Flooring industry weighs in on election’s impact

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By Ken Ryan

As a new administration prepares to take the reins on Jan. 20, 2021, flooring industry leaders are mulling what impact President-elect Joe Biden and his policies might have on business. What’s still unknown, of course, is control of the Senate, which will be decided in a Jan. 5 runoff in Georgia, and the effects a still-active COVID-19 may play—even as several vaccines are expected to arrive on the scene.

FCNews reached out to industry leaders to ascertain their thoughts and expectations in several key areas:

Stimulus legislation

Even if Republicans retain control of the Senate, many observers say both sides can agree on a second stimulus package. That would be a good thing, many executives said. “Stimulus was vital in a rapid restart of our economy and can only help again,” said Craig Phillips, president, Carpet Country and Barrington Carpet & Flooring Design, Twinsburg, Ohio. “The next stimulus bill will hopefully address the service industries in our country. Stimulus may be critical if more shutdowns and restrictions are put in place.”

Not everyone agreed that stimulus was beneficial, however. One retailer, who requested anonymity, said, “From what I understand, the stimulus bill doesn’t do much for the average consumer…We should do what Angela Merkel did in Germany—subsidize businesses at 50% so they can keep their people employed even if they can’t operate at full capacity.”

Jeff Hamar, executive chairman of top 20 distributor Galleher, Santa Fe Springs, Calif., said the housing industry does not need stimulus. His recommendation? “Keeping interest rates low is far more important than creating conditions with too much stimulus, which could lead to inflation and higher rates.”

Tariff impact

Tariffs of up to 25% levied against flooring products sourced from China never had the deleterious effect that many industry observers feared. That said, some executives expect to see tariffs repealed over the next four years. “I think a rollback in Chinese tariffs are likely,” said Sam Roberts, president/owner of Roberts Carpet & Fine Floors, Houston. “I think the movement of manufacturing back to domestic locations and into places like Cambodia, Vietnam and Indonesia are more positive than not for our country.”

Adam Joss, co-owner of The Vertical Connection Carpet One in Columbia, Md., said rolling back existing tariffs would be helpful in the short run until more American-made product is available. “As a retailer and an American, we absolutely want to see more American-made product,” Joss said. “It’s good for our customers and our economy.”

Hamar argued that the ultimate objective with regard to tariffs is forcing China to play by the rules. “The flooring industry has clearly figured out a sustainable path forward using all of Asia as the beginning point for global supply chain,” he explained. “Avoiding disrupting the flow of value- driven products should be the goal of the new administration. It’s also important that North American supply chains be allowed to flourish in the years ahead, but their success must come from wise investment and solid strategies, not government retribution against foreign suppliers.”

Taxes

Biden has proposed a tax increase to fund Social Security (on those earning more than $400,000 a year) and reduce the growing deficit. However, any mention of taxes around flooring business leaders is met with disdain. “Why a man as smart as Joe Biden starts rattling the tax increase sabre so early is beyond me,” said Kevin Frazier, owner of Frazier’s Carpet One Floor & Home, Knoxville, Tenn.

Roberts added, “Tax increases are a huge negative. It reduces investment and available capital for greater compensation, primarily in the form of better benefits and higher remuneration for employees. Government does not spend or invest money efficiently. I have absolutely no confidence that tax increases will meaningfully address the deficit.”

Vaccine hope

The arrival of multiple vaccines and prospect of mass distribution in 2021 is great news as it will likely hasten a return to normalcy, executives said, though it may slow the rapid growth in flooring sales. “This is great news, although surprisingly this may negatively impact our industry as consumers begin to travel more and shift disposable income,” Joss said. “However, it’s very good for our country.”

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Nov. 23/30, 2020

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