The tradition of Carpet Factory Kowary S.A. goes back to 1854. That was the time when the first weavers, trained in the Turkish town of Smyrna (now Izmir) which was famous for carpet manufacturing, started carpet weaving by tying knots on wooden looms.
Nowadays that period tradition remains in the company's strive for high quality and in the experience of many generations of weavers, but the production process has been modified many times. In 1894 the company was renamed to Vereinigte Smyrna Teppich Fabriken. In the 1906-1912 period new looms were installed to allow production of 64-colour pile and thus to make the products competitive on world markets. As early as in the 1930s, the carpets were exported to Scandinavia and the Americas. At that time the monthly output was 23 tons of yarn and 12,000 sqm of carpets. The carpets and floor coverings from Kowary were quickly recognised both at home and abroad. In 1973 the factory was expanded to include a new needled floor covering production plant, the products of which were exported mainly to the former USSR. The introduction of a number of technical and design measures made the products still more attractive and enlarged their range. This allowed the factory to survive the economic transformations of the 1990s.
On the basis of the Act on Denationalisation of Companies (Art.5, item 1), in 1992 the so-far state-owned Kowary Carpet Factory was transformed into a joint-stock company wholly owned by the State Treasury, gaining the name of Carpet factory "Kowary" S.A.
Under the National Privatisation Programme, in 1995 the company was admitted into National Investment Funds, and since 1996 its main shareholder has been the National Investment Fund "Hetman" S.A.
The 1997-1999 period was the most difficult one in the company's history. Even though the revenues from an issue of stock allowed establishing a daughter company in Kamienna Góra (Kowary- Dywan S.A.) to produce Axminster-Jacquard floor coverings, the end of 1998 saw severe hardships of the company. One of the reasons was our declining competitiveness on the British market. Besides, virtually no investments in technology were made during the 1990s. Another important factor was that for years the company did not pay enough attention to changing consumer preferences and interior decoration trends within the floor covering markets, including the British one. This coincided with increasing exports of cheap needled floor coverings, mainly from Belgium, which caused a decrease in sales and profits on our needled products.
Such a situation induced NFI Hetman S.A. to implement measures aimed at rescuing the company that involved employing an American consultancy for crisis management of the company.
The recovery measures included:
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making use of simple reserves, downsizing the staff and stocks,
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negotiating a prolongation in debt repayment,
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streamlining the technological process and adoption of technological regimes,
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limiting the scope of activities - liquidation of needled carpet plant and sale of some assets,
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entering the US market and starting US sales,
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termination of an inconvenient agency agreement that brought about monopolisation of our sales in Great Britain.
The year 2002 saw another change in the position of company President. The primary area requiring changes was Sales and Marketing Department.
There, the Board proposed a strategy to involve:
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focusing on Axminster technology (at the time needled products were still manufactured),
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focusing on corporate customers,
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increased diversification of British markets and customers ,
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developing our share of other markets.
As a result of adopting the new strategy, the company managed to significantly improve its financial performance. In 1999 the workforce was downsized to 591. Both expenditures and production costs were cut down. This led to a decrease in company's debt from PLZ 37 M to 11 M. Since NFI Hetman was planned to cease operations by the end of 2002, it was seeking an industry-related investor for Kowary S.A. However, that search was not successful - the Company President took over a 52% stake of company stock under the Management Buy-Out Programme.
During 2002 and 2003 the Board continued implementation of the strategy and initiated new projects aimed at cost reduction (employment reduction, implementation of QA system, lowering the costs of security system, lowering the costs of materials acquisition, reduction of production cost), which allowed the company to come into the new year 2004 - the 150th year of its operation - in a good financial condition.