Leather supplier Eagle Ottawa sees growth niche despite auto downturn
by Sven Gustafson Oakland Business Review

A nearly 150-year-old supplier of automotive leather interiors is expanding its product line, capabilities and environmentally friendly offerings even as it hunkers down to weather a crippling downturn in automobile production.

Auburn Hills-based Eagle Ottawa, which traditionally focused solely on leather seat covers, has quietly been moving toward becoming more vertically integrated as a complete leather interior solutions provider.

The company today is shopping expanded wrapping, laminating and sewing services to automakers, all while expanding a line of environmentally friendly leather products.

"It's been under way for about ... two to three years. And it came about in a bigger way for us when we went into China," President and CEO Jerry Sumpter said.

That's when the company was working with automaker BMW, which wanted a leather company that also could sew seat covers, Sumpter said. Eagle Ottawa, which was working on leather-wrapped door panels at the time with GM's Cadillac brand and Southfield-based sewer Lear Corp., decided to open a sewing and door-wrapping plant in China, its first.

The moves, company officials say, coincide with an industry trend toward greater use of the material for a variety of vehicle segments.

Sumpter"It's not just for large luxury cars anymore," said Pat Oldenkamp, Eagle Ottawa's vice president of design and marketing for the Americas. "We see the luxury appointments in the interiors becoming much more important even in smaller vehicles.

"We're really helping (automakers) to sell their brands, to give them new products, to give them differentiation through their brands and to help at the end of the day to sell more products."

The company got its start in 1865 in Whitehall as Eagle Tanning Works, which made goods for the horse and buggy trade. Eagle merged with Ottawa Leather Co. in 1916 to form Eagle Ottawa Leather Co.

Today, the company boasts more than 4,000 employees over 25 locations globally, and about $550 million in expected revenue for 2008. It employs about 130 in Michigan, where it also operates a product development and prototype manufacturing center in Rochester Hills.
The company's products are carried on more than 100 production vehicles, including 2008 models Chevrolet Malibu, Cadillac CTS, Honda Accord and BMW 3-Series.

Like competitors including Lear (a seat-maker that also is a large customer of its hides), Eagle Ottawa is taking cues from the worlds of fashion and interior design for its automotive leather accoutrements. In recent years it has expanded its capabilities to include highly stylized custom perforation, decorative stitching, tipping, embroidery and pearlescence effects.

Oldenkamp said the company sees the luxury vehicle segment growing more competitive globally, along with features such as leather-wrapped instrument panels and head rests. But it also sees growing demands for some of its technology advances.

Courtesy photoEagle Ottawa has added 22 new colors and 44 new textures to its automotive leather portfolio.

Those include new cleanable, anti-soiling leathers and coatings that help reflect solar rays to keep leather surfaces cooler on hot days. They also include greener leather initiatives such as non-chrome leathers, water-based finishes and extensive reuse of wastewater, which is treated onsite at each of the company's production facilities.

While the company hasn't completely eliminated pollutants from its hide finishing and production processes, it has won numerous environmental awards. Its newer roll-coating finishing technology has drastically reduced its waste stream, and it is actively looking for ways to reuse its leather trimmings, said Nathan Mullinix, vice president of research and development for the Americas.

"One of the ideas would be maybe to generate ... some type of substrate that would have a lot of leather content to it, maybe upwards of 70 percent, that could then be finished and grained in a similar fashion to what we do and utilized as well," Mullinix said.

The company hasn't been immune from the slowdown in automotive production.

"What's happened in the business is affecting us just like it is anyone," Sumpter said. "The thing about this that was a little eye-opening, I guess, was how fast and how severe the slowdown was and how global it was."

The company has been consolidating, reducing capacity and "laying off hundreds of people around the world" in places like Hungary, China and Mexico, Sumpter said. But the company's U.S. work force, which is centered largely in its Auburn Hills headquarters, its Rochester Hills R&D center and a design center in Newport Beach, Calif., has mostly been spared.

"You try to affect the parts of the business that aren't as value-oriented," Sumpter said. "We're not going to cut down on our R&D, we're not going to cut down on our selling. Those are the things we have to have."


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