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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (62722)	4/25/2005 2:43:37 PM
From: Slagle	Read Replies (2) \| Respond to of 74559

TobagoJack Re: Carpet industry trends. The consensus is that the business is slowing down a great deal at the retail level and the slowdown since December has been considerable. This time last year business was good. Ceramic tile and wood flooring may be doing better but they are slow too and vinyl flooring is doing worse than carpet. This is what I have been told today by people who are in a position to know. Whether this is carpet specific due to price increases due to the rise in the price of the petrochemicals from which carpet is made or the slowdown is due to a slowdown in demand for flooring materials overall is not clear. Still...all new houses have floors and ALL those floors have floorcoverings. I can't imagine a single square foot of any new home, at least any home that would qualify for a mortgage that would not have floorcovering and over 60% of that floorcovering in the US is carpet, though hardwood and ceramic tile are gaining in market share. There are some factors that make the US carpet industry a pretty good gage for the US housing industry at large. One is its concentration; 80% of the US carpet market is supplied by mills located within a 65 mile radius of Dalton, GA. Very little carpet is exported and very little is imported. There is a big import market, but that is mostly in woven area rugs and the like, not in the tufted broadloom that is part of the initial construction of the new house. In other words, a new house is not occupied until the carpet has been installed. Even the petrochemical feedstocks that are used to make carpet fiber, backing and adhesive are products of the domestic refining industry. Another thing I didn't realize is that there has been a big shakeout on the fiber supply side and even if oil goes down yarn and fiber, especially nylon, may continue to rise. Today there are only three independent fiber producers; a decade ago there were a whole bunch. Slagle