Starnet Welcomes New Board Director
In 2018, CB Flooring celebrated 20 years in business, and the company purchases and installs just over $100 million in commercial flooring annually. The company is active in all segments of the commercial flooring market ranging from healthcare and education to corporate tenant spaces, government and multifamily. We connected with Chuck Bode, executive vice president of CB Flooring, and chairman of Starnet’s board of directors, to find out what’s in store for his term.
Simpson: Welcome and tell us about your role with Starnet.
Bode: My role is to provide leadership to the Starnet membership and to the cooperative. Our main objective is to preserve the role of the independent flooring contractor around North America in the middle of extreme industry change. So, it’s a band of brothers and sisters who have gotten together to jointly attack some of the issues that are facing our industry and then try to improve the professionalism of the floor covering industry.
Simpson: Where are you experiencing membership growth and how are you identifying potential new members?
Bode: When it started out, Starnet was viewed by most non-aligned contractors as a good gathering place for firms that want to network with others who are outside of their competitive area with the goal of becoming more professional. Our philosophy is bigger is not necessarily better, but we’re constantly on the lookout for quality companies that have a strong financial background and a proven industry track record. We have a lot of great candidates for growth and geographical limits are not necessarily an obstacle. We don’t really protect geographies as, for example, a Carpet One franchise would. If you’re a good quality candidate and you have the credentials that we’re seeking, you could certainly apply for membership in our organization.
Simpson: How is business trending this year?
Bode: Our business is very strong at the moment and 2018 is looking to be a great year. I think our members, along with a lot of other companies, are enjoying the current robust economy and Starnet is enjoying the increased revenue resulting from these market conditions. As I see it, there are two main challenges going forward. First, with the soft surface side of the commercial market, there is little or no growth overall due to the shift to hard surface. Second, we need to address in the long term the growth and financial health of Starnet. We know that the economy is mildly over heated at moment and a downturn is inevitable. When the music stops playing, we have to prepare our individual businesses and Starnet for that possibility.
Simpson: What are the concerns that keep Starnet members up at night?
Bode: First of all, from a hiring perspective overall, the current economy is a full employment economy. Our issues are not solely concerned with labor to install the products in the field. We are concerned about hiring at all levels—from estimators and project managers to installers. Finding qualified people these days is much more difficult because of the labor shortages. That’s a very significant problem for our members and certainly in the top three of their concerns. There are not a lot of young people coming into our industry, which is concerning, and I don’t think the apprenticeship programs are strong enough to attract new people to our industry.
There is a major league dynamic on exactly who’s going to install these products over the next 10 to 20 years. Our industry is not alone in confronting this issue; all construction related industries are facing the same challenges.
Tariffs are another serious problem. Our members work with a lot of general contractors since we deal with fixed-priced contracts for jobs that don’t go for an extended period of time. Based on the most recent manufacturer communications, the tariffs are in place at the 10% level now and will increase to 25% in January. This is a significant financial event for most of our members. As an organization, Starnet’s goal is to educate our membership on navigating materials which are sourced from China and identifying alternative solutions to minimize the impact of the tariffs.
Moisture in concrete is another issue. General contractors today are trying to build and deliver jobs faster than they ever before, particularly in healthcare settings. Spaces of that nature, such as operating rooms, have millions of dollars of equipment and you really cannot afford to have a floor failure. However, you have to manage that issue in the face of fast-track construction processes. Any professional contractor needs to deal with these matters well in advance of installing their product in order to avoid the possibility of future litigation. This has become a top five issue for flooring contractors and a significant new industry has emerged for products necessary for moisture mitigation.
Simpson: Starnet is doing more mill visits and encouraging more networking among members and vendors. How is this benefitting the group?
Bode: Fantastic. I like to say all politics are local. We like the quality of our membership meetings, but frankly, only the owners and the senior managers of most firms attend. The real project work occurs between the sales rep and our salespeople and project managers back at the office. So, the whole purpose of the joint mill trip initiative was to enable these people to bond closer together, to be more collaborative about the potential for business development, and to understand that through partnership a lot more can be accomplished. We have had several of these meetings which we call Organic Growth during which you try to grow the business from within the cooperative with the existing Preferred Vendor Partners. We have high hopes that, over time, sessions like this will pay off.
Simpson: What do we have to look forward to at the Starnet 2018 Fall Membership Meeting in San Antonio?
Bode: This year, our fall meeting is in San Antonio, Texas. Every year, we send out a survey to try to ascertain what aspects of the meeting were most useful. As a result of the survey from 2017, this year our entire meeting is dedicated to education and training. This area is a large priority for the membership. In San Antonio, the location is a resort venue just outside of the city, and we’re hoping to have a good crowd out there to do some bonding, some networking and, most importantly, to get smarter and more professional about the issues we are facing on a multitude of topics. When it is appropriate, we call on experts for the training. Or, when it makes sense, we call on our internal people who have experience in a particular subject matter. We are excited about this meeting and certainly look forward to seeing you there.
Simpson: What’s your outlook for 2019?
Bode: We’re moving forward in 2018 and the trends are very strong for 2019. I know most people out there probably have experienced an extremely busy summer, and construction is in high gear at the moment. I think the trend will continue through the balance of this year and into 2019. At some point in time, things are going to slow down and people should be prepared to deal with that when it occurs.