January 19/26, 2015; Volume 28/Number 15
By Craig Folven
As 2014 came to a close, so did my time as president of the North American Association of Floor Covering Distributors (NAFCD). 2015 looks to be another great year for not only NAFCD, but our industry as a whole. Most companies will agree the floor covering market slowed in 2014 after experiencing incredibly strong growth in 2013. We still saw growth, but new home construction levels seemed to level off near the end of the year, and commercial market sales continued to be adversely affected by the decline in public construction activity. Despite the slowdown, suppliers appeared to have found the confidence to significantly increase capital spending to offer new products, improve efficiency and provide a more reliable supply chain by in-sourcing production.
This confidence makes it seem as though our industry is entering 2015 with more momentum than we entered 2014. The flooring market appears to continually gain strength, due in large part to the upswing in remodeling markets as well as in the commercial and office segments.
A recent webinar featuring David Crowe, chief economist with the National Association of Home Builders (NAHB), discussed the factors that impact growth in the U.S. single-family housing market. He stated that most economists are calling for 26% growth to 802,000 units in 2015 and on up to 1.1 million units in 2016. This is good news for tthe flooring industry.
How do these projections affect our industry specifically? A recent study by The Freedonia Group shows U.S. demand for hard surface flooring rising 5% per year, increasing to 9.3 billion square feet in 2017. The Hard Surface Flooring study shows laminate flooring growing 3.7% annually to 1.11 billion square feet, and wood flooring growing at an annual pace of 4.7%, reaching 1.07 billion square feet.
Given the multiple forecasts of general economic expansion through 2017, NAFCD’s latest Economic Trend Report suggests you should seriously consider the following:
- Assess if your on-boarding and training programs are adequate to handle the additional labor you may need.
- Determine if you can increase your use of technology to lessen your dependence on human labor.
- Do you have enough working capital or capital sources? Growth burns through cash.
- Ask yourself if you have the systems and equipment to handle additional orders/business. Are you going to be losing market share to someone who can handle more business?
- Decide if you can maintain quality at higher volumes of output. This is not easy to accomplish, especially when capacity constraints crop up.
- Raise prices! Capacity-constrained businesses and industries should be regularly raising prices.
Think and act upon the above items as they relate to your business to enable you to get the most return on your investment. Remember that the NAFCD Quarterly Economic Trend Report is just one of the many resources NAFCD uses to educate its members on the emerging trends that impact their businesses.
For those attending Surfaces, be sure to visit NAFCD at booth number S6101 during exhibit hall hours to learn more about what NAFCD has planned for 2015. NAFCD will also be hosting a Distributor Lounge adjacent to the NAFCD booth where member and non-member distributor attendees can hold meetings, catch up on work and talk with other NAFCD members and staff.