MultiFamily Solutions members attend the National Apartment Association trade show.

FloorExpo, the nation’s largest residential flooring contractor organization, continues to grow despite a less-than-stellar climate. The CCA Global Partners subsidiary now boasts an annual sales volume that exceeds $2.5 billion through its two divisions: Home Solutions and MultiFamily Solutions. Members of both groups are large, high-volume contractors with average annual revenues of more than $20 million. Home Solutions’ 50 members serve the single-family production-home builder from more than 200 locations, while MultiFamily Solutions’ 40 members target real estate investment trusts (REITs), apartment owners and property managers in 70 markets. FloorExpo CEO David Gheesling recently sat down with FCNews to talk a little about each group and how they are positioned for the future.

FCNews: Tell me a little about Home Solutions.

Gheesling: Today, Home Solutions installs one out of every four new, single-family homes built in this country. Seven of the top 10 largest independent flooring contractors are a part of our organization, so Home Solutions is truly the place to be if you’re a contractor focused on the flooring industry. Our members include top companies like Interior Specialists, Coleman Floor Co., Floors Inc., Georgia Floors and Home Valu. We tend to be thought of as a place for only the largest contractors. However, we don’t just focus on the size of the company; instead, we look at the people and their commitment to the builder market. We have some members who are nowhere near as large as the biggest but are truly the key players in their marketplaces. Most, of course, also have a significant commitment to the design center side of the business as well.

FCNews: Speaking of design centers, I understand that is a big part of your members’ business. What tools do you offer to support the design center?

Gheesling: One tool is Home Solutions Interactive, our online software system for supporting the marketing and management of a design center. We have more members utilizing the system than ever before. Greg Kenith, owner of Flooring Design Group, a member in Atlanta, is having terrific success with the tool. He tells me that they are experiencing higher upgrades and lower claims as a result of running all their homebuyers through the software.

In addition to Home Solutions Interactive (HSI), we also have our Homeowner Education DVD product. This product accomplishes the critical goal of setting realistic expectations about the products for the homebuyer. We explain, for example, that hardwood can be scratched and ceramic tile can be cold to the touch… that carpet seams can be visible. By communicating this disclosure information in a fun, attractive way with high production values, we positively impact overall homebuyer satisfaction rates. Setting the right expectation is the key to a happy customer.

FCNews: What about MultiFamily Solutions?

Gheesling: These members are the who’s who of the multifamily segment. Our goal is to add value to our members’ business and, with MultiFamily Solutions we are doing this in many ways. For me, one of the most exciting initiatives is the MFS National Relationship program. Through this program, we are literally creating new, incremental business for our members.

FCNews: Are you still adding new members?

Gheesling: Yes, where it makes sense for us and the member. We are open to adding new members who share our values and are strongly committed to either the home building or apartment segment. In fact, we have added several quality members to both groups in recent weeks. The bottom line is that we remain very exclusive while growing with the right kind of new member.

FCNews: The once red-hot builder market has cooled off significantly. What has caused the slowdown?

Gheesling: A combination of factors has brought us to this place: Housing prices outpacing household income, overbuilding, aggressive lending practices, problems with the sub-prime lending market and high inventory levels. These factors and others, which vary dramatically from market to market, are working in concert to create challenging market conditions.

FCNews: You say it is challenging. What does that mean in terms of numbers?

Gheesling: Nationally, it looks like we’ll be off on starts somewhere around 20%. But it’s important to remember that the builder business is really a regional business. In some of the hardest hit markets, such as Southern California and Florida, you see pullbacks that exceed that number. In other markets, such as Texas and the Mid-Atlantic, we can already see signs of recovery. Controlling price erosion and selling off existing inventory are what the major builders are focused on right now.

FCNews: What is your forecast for the second half of the year?

Gheesling: We think nationally, the second half will continue to be soft. It is going to take some time to sell off the excess inventory that is out there. We see 2008 being a better year than 2007.

FCNews: What is your long-term outlook?

Gheesling: Our mid- and long-term outlook is very positive. We believe the American dream is, and will continue to be, to own your own home. According to the Harvard Center for Joint Housing Studies, there will be more households put in place in the coming decade than the decade past. At FloorExpo, we believe we’re in a momentary trough in the business cycle, and the long-term outlook for the building segment, based on demographics, is extremely positive. We also have a strong presence in the multifamily business, and that segment is also positioned for long-term growth.

FCNews: What are the goals for each group?

Gheesling: Let’s start with MultiFamily Solutions. In the near term, we are striving to grow our exclusive vinyl and carpet product lines. We want to be the highest-quality installation service in the industry. We are also building our exclusive best practices workshops to allow members to share business strategies that work. Another area that we are currently working on is technology for this segment.

Perhaps, our biggest long-term goal is to have exclusive preferred supplier relationships with the largest multifamily customers. It is a big goal, but we eventually want to do all the work for the top 50 REITs and property managers.

The Home Solutions group is constantly working on bringing the strongest contracting companies together and making them better. It is also about to launch new marketing technology systems that will compliment our existing assets, like Home Solution Interactive and the Homebuyer Experience DVD. Another focus for us right now is building our new Design Community. We are getting much closer to this group and are committed to bringing them programs that help them drive upgrade business. One such program is our new DISCover Your Home Buyer program. DISC (which stands for dominant, inspiring, supportive, cautious) is a very clever way of identifying and working with different personality types. As we look down the road, our goal is to grow our business and members’ businesses to the point where Home Solutions becomes the largest and finest finishing contractor network that includes cabinets, countertops and all other interior finish products.

Training is a big focus for both groups. For instance, at this year’s national conference we will be rolling out a comprehensive performance portfolio. This program will be like an “extreme makeover” for members’ businesses. The program includes strategies and tools for winning the war for talent, maximizing the value of your business, building long lasting relationships with your customers, creating high-performance teams and managing a design-focused team.

FCNews: What do you see as the biggest challenges facing FloorExpo? What keeps you up at night?

Gheesling: I am concerned by some customer efforts to directly source products. We need to better communicate the full value that our member contractors provide. There is no doubt in my mind we can deliver better service and value than can be achieved through direct sourcing. We just need to hammer that story home and then back it up with action.