Shaked, Israel, November 2-- Carmel Carpets, owned by the Eitani family, is negotiating to buy a factory in the US, in order to send part of its carpet manufacturing overseas, according to Globes Online.
Carmel Carpets CEO Ofer Eitani told Globes that the company would keep its development center in Israel, as well as most of its production at its factory at Shaked, near Umm el-Fahm.
Eitani said Carmel Carpets was considering setting up a factory in the Atlanta area, about two hours from Dalton, Georgia, a global carpet center. The factory will be established in partnership with a US carpet maker. Most of Carmel Carpets' exports are already to the US.
The US factory will cost $10 million to build. The Eitani family will own 75% of the factory through Carmel Carpets, while the US partner will own 25% and manage production.
Carmel Carpets' Israel center will continue designing the collection, and designing and adapting carpets for the market. Only production will take place in the US. Sales in the North American market will be carried out through Carmel Carpets' existing distribution channels based in New York and Los Angeles. Carmel Carpets will also set up a third distribution center for the Midwest and Florida.
Eitani revealed that Carmel Carpets will achieve NIS 70 million in sales this year, a gross profit margin of 45% and a net profit margin of 5%. Israel's floor covering market (including parquet, PVC tiles and ceramic tiles) is estimated at NIS 450-500 million a year.
Carmel Carpets expects full production at its Shaked factory to boost its domestic sales to NIS 80 million in sales in 2005.
The US factory is expected to produce $20 million worth of carpets a year, beginning in 2006. All production is intended for the North American market.
Sixty percent of Carmel Carpets' current sales are for export, amounting to NIS 42 million. Sixty percent of exports are to the US, Canada and Mexico, and 40% are to China, Japan, Australia and Mediterranean countries.
Eitani says production in the US will not lead to a reduction of production in Israel, at least in the first stage. Carmel Carpets' Israeli factory is operating at full capacity, so the US factory will increase the company's total production capacity.
