Everything started in the 1930s when his grandfather, himself the son of a tanner who used vegetable tannins, created the Riba Guixà tannery, specialised in glove-making. The company diversified into ready-to-wear, becoming the leading producer of Entrefino lamb leather. Four generations later, Carlos Riba Antò manages the family holding company and has opened its capital to LVMH group. A strategy that illustrates how the tannery industry is changing, with players capitalising on potential and expertise to invest in societal and environmental areas and, equally importantly, consolidate the competitiveness of their activity. Meet a director firmly facing the future.
Carlos Riba Antò, the company director and the fourth generation of the family (centre), surrounded by his two brothers. Kiko (left) is the Sales Director and Joan (right) is the Technical Director.
How did you move closer to LVMH?
The luxury groups are very concerned with securing their supplies of material. The value chain starts with the farmer, then incorporates the abattoir, the stock of raw skins and the processing (the beamhouse work and the tanning). As with a number of sectors these days, there are no margins in this industry, compared with the 20-30% gross margins on average in other sectors, and that is why many tanneries have closed down in France, Spain and Italy. This situation is difficult to manage and we have to learn to adapt. In the last 20-30 years, if we exclude the automobile sector which includes the largest tanneries, most of the companies are family-owned SMEs. When I started to work in 1997, there were dozens of tanneries in Spain. The sector employed 25,000 people compared to 1,900 today. The same thing happened in France. All the well-known tanneries: Annonay, Roux, Dupuy, Haas, Richard, Bodin Joyeux, belong to groups, otherwise they would have ceased to exist. It is very difficult for us to create a margin because of the prices of skins, the manufacturing process is long, the level of quality in the material that is required…We have to have a constant production of skins, and we pay for them in cash, there are no lines of credit with hide traders. We have to finance large stocks of raw skins and we do not have the financial capacity to do so. This is one of the reasons why major groups enter the capital of tanneries, in order to secure their supply chains and ensure compliance with production standards.
What are the quality requirements for leather from luxury groups?
Labels are serious and intelligent and want total compliance: from the well-being of the animal, including the slaughter conditions, through to the process of producing the leather. When a very expensive bag goes on sale, the label must be sure of the compliance of all its suppliers. Imagine that we had a capacity to produce 100 skins, but a label bought 200 from us, which we were unable to produce so we went and bought the 100 others from other tanneries, anywhere in the world: that would be inexcusable. The same applies for the subcontractors. So, the major labels prefer to invest in the best tanneries such as Riba Guixà, which are regularly audited by the Leather Working Group and Intertech, while still monitoring production conditions. The major labels are concerned about quality, security and compliance, and require us to align ourselves to these values, which is a positive thing!
The laboratory where the formulas of components coming from multinationals such as Stahl, are prepared, in compliance with Reach regulations, the pivotal legislation governing the chemical products market.
What do you see as your major challenges in the next few years?
In the next few years, we will see a revolution in the tanning industry. Only eco-responsible tanneries will survive, as you need to have a certain capacity to last. At Riba Guixà, we have an Engineer to control production, a Sourcing Manager, whereas smaller tanneries which don’t have the structural capacity nor the financial capacity for this are likely to disappear. Three or four tanneries have recently closed in our zone, the smallest had 10 to 15 staff.
Today we are facing the leading labels on this market, positioned in the luxury or retail sectors requiring enormous volumes. The small tanneries cannot cope and their clients have left. There are just a few players in the mid-range sector, some American brands maybe, with relatively accessible prices, but they are just as demanding in terms of standards, which means being audited to get certification…all of which will lead to a natural selection of tanneries.
Before they arrive at the Riba Guixà tannery, the raw Entrefino lamb hides are carefully inspected. The trading firm Penades makes the first selection of hides leaving the abattoir before then giving them to Adobinve, which is specialised in wet beamhouse works for third parties. In December 2015, the family holding RGMA, which held shares in each of the three companies, from the purchase of hides to the finishing, opened its capital to LVMH group.
What are the expected benefits from an alliance with a luxury group?
Relationships with groups are becoming more open in terms of processes. They want to have the right to know who is involved in the production chain, the working conditions of employees, the chemical products used…In addition, this revolution will also occur in the area of energy optimization: electricity, gas and water. We have to succeed in producing the same volumes while consuming less energy per m². This means investing. This morning, when you arrived, we had just been discussing changing our water treatment system and we are thinking about investing in solar panels next year. Our medium-term objective, in the next 2 - 3 years, is to reduce the consumption of energy for our production, for both economic as well as environmental reasons. We have to learn to communicate this to our clients as well. To this end, we are putting in place key performance indicators to measure our reduction efforts.
When a consumer buys a bag from Louis Vuitton, Hermès or Chanel, it is not just a question of price. In this sense, the luxury business is a social business. The employees working for these companies are well paid, they pay taxes, the suppliers of the same chain and their employees earn at least the minimum wage, they pay their taxes and work in good conditions. Behind the 2000 - 3000 euro price tag of a bag, a luxury label is giving life to a system of values. If we buy a bag costing 100 euros, we can suppose that the person making it can’t be earning a decent salary, it’s mathematics.
The tannery put in place its own water treatment plant two years ago and is planning to invest in solar panels.
More precisely, since 2005, what changes have you seen in your company following the entry of LVMH into your capital?
We are still the majority shareholders in our company. LVMH group can count on the expertise of the operational team in place. Our shareholder brings us a strategic vision, a better understanding of the market. Its objective is not to have a tannery that works in isolation and is their exclusive supplier, as the tannery would lose its competitive edge. It is very important for a factory to have a number of clients as each has different expertise and needs.
Sometimes in family firms we do not demand enough of ourselves and it is good to be challenged by an outside partner. We can see the return on investment – we cannot continue to work as we had done for the last decade. We must become more efficient and that means investing. There are always plenty of projects in groups – a clear strategy with people dedicated just to that, whereas we are very often taken up with operational issues. It is sometimes uncomfortable to be taught lessons by people who have not worked in the company for generations, but very often, they are right!
It is very important to think of the future, to put in place projects, like we have with Penades our supplier of raw Entrefino lamb skins in Valencia, a company in which we have a 50% holding.
With a turnover of 24 million euros per year, Riba Guixà, which opened its capital to LVMH group, boasts a number of luxury houses among its clients, and is preparing to rise to the environmental, social and ethical challenges of tomorrow.
What are your levers for improving the quality of raw Entrefino lamb skins?
Improving the quality of the skins is an essential issue: animal wellbeing, the slaughter process and a better life for the animal all mean better quality meat and skins. To achieve this, traders of leathers and raw skins need financial assistance. In Spain, the climate is harsh. The animals suffer in winter because the temperatures can go below zero, whereas in summer the thermometer can rise to 40-45°C. We have to maintain a constant temperature in their sheds, ensure good hygiene, provide access to water, give them good quality food…We have the means to apply pressure and not purchase these skins if all of these conditions are not met.
There is still a lot to do in the upstream parts of our chain. We have to protect species too, because there are sometimes mixed-species pairings which could lead to a deterioration of species. Farmers seek to have the largest animals as they sell the meat by weight, so they crossbreed in order to obtain heavier animals. In the case of lambs, the skin has a high value, representing 15% of the cost of the animal. But if the abattoir does not pay the farmer for the skin, who will? We have carried out tests on small groups of 300 animals. The meat was excellent, the leather generally good but the problem is to roll this out on a much larger, industrial scale. We have to find the right partners, who don’t only think about price, and raise awareness with consumers about what is good and what isn’t.
The RGMA Riba Guixà and skin services SL holding in figures
Shareholders: the Riba family (majority) and LVMH group (minority) since December 2015.
Companies: Riba Guixà (100%) - tanning activities from wet-blue to finishing; Adobinve (joint ownership with Russo di Casandrino and Chanel) - wet blue works; Penades (shareholding) - skin traders.
Words by Juliette Sebille via Leather Fashion Design magazine.
Photos © Corinne Jamet