CHICAGO - In January, 2018, the Floor Covering Leadership Council (FCLC) commissioned an independent research firm to conduct a multi-phase study to quantify the scope and severity of the lack of installation professionals on the flooring industry's sustainability and growth. A Chicago-based research firm, The Blackstone Group Inc., was contracted to conduct the research, whose quantitative component focused on businesses that purchased workers' services by engaging floor covering installers as direct employees and/or subcontractors in 2017. A total of 334 executives, representing floor covering contractors, retailers, workrooms, and installation businesses across 45 of the 50 states, participated.
Two-thirds of the participants agreed they are experiencing a shortage of installation employees and/or subcontracted labor that has had a negative financial impact on businesses up the industry supply chain, including floor covering retailers, distributors, and/or manufacturers.
When those who agreed or had mixed views regarding the overall impact of their firm's labor shortage were exposed to a list of financial impacts, half or more reported that their own businesses had experienced each impact in 2017 specifically due to their lack of labor:
• Increased labor costs that could not be passed along: 73%.
• Reduced margins due to a change in the product mix: 66%.
• Increased logistics costs: 60%.
• Projects that never took place or were abandoned: 53%.
• Increase in claims paid due to a lack of trained labor: 48%.
For each impact of the installation labor shortage they experienced in 2017, the businesses incurred a median cost of $16,000 to $50,000.
The combined cost of the labor shortage's impacts on the research's participants was 3.8% of their revenues from installation and/or floor covering product sales. Since the participants' reported revenues totaled just over $2.5 billion, the cost of the specified impacts of the labor shortage on these businesses alone was slightly below $100 million in 2017.
The study's findings suggest, not only that the installation labor shortage is real, but that its financial impacts on the manufacturers, distributors, and retailers up the flooring supply chain - impacts that include lost margins on products and labor, production inefficiencies, higher labor costs, and increased claims - are significantly greater than previously understood.
Associations included in the FCLC coalition and others donated the funds needed to accomplish the 2018 research. Ongoing industry fundraising will be coordinated to generate the funding needed for the initiative's future work.
Presentations detailing the FCLC research findings will take place on January 24, 2019 at The International Surface Event (TISE) in Las Vegas and on February 28 at Domotex USA in Atlanta.
The FCLC was established in 2015 as a coalition of flooring industry trade associations committed to identifying issues and developing solutions to the industry's most pressing challenges. Currently, twelve flooring associations support the FCLC: American Floorcovering Alliance, Inc. (AFA), International Certified Flooring Installers Associations Inc. (CFI), Ceramic Tile Distributors Association (CTDA), Floor Covering Installation Contractors Association (FCICA), Multilayer Flooring Association (MFA), Natural Stone Institute (NSI), North American Association of Floor Covering Distributors (NAFCD), North American Laminate Flooring Association (NALFA), National Institute of Certified Floorcoverings Inspectors (NICFI), National Tile Contractors Association (NTCA), Resilient Floor Covering Institute (RFCI), World Floor Covering Association (WFCA). For more information, visit www.fclcouncil.org.