Published: March 13, 2008 10:54 pm            

Facing carpet slump, Shaw plans S.C. expansion

Dalton-based Shaw Industries will invest approximately $60 million to expand nylon carpet fiber manufacturing capability at its plant in Lexington County, S.C., despite a downturn in the carpet industry.

Shaw Industries spokesman Julius Shaw was out of town and unavailable for comment. Shaw Industries executive Hal Long could not immediately be reached for comment.

Dave Foster, an industry observer and host of the talk show “Floor Radio” on WBLJ 1230 AM, said Shaw Industries’ investment did not come as a surprise since the company is “looking beyond this initial slowdown.”

“It’s probably going to take them quite a while to get this whole operation up and running any way,” Foster said. “They are looking long term at this. Any sizable organization in this industry is probably doing things very similar to this, looking at what their needs are going to be down the road and how they can maximize their bottom line.”

The company’s expansion plans coincide with a “down cycle” in the floorcovering industry. Shaw Industries, a subsidiary of Omaha, Neb.-based Berkshire-Hathaway, is the world’s largest manufacturer of tufted broadloom carpets and has seen demand wane in recent months.

Shaw Industries president Randy Merritt said last week the housing industry slowdown, coupled with concerns of a recession, have hurt the floorcovering sector and carpet sales. The current “down cycle” has reached 18 months, he said.

Last year, carpet units sold were off 10 percent from 2006. Dollars from carpet sales were off 8 percent. And since 1991, when carpet had a 73 percent share of the floorcovering market, that share has dropped to 64 percent. Revenues at Shaw Industries fell from $5.83 billion in 2006 to $5.37 billion in 2007, an 8 percent drop.

The industry slump has affected jobs at Shaw Industries. Last fall, the company shut down a spun nylon yarn plant in Fitzgerald resulting in 550 job cuts and laid off approximately 40 employees from its Andalusia, Ala., polypropylene and nylon extrusion plant.

Shaw Industries plans to renovate a vacant part of the former AlliedSignal/Honeywell plant in Lexington County to produce nylon polymer chips used to make carpet yarn. The company bought the plant two years ago. During the next five years, the company expects to create 350 jobs as a result of the investment. The company currently employs more than 400 people at its Lexington facility.

Richard Stuckey, a regional director for Shaw Industries, said in a press release the company has more than 1,500 employees in South Carolina manufacturing operations “that produce nylon carpet fibers to support our future growth.”

“We will continue to look for opportunities to grow our business investment in South Carolina to meet our customers’ needs,” Stuckey said in the press release.

Shaw Industries has 30,000 total workers including more than 10,000 employees in Murray and Whitfield counties. The company has 16 manufacturing plants in the two counties, and several warehouses and office buildings.

        

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