Sales: $75 million
Description: Key Personnel
Shuki Goldwasser, joint managing director; Nir Peleg, joint managing director; Moshe Goldwasser, principal
Holon, Israel; Mocksville, NC
ISO 9002 certified
Spunbonded, melt blown, extrusion coating
Hygiene, medical, filtration, construction, agriculture, furniture upholstery
The year 2001 was marked by a $15 million jump in sales, despite the soft global economy, for Avgol Nonwoven Industries, Holon, Israel. This significant increase in sales can largely be attributed to the sold-out status of all of its five lines in Israel as well as the acquisition of a North American operation in Mocksville, NC. Furthermore, the company expects sales to receive a further boost once the North American plant comes fully onstream.
The Mocksville facility, which Avgol purchased from Unifi, Greensboro, NC, in April 2001, is equipped with a five-beam Reicofil 3 SSMMS 4.3 meter wide line capable of producing approximately 15,000 tons of material per year. The company is now in the process of incorporating the new lin e, which brings Avgol’s global capacity to more than 50,000 tons per year, into its overall business.
“We are very happy with the line in North Carolina,” remarked Nir Peleg, joint managing director. “The timing was perfect and we have been able to do well. The expansion into North America was in line with demands from our customers, and they were glad we were ahead of our original plan.”
In October 2000, six months before purchasing the Mocksville site from Unifi, Avgol had announced its intent to build a plant in North America, where it currently conducts 75% of its sales. Purchasing a facility in North America, instead of starting from scratch, allowed Avgol to achieve this goal more quickly.
In addition to added sales, the Mocksville site presents Avgol with a lot of room for future expansion. The facility is located on a large site, which allows room for construction. Because it has only been a year since Avgol purchased the Mocksville site, however, no firm plans for expansion have yet been unveiled. Still, executives are hinting that expansion plans are imminent. More specifically, these expansion plans will allow Avgol to target new markets and application areas outside of its traditional spunmelt business.
“We have a lot of land there, and we are definitely going to expand,” Mr. Peleg explained. “The infrastructure is ready.”
In terms of end use markets, approximately 70% of Avgol’s sales are conducted in the hygiene market, and Avgol is well aware of the problems here, including pricing pressures and increased competition. Despite these challenges, the company feels that companies with high quality, consistent products still have a chance to prosper. “We think that the hygiene market is a good one for us because our customers show appreciation for quality,” opined Moshe Goldwasser, principal. “Still, it is dangerous for anyone to put all of their eggs into one basket.”
In addition to hygiene, Avgol targets the medical, filtration, construction, agriculture and upholstery markets. Each of these markets represents a small portion of the company’s overall business, but together they provide the benefits of better cost distribution and diversity within Avgol.
One of Avgol’s key advantages, according to executives, is its ability to manufacture products that are consistent in quality on each of its six lines, meaning that its products do not vary depending on where they are manufactured. This also enables Avgol to fully utilize all six of its lines to their maximum ability.
“We have spent a lot of money to improve our operations,” said Mr. Peleg. “This has allowed us to reach a situation where our biggest strength is the consistency of products and an assurance that they’re cost effective. Customer loyalty depends on these things.”
In Mr. Goldwasser’s opinion, the practice, among many nonwovens manufacturers, of replacing older equipment with newer, more state-of-the art machinery, has contributed to the overcapacity situation in the industry. This new equipment needs to produce more material to justify its investment. Therefore, most of the players in the industry are now producing more material than they were a few years ago, causing a competitive environment in the nonwovens industry.
“The nonwovens industry is facing a major problem of overcapacity in spunmelt technology and it’s beginning to have a problem in other areas as well,” Mr. Goldwasser explained.
To remedy this situation, Avgol has taken some major steps toward improving its efficiency during the past two years. Among these steps are making logistical changes and reducing overhead costs. This has made the output per employee in the company significantly higher than it was before the initiatives.
“We are facing some pricing challenges that have forced us to become more efficient,” Mr. Peleg said.
During INDEX 2002 in April, Avgol and machinery supplier Rieter Perfojet, Montbonnot, France, announced they had formed a joint venture targeted at enhancing Rieter’s technology offering in the spunbond area. Avgol has commercialized production on six spunmelt lines during the past 15 years and has generated invaluable proprietary expertise in optimizing the performance of spunmelt equipment. Rieter Perfojet has been a leader in the development and manufacturing of spunlace equipment with more than 100 units sold, to date. This partnership is expected to benefit from the many synergies that exist between the two companies, according to company executives.
Looking ahead, Avgol will continue to focus on increased efficiency, a diversified product base and consistency in its materials to continue the successful path it has been traveling on since its founding in 1987. For 2002, executives expect sales to reach the $100 million mark and continue to grow beyond that with the introduction of new capacity and penetration into new markets.