Massive DeCoro plant aims to widen dealer base, speed deliveries
By Joan Gunin -- Furniture Today, March 31, 2003
Shenzhen, China — DeCoro, an Italian-owned leather upholstery manufacturer with production facilities here, is completing construction of a multimillion-dollar, 2 million-square-foot complex it says will satisfy growing demand and alleviate delivery problems.
The new facility, opening later this month, will allow DeCoro to ship about 80 containers a day and slash its delivery time nearly in half, to 10 weeks.
Six-year-old DeCoro says it has jumped from sales of $10 million its first year to $220 million in 2002. The anticipated expansion will allow DeCoro to address its current 45-day backlog and broaden its customer base, President Luca Ricci said in an interview at the factory here.
"If we continue to do our job and work as we do today, we will become a $350 million to $400 million company," he said.
Meeting this target would position DeCoro as one of the largest dedicated leather upholstery producers in the world. The largest, Natuzzi, had sales in 2002 of $761.5 million.
DeCoro's expanded operation is expected to increase container loads from the current 28 per day to 45 per day immediately, and to nearly 80 by the end of summer. Each container holds 126 seats, Ricci said.
The corporate expansion also "sends a message that our delivery issue is over," Ricci said. "Deliveries will be on track by the end of April."
The secret to any factory is capacity, said Larry Crink, DeCoro's newly hired executive vice president of sales and marketing. "The backlog is there to fill the containers. We know the product is right; we know we have an opportunity."
Sales Director Giovanni Prati said, "I am confident from a realistic point of view that DeCoro will be one of the biggest suppliers to America (now 72% of the company's business) and, for sure, the biggest Italian supplier to North America."
The DeCoro facilities in the Bao Long Industrial District here will employ 2,800 workers when they reach full capacity this summer. Included in that number are 14 Italians in management positions.
With the exception of Crink, plus a small staff in Italy charged with initial quality control checks on finished hides before shipment to China, all of the staff live and work here full time.
With the opening of DeCoro in 1997, Ricci is credited with revolutionizing the leather upholstery industry by basing his operations in China, resulting in huge savings on labor. He said those savings are put back into the product.
"We offer a quality product at a competitive price," said Ricci. Despite its Asian address, he very much considers DeCoro an Italian company because of its craftsmanship, quality and credo.
And there is a limit to low prices. "If you want a certain quality, you cannot go below a certain price," said Prati.
Having a range of price points broadens the market by allowing more people to buy leather, Crink said. To that end, DeCoro is introducing 50 styles at the High Point market this week, with an emphasis on its motion line.
DeCoro's new six-building compound here was funded without government assistance and will augment the company's existing 800,000-square-foot plant nearby, which already employs 1,600 workers. They work 10 hours a day, six days a week.
About 700 new employees are now in training, and 500 more will come on board once operations are in full swing, Ricci said. An official grand opening is set for mid-May.
"We are a financially sound, well-managed company that has been able to invest in its future," he said.
The complex, built by Kansas City, Mo.-based Butler Construction, will have an office and six prefabricated buildings. Each massive 360,000-square-foot structure resembles an airplane hangar the approximate size of five football fields.
The DeCoro expansion was the largest construction project in Shenzhen this year, the company said.
"I am so happy. It is so modern, so perfect," said Ricci, who purchased the land in March 2002. He said he paid a premium for the property because of its proximity to a customs office.
"Customs is right here on site in this zone," Prati said. "The containers can be cleared and then trucked directly to the vessel. This saves two or three days from the typical route."
Each container takes about a half-hour to load, he added, pointing to eight loading docks. After loading, they're transported to the port city of Yantan, 45 minutes away.
The climate-controlled buildings will house cut-and-sew, framing, assembly, quality control, a two-level computerized foam-processing center, materials warehousing, packing and loading areas.
DeCoro has purchased 250 sewing machines, including 120 from Germany and 130 from Japan, and additional cutting machines.
Most of the leather is hand-cut, according to Ricci, because human cutters can identify defects better than a machine.
Ricci was unsure how the original 800,000-square-foot building would be used when the new plant comes on line. It may be reserved for DeCoro's growing motion line.
Eyeing the future, Ricci said he has purchased an additional 10 acres to construct a seventh building as needed.
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