DALTON, Ga. — The housing slump that has slowed Georgia’s overall economic growth this year is pulling the rug out from the state’s most northern metropolitan area.
As the self-proclaimed “carpet capital,” Dalton, Ga., is being hit harder by the economic slowdown than any of Georgia’s 13 other metropolitan cities, according to state employment figures released last week.
In January, metro Dalton lost 1,400 jobs and the jobless rate jumped to 5.6 percent — the highest rate since February 1997.
Dalton Mayor David Pennington, who took office in January, said this year could be the worst in decades for Northwest Georgia, where nearly 85 percent of America’s carpet is produced.
“Business is definitely slowing down, and I’m afraid it’s going to get worse before it gets better,” Mr. Pennington said. “There are rental vacancy signs all over town that we didn’t see a couple of years ago.”
In its 2008 report released last month, Georgia State University’s Economic Forecasting Center predicts that metropolitan Dalton will be the only Georgia metro area to suffer a net decline in jobs in 2008 and an economic rebound next year still won’t make up for this year’s job losses.
“Since the textile industry has been ailing in Dalton, depicted by two years of consistent declines in manufacturing, we forecast a 0.3 percent decline in employment for 2008 and 0.2 percent growth in 2009,” Georgia State economist Rajeev Dhawan said.
Even for those who don’t lose their jobs, times are bad with shorter work shifts and less take home pay for many, Mr. Pennington said.
“Dalton is really an overtime town with a lot of people working extra shifts during good times,” he said. “But at the moment, a lot of people are working only three or four days a week.”
Truck driver Jimmy Adams, 42, hauls carpet for Mohawk Industries, one of the biggest carpet makers. Business typically slows during the winter, he said, but his work has never been this scarce. Mr. Adams, a divorced father of two, said he can support himself on 3,000 miles a week.
Recently, he has driven as few as 1,400 miles a week. “That pays my child support and my insurance,” he said.
Still, Mr. Adams said, “Right now, you’d be crazy to quit your job.”
Jacquelyn Bonds, 52, started work operating a tufting machine at Mohawk in August and said the company let her go her by September. Since then, she’s been unemployed and searching for a job “anywhere.”
Mohawk Industries announced last month it will close its 158-employee tufting plant in Armuchee, Ga., and its 68-employee finishing plant in Dalton. The latest job cuts come after the biggest U.S. floor covering companies — Mohawk, Shaw Industries and Beaulieu Carpets — collectively laid off nearly 1,000 employees last fall at five plants in Alabama and Georgia.
Mohawk President Jeff Lorberbaum said he expects sluggish sales through the first quarter but improving sales this spring.
“Material costs are rising even though the industry volumes are falling,” Mr. Lorberbaum said in Mohawk’s latest quarterly earnings announcement. “We have reduced production in the plants in the first quarter due to lower consumer demand and both our customers and Mohawk not building inventories as we have in prior years. With the current industry conditions, we are reducing our infrastructure costs further and increasing prices which will lag the rising costs.”
Shaw Industries, the world’s biggest carpet producer, reported last week an 8 percent drop in sales and a 26 percent decline in pre-tax income last year. In the annual report released by Shaw Industries’ parent firm, Berkshire Hathaway, the carpet giant said it earned $436 million on sales of nearly $5.4 billion in 2007, down from the $594 million of operating income from more than $5.8 billion in sales during 2006.
In the annual report to shareholders, Berkshire Hathaway Chairman Warren Buffett said the carpet, brick and real estate operations were the hardest hit businesses in his portfolio. But Mr. Buffett said “setbacks are minor and temporary.”
In a separate report issued last month, Dixie Group CEO Dan Frierson also said carpet industry sales declined 8 percent last year and could dip further in 2008.
“The severe weakness in the housing industry and tough credit conditions will likely continue to have an impact on demand for residential carpet products throughout this year,” Mr. Frierson said.
The carpet slowdown is already ripping through Dalton’s economy.
James Etheridge, a 60-year-old handyman, said he is being pinched both by a drop in work and a jump in costs for gasoline and utilities. As a building helper, he said his wages have dropped in the past year.
“We’re not getting as much work now,” he said. “I even tried a flea market sale, but I couldn’t sell much. Everybody seems worried about what tomorrow will bring, so they are hanging on to their money. People are looking, but they are not buying.”