published Tuesday, March 1st, 2011

Carpet industry predicts recovery

Hubert Bryson replaces spools at Beaulieu of America, a carpet factory in Dalton, Ga.
Hubert Bryson replaces spools at Beaulieu of America, a carpet factory in Dalton, Ga.

Mohawk Industries will close its 50-year-old mill in East Dublin, Ga., in April as the carpet industry continues to shed its older commercial broadloom plants.

But Mohawk and its rivals still expect the carpet industry to rebound this year. Shaw Industries, the biggest carpet manufacturer, revealed over the weekend that it will invest $200 million in 2011 on carpet mill upgrades.

In his annual letter to shareholders, Berkshire Hathaway CEO Warren Buffett predicted the long-awaited housing recovery should come in the next year. Berkshire Hathaway bought the Dalton, Ga.-based Shaw Industries in 2000.

“A housing recovery will probably begin within a year or so,” Buffett told shareholders Saturday.

Buffett said his business will spend $200 million this year on plant and equipment at Shaw facilities in the United States, part of new investments Buffett is making in all of his housing related ventures.

“These businesses entered the recession strong and will exit it stronger,” he said.

Pre-tax profits from the housing-related manufacturers owned by Berkshire Hathaway earned $362 million last year, down from the record $1.3 billion in 2006 before the recent recession.

Mohawk Industries reported last week that its fourth quarter profits more than doubled the year-ago level, in part, due to staff and mill closings.

The Laurens County facility in Middle Georgia being closed by Mohawk was one of the original mills the company built when the company moved south from the Mohawk River Valley in the 1950s. The plant employed nearly 800 workers two years ago, although only 173 employees are still on staff.

Kemp Harr, publisher of Floor Focus magazine, said the closing reflects changing technology and trends, and doesn’t signal further declines in carpet shipments.

“The second half of 2011 could begin to show the housing recovery,” he said. “Right now, the sweet spot is the replacement market for commercial carpet.”

Jeff Loberbaum, the Chattanooga CEO of Mohawk Industries, said he expects markets to improve this year.

“Commercial remodeling is already growing, as business investment increases with higher economic growth,” he said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

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