Goodbye Scottish Tanning Industries, hello Scottish Leather Group24 October 2005
In 1965, a number of Scottish tanneries joined together to form one group and linked three tanning families: the Muirheads, the Langs and the Martins. But it was another twenty years before they formulated their STI corporate identity. While this latest change in their name accords with their twenty-year pattern, it would be a mistake to overlook the group's continual investment in buildings, equipment and human resources or their determination to cut out all waste from the business including duplication of effort.&rtreturn;They have created a greater efficiency by merging jobs and gaining strength from the overall group which each company might not accomplish on their own. Throughout, the group have remained in private ownership with around 90% owned by members of the Muirhead or Lang families and the remainder with past and present workers through share option schemes. No one person has a controlling interest.&rtreturn;One prime example of how the synergy between the various companies can benefit is in the choice of equipment installed. Iain McFadyen, managing director of Bridge of Weir and NCT Leather, told Leather International that Scottish Leather Group are 'not afraid to spend money when it is felt necessary or will add benefits.' If they see a machine which can do the job better then they will buy it 'provided it meets our criteria of productivity, quality, safety and the environment.' &rtreturn;A case in point is the recent installation of GeMaTa's Spraystar at Bridge of Weir. They had received good reports from Andrew Muirhead & Son so were able to go to the Glasgow plant and carry out their own trials. They liked what they saw so much that they ordered one for themselves. So pleased have they been with the results they have since ordered three more.&rtreturn;Today, the group consists of two wet-blue tanneries and two finishing plants: Bridge of Weir Leather Company, established in 1905 and famous for automotive leathers; NCT Leather located next door in Bridge of Weir, established in 1936 and processing both wet-blue and wet-white; W J & W Lang, Paisley, 1872, also manufacturing wet-blue and wet-white; and Andrew Muirhead & Son, Glasgow, 1840, specialists in high performance upholstery leathers with particular emphasis on fire retardancy. Until recently, the group also operated Garston Leather, UK, founded in 1899 and purchased by the group in 1998 to assure their supplies of wet-blue. &rtreturn;The past five years have seen a huge amount of change within the group. This has largely been due to key workers retiring. James Lang, managing director of Andrew Muirhead, found he had to build a new management team. &rtreturn;Jonathan Muirhead, group chairman, says that they put great store on recruitment and building a skills-based workforce. He said the group offer an attractive final salary pension scheme and are trying to redress the low paid image of the leather industry generally. &rtreturn;Despite his name, James Lang has spent most of his working life with Andrew Muirhead. He says that the formerly fragmented group are now very much a corporate structure. Muirhead's particular strength is in meeting very high specifications on a project-by-project basis. They have invested heavily in the technology required to develop leather to serve niche markets such as the aviation industry and there is a further £1 million investment underway at their Glasgow factory.&rtreturn;More than 100 airlines in 45 countries feature Muirhead leathers. In addition to their comprehensive range of high-quality flame-retardant aviation leathers, Andrew Muirhead have also developed a unique leather which meets the stringent requirements for heat release, smoke and toxicity emissions and they believe they are the only company in the world able to offer this. Recent investment in a smoke emission and toxicity chamber for testing products to meet the Airbus directive ABD0031 demonstrates their commitment to supplying this demanding market with the quality product it requires.&rtreturn;Lang says that Muirhead try to be different. They operate much as a small company might, processing 3,500 hides/week and allowing companies to order small batches which would not be possible with large, volume driven companies.&rtreturn;Despite their dynamic and flexible approach to their small specialist customers, they can also offer the type of investment in technology and human resources which is normally only possible with the backing of a much larger group with greater financial resources.&rtreturn;Lang describes himself as 'maniacal' about making sure a customer gets what he wants and when he wants it. The company offer consistency, reliability and will meet any specifications which they are contracted to. For example, when the Four Seasons were building a six-star hotel in Hong Kong, they approached Muirhead with a request for special colours, special effects, fire retardancy and smoke density. The ongoing contract specifies leather for seating over the four floors containing 399 guest rooms (including 54 suites), six meeting rooms and two ballrooms. &rtreturn;They promise bespoke leathers to a high specification and undertake to deliver in ten days. Muirhead also have a distribution centre in the north of England, in Burnley, where they hold 12,000 hides in stock in a variety of colours and types. &rtreturn;Sales are broken down roughly 50:50 between exports and domestic trade with the US and the Far East being their biggest customers. They have a network of agents/distributors which pretty much covers the world and who trade under the Muirhead name.&rtreturn;In September, they launched their first non-chrome tannage in aniline and semi-aniline although Lang is not happy with these definitions. Basically, the non-chrome leathers will be offered with either a light finish containing no colour (aniline) or with a surface colour coating which actually offers a better yield.&rtreturn;Their prime aims are serving niche markets and investing in technology, automation and human resources to give them a versatility which will appeal to their specialist customer base. They have embraced a management system - Lean Manufacturing - which is a no waste concept. Their focus is on cutting lead times, reducing the amount of work in progress, addressing delays and more efficient machine changeovers to cut down time.&rtreturn;<b>Wet-blue</b>&rtreturn;Hugh Gilmour has been with W J & W Lang for many years where he served as general manager. His efforts were recently rewarded when on April 1 he was appointed managing director, followed a month later by the announcement that he would also be managing director of Garston Leather.&rtreturn;He explained his dual role by describing how, in the past, all three of the tanneries were competing against each other for hides and driving the prices up. It became obvious that some form of consolidation or centralisation was necessary. Now, all administration for the wet-blue facilities is centred on Lang's at Paisley, including all raw materials purchasing and invoicing. &rtreturn;It also became necessary to look carefully at what duplicated efforts could be eliminated. And a very lean management team was one of the first requirements. Commercial manager Billy Riddell is now responsible for all raw materials purchases and sells surplus wet-blue for all three tanneries.&rtreturn;In addition, a new position has been created and since May 1 Gareth Scott, as raw hide procurement manager, visits the abattoirs and checks incoming hides as part of the Scottish Leather Group commitment to quality. According to Gilmour, the group do not buy cheap and are prepared to pay for quality. &rtreturn;Jonathan Muirhead says that the group have taken advantage of meat quality schemes which are in place with major retailers such as M&S and Sainsbury's. By using the same abattoirs as these chains, they are able to benefit from regular inspections and an insistence on top quality meat. The knock-on effect of ensuring first rate beef means that the hides are better too.&rtreturn;Gilmour says that they will never settle for second place and always strive to be the best. Quality is paramount and this is accomplished through the choice of equipment, offering good career prospects to people and by improving the working environment which aids health and safety issues. &rtreturn;By striving for continual improvement, standards rise and this encourages even more. Quality, environmental, and health and safety systems are in place throughout the group.&rtreturn;Both Lang and Garston have been processing around 8,000 hides/week. Of this throughput, around 80% of Lang's production is retained within the group, with the remainder, along with the Garston output, going to export. They take in around 30% of green Scottish hides and for the rest purchase from the UK, Ireland and Europe according to end-product requirements.&rtreturn;Gilmour says that the company's philosophy has been to move away from high to moderate volume with an emphasis on quality hides, quality customers and quality suppliers and this is paying off. &rtreturn;Five years ago they had between 20 and 30 suppliers but this has been reduced to 6-8 main suppliers. With operational costs continuing to rise (power, electricity, waste disposal), it is not cost effective to put through low grade materials with all the associated costs. &rtreturn;They are investing heavily in the effluent treatment plant in order to reduce water, waste and treatment costs. In addition, having three plants enables the group to conduct different tests across the three sites, which gives them a broader perspective, and by paying attention to detail they can take some of the costs out of the business.&rtreturn;<b>Bridge of Weir</b>&rtreturn;This is both the name of one of their finished leather companies and also the location of NCT (National Chrome Tanning). Despite the difference in their product, because they share the same site it was appropriate that they appoint one managing director for both, Iain McFadyen.&rtreturn;McFadyen is a good example of how the group take talented young people and train them up. McFadyen joined in 1976 as a management trainee across the group. At that time NCT still made finished leather and, in 1989, their new tannery was opened by the Princess Royal.&rtreturn;However, in the early nineties, wet-blue became more profitable while footwear upper leathers were struggling, so NCT pulled out of finishing. However, they continued to grow and today there are three externally identical buildings where once there was just one.&rtreturn;Ten years ago or so, McFadyen was appointed managing director of NCT and then about eighteen months ago he took over at Bridge of Weir from John Henderson, who served a dual role, to allow him to concentrate on his group responsibilities.&rtreturn;Bridge of Weir occupy Baltic Works, the adjacent site to NCT. Originally this was the site of the Martins tannery and it got its name from Martins former address in Glasgow in Baltic Street. Martins closed in 1980 and initially remained empty other than for storage. Bridge of Weir moved part of their production into Baltic Works when NCT stopped making finished leather.&rtreturn;For a while, Bridge of Weir still continued in their original Clydesdale Works a short distance away. Then the decision was taken to invest in the Locher and Baltic Works site and the old tannery buildings were demolished and the site levelled for future redevelopment. &rtreturn;No matter who you talk to at the Scottish Leather Group, you will hear continual mention of the word 'investment' - investment in people and investment in equipment -- and it is obvious all around you. Not only have Bridge of Weir just purchased four GeMaTa Spraystars, they have also recently installed a Cartigliano vacuum drying line and a £460,000 Pirovano computerised resin and pigment mixing system.&rtreturn;One particular investment, amounting to £1.2 million, starts with a Bauce throughfeed sam setter followed by a Cartigliano wet staker, then a conveyor to a Cartigliano 6-plate vacuum dryer. This is followed by Cartigliano staking, conditioning and stacking machines. &rtreturn;The first Spraystar cost them £135,000 and the remaining three with ancillary equipment £850,000. Nor does it end there. At the time of my visit there were two new Dose stainless steel drums in evidence with two more due the following week and a further two due in December; an additional investment of £750,000. This is a very impressive tannery which has come a long way since its foundation one hundred years ago. &rtreturn;And there is more investment elsewhere, one example being in Feltre conveyor handling equipment worth £350,000 in the adjacent NCT plant. &rtreturn;<b>Group evolution</b>&rtreturn;Until five years ago, there were five autonomous companies within the group, each with their own managing director. There was no group managing director but a group chairman from outside the industry who was a chartered accountant and served in a part-time executive capacity. This led to autonomy going haywire with each company pulling in different directions and competing against each other. While undoubtedly they were establishing strong individual brands, they were also driving prices of raw materials up, duplicating each other's efforts and overall the group lacked cohesion.&rtreturn;To remedy the situation, they decided to appoint a group managing director and John Henderson, managing director of Andrew Muirhead at the time, was their choice. While customers still retained the perception of autonomous companies, each with a clear difference, behind the scenes they were now pooling their resources and creating greater efficiencies.&rtreturn;Then a couple of years ago, they went one step further and appointed a group chairman from within the organisation which is when Jonathan Muirhead took over. He says: 'The board had been headed by an independent chairman who served in a part time capacity. This structure reflected a subsidiary company autonomy (I don't think it went haywire!). However, it was decided that better performance and greater efficiencies could be achieved by the appointment of a group managing director. Then came the time when it was felt right for an internal appointment as chairman but we would not want to discount the possibility that my successor might be from outside.'&rtreturn;Jonathan Muirhead is a sixth generation tanner with the original tannery being founded in 1758. Andrew Muirhead was Jonathan's great grandfather. His grandfather, Arthur, founded Bridge of Weir in 1905 making this their centenary year. &rtreturn;Arthur Muirhead was a farsighted tanner who predicted that the way forward for leather manufacture would come through transportation. How right he was. &rtreturn;When Jonathan joined Bridge of Weir 35 years ago, their main competitors in upholstery leathers were Connolly, Roser and Costil, now all gone. The big three in the US, Garden State, Eagle and Seton, all still around today although not necessarily tanning in the US, concentrated on their domestic market. &rtreturn;The Scottish Leather Group will continue to excel, making the type of leathers predicted by Andrew Muirhead - transportation leathers - for the automotive and aircraft industries. And given their exceptional level of investment, there is no reason why they should not continue to thrive.