published Sunday, December 11th, 2011

Carpet pioneer Shaw blazes back into industry after brief retirement

Bob Shaw, former head of Shaw Industries, came out of retirement and is chairman of Engineered Floors.
Bob Shaw, former head of Shaw Industries, came out of retirement and is chairman of Engineered Floors.
Photo by Angela Lewis.
  • Engineered Floors expanding
    Engineered Floors, a carpet manufacturing company led by Bob Shaw, is opening a new plant in Dalton, Ga., to produce solution-dyed polyester carpet.

Golf got boring for Bob Shaw, godfather of the carpet industry, after he sold the company that bears his name to billionaire Warren Buffett and stepped down in 2005.

“I built a golf course and played a lot of golf, but eventually your knees start to hurt and your score goes up,” said Shaw. “You get bored.”

So in 2010 he decided to re-enter the industry in which he first made his fortune, stealing a few glances at his old playbook and writing new chapters on how to manufacture flooring in North Georgia.

It’s paid off.

No stranger to carpet manufacturing, the 80-year-old Shaw has a few tricks up his sleeve that he says already have allowed him to twice double the size of his company, Engineered Floors, to more than $100 million in revenue out of the gate.

As the entire industry contracted in 2011, laying off thousands of workers and closing dozens of plants, Engineered Floors has been hiring workers and building new plants, one of which will come online in the first quarter of 2012.

By the end of 2012 he’ll employ about 1,100 workers under the Engineered Floors banner including more than 500 in Calhoun, Ga., and between 600 and 700 at the new Dalton, Ga., plant, said company President Danny Freeman.

“People I meet around town come up to me and hug me around the neck and thank me for giving them their life back,” Freeman said. “North Georgia is [Shaw’s] home, so we’re going to support North Georgia.”

TIMELINE

2000 — Warren Buffett buys Shaw Industries from founder Bob Shaw

2005 — Bob Shaw steps down as head of the company at nearly the height of its success

2007 — Recession strikes the housing market, causing demand for carpet to drop in the single-family home market.

2009 — Bob Shaw breaks ground on a new plant in Calhoun, Ga., for Engineered Floors, his new company, targeting the multi-family market.

2010 — First full year of operations for Engineered Floors.

2011 — Engineered Floors breaks ground on a second plant in Dalton, Ga, which will have the capacity to expand to 1 million square feet

Source: Engineered Floors


ENGINEERED FLOORS AT A GLANCE

• Headquarters: The historic city hall building in downtown Dalton, Ga.

• Chairman: Bob Shaw, former head of Shaw Industries

• Employees: 500 currently, with plans to add 250 more by the end of 2012

• Plants: Calhoun, Ga, Dalton, Ga [under construction]

• Square footage:

Calhoun Plant: 510,000 sq ft expanding to 650,000 sq ft by end of 2012

Dalton Plant: 215,000 sq ft when completed

• The Environment: The company doesn’t use water to color its fiber, savings millions of gallons per year.

Source: Engineered Floors.

Outside of employment, there’s a good business case to be made for his expansion. Despite what Shaw calls a “depression” in the industry brought on by the national housing collapse, there’s always money to be made for savvy operators.

“They thought the best years of the carpet industry were over with, but I see opportunity here,” he said.

The plan is to focus on the only growing segment in the flooring industry: mid- to low-range carpet designed for rental units, what’s known in the industry as “multifamily.”

“If you think floor covering is not a commodity, you’re wrong,” Shaw said. “I have yet to make a lot of money off rich people.”

It’s a tightly contested market, but his competitors are working with higher transportation costs and aging equipment that is expensive to refurbish, he said.

In fact, much of the equipment used to manufacture carpet in the U.S. dates back to the 1980s, when companies like Shaw Industries began to expand by buying other companies instead of building new plants, said James Lesslie, assistant to the chairman at Engineered Floors.

Engineered Floors, on the other hand, is rushing to finish its second completely new plant in as many years, as builders in Dalton haul state-of-the-art extruders, yarn spinners and heat setters into the 215,000-square-foot building that the company could expand to up to 1 million square feet.

“There hasn’t been greenfield carpet construction since 1980,” Lesslie said. “The carpet coater we installed [in Calhoun] in 2010 was the first one installed since then.”

Starting with nothing but a cotton field and a good idea of how to run a carpet company, Shaw simply built everything from scratch to cut out parts of the manufacturing process that technology has rendered obsolete, he said.

To simplify matters, Engineered Floors essentially makes one type of carpet — solution-dyed polyester — and at less cost than its competitors, Shaw said.

Solution-dyed differs from regular carpet in that the fiber is dyed during the extruding process, giving it a solid color throughout, like a carrot, instead of a coating that can wear off.

“The fewer things you do, that was Henry Ford’s philosophy: you can have any color, as long as it’s black,” Shaw said. “In this industry, to not confuse yourself, you have to put your blinders on and focus on one thing.”

The polyester fiber Shaw uses, more widely available than the commonly used nylon, gives the company better buying power and doesn’t force Engineered Floors to compete with larger players for supplies, he said.

But outside a discussion of the growing regulatory burden that carpetmakers face, or the relative merits of the three most popular petrochemicals, Shaw is just having a good time being back in the driver’s seat.

The simple answer to the question of “Why, at 80 years old, am I getting back into this,” is that he wants to see North Georgia prosper again, he said.

“My mother taught high school here before I was born. I was raised in Dalton,” he said. “We’re still in the ballgame.”

His goal is to “be number one,” a feat he’s already accomplished once in his lifetime as head of Shaw Industries, and he feels that he’s on track to do it again in the same market.

“You don’t go into a game hoping that the other team doesn’t score too many touchdowns,” Shaw said. “You go in it to win.”

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Wilder said...

It was just by the luck of the draw that Chattanooga spawned Jack Lupton, and Dalton, Bob Shaw, and the contrast of their legacies couldn't be more pronounced.

While one man applied his personal wealth, talent and foresight to projects that would provide for a longterm positive impact on his hometown, the other operated devoid of any consideration for the longterm impact of his actions on his fellow citizens.

As Chattanooga's citizens are currently enjoying unprecedented growth and prosperity, Dalton's native citizens not only face the highest unemployment numbers in their state, but they also, literally, find themselves being purged from the community that they and their ancestors spent 160 plus years in building.

December 11, 2011 at 11:44 a.m.
rolando said...

The Georgia police should set up a roadblock just outside the entrances to Shaw's plants...doing legal checks only [license, insurance, registration, etc].

Then see how long his business continues to profit...and to take, take, and yet again take jobs from legal residents.

December 11, 2011 at 4:31 p.m.
Wilder said...

@ Rolando

They would announce the roadblock two weeks in advance, and remind the illegal aliens everyday, and stage Mexican taxis to pick them up the day of the roadblock, and if they could get away with it, charge their fares to taxpayers. The next day it would be business as usual.

Dalton's used car lots are overflowing with "really sharp chorts", in anticipation of the millions of dollars of Earned Income Tax Credit checks that will be E-filed at at one of Dalton's numerous espaniol tax preparers , who eagerly inform the illegal aliens that they can use their Individual Taxpayer Identification Number (ITIN),(obtained without proof of legal status),to "Reclame hasta $1,000 por cada nino” (Claim up to $1,000 for each child).

The majority of illegal aliens who file do not pay any income tax, but file only to claim their Additional Child Tax Credit, with no questions ask. The GAO estimates that 4.2 billion dollars were frauduently obtained in this way by illegal aliens last year.

This is a story that the newspapers will never report.

December 11, 2011 at 7:12 p.m.
Shock said...

I am strongly opposed to illegal immigration, but is no one concerned that these checkpoints violate our constitutional 4th amendment rights? The government is stopping citizens, asking for their "papers" and poking around in their personal property (cars). This doesn't bother anyone? DUI sobriety checkpoints only narrowly made it through the supreme court because according to the majority "they only violate your constitutional rights a little bit" and the trade off of stopping drunk drivers is worth it, supposedly, in terms of saving lives. Now we have checkpoints that don't even pretend to be DUI checkpoints. This government intrusion is pernicious and people need to speak out.

The solution to illegal immigration is not trampling US citizen's constitutional rights. The solution lies in cracking down on companies who are hiring illegals. If they can't get jobs in the US, they won't come here - right?

December 12, 2011 at 8:16 a.m.
chet123 said...

No chech point is needed.....Big corporation only need to stop hiring illegal...they will go back home.......Big Corporation encourage illegal Immigration in the past.....Boosted about how hard they worked.....Big Corporation benifited from cheap labor and the absent of American unions......Now immigration is out of control so big Corp. claim it is the victims.

Vintage republican from Lee Atwater play-book.....the old switch-o-roo.....Create a situation...then blame it on someone else....

December 12, 2011 at 8:44 a.m.
rolando said...

My God, chet. You are right for a change [a big change]...but then, even a broken clock is right twice a day.

Industry that knowingly hires illegals is as much to blame as the illegals themselves...but then, so is a government that pays them to stay here.

December 12, 2011 at 7:23 p.m.
rolando said...

You missed something, Shock. Those roadblocks have been found constitutionally sufficient -- that means they are legal, when properly done. It is not essentially different than asking for a driver's license, a hunting permit, a photo ID, or a Social Security Number at a bank, et al under the appropriate circumstances.

These are NOT US citizens; they are in this country illegally and are criminals from the day they entered.

December 12, 2011 at 7:26 p.m.
rolando said...

Not a word about not hiring illegal aliens...a real problem in Dalton area industry.

Sounds more like making a quick buck than anything else.

Enjoy your new illegal mestizo neighbors, Dalton.

December 12, 2011 at 7:30 p.m.
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