Orlando, Fla.—Featuring a Caribbean Island theme throughout, hundreds of industry professionals from across the country helped the National Association of Floor Covering Distributors (NAFCD) celebrate its 31st Annual Meeting in style at the Hilton in the Walt Disney World Resort here from Sept. 21 to 24. Distributors, manufacturers and others met to discuss the “Challenges, Choices, Changes” currently facing the industry, and were provided with some of the best speakers, seminars and educational events the industry has to offer in order to help them operate their businesses more efficiently.

The economy, the changing lines of distribution and how best to serve the customer all turned out to be hot topics at the conference. “Right now, one of our main challenges is the current state of the economy, no doubt about it,” said David Rowe of Denver Hardwood Co. in Denver. “We’ve come off a six- or seven-year period where the economy has been growing very vigorously. Even some of the mid to lower performers in our business were successful because of the demand for products and services. As that dynamic has changed, we’ve had to shift gears from doing everything we could to service the business in front of us to taking advantage of every single opportunity out there. “In some of the markets we serve, with the economy not being as vibrant as it had been we are all chasing a little smaller pie,” he explained. “So the competitive nature of the business has grown even more intense over the last several months, perhaps even before 9/11.” “At this point, with the economy what it is, cash management has become a major issue,” said Scott Hendricks of Central Distributors in Des Moines, Iowa. “Trying to keep the customers paying their bill is a challenge at times. They’re stressed. Another is keeping the manufacturers happy and supplying them with funds for the materials we are buying.”

Hendricks, NAFCD’s newly elected secretary, noted, aside from the economy, another major focus for his company is to differentiate both itself and its product lines from the competition. “For instance, sheet vinyl displays: There are a number of lines, a huge number of samples available, and, for the most part, the displays look the same. While product lines look the same, the key is differentiating your product from everyone else.” “Most distributors today are feeling the effects of a pretty tough economy and a lot of uncertainty in the country,” said Mike Klingele of Diamond W. Floor Covering in Los Angeles. “However, we see that there are many manufacturers who realize the need for distribution. I believe wholesalers are stronger than ever and are needed by the mills more than ever.”

At a press conference held on the event’s second day, NAFCD’s board of directors gathered to voice their concerns about the industry and its future, talk about how the industry is both changing and staying the same and in what ways distributors are learning to be more successful in the marketplace. Arden Kelley, the organization’s outgoing president, told FCNews, “We face many of the same challenges we have always faced, such as trying to do more with less, while facing higher expectations. We look at other industries and we still don’t do quite the EDI level you see in some other places. I think that is coming. I believe most of us have made dramatic differences in financial foundations and operating costs of our companies.” “Change is inevitable and I think we are all learning to deal with it better,” said, Hoy Lanning of CMH Flooring Products in Wadesboro, N.C., “but we are also preparing for change ahead of time and we are looking outside the flooring community for some ideas as well.” “I think we are looking for some different formulas too,” said Robert Weiss of All Tile in Elk Grove Village, Ill.

“In distribution, we used to think that one suit fit everybody. In my business, we don’t do anything except commercial hard surface. We’re never going to be a giant logistical player; we are operating a business where there is a lot of technical information. “Many distributors, even a lot of the full-line players,” he added, “are now finding an edge in something that is giving them that little extra margin, that little extra niche that takes them through. We are beginning to realize there is more than one market out there. There are big box operations, commercial firms and builders and each one of them requires a little different attention.” “In looking at our business the past couple years,” said Rowe, “we would consistently shy away from lower margin business because it just doesn’t make your ratios look good. You are always thinking of gross margin percent and you really don’t want to take on too many of these things. On the other hand, you look at the gross profit dollars it is going to bring to the bottom line and what is your true incremental cost of taking on that business. More and more over the years we’ve taken that kind of business on, quite frankly, without a lot of added cost.

‘What we’ve tried to do is,” he continued, “stratify customers on the basis of how needy they are, how much handholding we have to do with them. We all have some customers we hope the rest of our customers were like—the ones who know what they are doing with the product, they know how much they want and need on a consistent basis, they are willing to look at new products and they order on a timely basis. With those type of folks, you can develop a relationship and an understanding where you don’t have to hold their hand everyday.” “The NAFCD has helped us make the changes to do business in an atmosphere that is very different than it was 10 years ago or even five years ago, and sometimes I think even six months ago,” said Hendricks. “As a group, I think distributors are incredibly more flexible today than we used to be.”

“We are also finding that we have to be smarter and better at our credit policies,” said Dennis Mohn of Design Distributing in Ashland, Va., “because if you are going to operate on lower margins, you have to be careful how you are going to do your credit. If the customer isn’t going to pay you the right way there is just no reason to offer all the benefits of your company too. “In everything we do there is constant change,” he added. “Every facet, whether it’s how you configure your warehouse or your delivery schedule or whatever it is, you are always trying to adjust to stay ahead of the curve.”

Following one of the conference’s many seminars, Mary Kerr, organizational development manager for Torlys, said, “Being part of a small, entrepreneurial growing company, the biggest challenge is getting a clear plan and communicating that to our new associates because, while they are learning the flooring business, at the same time, they are eager to learn how they are supposed to contribute. The seminars here have been very helpful as far as laying out expectations to your employees and measuring them. “The challenge I am working on right now is applying some big business mechanisms into a small, entrepreneurial business,” she added. Kerr, who is fairly new to flooring, also noted how it is transforming into a fashion industry. “From what I have seen and heard so far, people are perceiving flooring a little bit differently now than in the past. The flooring business is turning into a fashion industry. The products that are coming along now are incredibly different than what was around 10 years ago. So that is a big change.”

Ed Korczak, executive director of the National Wood Flooring Association ( NWFA) agreed with Kerr and noted that keeping up with all the new products available in the industry is something both manufacturers and distributors must pay close attention to in order to succeed. “There are so many more product types coming out that the distributors have to be responsible for,” he said. “And there are more lines of every product. In the past, you had five or 10 lines in either ceramic tile or vinyl, now you’ve got 15 or 20, so it is really difficult to keep track of all the mixes you have to carry in order to satisfy your customer. There are just so many new things coming out every day. “In wood flooring alone, seven or eight years ago we had about 30 species we were using, now there are around 50,” he added. “and there are more manufacturers, more importers and more exporters as well. How do you keep track of it all for your customer? It used to be 85% of the business was carpet with some of that being nylon. Now there are different woods, laminates, ceramic tiles and vinyls. There is something new coming down the road all the time.”

The conference also featured an update on NAFCD’s Road Map and Tool Kit, a collaborative study by NAFCD and NW- FA designed to help distributor personnel run a diagnostic check of their business in order to find out its weaknesses. “Employees want to know they are doing a good job. They want guidance and respect. It’s our job to provide them with a road map and teach them to help themselves,” Rick Johnson of the Indian River Consulting Group (IRCG) told the attendees. IRCG worked with NAFCD and NWFA to help put the Road Map study together. “The more prepared you are, the better you can handle those twists in the road. If your employees are successful, we’ll be too.”

“NAFCD has always done a good job getting good speakers who say relevent things,” said Klingele. “If you come to the events and get just a couple tips out of them, it’s worth it. For example, I attended the Road Map seminar and believe they are ‘right on’ with it.” Another speaker whose message attendees felt was “right on” was Matthew Eversmann, the U.S. Army Sergeant immortalized in the film, “Black Hawk Down.” In telling the group how his battle experiences in Somalia were depicted in the film, Eversmann said, “The producers did a very good job on the theme of commitment, of staying for the right cause for the right reasons no matter what the odds are; not turning and running because it’s easier to do than staying and fighting.” Many of those who attended this presentation, which took place on the conference’s final day, left the event feeling both inspired and thankful that the battlefield they deal with is not nearly as hostile in comparison. Next year’s NAFCD conference will take place Oct. 17 to 19 at The Westin Harbour Castle Hotel in Toronto, Canada.