At what point does a commodity become a product? The answer is not easy to find. For instance, iron ore, coal and power, used in making steel, are all globally traded commodities. Even steel, when it is sold as billets and slabs, is nothing but a commodity. Some of our country’s leading steel makers, with Tata Steel in the forefront, are reducing their exposure to the commodity part of the business by focussing on solution designing for user sectors.
The same is the case with aluminium, till value addition takes it beyond ingots, billets and wire rods to rolled products like cold rolled coils, foil stock and flooring sheets. Copper remains a commodity till the cathodes and wire rod stages. But what about carpets? An intricately designed silk or pashmina carpet woven by Persian or Kashmiri artisans could well become a piece of art to be universally adored and coveted by the super rich.
Otherwise, why auctioneers of the standing of Sotheby’s and Christies should have separate sections for rugs and carpets. Or why did someone think it was wise to buy a Safavid carpet from east Persia at a Sotheby’s auction held in November 2005 by paying a hammer price of $2.03 million. But, here we are not into what is called collector’s pride. Carpets made per se from either wool, manmade materials like nylon or our own humble jute that is pure commodity.
India, the world leader in carpet exports, has achieved unique dominance in handmade rugs and carpets, with some other leading sellers, including China, having almost totally switched to machine-made varieties. Interestingly, even in a puritanical market like Iran, machine-made carpets have started finding custom. What will prove particularly good for the carpet industry of the emerging world is the decision of India, China, Iran and Pakistan to hold carpet fairs jointly. The first such joint fair will be held in New Delhi in March 2011, followed by one in Beijing.
Last year, for reasons linked to the state of the Western economies, Indian carpet exports were down 12 per cent to $525 million. The expected setback in the two zones, accounting for 70 per cent of our exports, prompted the Carpet Export Promotion Council to discover new markets. This has started paying rich dividends. Exports have rebounded over 20 per cent so far this year. Interestingly, the domestic market for carpets is less than one-tenth the size of the exports market. Lack of consumer awareness and poor promotion are cited as reasons behind the tiny carpet market here. But, with more and more people armed with good disposable income joining the ranks of fashionistas, domestic demand for carpets is bound to rise.
Here, we are talking about laying carpets on the floors of private houses. But, the commercial space being created, more in emerging markets than in the struggling-to-recover western countries, already needs carpets in large number for new floor covering and replacement. There could be endless hair splitting as to whether modular carpet tiles, the top of which is nylon and the backing PVC composite, should be seen as a commodity or an industrial product. The point is whatever goes in the making of carpet tiles are all petroleum derivatives. Therefore, the disposal of carpet tiles after these have lived their useful life should be an environmental concern. After all, how much waste can be sent to landfill!
Raj Menon, India head of InterfaceFLOR of the US, says, “We have set for ourselves the target of leaving nil negative environmental footprints by 2020 and we are making encouraging progress. The amount of waste sent by us to landfill since 1996 is down 80 per cent.” This means that InterfaceFLOR, which has identified India as a potentially large market for carpet tiles, has put in place an effective mechanism for recycling of nylon and PVC composite. Users of such carpets have the satisfaction that InterfaceFLOR gives the undertaking of taking away the whole lot of carpet tiles after 15 year of use. But, for the world’s largest manufacturer of carpet tiles, environment care also includes reduction in the use of energy and water per unit of production steadily.
Menon claims as InterfaceFLOR pursues sustainability with “missionary zeal”, efforts over the last 15 years have resulted in savings of $433 million. According to CEO Lindsey Parnell, sustainability, as it is good for environment, is also bottom line enriching pursuit. This unwavering focus on sustainability, he says, has “brought our costs down, galvanised our people around a common cause and we find our products are getting better as the mission is an infinite innovation source”.
InterfaceFLOR makes carpets at six locations in the world, including Thailand, from where imports to India are made. A new factory in China will be commissioned soon, in response to the demand scene there. An InterfaceFLOR factory in our west coast should not be long in coming, as critical demand mass here is building quickly.
