Spotting opportunities where others see gloom
If the mark of a true entrepreneur is the ability to spot an opportunity where others only see gloom, then Wynand Hart is a champion. Picture him at the end of 1995, standing outside the weathered buildings of the Sutherlands Tannery from which he had just been retrenched as part of the liquidation of the 117-year-old company. The once-thriving South African leather and tanning industry was in ruins because of cheap imports from the Far East.
All around the factory, based in the township of Plessislaer on the banks of the Msunduzi River in Pietermaritzburg, a deadly civil war had raged between supporters of the ANC and IFP. Many businesses in the area that did not go under pulled up roots and relocated. Surveying this dismal wasteland, which included two neglected toxic waste dams in dire need of rehabilitation, Wynand Hart chose to see opportunity.
The then 37-year-old tannery technician had spent his whole career working for various tanneries throughout South Africa and had always wanted to work for himself. With a retrenchment package of R130 000, he decided to try to revive the forlorn factory. In a measure of just how contrarian Wynand’s idea was, the owners of the buildings, the meat giant Imperial Cold Storage, did not believe they could ever sell the buildings to anyone. As far as they were concerned, it was just a liability, so they simply gave Wynand the massive 12000 square meter premises on condition that he rehabilitate the two waste dams. Because the shoe-leather industry was virtually wiped out and tanned hides for the furniture and car-upholstery leather required equipment that Wynand did not yet have, he decided to focus on a small niche, namely heavy leather for belts and horse tack such as saddles and bridles.
For the first few months Wynand worked on the factory floor together with three workers. “It was the most exciting time of my life. I just loved it. It was what I always wanted to do,” he says. “At first it was scary, because I didn’t earn a salary anymore, and you have to do everything from HR to production to accounting.”
It took him about six months to build the business to the point where it gained its own growth momentum. Meanwhile, Wynand also had to buy heavy earth-moving equipment and hire a consultant to keep his side of the rehabilitation bargain, a process that took a total of eight years.
Wynand’s company, called Leather From Hart, grew well, but it turned out to be only a warm-up exercise compared to his next venture. In 1999, Wynand was ready to enter the bigger playing field of the leather industry – the production of “wet blues”, hides that have been treated with chromium for use in furniture and car-seat upholstery.
For this venture he joined forces with a cattle feedlot-company and formed Crafcor Hart Hides, which meant that he could equip the unused part of his factory with chromium tanning equipment. The venture thrived and became a substantial supplier of wet blues for the growing local automotive industry.
Wynand, who later bought out his partners’ shares, kept on growing the business until 2014, when a perfect storm hit the business. His biggest local client was bought over by another company and closed down.
Wynand decided to try the export market, but within a few months Crafcor Hart Hides found itself hopelessly overextended. In the wet blues trade, explains Wynand, the raw hides bought in by the tannery has to be paid within seven days, and if you miss a payment, production grinds to a halt for a lack of raw material, worsening the cash crunch.
Crafcor Hart Hides never managed to escape from the ensuing vicious circle and was liquidated in 2017.
It just so happened, however, that at the time of the liquidation of Crafcor Hart Hides, another substantial player in the leather industry went bust. Once again, despite having gone through the most difficult time of his business career, Wynand chose to see opportunity. With a major gap in the market, it was unlikely that there would ever be a better time to start over again. The problem was that no bank would consider financing Wynand to start a new chromium tanning operation after the liquidation, especially since one of the big banks were the biggest creditor of the liquidated operation.
Fortunately, Wynand found a financier that shared his entrepreneurial vision – Business Partners Limited. They agreed to finance the settling of the debts of the liquidated venture and the reopening of the wet blues operation as a subsidiary of Leather From Hart.
Today, Wynand’s business is once again in full swing, processing up to 1000 hides per day, but with one major difference. Rather than buying the raw hides, he does the tanning as a contractor, thereby sidestepping the need for and risks of owning the hides. The business is contracted to process all the hides from South Africa’s second largest cattle feedlot.
His immediate plans are to push up his production to 1250 hides per day, and, in a sign of just how much his fortunes have changed, he was recently able to buy a new R3.5 million machine in cash. In the longer term, Wynand reckons opportunities are opening up once more in the shoe-leather sector for South African tanneries. He says there are signs that local retailers are increasingly looking to switch procurement from the Far East to local producers. Given Wynand’s track record with spotting opportunities, South Africa might just have a proud foot-wear industry back soon.