Choosing to Expand in the Garden State

“We’re New Jersey born and bred,” says Christopher Avallone, Alpha’s president. “We’re committed to staying and growing in New Jersey.” He says the company saw double-digit growth last year with revenues greater than $55 million. Alpha is profitable, Avallone says.

To accommodate an influx of equipment and personnel, Alpha is building a 52,000-square-foot facility next to an existing 60,000-square-foot plant on 15 acres in Lakewood. Avallone says the buildings will take up about half the total acreage.

At the moment, Alpha’s 130 employees are in Lakewood and Woodbridge; Charleston, S.C.; Henderson, Nev.; and Burgstadt, Germany. Avallone says the Henderson site, which has a staff of four, will remain intact.

The consolidation will cost about $5 million, but will eventually result in savings that exceed 20 percent of the company’s operating costs, according to Avallone. “Having everything under one roof will improve lead times and lower logistics costs,” he says.

Alpha specializes in chemically treating materials used in a wide range of products such as heat shields for aircraft and insulation for houses. One example is a fire resistant material for airport gate corridors. Alpha also makes and coats rubber pieces for applications that include flue ducts. The materials range in price from $.04 per square foot for insulation backing to $40 per square foot for specialized conveyer belt materials.

State Sen. Robert Singer (R- Ocean), who attended the groundbreaking ceremony in November, says that Alpha is the “type of company that you want to attract to your area, that’s putting dollars into the economy. And they’re a manufacturer expanding in New Jersey. That’s unique.”

As to why Alpha chose Lakewood over Woodbridge, Avallone says the Woodbridge site is “bordered by other industrial companies and residences. There was no real room to grow.”

Also playing a part in the decision was the fact that Lakewood is in both an Urban Enterprise Zone (UEZ) and a Free Trade Zone, he says.

Certain companies in the state’s 32 UEZs are eligible for tax breaks, including a $1,500 tax credit for hiring a full-time employee who lives in a zone or a qualifying municipality. Free trade zones allow manufacturers to delay taxes on imported raw materials until they are processed or sold, which “helps with cash flow,” says Avallone.

The company will maintain its sales and distribution sites in the United States and Germany. Avallone says its German location is a “good central point” for reaching its European customers. Alpha had considered moving to places like Mexico and China but transporting the company’s machinery to foreign soil and training new employees to use it would be a “long and difficult process,” he says. The company uses equipment including huge rollers to wind and unwind rolled materials, and 30-foot-tall ovens for drying. It also makes use of drums that hold up to 2,000 gallons of chemicals.

Firms like Alpha that make specialty and customized items may also be reluctant to move part of their operations to another country because they want to protect proprietary information about how their products are made, says industry consultant Timothy Walker, owner of TJWalker and Associates in St. Paul, Minn.

Successful coaters and laminators in North America—where it costs much more to do business than in places like China—are finding “niches with some part of their process being high tech,” says Walker. “If you make specialty products where you start doing something that’s challenging and difficult for others to copy, then your margins will be higher.”

Avallone says the company’s growth is being driven by its rubber business, which was given a boost when Alpha acquired Buffalo Weaving & Belting of Buffalo, N.Y., in 2003.

Entering new markets through research and development is vital to Alpha’s growth, says Avallone. “We’re constantly in the field looking for new applications and products, and heavily working with customers to come up with new ideas to bring back to our product development staff.” Part of Alpha’s Lakewood site will be dedicated to creating and testing new technology and products, he says.

Avallone grew up in Glen Ridge and now lives in Chester. Alpha was founded by his father, A. Louis Avallone, the company’s current chairman and CEO. The younger Avallone says the company’s employees have an average length of service of around 10 years.

E-mail to tgaudio@njbiz.com