Rug importers shift production
By Lissa Wyman -- Furniture Today, October 14, 2001
HIGH POINT — Hand-made rug importers with ties to Pakistan — and to other countries facing potential upheaval as the United States strikes at terrorist organizations — are shifting production to India and China.
It is a trend that has been under way for several years, but the terrorist attacks of Sept. 11 and the ensuing counter-attacks have focused and accelerated the movement.
Together, India and China already account for more than half of hand-made rug imports. That dominance will become even more pronounced in the near future, importers and retailers predict.
Most notably, the supply of Pakistani-made rugs will be disrupted. Many of the Afghani refugees who have fled to Pakistan in the past decade are part of traditional rug-weaving cultures. As a result, a fairly well-organized rug-making industry has developed in the refugee camps.
The rugs are brought to distribution centers such as Peshawar, a major city in Pakistan, then sent to Germany for finishing and washing. From there, they are shipped around the world.
Importers believe consumers probably are not aware of the provenance of the rugs they see in U.S. stores.
"People buy rugs for color and design, not for political reasons," said Ron Couri, president and chief executive officer of Couristan, an importer of both hand-made and machine-made rugs. "They probably don't know the location and conditions under which the rugs are made."
It's a supply problem, not a demand problem, he said.
"We have a very popular collection of rugs that uses Afghani wool, which is especially prized because it is so soft and lustrous," Couri said. "Afghani refugees weave the rugs on traditional horizontal looms. Now that source of supply is drying up."
Noonoo Rug Co. has specialized in finely knotted Pakistani rugs.
"A few years ago, we began to deal with India as an alternate source of supply," said Gene Newman, Noonoo president. "Now we will be shifting more of our production there. We may also be introducing some rugs from China in January."
Newman noted the Middle East has been a tinderbox of politics and terrorism for the last 50 years, if not longer. "Yet the traditional rug-making industry has survived for thousands of years," he said.
The area surrounding the Pakistan city of Peshawar has been extremely important for production of fairly inexpensive but highly decorative hand-made rugs.
"The war hits the heart of the market for Peshawars," said Reza Momeni, president of Momeni.
Much of Momeni's production currently comes from China and India, but the company also has long-term ties to sources in the Middle East.
"Some traditional import companies have specialized almost exclusively in the Peshawar business, and they will be deeply affected," Momeni said.
Feizy Import & Export, like many importers, has relationships all over the globe.
"We are in constant contact with all our overseas suppliers and have not had any supply-line problems to date," said John Feizy, chairman.
Feizy said there currently is stock on hand of Pakistan-made rugs coming from the Lahore region. "As for the future, it's too soon to tell," he said.
"From a business standpoint, Sept. 11 and its aftermath magnified issues that were already developing in the global economy," said Charlie Peck, president of Trans Ocean Import Co. "Retail sales already were slowing down before the attack. Now, more than ever, stores don't want to take the responsibility for deep inventories."
Peck noted that importers who stock deeply in the United States are in a position to maintain the supply chain. "Today, this is a drop-ship business," he said. "This trend will only accelerate in the weeks and months ahead."
Trans Ocean imports hand-knotted and hand-tufted rugs from China and India as well as machine-made rugs from such European countries as Belgium and France.
Last year, the United States reopened trade with Iran, which is generally considered to be the cradle of the hand-made rug business. However, new Iranian rugs have not made a major impact here. Conflict in the Middle East is unlikely to help that country's trade with the United States, most importers believe.
Many major rug importers came to the United States from Iran after the Shah was deposed in the late 1970s.
"I have been in the United States for over 20 years, and now more than ever, I want nothing to do with Iran or Iranian rugs," said Alex Peykar, a principal of Nourison.
Nourison has become a leading importer largely because of its deep stocking position in the United States, and its commitment to Chinese and Indian production. It also owns manufacturing facilities in China which produce machine-made rugs.
828 International Trading recently entered the hand-made rug business, and most of its products are coming from India and Tibet. "The products are arriving on schedule," said John Shepherd, chairman.
Shepherd was one of the few who predicted consumers may react negatively to rugs made in the Middle East, particularly Pakistan.
"I think consumers may avoid buying rugs from countries known to harbor terrorists," he said. "For the near term, I think Americans may support U.S. companies and products as a patriotic gesture."
There have been no interruptions in supply for Central Oriental, which imports hand-made products principally from India and China. "We've also had some calls from Turkish producers trying to drum up some business," said Mark Ferullo, president.
In addition to potential local production problems, all importers are facing shipping challenges associated with increased security at airports and seaports around the world.
"In the past, we have shipped rugs on passenger jets," said Newman of Noonoo. "That is now being restricted, and we will have to use cargo planes. There will be a backlog,"
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