By Matthew Spieler
Orlando, Fla.—When Warren Buffett speaks, people stop to listen. It’s not often though, the average person gets to speak to him directly, but that’s exactly what happened at the Shaw Flooring Alliance (SFA) convention for the 3,600 people who were in attendance.

To kick off its sixth SFA meeting, the membership was treated to a special event, as the business mogul sat down with Vance Bell, Shaw’s CEO, for a town hall style meeting in which they answered questions submitted by SFA dealers.

Scott Humphrey, SFA’s marketing manager, asked a sampling of the 130 questions that were submitted online prior to the event. While every question could not get asked, the ones suggested the most were grouped into a common theme and posed to both Buffett and Bell.

Because of the nature of the questions, Buffett was able to take a more worldly approach to answering them, while Bell narrowed it to the industry and Shaw.

What follows are excerpts from their answers to questions dealing with such topics as doing business and investing, raw materials, the impact from the rise of China and India, the environment and brands.

On business and investing

Buffett: I don’t concentrate on the long term...Over a 30-year period we’ll have good times, bad times and indifferent times, so you can’t bounce around...The country will do fine over time—the pond keeps rising and we’re ducks sitting on it...You still have to do the same thing and simply take care of your customer because if you do, then your customer will take care of you...Just look at the great businesses... Housing has come off a huge peak—there’s more people owning homes than ever before. In the last 10 years there are between 35 million and 40 million more people in the U.S.

Bell: 15% to 20% of the industry is in new housing, so the next few months will see the tail end of the affect from the slowdown...Think of all the flooring space that has been added in the U.S. in the last 20 years...There’s going to be a tremendous market for floor coverings...and over the next 20 years it will be unbelievable.

On raw materials, namely oil

Buffett: The world produces about 84 million barrels of oil per day...The U.S. uses more than its fair amount, and as others start moving up in society they, too, will use more oil... China has already had a huge percentage of the gain in world oil use, and it’s not slowing down...But we’ll be OK...What we need is a sound energy policy, and it has to come from Washington.

Bell: We’ve been through a very volatile time in floor covering...If things can remain calm like they have recently, then we should see some effect in prices, especially with regard to transportation...The problem is, it is not just oil—other materials are high...We hope they will come down if oil remains around $50 a barrel...We need stability to get the whole chain to settle down.

On the rise of China and India

Buffett: Last year, $230 billion more in goods came from China to the U.S. than was sent out...In 1980, it was almost equal...Yet, unemployment is still around 4.5%...So we find ways to keep people employed despite losing so much to cheap labor in other countries...There was a time in the U.S. when most people were farmers... Everyone worried when new machinery came into play, yet we found a way then and we’ll continue to find ways.

Bell: Over the next five years I don’t see China or anyone seriously competing in the U.S. in carpet—it’s a very complex market and distribution system... Once the time to get the product, the shipping, shortages and other problems are factored in, it costs more than most thought... The rose is coming off the bloom for those importing...This is not to say they are not a factor; they are and we will need to keep an eye on them.

On the importance of environmental responsibility

Buffett: It’s extraordinarily important...We’ve got only one planet and we’ve injected ourself into it in such a way that we didn’t think of the long-term effects...It takes time to adapt and we can’t simply change certain things that are a part of society...It’s going to take an international effort, but it also has to be done way down the line...Berkshire made it a point that our company be a friend to the environment.

Bell: Being environmentally responsible is a part of our culture—long before we were bought by Berkshire...Our Green Edge program is not just a fancy name, we’ve made substantial investments in this area from our Evergreen nylon recycling facility, which is going online this year to the more than 100 company-wide initiatives we have going right now...This year, we will have almost zero input into landfills from our operating facilities...We feel the U.S. economy is reaching a tipping point and this will really start to build when all can be involved in the process...That is happening with regard to recycling carpet. Now everyone in the chain will be involved in helping to keep carpet from the landfill.

On the importance of brands

Buffett: At Berkshire Hathaway, we live by brands...If I say ‘Coke,’ we all have something in mind—we hope positive. That’s why we advertise at the Olympics and other major events—not to sell there, but to create an image...Last year we spent $600 million—and we’re going to spend more this year—promoting GEICO. It takes lots of messages to get an image of a company in peoples’ minds. In the 1930s, Gillette had a 10% market share. Then it started sponsoring the “Cavalcade of Sports” and became every young man’s friend. Twenty years later its market share was 70%...A brand has to keep its promise of what it is supposed to do so that even if an alternative comes in a few cents cheaper, people will still go to the brand. Snickers is the number one candy bar and it’s been that way for 40 years. Why? Because you know what you’re going to get every time you bite into one...If you have a favorable experience with something, you will go back to it.

Bell: We fully believe in them...We feel the change brands can have from our efforts the past couple of years...Anso, one of the best known fibers in the industry, is the centerpiece of our environmental program...Shaw started small in our marketing efforts, but we keep investing more, especially on the Internet. We’re committed to this and will continue to invest to give a long-term advantage—we may not get to the level of Coke, but...

To close the session, each was asked an individual question.

Shaw’s commitment to hard surface products

Bell: It’s been a fast growth area for the past five to 10 years. Shaw is committed to participate, mainly because our customers are moving more into hard surfaces and Shaw wants to be your supplier of choice... We are here for the long run and have invested heavily to prove it. We are one of the largest in laminate, we built a wood plant and created one of the most unique, innovative products in years in Epic, and we source the world for the finest tile...Our investment is not just in products, but logistics. We will have a global operation that will be the most effective in the world.

On independent dealers

Buffett: Just take care of the customer. Last year we spent $4 billion to buy 80% of a company in Israel. It makes these little tools and stuff that every major company needs and serves clients in 61 countries. It has quickly gained ground over its competitors because it makes life better for its customers. It has a system of getting product to customers so they don’t run out...Companies fail when they don’t take care of their customers. I’ve never seen one fail that didn’t concentrate on its clients...You need to ask, who are my customers and what do I bring to them to make their life significant. Then go out and do it. Just look at Mrs. B from Nebraska Furniture Mart. She started with nothing, but her integrity and concentration on the shopper earned her a reputation to be successful...Money is not what makes you rich—do you have people in your life who will hide you?