Beaulieu of America told employees Friday that it would close its Dalton, Ga.-based Riverbend plant by the end of 2011, a move that may cost as many as 170 jobs.
Just days before, Beaulieu had completed a refinancing deal with lenders on debt of $230 million.
"We are disappointed with having to make this decision," said Ralph Boe, president and CEO of Beaulieu. "But it is necessary for Beaulieu to remain strong and operationally efficient."
Beaulieu has traditionally attempted to avoid direct layoffs through furloughs and pay cuts, including cuts to executive pay.
Beaulieu has operated its Riverbend plant, which produces tufted and finished carpet, since 1988.
The closure was the latest blow to Dalton's struggling carpet industry, which has suffered a series of shutdown announcements in recent weeks, including Shaw Industries' Riverbend facility.
The latest cuts come from the business heart of Dalton, which calls itself the world's carpet capital, at plants that have long been major centers of production for the tufters and at locations that are just a stone's throw away from carpet companies' corporate offices.
That's worrisome, said David Pennington, mayor of Dalton.
"These are the first ones that are inside Dalton," Pennington said. "The carpet mills are the largest taxpayers in the city of Dalton and largest users of energy from Dalton Utilities."
Of late, Dalton officials have begun to consider life after carpet and are studying ways of attracting other industries to the city, using a nickel sales tax to help offset utility costs to new business.
Overall, carpetmakers have shed thousands of jobs since 2008 as builders slowed the pace of home construction amid record foreclosures and high unemployment.
"While regrettable, closing Riverbend will allow us to adjust our capacity to reduced sales levels," Boe said.
Since Oct. 10, there have been 634 carpet job cuts announced nationwide, including an additional 194 jobs cut at a Shaw Industries plant in South Carolina, as executives budget for what is expected to be another flat year in 2012.
Initial estimates called for slightly better results in the second half of 2011 after spring sales results ticked upward, said Kemp Harr, publisher of Floor Focus magazine.
"We thought it would recover in '11 but it hasn't," said Harr.
The recovery didn't take hold, however, and fears of a double-dip recession set in after the economy failed to improve over the course of the year. Shaw Industries' owner, Warren Buffett, predicted that housing may not recover until 2014, according to Dalton executives who spoke with him.
Both Beaulieu and Shaw plan to transfer affected employees to other plants, where possible, and pick up production at other plants, the companies said.