Focus on Leadership - October 2009

Interview by Kemp Harr

Randy Merritt joined the company in May of 1976, less than a week after graduating from the University of South Carolina with a bachelor’s degree in biology. Many times he’s been referred to as “Shaw’s first trainee.” 

He began his career in research and development, doing anything that needed to be done, but mainly learning about carpet manufacturing and construction. His first opportunity in sales came in 1979, when department store chain Carson, Pirie, Scott became his first customer. He has held various leadership positions in R&D, sales, and marketing as he navigates his 34th year with the company.

Q. What is Shaw’s unique selling proposition?

A. Every market segment and channel is different. But if I had to identify perhaps one common theme in all segments, it would be that we work very hard to hear the “voice of the customer.” By that I mean listening to all voices in the channel. The best solution is one that can help all in the channel to be successful. In response to that voice, we work every day to design and innovate product solutions, compelling marketing tools, value added services, and leading edge technology systems to provide a unique environment for these customers to win by partnering with Shaw Industries.

Q. What are the biggest advantages of being part of Berkshire Hathaway? Are there disadvantages? 

A. One of the most important advantages is the independence to do what we need to do to continue to be the best we can be. Although technically Berkshire is a public company, as a division within this very large organization, we are free to do what we need to do in the best long-term interest of our customers and our associates without worrying about one quarter’s result. As for disadvantages, I don’t think we have found one.

Q. Who are your mentors/role models and what did you learn from them?

A. Clearly over the years I was fortunate to be around and to learn from Bob Shaw. But our industry has been blessed with many pioneers that have set great examples for those of us that have followed. The Shaws, the Shaheens, the Sauls, the Bandys, the Lorberbaums and others—these people and many more have been so generous in helping build not only a strong industry but a strong community here in northwest Georgia. They taught me the importance of balance between work, family and community. That’s what makes a true leader. 

Q. In this economic climate, how do you decide where to make cuts and where to make investments?

A. There’s no doubt that in these times we have to look at everywhere we spend dollars and work to right-size our businesses. We have tried to approach this from a perspective of cutting fat, not muscle. An example of where we have made cuts in costs would be the reduction of capacity in areas where there is less demand, and for us that has been principally in staple fiber. At the same time we have to be careful not to make short-term cuts that will result in long-term damage for when the inevitable upturn comes. Conversely, we have continued to invest in projects that make sense for the longer term, such as in BCF, not only through added capacity but through a project like ClearPath Recycling with DAK, which will recycle bottles for inclusion into our BCF PET fibers. We see the growing position that filament (BCF) is going to play during the recovery.

Q. Does this recession offer Shaw any particular opportunities or advantages?

A. It is hard to see many advantages in this economy given the amount of struggle all levels of the channel have experienced. That said, I do think the financial strength of Shaw Industries has allowed us to be more supportive and perhaps even aggressive in support of all of our customers. For some that has meant credit support in response to the banks’ reduced lending. I also think this financial strength has allowed us to continue to invest in systems, support services, and product innovation while some others have had to merely focus on survival. I believe these investments will pay significant dividends when the market does begin to rebound. 

Q. What initiatives have you implemented to ensure that your company will be stronger when the market recovers?

A. We have continued to invest. We have realigned assets to ensure that we have the capacity to provide the types of products in both hard and soft surface that the consumer/end user wants. We have continued to invest in innovations, in marketing and in our brand throughout the recession. And we continue to focus on training and education so that our people are prepared for the upturn.

Q. With game-changing channel issues facing this industry such as e-commerce, direct sourcing, and shop-at-home chains, how do you optimize your sales and yet support the channels that best serve the customer?

A. All of these channel issues are merely opportunities. In a rapidly changing, more diverse world, technology has driven change at dizzying speeds. As a company you can embrace these opportunities or you can ignore them. At Shaw we are working to understand the changes and to adapt, including using new technology and systems to try to support any channel that the consumer/end user sees as viable.

Q. Do you foresee any changes in market dynamics such as fewer retailers, channel collapse, fewer trained installers, supplier consolidation, etc.?

A. There will always be changes. As we have come through the recession over the last three years we have definitely seen a reduced number of dealers. Some have simply decided that the environment was too tough and closed their doors. However, in a recovering economy some will come back. New channels emerge, whether that is via e-commerce, shop-at-home, or other avenues that come about because they achieve a level of service or convenience that the customer demands. 

There’s no doubt that we will continue to see supplier consolidation throughout the channels. In hard surface, especially, imports will continue to play a role. The real question that remains is how the consumer will change coming out of this very challenging time.

Q. What will the economic recovery look like by sector?

A. I think this remains to be seen. If you look at past recessions, most were followed by a recovery year with double digit growth. I seriously doubt we will see that this time around as credit remains a critical issue. I think the recovery in all segments will be a slow, steady climb. But there’s pent-up demand in almost every market. This is especially the case in home remodeling and in the new home market. The beautiful part of the flooring business is that the need never goes away; it may be postponed, but the need is always there. Commercially, the downturn is only about eight or nine months old, and it has been quite severe, especially in the corporate and hospitality markets. While no one knows for sure, we feel recovery is still a ways away in the commercial arena.

Q. How has this recession affected environmental priorities?

A. I don’t think it has. Achieving greater sustainability is not a sprint; it’s a marathon. And we have continued to move down that path, again investing more time, energy, and capital into driving progress and improvement. I think if any area has been impacted it has been the recycling and collection community. This is a developing and infant business. The downturn has definitely added strain to these young, formative efforts.

Q. What is your opinion of the range of green certifications available and how should the industry approach making them more standard, more comprehensive and less confusing to specifiers?

A. This is clearly a great question and one I can’t answer. Every company is working to drive what they feel is most important. For some that is “cradle to cradle,” for others it is recycling and recycled content. It may well be that the government is going to force us all to look at greenhouse gas emissions and other energy issues more closely. Almost every company I know is working with different third-party, independent certifiers to try to get validation of their claims and results. Then you have industry standards like NSF 140, channel standards like LEED for commercial and residential buildings, and FSC for wood. And there are many more. While it is certainly confusing to consumers and end users, the fact that the flooring industry has taken the sustainability issue to heart and all are working to do the right thing is encouraging. I think the flooring industry is ahead of many others in this category and we all should be proud of this. I am not sure we will see the picture clear up anytime soon as we all try to sell to our strengths, certainly in product, but also now in our environmental messaging.

Copyright 2009 Floor Focus