If SFSK's competition can manufacturer large amounts of similar gloves, how will SFSK avoid either a loss of market share or a price war? The article was clear that such an event is a couple of years away, but I'm interested as to how the company plans to meet this challenge. Is a glove a glove? Or does SFSK have some kind of unique advantage over its competition?
william.
you pose valid questions and i'm a bit surprised no one on this board took at stab responding. i'll attempt to do so, but fair warning: i'm a long-term bull on safeskin, so my objectivity may be clouded.
first off, regarding pricing, it's well established that SFSK doesn't tout itself as the cheapest glove manufacturer. their customers have traditionally come to them because of the quality of their product. while larger competition is certainly on the horizon, they will clearly have to offer a solid alternative, not just bargain basement volume. as morash indicated in the barron's article that mr. happy was so kind to post, "The argument...has always been, a glove is a glove is a glove, and we've shown that that simply isn't the case."
regarding unique advantages, SFSK is definitely cozy with the thai government and obviously currently leads the pack. and while it's true that their gloves aren't patented, their technology to manufacture them is proprietary. in addition, SFSK's acquisition of tactyl last year did add a patented "thermoplastic elastomer" synthetic to their arsenal which now complements their own safeskin 2000 powder-free surgical glove, essentially giving surgeons two choices of surgical gloves.
personally, i don't believe it's trivial that SFSK's proprietary processes minimize particulates, reduce latex proteins, remove residual chemicals, and now "offer the first non-cytotoxic (i.e., does not destroy cells) glove to the high technology and scientific market."
if you're serious about investing in this company for the long term, take a peek at their webpage (http://www.safeskin.com) and/or read last year's 10-k (http://www.sec.gov/Archives/edgar/data/911636/0000936392-98-000515.txt). take a good look at their various product offerings and i think you'll be impressed. when i first began investigating SFSK, i too presumed that a glove was a glove; however, now i realize that the market is very specialized and SFSK offers a wide range of synthetic, powder, and powder-free gloves not only for hospitals (medical examination, surgery), but for dental, semiconductor, biotech, pharmaceutical, general industrial manufacturing, and research segments of the high technology and scientific market.
hope this helps,
-chris. |
