(From the Aug. 22, 2011, issue of Rubber & Plastics News)
CADILLAC, Mich.—Avon Rubber P.L.C. has landed another sizable contract to further bolster its Protection and Defense business.
The company said Aug. 8 the protection operation in Cadillac was awarded a three-year indefinite delivery, indefinite quantity contract from the U.S. Department of Defense for the supply of M61 filters, a key component in Avon's M50 respirator used by the U.S. military.
Maximum value of the pact was estimated at about $38 million with an initial order value of $11 million in the current financial year.
Avon's M50 mask protects against chemical warfare agents, biological threats, radioactive dust and a number of other toxic industrial chemicals, a company spokeswoman said.
Growing demand for the consumable filters as part of the mask systems was one of the reasons Avon decided to expand its Cadillac plant in 2010, according to Chief Executive Peter Slabbert. “As the sole source supplier of this unique conformal filter, we believe the growth will continue.”
In 2008, Wiltshire, England-based Avon was awarded a 10-year contract, with a value of at least $112 million that could climb as high as $500 million, to supply the U.S. military with M50 mask systems annually for at least five years. Manufacturing of the masks and spare parts is being handled at the Cadillac factory.
That pact had an option under which the company would manufacture a significant number of additional masks and spares above the 100,000 figure for up to 10 years, Slabbert said at the time.
The chief executive said the deal could become the largest respiratory protection contract ever placed by the U.S. defense department and would give the company “a long-term, growing and profitable revenue stream for the group.”
The 2008 contract was followed by two offshoot awards from the U.S. federal agency in 2009, one for 61,000 mask systems in February and the other for 726,834 spare mask parts in June.
Avon's current three-year award for spare filters falls under the 10-year contract umbrella, according to Andrew Lewis, group finance director.
He painted a positive picture for Avon's overall defense and protection business, both in the U.S. and overseas, with profits rising year over year. Lewis said, however, that the defense product market is under pressure because of delays in federal funding, “especially big ticket items like planes. But respiratory masks are doing well.”
Long-term programs like the 10-year M50 mask system contract have been virtually unaffected by the budget delays, he said.
Because of reductions and delays, Lew¼is said, the company's firefighter protection products business has been slow. Avon's dairy products operation continues to improve “with milk prices holding up and farmers doing well.”