Interface, Inc. - Company Profile, Information, Business Description, History, Background Information on Interface, Inc.

2859 Paces Ferry Road, Suite 2000
Atlanta, Georgia 30339
U.S.A.

Company Perspectives:

Interface will become the first name in commercial and institutional interiors worldwide through its commitment to people, process, produc t, place and profits. We will strive to create an organization wherei n all people are accorded unconditional respect and dignity; one that allows each person to continuously learn and develop. We will focus on product (which includes service) through constant emphasis on proc ess quality and engineering, which we will combine with careful atten tion to our customers' needs so as always to deliver superior value t o our customers, thereby maximizing all stakeholders' satisfaction. W e will honor the places where we do business by endeavoring to become the first name in industrial ecology, a corporation that cherishes n ature and restores the environment. Interface will lead by example an d validate by results, including profits, leaving the world a better place than when we began, and we will be restorative through the powe r of our influence in the world.

History of Interface, Inc.

Interface, Inc., is a leading producer of commercial carpets. It also makes other types of flooring for work and home. Originally a manufa cturer and distributor of carpet tile, Interface has expanded its pre sence in the commercial and institutional interiors industry. Carpet tiles, uniform floor covering modules that are easier to maintain and replace than broadloom carpet, continue to underlie Interface's busi ness, proving popular in office design because of their flexibility i n redecoration and easy removal and replacement for rewiring and othe r repair work. These modular carpet systems--marketed under the brand names Interface Flooring Systems and Bentley in the United States, a nd Heuga in Europe--are used primarily in commercial and institutiona l settings. Interface is also a leading producer of interior fabrics for open plan office furniture systems and other applications. These are sold under the Guilford of Maine, Chatham, Intek, and Camborne br ands. Interface is also involved in specialty chemical production. In terface currently controls about 40 percent of the international carp et tile market.

Early History

Interface was founded in 1973 by Ray C. Anderson, who would remain th e company's chairman and chief executive officer into the late 1990s. Before founding Interface, Anderson had been working as a research m anager for Milliken & Co., a privately owned textile firm. On beh alf of Milliken, Anderson was sent abroad to research the technology for manufacturing carpet tiles in preparation for Milliken's prospect ive entry into that field. While visiting Carpets International plc ( CI), a large British company specializing in carpet, Anderson was int roduced to a process called "fusion bonding." Anderson immediately re cognized the potential of this process for producing carpet tiles, as well as the huge market for carpet tile in the United States that ha d not yet been tapped. In 1973 he quit his job with Milliken & Co . in order to start his own business.

Interface first appeared as a joint venture with CI, called Carpets I nternational of Georgia, Inc. (Cl-Georgia). Of the initial seed money for the company, $750,000 (half of the total) came from CI, the rest from Anderson and various backers mostly from his hometown of We st Point, Georgia. The new company produced its first piece of carpet on New Year's Eve, 1973. On its first day of operation, CI-Georgia h ad only 15 employees, including Anderson. The company's first year of operation was a financial disaster. It lost $400,000 on sales of just over $800,000. Skyrocketing prices for petrochemicals, an i mportant raw material in the carpet industry, were a large part of th e problem. These price increases were the result of the 1973 oil emba rgo, and the recession that ensued.

On the other hand, the company's association with an established firm like CI gave it several advantages. The most important of these was access to advanced technology. CI was able to provide cutting technol ogy superior to that of companies like Milliken, saving the company 1 0 percent on the cost of yarn. Other technology was made available th at enabled CI-Georgia to develop special bonding equipment. This equi pment made it possible to install carpet tiles without glue, bonding the four-ply carpet fibers to a fiberglass backing. These contributio ns, along with the beginning of the office building boom, helped CI-G eorgia triple its sales to $2.4 million by the end of 1975. The c ompany also turned its first profit that year.

During the second half of the 1970s there was tremendous growth in th e white-collar segment of the U.S. economy. About 800,000 office jobs per year were created between 1975 and 1980, causing huge demand for office furnishing. It was during this period that modular carpet sys tems became extremely popular among office managers and interior desi gners. Carpet tiles allowed designers to install floor coverings that were pleasing to the eye, while at the same time were easy to remove and replace, whether for cleaning, redecorating, or accessing wiring beneath the floor. By 1978, Interface's sales had reached $11 mi llion.

In the early 1980s CI began to face fierce competition from a flood o f broadloom carpet being imported into the United Kingdom. Meanwhile, the American joint venture continued to grow, with sales swelling to $57 million in 1982. As CI continued to flounder, the American f irm took over 10 percent of CI's equity in the company, and changed i ts name to Interface Flooring Systems, Inc. The two companies continu ed to move in opposite directions. While Interface's sales leaped aga in in 1983, to $80 million, CI teetered on the edge of bankruptcy . In order to avert receivership for CI, Interface concocted a plan t o provide a $4 million loan convertible to 41.3 percent future eq uity in CI. The agreement also gave Interface the option to purchase another 8.8 percent of CI shares for about $2.3 million through 1 987, the year the loan was due. Interface also went public for the fi rst time in 1983, selling its shares over-the-counter. The company ra ised $14.4 million in its initial offering.

Growth through Acquisitions in the 1980s

Interface purchased CI's carpet tile division for $8.4 million in 1984, giving Interface entry into the European market for the first time. This transaction gave Interface ownership of CI's Illingworth a nd Debron brands of carpet. Around the same time, Interface acquired Carintusa Inc. from CI, for $440,000. Carintusa, the sole U.S. di stributor of woven English-broadloom carpet manufactured by CI, was b ased in Los Angeles. In the same period, Interface also acquired Chem mar Associates, Inc., merging it with its Interface Research Corporat ion subsidiary. Chemmar was the licensor of Intersept, the antimicrob ial agent developed for hospital carpets. Aided by these acquisitions , Interface's sales climbed to $107 million for 1984. By that tim e, after only 11 years of existence, Interface already controlled abo ut 30 percent of the growing U.S. carpet tile market. This figure put the company in a virtual tie for the lead in market share with Milli ken & Co., Anderson's former employers.

In 1985 Interface exercised its option to convert its CI promissory n ote, acquiring 41.3 percent of CI. The company's overseas business be gan to pick up around this time as well, particularly in oil-rich Mid dle Eastern countries. As the 1980s progressed, Interface began to di versify beyond carpets into related industries. The company purchased Guilford Industries for $97 million in 1986. Guilford was a text ile company that specialized in fabrics for office furniture systems, including cubicle dividers, walls, and ceilings. This acquisition ga ve Interface the ability to market complete office furnishing package s, an idea that proved to be appealing to designers both domestically and abroad. Interface also began to expand its specialty chemical op erations that year. Two Georgia-based companies, Rockland Corporation and React-Rite, Inc., were acquired on the last day of 1986, for a c ombined total of about $4 million. With the addition of these two companies, Interface improved its ability in polymer chemistry, esse ntial to the further development of its Intersept program.

Interface swallowed up what was left of CI in 1987. CI's remaining de bt was then paid off, and its broadloom carpet business sold. By this time, CI's name had been changed to Debron Investments plc. For 1987 , Interface reported sales of $267 million, nearly double the pre vious year's figure. During that year, the company's name was changed to Interface, Inc., and Interface Flooring Systems, Inc., was retain ed as the name of the company's North American carpet tile subsidiary . Interface became the undisputed world leader in carpet tiles in 198 8, with the acquisition of Heuga Holdings B.V., a Dutch company with sales of more than $200 million. Heuga was one of the world's old est manufacturers of carpet tiles. Interface had been trying to acqui re the company since about 1983, when it was first put up for sale by the 13 children of Heuga's founder. At that time, Interface was not able to complete a deal. The company that did buy Heuga was subsequen tly acquired by Ausimont N.V., a firm that was not interested in the carpet tile business. From Ausimont, Interface purchased not only Heu ga but Pandel, Inc., another wholly owned subsidiary. Heuga contribut ed manufacturing facilities in the Netherlands, the United Kingdom, C anada, and Australia. Pandel's U.S. plant produced carpet tile backin g and mats. That company recorded sales of $10 million in 1987. T he acquisition of Heuga expanded Interface's international business e normously, gaining the company contracts with a number of major Briti sh firms, as well as such prominent Japanese companies as Hitachi, To kyo Marine, and Nomura Securities. It also helped Interface further d iversify into residential carpet tile sales, which had accounted for about a quarter of Heuga's European business. With the addition of He uga, the company's revenues jumped dramatically once again, reaching $582 million.

In early 1990 Interface acquired the assets of Steil, Inc., based in Grand Rapids, Michigan. Steil had for several years been the exclusiv e U.S. distributor of Guilford's open line panel and upholstery fabri cs. Later that year, the company invested in Prince Street Technologi es, Ltd., a producer of upper-end broadloom carpet. Prince Street, ba sed in Georgia, received a loan from Interface in exchange for the ri ght to acquire an equity interest. Interface generated $623 milli on in revenue in 1990.

More than Carpet in the 1990s

Sales shrank for the first time in the company's history in 1991, lar gely due to the recession in the global economy. In that year, Interf ace generated net income of $8.9 million on sales of $582 mil lion. During 1991, Interface Service Management, Inc. (ISM), was form ed in conjunction with ISS International Service System, Inc., a Dani sh firm specializing in facility maintenance. The creation of ISM ena bled Interface to provide its customers with a more integrated interi or system in which all of its furnishing needs could be supplied by o ne source. In Europe the company launched a similar project, in which independent service contractors were licensed to provide maintenance services. These contractors operated under the name IMAGE (Interface Maintenance Advisory Group of Europe). Interface also reorganized it s corporate structure in late 1991. The company's operations in Asia and the Pacific Islands were unified under a new holding company, Int erface Asia-Pacific, Inc. Interface Europe, Inc., was also formed, me rging Interface International, Inc., which had controlled operations in the United Kingdom, with the holding company that owned Heuga and its various European subsidiaries.

By 1992, Interface's antimicrobial chemical Intersept was being used in over a dozen product categories, including paints, wall coverings, ceiling tiles, carpet, fabrics, and coating materials. The marketing of Intersept was assisted by the formation of The Envirosense Consor tium, a group of companies that used Intersept in the manufacture of a variety of products. The Envirosense program was initiated as a res ponse to increasing cases of and concern over building-related illnes ses and other health concerns associated with indoor work atmospheres . Interface's sales rebounded somewhat in 1992. Sales for the year we re $594 million. Net income increased by over 37 percent, to $ ;12.3 million.

In January 1993 Interface announced that it had acquired the low-prof ile access flooring system of Servoplan, S.A., of France. The acquisi tion, through the company's U.S. and French subsidiaries, included al l patents, know-how, and production equipment relating to this floori ng system. Interface had previously marketed the Servoplan system in North America alone, and the positive response of its customers led t he company to seek worldwide control of the system's manufacture and distribution. At the time of the acquisition, Anderson indicated that the system would be sold under the name Intercell.

The following month, Interface announced another acquisition. The com pany's Guilford of Maine subsidiary had acquired the fabric division assets of Stevens Linen Associates, Inc., a leading producer of panel and upholstery fabric for office furniture systems. Another acquisit ion occurred in June 1993, when Interface bought Bentley Mills, Inc., a manufacturer of designer-oriented broadloom carpet used for commer cial and institutional settings.

New Directions for the Mid-1990s

In the mid-1990s, Interface's chairman and CEO Ray C. Anderson emerge d as an outspoken advocate of sustainability, a concept that included environmental and social responsibility. Under the influence of Ande rson's crusading efforts on behalf of sustainability, the company shi fted strategy, aiming to redirect its industrial practices without sa crificing its business goals. Anderson, who served as co-chair of the President's Council on Sustainable Development, wrote a book entitle d Mid-Course Correction, in which he discussed his own awakening to e nvironmental concerns and commitment to changing a business not tradi tionally allied with the environmentalists. Anderson was called the " Eco CEO" by Metropolis magazine.

In 1996, Charlie Eitel was named president and chief operating office r of Interface. This allowed Anderson, who remained chairman and CEO, to pursue the ecological issues that had become so important to him. Under Eitel, the company began leveraging its market share with a sa les approach he called "mass customization," which facilitated rapid delivery of a wide variety of patterns, in colors selected by the cus tomers. The owned and aligned providers of carpet and installation an d other services became known collectively as the Re:Source Solutions Provider Network, and Interface began bundling installation, mainten ance, reclamation, and other services with carpet sales, promoting th is strategy with the slogan "This Carpet Comes Installed." Carpet adh esives and other chemical applications began to be sold under the IMA GE brand name. Intercell became part of Interface Architectural Resou rces, a larger effort to integrate wiring and heating, ventilation, a nd air conditioning under the comprehensive facility solutions that I nterface offered. Under Eitel, Interface branched out into a seemingl y unrelated activity: motivational seminars. These sessions originate d as "Why?" conferences for promoting social bonds with designers and other customers, and the positive response to these conferences led to the formation of "one world learning," a wholly owned subsidiary d edicated to fostering organizational development through activities a nd discussion.

In its quarter-century of activity, Interface had grown into a billio n dollar corporation, named by Fortune as one of the "Most Adm ired Companies in America" and the "100 Best Companies to Work For." With the exception of the recession year of 1991, the company was abl e to increase its sales every year since its founding. In the first d ecade of the new century, Interface would likely be able to continue this pattern of expansion, primarily by introducing its products to a wider range of commercial customers in Asia and continental Europe. In addition, Interface's specialty chemical operations seemed poised for continued growth, as public attention to occupational health incr eased, and the potential hazards of higher technology in the office e nvironment, came under closer scrutiny.

In an attempt to penetrate the health care and education markets, whi ch generally rejected carpet in favor of hard surface floorcovering, Interface introduced Solenium in 1999. Made from PTT (polytrimethylen e terepthalate), a polymer developed by Shell Labs, Solenium was a de nse, lightweight material that, according to the company, combined th e design, comfort, sound absorption of carpet with the practicality o f hard flooring. Solenium incorporated Intersept, the company's paten ted antimicrobial preservative. It was pitched to hospitals and schoo ls as an alternative to vinyl tile flooring.

The company continued to make strides in developing earth friendly fa brics for carpets and cubicle coverings. A polylactic acid-based biod egradable fiber developed with Dow and Cargill was rolled out in 2000 . It was made from corn. Other innovations cubicle fabric made from r ecycled soda bottles

In thinking about the life cycle of its products, Interface came up w ith a new way of selling carpet: via a lease. The company offered to install, maintain, and eventually recycle carpet tiles for a monthly fee. The concept was slow to catch on. In its own facilities manageme nt, Interface found that when they did wear out, the company only had to replace 10-20 percent of carpet tiles at once, rather than entire floors.

Post-2000 Recession and Recovery

Charlie Eitel left the company in 1999. The company's chief financial officer, Dan Hendrix, became CEO in 2001. Anderson retained the titl e of chairman. It was a difficult time for management and staff. Inte rface was making its way through a prolonged recession carrying a  6;400 million debt load. The company cut hundreds from its work force of 7,000 in 2000 and 2001.

There were acquisitions and divestments as Interface focused on its c ore business. Interface bought Chatham Manufacturing, which made fabr ics for furniture, from CMI Industries in 2000. Interface divested it s access flooring business in 2004. The company's total sales fell be low $1 billion, partly a result of the sell-offs.

Interface continued to trudge towards its 2020 goal of reaching "Moun t Sustainability." In 2004, the company reckoned it was a third of th e way there. In a long article in the journal Quality Progress, Anderson compared the quest for sustainability to the previous one for quality: "It's not as though business was previously on an anti-q uality kick, but when quality with a capital Q took hold, it became t he battle cry for business. You would be left behind if you didn't ge t on board."

Anderson answered business skeptics thus: "Our costs are way down. Th at dispels one myth that sustainability costs. Our products are the b est they've ever been," he told the Calgary Herald. Looking to nature for inspiration, the company had just brought out a new line of carpet tiles based on random patterns found on a forest floor (the earthy tones helped camouflage tracked-in dirt). He also cited emplo yee motivation and the goodwill of the marketplace. In fact, Anderson credited the concept of sustainability with sustaining the company t hrough the worst market conditions it had seen in 30 years. He was th inking of more than just goodwill; Anderson had long compared busines s endurance to survival in nature.

Anderson appeared extensively in the Canadian documentary The Corp oration, flailing businessmen such as himself as "plunderers" of natural resources. The visibility invariably attracted critics, inclu ding Canada's National Post, which ran a couple of columns que stioning whether any real environmental progress had been made at Int erface.

Anderson replied that over the ten years the sustainability initiativ e had been in place, reduction of waste alone produced enough savings ($262 million) to pay for whole program. The company had slashed greenhouse gas emissions by more than half, and had cut usage of fos sil fuels, water, and landfill while planting thousands of trees to o ffset the environmental impact of its air travel. While Interface had its fans among socially-conscious investors, the company itself had not shown a profit since 2000. It posted a net loss of $55.4 mill ion on sales of $881.7 million in 2004.

Principal Subsidiaries: Bentley Mills, Inc.; Bentley Prince St reet, Inc.; Camborne Holdings Ltd. (United Kingdom); Interface Americ as Holdings, LLC; Interface Americas, Inc.; Interface Americas Re:Sou rce Technologies, LLC; Interface Architectural Resources, Inc.; Inter face Asia-Pacific Hong Kong Ltd.; Interface Australia Holdings Pty Lt d.; Interface Europe B.V. (Netherlands); Interface Europe, Ltd. (Unit ed Kingdom); Interface Fabrics, Inc.; Interface Fabrics Canada, Inc.; Interface Fabrics Finishing, Inc.; Interface Fabrics Marketing, Inc. ; Interface Fabrics Guilford, Inc.; Interface Fabrics Elkin, Inc.; In terface Flooring Systems, Inc.; Interface Flooring Systems (Canada), Inc.; Interface Global Company ApS (Denmark); Interface Heuga Singapo re Pte. Ltd.; Interface Leasing, Inc.; Interface Overseas Holdings, I nc.; Interface Real Estate Holdings LLC; Interface Research Corporati on; Interface Securitization Corporation; Interface Teknit, Inc.; Int erface Yarns, Inc.; InterfaceFLOR, Inc.; Pandel, Inc.; Quaker City In ternational, Inc.; Re:Source Americas Enterprises, Inc.; Strategic Fl ooring Services, Inc.

Principal Divisions: Modular Carpet; Bentley Prince Street; Fa brics Group; Specialty Products.

Principal Competitors: Asahi Kasei Corporation; BASF AG; Beaul ieu of America LLC; The Dow Chemical Company; Mohawk Industries, Inc. ; Shaw Industries, Inc.

Chronology

  • Key Dates:
  • 1973: Carpets International of Georgia joint venture launched with Carpets International plc (CI) of the United Kingdom.
  • 1975: Company turns first profit as sales reach $2.4 milli on.
  • 1982: Carpets International of Georgia renamed Interface Floor ing Systems, Inc.
  • 1983: Interface goes public, trading over-the-counter.
  • 1984: Interface acquires CI's carpet tile division for $8. 4 million; revenues are $107 million.
  • 1986: Office cubicle manufacturer Guildford Industries acquire d for $97 million.
  • 1987: Company, renamed Interface, Inc., buys out CI.
  • 1988: Dutch carpet tile manufacturer Heuga Holdings is acquire d.
  • 1990: Revenues reach $623 million.
  • 1996: Company pursues sustainability, mass customization.
  • 2000: Polylactic acid-based biodegradable carpet rolled out.
  • 2020: Target date for zero environmental footprint.

Additional Details

  • Public Company
  • Incorporated: 1973 as Carpets International of Georgia, Inc.
  • Employees: 5,006
  • Sales: $881.67 million (2004)
  • Stock Exchanges: IFSIA
  • Ticker Symbol: NASDAQ
  • NAIC: 31411 Carpet & Rug Mills; 31321 Broadwoven Fabric Mi lls; 325131 Inorganic Dye & Pigment Manufacturing

Further Reference

  • Anderson, Ray S., "Climbing Mount Sustainability," Quality Progress, February 1, 2004, p. 32.
  • ------, Mid-Course Correction: Toward a Sustainable Enterprise , The Interface Model, Atlanta: Peregrinzilla Press, 1998.
  • Anderson, Ray S., "A Hard-Headed Business Case for Sustainability ," National Post, July 18, 2005.
  • Anderson, Ray S., Charlie Eitel, and J. Zink, Face It: A Spiri tual Journey of Leadership, Atlanta: Peregrinzilla Press, 1996.
  • Basu, Moni, "Conservation Connection: Carpet Giant Weaves Earth-F riendly Policies," Atlanta Journal-Constitution, June 12, 2002 , p. F1.
  • Birchfield, Damon, "Sustainability--Totally Floored--The CEO Who Plans to Change the World," Management Magazine (New Zealand), August 2, 2002, p. 44.
  • Conlin, Michelle, "From Plunderer to Protector," BusinessWeek, July 19, 2004, p. 60.
  • Foster, Peter, "Heaven Can Wait," National Post, July 2, 2 005.
  • ------, "'I Am a Corporate Sinner': Who Is Ray Anderson?," Fin ancial Post, June 25, 2005.
  • Hagerty, James R., "Carpet Maker Aims to Win Over Schools and Hos pitals," Wall Street Journal, June 3, 1999, p. B10.
  • Hoogeveen, Nate, "Reinventing Industry," Business Record, April 10, 2000, p. 22.
  • "Interface's Premium: The Tiles That Bind," Financial World, < /I>August 7, 1984, pp. 81-82.
  • Kinkead, Gwen, "Green CEO," Fortune, May 24, 1999, pp. 190 -200.
  • Lappen, Alyssa A., "Carpet Tile King," Forbes, April 17, 1 989, pp. 60-64.
  • Lee, Shelley A., "Magic Carpet Ride," Business Atlanta, Oc tober 1992, pp. 111-19.
  • Neuwirth, Robert, "The Eco CEO," Metropolis, July 1998, pp . 69-73, 103-04.
  • Sanchez, Mark, "Nature Is Model for Firm's Recycled-Materials Pro duct," Grand Rapids Business Journal, February 24, 2003, p. B6 .
  • Sandberg, Jared, "Mystery Underfoot: The Dizzying, Ugly, Reliable Office Carpet," Wall Street Journal, January 29, 2003, p. B1.
  • Toneguzzi, Mario, "'Green' CEO Dreams of Saving the Earth," Ca lgary Herald, September 16, 2005, p. D3.
  • Turkel, Tux, "Fabric Woven with Vision of Sustainability," Por tland Press Herald (Maine), September 15, 2002, p. 1F.

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