For this month’s Director’s Perspective, we sat down with Jon Namba to find out his perspective on the state of the installation industry. How is the skilled labor shortage affecting the bottom line for contractors? What are some steps that can be taken to keep business booming even with the shortage? How can a contractor differentiate themselves from their competition?
How is the skilled labor shortage affecting your business and the industry overall?
A: With my business, it limits us to the amount of work we can do. There’s more opportunity for installations out there, but not having qualified installers or skilled labor backlogs our calendar. Right now we’re about two months out in our schedule—it’s at a fever pitch.
Locally what we’re seeing right now is that other businesses are trying to recruit employees or subcontractors away by enticing them with more money or cash under the table. Basically, offering incentives to get them to jump ship. We’ve had a couple of our contractors tell us they’re down to half their crew because everyone is trying to entice [their installers] away with more money.
Is there any way to combat that?
A: You have your employees and contractors who are going to be loyal to you. We have some who have been with us for years, and we know they’re not going to jump ship. We pay a fair price, typically above market price, for our subcontractors. So usually they’re willing to work with us.
Guys who maybe aren’t as top-tier can be persuaded to move over to another company. We just keep telling them, guys, the grass isn’t always greener on the other side. And as long as you’re being fair, there’s not a lot you can do if they decide to leave you. You wish them well and always leave that open door for them to come back.
You’re going to have a certain amount of fallout. Right now the economy is robust throughout the United States. Not only in flooring, but just the construction trades in general.
Is it in some ways a good thing that contractors can be paid more what they’re worth as a professional?
A: It’s definitely time for contractors to raise their rates. Everything else is going up, and the wages in the flooring industry do not match the cost of living. I wrote a blog about this recently [Editor’s note: See the blog at www.fcimag.com/blogs/19-what-would-namba-do/post/94222-installers-raise-your-rates]. It’s time for contractors to realize they don’t have to be afraid to ask for more money. To run a business legitimately, you have to make a profit.
With the limited number of people who are qualified, professional installers, is there a long-term solution to getting those numbers up?
A: We kind of shot ourselves in the foot when we tried to steer kids into technology instead of working with their hands. We took away woodworking classes and took away metal shop. There was no opportunity for high school kids to get introduced to the trades. We need to go back and reintroduce this, but it’s going to take years and years to do that.
What can be done in the meantime?
A: You’ve got your national associations that are trying to make things happen. Even the National Association of Home Builders (NAHB) is creating a program for bringing in new blood. In the meantime, we’re going to have to do this on our own on a regional level. On a national level, it’s going to take years and years as far as a recruitment program goes.
We hear again and again that a common obstacle to quality flooring installation is big box stores. What are your thoughts on that?
A: Big box stores know how to market their product. When you see their free labor and free installation offers, you know there’s a cost to that, but they know how to market it. Do they have the most premier installers? No. But they are big, and they definitely dominate a lot of the installations and products going out the door.
You can’t compete against them on price. However, there are many small businesses that say they would love to be next to a big box store, because they can provide the quality and service that big boxes can’t. That’s one way people are [differentiating themselves and] surviving.
Do you have any thoughts on legislation that categorizes independent contractors as employees?
A: That’s a tough one. The retailers and dealers who typically pay subcontractors don’t have all the issues and the cost of having an employee. They realize [upon taking on the subcontractor as an employee], “Wow, I’ve got to raise my rates.” In that sense, it’s a good thing; but if they’re not prepared, it’s a negative because they’re not used to paying that much money. The smart ones realize that to have these employees and retain these employees, they will be spending more money.
In our business, we pay a lot out for our employees, but we also have control over those installers. We can provide the training. We can keep them at a 40-hour week.
I always enjoy talking to you about these industry issues. When you see an obstacle, you turn it into an opportunity so it becomes a competitive advantage. How can other business owners adapt to this type of perspective?
A: You’ve got to treat [your business as] your own brand. Think outside the box and try new things. Some things work and some things don’t. Is everything we do a success? Heck no. But you always have to try to do something a little bit different.
Also, don’t look at the contractors and businesses around the area as your competition. We’re all trying to make a living. You don’t have to hate your competition or belittle them. Work with them. I lean on them, and they lean on me.
What do you think this industry excels at? What is it about flooring that makes it a rewarding career for some?
A: What we create is art. When you’re dealing with that electrician or plumber, their work is hidden behind the walls. What we do is display ours out in the open for the world to see. When a contractor goes in and does a beautiful job on a patterned piece of carpet, a tile installation or an inlay on a hardwood floor, they have created a piece of art. You have some stunning designs out there.
It’s the pride factor—that passion and pride that you’re putting into the job every day. That’s what drives a lot of the installers out there. They can say, “Hey, I did that job. That’s my work.”