Elmo Leather will begin cutting leather for the automotive industry this autumn at a new production plant in Germany, in the old Swedish town of Wismar*. Elmo’s investment for the first phase will be around $519,500 and the plant at Wismar will employ between 50-60 people. Further machine installation is expected up to mid-2004 and Elmo estimate that they will invest around $1 million) on the German plant.
Elmo, who have so far concentrated on supplying whole hides to the automotive industry, expect this investment to improve profitability because cutting means further processing.
‘We are integrating up the value chain and underpinning Elmo’s position as an attractive partner to the automotive industry. It will also improve profitability’, says Nalle Johansson, president and ceo of Elmo Leather AB in Svenljunga.
The automotive industry sees an opportunity to reduce its costs by buying ready-cut leather directly from the supplier for its car upholstery, instead of whole hides which, via other subcontractors, are cut and sewed together to become finished upholstery items. The first order for cut leather for automotive upholstery has already been secured.
With cutting services as part of their range, the company also expect new business opportunities to open up in other automotive sectors. Elmo’s supplies to the automotive industry currently account for around 50% of the group’s total sales. The remainder is made up of high-quality leather for the international furniture industry.
The plant at Wismar, Elmo Trim GmbH, will be a wholly-owned subsidiary of the Elmo Leather Group. The company will have German management and staff. The plant will initially employ around 50-60 people working a two-shift system.
The cutting plant will be supplied with whole hides from Elmo Leather’s plant in Sweden. Cutting and packing will be done at Wismar. Cut upholstery sets will then be transported to the car manufacturer or subcontractor for sewing.
* Wismar is a port town on the southern Baltic coast in the German province of Mecklenburg- Vorpommern. In the late middle ages Wismar was an important Hanseatic town.
Following the 30-year war, Wismar became Swedish territory via the Peace of Westphalia in 1648 and between 1653-1802 was the seat of the Superior Court for Sweden’s German occupation and the Wismar Tribunal. Wismar was leased to Mecklenburg-Schwerin in 1803 and Sweden relinquished its rights on the town 100 years later.
