December 11, 2011

‘The carpet industry is going to flourish’

Despite recent slump, Bob Shaw is bullish on Northwest Georgia’s future

Jamie Jones

— To the casual eye, it’s a confluence of piles of dirt and brawny steel.

To the passerby, it’s just another tucked-away building amongst a sea of buildings near the South Bypass.

To Robert E. “Bob” Shaw, the building represents much more.

In a time of floorcovering plant shutdowns, painful layoffs and runaway unemployment, Engineered Floors’ 215,000-square-foot carpet yarn plant under construction in Dalton is affirmation the carpet industry doesn’t need its obituary written just yet. Shaw, who built a carpet empire as the co-founder and head of Shaw Industries before stepping down in 2006, hopes the facility will reinvigorate Northwest Georgia’s slumping economy. At the same time, he believes the plant can reignite the entrepreneurial spirit that built Dalton into The Carpet Capital of the World.

“I can go to The Oakwood back table and hear them saying, ‘Gosh, the good old days sure were good. We’re in a recession, we’re in a depression but it will never return,’” Shaw said during a rare interview at his downtown Dalton offices. “That’s the biggest bunch of bull I’ve ever heard.”

Dalton-based Engineered Floors is a privately held carpet yarn producer with facilities in Calhoun that Shaw founded in 2009. The company produces stain-resistant and colorfast PureColor solution dyed polyester yarns for residential replacement, builder and multi-family housing carpets. It currently employs 500.

In September 2006, Shaw stepped down from Shaw Industries. At the time, he was the only chief executive officer the company had ever had. Why, after spending more than 40 years building Shaw Industries into the world’s largest carpet manufacturer, did he not choose just to retire and play golf every day?

“I played golf for about four months,” Shaw said with a laugh.

One of the main reasons for returning to the carpet industry was to give back to Northwest Georgia, Shaw said. He is a graduate of Dalton High School and still resides in Dalton.

“I made a fortune here, I’ll tell you that, and I made it right here,” Shaw said. “I owe it to the community to at least do what I can to return some of what it did. The carpet industry is going to flourish.”

In 2009, Engineered Floors broke ground on its first plant in Calhoun. A year later, production began at the plant. By the end of 2012, the Calhoun plant will expand to 650,000 square feet from its current 510,000 square feet. The Dalton polyester carpet yarn plant will open in early 2012, employ 200 and will have room for expansion.

“If by some stretch of the imagination Engineered Floors is successful, that will attract, quite frankly, satellite businesses that will probably employ five times as many people that work at Engineered Floors,” Shaw said. “If we will start capturing some of the success of entrepreneurship, we then will start bringing in educated people to Northwest Georgia.”

The Engineered Floors Dalton plant will be the second largest manufacturing facility to open here lately. IVC U.S. operates a 520,000-square-foot vinyl manufacturing plant near the South Bypass.

“Success breeds success,” said James Lesslie, a 30-plus year veteran of the carpet industry, who recently joined Engineered Floors as assistant to the chairman and was most recently chief operating officer of Beaulieu of America, the country’s third largest carpet manufacturer. “Now there is more than one plant that has been built in our community. We sincerely hope there will be others.”

Shaw said the problems the floorcovering industry is facing are “short term.” He doesn’t see any other countries — including China — as a threat to the carpet industry because of the difficulties in shipping large rolls of carpet. He also does not believe any product will replace soft floorcovering.

“This community has something that nobody else has,” Shaw said. “We have a moat built around us. Third World countries can’t compete with us in our carpet industry. We have a growing population and nobody can do it better than we can do it right here.”

To overcome the current challenges, the floorcovering industry needs some help, he said.

Worrisome to Shaw is the state of Georgia’s ability to be competitive with neighboring states such as Alabama, North Carolina, South Carolina and Tennessee. He believes repealing energy taxes on manufacturing, mining and agriculture would be useful in closing that gap. State officials have been hesitant to remove the tax, since forecasts indicate removing the sales tax on energy would cost the state government about $160 million a year.

Closer to home, Shaw sees several obstacles. There is a dearth of “truly” local banks willing to lend, he said. There are also too many top presidents or managers of locally based companies who choose not to live in Dalton, he said.

Does the floorcovering industry in Northwest Georgia have a bright future?

“If we have businesses that are redeploying capital someplace else, the answer is no,” Shaw said. “If we have capital that’s made in Northwest Georgia and redeployed in Northwest Georgia, then the answer is yes. It makes a world of difference.”

More cooperation between the city of Dalton and Whitfield County governments and the school systems would also be beneficial, he said. A special commission is studying the possibility of the two general governments merging. The commission members have until April 30, 2012, to decide whether merging makes sense for the city and county and their residents and, if the commission members believe it does, to draft a charter for a new unified government. Voters would vote on that charter in November 2012, and it would have to pass by a majority in both the city and the county.

“If you get two shoulders pushing the plow — meaning the county and the city — in one direction, you’ll get there quick,” Shaw said. “As long as we’re pulling in two different directions and making decisions based on old Friday night football rivalries we’ve got wasted energy.”

Overall, Shaw is bullish on the carpet industry’s future.

“We are really enthusiastic,” Shaw said. “I can almost guarantee you if we don’t get some help, we’ll continue to build plants.”