Alcantara Can’t Keep up With Demand as More Vehicles use the Material
Take one look at the opulent interior of the Lexus LC 500, with Alcantara seats, headliner, and door panels. That’s just one model from one carmaker, but it reflects the growing popularity of the suede-like and versatile material. The result: there isn’t enough Alcantara in the world to meet demand and the Italian supplier is turning down contracts as it works to double production.
Alcantara Chairman and CEO Andrea Boragno was in Detroit to provide an overview of the company behind the unique synthetic material made of polyurethane, polyester, and microfibers that is finding its way into ever more uses in vehicles.
It is not just seats and headliners, either. The material is being used increasingly on dashboards, doors, gearshifts, steering wheels, and as trim. In the future he expects to see more Alcantara on steering wheels and even inside door handles. And his goal is to increase penetration so that more vehicles roll off the line with the material with cost on par with leather but there is less waste.
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The synthetic material is also being used in luxury yachts and planes as well as finding favor in the fashion, interior design, and consumer electronics industry. Microsoft is promoting its use as a high-end cover for the Surface 4 Pro laptop and it is showing up on headphones and iPhone covers as it increasingly is perceived as a lifestyle brand.
All this means Alcantara can’t meet demand—especially with more orders from America and China—and Boragno said he is turning away as much as 20 percent new business because his plant in Milan can only make 8 million meters a year. The U.S. accounts for 10 percent of global sales while Europe’s share stands at more than 60 percent, while Asia Pacific and other emerging markets account for nearly 30 percent.
Alcantara Chairman and CEO Andrea Boragno posing with a giant Alcantara shoe
And part of his job as CEO since 2004 is playing up the company’s Italian roots which is especially important to customers in China, Korea, and Japan, he said.
The company, which was founded in 1972, has seen net sales triple from 64.3 million euros ($78.8 million) in 2009 when it was hurt by the recession, to 187.2 million euros ($230 million) last year. Its use in the auto industry has grown 15 percent or more for each of the last seven years, which is significant given that 80 percent of its business is in the auto sector. But it was the 35-percent growth spike in 2015 that caught the company off guard and unable to meet the demand, Boragno said.
So Alcantara is investing 300 million euros ($368 million) to double production in the next five years and the company’s brand value is expected to triple to 300 million euros ($368 million) over the same period. The company is also projected to grow from 600 to 800 employees, including about 500 production workers who make Alcantara around the clock.
The basic tech has not changed much since the ‘70s but Alcantara has worked to improve the color, thickness, and texture. One advantage of Alcantara is that it is up to 50 percent lighter than leather. Boragno said Lamborghini saves 11 pounds by using the material—an advantage in an industry fighting to reduce every ounce of weight to improve fuel economy.
Boragno said his proprietary material is also more durable, has better grip, breathes better, and is warm in winter and cool in winter. The texture is pleasing to the touch and it can be customized for automakers looking to provide something unique. Customized interiors will only become more important with the advent of autonomous vehicles.
The other passion project: the chemical engineer wants to develop and offer only bio-based products by 2020, further differentiating Alcantara from its main competitor: natural leather which involves animals, curing, and chemicals. “We don’t kill animals and our raw materials are polymers,” the CEO says bluntly.
Alcantara was certified as carbon neutral nine years ago and remains committed to sustainability. Boragno said it is also good for business as it is appreciated by investors.