Nonwovens Industry
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Avgol


Location: Israel

Sales: $75 million

Description: Key Personnel
Shuki Goldwasser, joint managing director; Nir Peleg, joint managing director; Moshe Goldwasser, principal

Plants
Holon, Israel; Mocksville, NC
ISO Status
ISO 9002 certified

Processes
Spunbonded, melt blown, extrusion coating

Brand Name
Zebra

Major Markets
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.


Location: Holon, Israel

Sales: $91 million

Description: Key Personnel
Shuki Goldwasser, chairman; Nir Peleg, CEO; Moshe Goldwasser, principal; Achai Bonneh, vice president of technology; Sari Goldwasser-Uri, vice president of sales

Plants
Holon, Israel; Mocksville, NC

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown

Brand name
Zebra

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

The year 2002 was described as “significant” in its 15-year history by Avgol Ltd. Nonwoven Industries, Holon, Israel. Not only was it the first full year of operating a North American facility, Avgol was able to realize technological improvements in its major production lines, thus increasing its output on growing demand of high quality spunmelt material.
 
The company purchased a spunmelt manufacturing facility from Unifi, Greensboro, NC, in April 2001, as part of an effort to bring it closer to its consumers, 75% of which are located in the U.S. The purchase of the North Carolina site added 15,000 tons of SSMMS capacity to Avgol’s operations. This new capacity, which brings Avgol’s global capacity to more than 50,000 tons, has been completely sold out since the third quarter of 2002. While no firms plan for expansion in Mocksville have yet been announced, company officials recognize the importance of this location to its global operations and admit the expansion plans will be forthcoming.
 
“We consider our U.S. investment to be a vital move on our behalf as it has allowed us to become a global operation and makes our customers feel confident in our intention of growing our capacity and bringing more value to their decisions to work more closely with us,” remarked company chairman Shuki Goldwasser.
 
In addition to new capacity, the North Carolina operation has given Avgol increased flexibility in its production planning, particularly in terms of raw material usage. This has been a major contribution to Avgol’s ability to operate at a profit, despite recent increases in raw material costs, according to executives.
 
The 4.3-meter, five-beam Reicofil line in Mocksville is the company’s sixth line. The other five are located in Israel. Currently North American output represents 35% of its business, while 65% of material is produced at two sites in Israel. While no plans have been finalized for a seventh production line, the company is constantly upgrading its lines to meet customer needs for higher quality demands.
 
By end use market, approximately 70% of Avgol’s customer base is involved in hygiene. While competition and pricing pressures continue to plague this segment, Avgol also sees a strong need for high quality material in hygiene, a trend that is expected to continue as more technologically sophisticated products are introduced into the market.  In addition to hygiene, medical, filtration, construction and upholstery are becoming increasingly important to Avgol’s business. “These markets have always been important to our business and today some have become even more important as we continue to diversify our activities,” Mr. Goldwasser explained.  
 
In fact, the next challenge for Avgol will be further diversification, which could eventually mean the addition of a technology outside of spunmelt. While the company has, since its 1988 inception, strived to focus solely on offering high quality spunmelt products as a way of growing its business, it does recognize the advantages of having more than one technology to offer customers. “There are markets and technologies we have not put our efforts into, and it is our goal to pursue this further as we now have better technological means to make progress in these areas,” Mr. Goldwasser explained.  “We believe that being competitive today is not just a mater of size but being committed to grow in areas where a company feels it has some advantage.”
 
Looking ahead, executives expect the company’s strong pattern of growth to continue with sales forecast to jump from $91 million in 2002 to surpass $100 million this year. This will be achieved through improved quality of its nonwovens as well as favorable conditions in the industry as a whole. “We see the nonwovens industry as still growing and expanding,” Mr. Goldwasser explained. “Competition continues to be strong. Prices of raw materials are the highest we have seen in several years and prices of nonwovens are at their lowest levels. However, there are opportunities in different areas with higher added value that can be explored and developed by the industry.”"

Location: Holon, Israel

Sales: $106 MILLION

Description: Key Personnel
Shuki Goldwasser, chairman; Nir Peleg, CEO; Achai Bonneh, vice president of technology;  Abraham Zilberfeld, CFO; Sari Goldwasser-Uri, vice president of sales

Plants
Tel Aviv, Israel; Mocksville, NC

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown

Brand name
Zebra

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

In 2003, roll goods producer Avgol Nonwoven Industries, Tel Aviv, Israel, achieved its goal of surpassing the $100 million mark in sales. The producer of spunmelt nonwovens reported sales of $106 million last year (compared with $91 million in 2002) and expects to reach $120 million this year.
 
This growth pattern is consistent with past years. Thanks to a steady stream of capital investments, Avgol has more than doubled its sales since 2000 when $48 million was reported.  
 
Much of this growth can be attributed to new machinery. The company currently runs five lines in two facilities in Israel as well as a sixth line in Mocksville, NC, which was acquired from Unifi in April 2001. This 15,000-ton-per-year line is operating at full capacity and has allowed Avgol to become closer to its North American customers, which represent 75% of the company’s total business.
 
And, while executives have failed to comment, industry insiders are reporting that Avgol is already adding a second line in Mocksville, set to come onstream sometime next year. This new line will supplement the original line which has reportedly been completely sold out since the third quarter of 2002.
 
The majority, 70%, of Avgol’s nonwovens output continues to recognize the need for diversity in today’s nonwovens industry. “In order to survive in today’s competitive and changing nonwoven industry, we continue in doing what we think we know how to do best, which is to produce the highest quality material with a continuing growth of efficiency contributed by our dedicated workforce,” said company chairman Shuki Goldwasser.
  
Some of the keys behind Avgol’s success strategy include great management teamwork, strong marketing efforts and, most importantly, the production of high-quality, consistent fabrics that allow its customers to also produce consistent goods. The results have been continued satisfaction among its customers.
  
With 100% of its more than 50,000 tons of nonwovens output made using spunmelt technology, Avgol’s next challenge could be diversification into new areas. Executives are reluctant to discuss any future plans but concede that there are markets and technologies being considered.
  
“We continue to investigate new regions and new markets that would be complementary to our current activities and, as it has always been Avgol’s policy not to make public announcements of any of its current and future activities—as we believe a private company should act. We can say we are content with the way our business has developed and hope to continue and be successful in the future,” Mr. Goldwasser said.



Location: Tel Aviv, Israel

Sales: $123 million

Description: Key Personnel
Shuki Goldwasser, chairman; Nir Peleg, CEO; Achai Bonneh, vice president of technology; Sari Goldwasser-Uri, vice president of sales

Plants
Tel Aviv, Israel; Mocksville, NC

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown

Brand name
Zebra

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

Avgol executives have described 2004 as another successful year in the company’s history. The Tel Aviv, Israel-based company was able to increase its nonwovens sales from $106 million to $123 million thanks to strong customer relationships as well as increased nonwovens output.
 
“A key contribution to our growth is the continuing confidence and trust we receive from our customers in growing their activities with us, thus enabling us to concentrate on efficacy to serve them according to their expectations and using our creativity for new products, which will help them benefit in the future,” said company chairman Shuki Goldwasser.
 
Avgol currently runs five spunmelt lines in two Israeli facilities as well as two lines in Mocksville, NC. Additionally, future growth is expected through the start up of a third North Carolina line during the fourth quarter of 2005, which will bring Avgol’s worldwide capacity to exceed 80,000 tons.
 
The new North American line responds to customer demand in that region. Nearly 75% of the company’s business is conducted in North America and this business has continued to thrive thanks to the North American lines. Avgol first entered North America in 2001 when it purchased the Mocks­ville, NC site, containing a Reifenhauser spunmelt line, from Unifi. A second line was added last year.
 
In addition to its facilities in North Carolina and Israel, Avgol operates a 50/50 joint venture with Hubei Goldkinglong Investment Stock Co. Ltd. dedicated to the production of spunmelt nonwovens in China. Located 300 miles southwest of Shanghai, in

Jingmen City’s High Tech Development Area, this HGD joint venture company began production on a 3.2-meter-wide SM”X”S Reifenhaeuser line in January 2005 to meet Chinese demand for spunmelt fabrics. Key markets include hygiene and medical in both China and other Asian countries. The first Reifenhauser line, a 3.2-meter-wide SM”X”S machine, will produce 10,000 metric tons per year and will include Avgol’s proprietary technology and spunmelt technology know how.
 
According to executives, the Chinese joint venture is the result of a strategic decision to target markets prime for future growth. Future investments will also center on this philosophy and be located in proximity to key growth areas.
 
Currently 100% of its more than 60,000 tons of nonwovens output consists of polypropylene-based spunmelt. In the past year, polypropylene has fallen victim to severe price fluctuations, which have had significant impact on the nonwovens industry. Avgol was able to thrive despite these challenges but executives recognize their impact on the industry. “We were able to achieve our goals in 2004 despite the dramatic hike in the price of resin throughout the year,” Mr. Goldwasser said. “This is a devastating situation for the industry and I assume only the companies that are efficient enough can survive a “ride” of this nature. Long term, we believe that this is not a healthy trend and will continue causing margins to shrink, which will have a very grim implication on new investments.”"

Location: Tel-Aviv, Israel

Sales: $160 million

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

Plants
Tel Aviv, Israel; Mocksville, NC, China, Eastern Europe

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown

Brand name
Zebra

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

Sales reached $160 million last year for Tel Aviv, Israel-based Avgol Nonwoven Industries and this figure is expected to reach $220 million in 2006 as the company achieves full utilization of a new Reicofil spunmelt line started up in October 2005 at its Mocksville, NC facility. The new line is the second added to the site, which already contained a spunmelt line when Avgol acquired it from Unifi in 2002. 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 Avgol CEO Nir Peleg, the Chinese joint venture is the result of a strategic decision to target markets prime for future growth. Next on Avgol’s global growth plan is Eastern Europe. In June, the company confirmed plans to build a new factory at an undisclosed Eastern European locations designed to serve emerging markets in Eastern Europe, Russia, the Ukraine and “Stan” countries. The factory is expected to begin operation by the fourth quarter of next year.
 
In addition to capital investment, Avgol is set to benefit from its recent collaboration with Israel Petrochemical Enterprises (IPE). In June, the conglomerate, which already owned a 50% stake in Carmel Olefins, an Israeli producer of polypropylene and polyethylene resin, purchased 20% of Avgol’s outstanding shares. Mr. Peleg said that this partnership would further enable Avgol to globalize its brand name and establish synergies in Avgol’s raw material usage.
 
Currently, 100% of Avgol’s output, of which 65% is produced outside Israel, consists of polypropylene-based spunmelt nonwovens, which largely targets the hygiene markets globally. With a reported 75% of its business conducted in North America, Avgol has been able to continue to this portion of its business successfully, as evidenced by the addition of a third line in North Carolina, while expanding globally.
 
“Although we are a relatively small company, we are doing our best to emulate the multinational companies’ philosophy of thinking globally and acting globally,” said Mr. Peleg. “We continue to leverage our competitive advantage of efficiently employing young Reicofil spunmelt assets with innovation, execution and hands-on management across strategic geographies for consumer and industrial product applications.  By combining our technical and production know-how with targeted marketing and servicing of our bundle of quality spunmelt products, our organization has become a very reliable material supplier for our global and regional customers.”"

Location: Tel-Aviv, Israel

Sales: $229 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

One company growing by leaps and bounds is Tel Aviv, Israel-based Avgol Nonwoven Industries, which doubled its profits last year and bumped its 2006 sales up a substantial 40% to reach the $229 million mark. Gross profit rose to $55 million, representing nearly 24% of turnover last year. Meanwhile, operating profit rose 105% and net profit doubled to $15 million, which increased the company’s cash to just under $25 million.
 
As much as 75% of Avgol’s revenue comes from two main customers—Tyco International and Procter & Gamble. Based on its standing orders for these two companies, Avgol’s orders backlog for 2007-2008 totals $340 million (the annual average is similar to revenue from the two companies in 2006).
 
Avgol attributes its 23% year-to-year internal growth to an overall strategy announced in the mid-90s to make a solid commitment to the hygiene market. “When everyone else was trying to get out of hygiene, we sat down in it,” explained company spokesperson Dennis Durkin. “We decided to make it our focus and to do it better than anybody else. We’ve been able to answer the call for lower basis weights and we’ve made investments and added equipment to make this happen.” He added that the company’s existing lines have been fully utilized since 2005. “We’ve been sold out for five years. However, we are keeping our promises. When customers grow, they expect you to grow with them. And we plan to do just that.”
 
A recent example of this growth initiative is Avgol’s plan to expand its Mocksville, NC manufacturing facility by adding a fourth  Reicofil spunmelt machine. Scheduled for start-up during the second quarter of 2008, the fourth line follows the company’s second line, which was added in October 2004, and its third line, which was added in September 2005. Avgol acquired the North American factory in June 2001.
 
Currently, the Mocksville, NC site operates three Reicofil SSMMS production lines. The factory has been running at full capacity for the last five years. The total additional investment for the fourth line is approximately $30 million for the spunmelt machine and all related auxiliary and finishing equipment.
 
Clearly Avgol’s investment plans extend beyond the North American region, with the company unveiling the location of a new Russian spunmelt facility that will start production in the fourth quarter of 2007. Based in Uzlovaya, which is in the Tulia region of Russia and 200 km south of Moscow, the new line will boast a capacity of 10,000 metric tons of SMMS material. The breakdown of the machine’s output will be 80% hygiene and 20% industrial applications, which will supply local markets.
 
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 continues to grow with more local business being added.
 
All of this expansion continues to widen Avgol’s geographical base, with 60% of its overall output (including China) coming from outside of Israel. Meanwhile, the remaining 40% of products are manufactured in Israel, with half of that amount supplying the U.S. market. Only a minimal amount of nonwovens produced within Israel serve the domestic market while the rest is used to supply European customers. “We now have more capacity on the ground in North America than in Israel,” pointed out Mr. Durkin. “And in Europe, we are garnering more business than ever before.”
 
Wrapping up, Mr. Durkin described Avgol as a great competitor with top-of-the-line standards and assets. “What we do, we do first class. We may be plain vanilla but we are Häagen-Dazs vanilla. From a technology standpoint, we are very strong and we’ve worked hard to solve problems in a market that a lot of people wanted nothing to do with.”
 
Moving forward, the company plans to continue to grow its base market where it can exploit technological possibilities such as elastomerics. Avgol will focus on the production of increasingly sophisticated products at lower basis weights to meet customer requirements. “This is who we are and who we will continue to be. We’re taking it around the world now. It’s a small idea that grew big.”
"


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.
Location: TEL AVIV, ISRAEL


Sales: $254 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, hydroentangled spunlaid

Brand Names
Zebra, Avspun, Avsoft

Major Markets
Hygiene, Medical, Construction, Agriculture, Furniture, Upholstery

With 85% of its output continuing to target hygiene markets, Avgol’s strategy centers on consistently delivering top quality, low basis weight spunmelt products around the world. The company is riding out the economic turbulence by keeping its head down and focusing squarely on its core capabilities. “We continue to grow with our major customers, providing them with better, lower weight versions of the products we’ve been making all along,” stated Dennis Durkin.  “We have expanded to the point that we are now able to quickly deliver our products in all corners of the world.”

In light of current worldwide economic hurdles, Avgol is pleased with its $254 million in sales in 2008, a 7% bump up from the previous year. “Resin prices are a huge factor when it comes to revenue, and it makes it difficult to judge what kind of year a company had strictly based on sales figures. For instance, our 2009 sales may actually decrease, but there’s a good chance that we’ll have an even better year than in 2008.” Meanwhile, Mr. Durkin described 2008 as a year where producers were faced with the worst resin pricing in history.

In terms of current challenges, excess global hygiene capacity tops the list for Avgol. Some excess capacity stems from First Quality’s acquisition of Covidien last year, but other recent examples of spunmelt installations include a new multibeam Reicofil machine in Hazleton, PA from First Quality as well as PGI’s new state-of-the-art spunbond line in San Luis Potosi, Mexico. Concerns of overcapacity are being exacerbated by announced investments by Fitesa and Companhia Providencia, which so far have not come to fruition.

“Frankly, we were scratching our heads and wondering what Fitesa and Providencia were seeing that we weren’t,” remarked Mr. Durkin. “The fact is there’s excess capacity and plenty of people out there selling. In South America, companies are trying to justify their potential investments here in North America. At least in North America, spunmelt is a relatively difficult market right now that could get even more challenging as new investments from either Fitesa or Providencia come online.”

In addition to these challenges, Avgol is still regrouping its customer mix following First Quality’s purchase of Covidien, which sent a tidal wave through the spunmelt chain last year. “It’s no secret that this had a dramatic effect on our business,” he said. “We recovered from most of it by late 2008 by adding new customers to fill most of that gap. We still have global system capacity.”  Prior to the purchase, Covidien’s business represented approximately 30-35% of Avgol’s worldwide revenue.

Outside of North America, Avgol has been in the process of expanding and has set its sights on both China and Russia as markets with growth potential. The company announced in January that it will add a second Reifenhauser polypropylene line in Jingmen in Hubei Province, 1000 miles west of Shanghai, with an annual capacity of 15,000 tons. The facility is jointly owned by Avgol and China’s Hubei Gold Dragon Nonwoven Fabric Co. Ltd., which produces SMS fabrics at the Jingmen site. Avgol has also increased its stake in the Chinese joint venture from 50% to 70%.

“The new line is coming along well and will be running, as expected, in the second quarter of 2010,” reported Mr. Durkin.  “Preparations are being made and we’re already taking delivery of equipment. We’re optimistic about growth in this region and
about the support we’ve received from global and regional customers who are pushing us to expand into increasingly lower weight materials.” Mr. Durkin added that producers with Reicofil equipment may have difficulty competing in China on certain high weight, low tech applications now, but he expects this to change as demand becomes more sophisticated and the need for higher performing, lower cost materials increase.

“This will change how the market in China looks,” he predicted.  “As big players come in and set up shop, needs will change and we’ll see continued growth of low basis weights. We’re beginning to see this in hygiene already and the medical market is growing as well. There’s an increasing need for higher quality medical grade materials.”

As for Avgol’s recent strides in the Russian market, the company’s new line is up and running and supplying commercial grade materials to local customers. Based in Uzlovaya, which is in the Tula region of Russia and 200 km south of Moscow, the new line boasts a capacity of 10,000 metric tons of SMMS material and serves hygiene and industrial applications. “Russia is actually starting to do well and the plant has just recently come pretty close to capacity. We have no current plans to expand in Russia, but I wouldn’t be surprised to see plans develop in the next 18-24 months. This is a great potential market for us but we’ll take our cue from the local customer base about adding capacity,” Mr. Durkin continued.

In Israel, where Avgol is headquartered, the company’s five spunmelt lines continue to service local customers as well as some markets in Europe and the Middle East. “The lines in Israel represent about 30% of our business and are doing fine. We have no plans to expand capacity at this time. We’ve continually upgraded the lines as they have aged and the older, original lines are being put to good use targeting a variety of higher end industrial applications,” he offered.

At Avgol’s Mocksville, NC facility, plans are moving along to add capabilities to two of its three spunmelt lines, a move that will bump annual capacity by 3500 tons and expand the company’s product range for its existing customer base. “There are two phases of this project, one of which happened in June and the other is scheduled for September. I can’t give any specifics, but these changes will provide us with the ability to make products we couldn’t make before. We’ll be producing enhanced new products at our customers’ requests.” Although the products will initially target hygiene applications, Mr. Durkin indicated that they could spill over into other areas.

In closing, Mr. Durkin highlighted the company’s ongoing commitment to the spunmelt market. “We will continue to concentrate on better products for a variety of hygiene applications where our technologies are best suited. We don’t know where our recent upgrades will bring us, but for now, we’ll focus on our core lightweight offerings. Our 8-13 gsm products have fueled our growth and we’re now ‘Taking Our Innovation Around the World.’”
Location: Tel Aviv, Israel

Sales: $213 million

Description: Key Personnel
Shuki Goldwasser, chairman; Achai Bonneh, vice chairman & CTO; Shlomo Liran, CEO

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

ISO Status
ISO 9002 Certified

Processes
Spunbonded, meltblown, hydroentangled spunlaid

Brand Name
Zebra, Avspun, Avsoft

Major Markets
Hygiene, medical, and construction


Reporting a slight decline in sales was Avgol Nonwovens who attributed this drop solely to decreased resin prices. Tonnage remained the same. “With 93% of the business contracted and 85% of that related to resin prices, fluctuations can really impact the results. What is really more important is looking at profitability,” said company spokesman Dennis Durkin.
In fact, net income increased to $15 million in 2009 as the company continued to implement cost savings measures including streamlining operations, product mix and increasing productivity.
Meanwhile, the Israeli company with plants in Israel, North America, Russia and China continues to invest aggressively in lightweight spunbond nonwovens largely targeted at the global hygiene market.  Recent investments include its new plant and new line in Russia in 2008, which quickly sold out and could soon be followed by a companion line, as well as a second Chinese line, which came onstream in June 2010 and is also seeing high customer demand.  Avgol executives even hinted that a third line for China chould not be far behind.
“China has been a big success and opportunity and, judging by the demand for our line two capabilities, we are going to be looking to add a third line pretty quickly,” Mr. Durkin said.
Avgol currently operates in China through a joint venture with locally owned Hubei Gold Dragon Nonwoven Fabric Co. The partnership was formed in 2005, and since 2009, Avgol increased its ownership to 80% of the joint venture with full management control.   The factory is located 1000 kilometers west of Shanghai.
 “Continuing investments will likely take place in Russia, China, South Asia and in North America, where we see growth and matches for our technology and product know-how,” Mr. Durkin said, adding that there most likely won’t be expansion in Israel where the company operates five mature spunbond and SMS lines. “We will continue to grow with our partners around the world who desire to see us penetrate new markets in new regions with high performance products.”
Mr. Durkin added that success in the hygiene market is a balancing act. On one hand, you need to run your lines at maximum capacities to turn a profit; on the other hand, you need to be flexible enough to respond to shifts in market demands.
“To be profitable, you have to run at full capacity and sell out very quickly,” Mr. Durkin said. “At the same time, you have to be somewhat flexible because there can be big spikes in demand.”
Avgol has achieved this balancing act through robust relationships with its customers as well as strong connection to market and product trends. “Times have changed,” Mr. Durkin concluded. “There are no more small customers. People are married a lot longer in this business than they used to be.”

Tel Aviv, Israel
www.avgol.com
2011 Nonwovens Sales: $329 million

Key Personnel: Shlomo Liran, CEO

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

Processes: Spunbond, meltblown, hydroentangled spunlace

Brands: Zebra, Avspun, Avsoft

Major Markets: Hygiene, medical and construction

The year 2011 went down as a record one in the production and sale of nonwoven fabrics for Israel’s Avgol Nonwovens. The spunbond specialist expects growth to continue as a third production line comes on-stream in China and a fourth U.S. line becomes operational in 2012.

“Avgol’s momentum in investments last year will ensure the strengthening of its business and competitive positioning in the coming years,” says Shlomo Liran, CEO. “Not withstanding these investments, Avgol’s level of leveraging increased moderately and its strong and stable financial position will enable the company to prepare for strategic moves in the market.”

In 2011, sales grew about 18.8% to reach $329 million, due largely to contributions from the group’s second Chinese line, which came on-stream in mid 2010, as well as an adjustment in selling prices caused by raw material price increases. During this period, the company placed special emphasis on improving the operating efficiency of existing production lines at all of its sites to contend with changing market conditions.

With six older lines operating at its Israel headquarters, Avgol operates sites in North Carolina, China and Russia, from which it serves global hygiene markets. Recent investments include a fourth line in North Carolina and a third line in China and executives have hinted at the possibility of a second line in Russia.

“We are seeing another Avgol growth engine in Russia, in light of steadily increasing demands in Russia,” Liran says. “Currently, our production line is running at full capacity.”

Avgol began making nonwovens in Uzlovaya, Russia, in late 2007 to serve emerging markets in Eastern Europe, Russia, the Ukraine and the “-stan” countries.

Meanwhile, in the U.S., Avgol’s fourth line began operation in Mocksville, NC, in August. This new line is adding 15,000 tons of capacity to the site. Combined with another 15,000 tons being added in China, Avgol’s global capacity is increasing nearly 30% this year to reach 140,000 tons.

Avgol first entered the U.S. market in 2001 when it purchased an existing spunbond line from Unifi. The company has continuously added to this site since then, becoming a leading player in the hygiene market in the Americas. The Chinese site was started in 2005 as a joint venture agreement with Hubei Gold Dragon. A second line was added to the site last year and the third line is set to come on-stream later this year.

Sine the establishment of this Chinese arm, Avgol has invested heavily in new lines, also increasing its stake in the company, which will stand at 83-84% after the new line is added. When the third line comes on-stream, production at this site is expected to increase to 40,000 tons.

The cost of the additional Chinese production line was mainly financed by investment in equity from the Chinese partnership, bank financing and/or with a shareholders’ loan. The investment required to set up the new Chinese production line includes an investment of between $10.2 million and $12.4 million by Avgol in the Chinese partnership equity, as well as a $1.1 million investment by the Chinese partner in the partnership equity. The Chinese partnership will raise the remaining $27-30 million of the investment through local bank financing and/or a shareholders’ loan.

“We identified great opportunities in the China/Asia-Pacific markets, which are considered markets with high growth rates in the categories of disposable hygiene products and specifically baby diapers,” says Liran. “The investment in a third production line in China underscores our complete satisfaction with the investments we have made to date in China within the scope of the partnership and prepares the groundwork for driving the sales momentum in response to the already high demands in China.

“This strategic decision is the outcome of the continuing increase in the volume of purchases and the expression of trust in Avgol and in its production lines by our major customers in China, as well as throughout the world,” he continues. “Increasing our production capacity will enable us to give expression to our competitive advantages—global presence, innovation, uncompromising quality and superb service to our customers, and to fortify Avgol’s positioning as a leading and preferred supplier for the long years ahead.”

Noting that there are a number of untapped markets for the hygiene market, like India, which represents about 11% of all infants in the world, Liran told investors that new manufacturing sites are a strong possibility. “Furthermore, we are considering entering additional territories in growing markets with high growth potential,” he says.

Avgol’s momentum and substantial strategic investments in new infrastructure last year, with the establishment of two production lines in China and in the U.S., will strengthen Avgol’s business and competitive positioning and improve profitability in the coming years, Liran concludes.
Tel Aviv, Israel
www.avgol.com
2012 Nonwovens Sales: $315 million
 
Key Personnel: Shlomo Liran, CEO
 
Plants: Tel Aviv, Israel; Mocksville, NC; Jingmen, City, Hubei Province,
China; Uzlovaya, Russia
 
Processes: Spunbond, meltblown, hydroentangled spunlace
 
Brands: Zebra, Avspun, Avsoft Major Markets Hygiene, medical and construction
 
Sales decreased slightly for Israeli-based Avgol Nonwovens due to a decrease in the average selling prices of its nonwovens. The company, in fact, reported an increase in sales volumes in 2012 due to the start up of new plants in China and the U.S.
 
“Avgol has concluded a year of growth in its production capacity and an increase in the quantity of nonwoven fabrics that we sold to our customers compared to last year,” says Shlomo Liran, Avgol’s CEO. “Avgol continues to show an increase in sales compared to last year after neutralizing the volatility in the raw material prices throughout the year.”
 
For the full year, sales decreased about 4.4% from $329 million to $315 million. Gross profi t was $63.2 million, which declined due to low operating effi ciency in the U.S.
 
Liran says, “Demand for our products continues to be favorable with many of the products and solutions that we offer to our customers being at the forefront of technology, an advantage that helped us considerably when working with our customers during a challenging year.”
 
At the end of 2012, the controlling interest in Avgol changed when a new major shareholder, HFH International, took over the company from Israel Petrochemcial Enterprises.
 
With six older lines operating at its Israel headquarters, Avgol operates sites in North Carolina, China and Russia, from which it serves global hygiene markets. Recent investments include a fourth line in North Carolina and a third line in China and executives have hinted at the possibility of a second line in Russia where it began making nonwovens in Uzlovaya in late 2007 to better serve emerging markets in Eastern Europe, Russia, the Ukraine and other “-stan” countries.
 
Meanwhile, in the U.S., Avgol’s fourth line began operation in Mocksville, NC in August 2012. The new line added 15,000 tons of capacity to the site. Combined with another 15,000 tons added in China around the same time, Avgol’s capacity increased 30% in 2012 to reach 140,000 tons.
 
Avgol first entered the U.S. market in 2001 when it purchased an existing spunbond line from textile maker Unifi. The company has continuously added to the site since then, becoming a leading player in the hygiene market in the Americas. The Chinese site was started in 2005 as a joint venture agreement with Hubei Gold Dragon. A second line was added to the site in 2011.
 
Since the establishment of this Chinese arm, Avgol has invested heavily in new lines and steadily increased its ownership position in the company, which now stands at 83-84%. With the establishment of the third line, the site can make 40,000 tons of nonwovens per year.
 
“It should be noted that, coupled with the robust demands in China, we are beginning to see entry by global companies that are investing in the construction expansion of plants in China and we believe that we will be seeing increasing competition in this territory,” Liran says. “Such competition will benefit the entire diaper industry operating in China and will deepen the penetration into additional population segments that have not been using diapers until now.”
 
Beyond China and Russia, Liran admits his company is considering entering other areas that show similar levels of growth potential. These include India, where customers indicate that the market is expanding and a surge in growth is expected to occur soon due to a high infant population.
 
“Avgol’s momentum in substantial strategic investments in new infrastructure last year with the establishment of two production lines in China and the U.S. will ensure the strengthening of Avgol’s business and competitive positioning and improve profitability in coming years,” Liran says. “Notwithstanding, the investment of some $52 million in the new production lines in 2011, Avgol’s level of leveraging did not increase significantly and its strong and stable financial position will also enable the company to prepare for strategic moves in the market, if needed.”