Leather International: From PrimeAsia’s perspective, how was 2014 in terms of achievements, targets and evolving challenges?
Jon Clark: PrimeAsia thrived in a difficult climate during 2014. Company employees volunteered 2,517 global hours to their local communities – an increase of 15% compared with 2013. The company saw a 29% increase in global demand and a 1.6% improvement in our ‘quality matrix measurement’. The company increased its market share with 67% of its core branded customers and maintained its market share with the remaining 33% of PrimeAsia core branded customers.
We also stayed on track to meet our five-year 30% reduction of energy, water and waste goals per-square-foot-of-leather targets. These five-year company sustainability goals were set in 2012. In 2014, PrimeAsia China saw energy efficiency improvements of 19.6%, and PrimeAsia Vietnam saw energy efficiency improvements of 7.4% compared with 2013.
An exact update on 2014 progress will be reported in the company’s GRI Annual Report, which will be forthcoming soon. We continue to focus on moving towards zero waste and inefficiencies, reducing usage of finite energy sources, using more sustainable raw materials through collaboration with our supply chain and engaging our employees, customers and suppliers in environmentally responsible choices. Meeting sustainability goals requires efficiently using local resources, maximising the space available at each tannery, and ensuring all legal obligations are met locally and internationally.
Last year also brought an abundance of challenges for the leather industry and PrimeAsia specifically, including historically high raw material costs, fluctuating material supply chains, a continued trend of increased labour costs, social unrest throughout Asia – specifically in China and Vietnam, the two countries where our production facilities call home – and a tepid global economy that showed expansion and retraction depending on the region.
Another challenge during 2014 – and into 2015 – is to effectively communicate to the supply chain and wider public what sustainable leather is, how it is manufactured and why tanneries such as PrimeAsia are different than tanneries making headlines for their pollution stories.
What are your priorities for 2015?
PrimeAsia’s priorities for 2015 include a continued focus on product creation and expanding the Smart Engineered product line. The Smart Engineered product line has been offered during the past six development seasons. Smart Engineering is an important part of PrimeAsia’s ongoing efforts to meet the needs of customers in this challenging environment. In addition to providing best-in-class products to customers, PrimeAsia strives to continue providing excellent customer service and to focus on the company’s ‘Unique Selling Proposition’, which highlights the reasons why customers should continue to source from PrimeAsia.
Internally, the company seeks to increase the amount of hours PrimeAsia employees volunteer in their local communities during the upcoming year. Externally, the company will continue to focus on the security of PrimeAsia’s supply chain – a topic that has already been discussed to prepare for the challenges of the first and second quarter of 2015.
In addition, PrimeAsia will begin expanding its tannery in Vietnam. The expansion will take advantage of employing best-in-class technologies and efficiently reorganising the tannery to meet the changing demands of customers. Efficiency updates will also occur this year at PrimeAsia’s China tannery.
The company is also looking to maximise on large-scale sustainability projects, such as PrimeAsia’s parent company’s biomass boiler, which supplies all steam for the Pou Chen facilities in the industrial park. Large-scale sustainability projects take advantage of economies of scale and make it possible for more facilities to become sustainable providing increased environmental benefits to the surrounding community.
How is PrimeAsia maintaining itself as an industry leader amid increased regulations and barriers to entry?
We continue to invest in new technologies and the right global personnel to meet all future challenges by staying ahead of regulations rather than chasing them. In addition, the company focuses on providing transparent data to all its stakeholders, including local governments, about working conditions, wastewater treatment facility operations and hide traceability, for example. The company is managing and proactively decreasing risk in its supply chain and manufacturing locations through long-term planning and analysis of geographical supplies. Customers purchasing PrimeAsia leather receive peace of mind that the leather in their supply chain is not creating pollution or being manufactured in an environment with unacceptable working conditions. Our customers also receive best-in-class global service and access to the newest and most reliable leather products.
Can you detail your growing presence in Vietnam? Is it experiencing a middle-class boom like India and China, where meat consumption and demand for leather are increasing?
Vietnam’s manufacturing presence is growing, especially in the accessories, apparel and footwear industry. In the short term, PrimeAsia believes that Vietnam is well positioned for the company as a gateway to South-East Asia. PrimeAsia Vietnam is attractively situated to provide its customers with excellent customer service near their factories. The immediate drivers for the increased demand in Vietnam are a combination of stronger demand from manufacturers expanding exports and from other nearby South-East Asia countries.
The Vietnamese population is also growing and becoming more affluent, leading to an increased demand for leather products and meat. The accessories, apparel and footwear industries, and PrimeAsia, are well situated to react quickly to this emerging market.
What other regions in Asia are particularly attractive to PrimeAsia’s mission?
We want to provide not only international brands, but also Asian brands and customers with responsibly manufactured leather. PrimeAsia’s current focus is on Vietnam – future expansions have the company analysing India, Myanmar and South America.
How has PrimeAsia’s approach to transparency strengthened amid steady reports of poor waste management in tanneries around the world?
PrimeAsia provides transparent data to stakeholders in many formats including third-party verified Leather Working Group audit data, Higg Index environmental and social data through the non-governmental organisation The Sustainable Apparel Coalition, and third-party wastewater discharge laboratory reports through the non-governmental organisation Institute of Public and Environmental Affairs in China.
Company data is provided from multiple sources and covers a range of information from waste discharge to workers rights. PrimeAsia also requires its supply chain to deliver extensive data about finished goods and raw materials. The company also only purchases from Brazilian hide suppliers that require their farmers to GPS their land boundaries to ensure zero deforestation.
Outside of Brazil, all of PrimeAsia’s hide suppliers are required to provide a traceability system that tracks raw hides by means of physically stamping the hides or delivering an extensive paper record. If an outsider was to analyse any of the above PrimeAsia data, they would get a good understanding of its commitment to its employees, the environment and the communities in which the company operates.
In addition, PrimeAsia seeks to inform the wider public about the positive impacts of the leather industry through organisations such as Leather Naturally, which promotes leather as a sustainable material and challenges non-validated reports designed to tarnish leather’s image. The leather industry has leaders, as well as tanners, that fail to provide a safe manufacturing environment for their workers and manufacture non-sustainable leather. The effects of pollution and unsafe working conditions are not frequently factored into the price of a square foot of leather. If these factors became part of the basic pricing equation, the cheapest leather would often become the most expensive.
What are the core principles to being sustainable at PrimeAsia?
The best way to summarise PrimeAsia’s core principles is through its sustainability vision, which states "PrimeAsia’s commitment to the environment guides us to create the highest quality leather with the lowest life-cycle footprint through innovation and engagement of employees, customers, suppliers and the communities in which we operate".
As a company, we want to develop collaborations between stakeholders to push the limits of what can be achieved by employing best practices and new technologies. New sustainability projects must be environmentally sound, socially equitable and economically feasible. In addition, PrimeAsia seeks to educate and communicate to stakeholders and the public about what the company and the industry is accomplishing in terms of sustainability progress. PrimeAsia wants to continue creating a community environment in which anyone would be willing to work and live, while manufacturing the highest quality and most sustainable leather products.
