A couple of months ago, we wrote about the impact that the rising cost of labor and the changing demand for rugs has had on rug prices. Additionally, material costs that started to creep higher and higher during the latter portion of the U.S. recession and have continued to rise into the start of the recovery.


According to an article by Richard Woodard dated July 29, 2011 from just-style.com (a website dedicated to providing the apparel and textile industry with world class business news, comment and analysis), flooding in Queensland and Victoria, Australia early in 2011 led to the doubling of wool prices in just a 12 month period and broker inventories were seriously depleted.  Australia is the world’s largest wool-producing nation.  And unlike other natural fibers like cotton, which can have an increase in production in a relatively quick period of 12 months, it may take years for the number of wool producing sheep to increase.  Until 2011, wool prices were always relatively low, but reduced production and increased demand in the apparel industry has driven up the prices.  According to Hugh Blythe of the British Wool Marketing Board as quoted to the BBC Scotland:  “It really comes down to supply and demand.  There are less sheep in this country and all around the world.  All the wool-producing countries of the world have got roughly half the number of sheep they had at their peak.”  Mr. Blythe also indicated that in previous years, sheep farmers made more money on the meat value of their lambs than on the wool.

When it comes to the prices of garments made of wool, increased demand has help to offset some of the material price increases, while, alternately, decreased demand for wool rugs and carpeting during the recession has resulted in price increases that had to be passed on to the consumer.  According to woolnews.net (a monthly newsletter bringing the latest news from major wool producing countries such as Australia, New Zealand and Uruguay), “The demand for wool carpet is not as strong as for wool garment products.  It is further affected by a slower property construction and development market worldwide.  This substantial increase in wool prices has impacted less on the cost of a garment than it has impacted on the price of carpet, as the cost component of wool fibre used in a garment is a substantially smaller part of the overall manufacture cost.”

Another material important to rug production is cotton, which is used as the foundation of most rugs being hand-knotted today.  Increased demand for cotton from apparel makers coupled with a short supply has resulted in prices which have risen steadily for three years.

According to reporter Stephanie Clifford in the New York Times on November 2, 2010:  “The problem is a classic supply and demand imbalance, with the price of cotton rising almost 80 percent since July and prices expected to remain high.  ‘World cotton production is unlikely to catch up with consumption for at least two years,’ said Sharon Johnson, senior cotton analyst with the First Capital Group, in an email.  Cotton inventories had been low because of weak demand during the recession.  This summer, new cotton crops were also depleted because of flooding in Pakistan and bad weather in China and India, all major cotton producers.  But demand from China, in particular, was rising. And as the economic recovery in the United States began, apparel makers and retailers placed orders for more inventory, spurring even more demand.  As prices rose, speculators entered the market, driving prices even higher.”

A February 11, 2013 article by Alexandra Wexler in the Wall Street Journal stated:  “[China’s] textile mills are importing more cotton than many investors and analysts had expected. This large appetite for imports from the world's biggest cotton consumer, combined with rising consumption of the fiber globally and a decrease in U.S. plantings, has fueled a rally in cotton prices.  Cotton plantings are forecast to fall to the lowest level since 1983, down 27% from 2012, according to estimates from the National Cotton Council, an industry group.  Prices have risen 17% since Aug. 1 [2012], the start of the new marketing year, and are near a seven-month high.”

With no sign of cotton prices easing, several manufacturers’ representatives, including those whose companies provide garments to Walmart, Ralph Lauren, and the Gap, were quoted in the articles we read, as needing to raise their prices as much as 30% to accommodate for the increased cost of cotton.  Similar sentiments regarding the need to increase prices were expressed by representatives of brands like Levi’s, Hanes, Nine West, and Anne Klein.  Interestingly, the price increase of 30% in wholesale garments mirrors the 25-35% increase in wholesale rug prices that we have observed over the last 2-3 years.

It would seem that the reality of the increase in material costs is the same for the rug retailer as it is for the garment manufacturer as it is for the clothing retailer:  as much as each business tries to keep prices down for the benefit of its customers, the more time that passes with the prices of required materials rising and remaining high, the harder it becomes to maintain the prices of finished goods at previous levels.  As for the rug retailer, when it costs 25-35% more to replace a rug that is sold today with a comparable new one, inventory pricing must reflect the expense of keeping a store stocked with high quality merchandise.  In order to remain current and competitive, the rug retailer must bring in new inventory even if the cost to do so is significantly greater than it would have been 5 years ago.


As early as 2006, when he visited approximately 30 hand-weaving factories in Shandong Province, China, Job observed that many of these factories were already in the process of closing, because employment rates were rising so high that people could find better paying work elsewhere.  Shandong Province has a population of over 95 million people according to 2010 Census Data. 

The Impact of Recession & Market Changes on Hand-Knotted Rug Production & Export

This used to be a major weaving center in China where some of the absolute finest hand-knotted rugs were being made, including outstanding silk rugs.  Now Chinese rug making centers on hand- tufted and other machine-facilitated rug types.   As there is an increasing demand for lower priced rugs, China is loosening restrictions on the use of automation and machinery in factories – a restriction that once existed due to the availability of workers exceeding the availability of work.

The December 2012 issue of “Rug News and Design” provides the following statistics from the United States International Trade Administration:

In 2005, hand-tufted rugs were 23% of U.S. rug imports.  By 2010, that percentage had risen to 41%.  And, by 2011, 50% of U.S. rug imports were hand-tufted.

(Hand-tufted rugs are constructed by punching wool strands through cloth to create the desired design, which is then anchored with glue and covered by a fabric backing.  A tufting gun is used to punch the wool through the fabric.  Tufted rugs have gained popularity for both their trendy designs and their ability to replicate traditional designs at a lower price point, but tufted rugs are less durable than hand-knotted rugs, and their overall beauty and material quality are not comparable to well-made, hand-knotted rugs.)

Since the U.S. recession began in late 2008, labor has started to move away from making hand-knotted rugs in countries like India and Turkey, where older weavers have retired and those who might otherwise continue the art and skill of weaving have found jobs in other industries that provide better wages and more reliable employment.  In order to keep the smaller number of willing weavers at their looms, wages have had to increase significantly.  Increased wages in combination with higher material and fuel costs have resulted in a 25-35% increase in the wholesale price of hand-knotted rugs across-the-board.   This means that it costs 25-35% more for the retailer to restock inventory today than it did just four or five years ago.

Following the U.S. recession and the global economic downturn, when the reduced demand for hand-knotted rugs was followed by increasing material and fuel costs, according to data from the United States International Trade Administration, the volume of hand-knotted rugs being shipped to the U.S. hit its low point in 2009 and has only modestly increased in years since.  So, not only has the price of these rugs increased, but the supply of new rugs has decreased as well.

According to the December 2012 issue of “Rug News and Design,” publishing data compiled by Rob Leahy who serves as a Subject Matter Expert for the U.S. Department of Commerce and also works with the interagency Afghanistan Investment and Reconstruction Task Force, the four largest exporting countries for hand-knotted rugs have experienced a decline for the following reasons:

  1. India – Decline primarily due to global economic downturn.  Still biggest shipper of these rugs and slowly recovering.
  2. Pakistan – Decline primarily due to poor demand and political unrest.
  3. Iran – Decline due to U.S. embargo, signed into law July 1, 2010, preventing import of all rugs and carpets.
  4. China – Decline due to major shift in rug production to types such as hand-tufted.

According to several recent articles, including one published February 21, 2013 in the Wall Street Journal, workers are moving away from jobs in industries like apparel and toy making, to look for work in more lucrative industries like electronics.  Following this year’s Chinese New Year holiday, writers Dana Mattioli and Laurie Burkitt stated in their WSJ article that of the millions of migrant workers that will visit their small towns and villages during the extended holidays, a higher percentage of those workers will return to their jobs in support of technology companies, than will return to their positions in other industries like apparel production.   The article goes on to state:  “The developments have American apparel companies scouring other countries for factory sites and have raised concerns in China.”

However, when you compare this crisis of labor in the apparel industry to the crisis of labor in an industry like hand-knotted rug weaving, the skill set is not so easily found in countries outside of those traditionally known for their rug weaving.  Countries like Vietnam and Indonesia, that have the labor force to produce apparel at a lower cost, do not have a tradition in rugs, so it is not a natural transition to develop organized hand-knotted rug production to these countries.  According to the “Rug News and Design” article by Rob Leahy, the most likely country to continue and expand on a tradition of rug-making would be Afghanistan “as Pakistan teaches the Afghan traders new skills and methods.”  The biggest impediment to increased production and export of Afghan rugs is ongoing political and economic instability in this part of the world.  According to Leahy:  “Prolonged civil unrest in either Afghanistan or Pakistan will severely weaken the carpet trade’s relationships with buyers and the consequent lack of demand may prevent this generational knowledge transfer.”

So, it would seem that the future of hand-knotted rug making has a huge question mark hanging over it.  While the U.S. economy is recovering, the demand for hand-tufted rugs has increased, while the demand for hand-knotted has not.  Weavers of hand-knotted rugs, who were once kept busy by the steady demand for these rugs in the 1980’s and 1990’s have now gone on to work in factories where other types of rugs are made, have stopped making rugs in pursuit of work that is likely to be higher paying and more consistent, or have demanded higher wages to continue weaving in light of reduced demand.  With the finest rugs being made by the most experienced weavers, in the absence of heirs to this culturally significant, traditional artisan craft, fewer and fewer high quality, hand-knotted rugs are likely to be available on the wholesale market going forward.

In order to replenish inventory and to maintain pricing stability, it is up to the retailer to buy very carefully.  Job Youshaei continues to hand-select rugs that fulfill his philosophy of providing quality and value to customers, while working with suppliers to get the best prices that he can.  Clearly, in light of all of the above, keeping our prices as low as possible for the beautiful, well-made rugs that we sell provides Job Youshaei Rug Company with both a goal and a challenge.

On June 3rd 2008, a Persian silk Isfahan from the personal collection of Doris Duke, a tobacco heiress turned philanthropist, and the Newport Restoration Foundation that she created in 1968 sold at Christie’s auction for 4.45 million dollars.  The rug, dating back to the early 1600s, is 7’5” x 5’7”, which means that its final sale price translates into $107,488.00 per square foot. For the sake of comparison, a very high quality new rug could cost a consumer about $80.00 per square foot in today’s market.  The auction buyer, a resident of Long Island, NY; remained anonymous. 

Doris Duke Isfehan

This record-breaking Isfehan was woven during the reign of Shah Abbas “The Great” (1588-1629), who was a ruler of Persia’s Safavid Dynasty.  Shah Abbas made Isfehan his capital, building magnificent mosques, baths, colleges, and other public facilities.  Isfahan came to be known as one of the most beautiful cities in the world.

The rug was purchased by Doris Duke in 1990.  Prior to that, it was in the collection of Grace Rainey-Rogers, who was an American collector of Islamic Art in the early 20th century.  In 1931, a number of items from her collection were part of the Exhibition of Persian Art held at the Royal Academy in London.  Due to the success of the exhibition, the curator, Arthur Upham Pope, published A Survey of Persian Art in 1938, which is a 6 volume retrospective.  The Isfahan rug is one of the few reproduced in full color. Mr. Pope wrote of the rug, specifically in reference to its coloring, “No more exquisite harmony was ever realized in any Persian Rug.”

Isfehan Close Up

Isfehan Super Close Up 

Doris Duke was the only child of James Buchanan Duke, who was a founder of the American Tobacco Company and the Duke Power Company.  He was also a benefactor of Duke University.  When Mr. Duke died in 1925, his daughter, who was only 12 years old, inherited an estate estimated at $80 million.

Doris Duke pic

Throughout her life, Doris Duke developed a passion for Islamic art and culture, which led her to establish the Doris Duke Foundation for Islamic Art (DDFIA).

A honeymoon trip through the Islamic world, which also included an extended stay in Hawaii, prompted her to build “Shangri La” in 1937 on 5 acres of beautiful oceanside real estate.

The breathtaking Honolulu retreat integrates architecture inspired by various Islamic regions to the east with the styles and sensibilities of the Hawaiian islands.  For nearly 60 years, Ms. Duke commissioned and collected art and artifacts for Shangri La resulting in about 3500 pieces in all.  The home is maintained by her foundation and is open to the public for tours.

Shangri La View

Central Courtyard at Shangri La


Production of handmade rugs for export has continued to decline.  We recently saw an e-mail sent by a manager of weavers in India to a supplier in the U.S.  He wrote:  “In present conditions, our weavers are not working as before. They had kept carpet manufacturing in last priority as they had many option (sic) of other income, too.”

This message reiterated what we had come to understand last winter as one of the reasons for a reduction in weaving: competition from other industries in the growing economy of developing nations, like India.  In order to keep weavers weaving, they must be paid more, which results in an increase in wholesale prices.  And with a dollar not going as far to buy rugs overseas, suppliers will stock a smaller inventory of new pieces.

Rugs are also taking longer to make, because it is more difficult to maintain a steady and stable workforce abroad.  In some cases, when a supplier carries programmed rugs (rug designs that are available in a variety of sizes), fewer sizes are readily available to ship.

Rising energy and fuel costs have contributed to increases in everything from wholesale prices for wool and cotton to transportation and shipping. 

We have received several notices from rug manufacturers and wholesale suppliers who have reluctantly raised their prices.  They know that retail buyers are still cautious about making the investment in handmade rugs while the U.S. economic recovery is sluggish. 

There have still been good deals for retailers buying “last year’s” rugs, i.e. rugs that were made and stocked before the prices began to rise.  We were able to purchase some of these rugs in the early spring and pushed very hard with our suppliers to keep the prices as low as possible.

An interesting consequence of the confused market situation is that while there is not a high demand for rugs on the retail scene, the value of your rugs, provided they are well maintained, has probably increased.  If you had to replace your handmade rug today, there is a high likelihood that you would pay more now than you did when you bought it. 

Hence, it is very important to maintain the condition of your rugs by doing the following:  

  1. Lightly vacuum or sweep rugs: do not use the rotating brush, if you can avoid it.
  2. Rotate rugs every six months for even wear.  Worn areas occur when foot traffic impacts the same areas of your rugs over and over again.
  3. Blot pet stains immediately.  Remove any solid matter.  Flush urine stains with water whenever possible to reduce the likelihood of staining.  If pet urine appears to have caused the color to bleed, do not add more water.  When using water to rinse a rug, protect the flooring below:  do not allow wet items to sit on hardwood floors.  Call us at (847) 432-8100 to discuss cleaning.
  4. Have the rugs professionally dusted and washed every 1-5 years depending on the traffic in your rooms.  A very heavy traffic area like an entry or hallway may result in quick soiling of rugs.  A rug in a formal dining area without foot traffic will accumulate dust slowly.
  5. Do not avoid having rugs washed.  Dry dirt deep in the pile of the rug can cause the cotton foundation to rot.  When in doubt, Job Youshaei Rug Company can help you determine when to clean the rug.

Thriving financial and real estate markets provide the backbone to a flourishing rug market.  New home building or the selling and remodeling of existing homes will precede most home decorating projects.  A down economy, resulting in reduced consumer demand, has had wide reaching impact on the making and selling of all rugs, especially those that are handwoven.  When fewer rugs are purchased by consumers in the context of global economic instability, fewer rugs are subsequently manufactured.  Reduced manufacturing has created a lag in the supply and variety of rugs available to retailers.

Those companies whose job it is to produce the wool, cotton, silk, and dyes used to make rugs strive to maintain consistent levels of production and have raised the price of the materials they sell in order to do so.  Labor costs have increased in the last few years due to growth in developing countries; an increasing number of weavers have turned away from their craft to find other means of financial support.  In countries where rug making is tradition, young people choosing among trades will likely consider ways of earning a living thought to be more “modern” than weaving, like factory work; hence weaving continues to become an occupation held by fewer and fewer skilled artisans.

So, while weaving handmade rugs is not a dying art, it is one that struggles.

For enthusiasts, it is important to maintain the rugs in your possession and to be highly selective when purchasing new rugs.  It is likely that the division between those rugs that are very high quality and those that are poor quality will broaden as rug makers determine which markets to pursue aggressively.

Job Youshaei Rug Company, in business for almost 30 years, is an emblem for the highest quality rugs that money can buy.  And our concept of “quality first” carries through to the cleaning and repair work that we do on-premises.  Our prices have been stable throughout the recession even as we thoughtfully expanded our selection of new, hand-selected rugs and launched a comprehensive website in late 2009 that features all of our rugs.