important.”