Setting an example

Ethiopia Tannery are one of the largest and most modern tanneries in Ethiopia. The company are fully equipped with modern production lines for cattle, sheep and goat skins up to the finished stage. The company have made a significant contribution to the improvement of hide and skin quality from Ethiopia and have generated much needed foreign currency for the country. Ethiopia Tannery SC, located in Koka near Modjo, about 90km south of Addis Ababa, are a public enterprise established under a technical cooperation agreement signed between the governments of Ethiopia and the former Czechoslovakia on December 11, 1959. The factory was initially established as a share company before being transferred as government property during the change of government in 1973. Until 1992, the factory operated under the direct supervision of the former National Leather and Shoe Corporation of the then Ministry of Trade and Industry. When the tannery started operating in 1976, they were faced with the problem of having to start production before the facility was completed and with a shortage of working capital. Additional funding had to be found for the construction of an employee village which was not included in the original project plan. Production started in 1976 with 293 Ethiopian employees and 12 Czechoslovakian experts. At the start of trial production, input was about 3,000 pieces of skin and 400 cow hides and the quality of the leather produced was below expectations. The way in which the cattle were treated while they were alive was, and still is to a certain extent, proving to be a problem. The company operated for many years without a profit. However, with a subsidy from the Ethiopian government and a change in foreign currency policy, things improved. The government put a stop to the export of hides and skins in their raw form and instead allowed the hides to be processed as an industrial product to attract additional capital, thereby saving foreign currency that was spent on importing substitutes. The company began upgrading and expansion programmes with government financing and began securing permanent customers in both local and foreign markets. As the company's financial situation improved, obtaining bank loans became much easier. Main objectives The domestic livestock population in Ethiopia is estimated at 27 million cattle, 24 million sheep and 18 million goats, meaning that raw hides and skins are readily available from the local market. Ethiopia is in fact the first in Africa and the tenth in the world for its abundance of livestock. The main objective for establishing the company was to convert the vast potential of Ethiopian hides and skins into semi-processed and finished leather where they could fetch a better price on the export market. The tannery would supply the required finished leather to the local shoe and leathergoods industry, who in turn would sell leathergoods at a higher price to both the international and domestic markets. Other objectives included: * generating foreign currency for the country by selling hides and skins which were formerly being sold in their raw state for a lower price by using modern processing methods in the factory * meeting the local raw material demand of leather and leather product factories and to substitute raw materials that are imported * creating additional job opportunities The tannery also contributed to the establishment of other shoe and leather product factories and played a significant role in producing skilled and professional manpower in the sector and providing job opportunities for a large number of local citizens. Since the establishment of the factory, the local village of Ejersa has developed into a small town and now benefits from an electricity supply, a 2km asphalt road, potable water, and a junior secondary school. A clinic has also been opened by the company which provides a medical service to the locality. Ethiopia Tannery have received numerous awards from organisations and institutions for contributions the company have made to foreign trade. In addition to generating foreign trade, the company are now able to satisfy the raw material demand of most of the factories in the country, such as Anbessa Shoe Factory, Tikur Abbay Rubber and Canvas Shoe Factory, Ras Dashen Shoe Factory, Ethio Sung Bin and others. The company have also played a significant role in helping farmers benefit from the leather sector by encouraging them to preserve their hides and skins rather than wasting them. The main items currently produced at the tannery are pickled sheepskins, wet-blue hides and skins, crust hides and skins, finished garment leather, finished glove leather, lining leather and finished shoe upper smooth, embossed, softy and nubuck. Sales and production Even though 25 years can be considered a relatively young age for a company, Ethiopia Tannery have managed to overcome various problems and have successfully competed with companies in Europe, America and Asia which have been in business for over 25 years. In the first year of production (1977), total earnings were Birr3.1 million (US$367,700) from local sales, with no sales recorded that year on the foreign market. The following year, the company recorded local income of Birr1.6 million (US$189,800) and foreign income of Birr2.5 million (US$296,600). From 1976 to 1999, annual sales averaged Birr46.7 million (US$5.54 million). The years 1993 to 1997 were particularly successful on the foreign market, earning a total of Birr91.9 million (US$10.9 million). The total revenue obtained from sales in the past 25 years was Birr1.2 billion (US$142.3 million), with 70% generated from foreign sales. The company have a current capital of Birr135 million (US$16 million): 20% is directly supplied to various government and private shoe and leathergoods manufacturers in Ethiopia, while the remaining 80% is exported to the international market, such as Great Britain, Italy, Malaysia, the Netherlands, Romania, Spain, Germany, India, the Czech Republic and China. Ethiopia Tannery regularly exhibit at locally organised trade fairs, in the capital Addis Ababa for example, but also at international fairs in Europe, Asia and America, in particular Hong Kong, Paris, Miami and Bologna. The company plan to make an increased effort in the future to attend new trade fairs around the world. Updating technology Even though the factory has been described as one of the giants in Ethiopia, the machinery initially installed was backwards compared with the technological advances around the world, and to begin with this hampered the tannery's progress. Since then, a substantial amount of investment has been spent on replacing old machines with new equipment to make the tannery the first of its kind to produce semi-finished and finished leather both for the domestic and export markets. A significant number of machines in the wet-end production stage have also been replaced over the past ten years. Today, the machinery is either hydraulically, pneumatically or electrically controlled and means that the tannery produces 12,000 pieces of sheep and goat skins and 1,300 pieces of cow per day, and has an attainable capacity of producing 13,000 pieces of sheep and goat skins and 1,500 pieces of hides per day. Ethiopia Tannery also offer extensive training for their 850 permanent and 190 temporary employees. Those engaged in operating production lines are offered 4-6 months training on leather processing, while training professionals in turn use the tannery's leather laboratory for research and development. Ethiopia Tannery are the only company to have a fully-equipped leather laboratory and the company have become a role model for other factories wishing to establish laboratories. Other companies have also been able to benefit by training their staff at Ethiopia Tannery's facilities. Ethiopia Tannery are also at the forefront of environmental technology. At the time the tannery was constructed, a modern waste processing plant was erected alongside. This made Ethiopia Tannery the first company to treat their waste and this is one of the main reasons for continued good relations between the company and the local residents. The conversion of the tannery's waste into glue not only prevents environmental degradation but creates more job opportunities for local residents. Silver jubilee From September 17-23, 2001, Ethiopia Tannery celebrated their silver jubilee. Over the past 25 years, the tannery have produced 12 million pieces of goat skin, 40 million pieces of sheepskin and 5 million pieces of cow hides. The company began producing six types of products - today, this number has increased to 47. The silver jubilee celebrations consisted of a selection of different programmes, including the Leather Technology day, Bayer's day and a suppliers' day. Various papers were presented on different topics during seminars held throughout the 'Leather Week' and discussions were held with buyers and suppliers. Over three thousand shareholders and foreign and local guests were present at the final day of the celebrations. Alem Asfaw, general manager, conveyed his gratitude to all those who have provided their all-round support and assistance for the successful achievements gained over the past 25 years. He added: 'We have to work harder than we have done in the past 25 years to carry on generating our share of the necessary foreign currency which will be invested in our country's development efforts. 'I have a strong belief that the government and all concerned parties will provide us with their usual support and cooperation to enable us to meet our lofty objectives.' Following the general manager's speech, Reda Tamirat, board chairman, added that an all-out effort was being made to build the factory's capacity and raise profitability. Tamirat also congratulated workers and the management for the company's success, and expressed his belief that the considerable progress achieved so far would continue in the future, with a promise that the members of the board of directors and himself would contribute their shares towards this end. The guest of honour was the director general of the Foreign Trade Promotion Agency, Fantaye Biftu. He said that the government has been making efforts to establish leather and leather products training institutions to promote the proper utilisation of the country's hide and skin resources efficiently and that the sector would receive proper attention and consideration by the government to provide for all the industry's needs. Future expectations With the joint efforts of the board of directors, the management and the workers, the tannery has shown tremendous growth every year beyond expectations. Today, the company have become financially strong and self-dependant in all aspects. In the near future, the tannery aims to consolidate all the efforts that have already begun to transform the production from semi-processed to finished products, and to become a better raw material supplier for local leather and leathergoods manufacturers to generate additional income for the export market. The company will be looking towards the establishment of joint ventures with investors and large corporations that can provide marketing and financial input and plan to build more housing for the workers to provide more pleasurable living conditions.