Installation Update - June 2011

By Jessica Chevalier & Darius Helm

Installation has been at the top of flooring dealers’ complaint lists for as long as Floor Focus has been surveying the industry. In our most recent surveys, retailers and contract dealers once again listed installation as one of their top ten leading problems; however, on both sides of the business, it slipped significantly, giving way to other concerns. In the Retailer Survey, installation, which was the perennial top problem until the housing crisis, fell to the bottom of the list last year. And in the most recent Contract Dealer Survey, installation got the fewest votes as a top problem, though it received the most votes in all the Contract Dealer Surveys before. Are we seeing a fundamental tide change regarding installation?

The decline of installation as the top problem certainly has to do with the economy; intense competition, low margins and home centers took the top three spots on the retailer side last year. But it also helps that the recession has forced retailers and contract dealers to pare their installation teams down to the bare minimum—those few trusted installers that they have worked with for years, the ones who do the job right and don’t cut corners. Jon Namba, industry consultant and owner of Namba Services, Inc., reports that he has thinned his subcontractor list—those he hires on a regular basis—from ten in the year 2000 to three at present. And don’t think for a second that he hasn’t kept his best three around. 

This relates directly to a concern that many expressed during our preparations for last year’s installation update, when no one was sure whether the recession was winding down or revving up: with so little work, would qualified installers leave the business, creating a void of experience when the market rebounded? 

By all accounts, this crisis has been averted. Though some installers have no doubt moved on, it is believed that the quality installers—those with good skills and business sense, those who have truly made installation a career—have remained. Yes, some of those close to retirement age may have opted out a few years early, but there hasn’t been a mass exodus as was feared. And it’s possible that the bar on installation has been raised, as the mediocre and poor quality installers are the ones to have been pushed out. 

MAKING A LIVING THROUGH INSTALLATION
Making a living wage as an installer in today’s market is another matter. Jon Namba reports that payment has dropped to mid-1970 levels. Before the recession, residential carpet installers were making $3.50 to $4.00 a square foot; in some areas, they are now making $1.75 to $2.75. Tile setters who were pulling in $3.00 to $5.00 a square foot previously are sometimes getting only $1.00 to $1.50 now. And hardwood installers, making $3.00 to $5.00 before the recession, are averaging $2.00 to $2.50 in some markets. Throw in licensing and insurance costs, and it’s hard for up-and-up tax-paying installers to compete. 

Plus, at least on the residential side, quality installers will always be fighting a battle against fly-by-nights hoping to make a quick buck. The barrier to entry for the residential installation business is so low—roughly $350 to $400 of tools—that anyone with a couple nights worth of bar tips and an insurance policy can call themselves an installer, regardless of their experience, education or a track record of success. Committed retailers have a hand in curbing this problem by establishing (and maintaining) a close relationship with their installers and encouraging customers to use only these vetted workers. 

The Carpet One Floor & Home store in Vallejo, California, owned by David and Michelle Struble, has worked with the same five installers for over 15 years. These installers do a good job and are rewarded for it—knowing that they will get first dibs on any jobs that come along. This reciprocal loyalty serves not only the installer and store but also the customer—as they are guaranteed an installer with experience and a history of success. In addition, at Struble’s store, customers are presented with a total cost—for materials and installation—after the store scopes out the job, and that price is guaranteed. Customers aren’t sold a roll of carpet and left to haggle with an installer over the cost of installing it.  

Though it is often assumed that subcontractors will take shortcuts on the job site—when they aren’t under the watchful eye of the retailer—Struble says that this is not the case with his installers. Struble guarantees installations for life, and when problems occur, which they inevitably do, Struble expects the same installer who did the work to fix it. “The installer won’t take a shortcut because they know the will lose money in the repair,” says Struble. 

Avalon, a major 14 store chain in the Northeast, pays for some of its installers’ training and certifications but also seeks to enable them with the best tools in the field. At times, the store will buy new tools at cost and sell them to the installers, for the same price, under a payment plan, which is much easier to absorb than a single payment. “Then I know they have the right tool in their hand,” says Vince Licolli, vice president of installation for Avalon. 

If an Avalon installation needs to be repaired, the company gives the original installer the opportunity to take care of it. And if the repair costs Avalon money, they charge that back to the installer, again using a payment plan to make it easier on the installer’s finances. Licolli notes that repairs are needed infrequently—only a few call-backs are made a month across Avalon’s entire chain. 

Things often work differently on the commercial side because all landed jobs aren’t local. When contract dealers get work outside of the areas where they’re based, they work with contract dealers in the job’s region to install the product. It’s a cooperative and mutually beneficial relationship, generating networks of communities spread across the country. When a flooring contractor hands over installation to an operation in another part of the country, they’re counting on this partner to ensure quality control, schedule and other key elements. Both parties have a vested interest in maintaining high standards, since they’re generating revenues from each other.

Members of Starnet, the independent contract dealer network, are constantly working together on installation projects in each other’s regions, relying on the quality of the network to ensure successful relationships. Contract dealers doing projects in union regions also often hire directly from the local union halls.

All of the dealers that we spoke with use subcontractors for installation, and that is fairly standard across the industry. Jim Walker, a seasoned installer and founder of the Certified Floorcovering Installers organization, estimates that less than 15% of retailers employ their installers. Licolli, who has been in the business for 20 years, notes that those retailers who do employ installers usually have only one or two on staff, and they generally serve as general contractors but also know how to install. Over the years, Licolli has considered moving installation in-house but believes that contracting creates healthy competition among installers that encourages them to work harder and smarter. Licolli has approximately 60 subcontractor installers that he works with. 

Struble points out that his store could not offer competitive prices on installation if they had employee installers. “This is the best way to offer value to the customer and allow people to make a living,” he says. Struble—who owns Struble Family Funeral Services, which is located right next to his flooring store—purchased his Carpet One store when the owner, his former tenant, went bankrupt. Struble has employed his experience as a funeral director in the flooring store, taking a very humanistic approach to the business. He encourages both his employees and installers to focus on building relationships, rather than selling. And he seeks to meet the customers needs—whatever they may be—even if it means sending them to a store that better suits their needs. “I don’t take off one hat and put on another,” Struble explains. “All of us are here for the customer. It’s about hearing what the customer is saying, putting ourselves in their shoes and considering what we would want from someone in our role.”

DIVERSIFICATION
Rather than leaving the field during the recession, many installers have chosen to diversify, installing more than one flooring type. Most often, carpet installers jump to hard surface installation of engineered hardwood and resilient flooring. This trend has received a mixed response from dealers.

Some dealers value this diversification because they can send one installer to do a complete job of both hard and soft surface installation, freeing up another installer to go elsewhere. But other dealers believe it produces installers who are jacks-of-all-trades, masters of none. 

Regardless of that “danger,” specialization might not be an option for long. Namba says, “Years ago, people could specialize; now they have to be diverse. They have to up their value. They have to install a minimum of two flooring types to be competitive.” In fact, Namba believes that the value of diversification is the most important lesson an installer—budding or experienced—can learn. He also advises that installers earn certifications through non-profit agencies to build their credibility.

During this recession, there have also been plenty of residential installers, in both union and non-union regions, that have looked for work by targeting the commercial market, offering lower bids to take jobs from established contract dealers. 

Though this has been a huge frustration for contract dealers, it’s not without a silver lining. Too often, the commercial installation by the residential installers fails, and contract dealers have had to go in there and fix the job. Not only does that mean money in the contract dealer’s pocket, but it also is an excellent selling tool—next time around, that client will be willing to pay top dollar for an experienced contract dealer.

However, it still gives flooring installers a bad name to have amateurs out there doing slipshod work. Fortunately, after a while the principle of survival of the fittest tends to weed out the worst of the worst, while others find they’re losing money to get the jobs done and they retreat back to the residential sector. 

TRAINING
Training is an inherently troubled subject in installation. To start, even if retailers are willing to pay for their sub-contractors’ training, many installers are hesitant to accept because it means losing a day or two of work—a financial hit that some contractors can’t stomach. 

However, Avalon reports that training is one of the first inquiries they make when a job-seeking installer comes calling. 

To convince installers that training is important, Walker points to a survey that Mohawk conducted with its retailers that identified installation as the number one problem across the board. Walker believes that his experience in the trenches as a working installer helps other installers accept his critiques and advice. CFI expects to hold close to 100 training programs this year with between 20 and 25 students per session. CFI also organizes classes that focus on inspection.

Walker believes the most important skill that he can provide to his students is the ability to recognize whether they are capable of installing a product properly—in other words, being able to identify where the limits of their skills lie. 

Many trade organizations are committed to helping their membership gain training as well. The World Floor Covering Association has established its WFCA Trade & Education Scholarship Program to assist its members in maintaining the best-trained workforce possible. Every year, the organization allots funds to provide assistance for employee training in installation, sales, products and administration. 

Copyright 2011 Floor Focus 

Related Topics:Mohawk Industries, Carpet One, Starnet