Hide procurement - Coping with the great expanse

23 April 2002




The last email I received before heading to Canada was a warning to wrap-up warmly. The first night in Ontario saw the temperature dip to a chilling -16°C plus a wind chill of a further -10°C. According to the locals this winter has been mild by the usual Canadian standards and temperature can go far lower. A layer of snow, which had fallen over the previous few days, covered the landscape, and the lake in Barrie was iced over. At least the ice fishermen were happy. Barrie is approximately one hour north of Toronto and has a population of around 100,000. The town was the former home of two tanneries, which have since closed, but is an ideal location to source raw materials from meat companies located throughout the state of Ontario. These were two good reasons why the town was chosen as the headquarters of Barrett Hides Inc. The company have a four-acre site in Barrie featuring a 30,000ft² warehouse with a further 10,000ft² under construction. Irish immigrant, Jim Barrett, established Barrett Hides in 1990 following the demise of other companies in the area. 'Very few people are aware of the size of this country and the collection of hides can best be described as a logistical nightmare', says Jim Barrett, president and founder. In the state of Ontario alone (population: 10.7 million - the largest populated area of Canada) Barrett Hides have eight trucks servicing the factory in Barrie. Distances of 250 to 750 miles are covered 'locally' each day or in the case of the furthest distance every two days. Ontario covers an area of 1.07 million sq km. 'I have seven trucks running daily and one stopping overnight five days a week. In the busiest season between the end of September and the end of December the plant and the trucks are operating seven days a week', says Barrett. The late autumn/winter season in Canada is especially busy as beef production increases and the hunting season is in full swing. Barrett emigrated to Canada from his native Dublin and began working in a beef packing business in Toronto. While working for the packers he was approached by a then leading hide processing company, Levine Brothers in Toronto, part of the Martin & Stewart Company. Shortly after taking the job he found himself out of work when the company went into receivership. This was the point which marked the beginning of Barrett Hides Inc. Jim Barrett began his own hide business in 1990 with six employees. In just twelve years Barrett Hides have grown to become one of the top three hide and skin trading companies in Canada. At the end of the first year they had already achieved a turnover of C$5 million (US$3.2 million) which will have grown to an impressive C$80 million (US$50.4 million) by the end of the 2002 fiscal year. 'When I left Martin & Stewart I saw a gap in the market for a hide processing company in the Toronto area. Since 1990 the company has grown through a steady and reliable workforce and a number of acquisitions', says Barrett. During the past twelve years the company have taken over four other smaller hide businesses and merged them into a single operation. These include Myers Brothers Hide (1995), Larry Fritz & Son (1995), A C Stull (1996) and, most recently, Harrison Hide & Sons in January of this year. 'The smaller hide companies were all finding business increasingly difficult, especially as the unit cost of processing each hide is getting higher making business more difficult. Because we are larger we are able to manage the unit costs more closely', explained Barrett. The total number of hide processing companies in Canada has fallen from 15-20 in 1990 to only five or six in 2002. While acquiring hide firms in the Ontario area Barrett Hides have also opened up a network of self owned or contracted hide warehouses across Canada and into the north eastern part of the USA. Barrett Hides have plants in Quebec, Utica in New York state of the US, Winnipeg and Calgary. The network gives Barrett a greater way of spreading their procurement web across Canada. Dependent on season and demand Barrie typically handles 20,000 pieces a week followed by Quebec which takes 4,000. Utica and Alberta both handle 1,000 pieces and the plant in Manitoba processes between 500-700 pieces in an average week. As well as the hide plants the company have a worldwide network of sales agents and a wholly owned sales office in Miami. The Florida office caters for the Central and Southern American markets, particularly Mexico. Barrett Hides also have an agreement with Hilltown Hides in Ireland to supply European customers and agents in Türkiye and the Far East. European tanners represent the largest export market taking approximately 40% of their procurement. Other major export markets include Mexico (20%), USA (20%) and the Far East (20%). The company have between 30-40 direct employees and a further 40 are employed on a contract basis across all the plants. Dependent on season and demand the company's average throughput is calfskins (40%), beef hides (30%) and the remaining 30% is a mixture of pig, sheep, horse, moose and deer hides and skins. Most deer and moose hides are collected during the Canadian hunting season, which runs from September to December. Long distance procurement In a typical day the trucks leave Barrie around 7:30am to arrive at the furthest destination to coincide with the end of the kill. The hides are then graded and loaded fresh onto the truck. The closest butcher or packer to Barrie is the last pick-up destination. The trucks return between 4pm and 7pm where the hides are unloaded and the drivers' grades are re-checked. A full list of the bovine products supplied can be seen in table 1. Each hide is then salted, trimmed and selected into weight category. Hides are stored for 8-14 days in a refrigerated room on a pallet according to Canadian law. Depending on customer requirement, hides can be transported to a nearby beamhouse where the hides are fleshed and/or brine cured. As well as the local fleet of trucks Barrett Hides have an alliance with a haulage company to provide a long haul trucking service. Crawler International Inc, who are located in the same building as Barrett Hides, provide four trucks, two flat beds and four trailers for long distance work. 'Our long distance lorries cover a range of 3,000 miles a week and most trips will see our drivers away for at least two days. Between them they often carry twelve 45,000lb loads a week taking hides and skins to and from our warehouses, visiting suppliers and customers or taking hides to the docks for export', says Barrett. All the trucking document handling and paperwork for shipping is controlled at Barrie. The plant exports around 100 containers each month. Approximately 25% of the containers are sold directly as a brokerage trade from Barrett to the customer. The remaining 75% is shipped from the regional network of warehouses through the Barrie plant where they are re-graded to make sure that the customer receives the same price for the same quality from wherever the hides or skins are sourced in Canada. Environment Later this year Barrett Hides will become the first hide processing plant in Canada to be awarded ISO9002 certification. Quality is linked to cleanliness and Jim Barrett is a stickler for cleanliness. At least once a day work at the plant is suspended and the whole working area is cleaned down to prevent contamination and to maintain as comfortable a working environment as can be expected considering the nature of the business. Walls in the areas where hides and skins are graded, trimmed and salted, are covered with white refrigeration panels to maintain cleanliness. The concrete floors are also regularly cleaned. The result is a very tidy operation, which helps the operatives keep track of stocks, and limits contamination of hides from dirt, blood, insects and rust. In a cold country such as Canada, salt is regularly used to keep Ontario's roads free of ice and snow. After the state authority Barrett Hides are the second largest users of salt. In order to reduce the environmental load of disposing of the waste salt, and to save costs, the company have installed a reconditioned mixer vessel. Over the coming months an air heater will be fitted to the mixer. By blasting hot air on to the used salt pilot studies have shown that around 80% of the contamination can be removed by evaporation. The clean, recycled salt can then be used to cure lower grade selections. Reason for success Since the company were formed the staff turnover has been very low at around 5% over 12 years. The workforce is a mixture made up mainly from immigrants who moved to Canada to seek work and a new life. 'The relationship I have with other workers in the plant is this company's greatest asset. The mixture of native Canadians with a large number of ethnically diverse people from all over the world works well. The employee loyalty is fantastic here', Jim Barrett, explains. 'It is one of the major reasons why this company has been successful.' The management team have also been with the company over a number of years. Two of the senior members of the staff who joined the firm in the earlier days include Michael Clement, chief financial officer (who joined Barrett from Martin & Stewart) and US born Doug Wonsch, procurement and plant manager (who joined Barrett following many years of working for other firms in the hide business). Both supply the company with a sound financial discipline and a continually consistent product for customers. Raw material quality Cattle reared and slaughtered in Canada often have thicker hides than those from regions such as Texas where the climate is mild. Clearly the thicker hide is a result of a colder climate. However, the general feeling is that the quality of raw materials in Canada and the whole of North America have deteriorated over time. Especially, with the increase in throughputs at the meat packing plants. Being a product of the meat industry the hide is often a secondary concern for the packer or butcher and is removed from the carcase as quickly as possible. Coupled with the increase in throughput, the turnover of staff in the packing industry has also increased, thus more partially or untrained operatives are being employed to remove the hides. Jim Barrett told Leather International that he had seen a higher incidence of flay damage during his years in the business and blamed inadequate take-off as a major problem. However, it should be stressed that the problem is not unique to Canada and can be found all over the world. 'We now live in an age where the packer takes the animal from the farm and provides the meat ready-boned for the supermarket', says Barrett. 'Consequently, less care is taken over the carcase or hide removal. The problem looks set to get worse as the number of 'boutique' butchers is falling as they cannot compete in terms of price and throughput with the major packers'. Despite problems occurring from the slaughterhouse Canadian hides are generally regarded by most tanners as good quality. Dung is a problem during the winter months but very few animals are found with natural diseases or scratches. Canadian hides are perceived to be not as high in quality as Northern European pieces. However, the quality to price ratio is often higher than the more sought after European articles. Barrett Hides also specialise in providing calfskins including the high quality Provimi black and white selection.



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