Meat Producer Cooks Up Leather NicheFri, 09/01/2017 - 15:01
The manufacturing industry might seem like an odd place for a meat producer but demand requires supply and that equation sometimes makes for strange bedfellows. When the arrangement creates benefits on both sides, it also makes perfect sense.
Booming demand for leather interiors has caused the automotive industry to outshine footwear producers’ demand for the material. This has created an opening for companies like meat producer SuKarne, which until recently had been content to dominate the meat sector, its main niche for 30 years. “We began to enter the industry by working with highly specialized tanners such as Bader and Midori that are certified by automotive companies, expanding our operations into the maquila industry,” says Jesús Vizcarra, President and Director General of SuKarne.
The Economist reported a 40 percent increase in demand in Mexico between 2013 and 2015, just within the automotive sector. Until 2014, 80 percent of the leather used in all industries was imported but new players are emerging as Tier 3 suppliers to carmakers. The Guanajuato Chamber of the Tanner Industry (CICUR) cites demand for leather at over 150,000 pelts per day to satisfy automotive demand.
“The governments in each Mexican state have evidently worked hard to develop the automotive value chain, so entering this industry is pivotal for the future of SuKarne,” says Vizcarra, echoing AMIA’s view of the industry as a “catalyst of growth in Mexico.” The new entrant into the automotive supply chain opened a distribution plant in March 2017 in Leon, Guanajuato, which will supply the country for the moment but the company prefers to be closer to the client long-term. “Our teams want to be located near companies that see us as long-term suppliers and not as opportunists.” That would also help the company integrate into the industry, to understand its needs and avoid simply supplying companies that look for a one-off saving.
The distribution center will supply the wholesale market initially, up to its capacity of 33,000 tanned pelts per week, 40 percent of which will be exported and the remaining 60 percent will go to companies based in Mexico. Vizcarra reiterates the company’s focus on Mexico: “We want to offer a local solution to companies that need high-quality materials, so they need not purchase leather overseas and incur extra costs.”
Though the company plans to use the same business model that has been successful in the meat industry, Vizcarra also recognizes how long relationships with clients can take to consolidate. The company would ultimately supply OEMs indirectly, by working with companies that handle the interiors of cars for seats and steering wheels specifically. This will include international companies, several of which already use SuKarne. “SuKarne is working with 15 international companies and three Mexican automotive suppliers,” says Vizcarra. SuKarne’s meat is produced in Mexico and Nicaragua and the company’s products have presence in a handful of Asian, European and South American countries and is building its leather capabilities to export leather to more markets. But SuKarne’s meat business shares the automotive industry’s principal export destination: the US purchases 70 percent of its exported product.
The company’s leather supply division estimates 1.6 million pelts will be produced in 2017. “We are the top leather supplier in the country, handling 40 percent of Mexico’s production, so we have many plants that are certified by the Federal Government and the United States Department of Agriculture (USDA),” says Vizcarra. Working to these standards has meant the company has had to acquire specific certifications and quality standards over the years for various clients. Today SuKarne can guarantee quality in-house processes and supply Tier 1, 2 or 3 automotive companies with leathers to their specification.
SuKarne’s philosophy is to reach more people every day, with the best products and accessible price tags. “It is crucial for me to offer quality at a reasonable price. To guarantee this quality, our control of livestock is based on traceability.” Tracing every step of the process from birth of the livestock to its arrival at SuKarne’s facilities is the main advantage Vizcarra sees for the automotive industry and its high standards.