June 15, 2007

Boe takes over

By Jamie Jones

The 28-year floorcovering veteran elected to lead Beaulieu of America as its chief executive officer through the aftermath of a troubling federal tax evasion case says he does not believe it will have any negative effects on the company.

Ralph Boe, who has been with Beaulieu of America since June 2001, said he has run the day-to-day operations of the world’s third largest carpet manufacturer for the past six years.

“We don’t expect any change in the business level with those customers based on the comments that they’ve made to us,” Boe said at a press conference Friday afternoon. “They recognize that it’s a serious situation but they also appreciate that we’ve been diligent about how we’ve taken care of it and things are looking positive going forward.”

Beaulieu of America on Friday pleaded guilty to one count of tax evasion dating to 2000 and will pay $33.38 million in back taxes, fines, penalties and court costs. No individuals were criminally charged.

As part of the plea agreement, Carl Bouckaert stepped down as company CEO but will remain as board chairman. He cannot be part of the company’s day-to-day operations. His ex-wife, Mieke Hanssens, will no longer be executive vice president and also cannot be involved in day-to-day operations. She will remain on the company’s board.

Bouckaert and Hanssens co-founded the company in 1978. They will continue to own the business. The Bouckaerts could not immediately be reached for comment and did not attend the press conference.

Beaulieu’s board elected Boe CEO on Friday.

Boe said the company had been waiting for a resolution to the investigation, which involved six countries and spanned 10 years.

“From operating the business day in to day out, he’s (Carl Bouckaert) basically given up the reins some time ago, probably in anticipation that this day was going to come, and wanted to be sure that we were on solid ground and were operating well without his day-to-day involvement,” Boe said.

Boe said he was “excited” to be elected chief executive officer, but that excitement was tempered.

“Certainly I would want to be coming into this position under different circumstances,” Boe said. “I’m honored to be taking on the chief executive role and certainly need to make sure that we as a company and a management team deliver the results. It’s one thing to become something, it’s another thing to stay something.”

Boe admitted that Beaulieu of America was experiencing financial problems when he came aboard in 2002, but said there “was no truth” to rumors that the company was up for sale or was going to be sold anytime soon. Beaulieu of America sold its rug division and its nylon fiber business in 2002, and cut its work force from more than 11,000 to less than 10,000, according to Floor Focus magazine in March 2002. Today, the company employs approximately 6,500 workers.

“We’ve had several years of good growth and profitability and we expect that will continue,” Boe said. “In terms of where we’re headed right now, I feel very confident in that.”

Boe brings a wealth of experience to the chief executive officer position. He worked for DuPont for 15 years before entering the carpet industry. He was president of Horizon Industries from the early 1980s until 1992, and then worked with Diamond Carpet Mills for three years. He also worked for Shaw Industries in Europe before coming to Beaulieu to head the residential side of the business.

“Ralph Boe is a very talented individual and he’s been partly if not primarily responsible for Beaulieu’s success,” said Kemp Harr, publisher of Floor Focus magazine. “He understands the importance of customer relationships and continues to refresh the line of products. He has excellent marketing experiences and I think he’s been a big part of their recovery. I’ve got to think that Ralph being at the helm will continue good things for Beaulieu.”

Although Beaulieu of America must pay out more than $33 million, Boe said the company anticipated the action and had cash reserves through loan agreements with banks to finance the business.

“Even though it’s a significant amount, it will not put the company in jeopardy in any way,” Boe said. “We’re very strong, so we’ll be able to service our business as we’ve serviced it in the past.”

Boe said Bouckaert will still be involved with the company.

“Carl is someone who enjoys customers and enjoys all of the people that work here,” Boe said. “So I’m sure he’ll still be visiting customers from time to time and walking around the plants from time to time, but he won’t have an executive officer position in the company.”

After the company’s five-year probation ends, Bouckaert could decide to come back as CEO, but Boe said “that would depend on how he sees the company five years from now and whether he wants to get back in that role.”

Corporate scandals have made headlines throughout the country in recent years, from Enron to Tyco to Martha Stewart, who once partnered with Dalton-based Shaw Industries to produce a line of floorcovering. Boe said he doesn’t believe Beaulieu will receive a black eye from Friday’s developments.

“I don’t think anyone likes to face any situation like this,” Boe said. “But I think from the standpoint of our reputation that we have hit this heads up, have been very open in the past 10 years, and the government has had full access to anyone in the company. We haven't fought this. We’ve agreed to what the settlement is. I think people will recognize us as having done the right thing in getting this behind us.”

Marilyn Helms, a business professor at Dalton State College, believes the company will be able to quickly put the situation behind it because of the public’s short attention span.

“Unless it affects your job or indirectly you work in that industry, it’s horrible to say, but these things don’t get much playtime,” Helms said. “I think for the general public, there are so many new stories — and a Paris Hilton story of the day — there are so many other things to grab the attention. I think people’s retention span for these stories, if they don’t affect them directly, are very small.”

The inability of carpet companies to establish their products as well-known, household brand names could actually benefit Beaulieu of America, Helms said.

“Despite the industry spending a fortune on advertising, no one really knows which company made the carpet in their home,” Helms said.

She said the tax evasion plea is “life-changing” to the people involved and to the employees of Beaulieu of America, as well as being a “wake up call” to other executives in the floorcovering industry.

Harr said he doubts the majority of consumers will associate the federal tax evasion conviction with the carpet company.

“Dealers want a strong third player in the carpet industry, so they’re going to continue to support Beaulieu for that reason,” Harr said. “They need a strong third option (behind Mohawk Industries and Shaw Industries), so I think this will be a hiccup and will be behind us before we know it. It’s more important to worry about whether this will have an effect on distribution and the number of dealers carrying their products. I would say that Ralph could probably do what he needs to do to maintain his dealer relationships.”

Werner Braun, president of the Dalton-based Carpet and Rug Institute, said Bouckaert has been “among the most valuable voices in the industry” and is currently on the organization’s board of directors. He will remain on the board.

“Carl Bouckaert and Beaulieu have been great supporters of the Carpet and Rug Institute for many years and each are among the most valuable voices in the industry,” Braun said in a statement. “We are happy to learn that this event has finally been resolved and look forward to Beaulieu’s continued leadership in the carpet industry. Their leadership is and will continue to be invaluable to CRI.”