Article Number : 5010 |
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| Date | 10/27/2009 9:18:59 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=5010 |
| Abstract | By Steven Feldman AUSTIN, TEX.—FEI Group, the organization formerly known as Floor Expo, is expanding. The formation of a kitchen and bath cabinetry group, known as KBX, may be the group’s first foray outside... |
| Article | By Steven Feldman AUSTIN, TEX.—FEI Group, the organization formerly known as Floor Expo, is expanding. The formation of a kitchen and bath cabinetry group, known as KBX, may be the group’s first foray outside the flooring arena, but almost assuredly won’t be its last. The strategy not only necessitates the name change, but also makes FEI members more important to home builders. KBX is currently comprised of 24 of the country’s top installing distributors of cabinetry and collectively operate in 44 markets. According to Jay Smith, FEI president, the move was a natural for the group. “Our customer today is buying flooring, cabinetry and countertops, so it’s about being more important to that customer, whether he be a property manager, builder or remodeler.” That is something that was echoed by Frank Ready, executive vice president of Armstrong World Industries, which has a cabinetry business of its own. “Cabinets will give you more relevance to the building community,” he said, adding that KBX members will benefit from being part of one the most professional organizations in the industry. Dave Gheesling, CEO, noted that the formation of KBX takes advantage of the backbone of contracting businesses. “We see a wonderful opportunity to do cross selling on national, regional and local levels.” Although FEI’s Home Solutions and Multi-Family Solutions members are residential flooring contractors, Smith said it would be wrong to assume FEI is strictly in the flooring business. “We’re in the group assimilation and management business so there are a lot of things we can do of value for other segments.” In fact, FEI is looking to move into even more arenas going forward. Paint could be one possibility. As for KBX, FEI will look to expand that division by seeking out the top players in their respective markets. Kathy Turner, FEI vice president, heads up the group. State of multi-family While FEI’s Multi-Family Solutions members may have fared better in recent years than their Home Solutions counterparts, this business has now become exceptionally challenging. Vacancies in the multi-family segment have reached a 23-year high, according to Graham Howerton, vice president. National occupancy currently sits below 90%. “Right now it’s taking 60 days on average to rent a vacant apartment,” he said. Howerton pointed to unemployment as the chief culprit, and the consensus is that it is almost certain to get worse before it begins to get better, probably in the second or third quarter of 2010. “As unemployment rises, vacancies rise,” he said. “We need job growth to fuel the segment. That is the indicator most closely tied to this sector.” Once upon a time the prevailing thought was that foreclosures and the tightening of credit would be good for the rental market. Now the correlation is not as strong. As young adults graduate college, they are increasingly moving back home be-cause of the lack of employment opportunities. People are also more frequently cohabitating with friends as opposed to renting their own apartments, again, putting stress on the rental market. It is against this backdrop of high vacancy rates that property managers are tightening their budgets and spending less money to turn around a unit and make it available to rent. “Maybe the flooring will be cleaned instead of replaced,” Howerton said. “The volume of flooring we are installing in these units is down considerably.” He said opinions vary on when the market will turn: 2011, 2012 or beyond. “If we are prepared and have right-sized our businesses, when it happens doesn’t really matter. There will be opportunity like pent-up demand. At some point those properties will need to be freshened up. They will need new flooring, or the apartments won’t be able to be rented. What matters is that we are prepared for when this happens.” So what is FEI doing to help its 47 Multi-Family Solutions members? For starters, it is working on national programs with management companies that solidify current relationships and create new relationships on a local level. “Basically, we are bringing new business locally through a national selling approach,” Howerton said. FEI is also helping its members by reaching outside the apartment industry and finding new segments in which to compete, such as senior living. “This has been going on for the last year,” he said. “It’s been working out very well. We now have several national programs with senior living management companies. It’s about broadening our customer base and diversifying business so members are not dependent on one particular segment.” The group is attractive to these companies because it does business in about 100 markets nationally. “They may not know how to sell into the segment,” Smith said. “That’s the role we play for them. We show what’s important and how to compete and win.” As for specific products, the property management segment has always lent itself to carpet and vinyl. Some markets are seeing less carpet and more vinyl to extend the life of the floor, Howerton said. When it comes to carpet, it’s primarily 18- to 20-oz. nylon, PET and PTT at a $6 to $8 a yard price point, product only. On the vinyl side, it’s been loose lay sheet and floating and glue down LVT. “That’s 95% of the business these days.” |