Georgia Carpet Makers Look to German Show for Customers

Dozens of Georgia carpet industry representatives are headed to Hanover, Germany, for a huge worldwide trade show in January, hoping overseas buyers will help offset a two-year domestic sales slump.

The Domotex World of Flooring show Jan. 17-20 usually attracts more than 45,000 visitors. It is dominated by companies from Dalton, which bills itself as the carpet capital of the world. By some estimates, the Dalton region accounts for more than 80 percent of the carpet produced in the United States.

The Georgia Department of Economic Development co-sponsors a booth at the show with the Dalton-based American Floorcovering Alliance trade group, said Alison Tyrer, spokeswoman for the state agency. As many as 10 Georgia companies may exhibit in that booth. Other Georgia companies have their own booths at the show, she said.

Calhoun-based Mohawk Industries Inc. will send 40 people to the show, 14 of those from Georgia.  Mohawk has its own booth at the show, as do a variety of other North Georgia companies including Apache Mills Inc. of Calhoun and Clayton Miller Carpets Inc. of Dalton.

Georgia carpet manufacturers need overseas customers to help pull out of a two-year domestic downturn triggered by the decline of the U.S. housing market, industry experts told GlobalAtlanta.

Georgia’s November unemployment numbers tell the story. Unemployment claims in the Dalton metro area jumped 147.1 percent over the same month a year ago. In the nearby Rome metro area, claims increased 93.5 percent.

“North Georgia in general, and Dalton in particular are ground zero for the recession fueled by the collapse of the housing industry,” Michael Thurmond, Georgia’s labor commissioner, told GlobalAtlanta. “We still haven’t reached bottom.”

Dalton carpet manufacturer TI Acquisition LLC in November announced 379 layoffs, according to the Georgia Department of Labor.  Dalton-based Shaw Industries Inc. in November cut 125 workers at its Calhoun plant, the labor department reported. Shaw was acquired in 2001 by Berkshire Hathaway Inc., investor Warren E. Buffett’s holding company.  Shaw has annual sales of $5 billion, according to its Web site.

Over the last two years, carpet sales have dropped “upwards of 25 percent,” said Werner Braun, president of the Carpet and Rug Institute in Dalton.

“As anyone in the industry will tell you, this is as bad as it’s ever been,” said Mr. Braun.

Recovery hinges on a housing market rebound, and when that happens, North Georgia mills might be busy meeting pent-up demand, Mr. Braun predicted. Very little carpet is imported into the United States, in part because of the North Georgia factories are so automated that labor is a relatively small part of the cost of making the product, said Mr. Braun.

“When the housing situation resolves itself, this industry stands to do very well,” he said.

Meanwhile, the industry looks abroad for signs of life. Mr. Braun estimates that only about 5 percent of U.S. carpet industry sales are exports. But that is enough to prompt industry representatives to travel around the world is search of new customers.

The Hanover show “is one of the premier events for this industry,” said Alice Carson, an international trade specialist with the Georgia economic development department who will attend the event. “It allows companies to tap into the contacts of that region. They may sign a new distributor for their product line. They walk away with contracts. It is definitely not just to go over and meet and greet.”

For the first time, the Georgia economic development department in March will sponsor a pavilion at the Domotex carpet show in Shanghai, China, said Ms. Tyrer.

Meanwhile, a different type of foreign investment is seen as a way to help northwest Georgia’s economy get through the carpet industry slump.

Volkswagen Group of America, a subsidiary of the German automaker, last summer announced plans for a $1 billion auto manufacturing plant in Chattanooga, Tenn., only about 20 miles from Dalton.

It is expected to open in 2011, providing 2,000 jobs at the plant and thousands more from companies that supply the factory.

“That is the one bright spot, a beacon of hope in North Georgia,” said Mr. Thurmond, the labor commissioner.