Major leather producers set up shop in Latin America
By Thomas Russell -- Furniture Today, March 6, 2005
High Point — Ample supplies of hides and skilled labor have prompted major leather upholstery makers to set up shop in Latin America in recent years.
Italy-based majors Natuzzi and Incanto Divani own and operate plants in Brazil, while San Diego-based LeatherTrend has leather and fabric upholstery production facilities in Mexico.
Niroflex, a Brazilian company, also is a growing leather force.
Natuzzi's Brazil plant opened near Salvador De Bahia in late 2001 with nearly 194,000 square feet and 400 employees. Today, it is a 280,000-square-foot operation that employs 620.
The investment, initially valued at about $10 million, apparently is paying off. While Natuzzi officials declined to reveal the exact volume, that plant and a 200,000-square-foot operation in China produce $100 million of Italsofa products annually for the North American market.
"If you took just (the Italsofa) business, it's one of the largest leather upholstery lines in the country," said Natuzzi Americas President Fred Starr.
Natuzzi opened a second, 260,000-square-foot plant in late 2004 about 35 miles west of Salvador De Bahia. That plant is expected to employ as many as 600 workers.
"The people (in Brazil) are very industrious," Starr said.
Niroflex has four plants totaling just under 1 million square feet in the Arapongas region of Brazil, an area in the state of Parana about 400 miles southwest of Sao Paulo. The company chose that location because the owners, while of Italian descent, are Brazilian born. Most of the initial production was geared to the local market. It also produces for other countries in South America and Europe. Niroflex entered the U.S. market about five years ago.
"We believe we offer great benefits as a source," said Michael Elkhatib, Niroflex vice president of sales and marketing. "I think South America, as a whole, has gotten more attention in the last few years."
Materials plus labor
Like Starr, he believes his company's success is due in large part to the availability of raw materials and the quality of the labor force in Brazil.
Still, Niroflex faced challenges in adapting to the U.S. market. It had to make more traditional, bulkier pieces with larger seating and greater depth than in Europe. "We had do more engineering in terms of our frames," Elkhatib said. "We had to build what the market was looking for."
Today, its sofas retail in the $599 to $999 range, a price the company believes represents a value when compared with similar products coming out of Italy and China.
LeatherTrend opened manufacturing facilities in Tijuana, Mexico, in 1990, growing in total to just under 1 million square feet and about 2,300 employees. Its factories are dedicated plants for its LeatherTrend, LeatherMart and SofaTrend divisions, and also make product for EasyTrend, a motion division.
The vertically integrated operation has cut-and-sew and foam fabrication operations, producing sofas, ottomans, motion sofas and recliners. LeatherMart sofas start at $1,099, with three-piece groups at $2,999. Leather-Trend sofas retail from $1,499 to $2,499, and SofaTrend sofas retail from $599 to $1,199.
In addition to its skilled workers, LeatherTrend looked to Mexico because of its proximity to its home base, and because a Mexican government program allows foreign-owned producers to import raw materials, machinery and components duty free, as long as finished goods are shipped to the United States.
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