Shaw says carpet outlook improving

The carpet and flooring industry is typically one of the leading economic indicators pointing to a recession or recovery, and the founder and former chief executive of Shaw Industries said things are looking up.

Bob Shaw, who founded the Dalton, Ga.-based flooring manufacturer in 1960, spoke Thursday to the Chattanooga Rotary Club and expressed his feelings about the current economy.

"The carpet industry always leads into a recession and is always the first to lead us out," he said. "I am convinced we bottomed out in April."

The industry is down about 32 percent from its peak, but Mr. Shaw said he expects the economy will be stronger and unemployment lower by the second quarter of next year.

"Everybody wants you to believe that the carpet industry is all new construction," he said, noting that new construction makes up about 22 percent of the residential flooring industry. "Carpet replacement is the biggest part of our business."

Mr. Shaw said consumer confidence is the biggest factor affecting the flooring industry, and with confidence increasing, people will soon begin replacing their existing flooring.

"Our business is going to pick up," he said. "Peak to valley we are off 32 percent. We are in the trough right now."

Kemp Harr, a Rotary member and publisher of Floor Focus Magazine, said he predicts the residential market will soon begin to pick up, but he doesn't think commercial carpeting will improve before next year.

"We're not going to see any recovery on the commercial side until at least the second quarter of next year."

He said sales figures for May are flat.

"At least its not down," Mr. Harr said.

Lee Culpepper, an energy procurement engineer for Shaw industries, was a guest at the meeting.

He agrees that things appear to be getting better.

"I'm seeing it with what I do with the company as well," Mr. Culpepper said. "It appears we have hit bottom and are headed back up."

Mr. Shaw told Rotarians that he launched Shaw industries with $150,000 in 1960.

Most of the company was bought in 2002 by billionaire Warren Buffett's Berkshire Hathaway company. Mr. Buffett later purchased the rest of Shaw.

"Warren is a tough negotiator," Mr. Shaw said. "When I was with him I learned a tremendous amount."