Carpets and Rugs

SIC 2273

Companies in this industry

Industry report:

This industry includes establishments primarily engaged in manufacturing woven, tufted, and other carpets and rugs such as art squares, floor mattings, needle punch carpeting, and doormats and mattings from textile materials or from twisted paper, grasses, reeds, coir, sisal, jute, or rags. Coverage includes aircraft and automobile floor coverings, except rubber or plastics; bathmats and sets; dyeing and finishing of rugs and carpets; and Wilton carpets.

Industry Snapshot

Worldwide, the U.S. carpet industry accounts for about 45 percent of production with almost 80 percent of that manufactured in Georgia, according to the Carpet and Rug Institute. Carpet mills specialize in producing carpet backing as well as carpets and rugs. According to the U.S. Census Bureau, approximately 333 establishments operated in the carpet and rug mills manufacturing category in 2007. In this category, industry-wide employment was approximately 37,691 workers, 83 percent of whom were production workers. Total payroll was about $1.2 billion. In 2007, total industry shipments were worth $13.1 billion, down from $17.3 billion in 2005.

During the first decade of the twenty-first century, the industry's growth slowed due to weak economic conditions. Confidence in the future of the economy ran low, causing consumers to put off nonessential purchases, including new rugs and carpets. However, low interest rates created a robust new housing market, which sustained demand in the otherwise sluggish economic environment. However, the mortgage crisis at the end of the decade had a detrimental effect on the industry, leading to an inevitable downturn.

Organization and Structure

The majority of U.S. manufacturing plants were located in the Georgia in the 2000s. Carpet mills specialize in producing carpet backing as well as carpets and rugs. Intense competition in the 1980s led forward-looking companies to acquire both manufacturing and retailing operations in an effort to cut costs.

Tradition, profits, and consumer preferences, rather than a specific management approach, historically dictated the organization of the carpet industry. The product flows to residential and contract clients either directly from mill to client or from mill to dealer or wholesale distributor to a retailer who sells to a client. If manufacturers in the industry continue to follow the lead of Shaw Industries Inc., the industry's organizational mode may be revamped. According to analysts, Shaw's acquisition-based growth coincided with the company's novel management approach. First the company hired aggressive, no commission, straight salary sales representatives. Next, in another cost savings move, Shaw signed shorter, more flexible agreements with retailers, which eliminated the distributors who were a long-standing entity in carpet promotion. One outcome was that retailers began buying most carpet directly from the mills. In addition, total industry recovery was expected to require the development of strategies to create more unified partnerships between manufacturers, retailers, and cleaners that allow them to serve and sustain customer confidence.

Background and Development

The first carpet mill opened in Philadelphia in 1791. Until the mid-1800s, carpet manufacturing in the United States was a tedious process using hand-operated machines. High quality, artful appeal, and high cost described the carpets of this period. However, during this period and over the next century, several events changed the manufacturing and utility of rugs and carpets. Much of the impetus for industrialization of the carpet industry began when Erastus B. Bigelow, known as the "Father of the Modern Carpet Industry," obtained a patent for his invention of a power driven loom. As power looms became more refined and functional, carpet manufacturing became a profitable venture.

The next milestone in the carpet industry came with changes in the composition of carpet. Originally, all carpets were made entirely of wool because it insulated against cold and repelled water. Because of these characteristics, wool was declared an essential commodity during World War II causing carpet production to be severely curtailed in favor of war goods production. This setback served as an incentive for researching wool substitutes, which in turn led to the development and upgrade of new natural and synthetic carpet fabrics. By the 1960s, E.I. DuPont de Nemours and Co.'s manufactured continuous filament carpet nylon and Chemstrand's acrylic fibers were supplying most of the fibers for broadloom carpets in the industry. In the early twenty-first century, nylon accounted for 67.8 percent of the fibers used in carpet manufacturing, followed by 22.2 percent polypropylene, and 9.4 percent polyester, with wool constituting a little more than 0.6 percent of the total.

Weaving, needle-punch, and bonding and tufting are the principle carpet manufacturing processes, with the tufting method accounting for 95 percent of all carpets produced and sold in the United States. Tufting differs from weaving and other processes in that yarn is pushed through a previously manufactured backing material, while weaving produces the carpet backing simultaneously as the carpet is being manufactured. As tufting became popular as a faster and more economical alternative to the traditional weaving process, carpet manufacturers discovered several other cost and labor advantages. Utilization of the tufting process produced broadloom eight to ten times faster than prior methods, required less fined-tuned weaving skills, and ultimately lowered prices sufficiently to attract lower and middle-income groups. Nearly 63 percent of the industry's tufting mills were located in the South due to the area's abundance of low-cost labor and excellent water supply.

The impact of these milestones solidified the "homing" of the carpet industry. Between 1950 and 1968, U.S. production of residential and commercial broadloom carpet and rugs rose from 85.7 to 435 million square yards, with tufted carpet shipments topping woven Axminster, Wilton, velvet, chenille, and knitted carpets by more than 81 percent in 1968. Price, aesthetics, and utility changed the image of carpet from a luxury item to an essential accessory for every home. By the 1980s, consumer carpet selections included an enormous variety of colors and patterns suitable as indoor/outdoor floor or wall coverings. Moisture repellents and stain resistant treatments increased the life span of some carpets by as much as 10 years and allowed manufacturers to extend carpet warranties. Residential or "home use" carpet, one of the industry's major markets, comprised 76 percent of all residential floor coverings, 55 percent of which was used for remodeling and replacement purposes, and 45 percent of which was used in new home construction in the early 1990s. Carpets for commercial or contract use formed the next primary market and represented the preferred floor covering for 73 percent of all commercial space in offices, schools, hotels, hospitals, airplanes, and other heavily trafficked public areas.

Ironically, just as the "homing phase" of the carpet appeal became entrenched in U.S. living, both residential and commercial users began voicing concerns regarding health and environmental hazards attributed to carpet. In 1987, the Consumer Product Safety Commission received more than 130 complaints about carpeting, mostly focusing on eye and throat irritation beginning after installation of new carpet. One such incident occurred at the Environmental Protection Agency (EPA), where employees complained of flu-like symptoms within days after a new carpet was installed. Specific causes of the illnesses were never identified, but several areas were investigated. No toxic chemicals were found in the carpet, but questions remained regarding toxic ingredients in the carpet adhesives. Another theory postulated that noxious fumes resulted from carpet deterioration. Later tests, named the Anderson tests after testing company Anderson Laboratories Inc., introduced the possibility that carpet emissions capable of killing mice could also produce adverse effects on human life.

Despite disclaiming some of the hazards, the carpet industry vowed to reassess its overall manufacturing process, including the type and quality of raw materials used, the use of pesticides, microbiological contamination, and carpet installation and maintenance processes. As the industry trade association, the Carpet and Rug Institute launched a labeling program listing various characteristics of carpet that were consistent with the industry's objectives to improve consumer confidence. The institute also collaborated with the EPA to develop indoor air quality guidelines for carpet.

Because consumers remained unconvinced of the carpet industry's intent to alleviate the health hazards of carpet, a consumer lawsuit was filed in 1993 against several carpet manufacturers. Consumers involved in the suit were seeking monetary compensation and other rewards from manufacturers accused of promoting misleading claims regarding carpet air emissions hazards and so-called environmentally friendly carpets.

In the early 1990s, many homeowners took advantage of falling interest rates and refinanced their mortgages. This allowed homeowners to spend more money on remodeling expenditures, including new carpeting. A stabilized real estate market with increased new housing starts and greater turnover in home sales also had a positive impact on carpet sales. As businesses recovered from the recession, contract carpet dealers sought increased business with hospital, health care, and retail facilities. Schools were also seen by many in the industry as a potential growth market.

Carpet and rug sales totaled $9.5 billion in 1995 for 1.6 billion square yards. As they had throughout the postwar era, tufted carpet and rugs continued to dominate the market with 87 percent of volume and more than 90 percent of revenues. More than 85 percent of tufted carpet yardage sold was in roll goods. More than two-thirds of all tufted floor covering yardage was made with nylon face yarn, while about 20 percent was made from polypropylene, and another 6 percent was polyester.

In the early 1990s, the United States accounted for more than half the world's carpet consumption. Carpet mills downplayed the impact of the North American Free Trade Agreement (NAFTA), which merged Canada, Mexico, and the United States into one market. The European Community Agreement (EC), another international trade agreement affecting the textile industry, enhanced international opportunities in textile production.

During the 1990s, the majority of industry establishments were located in Georgia, which shipped a total of $7.17 million worth of product and employed 31,600 people. By 1996, the industry had shipments totaling $11.18 million. According to the Carpet and Rug Institute, an industry organization, shipments in 1997 totaled $10.3 billion, with a $15.7 billion retail value. Worldwide, the United States held 45 percent of the carpet market. Among all floor coverings, carpet had 65 to 70 percent of the market share. Market share of fibers used in the industry in 1997 included nylon (59.3 percent), Olefin (33.7 percent), polyester (6.6 percent), and wool (0.4 percent). The majority of U.S. carpet imports in 1997 came from India (45 percent), followed by China (25 percent), and imports totaled $961 million. Exports totaled $858 million with the largest markets being Canada, Mexico, Japan, and the United Kingdom.

In 2001, the economy began to show signs of weakness. As the industry prepared for a minor downtrend, the terrorist attacks on the United States of September 11 threw the nation into economic and emotional turmoil. On the heels of September 11 came the near-overnight erosion of consumer confidence. The U.S. war against terrorism in Iraq, beginning in 2003, kept consumers in a state of unease. Because rugs and carpets fall within the category of nonessentials, many consumers postponed purchases. Carpet and rug sales remained flat during 2002, which, considering the economic environment, was viewed as relatively positive.

In 2005, total shipments stood at 2.057 billion square yards, or 18.5 billion square feet, according to the Carpet and Rug Institute. Sales at the mill level during 2005 were $13.9 billion as compared to the 2003 total of $12.1 billion. The U.S. Census Bureau indicated that rugs, carpet, and carpeting shipments equaled nearly $14 billion in 2005. Of that, tufted carpet and rugs accounted for $13.1 billion of the total, woven carpet and rugs accounted for nearly $595 million, and other carpet and rugs accounted for $303.5 million. During the early 2000s, the carpet industry was helped by robust new housing construction that was the result of extremely low interest rates. Nonetheless, overall purchases were stagnant. The hardest hit sector of the rug industry was high-end offerings, which fell off significantly, although sales of low- to mid-priced rugs increased. However, the housing market crisis in the mid-2000s caused a downturn in the industry, which was further exacerbated by the slow economic conditions of the late 2000s.

Current Conditions

Total industry shipments of rugs and carpet in the United States were down to 1.6 billion square yards (14.4 billion square feet) in 2007, according to the Carpet and Rug Institute. Manufacturers were exploring different avenues to increase their sales during the sluggish late 2000s in the United States, and one of the focuses by suppliers was providing consumers with products they could afford. Sales of high- and moderately priced rugs and carpets had stalled, and companies began to focus on value products to meet demand. Smaller companies were following a similar trend. Jim Thompson of Central Oriental in West Warwick, Rhode Island, told Home Textiles Today in July 2009: "Value--that is what we are working on offering." Paul Sullivan or Orian Rugs (Anderson, South Carolina) agreed. "I know it's been said a million times, but I'll say it again--the consumer just wants value." Other tactics being used by suppliers included expanding lines of juvenile products and packaging rugs with other textiles such as pillows and wall art.

One of the most pressing issues in the industry in the late 2000s involved making the production of carpet and rugs more environmentally friendly. Several leading companies in the industry were members of the Carpet America Recovery Effort (CARE), a membership organization founded in 2002 and focused on reducing the amount of carpet in landfills and promoting recycling measures. In 2002, member companies diverted 57.2 million pounds of carpet from landfills and recycled 46.2 million pounds, according to the group's annual report. Those figures increased throughout the 2000s, and in 2008, CARE reported 292.4 million pounds of post-consumer carpet were diverted from landfills, and 243.4 million pounds were recycled into value-added products. This represented about 4.3 percent and 5.2 percent, respectively, of the carpet discarded, as compared to 1.0 percent and 1.2 percent in 2002. Of the carpet that was diverted from landfills in 2008, about 57 percent went to manufacturers and 25 percent went to processors; 14 percent was utilized in waste-to-energy operations, and 1 percent was sent to cement kilns. Most (86 percent) of the recycled carpet stayed in the United States, but the amount shipped to Asia increased from 0.5 percent in 2007 to 12 percent in 2008.

Industry Leaders

The industry leader in the late 2000s was Dalton, Georgia's Shaw Industries Inc. Founded in 1946 by Clarence Shaw and his son J.C. Shaw, the former Star Dye Company began finishing carpet once Robert Shaw, who was also Clarence Shaw's son, became CEO in 1958. Shaw Industries, as the company became known in 1971, has long utilized acquisitions to carve out a profitable niche in the carpet industry. In fact, it entered the market via the acquisition of a Georgia carpet mill. The 1987 purchase of West Point-Pepperell Carpet and Rug Division pushed Shaw's revenues over the $1 billion mark and made it the world's largest carpet manufacturer that year. Growth via acquisition merely accelerated from that point. By 1995, the company garnered more than one-fourth of wholesale carpet sales.

Having achieved its goal of establishing a worldwide niche in each important aspect of carpet manufacturing, Shaw began to acquire carpet retail chains with hundreds of outlets, including Carpetland USA Inc., The Carpet Exchange, and New York Carpet World. Shaw's sales increased at an average annual rate of 15.3 percent during the early 1990s, from $1.6 billion in 1991 to $2.9 billion by 1995. However, rising raw materials prices slashed the company's net profit from $127 million in 1994 to $52.3 million in 1995. At that time, the company employed 25,000 workers. The company's plans to acquire several British carpet manufacturers also backfired, and in 1999 Shaw sold the British holdings and 275 carpet stores in order to win back the favor of its retail customers.

By the end of 1999, Shaw had lost $200 million on its efforts to diversify. The company redirected its focus toward manufacturing and wholesaling, including the purchase of Queen Carpet Corp. for $470 million. This acquisition gave Shaw a U.S. industry market share of 35 percent in 1999, up from its previous 27 percent share. In 2000, the company agreed to be acquired by financier Warren E. Buffett's investment firm Berkshire Hathaway, Inc., and the deal was finalized in 2002, leading to its attaining the Dixie Group in 2003 (including Carriage Carpets, Bretlin, and Globaltex brands). By 2008, Shaw was raking in $5.0 billion in revenues with 28,000 employees.

The second largest carpet and rug manufacturer in the United States in the late 2000s was Mohawk Industries Inc. of Calhoun, Georgia. Founded in 1878, Mohawk scrambled to keep up with Shaw, its much younger but larger competitor. Following a public stock offering in 1992, the company made four acquisitions in two years, including Horizon Industries Inc., Karastan-Bigelow Inc., and American Rug Craftsmen Inc. In 1994, Mohawk merged with highly profitable Aladdin Mills Inc. The purchases catapulted Mohawk from eleventh in the industry to number two, increased its sales from $761 million in 1992 to $1.6 billion in 1995, and multiplied its market share from less than 4 percent to 19 percent in 1997. The company boasts three of the industry's most recognizable brands: Mohawk, Karastan, and Bigelow. Notwithstanding its impressive growth, Mohawk Industries struggled to cut costs and raise its profitability. By 1998, net income for the year had increased 58.2 percent to $107.6 million. The company acquired rival Lees in 2003. Mohawk continued to focus on its niche markets: household rugs, laminated and tiled flooring, and office carpet. In 2008, Mohawk posted sales of $6.8 billion and employed 31,200 workers.

Other industry leaders were the diversified Milliken and Co. of Spartanburg, South Carolina, with 2008 sales of $2.3 billion and 10,000 employees; Beaulieu Group LLC of Dalton, Georgia, with $1.1 billion in 2007 sales and 5,850 employees; and Interface Inc., of Atlanta, Georgia, with revenues of $1.0 billion and 3,673 employees in 2008.


The U.S. Department of Labor's Bureau of Labor Statistics (BLS) reported in May 2008 that the textile furnishings mills manufacturing industry employed 79,520 workers who earned a mean annual wage of $30,510. Of those workers, 64 percent were production workers who had a mean hourly wage of $12.57. Sewing machine operators made up the largest segment with 15,890 workers making a $10.80 mean hourly wage. The BLS expected only a 0.4 percent increase in employment by 2016.

While machine operators did constitute the industry's largest employment category, computerization of carpet manufacturing was changing job functions and requirements. Machines for tufting, shearing, and many other functions connected to computers were expected to eliminate many low-skilled jobs. The industry was expected to require higher skilled laborers to operate the sophisticated machinery. By and large, the majority of the industry's production employees had low literacy levels and were unable to interpret computer feedback. Without upgrading the literacy skills of their production workers, manufacturers stood to lose the potentially high returns from converting to a high-tech environment.

Research and Technology

Research and technology for the carpet industry focused on producing high quality and environmentally friendly products and on responding to contemporary customer needs. Backing materials were being developed to replace the environmentally unfriendly latex. As a secondary backing bond to tufted and needle punched carpets, hot melt adhesive films produced no fumes inside or outside the mills, offered between 70 percent and 80 percent energy savings, and resulted in a 50 percent reduction in backing application time. Waste reduction and reclamation were also key issues under study. Some in the industry campaigned to reduce carpet trim waste, which not only cost U.S. carpet companies an estimated $25 million per year but also generated tons of useless material destined for landfills. Other ideas being studied for waste reduction included reducing widths of backings and developing pure synthetic backings to match face fibers, which would allow burning or recycling of the whole carpet. Many, including Shaw Industries, adopted the goal of "zero manufacturing waste."

Recycling programs focused on recycling or converting packaging materials like PET bottles and used carpet into everything from floor tiles to concrete reinforcement material and highway guard rails to like-new carpet fiber. While these solutions required a concerted industry-wide effort, a few company initiatives showed some merit. DuPont maintained a joint program with Sonoco Products Co. that involved reclaiming cardboard drums used to deliver its fluorochemical products. In the late 2000s, Mohawk marketed a SmartStrand brand of carpet based on the DuPont technology of using renewably sourced polymer, called Sorona, which substituted 37 percent of the petroleum used in the product with corn-based ethanol. Hoechst Celanese Corp.'s introduction of a environmentally friendly carpet not only eliminated latex and the usual odor connected with indoor air quality problems, but it also totally eliminated carpet waste because it was made of 100 percent recyclable polyester.

One industry company took the challenge seriously to work toward making carpet manufacturing more environmentally friendly. Ray Anderson, owner of billion-dollar carpet company Interface Inc., began changing his operations after he read The Ecology of Commerce, by Paul Hawken in 1994. Anderson reduced scrap (and saved $67 million), reduced operations energy by using less nylon in carpet tiles, and introduced plans to lease carpeting so old carpet did not end up in landfills. Interface converted one of its plants to solar energy in 1999 and introduced a product that looked like carpet but that could be mopped like vinyl. The company continued to seek opportunities to utilize such "green energy" via solar, wind, and biomass energy and to eliminate harmful emissions in the late 2000s. Anderson received several awards in recognition of his efforts.

Another area of research addressed utilization of carpet to reduce physical stress, injuries, and fatigue in a variety of environments. While carpet's nonslip, pliant properties remained favorable, biomechanical studies had the potential to lift the carpet industry's sales by measuring how the human body reacts to subtle differences in floor surface properties.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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