Local News

March 20, 2011

Effects of high gas prices felt by carpet industry

When the price of gas soars, the carpet industry takes notice.

“It affects both the transportation of goods and the cost of raw materials,” said Kemp Harr, publisher of Floor Focus magazine. “It’s a double whammy to the business.”

Changes in gas prices are felt all along the supply chain, from the suppliers to the manufacturers to the retailers — and ultimately — to the customer, who pays more for the final product. The most popular carpet fiber, nylon, is petroleum-based, while the most prevalent backing, polypropylene, is closely tied to the price of oil. Carpet is also shipped by gas-guzzling tractor trailers.

So it’s no wonder why many in The Carpet Capital of the World keep a watchful eye on the price of a barrel of crude oil and the seemingly ever-changing numbers at the gas station pumps.

Harr said the carpet industry tried to raise prices last year in response to higher raw material costs but received “pushback” from big-box retailers such as Home Depot and Lowe’s and other large buying groups. Carpet companies enacted a price increase in January anywhere from 7 percent to 9 percent to offset the rising costs of raw materials. So far, that increase has stuck.

“One of the good things about it now is when they see it at the pump they know it’s going to happen,” Harr said.

Calhoun-based Mohawk Industries is the world’s largest floorcovering company and has facilities throughout the world. In February, Mohawk raised carpet prices 7 percent to 10 percent to offset raw material cost inflation. While commenting on the company’s fourth quarter 2010 and overall 2010 financial performance, Chairman and CEO Jeffrey Lorberbaum pointed to rising raw material costs as a continued obstacle.

Lorberbaum said the “seasonally slow” first quarter is being affected by harsh weather and increasing raw material costs. He also listed changes in raw material and energy costs as one of several issues the company will grapple with throughout the year.

Despite the many concerns, Lorberbaum still has optimism about this year.

“The economic recovery and stronger consumer spending will positively impact our industry in 2011,” Lorberbaum said.

To reduce their reliance on oil, carpet companies are looking for innovative ways to conserve energy, said Werner Braun, president of the Dalton-based Carpet and Rug Institute.

“I think that’s a trend we will see the industry continue into the future,” Braun said.

Harr said several companies are using technology to find alternative fibers.

Mohawk, for example, touts its SmartStrand carpet with DuPont Sorona as being manufactured with 37 percent renewable resources.

Making the Sorona polymer requires 30 percent less energy than the production of an equal amount of nylon, while greenhouse gas emissions from the manufacturing process are 63 percent lower than from nylon manufacturing. This drop in energy use equals to about one gallon of gasoline saved per every seven square yards of carpet.

National Average Per Gallon    

                      Unleaded    Diesel

Friday              $3.54    $3.93

A week earlier    $3.54    $3.92

A month earlier    $3.13    $3.53

A year earlier    $2.80    $2.93

Source: American Automobile Association

 

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