No risk, no reward: Transition from textiles to carpet pays big dividends for Dixie
The state of the industry in 1986…
“If you go back into the 1970s, that’s when Dalton was more like the Wild West. By the ’80s, businesses started becoming more professionally run. In the early ’70s, you had 300 mills. You had 50 or so in California. All of that had changed by the mid-80s. Many of the California mills were gone. It was still a dynamic industry, but a lot of companies were buying out other companies. It was also going through an era where spun yarns had really predominated, and we had been a spun yarn producer through our Candlewick division.”
Where was Dixie at this point?
We were not in the carpet business; we were in what I’d call the traditional textile business and the carpet yarn business. In 1986, we bought a company our size and became the largest spinner of yarns in the country. At one point in the ’80s we got up to 100 million pounds of capacity, which in that day was a lot of spun capacity. Today, we do no spinning; it was a different world.
Who had the control in your eyes: the mills or the fiber companies?
I’d say the fiber companies still had a lot of influence, and Stainmaster is a great example. That introduction and the fact they put so much money into making it a consumer recognizable brand. None of the mills could do that. BASF was a major factor back in the ’80s. Honeywell was a major factor. Anso, Monsanto. So, the fiber producers still had a major impact at that point. Then the mills began extruding polypropylene.
That’s when the changes really began.
When and how did Dixie get into manufacturing carpet?
We struck a deal with Prudential in 1986. We were a supplier of yarn to many carpet mills. We felt we eventually had to get into the carpet business because the spinners were losing position to the mills. So Burlington had been raided by Adelman, if I recall correctly, and they decided to sell the carpet portion of Masland. We were very close with the Masland management; we had supplied them yarn for years. They came to us and said, “Why don’t you strike a deal to buy our company?” So, we got together with Prudential, we bought less than half, Prudential bought less than half and management bought a small portion. That way we weren’t identified as a carpet manufacturer, so we continued to sell yarn without being a direct competitor. By 1993 that wasn’t working, so we bought Prudential out and Masland became part of Dixie. In 1993, we also bought Carriage Carpet, which was the largest supplier to the manufactured housing business. At one point in the late ’90s, about 25% of all new housing starts were manufactured homes. But like a lot of industries, it got way overbuilt, and that business dropped off. We also bought Danube and merged that into Carriage.
Was that also for manufactured housing?
Yeah, but Berkshire—after buying Shaw—also owned Clayton Homes and it became very clear to us that it probably wasn’t a good place to be between those two. So, in 2003 we sold our north Georgia operations (which was primarily manufactured housing) to Shaw Industries and concentrated solely on the residential business and higher end. From 1993 to 2000, we made about 13 acquisitions—carpet mills on both the East and West coasts, fiber producer, extruder. We bought Fabrica in 2000.
What are some of the other companies you bought along the way?
We bought a company called Ideal Fibers, which was in the extrusion business. I mentioned Danube and Carriage; we bought Calloway Mills, a small tufting operation in Chatsworth. We bought Multitex, we bought Patrick Carpet Mills on the West Coast, which was a well-known commercial mill that we moved into Masland. We bought Robertex, which was in the wool business. We’ve worked hard to make it one company.
What would you say was the first sea change in this industry post-1986?
I think the late ’80s was the demise of the spinning. The fiber producers finally became able to produce a filament product that you could put into a solid color with- out horrible streaks. That really changed the industry from a spun industry to a filament processed industry. Obviously, it’s more economical than taking filament, chopping it up, putting it back together. But that’s what you had to do back in those days to make really quality goods. As a matter of interest, talking about Fabrica, their product Chez was introduced in about 1986, maybe a little before that. That’s still a great seller for us. It’s one of the few spun yarns other than wool that we have in our lineup today.
What about Dixie?
Being a public company made it difficult to get out of the textiles business and into the carpet business. When we first went to our banks and told them, the head cred- it guy said, “You’re crazy. You’ve been successful in the textile business for 60 years, and now you’re going to get into a business you don’t really know.” I said, “Well, we have some knowledge but we’re not there.” But a couple of years later he came back and said, “You know what? You made the right decision.” I’ll tell you another thing that’s interesting. Think about all the textile companies that owned carpet businesses, West Point Pepperell, Dan River, Burlington, Springs, JP Stevens. They sold the carpet mills and saved their textile businesses and now they’re out of business.
Is the best decision you ever made getting out of the textile business and getting into the carpet business?
I’d say without it we’d be dead, so I think it has to be. Some people have asked me, “How did you reach that conclusion?” I say, “Fear is a great motivator.”
What has been the biggest innovations for this industry over the last 35 years?
Changing the distribution to a direct model, the movement from spun to filament, the movement to mill- extruded from fiber producer extrusion, the movement to polyester.
What has the move to polyester done for the industry? And for the retailer and the consumer?
I was around in the ’70s when we had a failed attempt at polyester. After having lived through that, I think all of us had some reluctance. But that was spun, the poly- ester that is done so well today is filament, and it is solution dyed. So it has tremendous advantages over the products that were being produced back then. The products are just a lot better; you’re not producing cut pile products that just aren’t going to perform.
What has solution dyed done for the industry versus piece dyed?
Solution dyed gives you some stain advantages. I think it helps in terms of streamlining your production, lowering your cost, making product for a consumer at a better cost. Now, obviously, it does have some limits in terms of color, style and design. That’s one area that we really play in. In the very high-end, people want different colors. Of course, we still do piece dying of product, and we’ll do it any color you want. So not only are our color lines extensive, but we have the capability of doing custom color. We think that’s part of what we bring to the industry, but the bulk of the industry is solution dyed, and it’s going to be solution dyed.
Stainmaster exiting specialty retail. Big deal?
I think what’s happened to Stainmaster in the last 35 years is a big deal. Maybe the last nail in the coffin is not as big a deal as we might want to make it out to be. Right now, it’s a big deal because it’s causing everybody to make changes. I think two or three years from now, people will look back on it and say it was some- thing that was gradually happening, Stainmaster’s importance in the industry peaked a long time ago.
What could this industry have done better over the last 35 years?
I think people will tell you the industry should have been producing better products all along. I agree that if all the products were better, maybe carpet would have a larger market share today.
What would hold this industry back from producing better product?
The desire to sell at a cheaper price. That’s not being negative about any company. But, ultimately, it does take its toll in terms of market share. I think we’ve seen the impact of the hard surface products having improved so dramatically.
How has the industry evolved as it relates to styling over the last 35 years?
That’s a little difficult to answer. I would say particularly on the commercial side, the movement to modular allowed styling to move more rapidly. It’s ironic that today in the commercial business, the base weight is the lowest it’s ever been and the styling is the best it’s ever been.
Why is that?
It goes back to machinery development. If you didn’t have the developments in machinery that made that possible, you’d have never gotten there. So it gets back to why carpet in this country hasn’t been directly attacked successfully from abroad. Distribution is another reason. You try to service 5,000 or 10,000 customers on imported products. That becomes very difficult to do because of the bulk. So the styling on both the residential and commercial sides have improved dramatically because we’re able to do things with machinery today we simply could not do 10 years ago.
Going from broadloom to carpet tile in commercial, why did that happen?
It happened because some people got behind it and believed in it. I think if you talk to installers there tends to be less waste. I think the styling was part of it, and the ability to buy one product and lay it out however you want. So the designer has more influence, and I think the designer in specified commercial likes to have that influence and capitalizes on it.
Is it a better product?
I think it depends on the application. Early on you could see seams, there were all kinds of cupping and other issues. Not so much today. Broadloom has its place; tile has its place. In a big city, you can get tile up and down the elevators a lot more easily, and it’s not as difficult to install.
Do you ever look back over the last 35 years on a decision that you made and say, “I really got lucky there?”
Yeah. We wanted to put a spinning plant in Canada. We were going to put it in a small town in Quebec called Wickham. This was actually about 37 years ago. Canada had a number of carpet mills; they’re all gone now. But this was going to be a joint venture with Peerless. We worked on it, we had all the layouts, we had the plant picked out, etc. We went to Ottawa and never could get permission from the Foreign Investment Review Authority of Canada for us to be a 50% owner of a plant in Canada. So, we ended up telling Peerless they ought to go ahead, that it obviously wasn’t going to work with us as a partner, so we pulled out of it. Well, that plant is closed today. That was a blessing in disguise.
If you could have done one thing differently, what would it be?
We would have moved out of textiles sooner. We would have moved faster into filament from spun. We would have moved into hard surfaces faster. Everything we would have done sooner and faster.
Who are you going to think of first when you think about this industry over the last 35 years?
I was in my formative years before that, so I’d go back further. One of them was my father, I worked very closely with my father.
What did he teach you?
My father and mother taught me basic morality, ethics, how to treat people. They were wonderful parents, and I think if you don’t learn those things when you’re young, it’s very difficult to learn them when you’re older. Over 35 years, I think a lot of people have certainly had an impact. We had a fellow at Candlewick, which was our carpet yarn business, named Dan Hurst. Dan was a great leader and a great person and certainly had a big impact on me as I moved into that business at a very young age.
Frierson walks down memory lane
Julian Saul—Somebody who used to work for Julian told me this story: Even after Shaw bought Queen, Julian could see whether steam was coming out of the different dye lines from his house. If all the dye lines weren’t running, he’d call down there and want to know what was wrong.
Ralph Boe—We were down in Puerta Vallarta. It was the CRI convention and everybody was in this hotel, but I had rented a villa from a guy who used to be head of Celanese and invited a bunch of people up for a party. Ralph commandeered this bus and the guy who drove it. He dropped them off, and Ralph took the keys to the bus so the guy couldn’t leave. The guy almost got them, but Ralph kept the keys and the bus was there when they were ready to leave.
Tom McAndrews—You can’t talk about Stainmaster without talking about Tom McAndrews. Tom really was the one who drove that. Years ago, we hired a couple of people away from DuPont. They had put somebody on our account and we hired them. Later, we hired somebody else from DuPont who had called on us previously. So, McAndrews sends me a letter: “Since every time we put somebody on your account you end up hiring them, you will need to place your orders through this 1- 800 number from now on.”
Gene Barwick—Once at the Chicago market, they were giving out little mirrors in a case at their showroom. I picked one up and Gene Barwick saw me. He was upset because he wasn’t get- ting as much yarn as he wanted. He berated me in front of a lot of people in a way that I thought was very inappropriate. That’s the kind of guy he was—bigger than life. But I always kept that mirror, and I did it because it taught me how not to treat people.