FEI Group: Members embrace ‘positive disruption’

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FEI Group
Max Holland and Graham Howerton of FEI Group told FCNews the national convention greatly exceeded expectations.

Marco Island, Fla.—The FEI Group’s National Conference here was all about “positive disruption,” a theme coined before Category 4 Hurricane Ian nearly jeopardized the meeting—yet aptly symbolized this 24th annual gathering.

While all other business conferences canceled their events at the JW Marriott Marco Island Beach Resort following the epic storm, FEI went ahead with theirs. It wasn’t a slam-dunk decision. To convince members that the venue—and area—were safe, FEI Group president, Graham Howerton, made a solo trip to Fort Myers two weeks after the Sept. 28 hurricane and videotaped his journey from the airport to the hotel and distributed it to registered attendees.

“We decided we are going to come down here and do good,” Howerton told FCNews. “FEI was the first group to commit to a conference, and our message to members was: There are 1,100 associates working here, and by coming here and supporting the staff, you are putting food on people’s tables who don’t have a table right now.”

Several dozen JW Marriott employees were displaced from their homes following the hurricane and many had not worked while the hotel was closed for two weeks. For them, the FEI conference was a welcome sight. To honor their service, Howerton welcomed the entire hotel staff into the conference room during general session where they received a standing ovation. Hotel management returned the gesture with a digital sign posted in the lobby thanking the FEI Group for making the conference happen.

In the end, 725 FEI members made the trip and immersed themselves in the spirit of “positive disruption,” seeking ways to grow and expand despite potential storm clouds on the horizon.

“We’re coming off two or three years of strong economic tailwinds; [however], economic headwinds are coming,” said Max Holland, FEI COO. “The things that allowed us to be successful these past two or three years are not the same things that are going to allow us to be successful moving forward. Success doesn’t always breed success; success can breed complacency if you let it. As you grow and evolve, people get comfortable in their positions. Therefore, you have to insert some change. You need positive disruption in your business.”

FEI businesses have stood out in the past by being better, smarter and quicker in adapting to market changes. Howerton emphasized that the group’s members consistently outperform the market, even during slowdowns—this past year it was by 12%-15%. “Our group is very good at taking share,” Howerton said. “And that’s why almost every time we are able to grow ahead of the market.”

To keep winning in the future, however, Graham said the FEI divisions have to be willing to change course and take a different path. “We need to be trailblazers; we are going to be disrupters. It is good for business to disrupt the status quo, which is positive disruption.”

FEI Group
Max Holland emphasized that the group’s members consistently outperform the market, even during slowdowns—this past year it was by 12%-15%.

Collectively, FEI Group’s division represents $12.3 billion in top-line revenue; they serve single- and multi-family contractors in 145 markets nationwide, and most members have backlogs that will get them through the first half of 2023, perhaps even longer. “For our Home Solutions division the pipeline is in place for a good Q1 into Q2—a healthy pipeline at least through one third of the year; and then multi-family is a positive outlook as well,” Holland added.

Labor challenges, however, are slowing the homebuilding process. For FEI, labor is the biggest problem facing the industry, although in a sense the slowdown will actually help some members catch their breath after a particularly frenetic period. “We’re still waiting on windows for 16 weeks, cabinets for 18 weeks,” Holland said.

“If we’d gotten all that material on time the last 12 to 18 months, we wouldn’t have had enough people to install it.” Positive disruption is taking shape across all FEI divisions. A case in point is the flooring division, which has been making more money on fewer accounts in recent years but will now have to rely on new account growth as business conditions tighten amid inflation and rising interest rates.

As Howerton noted, “Our members are ready to shift their business into a different mode—to be more adaptable, more readily changed. They feel more confident, more prepared in case those headwinds appear; as such, they will be able to weather this much better. We’re a more adaptable organization today and can manage this disruption better than we could in the past.”

The theme resonated with members. “With the challenges all faced over the last two and a half years, this year’s theme, positive disruption, was perfect,” said Brian Caress, CEO, Redi Carpet, Stafford, Texas. “It served as a reminder that we are in control of our businesses and our future, and it’s up to us to find new opportunities to improve our performance.”

Economy: Mixed bag

Robust job growth and consumers still spending despite a 40-year-high inflation rate of 8.2% doesn’t often occur at the same time, and yet that scenario mirrors our current economic predicament. That’s according to Mischa Fisher, economist, whose State of the Economy address was one of the highlights at FEI Group’s conference.

“It’s a bizarre period to be in,” Fisher told audience members. To tamp down inflation, Fisher said the Fed is counting on job losses. In fact, the Fed forecasts the unemployment rate to rise to 4.4% next year, from 3.7% today—a number that implies an additional 1.2 million people losing their jobs.

In the meantime, flooring contractors will be facing headwinds in the form of rising mortgage rates (now over 7%) but benefit from some tailwinds as well. Fisher predicted we will not see a huge drop in home prices going forward. “There may be a few years of flat growth or small declines, but it won’t plummet,” he explained. “I’m more bullish on home equity. Home equity is important fuel for the market. It will be interesting to see how homeowners tap into home equity since cash-out refinancing is no longer an option due to higher interest rates.”

Fisher said rising interest rates mean homeowners will find remodeling a better deal. To cite an example, 93% of homeowners have sub-4% mortgages, so moving would cost them double. Instead, homeowners locked into lower mortgage rates will stay put and remodel.

Another healthy sign: people are cash-flow positive, which is why spending is holding up, Fisher explained. For the near term, Fisher is bullish on multi-family and existing homes (for remodels) but not new home construction.

The long-term fundamentals for the flooring industry also look positive. According to Fisher, 44 million people will turn 30 years old in the next 10 years, a potential bonanza for builders that did not exist during the Great Recession. Of concern, however, is the ongoing shortage of skilled labor— a problem that impacts all trades and isn’t going away.

“People aren’t entering the trades,” Fisher stated. “Labor scarcity and recruitment in the trades will continue.” Fisher pointed out there has been a shift in the age people enter trades; today, the average is between 25 and 30, which is older than historical norms. “A slowdown in new home construction will ease the constraints being felt in the market today.

Education

FEI Group
FCNews’ Megan Salzano, far right, moderated the widely popular “High Impact Leadership” session, which was headlined by powerhouse panelists.

Part of the national convention lineup is FEI Group’s robust educational component, aptly named Learning Academy. At this year’s convention, topics ranged from “Winning the Tax Game” to “Effectively Mitigating the Risk of Material Price Volatility and Supply Chain Disruption” and the timely “Winning the Talent War.”

Megan Salzano, FCNews’ senior editor and digital director, moderated the widely popular “High Impact Leadership” session. The panel discussion focused on the power of a consistent and strong leadership strategy, ways to effectively communicate and manage through transition, the power of being agile and how to level up as a leader.

There was no seat left empty during the powerhouse panel discussion, which was headlined by five women in leadership: Jane Gendry, principal, Jane Gentry & Company; Shann Billings, senior director of global sourcing, procurement operations and direct + indirect materials and services, Shaw Industries; Jennifer Zimmerman, chief commercial officer, AHF Products; Linda Jean Saggese, head of strategic accounts, GAF; and Megan Bittle, president and CEO, RSI Kitchen & Bath.

Giving back

FEI Group held a “No Hungry Child” event to pack and deliver oatmeal for thousands of local children impacted by Hurricane Ian.

FEI Group’s national conference is more than just educational seminars and networking. The group also desires to give back. With that in mind, the group held the “No Child Hungry Give Back Challenge,” in which dozens of FEI members and suppliers worked on an assembly line to make oatmeal and pack them in boxes for distribution. Students at local primary and secondary schools, some of whom rely on school meals, were the recipients.

At this event, volunteers packed an astonishing 52,000 packages of oatmeal—within 45 minutes. “That was the highlight for me, that we were able to pack 52,000 meals for No Child Hungry in less than an hour,” Redi Carpet’s Caress said. “Now that’s teamwork for a great cause and a great way to give back.”

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Nov. 7/14, 2022

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