In May 1998, US President Bill Clinton issued an order whereby the infrastructure critical to the American nation, in the United States and elsewhere in the world, must be protected against non-conventional threats - such as terror attacks, weapons of mass destruction and attacks on computer systems and data banks. The administration launched the "Safeguard" plan for implementing the presidential decree.
In Israel, the Arpal share posted an unexplained advance. Arpal specialises in building inputs such as windows and metalwork products. Last Tuesday, the Arpal share shot up by 21%, advancing another 8% on Wednesday.
Since the beginning of the year, Arpal has risen 45%, mostly in the past two days. The reason was the company’s announcement of indirect contacts with US administration representatives concerning the marketing of protective windows.
Arpal has an agreement with MegaSeal, which engages in the protection of buildings. MegaSeal is one of ten companies in the consortium formed by SRA, which the US administration chose as its supplier of protection solutions. SRA has a BPA framework agreement with the US Federal Administration, and is responsible for supplying protection solutions in accordance with the presidential order, each of the ten companies specialising in a specific area of protection.
Arpal is accordingly the "sole supplier", according to company chairman and general manager Motti Emeq. Emeq reports that Arpal has developed a protective window designed to absorb energy from any possible explosion in the aluminium frame. The distinctive feature of this window is the connections between the glass and the aluminium frame. In addition, there is a stainless steel cable harnessed to the window and absorbing part of the blast energy. The company has three principal competitors, manufacturing ballistic windows (and not blast windows).
The BPA agreement provides for the allocation of $250 million for protective systems for 1999. Emeq says there are still no actual orders, but that at an exhibition in the United States at the beginning of the month, "Senior US army officers showed great interest in the product".
Arpal ended 1998 on a loss of NIS 8 million. In the first quarter of 1999, the company reverted to profitability. In its financial statements, published last week, it posted a NIS 2 million net profit on a revenue turnover of NIS 23.8 million. This compared to a token profit of NIS 240,000 on a NIS 21 million turnover in the corresponding quarter last year. The heavy financing expenses of 1998 gave way, in Q1 1999, to financing income, amounting to NIS 773,000.
In mid 1998, company founders Eitan Ben Horin and Zeev Sagi left Arpal. Emeq gives the reason as "differences of opinion and a different outlook". The mounting competition in the building inputs market and the import of merchandise at dumping prices added to the upheavals undergone by Arpal last year.
Emeq points to 1999 as a turnaround year. "Arpal", he maintains, "will become established in the windows manufacturers market, and, starting from the second half of the year, the company will start selling integrated systems of aluminium profiles and complex components". Despite the dumping prices he says, he believes in the company’s ability to soar.
Emeq still regards the protective windows market as one to be reckoned with: "We are about to receive orders from the Foreign Ministry and from Israeli customers. I hope we will also go strongly into the US market, but
this is not factored into our immediate calculations.
Published by Israel's Business Arena May 23, 1999