From The Floor Up – Georgia's Shaw Industries Invests In People
Thursday, March 5th, 2015
Vance Bell, CEO of Shaw Industries, headquartered in Dalton, maintains that there are few businesses for which people aren’t the company’s greatest asset. That is why Shaw’s mission —“Great People. Great Products. Great Service. Always.”—begins with people.
As a loyal fan, alumnus and former athlete at Georgia Tech, where the Yellow Jackets use one of Shaw’s products for its football practice field, Vance often observes from the perspective of a coach when considering some of the highlights and opportunities he faces at Shaw. “Business is a team sport and a competitive sport. I’m proud that we have the best team in the business—and are continuing to strengthen the team with new and fresh talent. Shaw’s success depends upon continuing to develop great people – and great leaders.”
Staying competitive in an ever-evolving global economy is key to Shaw’s ability to attract and retain the best possible people. Vance calls it “a war for talent” that will occur over the next few years as the economy improves and as this Berkshire-Hathaway-owned company grows. In his opinion, the winners will be companies that best harness the innovation and creativity of their total pool of talent.
Shaw places a great value on education and training at all levels of the company. On average its associates receive 40-60 hours of training each year. And as the company looks to hire and cultivate the best talent, Shaw has developed innovative programs, such as the Women’s Innovation Network, ShawVET and others to help ensure that they have the perspective, judgment, market knowledge and innovation that come from a diverse, talented workforce.
That focus on education isn’t confined to those who already work at Shaw. Like many U.S. manufacturers, they face a skills gap. With more than $1 billion invested in new equipment, technology and processes over the past few years, Shaw’s operations are more complex than ever. As a result, almost every job at Shaw—from designers and data scientists to machinists and managers—requires a higher skill level than in the past.
To address the needs of 21st century manufacturing, Shaw has partnered with state and local governments, educators in K-12 and higher education and local communities to create programs that help cultivate a competitive workforce—for itself and for other manufacturers. Focused on everything from reading to robotics, these education programs include STEM-focused summer camps for middle schoolers, career pathways in mechatronics for high schoolers and technical skills training necessary to fill in-demand mechanical and electrical jobs.
GROWTH CONTINUES IN 2015
Coming out of the Great Recession, single-family construction and sales, and existing home refurbishment were lower than most experts had predicted. Combined with rising raw material prices and stalled consumer confidence, a weaker market existed for flooring and other household goods than anticipated. Yet, Shaw, the world’s largest manufacturer of carpet and a major provider of hardwood, resilient, and laminate flooring, saw its business continue to grow in 2014.
“We continue to lead the industry in the eyes of our customers, as both residential and commercial divisions topped industry awards for quality, design and service,” said Vance.
“We’re cautiously optimistic about 2015. January got off to a solid start, but as everyone in the industry has learned through the Great Recession, the recovery isn’t always a steady progression and can be volatile.”
Population growth and household formations will force the expansion of the housing market and residential demand in the longer term. Combine that with increased urbanization, and what the residential and commercial flooring industry looks like in the coming years and decades could be very different than the past few decades, noted Vance.
“Shaw has made significant investments in what we expect to be growth markets, and we continue to invest in ensuring our products meet both residential and commercial markets’ high expectations. We’re well positioned to successfully navigate these and other changes and to continue to grow in the process.”
Shaw and the industry continue to see shifts in customer product preference. While carpet makes up the majority of market share in the industry, an increased demand for hard surface materials in both residential and commercial sectors has been evident.
SHAW LEADER IN TRENDS AND STYLES
Shaw Industries for years has been renowned for its trend and style leadership. Since customer preferences are constantly evolving, however, the company relies on its commercial and residential teams to keep a pulse on the market, and its designers gather inspiration and uncover user needs from their travels in the U.S. and around the world.
Armed with research, its marketers work hand-in-glove with the R&D and engineering teams. Shaw, as a vertically integrated flooring manufacturer, produces many of its own ingredient materials and operates its own recycling facilities to provide greater control of processes and opportunities for potential innovation.
Vance adds that he recognizes the value of outside thinking as well, and takes advantage of opportunities to collaborate with others and leverage open innovation seen in not only the company’s products, but in its processes.
According to Vance, one of Shaw’s greatest success stories is EcoWorx – a PVC-free carpet backing that led them from a niche player to a market leader in the fast-growing carpet tile business. Introduced a decade ago after six years of development, it’s now an industry mainstay. “It took extensive work, repeated risk taking and lots of collaboration to develop a product that was durable and environmentally sustainable,” said Vance.
Since Vance became CEO in 2006, Shaw has entered two additional flooring categories—hardwood flooring and luxury vinyl tile (LVT)—and has established industry leadership in both through acquisition and investment.
Shaw Industries will spend over $600M over two years to further expand these new categories, as well as to add capacity to its industry-leading carpet tile business. When the expansions Shaw has announced since 2013 are fully operational in the next couple of years, it will have added another 1,000 new jobs in the United States.
Innovation also takes place daily at Shaw through incremental improvement as well as disruptive thinking. The manufacturer will begin manufacturing LVT for the first time this year. This plant in Ringgold, Georgia is expected to produce opportunities to innovate in this category, as well.
As for what those latest trends are on the residential side, Shaw Floors has pinpointed “Lady in Grey” as the color of the year. The brand cites the continuation of grey as a trend in home furnishings and textile thanks to the sophisticated, modern, high fashion and elegant hue it can bring to the home. Additionally, larger, geometric patterns will continue to be a key design trend in 2015, especially in carpet.
Beyond color and pattern, the “soft” fiber trend continues in carpets. Building upon the successful launch of Shaw’s Caress products a couple of years ago, the company offers consumers “soft” carpeting in an expansive array of colors at a variety of price points with their Caress, Anso Originals, and Clearly Chic product lines.
The trends in hard surface flooring continue to focus on wide planks, large 6”x24” rectangular tiles, and visuals in resilient, laminate, ceramic and porcelain that offer increasingly realistic wood and natural stone looks with high performance features.
On the commercial side, carpet tile continues to grow in dominance with the exception of the hospitality sector that still largely favors broadloom although Shaw is beginning to see noticeable shifts in that market as well.
Saturated and bright colors are expected to be the trend in the commercial sector. Global inspirations such as the structures of India and yarn weaving in Cambodia contribute to the shapes, colors and textures behind some of Shaw’s newer carpet tile designs.
Carpet tile sizes allow for versatility. Beyond the square carpet tiles that are a staple of the commercial building sector, 18”x36” tile and the popular Hexagon tile have added a new element into carpet tile design.
In the same way that carpet tile was initially manufactured to look like broadloom and then evolved to feature its own distinctive patterns, the LVT market is coming into its own. No longer only mimicking the look of wood, stone and other natural materials, LVT product lines now also feature distinctive patterns that allow designers to create an abundance of stunning installation variations. And product collections such as the recently introduced Mixed Materials allow designers to integrate carpet and resilient side-by-side without interruption.
Sustainability is another key strategy for Shaw Industries. “Shaw’s vision is to create a better future for our customers, associates, the company and the communities in which we operate. Sustainability is one of the many ways we strive to achieve that vision,” said Vance.
The sustainable business strategy revolves around driving innovation into the business; protecting and making efficient use of resources; engaging associates, customers, stakeholders, and communities; and focusing on long-term financial success.
Vance added, “By doing so, we are steadily working toward our 2030 goals to:
- Reduce energy intensity 40%
- Reduce total waste to landfills 100%
- Reduce hazardous waste 100%
- Reduce water intensity 50%
- Achieve an OSHA incident rate of zero
- Design 100% of our products to Cradle to Cradle protocols
Shaw is in the process of compiling and analyzing its 2014 metrics, which the company will report in its annual sustainability report to be released this summer.”
“Our efforts to advance toward even more sustainable operations include a myriad of small efforts every day that add up to significant success, as well as groundbreaking thinking that ensures we meet customer expectations,” said Vance.
THE BUFFETT INFLUENCE
When asked what he has learned from Warren Buffett and his business philosophy, Vance responded that Berkshire’s structure and operating system is unique in corporate America.
“Warren gives his CEOs unusual operating and decision making autonomy. As he states, he delegates almost to the point of abdication. This first requires Warren picking the right businesses and people to be in business with—and creating a foundation of trust. It is also built on a strong expectation of ethics and integrity.”
“He has written and stated many times, ‘We can afford to lose money—even a lot of money. But we can’t afford to lose reputation—even a shred of reputation.’ These high ethical standards have been imbedded in Shaw’s culture for years and have been seamless with Berkshire. Culture and ethical standards come from the top and they require careful attention.”