Thread: 'Carpet Capital' economy unravels

By Shannon McCaffrey
Associated Press Writer

'Carpet Capital' economy unravels
Published: 03/29/2009


DALTON - Inside a cavernous factory, massive machines that churn out carpeting for Home Depot and Lowe's were idled on a recent Friday as workers took a forced day off without pay.


Across Dalton, the self-proclaimed "Carpet Capital of the World," storefronts stood vacant, once bustling restaurants were virtually empty and police battled a rising methamphetamine problem.

This city in the foothills of the Appalachians, which makes nearly 75 percent of the country's floor coverings, has felt a mountain of economic troubles since the country's real estate boom went bust.

Plummeting demand for flooring has led to a near doubling of Dalton's unemployment rate. Foreclosures are on the rise. And there are signs that the population may be shrinking.

There are doubts that Dalton's economy will ever look the same again - even after the nation's financial crisis ends.

"This has been a tough, tough time," said Ralph Boe, president of Beaulieu of America, one of the "big three" carpet manufacturing companies, which employ a combined 37,000 workers in north Georgia. Boe's company has shed 1,100 jobs over two years.

Another, Shaw Industries Group Inc., announced this week that it was closing plants in Calhoun, near Dalton, and Valdosta, in south Georgia, which will idle about 600 workers.

Mario Moreyra, who lost his job at a Shaw carpet plant, said he would do just about anything to pull in a paycheck right now.

"I'm not being picky and still I'm not finding anything," the 26-year-old said as he scanned online job listings at a career center.

Dalton's reversal of fortune is forcing residents and business leaders to confront an underlying problem that Detroit knows all too well: its economic rise and fall are too dependent on one industry.

Local officials three years ago launched a drive to diversify the economy and that effort has taken on added urgency since the housing market collapse. Tax breaks and abatements have already helped lure an automobile parts manufacturer to the region.

Brian Anderson, president of the Dalton-Whitfield Chamber of Commerce, said he envisions a new Dalton that is still a manufacturing center but one no longer dependent on just one industry. Job skills from the carpet mills translate into a ready work force, said Anderson, who wants to lure chemicals and plastics companies - and even call centers - to the region.

But such a turnaround could take years. And until then, Dalton's fate is tied to the volatile housing market.

U.S. demand for floor coverings has fallen a combined 34 percent over the past two years, according to the Dalton-based Carpet and Rug Institute.

That impact can be seen in a near doubling of Dalton's jobless rate over the past year to 11.2 percent, and that doesn't count the many Hispanic workers who may not have been in the country legally. The Labor Department says the Dalton region posted the second-highest increase in joblessness in December 2008, compared with the same month the year before.

The National Association of Realtors reported Monday that sales of existing homes grew 5.1 percent in February, the largest monthly sales jump since July 2003. Economists were encouraged by the news but sounded a cautionary note: sales nationwide were down 10 percent from a year earlier and tens of thousands of homes remain mired in the foreclosure process in Florida, Nevada and other epicenters of the housing meltdown.

Still, Werner Braun, president of the Carpet and Rug Institute, said that when the housing rebound happens Dalton will see the impact almost immediately.

"We're a leading economic indicator," Braun said. He said most large stores have very little carpet in stock, meaning that when a customer places an order for a rug the carpet mill begins making it.

The group is pushing members of Congress for a home refurbishing tax credit that would give people an incentive to buy carpet and other furnishings. There's been no legislation yet but Braun said lawmakers have been receptive to the idea.

Dalton's emergence as America's carpet hub was something of an accident. It began in the late 1800's when Catherine Evans Whitener began to sell her hand-tufted bedspreads. The spreads became popular and soon other local women followed suit.

Carpets came next. The craft really took off when local residents figured out how to mechanize the process.

The rise of tufted carpets from Georgia dovetailed with the World War II housing boom and soon carpets - once synonymous with luxury and wealth - were available to the masses, according to Randy Patton, author of "Carpet Capital: The Rise of a New South Industry."

In the last decade or so, the industry grew so rapidly and jobs were so plentiful that Hispanic workers flocked to the region. Their arrival changed the complexion of this blue-collar Georgia city. In 2005, the U.S. Census estimated 29 percent of the area's population was Hispanic. And it wasn't just single males coming but families putting down roots.

Now anecdotal reports suggest some of these workers are leaving as jobs disappear. Officials said school enrollment - once on the rise - has been flat. And some Hispanic grocery stores have shut their doors.

Throughout the region there is a rising sense of fear as the recession shows no signs of letting up.

"There isn't any work," said Charles Steele as he slumped in a chair waiting to speak to a job counselor at the state Labor Department's Dalton Career Center.

The 50-year-old had worked installing home security systems. When he was laid off late last year he wasn't worried. He figured he could easily find work in shipping and receiving, his fallback. Months later he's still looking.

"Nothing's there. That's starting to scare me," Steele said.

Danny Cope, manager of the career center in Dalton, said some of those who are coming in seeking help have spent decades in the region's carpet mills.

"They're scared. A lot of people have been at these jobs for a long time, technology has passed them by," Cope said. "This is their first time ever drawing unemployment."

Methamphetamine has long been a problem in north Georgia. But the economic woes appear to have added to the troubles.

Jim Langford, executive director of the Georgia Meth Project, said the jobless no longer have to submit to random drug testing at the carpet mills. With time on their hands and few prospects for work, anecdotal reports suggest use of the drug is up in the region, Langford said.

Unlike other American manufacturing sectors - such as the auto industry - which have suffered as jobs and business have moved overseas, the carpet industry has remained rooted within U.S. borders.

But Patton doesn't expect it will ever return to its heyday in 2005 when the local joke was that "if you couldn't find a job, you simply weren't looking hard enough."

"I think those days may be over," Patton said

http://mdjonline.com/content/index/show ... 0531.html#

The cost of wall to wall carpet per pound is low and so it is not something that can be done easily by China. The stores also carry limited stock so producers need to have a fast turn around on orders. The Mecicans can compete and we will probably be seeing more coming from there.