FCNews’ associate publisher and editorial director Steven Feldman recently had the opportunity to sit down with Beaulieu of America’s Ralph Boe, president and CEO, and Jeff Meadows, executive vice president, residential, to discuss the state of the industry and how Beaulieu is positioned to grab a bigger piece of the pie.

Talk a little about business in the first quarter.

Boe: We anticipated this would be a difficult market in 2008 and budgeted accordingly. The residential carpet business was off between 10% and 13% in the first quarter, and we did slightly better.

How did you take market share?

Meadows: As the third largest carpet mill, there is greater room for improvement. We focus attention around three primary business segments— Main Street commercial, residential replacement and builder— and we are making inroads.

What are you doing to lessen the impact of the soft economy and rising energy costs?

Meadows: We have fuel surcharges that we can pass along. We have cut a lot of costs in town. We closed a spinning mill. We try to get as much cost out of the system as possible.

Boe: We had the February price increase to offset increases, but those raw materials have continued to go up beyond those increases, suggesting margins will still be compressed. Also, we have right-sized our business to offset either reductions in volume or some of the ancillary cost increases we’ve faced. And we are changing the mix of our business to provide value products using different raw materials with less negative impact on our margins. For example, expanding our BCF polyester program, launching Healthy Home and Ultimate Home, and Simple Accents, a polyester BCF.

Is there another price increase on the horizon?

Boe: We just had one in February. Another one could be coming in the middle of the year if oil stays at its current rate or continues to rise. We can’t sit still if the raw materials stay at this high level.

Does there come a point where carpet comes close to losing its value proposition?

Boe: I don’t think so because if you look at last year, carpet took share. Why? Because of polyester. As nylon prices continue to climb, polyester offers the value because it has not gone up as much as nylon and polypropylene. If you look at all the fiber growth in the carpet business over the last three years, it’s been all polyester, either staple or filament.

And if you look at the installed square-foot price compared to wood, laminate or ceramic, it’s still a value, even at these prices. We as an industry are offering alternatives— keeping the average price down by changing the fiber base. The price of polyester today equates to the price of nylon three years ago.

Does polyester have a negative connotation in the marketplace?

Meadows: Most consumers are not aware of the type of fiber they are buying. I think the retailer has been the point in the chain where fiber has been most important. As recent as five years ago, many retailers or builders were reluctant to use polyester because of the stigma from the 1970s. But there is much less resistance today.

Everyone has a green story. Give me the two biggest environmental initiatives that separate Beaulieu from its competitors.

Meadows: Healthy Home (see main article) and green energy. (James Leslie, president, Beaulieu Commercial, responded to this question): Global warming is one of the world’s biggest environmental issues. The number one source of global warming is coal-fired electricity. For us, green energy comes from wind power. We buy electricity that is coming from wind farms. Our electricity is not coming from coal. This occurs in our two commercial facilities—Adairsville and Chatsworth.

Meadows: The other big story is Nexterra commercial tile, which has 85% post-consumer material in the backing and some post industrial in the face fiber. About 60% of it is produced from recycled material.