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Avgol



Published January 1, 2008
Related Searches: incontinence roll goods private label spunmelt
Avgol
Avgol
Related Sales Reports
Location: TEL AVIV, ISRAEL

Sales: $237 million

Description: Key Personnel
Shuki Goldwasser, chairman; Nir Peleg, CEO; Achai Bonneh, director  of technology

Plants
Tel Aviv, Israel; Mocksville, NC; Jingmen City, Hubei Province, China; Uzlovaya, Russia

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown

Brand Name
Zebra

Major Markets
Hygiene, medical, construction, agriculture, furniture, upholstery

It was a record year for Israeli roll goods producer Avgol Nonwoven Industries in 2007, with sales hitting the $237 million mark. By comparison, 2008 has brought more twists and turns, beginning with speculation that the company would buy fellow nonwovens producer Fiberweb. However, in May Avgol announced that it would not pursue the purchase due to difficulties obtaining finances given current credit market conditions.
 
Another “x factor” this year is the impact of First Quality’s acquisition of Covidien’s retail products business (including its sizable private label diaper business as well as adult incontinence and feminine hygiene products). Also a producer of spunmelt nonwovens, First Quality’s acquisition of Covidien is being closely watched by Avgol and other spunmelt producers supplying North America, especially those currently selling goods to Covidien.
 
The acquisition is expected to result in a supply shift throughout the spunmelt market as First Quality competitors assume some of its diaper market business and First Quality uses more and more of its output to fuel its diaper and related businesses. Considering the fact that Avgol counts Covidien (known as Tyco Healthcare until its split from parent company Tyco International at the start of 2007) as one of two main customers making up approximately 75% of its revenue, the impact on Avgol will be substantial.
 
In the meantime, at its new Russian spunmelt facility, the company’s new line is not yet fully up and running but is already supplying commercial-grade materials to local customers. Based in Uzlovaya, which is located 200 km south of Moscow in the Tulia region of Russia, the new line boasts a capacity of 10,000 metric tons of SMMS material, which serves hygiene and industrial applications. “The market in Russia is large; it’s healthy and has a lot of potential,” commented company spokesman Dennis Durkin. “P&G is already there and K-C has plans to enter it. For us, continued expansion there is very possible.”
 
In the U.S., plans to expand its Mocksville, NC manufacturing facility by adding a fourth Reicofil spunmelt machine are on hold until the First Quality/Covidien acquisition shakes out. “This machine may end up elsewhere,” explained Mr. Durkin. The line, which was initially scheduled for start-up during the second quarter, represents a $30 million investment. Currently, the Mocksville site operates three Reicofil SSMMS production lines. The factory has been running at full capacity for six years.
 
Additionally, Avgol operates five spunmelt lines in Israel as well as another at a joint venture operation (with Hubei Goldkinglong Investment Stock Co. Ltd.) 300 miles southwest of Shanghai, China. According to Mr. Durkin, the Chinese facility is oversubscribed at present. “We can’t make enough fabric,” he said. “This facility will get a long, hard look when we decide where to add capacity.”
 
In response to requests to twist its existing spunmelt technology to increase softness and barrier performance, Avgol is planning to tweak its current lines to meet current customer demands. “Even while the Fiberweb acquisition was up in the air, we knew that if we did not acquire this type of technology, we would install it,” he said.
 
Geographically speaking, Avgol remains a diversified supplier with 65-70% of overall capacity feeding markets outside of Israel. The company expects its overseas focus to continue to grow and is planning all expansions within the next five years to take place outside of Israel.
 
Looking ahead, Avgol plans to continue to think on its feet by responding quickly to shifting demand. “When 2008 is over, we will have gone from two main customers to one large customer and five other customers making up Tyco/Covidien,” Mr. Durkin said. Although the timing was different than the company had planned and several unanswered questions remain, Avgol expects these gaps to be filled in by the end of the year.
 
“Regardless of how things pan out, our strategy of lean, aggressive exploitation of Reifenhauser technology will continue. Our lower basis weight, wettable SMS products have been very well received. This formula has been a successful one and I believe this will become the prevailing culture. The bottom line is this: Avgol is fully immersed and can make quick decisions to get products to people,” he added.