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Fuse Alliance convention: Optimism abounds amidst bright industry outlook

By Reginald Tucker

 

Geoff Gordon, Fuse Alliance executive director, provided members with an update on the group’s activities to date during the general session.

Orlando—The 2019 Fuse Alliance conference hosted a record turnout of contractor members here earlier this month—a clear indication of not only the value that membership brings but also reflective of the prospects of the contract commercial industry.

Hence the theme of this year’s convention, “Rise of the Contractor,” which stressed the growing importance of Fuse Alliance members in the execution and facilitation of commercial flooring projects around the country. “The world is changing and our role has gotten bigger,” said Geoff Gordon, Fuse executive director, during his opening remarks to attendees. “In this changing environment, there’s strength in numbers.”

Gordon attributed the good fortunes commercial flooring contractors are experiencing—and, by extension, the fortunes of the association at large—to several key factors. The most prominent being the shift in the types of products being specified for many projects today. What was primarily carpet tile and sheet vinyl decades ago has evolved into higher-end hard surface products such as ceramic tile, porcelain, hardwood new high-performance resilient offerings as well as innovative surface treatments such as stained and polished concrete.

“We’re probably 60/40 hard surface to soft surface today,” Gordon stated. “And lot of it has to do with the changeover in products and what’s being specified in projects across the country.”

That shift is also inherent in the sales activity Fuse Alliance contractor members are seeing within their lineup of 43 preferred vendors—seven of which were added in 2018 alone. “Our sales with the suppliers in the group were up 10.5%, while the commercial contract flooring industry was only up 3%,” Gordon stated. “In fact, we grew with almost every supplier except two, and essentially all that growth was in hard surface.”

Juxtaposed with that 10.5% growth across the board, Gordon said the group was down 20% in broadloom sales and 5% in carpet tile. “With all that we still grew more than 10%. We can clearly see the transition to hard surface in our numbers. Not that carpet is going away, but we’re seeing a shift for sure.”

One could argue that Fuse Alliance also had a banner year with respect to growth amongst contractor members. According to Gordon, the group added 10 new members since the last convention, with another 15-some-odd members in the queue awaiting review. One Fuse newcomer is All Commercial Floors (ACF), based in Grand Prairie, Texas. ACF is a national floor covering solutions company whose experience resides in the healthcare market as well as general commercial segments including universities and major sports complexes.

“The Fuse Alliance is aggressively and proactively working on what we consider to be one of the primary challenges in our business today—finding and training labor to the high standards we and our customers demand,” said Kevin Jones, president and founder, ACF. “The educational resources Fuse provides will greatly assist our efforts in continuing to sustain the very best operations and installation teams across the country.”

Gordon attributes the increased participation in Fuse—which currently stands at 110 members strong and representing roughly $2 billion in sales—to a need to be a part of something bigger. “We’ve seen a lot of contractor interest in the Fuse network,” Gordon told FCNews. “A lot of it has to do with the value and expertise we bring as an organization, but it also reflects the angst we’re seeing in the business right now regarding tariffs, industry consolidation, etc. I’m very excited about the momentum we’re building.”

Ongoing evolution
Another trend Fuse Alliance management is seeing is an expansion of services contractors are offering. In the old days, a contractor may have specialized in one product category or another. But all that is changing—these days professional contractors are not only rapidly expanding into other, high-margin product categories but also adding post-installation services such as maintenance.

A panel of Mohawk Group executives—led by Mike Gallman, left, the newly appointed president of the commercial division—fielded some tough questions from attendees.

“A lot of our members are still true flooring contractors, but they have expanded beyond carpet and vinyl and they’re getting into other categories such as rubber, ceramic tile and polished concrete,” Gordon said. “As they get more involved with different flooring products—which come with their own lingo, floor prep techniques and so forth—they’re also looking to join organizations and partner because their businesses have become more complicated. Many of our members today are more well rounded because they have to be. Ten years ago a general contractor had to hire a tile contractor, a carpet flooring contractor, etc. Now they want one contractor to do all of that. You could have 30 different finishes on a given project today.”

One such contractor is Seattle-based Legacy Group, which counts Microsoft, Starbucks and companies of that ilk among its client base. According to John Finch, principal owner and founder, the company offers additional services such as furniture dismantle and assembly on top of its traditional carpet tile jobs. “We’ve been known to go into an office space over the weekend and rip out and replace all the carpet and put together new furniture while we’re there,” he said.

The same philosophy applies to maintenance services. After all, what better way for contractors to keep a client in the purchasing loop by maintaining contact with clients over the life cycle of the products they installed? For Fuse, which is putting more emphasis on building a larger scale and reach to service national accounts, this is a high priority.

“If I were to speculate, I would say 60% of our members offer maintenance services—although some are more active than others in this regard,” Gordon stated. “But through our committee efforts we are going to put more energy into maintenance so we can offer it on a national level for big, multi-use clients while educating our other members in the process.”

Abby Reinhard, owner and president of Pittsford, N.Y.-based GP Flooring, who also sits on the Fuse maintenance committee, emphasized the importance of expanding service offerings. “Maintenance makes us more valuable to our suppliers and keeps us in front of our customers more frequently,” she said. One of the main goals, she said, is to establish standard operating procedures to help make it easier for members to get on board with maintenance. “We are trying to use that network of expertise that we already have and gain national accounts.”

Another way Fuse is looking to build on the collective wealth of expertise that exists among its members is the launch of Fuse Technical—a sort of a “hotline” for A&D professionals to utilize with they have tough questions that arise during the product specification phase. Mike Hutton, senior vice president of Fuse, said all too often designers scout out answers from questionable sources online (or they simply call on other designers) when they have questions. But with this new program, he said, designers can reach out directly to Fuse directly. “If I can’t answer any question myself, then I will forward those questions to a Fuse member who operates in a market where the caller is based. You are the experts in your respective fields, and we need to leverage that expertise.”

2019 commercial outlook
Fuse is looking to build on the momentum generated last year and carrying those gains into 2019. Despite ongoing challenges facing the contract commercial marketplace (moisture/mold mitigation, labor shortages, reclamation, pollution control and claims issues chief among them), the group is predicting members will finish the year strong.

“Most of our members expect 2019 will be up as well based on an average five-to-six month backlog of projects already in the pipeline,” Gordon said, citing activity across most sectors, including healthcare, hospitality, education and corporate. The only caveat is retail, which he says has seen some softening. “But as an organization, we are budgeting for double-digit growth.”