They can see for miles and miles

By Dick Hughes  

JULY 7, 2011 12:31 p.m. (0)

In blinding speed, hair-thin glass fibers are bound together unit over unit in clockwise and counter clockwise twists, tested, sheathed and labeled to carry everything from energy off a utility pole to high-definition video to a home.

With strong demand for fiber optic cabling, AFL’s production lines in its 220,000-square-foot plant in Duncan are running four shifts a day, seven days a week.  Production at two other nearby AFL plants also is strong.

The main plant is turning out 400 to 600 miles of fiber cables per week, said H. Carr Pritchett III, product engineering manager.

Depending on customers’ tailored orders, AFL can produce cables with as few as one or two fiber units to as many as 432, Pritchett said.

“We are very excited with the growth in the market place,” said Jody Gallagher, president and chief executive officer of AFL.

AFL, he said, supplies materials critical to rebuilding communication and transmission networks with optics to satisfy a world demand for transmitting data faster to the end user and more efficiently for the provider.

AFL, a joint venture of Alcoa and Fujikura of Japan, came to Spartanburg County in 1984 to manufacture fiber optic ground wire. Since then, AFL has become a leading supplier and servicer of fiber optic cables and related products.

It is a market that will reach $30 billion worldwide by 2015, according to Global Industry Analysts.

To illustrate the shift to a more diversified company, Gallagher noted, that “today about 65 percent of our business is product based and the balance is technical services.”

Corporate ownership has changed, too.  In 2005, Alcoa, which held 51 percent ownership and Fujikura, which held 49 percent, split AFL.  Alcoa took the electrical automotive division, and Fujikura got the telecommunications division plus $176 million as a cash-balancing payment.

Fujikura, a diverse industrial conglomerate traded publicly, created AFL as a privately held wholly owned subsidiary incorporated in the United States.

“Once we acquired the company in 2005, we made the decision to make the headquarters here,” said Gallagher.  “We have a critical mass here and decided to build the business around this area.  It has been a great decision.”

AFL has increased its workforce in Spartanburg from 425 in 2005 to 643, grown its fiber optics market share, made several strategic domestic and overseas acquisitions, strengthened research and development and expanded its product and technical service lines.

Gallagher expects revenue to reach $600 million this year.

AFL’s core business is as a provider of fiber optic cables and service to such diverse markets as electric utilities, broadband and wireless telecommunication companies, railroads, corporate networks and data centers, wind and solar power producers, medical systems and, currently with development of robust cables, oil and gas and mining companies operating in the harsh environments.

Consumer insistence on wireless communication benefits AFL.   While it might be wireless to end users, wireless systems are not wireless.    Signals are uploaded and downloaded by hard wiring at towers and “very few of those towers are connected by fiber,” creating a large market for companies like AFL.

Although providers, mainly Verizon, are investing in fiber optics to homes, that market, too, remains wide open.According to the Fiber-to-the-Home Council, fiber cabling is available on the streets of only 16 percent of the nation’s homes and less than 6 percent are connected.

It’s a market AFL prepared for by investing “in a full line of products and a full-line of services,” said Gallagher.

AFL’s customers include such major Fortune 500 companies as AT&T, Verizon and Duke Energy that are investing heavily in fiber to upgrade their infrastructure and ultimately reap financial return from the wide array of services and efficiencies fiber offers.

As one example, Gallagher cites the advantages to consumers and to utilities that wireless monitoring and controlling of energy to homes and businesses.

When the connections all come together, he said, users “are able to control and monitor power delivery. Consumers can say I want to turn this off at this time because I don’t want to pay for it. What that means for power utilities is that they ultimately have to build less generation.”

“In some cases, we built it on our own and some cases we were better off acquiring,” said Gallagher. “We geographically expanded as well as from our customer base.”

With Fujikura being “very supportive in terms of growth,” AFL has a goal of buying two or three companies a year and Gallagher sees that continuing.  In its latest acquisition, AFL acquired TCC Group, a British company that designs, builds, installs and maintains “next generation networks.”

Gallagher said Fujikura expects 30 percent of AFL’s annual revenues “generated by the development of new products, and that goal is being increased so in the areas we invest in we have to be high successful.”

With companies resuming higher capital expenditures for building fiber infrastructure after cutting back in the recession, Gallagher said AFL is positioned to move with global demand as it develops.

“I foresee strong activity and strong growth for North America’s business; but if you look at where the world is growth, growth is in a lot of places outside the U.S.,” he said.  AFL’s challenge is to establish production “in areas of interest.  You have to be localized.”

What that means for Spartanburg, Gallagher said, is that “some products will move out at the same time we’ll have new products coming in.”

“While I would love to do it all out of one factory and I would love to do it out of here, the commercial challenges just do not allow you to do that.”