How firm got a leg up in shoe-making business

Eleven years ago, when the once-giant hides processor, the Leather Industries of Kenya, shut down operations at its Thika-based plant, Karim Nanji and a small clique of the then-management staff saw an opportunity to become business owners.

Demand for quality locally-made leather shoes was high, so the 11 reasoned that with their wealth of experience, their odds of finding success in the shoe-making business were good.

They quickly put together a business plan, marshalled $1 million in internal funding, which they used as initial capital and bought their former employer’s premises.

Their first order of business was to rebrand to give their business a different identity from the defunct entity. African Leather Industries Limited, the name of their firm, projected their ambition to become the leading shoemaker in the continent.

But first, they needed to carve a niche for themselves.

“The first advantage was that we were dealing with leather, a by-product in which we already had massive experience. Secondly, there will always be a demand for shoes. Everyone wearing a pair of shoes today will have to replace it at some point, sooner or later,” says Mr Nanji, the firm’s General Manager.

“So we rode on gaps in various sectors of the economy ranging from schools, government agencies, private security firms as well as factories that needed safety shoes for their workers,” he adds.

Teething problems

However, soon after setting up the plant, they encountered challenges, including a lack of awareness among the public, budget constraints, and skill deficiency among the workforce.

“Making a shoe is extremely difficult. The process has at least eight stages to get the final product. If one guy along the chain doesn’t do his job properly, then you start incurring losses,” says Mr Nanji.

“So a huge chunk of our costs was in the training and sharpening the skills of our workers.”

Sourcing leather from outside suppliers was also a challenge that hurt their competitiveness due to added costs.

Nevertheless, after overcoming the teething problems, the shoemaker quickly grew its footing in the Kenyan market, culminating with African Leather Industries’ appointment by multinational retailer Bata as its primary manufacturer of school shoes.

The two later parted ways in 2016 over what Mr Nanji terms as unfavourable business terms that massively ate into the firm’s margins.

But what is the firm doing differently from other players?

“One huge strength we had is that we were the first people in Kenya to make rubber soles. The challenge initially was how to attach the sole to the upper part without using glue or stitching, so we brought in the vulcanisation machine,” explains Mr Nanji.

He adds, “This machine provides the heating treatment between the two surfaces. The rubber softens during the burning process, almost to the point of melting. In that state, it easily attaches to the upper leather material, which is a very technical process. Many people are now copying that, and it’s okay, but that has been our competitive edge.”

The factory, which currently has 56 employees, can produce up to 1,000 pairs daily.

Their big business seasons are when schools are reopening and during the recruitment for security agencies such as the Kenya Defence Forces (KDF), the police force and other government agencies like the National Youth Service (NYS).

“If you were here two weeks ago, you wouldn’t have found space to sit. On any given day, 400 to 500 people came here to buy shoes ahead of schools reopening,” states Nanji.

Realigning strategy

The firm is, however, seeking to realign its market strategy as the GM notes that the new government regime doesn’t appear very keen to give them business as the previous administration did.

“About 80 to 90 percent of our business focus was with the government, which is risky because we put all our eggs in one basket. Now, our orders have significantly dropped. Our sales last year went down 60 percent,” Mr Nanji points out.

What is his advice to those seeking to venture into manufacturing?

“If you don’t have enough capital, forget about it. You need serious money because you depend on many suppliers as a manufacturer.”

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