ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, September 19, 1996 TAG: 9609190027
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
Where there once was farmland in Botetourt County, high-speed presses now make colorful packaging for Rolaids, Miss Clairol hair coloring and 5th Avenue, the new perfume by Roanoke's Elizabeth Arden Co.
Where county supervisors bought private land years ago to establish an industrial park, 70 people work for a New York packaging company with a new address off Alternate U.S. 220.
The presses have begun to hum at Arkay Packaging Corp. The Hauppauge, N.Y.-based company today will have a ceremonial opening for the new packaging carton factory at EastPark Commerce Center.
During a pre-ribbon cutting tour Wednesday, company president Howard Kaneff described how factors of cost, location and labor led him to choose the Roanoke Valley for his only manufacturing operation away from company headquarters. The $4 million building contains $7 million worth of equipment, a large portion of it new.
The company today is the leading U.S. supplier of packaging for the cosmetics industry, with a 30 percent market share, and sells to Avon, Estee Lauder and Chanel and many smaller makers, Kaneff said. The Botetourt plant will supply cartons to cosmetics makers as well as pharmaceutical and health and beauty companies such as Warner-Lambert and Clairol and media companies such as America Online, which contracts for mailing containers for promotional CD-ROMs.
The new plant lets the company manufacture more goods at a time when it is striving to grow rapidly. Sales, at $45 million in 1995-96, are targeted to reach $67.5 million in 1997-98, a 50 percent increase.
Kaneff said he was attracted to Western Virginia by its comparatively low costs. He said he pays 41/2 cents for a kilowatt hour of electricity here compared with 17 to 20 cents in New York. In addition, the county gave him a deal on land.
Costs were even lower in the Spartanburg, S.C., area, his second choice for the new plant, but he chose Botetourt because his trucks can haul materials to and from New York in 10 hours one-way compared with 17 hours to the South Carolina site.
Botetourt is also minutes from Elizabeth Arden's Roanoke cosmetics factory, which buys Arkay cartons, and from Westvaco's Covington mill, from which Arkay has a history of buying paper for its cartons.
"This is the future - where we can build our company," Kaneff said.
He predicted Arkay will grow into the 60,000 square-foot plant and then outgrow it, after which there are conceptual plans to build on and add to the 70-person work force.
He described his newly hired workers as fast learners who needed in-house training to get up to speed. Ultimately, they may well exceed the productivity of the company's Hauppauge manufacturing work force, he said.
His late father, Max, founded the company as a print shop in 1922 in Manhattan. His adept color reproduction caught the eye of cosmetic makers concentrated around New York.
Cosmetics come in pretty packages - and his father was able to make a career producing them - because the cosmetics business is really about "selling hope, glamour and fashion," Kaneff said. "Up on a shelf, it's the image that counts in the final sales. The image is the package."
But it's a myth that a cosmetic's packaging represents a high percentage of its retail cost, said Anita Mott, who teaches cosmetic package design at the Fashion Institute of Technology in New York City. The consumer pays about $1 for the container and package of an item that costs a manufacturer $5 to produce and advertise and which may sell in a store for several times that amount, Mott said.
LENGTH: Medium: 71 lines ILLUSTRATION: GRAPHIC: chart - Arkay Packaging Corp. color STAFF KEYWORDS: MGRby CNB