Bojos Tanning is a company that can trace its history back for almost a century, but perhaps the most dramatic event in that 100 years occurred in 2007 when flood waters wiped out the business completely. The Bojos company could have walked away, but decided to stay and fight for its future instead.

At the end of 2007, with thoughts turning to celebrations of the company’s ninetieth anniversary the following year, disaster struck. “We disappeared and took two-and-a-half years to recover,” Mr Bonilla explains. “The company had to start all over again.” What happened was that on the night of December 11-12, a rare out-of-season storm, Tropical Storm Olga, made landfall near Santiago. Fearing that a dam at Tavera would be unable to contain the heavy rainfall, the authorities decided to open the floodgates and more than 6 million litres of water per second poured into the Yaque del Norte river, leading to severe flooding. There were more than 30 fatalities and thousands of people had to leave their homes at short notice. Luis José Bonilla remembers his shock at receiving a phone call towards the end of December 11, and of driving to the tannery, which is in Bella Vista, one of Santiago’s successful Free Zones, in the Bella Vista district, in the early hours of December 12. No one there was hurt, but many hundreds of thousands of dollars’ worth of raw material, finished leather and machinery was destroyed by the flood and it looked as though the 90-year-old business was ruined. Within days of the enforced closure, Christmas bonuses were payable to the full workforce and there were no records or documents or computer systems available to confirm the amount each person was due to receive. The company had no choice but to ask the workers (and across the group there were 2,300 of them at the time), how much their individual bonuses were worth and to take their word for it. Later, when the effects of the flood eased and the company was able to recover records from the finance ministry, these showed that the tannery workers had told the truth. Meetings with government representatives and insurance companies to try to reach a resolution went on for many months.

“It was very tough,” Mr Bonilla says now, “but I was able to keep a key team on the payroll. We all used to come every day, just to see keep seeing each other face to face, although we couldn’t touch anything until the insurance companies had finished with us. I had two choices: to walk away, and I think no one could have blamed me, or stay and continue. I chose to continue, perhaps against all logic. I had a great team and all that history, and I felt that family tradition was pushing me to start again.”

New wet blue perspective

To start again meant a change to the new name and stepping away from footwear manufacturing. It also meant moth-balling the Bojos beamhouse and running from wet blue instead. This was the quickest way the company could recommence production, Mr Bonilla explains; holding out to process from raw again would have taken more capital, more investment and more time. The company maintains the drums and wet-end machinery and will be able to start beamhouse production again when it wants to. Another option would have been to continue with shoe production using someone else’s leather. “But I don’t feel like a shoemaker,” the managing director says. “I  have always been a tanner and I wanted to go back to basics. Beamhouse operations would have meant more investment in everything and, after two years, we just wanted to get going.”

A number of clients maintained contact during the downtime and promised to place orders as soon as the company started producing leather again. “Family and employees were the most important factors,” Mr Bonilla says, “but this support from customers, including Girza, Wolverine, Minnetonka, Timberland, Rocky Brands and others, was a big motivation.”

The first trials for the new production set-up ran in November 2009, with 30 people involved and full production from wet blue was up and running in 2010. There are now 230 people working at the new Bojos Tanning, processing 1,300 hides per day, achieving an output of between 1.3 million and 1.5 million square-feet of finished leather per month. Around 60% of the wet blue the tannery uses at the moment comes from South America, from Brazil, Uruguay and Mexico, among others. The other 40% comes from the US. All suppliers are accredited by multi-stakeholder organisation the Leather Working Group (LWG). Bojos Tanning knows them well and knows how they source their raw material. “They are stable suppliers,” says chief operating officer, Daniel Correa. “And this gives us a real guarantee that the wet blue we buy is right for each article we make.”

His managing director holds firm to the notion that strong relationships with suppliers are essential. “Without trust and good communication, it would be impossible,” he says. “I can’t afford a situation in which I might have a few surprises in every container [of wet blue] that I open, so to be able to trust and have a high level of communications with my suppliers is fundamental.”

People first

Bojos Tanning has its own gold rating from the LWG and is also certified by testing body SATRA. There is a strong commitment to providing technical and soft-skills training within the company; it delivers an estimated 400 hours’ training per year across the board. In 2011, it became one of the first tanneries in the Dominican Republic since a new law came into force in 2010, and the first company of any kind in Santiago, to receive certification from the country’s labour ministry for care of the workforce. Recruitment focuses for the most part on the communities closest to the tannery. “We have been here a long time,” the managing director says, “and are known in this neighbourhood to be a serious employer with high standards. To work for us gives people a certain standing in the local community.”

He points out workers who were there in the time of his grandfather, “people who were working here and knew me when I wore short trousers”. He also points to an open-door policy inside the tannery, with people coming from the shop floor to the management team’s offices whenever they have an idea or a personal worry to share. Mr Bonilla says around 90% of ideas for improving the workflow in Bojos Tanning have come from these exchanges. All of these things combine, the company believes, to keep worker turnover low.

The company also holds a national certificate as a ‘green company’ under an initiative called Quisqueya Verde (Quisqueya is an ancient word for the island of Hispaniola, which contains the Dominican Republic and its neighbour, Haiti, while ‘verde’ means green). Relations are good with local and national authorities: Bojos Tanning was part of a minister-led delegation that travelled to Macau in March 2014 to present the Dominican Republic’s case as a good location for footwear production to Asian and global brands (see below). Local universities also appreciate the tannery’s openness towards students who frequently pay visits to see how theories around industrial engineering or business administration play out in practice. “Once, one of the students who came was the son of someone I know,” Mr Bonilla recalls. “My friend called at the tannery one day and asked if he could see around too because his son had told him we have something spectacular here.”

In praise of Free Zones

Luis José Bonilla is president of Santiago’s Free Zone Association. He is also vice-president of a spin-off training and consultancy body called Capex and is a past-president of the Santiago Chamber of Commerce. Across the country there are currently 56 Free Zone industrial parks, in which 552 manufacturing companies operate, importing materials, making finished goods and exporting them (often to the US, which is only five days away by container ship) in a customs-free environment. The Cibao region, which includes Santiago, is home to 16 of these industrial parks, with 122 companies operating in them. There is a huge opportunity in the region, and in the country as a whole, in footwear, according to Mr Bonilla. Many prominent footwear brands and outsource shoe manufacturing groups believe in the Dominican Republic and the access, lead-time and cost advantages it can offer to companies with a market presence in the US through the DR-CAFTA free trade agreement, which came into effect in the Dominican Republic in 2007. A free trade agreement with the European Union has also been agreed, but awaits ratification. Europe is between 12 and 14 days away by boat, which represents a saving of around 50% in terms of time compared to many shipments from China. In 2013, the country’s footwear output was 14 million pairs and export revenues of $425 million. The footwear industry currently supports directly 14,000 jobs, a total that doubled between 2009 and 2012, and the Free Zone community is confident of creating thousands more jobs in the next few years as new manufacturers, including Taiwanese groups Hong Fu and General Shoe, come to the country. Anticipated output is of 20 million pairs per year in three years’ time. Thirty companies are in the Dominican footwear supply chain at the moment: 11 shoe manufacturers, 16 component suppliers and three tanners, one of which is Bojos Tanning.

“Retailers in the US want suppliers to be closer,” Mr Bonilla says, “and we are near our customers. They want to be able to reduce lead times and react quickly. We are seeing that in our orders. We used to have around 90% black leather in our production. Now we have a much wider range of finishes and colours. Consumers want something new, and they want it fast. We are supposed to have a minimum order, but what can I do if one of my biggest clients puts in an order for a small quantity of hot pink, or cherry red or purple leather? If the customer only wants 2,000 square-feet, I can’t say that my minimum order is 4,000 square-feet. I have to be able to do it; I have to be able to offer that flexibility.”

Change to embrace

Here, too, openness is important and goes hand in hand with the flexibility. This flies in the face of the recent experience of many tanners. “Tanners have put up walls,” says Mr Bonilla. “We have turned the production of leather into an enigmatic business. People didn’t want to admit they were tanning leather because they were afraid of being held to blame for pollution and contamination and everything that was bad. This has left our industry with a high price to pay; we have been criticised unfairly. We should have united to give a faster and better response to this. We have new technology, that we are creative, that we are more environmentally friendly now and more sustainable. We have to put up a proper fight. We have to be competitive.”

He thinks this is a responsibility that the whole leather value chain has to share, including suppliers, who need to keep thinking about the best ways to innovate. Specifically, he harbours fears that some in the leather chemicals sector have given up on “investing in a new era” for the leather industry. “Tanners are asking for new technology,” he insists, “and these companies ought to respond. Their offering ought to change.”

With regard to machinery manufacturers, he says European manufacturers, in particular those from Italy, have given “excellent and magnificent service, quality and durability”. But he says the debate for him now is about the benefits of durability.

Thoughts on the future

Luis José Bonilla describes leather as “a very noble product” and something that will continue to be valued. People will continue to buy and sell meat, he says, so the hides will be there to process. “It’s part of life,” he says. But leather’s ability to stay competitive is linked to its ability to innovate, he says. It’s up to the industry itself, in his opinion, to keep the value of leather high in the mind of the consumer. “Either we give consumers what they want, or someone else will,” he insists.

Initiatives in the community include support for Acción Callejera Fundación Educativa, an education fund specifically for street children. It works to give children at social risk access to education, helping them move away from a life of begging or theft. One local boy even worked in the tannery for a short time, upon completing his schooling, although he has now left to go to university. “Education is a vehicle for development,” Mr Bonilla says. “The better educated our people are, the more prosperity and development we will have.”

And where better to start than with the youngest children? A programme is in place in Santiago to offer pre-school care and learning to the children of workers in the companies in the city’s Free Zones. Not only is Luis José Bonilla playing a prominent role in promoting the idea, but his wife, Patricia Lama de Bonilla, is a very active president of the programme. There are currently three centres in different parts of the city at the moment and more are planned. There are around 150 children in each, with ages ranging from just 45 days to six years, which is when children in the Dominican Republic start primary school. The centres open at six o’clock in the morning and stay open until six o’clock in the evening, and the children can have breakfast, a morning snack, lunch and an afternoon snack there. They learn to read and write, make a start at learning English and at using computers, and all of this is funded by the companies in the Free Zones, with parents paying nothing. The system has been in operation for 20 years and has benefited many children.

Professional opportunities

In addition, care-givers at the centres have used the experience to go onto professional careers in education. “This has happened in the case of about 40 people over the years,” says Josefina Hernández, the programme’s director. “It’s been a real added bonus in a programme that is really all about the children, but is also a wonderful example of how companies, employees and the government, because we have the backing of the government now, can all co-operate to do something good.”

Luis José Bonilla thinks deeply about this aspect of his work, and has done for a long time. Once, when he was making a speech as president of the Santiago Free Zone Association, he told his peers that knowledge will make a business innovative and creative, qualities, of course, that he wants Bojos Tanning to have. But for a business to be truly great, he thinks the key quality is humility. “I don’t mean humility in the sense of meekness,” he says. “I just mean a desire to serve, to give good service to clients, for example. But at the same time, if you are going to ask people to come to work for you and stay with you, you have to show them that you are committed to them and that means, sometimes, showing humility. This does nothing to detract from your strength or your leadership, quite the reverse. We have to speak to one another person to person; we have to learn from one another.”

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