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					                                              Carpets & Rugs
                                                           US Industry Study
                                                    with Forecasts to 2007 & 2012

                                                      STUDY #1679 | June 2003 | $3800


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Carpets & Rugs                    US Industry Study with Forecasts to 2007 & 2012
Study #1679 • June 2003 • $3800 • 225 Pages

Over three-fifths of materials consist of face fibers, with the remainder
accounted for by primary and secondary backings and adhesives


US demand to reach 20
billion square feet in 2007                    Carpet & Rug Demand, 2002
US demand for carpets and rugs is
                                               (17.9 billion square feet)
                                                                                                             Transportation Equip. 6%
forecast to rise 2.2 percent per year
through 2007 to more than 20 billion
square feet, accounting for slightly
under 70 percent of the floor covering
market. This pace represents a decel-                                                                        Nonresidential Building
                                                                                                             24%
eration from the 1997-2002 period,
due in part to expected weakening in
single-family housing completions.

In addition, carpet demand will be
adversely affected by increasing
consumer interest in hard surface
flooring, especially laminates and wood.
However, demand for rugs will benefit
to some extent from this consumer
preference, as scatter and area rug
products are often used in conjunction
with hard surface flooring. Overall,         Modular carpet, or carpet tiles, will fare better than most  Residential Building
carpet and rug demand will be sup-           segments due to its use primarily in nonresidential markets. 70%
ported by a rebound in nonresidential
construction activity, particularly in the
office and commercial segment. Expan-         Area rugs, carpet tiles to                     color or warmth. In addition, modular
                                                                                             carpet, or carpet tiles, will also fare
sion of distribution channels and             outperform most segments                       better than most segments due to its use
product innovations will also assist          The US carpet and rug market has               primarily in nonresidential markets,
demand growth.                                historically been dominated by tufted          which are expected to rebound after
Polypropylene to lead gains                   products, including broadloom, scatter         slow growth in the 1997-2002 period.
                                              rugs and bath mats, vehicular carpeting
among materials                               and artificial grass. In spite of strong       Nonresidential sector to
Materials consumption will closely track      competition from such hard surface             drive industry advances
carpet and rug production, rising two         flooring as laminates and wood, tufted          The nonresidential building market is
percent per year through 2007 to 6.7          carpets and rugs are expected to                expected to provide the best opportuni-
billion pounds. Over three-fifths of          account for just under 90 percent of            ties for carpets and rugs, with demand
materials consist of face fibers, with the    total carpet and rug shipments through          rising 3.3 percent per year through
remainder accounted for by primary and        2007. However, the gains made in                2007. This market will benefit from
secondary backings and adhesives. Of          hard surface flooring will adversely            gains in new construction. Growth in
                                              impact most segments of the carpet and          the residential market will decelerate as
the fiber products, polypropylene will
                                              rug market, except for area rugs.               a decline in new residential carpet and
experience the best growth, due in part
                                              Commonly used in conjunction with               rug demand limits gains overall.
to its lower price and widespread use in      hard surface flooring, area rugs -- which
the rapidly growing area and accent rug                                                       However, the residential market will
                                              can be manufactured through tufting,            continue to account for the majority of
segment.                                      weaving or braiding -- provide an               demand, with almost 70 percent of the
                                              additional aesthetic element by adding          total in 2007.



      Visit www.freedoniagroup.com for complete text and table of contents
Table of Contents                                Letter From the CEO

INTRODUCTION

EXECUTIVE SUMMARY ................ 1                                   Dear Colleague:

MARKET ENVIRONMENT ............. 4                                     In challenging economic times, it is more important than
General ................................... 4                          ever to have credible industry information on which to
Macroeconomic Overview ........... 5
                                                                       base your business decisions.
Consumer Income & Spending .... 8
   Personal Income & Expenditures . 8
                                                                      At Freedonia, it is our mission to provide you with an
   Consumer Financing ............ 10
                                                                      unbiased, reliable outlook for each industry that we study.
Demographic Trends ............... 12
   Population ......................... 13                            We carefully examine available sources, separate the
   Households ........................ 15        wheat from the chaff, and distill an ocean of data into a concise presentation of
Building Construction Trends ... 16              where an industry stands today... and where it is going.
   Residential Construction ...... 18
     Housing Completions ........ 20             At Freedonia, it is our mission to provide you with an
     Single-Family Home Sales .. 22
                                                 unbiased, reliable outlook for each industry ...
     Improvements & Repairs .... 23
   Nonresidential Construction . 24
     Nonresidential Building                     Each Freedonia industry study provides you with the information and analysis
       Space ........................... 26      you need to make important decisions. How large is your target market?
     Repair & Improvements ..... 28              Which product segments are growing fastest? Which markets are growing
Transportation Equipment Trends .. 29            fastest? Our analysts review the relevant secondary sources and talk directly
   Motor Vehicle Outlook ......... 29            to participants in the industry to find the answers.
   Other Transportation
    Equipment ........................ 32        Our Carpets & Rugs study represents the culmination of several hundred hours
Pricing Patterns ..................... 33        of Freedonia analysts' time. In addition to examining various product segments
Market Trends ........................ 34        and major markets, our analysts also look at the materials used in the produc-
Environmental Issues .............. 37           tion of carpets and rugs- the various types of face fibers, backings and adhe-
World Carpet & Rug Overview ... 40
                                                 sives. This study is an excellent tool for both manufacturers and suppliers to
US Foreign Trade .................... 41
                                                 the industry.
   Imports ............................. 42
   Exports .............................. 45
Competitive Floor Coverings                      I invite you to add the Freedonia Group to your team by acquiring our
  Outlook .............................. 47      Carpets & Rugs study today.


MATERIALS ...........................       49   Very truly yours,
General .................................   49
Face Fibers ............................    50
  Nylon ................................    53
  Polypropylene .....................       56   Jeffrey Weiss, CEO
  Polyester ............................    58
  Wool .................................    60
  Other .................................   61
Primary Backing .....................       63
  Polyolefin ..........................     64
  Other Primary Backings ........           65
Secondary Backing .................         66
  Polyolefin ..........................     68
Table of Contents                           (cont.)


  Other Secondary Backings .....            69
Adhesives ..............................    70
  Styrene-Butadiene Latex ......            72        Carpet & Rug Shipments, 2002
  Other Adhesives ..................        73        (17.5 billion square feet)

PRODUCTS .............................      75
General .................................   75
Tufted Carpets & Rugs .............         78            Tufted
  Broadloom ..........................      81             90%
  Scatter Rugs & Bath Mats .....            84
  Vehicular Carpets ................        86
  Artificial Grass ....................     89                                                             Other
Woven Carpets & Rugs .............          90                                                              7%
Other Carpets & Rugs ..............         93
                                                                                                         Woven
  Needle-Punched ..................         95
  Miscellaneous .....................       96
                                                                                                          3%

MARKETS ............................... 98
General ................................. 98
Residential Building .............. 101
  New ................................. 102
  Replacement ...................... 104                                                         COMPANY PROFILES
  Residence Type .................. 106
    Single-Family Structures ... 107                        Solutia Incorporated
    Multifamily Structures ...... 108                       575 Maryville Centre Drive
    Manufactured Housing ..... 110                          St. Louis, MO 63166
                                                            314-674-1000
Nonresidential Building .......... 111                      http://www.solutia.com
  New ................................. 114
  Replacement ...................... 116                    Sales: $2.2 billion from continuing operations (2002)
  Building Type .................... 117                    US Sales: $1.4 billion from continuing operations (2002)
    Office & Commercial ......... 118                       Employment: 7,300 in continuing operations (2002)
    Institutional .................. 120                    Key Products: nylon intermediates and fibers and door
    Other Nonresidential ........ 122                       mats
Transportation Equipment ...... 124
  Motor Vehicles ................... 125                    Solutia manufactures and markets a variety of high-
  Aircraft & Other ................. 127                    performance chemical-based materials for use in con-
                                                            sumer, household, automotive and industrial products. In
                                                            2002, the Company operated in three segments: Perfor-
INDUSTRY STRUCTURE ............ 129                         mance Films, Specialty Products and Integrated Nylon. In
General ................................ 129                January 2003, Solutia sold the Specialty Products
Industry Composition ............ 130                       segment’s resins, adhesives and additives business, which
Market Share ......................... 134                  had sales of about $560 million and employed approxi-
                                                            mately 1,700 in 2002, to UCB SA (Belgium) for $500
Competitive Strategies ........... 138
                                                            million. Following the divestiture, Solutia realigned its
Product Development ............. 139                       remaining operations into two segments: Performance
Manufacturing ...................... 141                    Products and Services, and Integrated Nylon.
Marketing ............................ 144
Channels of Distribution ......... 147                      The Company is primarily active in the US carpet and rug
                                                            industry through the $1.3 billion Integrated Nylon seg-
Mergers & Acquisitions ........... 149
                                                            ment, which includes nylon 6,6 fibers for carpet applica-
Cooperative Agreements ......... 153
Company Profiles .......... 157-225
Freedonia Study #1679 - CARPETS & RUGS

                                             Nonresidential Replacement Carpet & Rug Demand
                                             (million square feet)

                                              Item                            1992      1997     2002   2007    2012


                                              Nonres Building Space (bil sq ft) 77.9     85.9    95.8   106.3   118.3
                                                sq ft floor covering/000 sq       63       66      71      75       9


                                              Nonres Replace Floor Cover Dd 4905        5640     6820
                                                                                                MARKETS7970     9360
                                                % carpets & rugs            56.8      57.5    57.3   56.9
                                                                                   The Markets Section ana- 57.2
                                                                                  lyzes trends and considers
                                              Nonres Replacement C&R     Demand2787 3243     3906   4535
                                                                                  the threats and opportuni-5357
                                                Office & Commercial          1773    2058    2470   2835
                                                                                   ties in each major market3305
                                                Institutional                  729       869     1071   1292    1611
                                                Other                          285       316      365    408     441


                                             % replacement
                                        MATERIALS                           88.6   85.8          88.1   87.0    87.7
                                              Nonresidential Carpet & Rug Demand31463778         4435   5210    6107

 Secondary Backing - Polyolefin

 Consumption of polyolefin secondary backing is forecast to
 increase 2.5 percent annually, the fastest of all backing
 types, reaching 13.3 billion square feet in 2007.
 Polyolefins accounted for 72 percent of all secondary
 backings in 2002, and are expected to increase market
                      percent by 2007. Demand will be
 share to almost 75 SAMPLE PAGE
                performance support each
 fueled by theText sections characteristics of polyolefins,
             table’s durability, and resistance
 including strength, numbers & projections to odors and
 mildew. In addition, the readily available supply of
 polyolefins in comparison to other materials such as jute,
 which must be grown and then imported, will also aid
 growth. Polypropylene accounts for the majority of
 polyolefin consumption.

                                               Tufted Carpet & Rug Supply & Demand
 The leading US producer of polyolefin secondary backings is
                                                Amoco
 BP via its Amoco Fabrics and Fibers division. (million square feet)
 Fabrics and Fibers makes ACTIONBAC, a stain- and mois-
 ture-resistant secondary polypropylene backing which
                                                Item                       1992   1997   2002   2007             2012
 eliminates mold and mildew. This product also produces no
 harmful chemical emissions. ACTIONBAC is produced in & Rug Demand 12900 15580 17960 20050
                                                Total Carpet                                                    22650
 pick counts ranging from 5 to 13, and is designed as an carpets & rugs
                                                   % tufted                 88.7  89.2    86.7   85.6            84.9
 economical option for long-term carpet installations. As
                                                 integrated &
 with fibers, many manufacturers are verticallyTufted Carpetin Rug Demand 11445 13895 15570 17160               19220
 the production of polyolefin backings. For example, Shaw
                                                   + net exports             795   585 PRODUCTS 110
                                                                                           200                    -70
 Industries produces the ECOWORX polyolefin backing
 system for its commercial modular carpet products. This                          The Products Section
 backing contains 40-percent recycled content,Tufted Carpet & Rug Shipments12240 14480 15770 17270
                                                 and is                           provides demand for          19150
                                                Broadloom                    10850      12450 13250 14250 15550
                                                                                          historical years and
                                                Scatter Rugs & Bath Mats       590        990     1380    1750
                                                                                       forecasts growth to 2007 2170
                                                Vehicular                      595        660      690
                                                                                               and 2012 750      830
                                                Artificial Grass               205        380      450     520   600


                                                $/sq ft 0.69                 0.69   0.72         0.73    0.75
                                              Tufted Carpet & Rug Shpts (mil $)846010000        11360   12670   14375
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