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Starnet: Tight margins still plague contractors as business rallies

PHOENIX—Commercial jobs appear to be picking up in many areas of the country, but increasingly tight margins continue to make it a tough environment. Nonetheless, at the annual membership meeting of the Starnet Commercial Flooring Cooperative here, the record-setting crowd was mostly optimistic the worst of times may be over and the long-awaited recovery is starting to take hold.

“We started seeing a rebound in the fourth quarter,” noted Randy Weis of R.D. Weis Cos. and Starnet’s chairman, “and the first two months of 2011 have been showing rewards, especially in healthcare.”

Dave Meberg, president and CEO of Consolidated Carpet, said he has a healthy backlog and is seeing much more opportunity for the balance of the year than he did at this point last year. “Our firm is primarily focused on the corporate market where leasing activity has been huge in the first quarter. We are also seeing opportunity in healthcare and higher education.”

John Stanfield of ReSource Colorado added, “The first quarter was about the same as 2010, but our pricing activity is more active than at this time last year. Healthcare has picked up, and we are budgeting more corporate replacement, but with no timetable for the replacements to begin.”

Even vendors were reporting the first quarter as a bright spot compared to last year, especially within Starnet. “The first three months were very solid,” said Anthony Minite, president of Bentley Prince Street. “Corporate and higher education—not at the state level—are coming back and healthcare and government remain strong.” Saying this was the carpet mill’s fourth year with the group, he added, “We’ve grown with them each year. This is a relationship business and that’s why we love coming to this convention. We get to have quality discussions about how we can help each other succeed.”

In line with Minite was John Bonney, director of sales for resilient maker Centiva, who noted joining Starnet “was the best thing we’ve ever done as a company.” His enthusiasm was no guise as the company was recognized as the fastest growing vendor within the group.

A few years ago, LG held the title Centiva now holds but had been absent at recent shows as it underwent a restructuring. At the spring show, the brand made its return under the Shaw Hard Surface label and seemed to pick up right where it left off from the activity around its booth.

Allie Finkell, commercial hardsurface marketing manager, said what helped was a Webinar the company did with members to “clear up confusion and explain what and where we are at in the integration and where we are going.”

Making its debut as a Starnet preferred supplier was Tandus and Russell Joyce, senior vice president of sales, was excited about the opportunities noting while the mill already did more than $100 million in business over the last three years with about half of Starnet’s members, “we are hoping to double, even triple it now that we are part of this world class organization.”

His goal may not seem far-fetched. Stanfield said even though his company has not previously done business with Tandus, “we are very supportive of Starnet vendors and have scheduled meetings with their management team to explore mutual opportunities.”

Meberg pointed out, Tandus “fills a need the co-op had for a design driven carpet tile manufacturer filling multiple price points. I was encouraged by their presentation at the share- holder’s meeting. If they walk the walk and are as committed to the co-op as they say they are, I am sure we will increase our business with them.”

While there was a generally good vibe at the three-day event, participants were quick to note they are not yet out of the rough waters.

“There are two things affecting everyone,” Weis said. “Margins are under pressure and the risk of slow or no payments is the highest it’s ever been. This combination can create a perfect storm for many contractors.”

Jeanne Matson, Starnet’s president and CEO, noted the membership “has done a remarkable job of getting through the recession, but the hardest part is making it through the recovery period unscathed. You need credit to expand and to be well situated to deal with the tight margins facing everyone.”

With educational sessions such as “Selling Smart to Take Advantage of the Economic Recovery,” “The Power of E-Mail Marketing” and more, the goal of this year’s event, she added, was to give members ideas and tools to help them be better prepared once

the recovery hits full steam. Perhaps the one session that caused the most buzz was the “Next Generation (NextGen) Leadership Seminar.” It brought together current and future leaders to share best practices on how to create a seamless succession to the next generation. Plus it was a way to get these future leaders not only involved with Starnet, but to understand the value their predecessors see in the organization while forming relationships with their own peers.

And it more than hit the mark, with 61 next generation members attending. “We never had a such a favorable response to a new workshop,” Weis said. “We’re a mature group of people, and in the next 10 years there is going to be a lot of new faces. That’s good, because they bring new ideas to the business and group. NextGen is a way for the membership to get a jump start on succession planning and not waiting until the last minute to try and find a successor.”

Matson added, “This was the first in a continuing series we plan on doing. We want to keep them engaged so next spring we’ll do another seminar around this topic.”

-Matthew Spieler