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April 30, 2008

Dixie Group to cut labor force

By Jamie Jones

Five years ago, Chattanooga-based The Dixie Group decided its future hinged on the niche market of high end residential carpets and rugs. The company was generally able to weather the slowing of the floorcovering industry as customers with money to spend on pricier carpet and rugs did so.

But on Tuesday Daniel Frierson, Dixie Group chairman and chief executive officer, revealed plans to cut about 8 percent of the company’s 1,400-person work force, postpone salary increases and not refill vacant positions to help offset “a very difficult period as an industry.” Frierson said the company will not cut sales staff. The Dixie Group does not have any operations in Dalton, but is a key player in the carpet industry.

Gary Harmon, the company’s chief financial officer, said the total number to be laid off isn’t yet known. Harmon said most of the cuts would be in Alabama and California.

“Obviously, if things get worse, we will work harder at that and look at additional cuts,” Frierson said in a conference call with analysts.

The company released its first quarter earnings report on Tuesday. The Dixie Group reported a $13,000 profit for the first quarter of 2008, which was a 92 percent decrease from the same period a year ago. Income from continuing operations was $82,000, compared with $237,000 a year ago. Revenue dropped to $70.7 million, falling 5.1 percent from the same period in 2007.

Several other floorcovering companies, including Calhoun-based Mohawk Industries and Dalton-based Shaw Industries, have cut jobs and reduced hours for their employees.

In 2003, The Dixie Group sold to Shaw Industries its yarn, tufting, dyeing, finishing, needlebond, distribution and logistics facilities in Calhoun, its needlebond facility in Dalton, and its carpet recycling facility in LaFayette. At the time, the Dalton facility had more than 100 workers. The Dixie Group markets and manufactures carpet and rugs to high end residential customers through the Fabrica International, Masland Residential and Dixie Home brands. High end carpet and rugs for commercial applications are marketed by Masland Contract.

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