Graboplast: Making Flooring in Hungary, Selling to the World

Interview

Graboplast CEO László Ivan.

The Budapest Business Journal sat down with László Ivan, CEO of flooring manufacturer Graboplast Zrt., for a frank interview about the company’s trajectory as it navigates a complex economic landscape and a volatile global economy. He discussed how the company is focusing on maintaining growth, current projects, sustainability efforts, and future aspirations.

BBJ: Why was Tatabánya chosen as the location for the Grabo Design Floor Factory?

Ivan Laszló: Graboplast is based in Győr, but for a long time now, we’ve had factories in Kecskemét and Tatabánya as well. For more than 25 years, we have typically manufactured our newer flooring developments in Tatabánya, in the design floor factory. Many factors played into the choice of location, including geographical positioning, an excellent workforce, and expansion opportunities. For instance, over the past quarter-century, we’ve seen several expansions and operational improvements here, such as the LVT [luxury vinyl tile] plant and the SPC [stone polymer composite] floor manufacturing unit we launched a few weeks ago.

BBJ: What are the benefits of LVT and direction-independent homogenous floor coverings?

IL: The LVT and homogeneous products manufactured in the design factory are very high quality, on par with [leading] global standards. Their size stability properties are exceptional, even among top-tier products. Both products are based on mature technology that we continuously develop and improve to meet the latest market demands. This is also the case with our most recently launched SPC unit, where, as of January 2023 and following the pilot production phase, we are producing high-quality modern SPC floors.

BBJ: How do you evaluate the growth prospects of the PVC floor market?

IL: Europe accounts for about 25% of the world’s flooring market, making it a significant market that has shown steady growth over the past 5-10 years. Unfortunately, the recessionary signs brought on by the events of the last few years, specifically the 2022 war in Ukraine and the European energy crisis, are visible in this area too. It should also be remembered that Europe is the home of classic PVC floor manufacturing, and most of our competitors are also European, which intensifies the competition on this small continent. With the reduction in logistics costs, the Chinese influence has also grown stronger, necessitating that Graboplast thinks globally.

BBJ: What are Graboplast’s plans for CEE and beyond?

IL: Central and Eastern Europe is Graboplast’s home, making these markets extraordinarily important to us. They are physically accessible and culturally the closest to Hungary, where Graboplast is most successful. However, [….] a company with growth ambitions like ours cannot be tied to one place and must open up to the world. We’ve already taken the first steps; we ship to around 100 countries on five continents, and more than 90% of our revenue comes from abroad. Going forward, we plan to selectively put more emphasis on some of the world’s most important markets.

We are an export-oriented company, but currently, we have our representation, our own sales team, in only a few places. Bridging the distance and balancing the cyclicality of different markets presents an ongoing task for our team. A noticeable shift from roll floors towards modular products (LVT, SPC, etc.) adds another layer of complexity to production organization and servicing.

BBJ: How do you handle PVC waste generated during production? What environmental measures do you take?

IL: Environmental awareness is a fundamental value for us, and our goal is that Graboplast will recycle all its residual material within the next five years. We’ve made significant progress with SPC and LVT, where we can reintroduce all remaining waste material and in-process scrap back into our products, thus not burdening our environment. Based on the concept of our research and development team, we plan to extend this technology to the entire PVC-based product range by the end of 2025, which will allow us to use more than 80% of the PVC residues. In the future, guided by our ESG strategy, we will also shift towards solutions that enable the reintroduction of waste and old floors generated by our partners.

BBJ: How did Graboplast respond to the rising inflation, energy prices, and geopolitical tensions?

IL: The European situation that emerged in 2022 shook everyone and posed severe economic burdens. We, too, had to adapt to the changed circumstances, counteracting the negative impacts: we restructured, became more efficient, and gave more focus to new markets. We are implementing energy efficiency investments as part of the [government’s] Gábor Baross Re-industrialization Loan Program designed for large corporations. Some of these changes are long-term, but I believe Graboplast will come out of the current situation stronger than it entered.

BBJ: What strategic goals have you set for the coming years, and what steps do you plan to take to achieve them?

IL: I’ve been serving as CEO of Graboplast since January. The past six months have been enough for the new (or I could say the old-new) management and me to review the company’s situation and define its strategy for the next five years. Our goal is stabilization, determining new market focuses and directions for growth, and strengthening our international presence. To this end, we have begun to establish appropriate systems and processes and to develop and implement strategies for each area.

One of my main goals is to demonstrate that global success in production can be achieved from Hungary. Hungarian flooring products have been produced to top-quality European standards for decades. Our sports floors are among the top three brands in the world. After the current decline in the construction industry, we expect growth in Hungary, and our goal is to have high-quality Graboplast flooring made in Hungary, laid in most buildings in Hungary.

BBJ: What product developments are you currently working on?

IL: Innovation and new product development are critical values for Graboplast. Our latest product family is SPC, currently the most modern flooring technology. As it’s completely waterproof, it can be used as flooring in rooms with underfloor heating, as well as wet spaces, both on the floor and on the wall. Another important direction is the development of recyclable floors, which will appear in every segment within the next five-to-seven years.

BBJ: What corporate social responsibility programs do you support or implement with Graboplast?

IL: Social responsibility is personally very important to me. Graboplast has implemented and supported several programs, such as the VinylPlus sustainability program, of which we are a member. We also cooperate closely with the local school in Tatabánya, where we sponsor technical classes and provide internship opportunities. Our ESG strategy will be completed by the end of this year, in line with our long-term plans and commitments, and will provide a framework for our future social responsibility activities.

This article was first published in the Budapest Business Journal print issue of July 28, 2023.

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