
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, May 29, 1990                   TAG: 9005260182
SECTION: BUSINESSS                    PAGE: A5   EDITION: 
SOURCE: Josh Kurtz The New York
DATELINE:                                 LENGTH: Medium

CARPET SALES IN U.S. BRACE FOR BIG SLUMP

For the U.S. carpet companies that survived waves of consolidation during the 1980s, the real challenge is just beginning.

Now they face an era of slack demand from their customers in real estate and the automobile industry.

New products are at best a distant promise. And the growth of Shaw Industries Inc. threatens its rivals.

Analysts say the industry will become still more concentrated.

A report to be issued by Carpet & Rug Industry magazine counts 170 domestic carpet makers in 1990, down from 350 in 1980.

The leading and third-ranked producers from 1980 are gone.

Thirteen North American mills have been sold in the last 16 months, with nine independent carpet makers absorbed into other companies.

Before the late 1950s, carpeting was a luxury.

Now, the mills turn out so many millions of yards, so rapidly and inexpensively, that carpeting is usually far cheaper than hardwood floors.

"Now we almost take it for granted," said Ronald E. VanGelderen, president of the Carpet and Rug Institute in Dalton, Ga.

Almost three-quarters of the nation's carpet mills are in the Dalton area, where labor and water remain plentiful and relatively cheap.

Carpet production set a record in 1989 of almost 1.4 billion square yards, or, as VanGelderen is fond of saying, "an amount equal to a 9-lane interstate highway, fully carpeted, around the equator."

But the age of strongly increasing sales appears to be over.

Production rose 224 percent in the 1960s and 76 percent in the 1970s as carpeting became common in U.S. offices and homes.

Output rose only 13 percent during the 1980s, a gain largely because of the introduction of stain-resistant carpeting.

Now that roughly 80 percent of all residential carpeting made in the United States has some form of stain blocker, even the industry's optimists admit that the rush to buy carpeting has subsided.

VanGelderen sees some profits even in economic adversity.

Housing starts are down, but people who are moving, or updating their current homes, often call for new carpeting, he says.

Fifty-five percent of all residential carpeting sales are replacements, with the other 45 percent for new homes.

On May 9, John Baugh, an analyst with Wheat First Butcher & Singer Securities, said that the weak economy was reason for cutting his earnings estimates for Shaw - by eight cents a share, to $2.15, for the year that ended March 31, and 12 cents a share, to $2.85, for the current fiscal year.

by CNB