More than meets the eye9 October 2002
Established in 1992, hide and skin group East Hides have had a busy decade. Starting out as traders, the group soon began setting up operations in different countries with the aim of sourcing directly from slaughterhouses. Ten years on, to describe the group simply as hide and skin traders is selling the group short of the range and quality of service that they offer. The group's philosophy is to control hides at source. But to do this from one office in London is very difficult and lacks the personal contact that is so important in this industry. Hence over the past ten years, East Hides have invested heavily in establishing a network of collection warehouses, tanneries, distribution agents and offices all around the world. 1999 saw the first indications that the group were changing direction. The decision was made to place a stronger emphasis on having their own secure and reliable hide and skin sources rather than simply being a trading group with irregular supply lines. 'Choice is important', explains Gluckman. 'We offer both low and high grade material in order to establish ourselves as a meaningful supplier.' This triggered a phase of rapid expansion for the group around the world: new warehouses, acquisitions and an overall increased presence in the raw material markets that matter. Today, Italy is the group's biggest customer, followed by Hong Kong and China who are growing in significance. As can be seen from the group's extensive network around the world, doing business 'face-to-face' is clearly one of the reasons for the group's success. Worldwide employees in the group total around 285, while the five traders who are based in the London office spend around 40% of their time travelling. East Hides, located in Golders Green, north London, liaise with all the group's satellites around the world. However, the office space has become too small for their requirements. The group have now bought a plot of land in Temple Fortune, near their current premises, and hope to move into the newly-built offices on October 15. Not only will the new facilities provide much needed space but also the capacity to incorporate a showroom for the company's subsidiary, Crest Leather. In addition to the UK office, East Hides also established Gestal Pelli Srl in 2000. Based in Arzignano, Italy, Gestal buy wet-blue splits, trim and select them in their warehouse. The trimmed splits are then sold either in Italy or are exported to various countries around the world. East Hides also use various bonded warehouse facilities in Arzignano, Santa Croce and Solofra to stock hides and skins for selling to local markets. CIS countries The group's subsidiary Sirio Leather control all of the group's operations in the CIS countries from their head office in Moscow. Sirio Leather oversee the sourcing of raw hides and skins from Russia and are the administrative centre for the Sirio Group. Each of the CIS countries has its own laws and trading can be difficult at times. However, the group have invested heavily in the region and plan to expand their activities to crust in the future. In Belarus, Sirio Leather entered into a partnership with the large state-owned Gatovo tannery in Minsk, Belarus. Commercially, Belarus is perhaps not as developed as some its neighbouring states, but the tannery is one of the largest in the world and was one of the last to be built under the former USSR regime. It has the capacity to produce 15,000 hides a day, although at present, the tannery is only working at around 30% of its full capacity. This has provided the group with the opportunity to produce wet-blue cow hides and pigskins which are exported mostly to customers in Europe and the Far East. Sirio Leather also make crust shoe leather from their own hides which is also exported. A similar situation exists in the Ukraine although, there, East Hides Group are the sole owners of a tannery in the Lviv tanning complex which the group bought in 2000. Wet-blue hides from the Ukraine are among the best in all of the CIS countries. With a direct presence in the Ukrainian market, East Hides Group are able to control every aspect of the process, from buying the raw hides through to the final selection of wet-blue. All the hides processed at the Lviv tannery are sourced within the country as import taxes and regulations in the Ukraine prevent hides from being sourced elsewhere. In Kazakhstan, Sirio Leather are represented with a head office in Almaty, the commercial capital of the country, and have two warehouses in Almaty and Petropavlovsk in the north of the country. Sirio Leather collect raw hides and skins which are selected and packed for export and also run a cutting operation, making croupons, avancorpi, bellies, dossets and culattas. Sirio Leather also acquired the Siriopet tannery in northern Kazakhstan in 2001. The tannery had been dormant for six years, but now, it produces approximately 10-15 containers of wet-blue hides and 2-3 containers of wet-blue sheep and goatskins per month. (A full report of East Hides Group/Sirio Leather's operations in eastern Europe will appear in the December issue of Leather International) Africa All of East Hides' activities in Africa are transacted through London. In 1999, the group established East Hides Tanzania where fresh, wet-salted and suspension dried hides, air-dried goat and sheepskins are collected, selected and prepared for export. The main warehouse is located in Dar es Salaam, with a branch office/warehouse in Shinyanga. East Hides Uganda were established in 2001 for the same purpose. The main Ugandan warehouse is located in Kampala, with a branch office/warehouse in Mbarara. In South Africa, South Hides and Skins source wet-salted and dry-salted hides, as well as wet-blue hides and splits. East Hides are also the exclusive sales agents for Karan Beef, perhaps the biggest feedlot in the southern hemisphere. 'The hides that we distribute on behalf of Karan Beef are the best quality hides to come out of Africa', explained Gluckman. East Hides are also working alongside several of the state organisations in the leather industry to improve hide quality in Africa. The group provide butchers with flaying knifes to discourage them from mutilating the hides. Asia East Hides India supply their own hides and skins to the local Indian market through a warehouse and distribution centre in Chennai. This company also act as sales agents for several important European hide exporting houses, supplying high quality hides to the Indian market. Where next? And it doesn't stop there. The company's subsidiary Crest Leather produce 100% upholstery leather. They buy raw materials from around the world and ship the hides to their warehouse in Italy where the hides are tanned and finished under contract. The products are then shipped to customers and various warehouses in the UK, the Netherlands, Poland and Hong Kong. The company have also recently opened a new sales office in High Point, North Carolina, with the future aim of stocking leather there. East Hides also have several strategic alliances in north, central and south America, so where next? The answer is China. East Hides Group plan to open a new office in China at some stage over the next 6-18 months, possibly in the Shanghai area. 'When China is open, this will have completed our mid-terms goals', explains Gluckman. 'We are now only just witnessing some improvement and normalisation of trade, so now it is time for us to consolidate', he concludes.