The decision by flooring giant Shaw Industries to build a plant in northwest Georgia is more than a dose of good news for a region struggling to recover from the recession. It’s also an indication that the housing market and Georgia’s carpet industry, one of the state’s most important manufacturing segments, are on the rebound.
Shaw, the world’s largest carpeting manufacturer, said Thursday the carpet tile facility in Adairsville will employ 500 and cost $85 million. The announcement comes after a local rival, Engineered Floors, said in May it would invest $450 million to build two nearby carpet plants that would employ 2,400 people.
The two flooring companies are placing sizable bets that the pace of new construction will quicken as the nation distances itself from the housing collapse of five years ago that forced the carpet industry to shutter facilities and shed thousands of jobs.
“The fundamentals of the housing market are so strong that I don’t think a lot will slow it down over the next couple of years,” said Vance Bell, Shaw’s chief executive, in an interview.
It’s cause for cheer in the rolling hills of the northwest corner of the state, where carpet manufacturers and flooring firms sprawl along Interstate 75. The region around Dalton, known as the carpet capital of the world, has struggled with double-digit unemployment rates for years.
Dalton once held the unhappy distinction of being the metro area that shed the most jobs of any in the nation. And despite modest recent growth, federal statistics show the area has lost about one-fifth of its workforce since its workforce peaked at more than 80,000 jobs in the summer of 2006.
Yet a more buoyant housing industry offers promise. Metro Atlanta’s long sluggish housing sales are suddenly enjoying double-digit gains compared to the same month last year. And though analysts say the growth can’t keep up the torrid pace, the local market’s revival mirrors a national trend.
The widely-watched S&P Case-Shiller Home Price Index released this week noted that home prices in the nation’s 20 biggest metro areas increased 12.1 percent between June 2012 and June 2013. And a report this month from McGraw Hill Construction projected that new home starts across the nation will rise 6 percent this year, reaching $506 billion.
“It’s hard to overstate how the housing market problems disproportionately hit the northwest corridor,” said Roger Tutterow, a Mercer University economist. “We saw nearly one out of every five jobs disappear from Dalton. And now they are starting to ramp up again.”
The state and Shaw didn’t immediately disclose the details of the incentives offered to land the plant, though Bell said they were competitive. The larger Engineered Floors expansion netted state incentives that totaled more than $105 million. Gov. Nathan Deal said that the state’s investment in the carpet industry would pay off.
“Companies such as Shaw Industries are moving aggressively to meet demand, and Georgia stands ready to equip them with the trained workforce and infrastructure network they need,” Deal said.
The expansions are something of a political coup as well. The jobs are in the backyard of Deal’s GOP rival, Dalton Mayor David Pennington, who has launched a primary campaign claiming the governor hasn’t done enough to jumpstart the economy through tax cuts.
In a statement, Pennington said Deal shouldn’t take credit for new jobs spurred by homegrown expansion and “quit talking about how great he is making things.” Deal’s campaign countered that the Dalton mayor “doesn’t get how silly he looks bad mouthing the successes of the Deal administration.”
The Dalton area, a 90-mile hop north of Atlanta, became a carpet hub in the early 1890s when a local woman named Catherine Evans Whitener pioneered a new tufting technique. Now carpet companies in Georgia supply more than 90 percent of the U.S. carpet market and 54 percent of the nation’s carpet exports, according to state figures.
Shaw’s new plant, which will gear some of its production toward office and healthcare markets, is expected to break ground in 2014. Bell said the company also plans to open a sister plant in China to serve the Asian market, but that domestic carpet production will revolve around Dalton.
“We’ve gone through tough times but we continued investing significantly in our company,” he said. “The manufacturing hub for carpet will always be in northwest Georgia. And this area will benefit.”
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