The Fuse Commercial Flooring Alliance is fired up for business in 2024 despite an uncertain economy, geopolitical conditions, and weaker conditions in construction.
The Fuse annual conference, which was held March 2-5 in Phoenix, Arizona, was themed “Fuse on Fire” to celebrate the organization’s growth and momentum going into 2024. In 2023, Fuse was up 9% and added 21 new members. Nine new member firms have joined so far in 2024, bringing the total membership to 171, according to Fuse Executive Director Geoff Gordon.
“We’re figuring a budget this year of 5%, and the suppliers have told us they’re going to be flat or down,” Gordon said. “We think we’re going to be up.”
The construction sector will see weaker conditions this year and next, according to The American Institute of Architects (AIA) January Consensus Construction Forecast. It indicates that spending on nonresidential buildings will drop from the 20% increase seen in 2023 to 4% in 2024 and only 1% in 2025. The AIA sees opportunity in the education and healthcare sectors and anticipates growth in each.
Currently, Fuse members said they view government and healthcare as the two sectors that will weather the economic storm. For contractors in more rural areas where government and corporate projects are less prevalent, rural hospitals and subsidized housing are other potential areas of focus. Additionally, K-12 was mentioned as a healthy market to explore, and with the privatization of military and student housing, this is viewed as an overlooked opportunity.
Suppliers have a mixed outlook for the year.
“It’s really difficult to pinpoint exactly what’s going to happen,” said Mike Gallman, president, Mohawk Group. Gallman said the company forecasts modest growth for the year.
Kelley Fain, EVP of Shaw's Commercial Division, said the first two months in 2024 were much better than expected, and he is “optimistic about the balance of the year” thanks to opportunities in healthcare and education. Shaw plans to launch EcoWorx resilient on the 25th anniversary of its EcoWorx carpet tile at NeoCon 2024. It is PVC-free, uses recycled materials and is eligible for Shaw’s reclamation program.
Rusty Joyce, president, Tarkett Commercial, echoes Fain, concerning Tarkett’s first two months and the outlook for the remainder of the year. He adds that the firm’s carpet business is up.
Taylor Adhesives experienced growth in 2023, according to Ralph Grogan, commercial president, Meridian Adhesives Group, the parent company for Taylor Adhesives. He sees an easing in interest rates going forward.
“We see volatility,” said Schönox President and CEO Thomas Trissl. “It’s about how we adapt to the market, and how we go about it.” The firm plans to launch a new time-saving product for flooring contractors, Moisture Blocking Leveler, in Q3.
Engineered Floors’ Zack Adamson, vice president commercial division, reported that the commercial carpet industry was down 7% in Q4 2023, and the commercial LVT industry was down 18% in 2023. For Engineered Floors and J+J Flooring, raw material pricing was stable in 2023, however, it saw an increase in labor and utility costs. For 2024, Adamson reports that its initial orders are encouraging but predicts that the second half of the year will be questionable due to the election year and wars waging internationally. The company expects raw materials to remain relatively stable. Labor shortages will continue to be an issue.
“I feel like we will be challenged with some headwinds—geopolitical and raw materials uncertainty,” Adamson said. “But there are other avenues to go after in different segments. I think the folks who do that will be the most successful.”
Business Survival 101
Fuse conference keynote, James Benham, founder, JBKnowledge, and author of “Be Your Own VC,” shared the 10 business principles he covers in his book to help members weather the uncertainty in 2024. Here are three key takeaways:
1. Cash is King
Benham advises to keep cash on hand especially during an economic disruption. “To build a sustainable business, seek opportunities to generate recurring cash with low overhead,” Benham said.
2. Stay out of Debt
Benham told contractors to get out and stay out of debt by minimizing expenses and debt. “You have to stop lying to yourself about it," he said. "When you look at an asset that you acquire with debt, you have to calculate the cost of that debt.”
3. Build for Survival
Lastly, he points to survival as the number one rule of business. “It's not to generate cash or keep controls; it’s not profits; it's simply survival," he said. "We have to build our businesses to survive. When people talk about sustainability, I don't think about green environmental sustainability. I think about financial sustainability. You have to build an enterprise that has the ability to survive anything.”
