Alcantara Fails to Meet Demand As More Automakers Now Queue for Their Products Despite the High Cost
You look at some Alcantara-made interiors and pause briefly to spot the difference. What actually motivates high demand despite the price being on the high side?
Chiefly of microfibre, made from mainly polyester and polyurethane, Alcantara products, as exclusively produced by Alcantara S.P.A, are pretty expensive; to a point one might rightly term “undeserving”. This is evidently reflecting on the prices of other products made with Alcantara covering materials as component.
Like what was highlighted in a recent article featuring the 2016 Nissan Maxima where the Japanese automaker explained that they had to overcome huge logistics logjam in their effort to procure Alcantara wrapping materials. So the high cost of these materials has more to do with logistics than the quality of the product itself.
But of more concern to automakers is actually not the high cost but its short supply. Dave Kalinowski, Nissan North America manager of seat engineering explained:
“We need to maintain our exclusivity. If going half of the world to get it is what it takes, we are prepared. Should they move production here or to a place like Mexico, anyone will be able to get it at a lower cost. That would take away our advantage over competitors like the Chrysler 300 or the Toyota Avalon. They’d be able to get the same material at the same price.
“We could have easily used leather instead of the Alcantara because there is an additional cost involved with the Alcantara products. But there is more to it than the price.The Alcantara brand name itself adds value to the car.”
If what Kalinowski said is anything to take home, it then means that the faint accusations, fingering the Italian micro-fabric giant to have been willfully throwing its weight to support a selected number of manufacturing companies against others hold true.
But in a swift defence, Andrea Boragno, the chairman and CEO of Alcantara, during the 2015 international exhibition, insisted that though his products might not be cheap as many manufacturers would rather prefer, they take no precedence in the distribution of the products.
Could he have given a true account of the situation? I personally disagree because there has been, indeed, a growing demand for the product, many of whose offers are turned down.
But again in Detroit, the company’s officials struggled to portray it in good light through what was seen as a comprehensive overview of what most of us might have missed concerning their unannounced intents.
Alcantara covering materials has, no doubt, been transformed into a household name in any circle where car interiors – seats, headliners, dashboard, doors, gearshifts, steering wheels, are discussed.
The overview captured their intention to penetrate farther into the global market with prices that would be on par with leather. This, they say, was planned in consideration of the fact that Alcantara had spread its wings across other industries where it is found irresistibly attractive.
Beside automakers, companies that are into other products see it as one opulent brand that mustn’t be ignored. In planes and yachts, Alcantara is being used. It is also the same in consumer electronics industry, phones, and sometime ago, Microsoft started promoting its use as a high-end cover for the Surface 4 Pro laptop.
What Does This Mean?
It simply means growing demand. One reading the overview would think that a huge plan had been hatched to assimilate and satisfy the new orders since reaching more markets was also a priority.
But NO! Alcantara can’t meet demand, especially as fashion industry, particularly from China and USA soon joined the queue.
Then there is a sudden rationing policy due to what Boragno called “compounded constraints” that hampered their Milan plant from producing beyond eight million meters annually.
While growth of this manner is recognized as a huge feat for the company, Boragno said that it was the 35-percent growth surge in 2015 that actually struck the company off guard, making it unable to meet the demand. It is remarkable to note that since the establishment of the company in 1972, it has seen quite a number of similar growth surge. For instance, the net sales flew from $78.8 million in 2009 to $230 million a year ago. This is mainly sustained by the close to 15% annual growth in demand by automobile industry which has lingered from the past 7 years.
However, the company has taken a decision of investing $368 million to improve production in the next five years with expected reflection on the colors, texture and thickness.
Emphasizing on this, Boragno said the new quality will be more durable, with better grip, warm in the winter and a tendency to customize for automakers who have a need for unique textures. The company’s brand value is likely going to triple but here is a question that vehemently demands for answer: “why now?”
If Alcantara S.P.A has been making tremendous sales over the years, and the demand suddenly grew beyond their production capacity which has led to starving many potential costumers, why wait till now before implementing an expansion project?
Again, what exactly is the rationale behind Boragno’s decision to restrict the production of Alcantara to Italy?
Sincere answers to the above questions will explain if the company is sailing at the threshold of business sophistication or clueless approach.