Getting proper margins

Redwood Comment
Published:  19 January, 2016
Mike Redwood

Not so long ago I had the chance to drive in a Ferrari California from San Diego to a weekend resort in Nevada. It was certainly a beautiful looking automobile and had a quite delightful interior. It had eight gears as I remember, and despite the protection of an accompanying motorcyclist looking out for police speed traps, we never got beyond 4th.

So we had a car with a high cost of ownership: purchase, fuel, insurance, maintenance, but whose primary features we could not properly use. Recently, David Heathcote, the Financial Time's design critic, has been asking whether this indicates good design.

How do we define good design? The struggle is even harder to put a value on it? Is it how something works, or is it based on its use? Or is it, as marketers are proposing via concepts such as service dominant logic, all about the experience?

This is more important than we think, since tanners are always angry about the huge prices that brands charge for luxury handbags and other items containing leather, while the tanners' are able to extract only a tiny percentage of the selling price with a minimal margin for their leather.

If we are looking at a future in which China is rushing towards automation, robots and a love of plastic rather than leather, then, this steadily moves leather out of old-fashioned industrial design, which is often blamed for pushing society thoughtlessly towards wasteful consumption and disposal. What it does not mean is that, in the belief of the future of leather being embedded in "craftsmanship", we can slow our commitment to the introduction of modern efficiencies in leather making.

While it is correct that tanners must fight hard with brands for the fair margins needed to allow tanneries to prosper and maintain effective new product development, they must also work to increase margin via process innovation and better deployment of mechanisation.

The skill for tanners dealing in the high quality leather market is to get that balance right between traditional craftsmanship that brings meaning to the product for the consumer and efficiency in manufacture. Not an easy judgement but one that must be made if tanners are to face up to brands with demanding shareholders and, of course, designers all looking for their share of the revenue.

Mike Redwood

19th January 2016

mike@internationalleathermaker.com

Follow Mike Redwood on twitter: @michaelredwood

Publication and Copyright of "Redwood Comment" remains with the publishers of International Leather Maker. The articles cannot be reproduced in any way without the express permission of the publisher.

comments powered by Disqus