Tarkett Sommer AG

Nachtweiderweg 1-7
D-67227 Frankenthal
Germany
(49) 6233-8100
Fax: (49) 6233-81 1640
Web site: http://www.tarkett-sommer.de

Public Company
Incorporated: 1886 as Malmó Snickerifabrik
Employees: 8,800
Sales: DM 2.93 billion (1997)
Stock Exchanges: Frankfurt
SICs: 3996 Hard Surface Floor Coverings, Not Elsewhere Classified

The October 1997 merger of Tarkett AG with the flooring division of France’s Sommer Allibert SA has created the world’s leading manufacturer and distributor of hard surface flooring products. Tarkett Sommer AG operates 28 manufacturing facilities in 13 countries with an annual production capacity of more than 350 million square meters of flooring, wall covering, and vinyl foil products. The company’s combined sales for 1997 is equivalent to nearly DM 3 billion. Under terms of the merger agreement, Sommer Allibert SA has acquired 60 percent of Tarkett Sommer’s shares. The company’s headquarters remains in Frankenthal, Germany.

Tarkett Sommer’s products are marketed under the brand names Tarkett, Pegulan, Sommer, Domco, Harris-Tarkett, and Febolit. The company’s primary products are its hardwood flooring and resilient (chiefly PVC) flooring; the company also produces industrial foils, wall coverings, and, with the addition of the Sommer operations, carpetings. Resilient floor coverings remain the company’s principal revenue generator. Although the company distributes its products throughout the world, Germany, Scandinavia, France, and North America remain Tarkett Sommer’s primary markets, generating some two-thirds of the company’s total sales.

Turn of the Century Swedish Origins

In 1885 Anders Martensson opened a small woodworking workshop in Malmó, Sweden. Within a year, however, Martensson had expanded his shop, installing steam-powered machinery, to such an extent that the workshop had now become a factory. In December 1886 Martensson incorporated his growing business as the Malmó Woodworking Factory. By 1887 Martensson’s business had grown to include a foreman and 18 workers, with sales of 14,000 Swedish crowns. Yet the company’s original products tended toward the exotic side, featuring, for example, Turkish divans, which found less of a demand than Martensson had hoped. In 1889, in need of capital, Martensson turned to R.F. Berg, director of a nearby cement factory. Berg became a director of the Malmó concern as well, before taking over the company’s leadership in 1890.

Under Berg, the Malmó factory turned its production toward a new product: materials, chiefly from oak and beech wood, for parquet flooring. Risking his own funds, Berg expanded the company, building a second plant in Limhamn, outside of Malmó, for large-scale production of parquet floorboards. By the end of 1889 the company had more than doubled its employees, and its sales topped 65,000 Swedish crowns. The addition of flooring products proved successful for the company, as parquet flooring had become popular among Sweden’s turn-of-the-century middle class. By 1898 the company’s annual sales neared 360,000 Swedish crowns, of which 90,000 crowns came from the flooring materials. Berg’s prior construction experience with his cement factory also enabled the company not only to produce the flooring products, but also to install them, adding to their profitability.

To ensure a supply of raw materials, the company purchased forest lands, as well as two sawmills, in the southern Swedish province of Smáland in 1899. Two years later, as the company intensified its forestry activity, a sulfite factory was added in the city of Bóksholm, processing the company’s excess logging production. Before long, the sulfite works was producing 3,400 tons of sulfite per year. By 1904 the company’s sales had reached 500,000 Swedish crowns. Flooring products, however, remained a small part of the company’s sales. Berg died in 1907 and was replaced by Ernst Wehtje, who would guide the company for nearly 20 years. In 1911 the company’s Limhamn factory burned to the ground, forcing the company to build an entirely new factory on the same site. This factory’s production was now turned wholly to the production of boards and frames for parquet floors. The following year, the company added two more sawmills, as well as expanded timber forests. The economic climate of the time—including a national recession in the years 1911–13—would, however, nearly force the closing of the company. The construction industry had all but collapsed; in the meantime, the company faced rising competition among raw materials suppliers. By 1914 the company was forced to sell off its sawmills and forest holdings, as well as its sulfite works, to stave off bankruptcy.

Production now was focused on the company’s woodworking activities, and flooring materials became the company’s chief products. Recognizing this new period in the company’s existence, its name was changed to Limhamns Snickerifabrik. As the construction industry recovered, the company saw its sales take off once again, reaching, by 1922, 1.6 million Swedish crowns, of which 500,000 crowns were generated by sales of flooring materials. Yet the company was facing a new crisis. A long strike by woodworkers in 1919 had led to lockouts in the construction industry, leading to a fresh collapse in demand. At the same time the company had made a series of poor investments, enabling foreign speculators to acquire some two-thirds of the company’s shares. The combination of these events forced the company into bankruptcy in 1924.

A Flooring Giant in the 20th Century

By 1925 the company had been reformed as Limhamns Golvindustri AB, now led by Hugo Wehtje. Yet, before production could resume, the company’s existence was threatened once again, as a new fire destroyed its Limhamn factory. Wehtje was determined to rebuild. New taxes and fire insurance requirements imposed by the local government, however, led the company to build its new production facilities in Liljeholm, outside of Stockholm. At this time, production was turned exclusively to wood flooring products.

By 1928 the company was producing some 70,000 square meters of flooring materials per year, with revenues of some 800,000 Swedish crowns. In less than ten years production and sales would double, and Limhamns would become one of the country’s top two producers of flooring products. The next decades would see the company’s development soar as Limhamns proved itself an innovator in the flooring market.

In 1938 the company introduced a revolution of sorts, in the form of the Lindemann board. This was the first industrially manufactured, prefinished floorboard. Produced as long boards, rather than the short pieces used for parquet flooring, the Lindemann board was both cheaper to produce and to install. The success of the new product was immediate—by 1939 the company’s revenues had topped three million Swedish crowns. Two years later the company moved to take control of its sales and distribution, founding Svensk Golvindustri in partnership with its chief competitor, Atvidabergs Industrier. The following year Limhamns took full control of the distributorship.

Rising raw material prices would lead to the company’s next innovation. In 1942 Limhamns introduced the first laminated floorboards. Featuring a surface of the more expensive oak or beech woods, the patented laminated board used cheaper pine for the bottom. The new board was a huge success. To meet the demand, the company was required to expand its production capacity. In 1943 the company acquired another producer of parquet flooring, Skanska Parkettfabrik, located in Hanaskog. That factory’s production was converted exclusively to laminated floorboards by the end of the same year.

In the following year the company acquired another parquet flooring producer, Ronnebyredds Trávaru, which not only expanded the company’s production capacity, but also gave it ocean port access. The company next moved its Liljeholm production to Ronneby as well, ramping up to full production by 1946. By then Limhamns sales had reached some 500,000 square meters of floorboards, producing some eight million Swedish crowns.

In addition, Limhamns already was developing a new product, using a new material. The postwar reconstruction in Europe had led to a boom in demand for flooring products; yet raw wood materials were becoming more difficult to find in the depleted European forests. In 1946 Limhamns introduced a new type of floorboard, using plastic. Known as Tarkett, the floorboard was especially targeted toward public uses, such as schools, hospitals, and offices. Initial production was small, only 3,000 square meters in 1947. But demand for the Tarkett floors quickly developed. By 1948 the company produced some 50,000 square meters of Tarkett floorboard; the following year production tripled. The company was now producing around the clock to meet the demand.

In 1951 the company began construction of a new plant in Ronneby, which started production of plastic flooring products in 1953. By then, the company also had expanded its product lines, adding complementary baseboard, steps, and molding products. These featured new materials, including PVC and asbestos. By 1955 the company’s annual sales had topped 20 million Swedish crowns. Total production had reached 400,000 square meters. To meet the continuously growing demand, the company moved its production entirely to Haneskog, more than doubling its production capacity.

Urban Wentje took over the company in 1961, as sales topped 33 million Swedish crowns and production passed one million square meters. By then the company also had made its first moves into the international market, with foreign sales representing ten percent of total revenues. These sales had come primarily through a Swiss distributor; in 1962, however, the company moved to take control of its foreign distribution, opening its first foreign subsidiary in Denmark. In the same year the company founded Limhamns Plastindustri, a subsidiary for sales of raw plastics materials, as the company’s plastic production far exceeded its own flooring requirements.

By the mid-1960s sales exceeded 75 million Swedish crowns, of which 15 percent were provided by exports. The company would top 100 million crowns two years later. To continue the company’s expansion—and to limit the Wentje family’s personal financial risk—the company agreed to sell 50 percent of its shares to Fóretagsfinans, a subsidiary of AB Gustos, in 1966. The following year the company, seeking addition capital for expansion, entered the Swedish stock exchange under a new name: Tarkett. By then the company had become Sweden’s largest flooring manufacturer, with sales of 122 million crowns. Tarkett also added a new product line, carpeting. A new foreign subsidiary, in Austria, opened that year, followed in 1969 by the establishment of a German subsidiary.

Merging to World Leadership from the 1980s and 1990s

In 1970 Tarkett was acquired by the industrial conglomerate Swedish Match, which soon added the carpeting production of its Anneplas subsidiary to Tarkett’s activities. Tarkett’s carpeting production was boosted still further in 1972, when it took over the operations of AB Wahlbecks, then Sweden’s largest carpet manufacturer.

In 1974 Tarkett introduced the first printed floorboards to the industry. The company also had anticipated the growing backlash against the use of asbestos in the construction industry, introducing fiberglass-based products to replace its asbestos materials. The company ended the use of asbestos for its Scandinavian production in 1975. In the 1970s the company added a French subsidiary, then boosted its French presence with the acquisition of that country’s Synfloor SA. In 1978 Tarkett grew again as its Swedish Match parent merged another of its subsidiaries, carpet and wallcovering producer Anneplas, into Tarkett. The company also introduced a line of industrial flooring products.

By the end of the 1970s Tarkett had grown to the world’s number six ranked flooring manufacturer, with sales of 745 million Swedish crowns, of which more than 40 percent came from exports. The 1980s, however, would see even greater changes for the company.

As Tarkett consolidated its position in Europe—including the acquisition of Nyland Matter and the flooring division of Protan & Fagertun, both based in Sweden, as well as the acquisition of Denmark’s Orebehoved Fanerfabrik—the company next turned to the United States market. The company’s first step was the 1981 acquisition of the flooring products division of GAF, adding three U.S. plants and a fourth plant in Ireland. The purchase not only doubled the company’s size, it also created Tarkett as the world’s leading flooring products producer. Tarkett consolidated both its world and U.S. positions the following year, with the acquisition of Harris Manufacturing Company, the oldest wood flooring producer in the United States. By the mid-1980s Tarkett’s sales had swelled to 2.6 billion Swedish crowns. Some 80 percent of the company’s sales were generated overseas; the United States alone contributed 50 percent of the company’s revenues.

In 1986, however, Tarkett took on a whole new dimension. In that year the company agreed to form a new company with Germany’s Pegulan, a flooring and carpeting producer founded in 1946. The new company’s name became Tarkett-Pegulan, and the company’s headquarters were established in the former Pegulan headquarters in Frankenthal, Germany. The merger of Pegulan into Tarkett would be completed in 1996. During the 1990s the company restructured its operations, concentrating its warehouse operations, and centering much of its activities on its Frankenthal base. The company also moved to exit certain activities, including ceramics and textile floorings, as it weathered the global recession of the 1990s. By 1995 the company’s sales had reached DM 1.3 billion.

Two years later the company would double in size again. Recognizing the increasing globalization of industry and the heightening consolidation of European industry as the continent prepared for the coming monetary union, Tarkett and Sommer Allibert reached agreement to merge Tarkett and the French company’s Sommer flooring division. The new company, called Tarkett Sommer AG, continued to be based in Germany, while 60 percent of its shares came under Sommer-Allibert’s control. Representing a combined sales total of nearly DM 3 billion for 1997, Tarkett Sommer became the undisputed leader of the world flooring industry.

Principal Subsidiaries

F und F Bodenbelagsvertrieb GmbH (Germany); Tarkett Bodenbeláge GmbH (Germany); Tarkett Pegulan Gmbh & Co. KG (Germany); Sommer Revétements France SA (France); Sommer Sports SA (France); Arvial SA (France); Polystyl SA (France); Tarkett SA (France); Tarkett AB (Scandinavia); Tarkett Svenska Fórsaljnings AB (Scandinavia); Tarkett Dan-mark A/S (Scandinavia); Tarkett O Y (Scandinavia); Tarkett Nederland BV (Netherlands); Sommer Nederland BV (Netherlands); Sommer Allibert International BV; Sommer Revétements Luxembourg SA; Sommer SA (Spain); Tarkett Ibérica SA (Spain); Tarkett Sri (Italy); Tarkett GmbH (Switzerland); Tarkett Polska SP.Z.O.O.; Harris Tarkett Inc.; Tarkett Inc.; Domco Inc. (Canada); Domco Enterprices Inc.; Sommer Ltd. (Hong Kong); Anssom Decor (China); Anshan Sommer Dalles (China); Tarkett Australia Pty. Ltd.