Carpet & Rug Manufacturing

Industry Insight

Date September 2015

By the numbers


Current trends

  • Industry shift towards pre-dyeing hitting values of continuous dyeing lines hard>
  • Demand for staple fiber extrusion lines is low>

Key statistics

  • Industry revenues: $10.1 billion (U.S.)
  • Major product categories: Yarn, backing, carpet
  • Significant companies: Shaw Industries, Mohawk Industries, Engineered Floors, Interface, Beaulieu Group
  • Market share of top: The four largest companies account for approximately 60% of revenue
  • Recent sales trends: The value of U.S. private nonresidential construction spending (SAAR), a demand indicator for commercial floor coverings, increased 8.2% year-to-date in June 2015 compared to the same period in 2014, while U.S. private residential construction spending (SAAR) increased 7.0% for the same period

Industry recovery focusing on capital investment: During the Great Recession, the industry contracted a massive 40%. But an improving economic climate, especially from the residential and automotive sectors, resulted in steady year-over-year gains during the past six years. Nearly all of the major players in the industry announced expansions and investment in recent years. Still, industrial production remains far below pre-recession levels. Margin improvement focused on the modernization of equipment and enhancing production efficiency to lower labor costs. At the same time, less strategic plants continue to shut down and capacity remains idle. Plant closures affecting more than 500 people were announced during the second quarter of 2015 alone.

Limited marketplace for some used equipment: In the carpet industry, the size of equipment is important. The U.S., Canada, United Kingdom, Australia, and New Zealand are the only countries typically making 12-foot wide carpets. The remainder of the world makes four meter (13.12 feet) wide carpet, so 12-foot wide equipment does not sell in those countries. This limited marketplace for U.S. equipment depresses values for equipment like tufters and twisters. However, lead times of up to a year for major pieces of machinery mean that late model equipment still retains value, even in a limited marketplace. For example, in recent times, an order for a new, highly technical tufter producing the “newest pattern capability” required an eight to 12 month wait as machine manufacturers worked through a backlog. Under these conditions, large carpet companies in the U.S. purchased used machines to fill current orders, rather than wait.

New technology rendering some dyeing lines almost worthless: The fundamental techniques for making carpet changed very little during the past two decades, but what has changed is how it is dyed. For decades, the industry primarily relied on post-dyed techniques, such as beck dyeing, print dyeing, and continuous during, techniques in which fibers are dyed after tufting and the dye penetrates just the outer surface of fibers. But increasingly, the industry is moving towards pre-dyed processes, such as solution dyeing, stock dyeing and skein dyeing in which fibers are dyed before tufting. The process leaves carpet perfectly consistent and colorfast because fibers are dyed all the way through. These qualities boosted the popularity of pre-dyed products and the industry is pivoting toward these production methods.

For example, Engineered Floors, the third largest manufacturer of carpet in the U.S., announced in 2012 that it would build the world’s largest state-of-the art 2.4 million-square-foot production facility in Carbondale, Georgia by 2016. In August, the company also announced its intentions to build another new plant in Northwest Georgia focused on producing carpet tile. The premise of both of these plants is to use solution-dyed methods to streamline production, reduce labor, and save water. The market for continuous dyeing lines evaporated as a result of this seismic shift. With no growth on the horizon for this type of equipment in the U.S. or Canada, mills that invested millions of dollars in this production process are finding the equipment has little value on the secondary market, and most active international customers aren’t interested because they are located in countries where water is not available to conduct the process. Thus, equipment on these lines would most likely be sold piecemeal, recovering only a fraction of its installed cost.

Industry shifting from staple to continuous filament fibers: The largest carpet manufacturers are vertically integrated and have plants that handle fiber and yarn processing, but the needs are changing. To create staple (or spun) fibers, synthetic pellets are melted and extruded into hair-like filaments. They are heated, cooled and crimped before being cut into seven to eight inch lengths and packed into bales. To process into yarn, fibers still need to be blended (to prevent streaking), carded (to add strength), and drafted (to be properly positioned). But in recent years, both Shaw and Mohawk moved to close plants that produce and tuft spun yarn, which is obsolete and labor-intensive, in favor of newer facilities that use a bulk continuous filament process. In this method, continuous filament extrudes as one long string and is then twisted and heat set together to form strands of yarn. The process is automated and more cost-effective to manufacture. Because of this change, staple fiber extrusion lines (from OEMs such as Fare and Bouligny) used in the manufacture of spun fiber have limited marketability and low market value. Extrusion lines used in bulk continuous filament processes (from OEMs such as Barmag/Neumag), on the other hand, remain desirable.