March 2/9, 2020: Volume 35, Issue 18
By Steven Feldman
Just getting back from a week on the road. You would think stops in Miami, Tucson and Palm Springs would buy me some warmth and maybe pigment to my skin other than the pasty white that the winter months habitually bring. Not a chance. But at least I didn’t contract the coronavirus.
Anyway, in between the six takeoffs and landings on three separate airlines was a stop at the Fuse Commercial Alliance convention. One of the highlights is the roundtable discussion, where the 118 members discuss an array of topics put forth by executive director Geoff Gordon. Some takeaways:
1. Biggest challenges facing business
Manufacturers competing against members on large commercial jobs. “We estimate that’s about 10% of the business,” Gordon said. “That’s not going to change. If anything, suppliers have gotten more involved because they are trying to take business. As contractors, we have to focus on what we do best.” He noted that Starnet tried to take a hard stance against that but wasn’t successful.
Labor. Gordon noted ceramic tile is the most affected segment. However, regarding the other categories, the WFCA recently launched the Floor Covering Education Fund and committed $1 million in seed money to address the labor shortage through recruitment and training. The idea is to have manufacturers and organizations commit resources to certification and training. “The union side does it well; non-union, not so much,” Gordon said. “At least now we have some dollars behind it.”
Cash flow and collections. “Often our clients are bigger than we are,” one member said. “Contracts are often one sided. Contracts are getting worse and more adversarial. They are becoming more favorable to the general contractor. We’re between a rock and a hard place. Do we want the job?”
Gordon added, “We’re not manufacturers, where it is all about volume. They have fixed assets. They make more money if their equipment is running 24/7. On our side, it’s about profit and cash flow. We have to work receivables all the time. For most people in this room, the average receivables time is about 70 days. We are like a bank for the general contractor.
2. Polished concrete
About 50% of Fuse members are into polished concrete in some way. Gordon said it is 15% of the business now and margins are better than regular flooring. However, there is more up-front cost because you have to buy the equipment. “Polished concrete is still growing, even though flooring manufacturers don’t want to admit it.”
3. Moisture claims—increasing or decreasing?
Down. “Everyone in this room is more educated and knows how to do the right things settled without getting the rep involved. But we don’t abuse it. Getting the financial part up front helps move the process along a lot quicker.
“Most manufacturers will turn down the claim if you don’t use their adhesives. That’s not fair because most adhesives formulas are just about the same. As long as we can prove from a legal standpoint that the one we used is constructed just about the same as the manufacturer’s brand, the objection to the claim will be legally overruled.”
4. Are members seeing more specs on rigid core?
“No. It’s still glue-down LVT. Rigid core is the fastest growing segment, but it’s just about all residential. The problem with rigid core in commercial is everyone wears high heels and the sound is hollow. Also, the material moves with rolling traffic because you have to leave a little gap by the walls.”
5. Random thoughts
• Most Fuse members expect business to be better this year than in 2019. Some suppliers believe 2020 will be flat, but those seem to be the ones that have heavy carpet assets.
• Margins are getting better.
• LVT pricing is going down. “You can take the price down by making a thinner product with a thinner wear layer,” Gordon said.