FCLC research assesses financial impact installation labor shortages

Home News FCLC research assesses financial impact installation labor shortages

Chicago—In January 2018, the Floor Covering Leadership Council (FCLC) commissioned an independent research firm to conduct a multi-phase study to quantify the scope and severity of the lack of installation professionals on the flooring industry’s sustainability and growth. The Blackstone Group, a Chicago-based research firm, was contracted to conduct the research, whose quantitative component focused on businesses that purchased workers’ services by engaging flooring installers as direct employees and/or subcontractors in 2017. A total of 334 executives, representing flooring contractors, retailers, workrooms and installation businesses across 45 of the 50 states, participated.

Two-thirds of the participants agreed they are experiencing a shortage of installation employees and/or subcontracted labor that has had a negative financial impact on businesses up the industry supply chain, including flooring retailers, distributors, and/or manufacturers.

When those who agreed or had mixed views regarding the overall impact of their firm’s labor shortage were exposed to a list of financial impacts, half or more reported their own businesses had experienced each impact in 2017 specifically due to their lack of labor:

  • Increased labor costs that could not be passed along: 73%
  • Reduced margins due to a change in the product mix: 66%
  • Increased logistics costs: 60%
  • Projects that never took place or were abandoned: 53%
  • Increase in claims paid due to a lack of trained labor: 48%

For each impact of the installation labor shortage they experienced in 2017, the businesses incurred a median cost of $16,000 to $50,000.

The combined cost of the labor shortage’s impacts on the research’s participants was 3.8% of their revenues from installation and/or flooring product sales. Since the participants’ reported revenues totaled just over $2.5 billion, the cost of the specified impacts of the labor shortage on these businesses alone was slightly below $100 million in 2017.

The study’s findings suggest, not only that the installation labor shortage is real, but that its financial impacts on the manufacturers, distributors and retailers up the flooring supply chain are significantly greater than previously understood.

Associations included in the FCLC coalition and others donated the funds needed to accomplish the 2018 research. Ongoing industry fundraising will be coordinated to generate the funding needed for the initiative’s future work.

Presentations detailing the FCLC research findings will take place on Jan. 24 at The International Surface Event in Las Vegas and on Feb. 28 at Domotex USA in Atlanta.

 

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