An enormous number of brands make a profit by proving they are the most healthy, or the safest for consumers. Car manufacturers are perhaps the most famous for this, touting their 5-star safety ratings as a main selling point for the latest model vehicles on the market. Customers are used to the battles over emissions and learning that their foods are now made without high fructose corn syrup, all efforts by their manufacturers to prove they’re the best choice at the car lot or grocery store. But in the past few months, a new battle of one-upmanship began that includes an entirely new sector — the home flooring industry. It’s not only encompassing safety standards, but also bringing environmental standards into a whole new part of the conversation.
The spotlight first shone on the industry at the beginning of March, when 60 Minutes aired its investigation into the chemical makeup of laminate flooring sold by Lumber Liquidators. Through independent testing, the news program found that laminate flooring sourced from China and sold through the distributor contained potentially unsafe levels of formaldehyde, a compound known for its carcinogenic properties when exposed to high concentrations of the chemical. Two men interviewed by 60 Minutes, who are suing Lumber Liquidators for the unsafe flooring, said much of the Chinese-sourced flooring contained levels of formaldehyde that were six or seven times higher than what is permitted in California.
California’s Air Resources Board set strict formaldehyde emissions standards under its Phase 2 compliance measures, a model adopted by Congress that is going into effect this year, according to the news program. Lumber Liquidators has said it follows the same standards for California in every state it sells its products, whether or not the state also has those sorts of emissions regulations. But 60 Minutes found that formaldehyde levels in other states such as Virginia, Florida, Texas, and others were also incredibly high — sometimes 13 times the limit of what is allowed by California law.
The flooring company takes issue with 60 Minutes‘ investigation and released a statement March 2 that said the business continues to comply with state standards and has proof of acceptable testing of its products. The company accuses the news program of applying improper testing methods, and points out that the people who first alerted 60 Minutes to the issue are investors and hedge fund managers who were short selling stocks of the company in order to make a profit when the company’s value faltered. (60 Minutes, during its investigation, sent samples of flooring to two other certified labs, not relying on the word of the investors.)
Despite Lumber Liquidator’s defense, stock in the company did indeed plunge, decreasing by 60% from late February to early May. It became clear that consumers weren’t about to start taking a chance on flooring — even if normal levels of formaldehyde are found in numerous products. (In the case of flooring, it’s used in the glue.) The same became true for Lowe’s, who was placed in the crossfire May 1 after the same investor who sparked the Lumber Liquidators investigation posted on Seeking Alpha that the chain might also be selling products with unsafe levels of the chemical.
Both companies have since stopped selling products from Chinese sources. Flooring makes up 6% of Lowe’s overall sales, and about 10% of all flooring sold was sourced internationally (read: China). By July, the company expects to source all of its materials through domestic sources, company spokeswoman Connie Bryant told Bloomberg. “While we are confident that our products are safe, we are responding to our customers’ concerns about Chinese laminate flooring,” Bryant said.
Lowe’s stock dipped slightly in the first day of the report, but overall has been able to bear the brunt of the storm since the company doesn’t rely solely on its flooring products. But the issue of chemicals in flooring isn’t over yet. Home Depot, which is the largest retailer of flooring in the United States, has managed to stay above the fray of formaldehyde. The company, though continuing to source some of its materials from China, has garnered praise for its high standards of quality. “In sharp contrast, Home Depot is regarded by suppliers as having very strict standards in product sourcing,” wrote investor Xuhua Zhou, the whistleblower for Lowe’s and Lumber Liquidators.
Home Depot is taking the flooring standards to a new level this year, by pledging to get rid of another chemical found in vinyl flooring by the end of 2015. Phthalates, a chemical that can cause asthma, harm to male reproductive organs, and risks to brain development and the immune system, is found in vinyl flooring products sold by all three major flooring retailers. Home Depot pledged to source its flooring with other less harmful materials after working with environmental and health advocates, Bloomberg reports. In light of the Lumber Liquidators problem people now care about the chemicals in their flooring, making this seemingly unrelated decision a brilliant public relations move.
A quick note about the formaldehyde levels: Yes, California has strict standards that are to benefit consumers. But even the board who sets those standards has said there’s no need to rip out flooring you suspect has the issue, unless there are “noticeable health effects” such as burning sensations in the eyes, wheezing, or trouble breathing. And the flooring won’t stay “toxic” forever, even if it is the laminate products in question. By properly ventilating your home if its already installed or allowing it to “off-gas” outside before placing it in your home, the remaining gases will be negligible. Lumber Liquidators and the other retailers will likely be able to ride out this storm, but one long-term effect will likely stay: Safety can now be a key marketing tool for more than just vehicles.
Follow Nikelle on Twitter @Nikelle_CS