Now a world leader in floor coverings, interior furnishings, and construction materials, Armstrong World Industries built its reputation on the quality of its corks. Founded as a Pittsburgh, PA cork shop, Armstrong won widespread brand-name recognition because it stamped its corks with its name and a written guarantee that promised quality merchandise for the customers. In 1908, Armstrong Brothers began producing linoleum, the flooring product with which Armstrong has been identified since.

From the ground level up

Armstrong began expanding into the home furnishing and furniture businesses during the 1970s, but it has scaled back its operations. As part of this reorganization, Armstrong laid off almost half of its workforce and sold its largest subsidiary, Thomasville Furniture, along with its original cork operations. Fortunately, the company's flooring unit has flourished; in 1995 alone, it produced 166 new products. Also, with the acquisitions of Triangle Pacific Corp., a hardwood flooring and cabinet maker, and of DLW Aktiengeselleschaft, the leading German flooring manufacturer, the company began to rebuild its manufacturing capabilities and workforce. Armstrong concentrated on expanding its overseas efforts as well; more than a third of the company's sales occurred overseas. In 1999, Armstrong announced a joint venture with Thermaflex of the Netherlands and NMC/Nomaco, a U.S. and Belgian company, to produce a type of flexible thermoplastic insulation to cover both hot and cold piping. The joint venture would enable Armstrong to boast of a wider selection of technical insulation among competitors and would expand Armstrong's market geographically.

A little more technical

Armstrong implemented an SAP/R3 technical solution in 1998 to help cut costs in their accounts receivable, human resources, sales and distribution, and materials management departments. In 1999, the company further announced that it would implement iXOS-ARCHIVE, a management system that uses R/3 technology, to reduce paper volume and storage necessities as well as increase employee productivity. The R/3 and iXOS systems have been implemented in Armstrong plants in Europe, Canada, and the United States.

An asbestos headache

Thirty-one years ago, Armstrong discontinued production of its line of asbestos insulation. The product had been relatively unimportant to the company; in 1969, asbestos insulation accounted for approximately one percent of Armstrong's annual sales. Now, 31 years later, the insulation has come back to haunt the company, as the asbestos-containing product, which is carcinogenic, has allegedly injured numerous people. Labeled by CEO George Lorch as "perhaps the most important" issue facing Armstrong, 175,600 personal-injury claims confronted the company in summer 2000. Armstrong shells out around $100 million annually to settle some of these claims. Not surprisingly, the asbestos concerns have adversely affected the company's investor relations; the company's stock reached a 15-year low in March 2000.