Elmo start automotive cutting plant in Germany

8 October 2003

Elmo Leather will start cutting leather for the automotive industry this autumn at a new production plant in Germany , in the old Swedish town of Wismar*. Elmo's investment for the first phase will be around SEK4 million and the plant at Wismar will employ between 50 and 60 people. Further machine installation is expected up to mid 2004 and Elmo Leather estimate that they will invest around SEK8 million in the German plant. Elmo, which has so far concentrated on supplying whole hides to the automotive industry and not cut parts, expects this investment to improve profitability because cutting means further processing in addition to the actual leather manufacturing. 'We are integrating up the value chain and underpinning Elmo's position as an attractive partner to the automotive industry. It will also improve profitability', says Nalle Johansson, president and ceo of Elmo Leather AB in Svenljunga. The automotive industry sees an opportunity to reduce its costs by buying ready-cut leather directly from the supplier for its car upholstery, instead of whole hides which, via other subcontractors, are cut and sewn together to become finished upholstery items. The first order for cut leather for automotive upholstery has been secured and forms the linchpin of Elmo's investment in the new plant at Wismar. With cutting services as part of their range, the company also expect new business opportunities to open up in other automotive sectors. Elmo's supplies to the automotive industry currently account for around 50% of the group's total sales. The remainder is made up of high-quality, exclusive leather to the international furniture industry. The plant at Wismar, Elmo Trim GmbH, will be a wholly-owned subsidiary of the Elmo Leather Group. The company will have German management and staff. When manufacturing starts at the turn of October/November, the plant will employ around 50-60 people working a two-shift system. The cutting plant will be supplied with whole hides from Elmo Leather's plants in Sweden and Denmark. Cutting and packing will be done at Wismar. Cut upholstery sets (one upholstery set for each car) will then be transported to the car manufacturer or subcontractor for sewing. Elmo Leather are the world's largest manufacturer of exclusive furniture leather and one of the six largest suppliers of leather to the international automotive industry. The company operate in some 40 markets worldwide and about 90% of sales are generated in markets outside Sweden. Of the group's total sales of around SEK816 million in 2002, furniture leather accounted for 50% and automotive leather for 50%. Elmo Leather are a strong international brand for some of the world's finest leather. The group work in a small niche of the international leather market, where high prices are accompanied by high requirements for quality, design and comfort. The company's management system fulfils the requirements of ISO/TS 16949 and ISO 14001. * Wismar is a port town on the southern Baltic coast in the German province of Mecklenburg - Vorpommern and during the late middle ages Wismar was an important Hanseatic town. Following the 30-year war, Wismar became Swedish territory via the Peace of Westphalia in 1648 and between 1653-1802 was the seat of the Superior Court for Sweden's German occupation and the Wismar Tribunal. In 1803 Wismar was leased to Mecklenburg-Schwerin for 100 years. In 1903 Sweden relinquished its rights on the town.

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