published Tuesday, July 27th, 2010

Woven together

The U.S. and Chinese carpet industries soon may face both increased competition and cooperation, as Chinese carpet mills move to institute U.S. standards, carpet industry officials say.

The remaining parts, electronics, textile and furniture manufacturers in the U.S. collectively cringe at the mention of China, the country where many former U.S. jobs now are located because of cheaper labor and government incentives there, according to a report by the Economic Policy Institute.

But the carpet industry, based primarily in Dalton, Ga., has remained relatively insulated from the trend of manufacturing leaving the country for developing nations, according to Dan Frierson, CEO and chairman of the Dixie Group.

“Labor costs are only about 6 or 8 percent of the selling price of carpet, therefore low-cost labor, which China has an abundance of, really doesn’t help because freight could easily eat up that difference,” Mr. Frierson said.

In addition, domestic manufacturers produce half of the carpet made in the world, giving the U.S. economies of scale and technological advantages, he added.

In a sign that the Chinese want to start playing on the same field as their U.S. counterparts, the Chinese Carpet Industry Association has been working with executives from the Dalton-based Carpet and Rug Institute on enacting uniform environmental and quality standards, according to Frank Hurd, vice president and chief operating officer at CRI.

Mr. Hurd, who also is head of government relations at CRI, took a trip in June to “strengthen CRI’s current relationships with CCIA and its members,” and discuss Chinese use of the Green Label Plus environmental standard.

  • photo
    Staff File Photo by Allison Kwesell/Chattanooga Times Free Press Carpet is rolled at Beaulieu of America, a carpet factory in Dalton, Ga. The company ships carpet all over the United States and abroad.

China currently is the largest user of GLP outside the U.S., with 21 carpet mills participating, according to Mr. Hurd.

“As with anybody, you want to make sure you have a good relationship with our Green Label Plus customers,” Mr. Hurd said.

He spent several days with the chairwoman of the CCIA, Madame Zhang, spending time as her honored guest with her entire family, he said.

“There’s not a much better way to get to know people than to spend that kind of time with them,” Mr. Hurd added.

Even though the cross-Pacific relationships may be warming, where there’s money to be made, competition is never far behind, according to John Davis, vice president for international sales at Shaw Industries.

Shaw and other U.S. manufacturers export some nonwoven carpet to China, and China in turn exports a significant amount of woven, or Oriental rugs, to the U.S.

While the cost of shipping heavy carpet precludes the kind of outsourcing that has decimated other industries, that hasn’t stopped U.S. manufacturers from opening factories in China to compete in the Chinese domestic market, and won’t stop a Chinese company from buying a U.S. firm outright to compete here, Mr. Davis said.

“Frankly, that’s probably how China’s going to come into the U.S.,” he said. “But there’s so much opportunity in Asia that we can build our own mills over there, and bring over our technology and experience as a matter of product differentiation.”

Because of what he calls the “mature” U.S. and European markets, Asian countries with quickly growing middle classes like China and India are the only remaining frontiers in the carpet world, and achieving dominance will not be an easy task for either side.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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