Installation Update - March 2009
By Brian Hamilton
As floorcovering manufacturers continue to downsize and retailers and commercial contractors struggle to find business during the recession, it’s easy to overlook the plight of installers, who are going through as much turmoil as anyone in the supply chain, not all of it due to the economy. In most areas, their low pay is moving even lower as a relatively large pool of installers competes for fewer and fewer jobs, which themselves are producing smaller margins. In some areas, especially in some major metropolitan centers where immigrants make up much of the labor pool, many installers are simply getting out of the business and moving back home. That could also have a significant impact when the economy eventually turns around and there’s a rising need for experienced installers.
“In 2007 and 2008 we worked with 125 crews but now we’re down to 25 or 30,” says Glenn Wyatt of Atlanta West Carpets, which does both residential and commercial work from locations in Georgia, Alabama and Florida. Immigrants make up a high percentage of his installer pool. “A lot have gone home but they’re sure to come back if the business is there.” Wyatt noted that he made his first price cut to installers January 1. However, he says he has no choice if he’s going to get some jobs.
The flip side to that coin, however, is that the recession has created a natural weeding out process so that in many cases the best installers are still working.
Some installers are doing reasonably well, especially those who work for high end retailers and handle harder to install materials like porcelain or stone, or others who do commercial installation.
However, it’s quite a different tale at the other end of the spectrum. Installers who work on tract housing projects and for low end retailers, where every nickel counts, are getting squeezed. Wyatt notes that one large builder last summer demanded that Atlanta West lower its price by 5%, then made the same demand last fall, without really any thought as to how that would happen. “The mills don’t negotiate much these days, so the install side is catching all the heat,” Wyatt says.
The current economic situation is almost adding insult to injury for many installers. Gerry Swift, executive vice president of Dulles, Virginia based commercial contractor Potomac Floor Covering Inc., says that in the last 20 years, the price he pays carpet installers has risen only about $0.50 per yard.
Jim Walker, executive director of the International Certified Floorcovering Installers training organization, acknowledges that some installers are taking the brunt of the competitive cost cutting. “The general contractors, and even some mom and pop stores, are beating these guys down to nothing,” Walker says. That often has the unintended and unfortunate side effect of encouraging installers to cut corners, which can cause problems down the road. Sometimes a problem won’t be apparent until many months later.
Some businesses, such as commercial contractor CraftCroswell in New Orleans, have found that their best installers aren’t always available when they need them these days since they will end up taking installation work from other businesses. “It’s an inconvenience but it’s not insurmountable,” says Bill Croswell.
Probably the biggest single flameout in installation happened in January when California-based Cover-All Inc., one of the largest flooring installation firms in the country, filed for Chapter 11 bankruptcy. The company at one time had more than 1,500 employees at 23 locations across the country and handled both residential and commercial projects, installing all kinds of flooring. Initially the firm said its Chatsworth, California and Las Vegas locations would remain open but that quickly changed and the whole operation has shut down. Cover-All’s largest customer was Home Depot, which according to reports had complained about Cover-All’s poor work and wanted an alternative.
A spokesperson for the company didn’t know how much of Cover-All’s problems were due to the economy or its problems with Home Depot.
What the Cover-All situation may illustrate, in addition to the treacherous economic landscape, is the fact that installation is far more than stretching carpet. It’s about enhancing relationships with customers, and when one large firm like Cover-All meets an even larger firm like Home Depot, the personalization of the installation can get lost in the shuffle and it becomes just another monetary transaction. A good case can be made that the installer is the most important person in the entire supply chain. The installer is usually the last person on a job and, in the case of a residential project, often the person who has the most interaction with a customer. A poor installation can not only ruin a current sale and require an expensive fix, but can prevent future sales by tarnishing the reputation of the local retailer or flooring contractor. Successful businesses understand this and treat their installers with respect, although they may be in the minority.
“Big boxes want to do installation right but they’re not willing to pay installers well,” Walker says.
Installers are overwhelmingly self employed subcontractors, and virtually everyone in the industry seems to like it that way, including the installers themselves. For retailers and commercial contractors, it boils down to lower costs and higher productivity.
“At one time we had six or seven installers on staff but what we found is that it takes a different field management structure to get the productivity,” Swift says. “The quality was there but we weren’t getting the productivity.”
Wyatt of Atlanta West, who came up in the business as an installer, agrees. “Today, we’re 100% subs. We changed in the early 90s and haven’t looked back. We’ve doubled our output.” The same is true at Coeur d’Alene, Idaho based Great Floors, which has about 95% subcontractors. “If they’re motivated on a piece rate, things just get done a lot quicker, and sometimes the quality is better because they know if they have to go back it will be on their dime,” says Ian Martin, vice president of commercial sales.
The subcontractor arrangement, however, creates some problems. First, it tends to depress wages through increased competition, especially in a slow economy, and it provides little in the way of benefits, job security, or even continuing education. It’s also relatively easy to get into the trade, because there’s very little oversight, and the installer population tends to be fairly transient. This, overall, tends to devalue the profession and does little to raise its profile.
It’s also an invitation for an IRS audit. Wyatt has had two full audits in the last ten years to verify that his installers were indeed subs and not employees, and passed both tests easily. However, he says he’s heard rumblings that the IRS might begin to tighten those regulations. That, by itself, could have an enormous impact on installation.
With the fallout in the industry, one unanswered question is, will the industry have enough skilled installers once business picks up again? If past recoveries offer any guidance, demand for floorcovering could rise sharply once the economy turns up. That, in turn, could prompt unqualified people to enter the trade in great numbers, just as happened in the last flooring gold rush.
The workforce is also growing older. Few young people are entering the field—it’s physically demanding work, installers have to buy all their own insurance, including worker’s compensation, and the job has no benefits, such as health insurance. As Walker says, there’s very little incentive for young people to enter the industry.
“The [International Standards and Training Alliance] union is in good shape with its training programs but non union shops like us struggle and wonder where the next generation of installers is going to come from,” says Swift. Union installers also get a pension, health insurance, and other benefits, but they’re concentrated in the East and Midwest, where unions of all kinds are more generally accepted.
Some businesses have tried to take matters into their own hands. Billings, Montana-based Pierce Flooring got an accredited training program going locally but had to shut it down for lack of interest. Wyatt, in Atlanta, tried to get a training program going for high school kids, but, likewise, there wasn’t enough interest.
One new tool on the scene is a website, installerpool.com. It’s a site to match installers with jobs, and it lets retailers and contractors rate installers so that, in theory, businesses will have some way of knowing how good an installer is. Walker says the rating system is flawed because there are many reasons a business could give an installer a low rating that have nothing to do with the actual work. A better system, he said, would be to have consumers rate the installers.
Success in installation
In every Floor Focus survey that addresses problems in the floorcovering industry, installation is always right at the top of the list. Many experts understand the necessity and challenges of improving installation and believe more needs to be done to raise the level of skill and professionalism. However, how that can be achieved is still a topic of debate.
What does seem clear, however, is the firms today that have few installation problems are the ones that value their installers, pay them well, give them additional incentives from time to time, and, can provide a steady stream of work. They tend to have installers who have worked for them for many years, sometimes decades.
“We also pay our commercial crews weekly and don’t make them wait for our payment from the general contractor,” says Martin of Great Floors.
Wyatt says he’s trying to help his subs in any way he can. One small example: he used to mark up some supplies but now just breaks even. “We’re going to need these guys when things turn around.”
These companies also do a lot of staging before the installer ever shows up at a job site, such as delivering all the correct materials, and making sure, for example, that wood gets acclimated. They also know which installers can work well with a homeowner and which would prefer to deal with a general contractor. The skill sets are completely different and can make or break a job.
As Walker notes, the so-called “soft skills,” such as how to interact with a homeowner, are more difficult to teach than installation techniques.
“Our trade is easy to learn but it all comes back to taking pride in what you do,” says Wyatt, a former installer. “That’s the key, doing it right the first time. Our industry has overstated how much training is needed. I’m not saying it’s easy but installers can be trained pretty fast.”
As floorcoverings have evolved, so have the skills and knowledge required to install them. For example, the number of different kinds of carpet backings has grown substantially and pattern matching is more difficult. Adhesives have become more numerous and specialized. Locking systems have changed how wood and laminate floors are installed.
Most installers still get their training on the job. Some mills, especially resilient manufacturers like Armstrong, Mannington, and Forbo, have extensive certification and training programs. Armstrong recently joined forces with INSTALL to provide a joint certification in commercial resilient flooring installation. But this is for union installers, which make up a small fraction of the overall pool. Walker’s CFI organization has certified more than 30,000 individual installers, most of them in carpet installation, and INSTALL has trained about 15,000. But together they only scratch the surface. Various associations, such as the National Wood Flooring Association and the North American Laminate Flooring Association, also have training programs. Now, many larger firms that have the facilities bring in trainers, sometimes from CFI but more often through their distributors.
One problem for installers is simply finding the time—and money—to attend an out of town training session. It’s hard to give up a few days’ pay to go to training. Just as significant, many installers simply don’t want to go to classes.
Swift, who works on the training and development committee for StarNet and serves on the board of the Flooring Contractors Association, says he hears about installer concerns from both organizations as well as the need for some kind of a standard or certification. He says the mills are ready to fund an industry wide program, and the A&D community would welcome such an effort, but no one is organizing it.
Swift says that, by itself, individual installer certification doesn’t mean much to him, and that the certification has to go with his business to be effective. But, he admits, “I have a lot of the questions and not so many answers.”
Copyright 2009 Floor Focus