Skai® Puts More Skin in the Game With O’Sullivan Purchase; In Just Two years Hornshuch Group Already Reaps Dividends; Makes $20 Million Wager on U.S. Manufacturing

March 25, 2013

Winchester, Virginia — Hornschuch Group’s shrewd and timely 2010 purchase of O’Sullivan Films, Inc. has already resulted in capturing five percent of the $400 million PVC upholstery market, according to Tim Lettie, vice president, interior and exterior business.

O’Sullivan is the American producer of Skai artificial leather, a product honed to success through Hornshuch in Europe and Asia. Lettie and his boss Bruno Lehmann, head of interior marketing and sales for Hornschuch in Weissbach, Germany say they are looking for double digit growth from the new spread coated product line while the traditional calendared vinyl line should grow at a more modest rate producing a 30 percent increase in business overall within five years. “We expect to catch up with the rest of the industry in terms of product depth and then surpass it, due to our deep technology and design capabilities,” Lettie said. Bruno LehmannBruno Lehmann

Lettie is one of the original ten members of the buyout group which sold the business to Hornschuch for what turned out to be a song. All ten members are still on board.  The $300 million Hornschuch Group now looks to O’Sullivan for about one third of the Group’s sales. O’Sullivan is in a very diverse product mix including decorative pool liners, blood bags and outdoor decking.

“O’Sullivan looks at itself as the Avis® of the artificial leather industry and expects to try harder than the competition to gain share of the market,” Lettie emphasized. He expects Skai to capture 15 percent of the PVC upholstery market in the U.S. and ultimately win the game now dominated by China’s Enduratex brand, Naugahyde, Omnova, Spradling and Morbern.

“Except for Naugahyde®, Skai is the only artificial skin produced in the USA. Made in USA is ringing cash registers again,” says Jude Sparrow, Skai sales manager. “U.S. buyers seek same week delivery, consistency in color matching and good technical advice from domestic manufacturers,” he said.  “Off shore suppliers can’t do that as well as we can.” Jude Sparrow, Naama Ben-Daat and Tim LettieJude Sparrow, Naama Ben-Daat and Tim Lettie

Skai is being sold to furniture manufacturers and to jobbers who supply healthcare, hospitality and contract markets as well as marine and automotive upholstery markets. The company said all Skai products meet U.S. FR standards. Two year Skai team member Sparrow is handling sales to jobbers and Naama Ben-Daat, armed with a freshly minted design and marketing degree from the University of Massachusetts completes the Skai team as design and marketing coordinator. Both Sparrow and Ben-Daat report to Tim Lettie along with 25 year veteran Joan Drinkwater, the senior product manager. Like a super restaurant chef, Drinkwater gets her hands around everything being made on the spread coated line as well as the conventional calendared line.

“She makes sure the customer gets exactly what they want in terms of product and coloration,” Lettie said. “The formulation of Skai can be tweaked to meet the exacting needs of the customer,” she said. “It’s like baking a cake.” Skai is a four layer product with a lacquer coating   applied to the vinyl face; sometimes urethane is applied to the face to produce a hybrid product; a PVC foam core follows with an adhesive layer and the fabric or felt back. 

Most of the U.S. PVC industry has mothballed plants and elected to produce artificial leather offshore in China and Thailand while Hornschuch invested $25 million in the first artificial leather spread coat line to be built in the USA in decades. It was completed less than a year ago right after the purchase of O’Sullivan which is already paying back Hornshuch a return on its original investment, Lettie agreed. O’Sullivan was founded in 1896 and was not previously a supplier of artificial leather; it was best known for producing rubber heels for shoes. 

The synergies between the European parent and the American ‘kid’ are expected to lead to joint product lines being offered in the USA and in Europe with little or no overlap in the products. It is expected that the American lines of Skai will also find new markets overseas through Hornschuch distribution. Skai ‘Osprey’ for example, a new American made product, is already exported to Europe.  Of course, there is a different aesthetic in the Euro lines versus the American lines of Skai.

Skai is said to be environmentally friendly, producing little or no VOC’s and no harmful chemicals like formaldehyde. Lettie is especially keen on removing as much PVC leather waste from landfill as possible. O’Sullivan has a 35 man R&D staff to help that cause and O’Sullivan shares a 14 man design department with the parent company.  

Most of the in-line product will be stocked in the warehouse for rapid delivery with custom products available in 800 yard minimums per color. Skai is sold in 30 yard rolls, 54 inches wide, the industry standard. Prices are in the mid range from $7-$12 a yard. The latest collection, called Osprey, is available in 18 fashion colors. Ipsum, with pebbled finishes and geometric design is complimented by Bison with a leathery grain produced through embossing. All three products have been   introduced in 2012 with six more lines planned for 2013 and three to four a year after that, well beyond what is the norm for artificial leather introductions.  This is all part of the plan to turn the staid PVC industry on its ear.

 



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