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Starnet members ‘rev’ revenue, enthusiasm

October 27/November 3, 2014; Volume 28/Number 10

By Ken Ryan

Screen Shot 2014-11-03 at 10.51.10 AMDenver—Unlike the larger spring meeting in which attendance is mandatory, the fall conference of the Starnet Commercial Flooring Partnership is an optional affair. But that did not deter a large turnout of members and vendor partners here for two days of workshops, a trade show and networking.

“It was excellent attendance if we look at the percentage of members here,” said Jeanne Matson, president and CEO of Starnet.

The attendance of 309—compared to last year’s 280—included 100 vendor partners, which meant there was no shortage of quality networking and sharing of best practices during the conference. “Our members work in tandem with our vendors,” Matson said. “We have two equal parties. If both groups aren’t seeing a value in Starnet, there is a problem.”

Fortunately, everyone seemingly views the partnership as beneficial. Carlton Billingsley, vice president of Floors & More, Benton, Ark., said he has been asked in the past why it is important to be a Starnet member. His response was that anyone who has to ask that question doesn’t get it.

“If you want to be a leader, if you want to be different, there is no better group to be involved with than Starnet,” he said. “Those who are not in the group don’t understand how valuable the education and knowledge you get here is. You either continue to learn and adapt or you die. The way business worked 15 years ago doesn’t cut it today, and that is why you have to constantly learn new ways of doing things.”

“REV Up Your Business with Starnet” was the theme of the fall conference, with workshops focused on revenue generation and the bottom line. On both fronts, Starnet members say they are doing just that.

Matson called 2014 “a tricky year,” but one that will be satisfying in the end. “We didn’t see strong numbers until May and June. Now we have kicked it in and are seeing very strong business, and we see 2015 as an even better year. I looked at some industry figures today and they are very encouraging.”

Many Starnet members who spoke with FCNews said their businesses in 2014 will be up at least 10% over 2013, and with contracts and orders in place or pending, 2015 looks even more promising.

Harold Chapman, president of Bonitz Flooring Group in Greenvile, S.C., said after a slow first quarter, business has picked up substantially and the company will end 2014 10% to 14% ahead of last year in revenue, 5% to 8% on the bottom line. “We now have a backlog of orders that will carry into 2015,” he noted.

Lane’s Floor Covering in New York City saw its business climb 10% in 2014 over 2013, driven by hospitals, retail and ancillary work such as airports and law firms. Umberto Aponte, vice president, said the business “has come in waves” and summer was particularly strong.

New programs and initiatives

At the behest of members, Starnet has introduced several new initiatives designed to foster growth among its group. One such venture is the Next Gen group, which now consists of 70 members. The group comprises younger members who are currently in leadership roles, leadership-track positions or who have a stake in a company and will eventually take over the operations. The Next Gen group convenes monthly to brainstorm and share best practices. They also meet with older members who serve as mentors.

Matt Miller, project manager at Commercial Flooring Systems in Omaha, is a Next Gen member. “We’re still growing, still figuring it out. We want to make our vendor partners aware that we are their partners for the next 30 years and let them know what we can offer.”

About two years ago, Starnet members launched StarNetworking, a referral system among members. To illustrate how the system works, Randy Rubenstein, director of Rubenstein’s Contract Carpet in Seattle, referred a customer who needed a project done in Chicago to fellow Starnet member Mr. David’s Flooring International in Itasca, Ill.

“The door wasn’t just opened; the mat was laid out for me,” said Mike Gannon of Mr. David’s. He said Rubenstein wrote a letter on behalf of Mr. David’s, saying in effect, “You want to do business with this guy; he won’t let you down.”

A few Starnet members said they have benefited from the referral system, either by landing additional business or helping customers and other members. By design, there is no formal business structure to StarNetworking. Sometimes there is a finder’s fee involved; other times a referring member is looking for reciprocity down the road. Sometimes it is simply about doing the right thing.

“The beauty of this organization is no one tells you how to run your business,” Rubenstein said. “We are here to share knowledge and information.”

Trade show

Screen Shot 2014-11-03 at 10.51.54 AMTwo years ago, Starnet added a trade show component to its conference. At the fall meeting, 31 vendors set up tables and small booths. Space precluded a larger gathering, Matson said, but even so, the networking was brisk and beneficial to both parties.

Masland Contract, which returned to Starnet as a member this year, brought a contingent that included Dixie Group CEO Dan Frierson, Masland CEO Lee Martin and four regional vice presidents. “This is a wonderful format to build relationships in a non-pressured situation,” Martin said. “These meetings are about connecting with the owners.”

Jim Cave, vice president of national accounts for Mats Inc., agreed. “It’s a relationship show, not a buying show, so it’s a great way to see owners in a relaxed setting and be able to socialize with them in a non-business environment.”

Deb Lechner, director of commercial markets for Armstrong, was back in familiar territory at the fall meeting. Lechner worked at Armstrong from 1990 to 2002 before joining the Starnet staff for 10 years. She then returned to Armstrong in March.

“I’m coming here to see friends,” she said. “It was a seamless transition going from Starnet to Armstrong because I understand the contract market very well.”

In other news…

* During the general session, Eric Boender, director of Starnet FloorCare and national accounts, previewed a program called Starnet Mega Training, which will be held Jan. 18-20, 2015, at the Monte Carlo in Las Vegas, just prior to The International Surfaces Event. The strategy is to combine Starnet-sponsored training into a single, large event with multiple training sessions and networking opportunities. Among the speakers will be training/education experts Sam Allman and Stephen Covey.

“We think this is going to be the third main event of Starnet after the two members meetings,” Boender said.

* Bonitz’s Chapman, a board member of the World Floor Covering Association (WFCA), urged Starnet members to join WFCA. He highlighted the WFCA’s strength in, among other things, lobbying efforts for the flooring industry, and the relatively inexpensive $295 fee to join. He pointed out the WFCA pays out $500 toward education.

“A lot of people think of the WFCA as a retail organization,” he said. “That’s not true; they work for all of us. We can work in conjunction with them. There are things they can do for us that we can’t possibly do on our own.”

* Starnet has added four new members to its group and now has 173 memberships, including 13 in Canada. “We are very selective in who we bring in,” Matson said. “We want a company committed to a full-service model.”

The new members are ACS Flooring Group in Houston; Commercial Flooring in Toledo, Ohio; Prodigy Flooring in Tampa, Fla., and Jones Schlater Flooring in Columbus, Ohio.

Matson said she personally visits each new member and encourages company executives to get involved in Starnet activities. “It can be very daunting for a new member to walk into this room,” she said. “We try to help the new members navigate their way through the partnership, and involvement is a great way to do it.”

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State of the industry: Carpet looks to play catch-up in tough year

September 15/22, 2014; Volume 28/Number 7

By Ken Ryan

Screen Shot 2014-09-24 at 11.17.06 AMThe carpet category grew both in dollars and units virtually every year for 50 years. But the flooring industry was then hit with the worst recession in its history, and since then carpet has been slowly on the mend.

According to carpet executives, by the end of 2014 housing starts will have recovered 70% of 2006 historical highs, with 93% by 2015. The carpet industry has recently rebounded somewhat following a brutal, weather-related slump during the first two months of this year, albeit not as robustly as some had hoped.

“Most of us agree that, on average, the carpet industry in 2014 is up modestly overall after a 2013 that was up 3% to 4% over the previous year,” said Karel Vercryussen, president and CEO, Beaulieu America. “That’s not exactly a cause for celebration, but it’s encouraging in terms of sales and shipments. But, when considering where carpet has been heading these last several years, there is cause for some celebration.”

Tom Lape, president of residential, Mohawk, said there is, in fact, good news out there. “Consumers are coming back, and they are shopping.” He cited some encouraging housing and economic data as well, including existing homes under contract are the highest in 11 months, new home sales are bouncing back and mortgage applications are higher. “Mortgage apps were down double digits early in the first quarter and have bounced back.”

Noting that the residential carpet segment has been playing catch-up following the dismal start to 2014, Shaw president Randy Merritt sees the overall category as “close to flat” at this point. “The average selling price of carpet is down slightly for the first time in several years due to the influx of PET at lower prices and the general weakness in the remodel segment. The winter of 2014 was exceptionally harsh across the country and led to the slow start of the year. We believe this slowed the new home construction process, and we will need a strong finish to the builder business.”

Lape and others talked about a bifurcated market in which the commodity end of the category and the premium side are showing buoyancy while the middle of the market is most challenging.

Overall, James Leslie, assistant to the chairman at Engineered Floors, suggested macro forces favor an upward trend in buying. “There is pent-up demand out there. Even with millennials starting families later and buying homes later, there will be a breakout. The macro forces indicate it is going to happen. We feel we are in the best part of the year right now–September and October.”

Larry Heckman, president of Best Buy Flooring, agreed there is pent-up demand out there, but suspects some of the reluctance on the part of consumers is the result of unsettling events in the Middle East and Eastern Europe. “As soon as we get some [positive] news, we’ll have people spending money and buying. The overall pulse I get is that we’re up as a market.”Screen Shot 2014-09-24 at 11.17.43 AM

In 2008, carpet represented 51.3% of the industry, according to FCNews estimates. By 2011, that number was 47.4%; by 2013 it was 46.9%. No one denies the gains being made by hard surfaces at the expense of soft surfaces, particularly in high-traffic areas in the home where hardwood flooring and LVT are being put down as “easy-to-care-for” alternatives.

“The multi family business is an example of where we are seeing more LVT going in places where carpet used to go,” Merritt said.

T.M. Nuckols, senior director of product strategy at Invista, added that LVT is taking away share from carpet by creating looks at price points previously not available in hard surface offerings.

Fiber

Polyester has grown significantly during the past several years at the expense of other fibers, especially nylon, and executives see that trend continuing.

As well, polyester has evolved from a nice value alternative to nylon to a strategic component of every carpet manufacturer’s overall product offering. Vercryussen said polyester is also shedding its image as the low-price fiber and is steadily closing in on nylon in terms of acceptance driven by improved performance.

Mohawk’s view is that its own triexta fiber and polyester are the growth platforms in today’s market. “Polyester really sets the foundation combo of value and performance,” Lape said. “We believe triexta is at the top of the pyramid for performance characteristics and design and styling, particularly the soft attributes. You can’t get that softness in nylon and polyester.”

Executives agreed that nylon, which still dominates the commercial marketplace, is not going away. “We recognize that even though polyester has come a long way since its introduction, there are still many dealers and consumers who prefer nylon,” Vercryussen said. “We think consumers are more ‘fiber agnostic’ these days, thanks to advances in polyester technology and similar warranties between nylon and polyester carpeting.”

Merritt said excess capacity in PET today is contributing to a very competitive environment. “There is very little staple polyester being sold. The industry is now predominantly filament—nylon, PET and some polypropylene.”

Screen Shot 2014-09-24 at 11.18.33 AMEd Williams, president at Lexmark Carpet, said the surge polyester has enjoyed in recent years may be slowing a bit; and with multi-family as one of the stronger segments, momentum may be swinging back toward nylon, at least in that sector. “In talking to various people there is a lot of work being done in the nylon area on the part of the mills,” Williams said.

Trends and innovations

The soft craze that hit the market a few years ago shows no signs of abating, and manufacturers are seizing that opportunity with ever-softer products that are resonating with consumers who can literally feel the difference. According to Merritt, credit goes to advances in tufting technology, which continues to evolve and produce aesthetically pleasing, stylish patterns. “Carpet is generally a soft product today—softer than ever.”

To meet the growing need for soft, Beaulieu America recently introduced two entries into the popular super-soft category: Bliss Vivid and Bliss Hypnotic. Both products are companion textures made of Tryelle, the super-soft PET filament fiber.

Best Buy’s Heckman said consumers are buying into the ultra-soft trend as long as the product delivers on performance with the latest in designs and colors, such as earth tones, brown grays and tan grays.

Nuckols said while ultra-soft products are hot, there is still a market for products that are soft, but not quite ultra soft.

In the meantime, innovation is the engine that is driving this soft trend.

Mohawk, for example, is reinvesting and expanding its triexta platform with up to 100 launches planned. “Triexta now plays in all levels of the market, all distribution channels,” Lape said. “It was launched in the ‘06 time period, which means it was launched in the face of the biggest downturn ever in flooring. That shows the legs of this product.”

Commercial

The commercial segment is up slightly in dollars in 2014 when compared to 2013, and probably flat to slightly down in units, according to industry executives.Screen Shot 2014-09-24 at 11.18.58 AM

Jack Ganley, president of Mannington Commercial, said 2014 started off sluggish as companies took a wait-and-see approach before releasing dollars for capital projects. This hesitation was largely due to continued economic uncertainty.

Lee Martin, president of Masland Contract, a unit of The Dixie Group, said the overall commercial segment is somewhat more active than 2013 and certainly stronger than 2012. “My feeling is that the commercial segment is up in dollars and probably flat to a small increase in yards,” he said.

Much of the commercial growth is in hospitality and assisted living, although the overall healthcare segment has experienced a slowdown in growth, Ganley said, as that sector waits to fully understand the implications of the implementation of the Affordable Care Act.

“We continue to see moderate growth in both the corporate and retail sectors, along with higher education,” he said. “Publicly funded K-12 and acute care facilities are lagging.”

Ganley said one of the major innovations/trends shaping the market in 2014 is the combination of carpet and hard surfaces. This blend, he said, “can increase long-term appearance retention through the installation of hard surfaces in high-traffic areas of a project, transitioning beautifully to carpet in open areas of a floor plan.”

As modular carpet continues to grow and take share from broadloom—it now represents about 50% of the commercial market—executives said there is increasing interest in different size formats and shapes. Additionally, there is “a fresh interest in innovative yarn processing to create unique textures and visuals,” Ganley said.

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Masland Contract installs solar water heaters

Masland Contract logoMobile, Ala.—Masland Contract announced it has installed thermosiphon solar water heaters at its Saraland and Atmore, Ala., manufacturing sites.
 The energy-efficient units heat water used in the manufacturing labs, as well as potable water in employee restrooms. Continue reading Masland Contract installs solar water heaters

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Fuse Alliance appoints Masland Contract as newest supplier

fuse alliance“We look ahead to our Masland Contract partnership with special excitement.  We have had a long and successful relationship with the leadership of Masland Contract and see their strategic direction as an opportunity for our members and their customers,” said Ron Lee, executive director, Fuse Alliance. Continue reading Fuse Alliance appoints Masland Contract as newest supplier

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'Be Heard' with Masland Contract at NeoCon

Masland Contract is poised to debut its newest collections for 2013 at NeoCon in Chicago. Now in its 45th year, NeoCon represents North America’s largest architect and design exposition and conference.

At this year’s show, inspiration in design is Masland Contract’s focus with its pre-show initiative called “Be Heard.” The company wants architects, designers, and specifiers to share their thoughts on what inspires them in their work. “We are asking people to share their inspiration, whether it’s a painting, quote, video or music,” said Steve Cocozza, executive vice president at Masland Contract. “Inspirations play such a role in the industry and helped us produce our latest collections.” Continue reading 'Be Heard' with Masland Contract at NeoCon

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HD Expo Hospitality seeks rebound from challenging 2009

LAS VEGAS—The hospitality industry may have suffered through the economic down- turn as much as any commercial segment in 2009 with estimates of a 30% to 40% decrease in business, but that doesn’t mean the sector is without optimism. This was evident at the recent Hospitality & Design Expo in Las Vegas, where more than 6,500 attendees had the opportunity to view the newest products and cutting-edge ideas from the nearly 900 exhibitors.

Most exhibitors with whom FCNews spoke said they noticed traffic and overall energy was up at the show. Comments such as, “We had all the right people visit us at our booth,” “Many [architects and designers] had new and exciting projects to talk about,” or “Not only are we seeing light at the end of the tunnel, we may be slowly coming out of the tunnel all together” were echoed in various forms throughout the three-day event. Continue reading HD Expo Hospitality seeks rebound from challenging 2009