January 6/13, 2014; Volume 27/Number 18
By Ken Ryan
Dalton—Shaw Industries’ decision to abandon its area rugs business and double-down its efforts in luxury vinyl tile (LVT) reflects its ongoing evaluation of business units and their long-term viability.
According to Shaw president Randy Merritt, the company viewed the current structure and economics of area rugs as unfavorable to continued investment. He cited global competition, tremendous fragmentation in product offering and a concentrated retail channel as reasons for pulling out of rugs.
“We are choosing to diversify our manufacturing in areas where we see more growth, opportunity and better economics,” Merritt said. LVT clearly offers that opportunity.
Shaw has been in the LVT business—residentially and commercially—for about three years and has developed what Merritt calls “a market-leading” position. However, it has not been a manufacturer until now. “The next logical step is for us to offer domestic manufacturing for a portion of our product line, allowing us to further enhance our product development, service and overall customer satisfaction,” he explained.
In repurposing the current Ringgold, Ga., area rug facility to an LVT manufacturing plant, Shaw will be able to shorten the timeframe to begin making product. The company plans to invest more than $100 million in the Ringgold LVT facility, and generate 200 jobs for the area.
“We wanted to exit area rugs at a point where there would be more opportunities available for our people,” Merritt said. “The recovery of the market in 2013 has created prospects within the northwest Georgia area.”
Most of the 400 associates employed by the Shaw Living Rug Division will have job opportunities at other locations in the company if they so choose, Merritt noted.
The Shaw Living division recently participated in the Atlanta International Area Rug Market. A Shaw spokesman said the company would treat the transition on a customer-by-customer basis.
Shaw’s LVT investment follows $250 million in other recent expansion efforts in carpet tile, hardwood flooring, yarn extrusion and distribution, and follows recent announcements by Armstrong, IVC and Mannington to either build or enhance its U.S. LVT manufacturing capabilities.