Carpet and Rug Industry

OVERVIEW

The carpet and rug industry proc- esses natural and manmade fibers into various types of floor cover- ings. Carpets and rugs accounted for more than 75 percent of the 1.7 billion square yards of floor cover- ings sold in the U.S. in 1989 (see Figure 1). Typical products in this industry include tufted and woven carpets, rugs, bathmat sets and synthetic playing surfaces. Basic statistics are provided in Table 1.

CHARACTERISTICS

Since 1986 mergers and acquisitions have changed the character of the carpet industry. The medium- and smallsized companies in the industry have been the primary benefactors of these mergers and acquisitions. Shaw Industries' pur- chase of West-Point Pepperell's carpet and rug divisions (Cabin

tries) was the major acquisition among the larger companies. This acquisition has had the greatest impact on market share. Shaw's sales approximately doubled as a result of the takeover, which placed them solidly in the leading position for sales in the industry. The top ten firms account for just over 50

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percent of the U.S. sales, while the top 25 firms account for about 79 percent (see Table 2).

Carpet production primarily takes place in Georgia, South Carolina and North Carolina. Some carpet and rug production also occurs in Pennsylvania and Califor- nia. About 65 percent of all U.S. carpet production takes place in North Georgia with the center of this production being Dalton, the "carpet capital" of the world (see Figure 2). Over 200 carpet-related manufacturing plants are located in the Dalton area.

Since 1980 carpet manufacturers have demonstrated a progressive

SIC 227

trend toward backward integration as a cost saving measure. Compa- nies practicing backward integra- tion produce the yarn for use in producing their own carpets, thus avoiding the manufacturers' markup.

All the top 25 carpet manufactur- ers now have the ability to produce yarn from raw fiber. The primary suppliers of raw yarn fibers include such companies as Allied, Amoco, DuPont and Monsanto. Dorsett and Beaulieu, two medium-sized manufacturers, are the only produc- ers capable of making their own nylon fiber.

Carpet markets can be divided

Table 1

orpet and Rug Industry Basic Statistics (1986)

the industry and now accounts for over 70 percent of all residential carpet sales. Many firms are now concentrating on the fairly new and a"

SIC 2271 2272 22?*

XNDUSTRY Woven Carpets Tufted Carpets & Rugs 8E Rugs Total

Employment (OOO) 3.4 43.7 49.8 Shipments Q Mil) 381.8 8,050.9 8,672.0 Value Added ($Mil) 186.2 2,196.6 2,485.8 Cap. Expend. ($ Mil) 6.3 128.5 143.3 Cost of Mat. ($Mil) 183.6 5,881.3 6,202.8

'Totals include SIC 2279 -Carpets and Rugs not elsewhere classified

into two main groups: residential (or retail) and commercial. The resi- dential market includes carpets for home use and accounts for just over 20 percent of all carpet and rug sales (see Figure 3). The remaining sales occur in the commercial market which includes offices, the hospitality sector (hotelsand motels), schools, hospitals and doctors' offices.

tion closely tracks the building industry, with winter months generally being slower. Recession years, such as 1981, hurt the indus- try. However, U.S. shipments increased almost 66 percent overall

Carpet and rug industry produc-

Figure 1 1989 Sales of Floor Coverings

................ ............... ................ ...............

- Cgyet75.7% -

- Resilient Vinyl

- Ceramic 3.9%

16.5%

- Hadwmd3.9%

during the 1980s. Because this industry is charac-

terized by intense competition and low profit margins, larger manufac- turers focus on increasing their market share through a nationwide expansion of their sales force. In addition, industry leaders have focused on building distribution centers in key locations across the country to help reduce lead-times on orders. Emphasis has also been placed on increasing the tradition- ally low profit margins of this industry through modernization of plants and equipment.

resistant carpet was a great boost to The introduction of stain-

Figure 2 U. S. Camet Production

growing area of carpet tiles for the commercial sector. These tiles are small squares of carpet that can be replaced as they wear out without having to replace the entire carpet. Two of the newest advances in carpet technology are anti-microbial and anti-static carpets. Anti- microbial carpet inhibits the growth of bacteria and is gaining widespread use in hospitals and doctors' offices. Anti-static carpet reduces the buildup of static electricity and is useful wherever electronic equipment is present.

Imports of carpets appear to be leveling off while exports continue to rise (see Figure 4). In 1988 carpet exports rose 19.9 percent to $398 million (3.7 percent of total textile mill shipments). Imports declined 1.3 percent to $596 million, or about 7.1 percent of U.S. consumption of carpet. The majority of all imports are higher end woven and tufted wool products. Most U.S. manufac- turers show little interest in export- ing, preferring instead to concen- trate on the expanding domestic market. The profitability of export- ing bulky carpets is limited by the high costs associated with overseas shipments. Imports from Europe

should also remain low as long as the dollar is fairly weak. European manufacturers will probably not devote much attention to the U.S. market until after 1992 when the European economic community drops trade barriers. Trade with Canada should increase with the signing of the U.S./Canada Free Trade agreement. Recent purchases by the Canadian firms Soreltex and Peerless Carpets of Cumberland Mills and Galaxy Carpet Mills respectively support this expecta- tion.

whole is generally good. Mergers and acquisitions are expected to slow down. Sales should continue to climb throughout the early 199Os, as baby boomers will be in their prime buying years for household furnishings, including floor cover- ings.

The outlook for the industry as a

MANUFACTURING METHODS AND ENERGY USE

Carpet production involves differ- . ent manufacturing steps depending on the style of carpet desired.

Figure 3 Carpet and Rug Markets

I I

Office 29%

Hospitality 22%

Retail 21%

Education 10%

I ,- Health 9% I

Woven carpets are produced by simultaneously intertwining the surface pile with the backing into an integrated whole. Tiifted carpet is produced by forcing yarn through a pre-woven backing with needles. An application of latex prevents the yams from pulling out of the pre- woven backing.

Although several different types of woven carpets exist, the manufac- turing process is basically the same. Predyed yam is woven to form the carpet. Tufted carpet, by contrast, can be made in several different ways as illustrated in Figure 5.

The most popular method involves tufting greige or uncolored yams into a primary backing made of jute or manmade fiber such as polypropylene. This is followed by dyeing, a process in which the carpet is immersed in a liquid dye bath heated with steam to provide high temperatures allowing the dye to penetrate the yarn. The carpet is then dried in gas fired ovens. Finally, a secondary backing com- posed of foam rubber and either jute or polypropylene is applied to the carpet. This process involves liquefying the rubber and compress-

Figure 4 Carpet and Rug Industry: Trade Data

Table 2

Carpet Company Sales 1988 US. Production

Shaw Burlington Salem Fieldcrest Amstrong Horizon Mohawk JPS Carpet Queen Galaxy

Top 10 U.S. totals

Exdudes Shaw's purchase of Armstrong World Carpets

ing it between the carpet and the jute or polypropylene. This finished carpet is then heated in a gas-fired oven allowing the carpet to bond with the secondary backing. The secondary backing provides stabil- ity and durability to the carpet while holding the tufts of carpet in place.

Y

1 (Millions $)

700 .

" I 1985 1986 1987 1988 1989 I

Imports Exports

i

TRADE As s o c 1 A n o N s

American Association of Textile Chemists and Colorists P. 0. Box 12215 Research Triangle Park, NC 27709 (919) 549-8141

Carpet and Rug Institute P. 0. Box 2048 Dalton, GA 30702-2048 (404) 278-3176

American Fiber Manufacturers Association 1150 17th Street, NW, Suite 310 Washington, DC 20036 (202) 296-6508

INFORMATION SOURCES

EPRI, Textile Industrv Scoping Study, November, 1988

U. S. Dept. of Commerce, Bureau of the Census, 1986 Annual Survev of Manufactures, 1987 Census of Manufactures, and 1990 U.S. Industrial Outlook

Katherine Lanshe, “Forecasts Past and Present,” Carpet and Rug Industry, Rodman Publications, Ramsey, NJ, July, 1989

Frank ONeill, “The Top 25,” Carpet and Rue Industry, Rodman Publica- tions Ramsey, NJ, July, 1989

“A Big Pie,” Carpet and Rug Industry, Rodman Publications, Ramsey, NJ, June, 1989

ABOUT INDUSTRY BRIEFS

Basic funding for this Brietis provided by the Electric Power Research Institute (EPRI), a non- profit organization that conducts research and development on behalf of the electric utility industry. Industry Briefs are designed to provide the utility marketing representative with an overview of industry trends, manufacturing methods and energy use character- istics of each industry. Such infor- mation will enable utilities to identify, evaluate and implement industrial DSM options suitable for specific process industry groups.

This Industry Brief was developed by the EPRI Textile Office at the College of Textiles, North Carolina State University. The Resource Dynamics Corporation coordinated technical review and production.

For technical information, contact EPRI Textile Office College of Textiles North Carolina State University Box 8301 Raleigh, NC 276958301 (919) 737-7550

For ordering information, call EPRI’s Affiliate Member Program 1-800-4320-AMP

Copyright 0 1991 Industry Brief, Vol. 1, No. 15 Electric Power Research Institute Palo Alto, California

Dennis Grant Murphy, The Materi- als of Interior Desien, Stratford

Burbank, CA, 1978 --G=py,

Figure 5

1 Tufted Carpet Production: c

Process Flow Diagram

Re-dyed Yam -+ Tufting

?

Depending on the style of the carpet, a final shearing process can be added. Shearing smooths out any uneven areas of the carpet and removes the loop at the top of the pile, creating a plusher cut-pile style of carpet.

While the process described above is the most common method for manufacturing carpet, many variations exist. One involves using predyed yam in the place of greige yam, eliminating the need to dye

- v

variation is to apply the secondary backing before the dyeing process takes place. If this is done, however, the dye must then be printed onto the carpet. The added weight of the secondary backing would make it impractical to dye the carpet in a continuous fashion. In both of these variations, a shearing process can be added if needed. Finally, a third variation in carpet manufacturing is the production of carpet tiles. A finished roll of carpet is cut into the

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v

tiles. In 1986 the carpet and rug

industry spent almost $154 million on energy (see Table 3). Tufted carpet accounted for over 92 percent of this expenditure. These numbers are the result of two factors: the lower number of carpet weaving mills and the energy-intensive dyeing and backing processes used to produce tufted carpet. Electric

-energy use for tufted carpets

Greige Yarn +

the carpet. A second possible necessary size squares for these

Table 3

Finished Backing + Shearing Tufted

Carpet Continuous

Dyeing Tufting

Carpet and Rug Industry: 1986 Energy Use Statistics

* Backing Print Dyeing

1

cost of Purchased

Fuels & Electric Purchased Energy Energy Electricity Cost

SIC Industry (.$mii) imii W’hi (Smii)

2271 Woven Carpets & Rugs 7.1 68.6 4.1 2272 Tufted Carpets & Rugs 141.8 1,166.8 57.7 227 Totals 153.9 1,289.8 65.0

*Total include SIC 2279 -Carpets & Rugs not elsewhere classified

totalled 1,166.8 million kWh and cost $57.7 million. This compares

Applicable DSM Load Objectives for SIC 227

I I

I Strategic Load Growth

Strategic Conservation

5' '_

. . . . , . .

. .

. . , . 3 . ' .. .. . ., .: ,

with woven carpet electricity use of 68.6 million kWh at a cost of $4.1 million. Woven carpet electricity costs accounted for 57.7 percent of its (woven carpet) total energy cost. Electricity cost for tufted carpets are only 40.7 percent of total energy costs due to the heavy dependence on non-electrical energy processes for dyeing and backing carpet (the two processes not used in produc- ing woven carpets). Electricity is used mainly for tufting and shear- ing.

DEMAND-SIDE MANAGEMENT OPPORTUNITIES - _ . . I

The cyclical nature of the industry results in varied energy use patterns depending on the economy. During prosperous economic times carpet companies may operate 24 hours a day, six or seven days a week; economic downturns can cause companies to scale back their operations to less than 40 hours a week. Based on these operating characteristics, three demand-side management (DSM) objectives are applicable (see box).

Load shifting applies when plants are not operating around the clock. Manufacturing shifts involv- ing shearing and tufting and other energy- intensive processes could be moved to off-peak hours. Shifting individual energy-intensive proc- esses such as dyeing and backing the carpet to off-peak hours, how- ever, is not a viable option-they must be done as the carpet amves for processing. Being wet processes, they are also the least electricity intensive.

crpportu- nities include the substitution of high-efficiency motors and applica- tion of industrial process heat pumps to recover some of the energy used in dyeing. The high thermal energy requirements in carpet and rug processing could make cogeneration a viable energy supply alternative.

Each of these potential conserva- tion options could involve substan- tial investments. The competitive nature of the induitry has lowered profit margins to the point where few companies could justify invest- ing large sums of money in such systems unless the benefits are substantial or companies are offered financial incentives. Utilities serving carpet and rug firms could offer plant audits as an initial step in helping these customers evaluate and adopt some of these energy savings options.

Another strategic conservation option involves the use of compu- terized monitoring devices which can be installed on existing equip- ment fairly cheaply while dramati- cally effecting operating efficiency. Computer monitoring systems have already been proven to work on tufting machines.

Strategic Load Growth options are associated with those process heating applications that currently rely on fossil fuels. For example, radiofrequency (RF) drying ma- chines are being installed in some plants to dry carpets. Automated processing could also result in strategic load growth. The intro- duction of RF dryers has an energy saving potential, but most compa- nies do not consider the return on these capital expenses as being high enough to justify such an outlay. This is especially true considering the low profit margins of this industry. Again, this points to the need for utili ties to work closely with their carpet and rug industry customers to help them make informed energy and technology ChGkX deCiSiOX5.