Capel Incorporated

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Capel Incorporated

P.O. Box 826
831 North Main Street
Troy, North Carolina 27371
U.S.A.
Telephone: (910) 572-7000
Toll Free: (800) 334-3711
Fax: (910) 572-7198
Web site: http://www.capel-rugs.com

Private Company
Incorporated: 1957 as A. Leon Capel and Sons, Inc.
Employees: 450
Sales: $50 million (2000 est.)
NAIC: 314110 Carpet and Rug Mills; 421220 Rugs Wholesaling

Capel Incorporated is the oldest and one of the largest manufacturers of rugs in the United States. Located in the textile and furniture producing region of North Carolina, Capel produces thousands of rug designs each year at its Troy headquarters and its manufacturing facilities worldwide. The company has captured an annual average of 7 percent of the $1 billion area rug market. Capel distributes its wares through a vast network of retailers throughout the United States and the world. Contracts for proprietary lines of merchandise with Pottery Barn, L.L. Bean, and other retailers have contributed to Capel’s stellar reputation as a purveyor of fine floor coverings.

The Early Years: A New Departure

In 1917, A. Leon Capel, an industrious 17-year-old North Carolinian, began a manufacturing company dedicated to the production of mule harnesses and ropes. His father, William Elijah Capel, was a prominent citizen in Montgomery County, North Carolina. Among the senior Capel’s many enterprises was the buying of faltering textile mills which he then restored to workable condition and sold for profit. It was one of these businesses that his son A. Leon Capel took over and named Gee Haw Plowlines.

However, A. Leon’s entrepreneurial enterprise was destined to be short-lived when, according to family lore, Capel traveled to Atlanta searching for distributors eager to sell his products. It was during that trip that Capel took notice of a newspaper article announcing the unveiling of Henry Ford’s new invention, the mechanical tractor.

A future dedicated to the production of mule ropes and harnesses for plowing fields appeared to be anachronistic overnight. Capel’s Gee Haw Plowlines, like many other businesses of the era, was faced with industrial and technological advances at a revolutionary rate. Capel, though challenged, was not defeated. Economy and thrift were strong traditional values in the early 20th century and Capel sought out another manner in which to use his inventory of rope products and the machinery and knowledge he had acquired. Capel gambled on a future in mechanical rug production, and created a family company that would produce quality goods for decades to come.

For centuries, cultures had produced hand-tied, hand-knotted rugs all over the world. Early American pioneers had decorated their homes with handmade rag rugs and animal skins. Capel found that by using his machines to braid rope and yarn, and completing the process by sewing the braids into concentric circles of ever increasing size he could produce beautiful area rugs that were useful, durable, fashionable, and affordable. It was the first time braided rugs were manufactured on a mass scale outside the home. A. Leon Capel aptly renamed his new business New Departure.

In order to grow his business, Capel bought his own loom in 1926. He began producing chenille yarn for rug use. Capel found chenille to be durable enough to hold up to foot traffic yet able to provide the comfort and warmth that customers desired. Capel found a market for his rugs and production continued to grow throughout the decades.

The Next Generation

In the 1930s Capel’s wife, Clara, gave birth to three sons and a daughter—A. Leon, Jr., Jesse, Arron, and Blanche. All three sons entered the family business in their 20s. In 1957, A. Leon Capel renamed his company A. Capel and Sons, Inc. to include the second generation owners. Jesse took over the business in 1957 until Leon was discharged from the Army and Arron finished school. All three owned an equal share of the company and served as its co-directors. Jesse Capel served the company as executive director in charge of manufacturing, and as the company’s treasurer, Arron Capel managed Capel’s retail operations and domestic spinning facilities as executive director, and A. Leon Capel was executive director of sales and marketing for the company.

The company bought its first spinning mill in 1936 when it took over an operation that had closed during the Great Depression. Ironically the mill had been rebuilt by A. Leon Capel under his father’s direction years before. Capel purchased another mill in 1960 to enlarge its operations, and in the process founded Capelsie Mills, Inc. The following year the Capels founded another corporation to manage the company’s real estate holdings, and Capel Real Estate was established.

Capel was involved in every step of its production from the time wool or synthetic materials arrived at its plants. Spinning, dyeing, braiding, knotting, weaving, sewing, packaging, distribution, and marketing were all done under the supervision of Capel family members. Capel expanded to include imported rugs in 1963. It began growing its foreign inventory with Spanish needlepoint rugs, and wool specialty rugs from Belgium and Holland. Area rugs from the Near and Far East also were included in the company’s stock. Domestic products in Capel’s line came from North Carolina and Dalton, Georgia looms, while imports originated from China, Belgium, and Egypt, with the company maintaining its status as one of the largest importers of rugs from India.

In 1972 the company’s founder, A. Leon Capel, passed away, leaving his sons equal ownership of the family business. The legacy of fine rug-making continued. In 1978, one of Capel’s early original designs, known as “Old Homestead,” was inducted into the Chicago-based Floor Covering Hall of Fame. Braided rugs, more so than any other area rugs, were identified with Americana and the colonial and pioneer lifestyle, and Capel had a lot to do with the association.

By the late 1990s, according to an article in Business North Carolina, the rug manufacturer was selling its products through 10,000 retail stores in all 50 states. The company also had vendors in Canada, Australia, Japan, Europe, and South America, and processed over 500 orders a day.

The company remained family owned and operated, with third generation Capels, known as G3, taking over more and more of the corporate leadership. Kea Capel Meacham, Jesse Capel’s daughter, acted as marketing and creative services director; her siblings J. Smith and Mary Clara were the imports manager and administrative services coordinator, respectively; Ron, Arron’s son, worked as general manager of retail; his other son, Richard, was manufacturing manager; and Leon’s daughter Cameron controlled human resources for the retail division.

The family did not always agree on the direction the company should take. Consolidation in the rug industry during this time had many businesses clamoring for their share of the retail market. In 1998, Capel brought on board a family-business facilitator to assist in defining the company’s future leadership and direction.

According to home furnishing analysts in 2000, area rugs was the fastest growing segment of the $11 billion floor covering industry. As within many other home industry segments, innovations in rug design and materials were leading to a wide selection of rug styles, from traditional to very contemporary. Capel, known for its high quality colonial style braided rugs, grew its operation to include over 100 different rug styles. Prices for the company’s products ranged from $10 to close to $12,000, depending on the size and type of rug.

High Fashion Floor Coverings: 1990s-2000s

In an October 25, 2001 Washington Post article, Kea Capel announced, “We’re not just about colonial anymore, and all those braided rugs aren’t just oval anymore either. While still a core product for the company, they’re looking considerably snappier these days. One pattern called Sunny side Up is woven in alternating rows of chenille and cotton in pinks and other candy colors ... it’s one of the hottest patterns in our line.” Braided rugs in differing shapes, animal prints, flat weave, even camouflage fabric had all made there way into Capel’s contemporary lines.

In 1998, when aromatherapy was a growing market in home products, Capel developed a scented braided rug by placing scent pellets within the fabric core. In the bold departure, Capel manufactured two rug prototypes, in cedar pine and floral fragrances.

In June 2001, Capel reopened a showroom on Fifth Avenue in the Home Textiles Building after moving its New York base of operations 23 years earlier. The company had moved its showroom to Third Avenue in 1978 to be included in the New York center of the floor covering market, but found its market increasing in textiles and so wanted to be back on Fifth Avenue. Capel began to cater to customers at the Home Textiles Show, where bed and bath buyers attended in great number. The company’s imported Indian and Chinese cotton rugs, competitively priced from $9.99 to $29.99, were well received by specialty stores and catalog merchants, making a presence on Fifth Avenue a strategic investment. In April 2000 Capel secured a large booth at the Home Textiles Show in Manhattan and, as a result, signed a significant number of partnerships with top retailers.

Company Perspectives:

Capel provides a unique range of quality floor coverings and complementary products at the best possible value. Capel utilizes domestic and foreign manufacturing, innovation, marketing and research and development to maintain leadership. The company strives for excellence on a personal and corporate level through quality, sennce, innovation, market acceptance and industry leadership.

The company had attempted to use resources wisely through its years of rug production. Capel manufacturing facilities recycled over 10,000 pounds of yarn a day, either converting it into reusable yarn or selling it to converters. The company made chenille yarn out of odds and ends of fiber threads that were hand color-matched and plied back into yarn. Through the Bob Timberlake collection Capel participated in the Keep America Beautiful Program, a national nonprofit public education program emphasizing responsible reuse and waste conservation practices in U.S. communities.

Capel began focusing a good part of its distribution through other name brand retailers in the 1990s. The company entered agreements with large volume well-known companies partially in response to the consolidation of the retail sector, which Capel had sold to throughout its years. According to an article in Business North Carolina, Leon Capel opined, “The biggest challenge most manufactures, and certainly Capel, are facing is the changing format of retail.” Capel explained that 80 percent of the market was moving to large discount chains such as Home Depot, Sears, Target, Wal-Mart, and Kmart.

The company had considered opening its own line of retail storefronts. It had maintained six showrooms around the country, as well as eight separate outlet stores for a number of years, but its retail/outlet facilities had been within North Carolina and Virginia.

In the 1990s, Capel secured merchandise deals with L.L. Bean and Pottery Barn Kids. Other companies with product ties to Capel included Linens ’n Things, La-Z-Boy Furniture Galleries, and ABC Carpet and Home.

In August 2001 Home Textiles Today announced that Capel had signed a licensing agreement with wildlife artist Dick Idol to manufacture rugs depicting outdoors motifs from the artist’s work. The company had not had any such agreements since 1997 but saw the trend towards wildlife themes as a significant enough market to justify pursuing the license.

Capel sold directly in a limited way through its eight retail sites in North Carolina and Virginia but Internet sales growth was expected to be a substantial piece of the company’s direct sales in the future. The company redesigned its web site in 2001. The web site showcased 150 standard designs, styles, and colors utilizing an easy format to search through company inventory. The site made it easy for consumers to view and select products. The redesigned site also increased the number of visitors to www.capel.com from roughly 12,000 per month to nearly one million. The web site offered promotional enticements including a monthly rug giveaway to one lucky winner.

At the end of 2001, Capel Incorporated stood as a successful family-owned and operated business that had endured for almost a century. The company was responsive to industry changes, determined to construct good products within a broad price range, and working tirelessly to maintain its market share in a competitive industry. Leon Capel, Jr., explained the company’s direction in the Home Furnishing Network’s trade publication HFN when he said, “creativity, foresight and financing are key to Capel’s growth and its ability to avoid major problems.” As to the future, Capel mused, “It is unknown, but Capel Inc., will continue to be an aggressive leader in rug manufacturing—both domestic and import.”

Principal Divisions

Capelsie Mills, Inc; Capel Real Estate and Development.

Principal Operating Units

Manufacturing; Retail Operations; Domestic Spinning; Sales and Marketing.

Principal Competitors

Colonial Mills Carpet, Inc.; Robin Industries, Inc.; Oriental Weavers USA Incorporated; Shaw Industries, Inc.; Mohawk Industries, Inc.; Orian Rugs Inc.; Costikyan Ltd.; Harounian Rugs International; 828 International Trading Co. Inc.; Aladdin Manufacturing Corp.; Nourison Rug Corp.

Key Dates:

1917:: A. Leon Capel begins Gee Haw Plowlines.
1918:: A. Leon Capel begins manufacturing braided rope rugs, names his business New Departure.
1926:: Capel buys local North Carolina loom to produce chenille yarn for rugs.
1936:: Capel buys a small spinning loom in Capelsie, North Carolina.
1957:: The company is renamed A. Capel and Sons, Inc. as Capel’s sons enter the family business.
1960:: The family founds Capelsie Mills, Inc.; during the decade, Capel begins selling its goods in the international marketplace.
1961:: Capel Real Estate Corporation is formed.
1963:: Capel begins importing rugs.
1972:: A. Leon Capel dies.
1978:: Capel’s rug design “Old Homestead” is inducted into the Floor Covering Hall of Fame.
1980:: A. Leon Capel and Sons, Inc. changes its name to Capel Incorporated.