Couristan Moves Production to China
Fort Lee, NJ, August 4, 2006--Seventy years ago, Couristan, the rug and carpet manufacturer, turned to China for handmade rugs to import into the U.S., according to NorthJersey.com. The company returned there in the mid-1970s, contracting with Chinese rug manufacturers.
Now, the company is again looking East--this time to stay.
The company, in a joint venture with China's largest carpet manufacturer, is building a 1-million-square-foot plant in Shangdong Province, on the country's east coast.
When it opens in the spring, the factory will make Axminister woven carpets to order, supplying some of the biggest names in the U.S. hospitality industry, from Marriott to Hilton.
The move is part of an aggressive effort by the 80-year-old, second-generation, family-owned company to make itself more competitive in the global market. Revenue has about doubled in recent years to more than $200 million, said chairman George G. Couri, who runs the company with his brother, CEO Ron J. Couri.
The company also has expanded its Dalton, Ga., distribution center and forged a partnership to build a factory in Poland.
The Chinese venture gives Couristan Inc., one of the largest carpet importers in the nation, a low-wage plant run by experienced local managers who have the connections to cut through the Chinese bureaucracy.
The new plant, on the North Korean border, will hold about 100 machines and employ about 2,000 people, many of whom will live in dormitories built on site, as is the custom in China where many workers come from great distances to find work.
As a direct result of the new plant, Couristan will close an Irish facility and shut down a similarly sized plant near Manchester, England, moving machines from both to China, Couri said.
He noted that his European competitors are increasingly making carpets in China, India, Singapore and Thailand.
"With the wages in Western Europe, we can't compete with competitors who are manufacturing in lower-cost countries in the Far East," he said.
He noted that American carpet workers earn upward of $2,000 a month, but similar workers in Poland are paid $520 and in China only $130.
Despite those wage differentials, Couristan's move into China is relatively rare in the U.S. carpet industry, which is still largely centered in Dalton.
Although numerous other U.S. industries now make goods and invest in China, few carpet makers have set up their own plants there, said James Beach, a spokesman for Georgia-based Carpet and Rug Institute, an industry trade group.
That's partly because carpet is expensive to transport, he said. And China's intellectual property laws are so weak that U.S. manufacturers worry their designs will be stolen, he said.
In addition, most carpets sold in the U.S. are made through "tufting," a fairly simple, highly mechanized manufacturing process that uses little labor, Couri said. Couristan, for instance, gets tufted carpeting made under contract in Georgia, he said.
"They make it so inexpensively down South that China wouldn't be competitive," he said.
Woven carpet, in contrast, requires more--and higher skilled--labor, George Couri said. That makes China's low-wage labor an attractive proposition, especially because Chinese production standards have improved significantly in recent years, he said.
That desire to learn from Couristan's extensive experience was evident Thursday as Zhaoqi Wang, CEO of Couristan's Chinese partner, Haima Group Corp., stopped in Fort Lee on a five-day visit to the U.S. He also visited Couristan's Georgia facility, and even took in a Yankee game.
Wang said that aside from the foreign investment, his company benefits from working with Couristan's skilled technicians.
His company's improved quality has already helped boost exports, which now account for about 30 percent of the company's $150 million in revenue, he said.
Related Topics:Carpet and Rug Institute, Couristan