Shaw departing area rug business
February 21, 2014,
In conjunction with the announcement, the Dalton, Ga.-based company, which is wholly owned by Berkshire Hathaway Inc., revealed plans to convert its Ringgold, Ga., rug facility into a state-of-the-art luxury vinyl tile manufacturing facility.
"The economics of the rug business today simply do not allow for future growth or encourage further investment," said Vance Bell, chairman and CEO in a statement. "We have been intentional about exiting this business at a time when more opportunities exist for our associates."
According to the release, Shaw plans to invest more than $100 million in its new luxury vinyl tile manufacturing facility and when complete, the investment is expected to generate 200 new jobs in the Ringgold area. This investment follows $250 million in other recent expansion announcements by Shaw in carpet tile, hardwood flooring, yarn extrusion, and distribution. Officials expect that the majority of the 400 Shaw rug division employees will have opportunities at other locations in the company. Customers will be serviced through a transition period.
While the timing of the decision was unusual due to the beginning of the winter market cycle, Susan Rich, Shaw Inds.' director of corporate communications, said officials felt that by making the announcement when it did, customers would have time to react accordingly.
"We want to be honest and transparent with our valued associates and customers. Once the decision was made, it was important to communicate to those impacted," Rich said.
At the just-completed Atlanta International Gift & Home Furnishings Market, a number of vendors felt that while Shaw's exit will be felt, it creates opportunities for those willing to step in.
"Nobody was expecting it. We really didn't compete head to head with Shaw, but it creates a void with some good retailers for companies like Jaipur to help fill it," said Asha Chaudhary, president of Jaipur.
In KAS's new showroom, Wendy Reiss, VP of key accounts, said while the company has traditionally focused on handmade rugs, it does have a presence in machinemades, which means it can help fill the gap vacated by Shaw. "Since the machine-made category has become an important category for us, I think additional opportunities are welcome. We'll keep our eyes open for them," she said.
It was unclear at press time what the decision means for Shaw's licensees, including Bob Timberlake Inc., and HGTV Home. Jim Slagle, president of Timberlake, said the company is committed to seeing Shaw through the transition as it weighs its next move.
"We're constantly monitoring our options and how things like this can change and what our intentions would be going forward," Slagle said. "I'm looking forward to meeting with Bob to see what vision he has for us going forward and what we want to do moving on."
Based on sister publication Home & Textiles Today's research and reporting, Shaw Living experienced a 2.5% total sales increase in 2013 to $280.9 million from $274 million in 2012.
Satya Tiwari, president of Surya, said from the scope of overall business, it makes sense for Shaw to focus its attention to areas in which it can reap more benefits.
"For them, I think it's a great decision. Area rugs are a small part of what they're doing," Tiwari noted.
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