Shaw Industries’ Carpet Fiber Advantage: The company’s South Carolina expansion evidences its commitment to carpet – October 2024

By Kemp Harr

Warren Buffett’s decision to add Shaw Industries to Berkshire Hathaway’s investment portfolio is a testament to the viability of the floorcovering industry as a sound investment for the long term. Flooring is a key contributor to the function and aesthetics of an indoor space, and over time, it wears out and has to be updated. Just as paint-Benjamin Moore is another Berkshire Hathaway business-is a necessary finish for walls, new flooring is core to revitalizing the interior of a building. As such, the demand for flooring might ebb and flow with economic conditions, but there will always be a demand.

One of Berkshire Hathaway’s core strategies for the companies it owns is to invest heavily in their durable competitive advantage, or economic moat. Just as a circle of water around a castle protects the structure from attack, an economic moat protects a company from being encroached upon by its competitors.

One of Shaw Industries’ economic moats is its scale and expertise in the U.S. carpet industry. As Floor Focus reported in our May Annual Report, Shaw commands a 36.4% share of the domestic carpet industry, and its wholesale carpet revenue in 2023 was $1.26 billion larger than the nearest competitor. And that revenue gap between number one and number two is larger than the total carpet revenue of number three.

This past April, FloorDaily ran the news that Shaw was nearing completion of the $500 million expansion of its Aiken, South Carolina carpet yarn facility-the largest single capital investment in the company’s history. One might challenge an investment of this magnitude in carpet-a flooring category that’s been slowly losing marketshare to hard surface flooring. But at 31% marketshare in 2023, it is still the largest flooring category in the business.

In mid-August, Floor Focus was invited to tour Plant 78 on the outskirts of Aiken, and it was impressive. As David Morgan, executive vice president of operations at Shaw, expressed on the tour, “There is no other carpet yarn facility in the world that is as advanced as this one.” From the German-made Oerlikon Neumag bulk continuous filament (BCF) S8 extrusion equipment to the Italian-made doffing robots to the latest in variable twisting and heat-setting equipment, this plant is the most high tech and efficient textile facility in the industry.

One example of the type of innovation made possible by this new facility is Shaw’s new Elevate carpet collection, an entry-level carpet that gives the budget-minded consumer a better experience due to its tight construction, tricolor visual and durability.

The lint-heads reading this article might want more details on the equipment and how it’s configured, but Shaw is keeping a tight rein on this information. One nugget we can share is that the production capacity of this operation will be 2.6 million to three million pounds of yarn per week, up from 1.4 million pounds per week prior to this investment. It comes as no surprise that this advanced textile mill is in South Carolina-a state that’s long been known for its leadership in fiber technology. Let’s not forget that Clemson University once had a college devoted to textile science.

There’s no denying that the 300 new jobs added to the 600 existing jobs prior to this expansion will be a boon to the local community. Those who understand extrusion know that this plant runs round the clock. And gone are the menial tasks of handling fiber packages-that work is now done by robots. This allows the employees to focus on the more challenging operations that come with process automation, new product innovation and quality control. These jobs require a higher level of skill, which commands better pay and raises the bar for the community. And to get the existing employees up to speed, Shaw is partnering with local community colleges to teach the skill sets needed to work at his advanced facility. Former doffers, for example, are being trained to maintain the automation equipment. And to help with employee retention, this facility is air-conditioned and equipped with basketball courts and other team-building amenities for employees to use during their break times.

Why Shaw has positioned its largest carpet fiber plant 250 miles from most of its tufting operations in and around Dalton, Georgia? The answer is two-fold: to mitigate risk from damage caused by a major weather event and to diversify its worker base in a community like Aiken, where it can hire select talent from more than one region.

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