Dalton struggles to recover jobs after recession

Chattanooga should top pre-recession employment peak by end of 2016

Dalton Mayor David Pennington stands overlooking Pentz Street in downtown Dalton, Ga., in an April 1, 2013 photo. Pennington announced Tuesday, July 9, 2013 that he will challenge Georgia Gov. Nathan Deal in the Republican primary. (AP Photo/The Daily Citizen, Misty Watson)

For 40 years, the Dalton area rode the workhorse of the carpet industry, and we don't want to give that up - just add on to it." -

Hardest hit metro areas

Hardest hit metro areas Among 381 metropolitan cities in America, those that suffered the largest percentage of jobs lost during the Great Recession were: 1. Elkhart-Goshen, Ind., down 26.8 percent 2. Kokomo, Ind., down 22.3 percent 3. Dalton, Ga., down 20.6 percent 4. Naples, Fla., down 17.5 percent 5. Cape Coral-Fort Myers, Fla., down 16.3 percent

Job losses in the region

› Nashville lost 50,800 jobs, or 6.4 percent of its employment, but returned to its 2008 peak by the first quarter of 2012› Cleveland, Tenn., lost 8,800 jobs, or 3.7 percent of its employment, but returned to its 2007 peak by the second quarter of 2012.› Atlanta lost 204,600 jobs, or 8.3 percent of its employment, but returned to its 2007 peak by the second quarter of 2014.› Knoxville lost 20,400 jobs, or 5.4 percent of its employment, but returned to its 2008 peak by the second quarter of 2014.› Huntsville, Ala., lost 7,200 jobs, or 3.4 percent of its employment, but returned to its 2008 peak by the third quarter of 2014.› Chattanooga lost 22,600 jobs, or 9.1 percent of its employment, and should return to its 2008 peak in the fourth quarter of 2016› Dalton, Ga., lost 16,400 jobs, or 20.6 percent of its employment, and won’t return to its 2007 peak until after 2021.Source: IHS Global economic study conducted for the U.S. Conference of Mayors.

When Mike Babb began working in human resources at the former E&B Carpet Mills in the early 1970s, he struggled to recruit and keep enough workers to staff all three shifts at the 500-employee business.

"If you had a pulse, we would hire you, and it wasn't uncommon for some applicants to accept three or four jobs in a single day then go home and decide which one they wanted to work at," recalled Babb, who is now chairman of the Whitfield County Commission. "Workers knew if they lost or left a job at one mill, they could go down the street and quickly find another job."

Unemployment fell as low as 2.4 percent in 1999 in metropolitan Dalton, which bills itself as the Carpet Capital of the World, and employers recruited thousands of immigrant and other workers into the region.

But as the floorcovering industry consolidated, automated and shifted more to hard surfaces, the staffing needs of carpet mills shrunk. When the housing bubble popped eight years ago, Dalton was one of the hardest hit metro areas in America, losing more than one of every five jobs.

Only Elkhart, Ind., where travel trailers are made, and Kokomo, Ind., where Chrysler shuttered several plants, were harder hit during the 2008-2010 downturn.

The Dalton decline was so severe that a new study by IHS Global for the U.S. Conference of Mayors predicts Dalton won't recover all of the 16,400 jobs it lost during the last recession until after 2021. Although most metro areas across America recovered their recession-era job losses by last year, Dalton won't be back to its 2007 peak employment for at least another five years.

Metropolitan Chattanooga, which shed more than 22,000 jobs during the recession, is expected to get its employment total back to its pre-recession peak in the fourth quarter of this year.

Even with the addition of the Volkswagen assembly plant erected during the last recession, overall employment in the six-county Chattanooga metro area still fell by 9.1 percent during the Great Recession and its aftermath from 2008 through 2011.

"The severity of this last recession was as great as any downturn since before World War II so it has taken much longer for the recovery to bring back all of the jobs we lost following the housing collapse in 2008," said William Fox, director of the Center for Business and Economic Research at the University of Tennessee. "In many areas like manufacturing and construction we have yet to return to pre-recession employment levels."

In many areas like manufacturing and construction we have yet to return to pre-recession employment levels

Jobs growing elsewhere

Employment has grown to record high levels in other Mid-South metro areas, including Atlanta, Huntsville, Ala., Cleveland, Tenn., Nashville and Knoxville. Nationwide, 61 percent of the nation's 381 metropolitan areas had regained all of their recession job losses by 2015, the IHS study found.

But in manufacturing-based cities like Dalton and Chattanooga, the downturn was much greater, and the recovery is taking far longer.

"The job losses we experienced during the last recession were devastating for our region," Chattanooga Mayor Andy Berke said. "But I think we are making progress again, and we're working hard to create the kind of jobs and opportunities we want our children and families to have for their future."

Berke said the ongoing expansion of the Volkswagen plant, combined with other expansions underway by McKee Foods, Amazon, Gestamp and others, should help the manufacturing recovery. Chattanooga's appeal as both an outdoor town and "Gig City" should also help attract more tourists, business startups and tech firms.

The addition of the SUV line by Volkswagen in the next year is projected to add 9,800 direct and indirect jobs in the region, according to a study by the University of Tennessee. The Chattanooga Area Chamber of Commerce projects the VW expansion and other announced business additions should help Hamilton County add jobs in the next five years nearly four times faster than it did in the previous five years.

To the south in Dalton, employment also is growing again. But the turnaround in the Carpet Capital is expected to take more time.

Last week, the Georgia Department of Labor reported that metropolitan Dalton ended 2015 with a 6.1 percent jobless rate, less than half the 13.6 percent peak unemployment rate reached in Dalton in 2010. Dalton' employment grew 1.2 percent in the past 12 months, still slower than the 1.9 percent gain nationwide.

Unlike Chattanooga's more diversified economy, Dalton has prospered or faltered on the relative strength and weakness of its carpet industry over most of the past half century.

But even with more carpet sales and shipments, new technologies and production methods employed in today's carpet mills mean that industry may never return to its former staffing totals.

"The carpet industry is rebounding, but it also has retooled and reinvented itself so it doesn't need as many workers as it once did," said Carl Campbell, executive director of the Dalton-Whitfield County Joint Development Authority.

Most of the yarns used to make carpet were previously produced at spinning mills that employed hundreds of workers across Northwest Georgia. Those spinning mills have been replaced in the past decade by the less labor-intensive extrusion line process by the carpet companies themselves.

Carpet companies are bringing more yarn production to the Dalton area and are diversifying into hardwood, laminate and tile to offer a full range of floorcoverings. But with the consolidation in the industry, more owners and managers now live outside of Whitfield County.

Former Dalton Mayor David Pennington said only two of the CEOs of the six biggest carpet companies in Dalton now live in Whitfield County, and the opportunities for starting a business in the industry aren't as great as they were in its early days.

We have a lot of great assets here, and we need to encourage more business startups like what is happening in Chattanooga

Carpet Industry's early days

A generation ago, carpet startups were akin to the tech and web-based companies of today. More than 300 carpet companies and hundreds more suppliers dotted the landscape of Northwest Georgia in the 1970s. Most floorcovering today is concentrated in a handful of companies - many of which are owned or controlled by those outside the Dalton area.

"A lot of millionaires were made in carpet here in Dalton," Pennington said. "We have a lot of great assets here, and we need to encourage more business startups like what is happening in Chattanooga."

Dalton leaders say they are working to diversify their economy, but they remain committed to the floorcovering.

"For 40 years, the Dalton area rode the workhorse of the carpet industry, and we don't want to give that up - just add on to it," Babb said.

Rob Bradham, the new president of the Greater Dalton Chamber of Commerce, said the rich manufacturing tradition of Dalton and Chattanooga make such towns attractive for manufacturers looking to locate in the growing South within two day's drive of 80 percent of the U.S. population.

Dalton Utilities grew to supply the water and energy needs of the carpet industry. But as that industry has moved to more efficient production methods, Dalton has plenty of relatively cheap energy and water to offer other industrial prospects.

"We also have a workforce with a lot of experience and understanding of manufacturing, and I think our technical education system in Northwest Georgia is as good as any in the country," Bradham said.

The Northwest Georgia College and Career Academy allows high school students to earn a year's credit in engineering tech programs while still in high school and then earn the equivalent of a two-year degree in only a year at Northwest Georgia Technical College. Such an associate's degree can then seamlessly be used to earn a four-year engineering degree in only two more years at Dalton State College.

"Most communities don't have that kind of pipeline, but we do," Bradham said.

Over the past three years, Dalton has attracted nearly $750 million of new and expanded business investments, which the Dalton Chamber projects will add more than 2,800 jobs over the next three years.

"We are in a recovery mode, and we're no longer looking back at what happened," Campbell said. "We're looking forward to what is coming. We're not where we want to be, but we're headed in the right direction."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.