FEI members remain upbeat; feel upswing coming

Home News FEI members remain upbeat; feel upswing coming

ATLANTA—Confident this prolonged economic downturn will soon end, members of FEI Group came to the 2010 National Conference with spirits up and hopes that the worst is behind.

“Times are tough, businesses are running lean,” noted Dave Gheesling, FEI’s CEO, who, like other executives, was greeted by raucous cheers from members of the buying group’s three units—Home Solutions, Multi-Family Solutions and KBx— “but there are some positive signs out there.”

While not proclaiming to possess a crystal ball that is better than anyone else’s he gave a practical look at what has and is taking place telling members while it is one thing to acknowledge the abundant amount of negative news, it is another to get all wrapped up in it all.

“Negative news outdoes positive news by 12:1,” he said. “Most of the stuff we are stressing over, we really have little to no control over—housing sales, the stock market, politics, etc. So acknowledge it and recognize it, but concern yourself with the things you can control. When you spend time on what you can control you push out the uncontrollable things filling up your head.”

In analyzing the current situation, Gheesling noted, the kind of positive growth experienced from 2002 to 2006 “was not sustainable; nor was the loses felt from the fall of 2008 through this year.” In other words, the more historic middle ground needs to be met. And, that amounts to a strong positive considering how depressed most things have become.

On the positive side, he said corporate profits are up 46% this year; the stock market is up 50% since March of 2008; large firms are sitting on $278 billion in liquidity, and Americans in general have saved more in the last two years than in recent memory. Add it all up and “there is a lot of cash sitting on the sidelines.”

When it comes to foreclosures, Gheesling added, “five states are skewing the national average, meaning “it’s not so negative all over.” Take away these five hotspots and conditions are “not far off balance from historical numbers over any 10-year period. It’s more of a mindset. There is a lot of pent-up demand so be ready.”

Kelly Carter, senior project manager of Post Properties, agreed with Gheesling’s assessment. During an industry executive panel that also featured Armstrong Flooring’s CEO, Frank Ready, and Mohawk Residential’s president, Tom Lape, he said, “We have data to show in the last six months we reached a turning point and are moving in the right direction.” He was quick to caution, “We still have a great deal to make up, but we’re at least moving in the proper direction.”

Ready said despite the positive signs business will continue to be “a roller coaster ride” at least for the next year as consumers continue to push for value. “It’s a challenge for all of us because it’s a business model that’s not sustainable and we will have to bridge the gap until things change.”

Prior to the panel, Lape told FCNews, “Everyone is spooked but the people here are the survivors—if they made it point, they made it through the hardest part. Within this sector of the industry, these are the best run operations with the brightest people heading them. The entrepreneur is alive and well with FEI and they’ve learned to adopt to different products and services to remain on top.”

Lape’s evaluation proved correct at the group’s supplier showcase which not only saw new vendors such as FEI’s exclusive partnership with Glidden, the world’s largest paint manufacturer, but members searching for opportunities to expand their offerings and services.

“When times are tough,” noted Jay Smith, FEI’s president, “FEI gets tough. Diversity in this business environment is key and we are always trying to bring new things to members.”

He told FCNews, “specialization is not what it once was. Most [members] now operate in multiple segments such as multifamily, builder, remodel, retail, commercial, and so on. Also, we are driving more product categories as well, such as: floors, cabinets, counter tops, lighting, window treatments, floor cleaning, restoration services, etc.”

Diversification was certainly the mantra among many of the members such as Jimmy Bonner, vice president of builder sales for Floors, Inc., in Southlake, Tex. “If you’re not doing something different then you’re going to be out of business.” The key thing the flooring contractor is doing is “using more automation. We’ve been steadily increasing the scope of using our computer system. It’s one of the best ways to be lean while not sacrificing the things we do best—professionalism, quality service and more.”

Ken Hilton, president of G.B. Sales in San Diego, credits his company being involved in other areas as the main reason for being able to actually grow during this down period. “We do a lot of different things, so we’re pretty protected in that when one is down something else is up.”

But like Bonner, he is focused on enhancing his store’s technology. Having come to the industry five years ago with a background at IBM, his own developed system is being boosted “to separate us from the competition.”

Beyond expanding their offerings many of the members felt being able to network with like-minded people at the conference was a way to help their business.

“I always enjoy going to these conferences as they energize me to get back to use the new tools I learned from the group sessions,” explained Scott Appel, co- founder of Touch of Color Flooring in Harrisburg, Pa. “I always have a few pages of notes of things I want to do differently in my business when I return.”

He added FEI members are not only leaders in their individual markets, they are among some of the best minds the industry has to offer. For instance the current chairman of the World Floor Covering Association, Nicholas Freadreacea, president of the Flooring Gallery in Indiana and Kentucky is an FEI member.

“Besides sharing many of the same challenges and concerns I have,” Appel said, “the ability to listen to this collective wisdom unwind during the group breakouts is exhilarating.”

-Matthew Spieler

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