The New Chemical Tannage Three

8/8/2019 The New Chemical Tannage Three

1/22

Network Pictures and Networking in the Introduction of the New Chemical Tannage

(Three)

Michael Redwood October 2003------------------------------------------------------------------------------------------

Introduction

This study looks at the leather industry in the late 1800s and early 1900s and examinesthe first, and perhaps only, major technological change in the long history of theprocessing of leather. Attention is paid to the establishment of a leather and a shippingbusiness by the Booth family of Liverpool. It takes a longitudinal view of the changes inthe networks involved in this activity, and examines how they reacted to the difficultieswhich arose. Comparison is made with the traditional tanning groups in the US CatskillMountains in the US and Leeds in England.

A Business Needs Friends

Being in business implies transactions, and for transactions to occur a business needsrelationships.

In industrial marketing it is accepted that dyadic relationships are vital to thefurtherance of business (Grnroos, 1990) and that these sit within a complex network ofrelationships.

While, as Sanzo et al (2003) confirm, the focal dyadic relationship is the unit ofprimary interest the business network provides the context. It is defined by Anderson

et al (1994) as a set of two or more connected business relationships in which eachexchange relation is between business firms that are conceptualised as collectiveactors.

Blankenberg (1992) identifies 14 distinct category types amongst the actors involved ina network surrounding a customer-supplier relationship. These are:

1. suppliers suppliers2. competitive suppliers3. supplementary suppliers4. other customers

5. customers customers6. other units of the customers firm7. other units of the suppliers firm8. bank or financial institution9. legal organisations10. consultants and research institutions11. trade unions and other social bodies12. governmental agencies13. international organisations14. other relevant bodies

1


2/22

Anderson et al (1994) have a similar listing but classed into ten categories. Theconclusion from both is to understand the complexity and diversity of actors andrelationships in a business network.

Lundgren (1992) describes how a companys network position is made of a complexity of

relationships which have three aspects (Fig 1)- actors

- resources- activities

These actors are linked together by their performance of complementary or competitiveindustrial activities, employing or consuming economic resources to produce otherresources.

Figure 1

No actor controls all the necessary resources of his business, and technological changeand industrial evolution makes actors more dependent on other actors.

It is a natural consequence of this complexity that no two businesses, even whencompeting as apparent equals, will have the same network, and as a consequence theirability to compete will vary.

The three dimensional aspect of networks is described by Holmen and Pederson (2001)with a business having its unique structure related to legal and finance, IT, innovationand new product development, human relations, and logistics matters. They show thatthis structure is so complex that a prioritisation is necessary, with choices being madenot to interact with parts of the network.

actors

resources activities

2


3/22

We are provided with a methodology (Fig 2) with which to examine the dynamics of whatis happening by Ford et al (2003) involving an examination of network pictures,networking and network outcomes.

Figure 2

Network pictures relate to the views of the network held by participants in thatnetwork. No two actors (participants) are likely to see the network in the same way.

The progress of networks is described by three paradoxes (Ford 2003):1. the network simultaneously enables and restricts a company2. relationships are developed and defined by companies, but companies are also

developed and refined by relationships3. companies try and control the network, but control is destructive

The Leather Industry in the 19th Century

In the 1800s the USA saw profound societal changes as its population grew and newmanufacturing technologies and methodologies were introduced. The proximity withFrance during the War of Independence had returned Jefferson to the US from Pariswith strong personal opinions on the importance of The Enlightenment. These were toplay a role in the introduction of the concept of interchangeable parts now recognizedas a major catalyst in the move to large factories and mass production.

The growth of the railroads, introduction of refrigeration and the growing needs of thepopulation for clothing and footwear lead to profound changes in the location and thestructure of the leather industry. Abattoirs were relocated, packers established, and

the availability of bark for tanning was steadily moving the industry from its East Coastlocation (Hoover, 1937)

Networkpictures

Networking Networkoutcomes

3


4/22

Part of this process saw the continued development of new machines for the leatherindustry, and for new chemicals to be used. Two routes were being followed. One wasto reduce the process time from 9 months plus and second to make softer and thinnerleathers which did not lose their tannage when dampened or wet.

Things began to move rapidly during the civil war in 1862-5. The war itself greatlyincreased the demand for leather. Not just for footwear but also for harness andsaddlery plus many types of belting and other industrial leathers. This pushed theindustry towards a higher level indutrialisation. Multi story tannery mills were built withlines of new machines driven by steam power offering significant levels of massproduction never before imagined.

The technical leap forward for the leather industry actually began in Germany in the1850s when Dr Frederick Knapp1, Professor of the Polytechnic School of Braunschweig,Germany made a thorough investigation of mineral tannages. His British patent 2,716(1861) covered iron, chrome, manganese, and other metallic salts in combination withfatty acids to form insoluble metallic soaps, so that the iron in the pelt might not bewashed out.2

Despite a number of false starts Knapp and his colleagues in Europe were not successfulin producing chrome tanned leather commercially, and the traditional vegetable tanningprocess remained predominate. Vegetable tanning was and remains a good process butthe chemical molecules are large. This makes penetration slow giving great bulk to theleather. The process time is long and the leather generally thick and hard. Some skinssuch as sheep and goat were tanned with alum to make softer glove leather, but this

tannage washed out very easily when wet.

The Booth Family

During the 1800s industry and society in the UK was also changing. In Liverpool theBooth family had been forced to recognize that their long successful family business ingrain was coming to a close and the two sons Charles and Alfred were educated ininternational trading and shipping, using family friends in a tightly knit nonconformist Unitarian society.

In the 1860s the brothers established a business in New York importing raw material

(part processed) from the UK to the US tanning industry. They also set up a separatebusiness with two small steamships they commissioned doing business between threenorthern ports in Brazil and Liverpool.

In 1877 the Booths were hit by the potential loss of $70,000 when the Kent andStevens tannery in Gloversville, in upstate New York, was impacted by the fraudulentactivities of one of the owners, Stevens. Booths decided to pay off all the othercreditors and back the remaining partner, John Kent. John Kent was a recognisedleather scientist who was working on new processes which the Booths felt to be ofconsiderable potential.

1 Knapp, Natur und Wesen der gerberei und des Leders, Munich 18582www.mikeredwood.com see timeline

4
http://www.mikeredwood.com/http://www.mikeredwood.com/http://www.mikeredwood.com/http://www.mikeredwood.com/


5/22

Success came quite quickly and in 1879 the company brought to market a new productthey branded as Dongola leather, named after a town in Sudan that was much in thenews at that time. Dongola was a mix of a vegetable tannage called gambier (which hadbeen identified by Sir Humphrey Davy in 1803) and alum, and gave a rapid and resistant

tannage.

This production was developed with gloving leather in mind but was also found to be goodfor footwear leather using goat and kangaroo, so the Booths had to seek out supplies ofthese. For kangaroo an agent was appointed in Sydney, and for goat they decide to lookin Northern Brazil and use their own ships to transport the skins both goat and laterhair sheep to the USA.

In 1880 they were able to launch a new brand Daisy Kid which was a Brazilian goatfrom Cear tanned with Dongola Tannage to make an imitation kid. This was a veryimportant leather for footwear at the time.

The timing of the takeover of Kent and Stevens by Booth linked closely with Mr JuliusKuttner joining the company to manage the New York office, and he went to Gloversvilleto provide the commercial control needed to free John Kent for his researches.

Moving frequently between New York and Gloversville Mr Kuttner met Augustus Schultzin the late 1870s. Schultz was a German chemist working in the dyestuff industry, andhe fancied himself as an inventor. Kuttner gave him access to the tannery in Gloversvilleand from 1880 until 1884 he worked on trying to perfect the chrome tanning processfirst suggested by Knapp. The immediate motivation was to make leather which would

not stain the metal pieces in ladies corsets when damp from perspiration.3

Hisknowledge of the recently established synthetic dyestuff industry founded by Perkinsmeant that he was aware of large quantities of chromium compounds being produced as abi-product.

In 1884 he took out two patents4for his new process, but could not persuade Booths toput it at once into production. Perhaps the Dongola was doing too well, or Mr Kent wassomewhat jealous of his part time researcher. Schultz lost interest in his patents andsold them to a New York leather chemical company Blumenthal, who subsequently soldthe development south to Philadelphia.

In 1890 Booths agreed to be sole agents for a product to be produced by a PhiladelphiaTanner J.P.Mathieu tanned with the new chromium process. This was to be Braziliangoat supplied by Booth tanned in chromium, dyed only in black and finished with atraditional polished or glazed finish. This was to be marketed under the nameSurpass.

This production was wildly successful, even more so than Dongola. By 1894 some of thegoat and kangaroo production in Gloversville had been converted to chrome and therewas steady expansion in Philadelphia. By 1900 the Philadelphia plant was producing half amillion dozen skins a year and was the largest tannery in the world. In 1904 the

3 Quoted in Leather Trades Review, Feb 11, 1896 p4904 Schultz, US Patent 291 784 (1884): US Patent 291 782 (1884)

5


6/22

shareholding of the tannery changed giving the Booths the majority and in 1906 theychanged the name of the tannery to Surpass. The shareholding of the original ownerswas liquidated over a few years.

The Booths and Networking

In our study the first significant network is the business, family and social network inwhich the Booth family lived and worked in Liverpool.

This is an interesting study in its own right as it must bear comparison with other UKindustrial areas in the 19th century, for example, where the Quakers dominated. Allmembers of the network came easily together in terms of shared beliefs. All hadcommon backgrounds, with similar education and, of course, religion. There isconsiderable comparison with the Clyde shipbuilders of the same time as described bySchwerin (2003).

This high level of alignment created very open relationships with levels of informationtransfer which would not be common amongst 21st century firms. The sons wereapprenticed with Lamport and Holt, a well known Liverpool merchant house and as well aslearning trading watched the start of the transfer from sail to steam. Lamport and Holtwere involved in the Alexandria trade in the Mediterranean. Mr Lamport was a secondcousin of their father.

On completing his apprenticeship Alfred Booth took a temporary post in the New York

office of an even greater Liverpool merchant house, Rathbone and Company. Themanagers in New York at that time were both members of the Chapel in Liverpool ofwhich the Booth family had been founder members. One of the managers, WilliamLidderdale, was to go on to be a Governor of the Bank of England.

When the brothers then moved to set up their business they had both business adviceand investment funding from these friendly organisations. The decisions to becomeagency traders in the Atlantic business, and then to enter the steamship business wereto follow the growth patterns of the time. To then specialise in the leather business onthe one hand and the three northern ports of Brazil (Fortaleza, So Luiz, and Belem) onthe other came from discussions as to how they could find sectors which were not

already dominated by the big established businesses. It would also mean for theirnetwork partners a financial interest in an extension of their businesses, where theirexpertise was of value, but they themselves did not have time to fully support the riskof entry.

Here see the overlapping of financial, mercantile, shipping and social networks to createa new business with a considerable chance of success. This was a very intense use of theresources available from a wide range of actors. It bears much similarity with manyaspects of extended family businesses today in China and in India.

Once they had agreed to enter the leather industry the first set of issues that theBooths had to deal with related to their choice of position within the leather network.

6


7/22

They needed to develop quickly strong trusting relationships with UK suppliers and asimilar set of relations with customers in the US.

The actors and resources being used to do this at the inception of the Booth businessconcept were largely family contacts and friends. Certainly they became in part bankers

and investors to the company, but at the start they fit in to Blankenbergs (1992)categories only under heading 14 as other relevant bodies yet they were vital to thedecisions and contacts being made. This matches todays revaluation of the importanceof stakeholders.

The Booth family and wider social network was much used in the UK and the familyreputation carried far. This with the references of Rathbones would have put them ingood stead. They quickly built a network of suppliers in London, Nottingham, Leicesterand Bootle. Goods were held in Liverpool and shipped to New York where they wereagain warehoused before being sold in the local leather area called the Swamp5. Otherleather would go to up state New York, to Gloversville which was the major centre forUS glove making or to Boston, which was the centre for footwear.

Traders in any technical industry will have a difficult time at first and this was the casefor the Booths. Early on we find Charles writing to his brother vowing never again tobuy another cask of pickled pelts from Turney of Nottingham. I was never able to tellwhether the skins were right or not and Turney could always shut me up. Neverthelessthe relationship with Turney Brothers was to last until 1971.

The issue with Kent and Stevens was confronted and very positively dealt with. On theone hand the observer could view it as a tactic to minimise losses, but the available

literature points to the company trying to take a wider view of their business networkand to see opportunity for new technologies such as that James Kent was working on.Writing later Charles Booth was to say the working up of a new business is the life ofany concern as ours, and it can be viewed that while the purchase had a tactical elementit had its basis in strategy and the Booth belief that they could exploit successfully anyinvention which Kent could make.

By strengthening the dyadic relationship with Kent and Stevens a new stable networkwas created which offered a good platform for the development of new ideas. Theinsinuation of the Booth network into the leather industry manufacturing networkemphasised its unusual structure. The Booths were accustomed to change and

interested in innovation. Their uncle, George, was famous for his work on steamengines. He had been a founder of the Liverpool and Manchester Railway Company, andhis inventions included the multitubular boiler first used in the Rocketin 1829.

The change with Kent and Stevens was both tactical and strategic. Tactical to recoversizeable potential losses and strategic since they believed there to be a good chance ofprofit from Kents research. It was their first move into ownership of manufacturingand as such an important moment. Hkansson and Snehota (1995) note that thedecisions related to ownership are about the balance of control over flexibility. At thesame time it is not always so simple to exit from ownership as it is to enter.

5

Near the Manhattan side of Brooklyn Bridge just south of the current City Hall set aside for tanning in 1664.Remained for 275 years.

7


8/22

As the success of the Dongola increased additional supplies of raw material wereneeded. Staff were despatched to Australia to look for kangaroo and the companybegan looking all round the world for goatskins. The link into Brazil for goat skins wouldalmost certainly not have been considered had there not been a Booth shipping line

travelling there and looking for suitable cargoes. The speed with which theseconnections were made should be noted. They identify the value of the Booth networkat that time, with the structure in place to quickly set up arrangements in Sydney and toexploit their Brazilian shipping links to the full.

It is worth examining two network pictures of the Booths Company twenty years apart.

In the mid 1880s the Booth Company comprised:

a. export trade of skins to USA from UK, and elsewhereb. small tannery in Gloversville, profitable because of Dongola on kangarooc. fleet of nine ships

i. trading Liverpool Brazilii. trading skins Brazil to US and Coal, flour and softwood from US

to Brazild. London office (to have access to European skins), Liverpool office,

Boston office (US shoe trade centre), New York office (US leathercentre in the Swamp)

What can be seen here is that a number of links would be growing which brought the USoffices into direct communication with overseas suppliers of hides and skins. A network

outline is shown in Figure 3 with arrows showing the flow of goods.

The development and introduction of the Dongola process and of chrome tanning hadwithin 20 years changed the orientation of the Booth business. The company was nolonger based on the principle of middle men but rather by 1905 they were tanners withan HQ in Philadelphia, and trading as a subsidiary. The US became the centre of theleather activities and a partner relocated in New York, after many years of leavingmatters in the hands of Mr. Kuttner.

8


9/22

Figure 3: The Booth Co in the mid 80s

This situation is shown in Figure 4 as we move into the 1900s. Many more dyadicrelationships had developed around the New York office and between the US membersand the raw suppliers and customers.

Figure 4: The Booth Co in the early 1900s

Quietly and insistently Booths had adjusted their position in the network to becometanners as well as traders in the US business. Indeed they had become one of the most

significant tanning organisations in the world at that time and perhaps the only one withthe associated world wide knowledge and access to raw materials.

LiverpoolNew

York

Turneys

, Notts

Leicester

Bermon

dsey

Bootl

e

Glover

sville

Philadelphia

Boston

Swamp

Brazi

l

Sydne

y

Liverpool New York

Turneys

, Notts

Leicester

London

European

shoe trade

Glover

sville

Philad

elphia

Boston

Swamp

Brazi

l

Sydne

yUK shoe

trade

Bootl

e

9


10/22

Although this was done steadily and without great publicity, the moves made weredefinitive and positive.

In his study of digital imaging in Sweden Lundgren (1995) notes a number of points

which fit well with the development of chrome tanning. One major element he identifiesis that new technologies are often not commercialised until some decades after theirfirst invention. The gap with chrome was around 40 years.

More importantly for the network perspective he highlights three aspects:- the evolution of technology is a process of accumulation- technological innovation results from local search processes, elicited by

locally perceived problems- technical development is an interactive process

At the same time Lundgren notes that new technologies go through three stages ofgenesis, coalescing and finally diffusion. To allow the new ideas to be accepted in themarketplace there has to be a receptive group to accelerate matters. Booths mighthave been pursuing the corset solution, but they were also well aware of the localshoemakers need for lighter weight and water-resistance leathers, as they would alsohave seen the problem tanners were finding in accessing supplies of bark for theirvegetable processes.

As such when the process was ready for commercialisation by the kid tanners ofPhiladelphia, providing the receptive network which Lundgren argues is needed fordiffusion to succeed was a large group of US and subsequently international footwear

producers.

As well as a receptive base being required for dissemination a lot of diverse actors areneeded in the genesis and coalescence stages. While there is some evidence of braveattempts made in Germany and UK (Eglinton chemical company) they either came tomarket with a product too soon or more likely did not find any mini-network that wasprepared to encourage them.

The German chemical industry might have been expected to put more effort into thisarea as they had large amounts of chromium bi-products. Perhaps dyestuff were such a

young business and accelerating too quickly and successfully for them to need or want to

spend time on chrome tanning.

Taking a step back the Dongola tannage did not quite work out as expected although itsimportance should not be underestimated. It remained a profitable leather inGloversville until at least 1910 and was still in use in the UK until the Second World War.

Two conclusions come from this. First the Booth company quickly realised the value ofits network connections, and how adjusting them in various ways could allow it toreposition itself in the network. Second the company was aware of the potential of newtechnologies and that many of their customers were hungry for improved leathers.

The introduction of a successful commercial chrome lead Booths to an acceleratedperiod of networking. They moved to strengthen their existing relationships to goatskin

10


11/22

suppliers throughout the world and to the footwear industry in the US and Europe, andwherever it deemed it useful or necessary new relationships were established.

The World and the UK

As Dr Luck (1986) summarised: chrome tannage was discovered in Europe, developed totechnical maturity in America, and returned to Europe via England, and with the turn ofthe century began its unstoppable advance. For the last five decades of the 20th

century it can be estimated that approximately 90% of leather made throughout theworld has been chrome tanned. As such it has proven to be both a robust and adominant technology.

The transfer to Europe was not easy and Church (1971) bemoans the slow progress madein the UK. He notes problems with British Tanners attitude to scientific research andto an unwillingness to stray from a winning formula. H.R.Procter had in 1877 advised theTanners Society of Great Britain (idem, p561) in a paper entitled scientific researchand its relation to tanning of unfavourable comparisons between the attitude of Britishand European Tanners towards science. Church (p 563) notes that even by 1913 90% ofthe chrome tanned leather consumed in the UK was still imported. It was the need forhigh volumes of leather quickly produced to supply troops in the First World War thattransformed the industry, but still left the UK having moved from first to third in worlddominance of leather production and technological development. This despite the factthat a British company had funded and lead the commercialisation of the new chrometannage.

Tanners in Leeds were particularly important in the UK at that time and Church quotesRimmers paper on the reasons for their decline: "The core of the matter" said Mr.Rimmer, "was that the ageing gentlemen who owned old reputable tanneries were notespecially interested in new methods. They were emotionally committed to methodswhich had earlier made them successful". As Church puts it there was in effect ageneration gap; a demonstration of sheer entrepreneurial conservatism.

The traditional tannery business in the US faced more severe problems in the 1890sthan the vegetable tanners in Leeds. They had issues of over capacity, vegetable tansupply, and being squeezed between the abattoirs and the shoe customers who bought

their upper and sole leather. They blamed their weakened financial returns on the wayin which the hide trade worked and decided that by creating a large buying monopolythey could leverage their buying power to their advantage.

In 1893 some 70 tanning companies, representing over 100 individual vegetabletanneries, mostly oak bark tanneries from the Catskills, combined to form the USLeather Company. At $126m this was the largest ever US Corporation at that timeconsiderably outstripping the $106m valuation of Standard Oil. US Leather was one ofthe ten founding stocks of the Dow Jones Average (Donham).

Unfortunately for the tanners the abattoirs were so uncomfortable with this move thatthey started to withhold their hides when prices were low. Within a few years the

11


12/22

abattoirs had become significant tanners in their own right, as did one or two of theshoemakers who felt similarly threatened by the US Leather giant.

The US Leather business never made the profits expected and within 10 years was thesubject of a large court case and restructuring as shareholders fought over the

distribution of diminished dividends and the value of the bark yielding forestry assetsheld by the company.

Network Horizons and Networking

The methodology presented by Ford (2002) and shown in Figure 2 highlights the role ofnetwork pictures. Also every actor is embedded in a number of networks creating aunique profile for each actor, with its own viewpoint. Consequently an actor in thenetwork has a somewhat different position and attitude from the other actors.

As each actor in a network has a different picture of the network and they are likelyto have different objectives when planning to adjust their network position for somereason. A movement in an actors network position may include discontinuing some bonds,creating new ones, and strengthening others.

With networks being so complex, and with technologies and economies changing andevolving all the time even an actor attempting to hold a static position is subject to achange in network position over time. Hkansson and Snehota discuss this point anddevelop it to observe that when an actor chooses to adjust by making a number of small

positional moves, it does not take long before the whole network can look substantiallydifferent.

The understanding that actors have of their networks and their attitude to them isimportant here. In the Unitarian Networks based on Liverpool the actors did seem to becannily aware of the value of a wide, trusting and loosely defined network. They setfew limitations and boundaries on their networks. They appear to have had strongopinions and some vision. They do not appear to have tried to prejudge where or howtheir network should evolve. The young Booths were part of the network and givenadvice and training. Yet they do not seem to have been tightly controlled. It could beargued that in stopping them entering Rio or major trades certainly highly competitive

areas some of the Liverpool were stopping them from creating competition, but it couldequally be suggested as just good advice.

The network picture held by the Booth Company was very large. The network picturethey had of the business of leather, its trading and its technology, was one framedwithin an international trading and shipping environment. There is an apparent open-mindedness in their approach to business structure which seems to come from thoseLiverpool associates who gave them advice. This group was willing to share informationand give good advice even although there was a potential for rivalry, and much of thiscould be viewed as an interest to expand their own network pictures in terms of depthand breadth. They were certainly very open-minded and appear interested to view theirbusinesses as a wide network enthusiastic about the business of networking and tryingto avoid too precise positioning or control.

12


13/22

We can assume that both Leeds tanners and the US Oak bark tanners did review theirnetwork positions, but by intent or accident they chose to put a close horizon on thenetwork they examined.

Lundgren makes the point (p87) that networks can extend indefinitely, embracing thewhole world and suggests the needs for rules for setting boundaries. He argues for theuse of relevancy in this, but the problem for our UK and US traditional tanners relatesto the view of the business world adopted by the decision makers.

While one can argue that the extent of the network being viewed should depend on thenature of the decision being taken, why then was it that these two successful groupsappear to have missed both the potential changes likely from the introduction of chrometanning and the rapid globalisation of the industry?

In both instances the tanners were confining themselves to matters related to shortand middle term profitability and raw material supply and as such had chosendeliberately to put a very narrow boundary or horizon on their network

In the process of networking the actions of the three groups were quite distinct. TheLeeds tanners chose to take no action, and it is an interesting question as to whethertheir local customers collaborated in such a decision.

The US Leather members decided to tighten their horizontal links with each other andso reduce the number of dyadic relationships between them and both their suppliers andtheir customers.

Table 1 shows the aspects of networking as described by Ford et al (2003).

Table 1: The Three Aspects of Networking (Ford et al 2003, p 184)

Choices Coping Networking

The first aspect of

networking

Choices aboutworking withinrelationships

Coping with thefirst networkparadox

Conform or confront

The second aspect

of networking

Choices aboutnetwork position

Coping with thesecond network

paradox

Consolidate orcreate

The third aspect

of networking

Choices about howto network

Coping with thethird networkparadox

Coerce or concede

There is certainly a strong link between Booths success from 1853 to 1890 and their useof communication via their contacts and offices around the world. Offices were quicklylocated where they felt they would be beneficial. Shortly after the company began aBoston office was set up to deal with sales there, and when skins were needed fromBelgium and France Booths established an office in London where they could meetfrequently with the European traders in Mincing Lane.

13


14/22

At the same time a large aspect of working in the leather industry as factors involvedthe provision of credit to smaller firms on both sides of the Atlantic. Associated withthis was the need to be skilled in the movement of money between the US and Europe,at a time of fluctuating exchange rates. The hide and skin markets of the world are

notoriously volatile and they had to handle this while buying in Sterling and selling inDollars. After 1879 a gold standard was established but by then the Booth Companysunique network structure had given them skills which meant trading for hides and skinsin other more far flung parts of the world would be much easier than for theircompetitors.

To put it another way careful management of their network position and of therelationships within the network had significantly increased the barriers to entry forcompetitors. They were clearly defined by their network but continued to adjust theirposition in it to avoid losing flexibility for further action. They kept themselvescontinuously in a position that they could be creative in the development of theirnetwork position. They also appeared able to do so without creating a negative reactionfrom their customers so that they were able to work within their networks as buyersand sellers at the same time. In this regard and with regard to their original Liverpoolbusiness associates they certainly conformed to the open minded and trusting behaviourexpected of network members.

By comparison The US Leather Company appears to have caused aggravation throughouttheir network and at home and abroad (Dewing (1911) and Donham (1930)). Their chosenroute was to control the network and their strong action to do so was to become totallydestructive.

This is in part described by Sonza et al (2003) in relation to trust and commitment. Inthe way that the US tanners united to form a new business they deliberately reacted tore-align the network and confront the suppliers and the customers so as to change theeconomics in their favour. Thus while there were cultural differences between the USand the UK which Sonza argues need to be overcome for trust and commitment tosucceed in dyadic relationships Booths long presence in the US, history of fair trading,employment and commitment to local staff, and willingness to invest will have helpedthem to become adequately integrated into the US leather business. To Americanize, itis essential for the buyer and seller to get the habit of dealing with each other. Fineoffices and highly paid salesmen make it necessary to get higher prices for our leather

but do not of themselves sell it wrote Mr. Booth. All these aspects could be consideredas norms for international traders, and as such skills brought to the Booth network fromtheir trading and shipping links.

By comparison the US tanners confrontation of their customers and suppliers will havedamaged the trust which would have been built over 30 years.

For Booths the discovery of an efficient method of tanning by chemical means, firstDongola and then the much more solid chrome tannage, adaptable for hides andcalfskins, but of particular value in producing a cheap kid leather, created a hugeopportunity. Its development in 1890-1900 saw more progress in the art of leathermanufacture than in any decade in the world according to John (p 73).

14


15/22

Consumption of hides in the US from 1889 to 1899 increased 21% and sheepskin 39%,while goatskins multiplied by 1600%. It now became possible to use kid leather in allupper parts of footwear, where previously it had been confined to mere decoration andto the more expensive types of womens footwear. The production of this chemicallytanned leather became the specialty of the Philadelphia district, the process spreading

only slowly to other countries.

On the supply side they also had to continue their activities. With the growth indicatedabove they needed additional supplies and between 1895 and 1905 set up relationshipswith trading houses in India, China, Brazil, in addition to the establishments alreadymade in Australia and New Zealand.

With regard to customers Lilley and Skinner became the first English shoemaker to useSurpass chrome kid and by 1899 a warehouse in Bermondsey was added to the Londonoffice and agents established for selling the leather into France and Germany. In 1900arrangements were made for sales into Russia. In 1914 Booth equipped all its USsalesmen with motor cars to visit customers.

Booths continued technical advances. They had tried hard to improve the Dongolafurther to make it more widely applicable, without much success, and after introducingchrome they backed another new leather invented by a Mr. Wolff, also fromPhiladelphia. This patent leather type ran for a few years before they withdrew in 1904and accepted that their Ideal product had failed. They kept the brand name forfuture use.

As they saw the success of the export of the US leather to Europe and the failure of

European tanners to adopt chrome tanning the Booths then embarked on bringing thetechnology to Europe themselves, and over the next fifteen years they progressivelymoved with their existing partners and with new ones Wades in Nottingham for shoeleather and Pavlova in Abingdon for glove leather - to transfer the technology.Formulas and staff were sent from the US to help with this process.

By 1914 Booths had adjusted their network further into a Surpass Leather centricorganization. On the one hand they had consolidated with 27% of the shipping businessnow employed between US ports and half the distance traveled by the whole fleet was inUS waters. Acquiring raw materials and distributing finished leather brought them intotouch with all parts of the world.

They had also added interests in glue, gelatine and felt (all bi-products of the raw hideand skin trade) on both sides of the Atlantic.

By comparison much of the residual leather business in the UK and the USA wassuffering. In the UK tanners were unwilling to change from the old vegetable processesand decided to stay with the products and markets which they knew.

However while populations and footwear markets continued to grow the other uses forleather in harness and saddlery and industrial uses started to decline. One can considerthe Leeds tanners network picture between 1890 and 1900 and compare it with that ofthe Booths. The Leeds tanner would use local hides and mostly local chemicals, possiblyaugmented by some European tanning materials brought up the Aire by barge. He would

15


16/22

be selling into the local trade, and had been doing so successfully and profitably sincethe 1860s. His business network was defined, stable and successful. His network washis source of profit and security, but as defined in the first network paradox (Ford,2003, p 24) it could become the cage which entraps him.

As shown in Table 1 the Leeds tanner did have choices but would not want to disturb hisexcellent existing relationships, and based on his restricted horizon either would not seeor did not choose to create a different position for himself in the developing networksin which he was involved. Obviously these tanners were part of the leather industrynetwork, but they were also part of the transport business with saddles and harnessleather, part of the industrial business with belting and other industrial leathers, andpart of the footwear industry with soles and uppers.

All three were changing rapidly. In transport the horse and cart was being replaced bythe automobile and bicycle, in industry rubber belting was found to be better thanleather, and in footwear leather soles were under attack from synthetic or compositionmaterials. And with lifestyle changes footwear was needed softer and lighter, hencethe enthusiasm for chrome tanning.

Contrast the network picture from the Booth position, surveying the evolution of theleather industry embedded in their trading and shipping businesses, and linked to theirknowledge of and investment in technical progress and innovation.

Based on this wider network picture Booths were able to continuously adjust theirnetwork position, and expand the network size to fit the demands and changes of thedifferent areas of the business. Some relationships diminished in importance, and in

some instances were terminated, as with Wolff, but others were strengthened andemphasized. They were willing to create a new network position if they felt a new areawas of importance and they would do this by new partnerships, strengthening weakrelations, or acquisitions. Whereas the Leeds tanners had become defined by theirnetwork position Booths became empowered by theirs.

The situation for traditional US tanners was somewhat similar and Donham (1930) makesit clear how difficult the first decades of the 20th century were for US tanners withrampant overcapacity and loss of market volumes. Between 1914 and 1926 sole leathervolumes declined by 25%, harness leather by 60% and belting leather by 12%.Competition from substitutes fell hardest on the heavy leather industry. This big

decline led to overcapacity in an industry already beset by problems of fluctuating rawmaterial prices a number of tanners have expressed a preference for poker.

Donhams influential analysis was quite scathing. He thought many tanners were doomedto failure because of ownership, age and product line. "There are still many privatelyowned small and scattered tanneries," wrote Donham in 1930. Generally speaking theyare old, inefficient, and useless for any purposes other than the manufacture of high-cost, low-quality leather. They could not be sold except at enormous capital loss . . .Members of the family eke out a satisfactory living from salaries, and family pride isstrong, the business having been handed down for generations . . . [Donham 1930:479]

Again this was against a background of a 10% increase in the shoe production in the USand a 20% increase in population. So while tanners like Booths continued to make their

16


17/22

mark on the world scene with the new chrome leather those who had a more limitednetwork picture struggled. When US Leather decided it could control the raw marketby establishing in 1893 they did not take into account that they were as much controlledby their relationships as in control of them. Instead of being in control of theabattoirs selling them hides the Packers retaliated and refused to sell when hides were

of low value. Instead they stockpiled while they built new relationships with thechemical company and technology houses, allowing them to start tanning themselves. Intrying to force a reduction in capacity and stabilisation in hide prices US leathermembers had led to an increase in capacity and no benefit in supply. Not only did thepackers react and move into tanning themselves, so did some of the shoemakers. As wehave noted earlier the United States Leather Company spent most of its first ten yearsin the courts fighting shareholders over the distribution of diminishing assets.

CONCLUSIONS

The third network paradox (Ford, 2003, 31) says that the more a company strives tocontrol its network the more it becomes controlled by it. For the 70 years we havestudied it is apparent that Booths tried to maintain a loose but co-coordinated networkable to be responsive and innovative. To some degree they saw themselves as being inthe business of networking.

Booths stated policy in 1920 was to have a widespread but generally inter-connectedbusiness, which provides a well balanced structure. Added to that must be put theircontinued flexibility within a wide vision of their area of activity, and dynamic approachto adjusting their position within their network and their dyadic relationships within it.

It would appear that they understood Blankenbergs (1992) fourteen categories and newwell how to consider the opinions and likely actions of suppliers and customers and theirsuppliers and customers. With Schultz and others they were willing to bring inconsultants and other outsiders who could bring a new perspective to the technology,and they ruthlessly used government organisations, banking services and the diplomaticservice to help and advice in their global development.

One interesting aspect is the thought that family hierarchies and tight social groupingswith similar viewpoints, but with individual network pictures, might be particularlycapable of evolving a business network into one which is both unique and creative. Thiscould be an appropriate way to study the large Indian family businesses such as the

TATA group, or the Chinese family and guanxi way of working.

It is also apparent that a business, even one who might be classed as networkconscious, needs to look at a great number of networks and be aware of developments inall of them. This network auditing would help them prepare for future structural,industry, or market changes.

If the tanners of Leeds had been more watchful of events in their transportationnetwork, industrial manufacturing network, as well as their own leather industry networkthey might have foreseen changes in time to move over to chrome tanning and into newmarkets. As it was, they found themselves trapped in rapidly declining markets. Theydid not have the linkages to new markets or to new technologies needed to secure theirfuture. A strong tanning industry did survive in Leeds and still exists in the 21st century,

17


18/22

albeit reduced in size. But these were born of new factories set up mostly after theFirst World War to meet the continued demand for chrome tanned shoe leather.

The US Leather Company did not survive in the Dow for long. In its network activity itfailed to eliminate competition, failed to stabilize prices, and lost a good deal through

the inflexibility which its size brought to it.

There is considerable evidence that had these same US tanners had a different networkpicture and looked more to exports, product development and to marketing the outcomeswould have been different.

One important question flows from the number of times the decline of businesses islinked to the age of the senior executives. The Clyde shipbuilders, the Leeds VegetableTanners, the US Oak Bark tanners have all been described as elderly and unwilling soaccept the need for change in businesses that had been successful for some decades.We have many instances in life of elderly people being indeed more aware than their

juniors for the need for change. Is there something else happening as businesses nearthe generational change which leads businesses to slip into the negative and destructiveaspects of the three network paradoxes?

Michael Redwood October 2003

REFERENCES

Allan, J, (1995) Traditional Glazed Kid Manufacture a Lost Art in the UK. JSLTC, 79,Sept-Oct 1995, No 5, 135

Anderson, Hkansson, and Johansson (1994) Dyadic Business Relationships within aBusiness Network Context. Journal of Marketing, Vol 54, pp. 42-48.

Blankenberg, Desire (1992) Kopplade Relationer:Industriella Network. Licentiate

thesis, Uppsala University

Church, R.A., (1971) Church, R.A. The British Leather Industry and Foreign Competition,1870-1914. Economic History Review, 2nd ser. 24 (4), pp. 543- 570. 1971

Dewing, Arthur S. (1911) The United States Leather Company And Its ReorganisationQuarterly Journal of Economics, Nov 11, Vol. 26 Issue 1, p68, 37p;

Donham, Richard (1930) Problems of the Tanning Industry. Harvard Business Review 8(4,July):474-479.

Dosi, G et al (1988) Technical Change and Economic TheoryPinter Publishers, London andNew York

18


19/22

Ford, D, Gadde, L-E, Hkansson, H, Snehota, I, (2003) Managing Business Relationships,2nd Edition, Wiley and Sons Ltd.

Grnroos, C (1990) The Marketing Strategy Continuum: Towards a Marketing Concept

for the 1990sManagement Decision, Vol 29 No 1 pp 7-13

Hkansson, H and Snehota, I (1995) Developing Relationships in Business Networks,Routledge. London

Hkansson and Ford (2002)

Holmen, E, Pederson, A, (2001) Knowledge and Ignorance of Connections betweenRelationships. IMP Paper, Oslo Conference

Hoover, E.M. (1937) Location Theory and the Shoe and Leather Industries, HarvardUniversity Press

John, A.H (1959) A Liverpool Merchant House, Being the History of Alfred Booth andCompany 1863-1958 George Allen and Unwin, London

Luck, W, (1986) The History of Chrome Tanning Materials, Journal of the Society ofLeather Technologists and Chemists, Vol 70, p 99-103

Lundgren, A (1995) Technological Innovation and Network Evolution, Routledge, Londonand New York

Sanzo, J, Santos, L, Vazquez, R and Alvarez, L. (2003) The Role of Market Orientationin Business Dyadic Relationships: Testing an Integrator Model. Journal of MarketingManagement, 2003, 19, pp73-107

Schwerin, J. (2003) The Evolution of the Clyde Regions Shipbuilding Innovation Systemin the Second Half of the 19thCentury, Journal of Economic Geography, forthcoming

19


20/22

Appendix 1

Time Line for the Booth Group

1812-1815 Napoleonic War of 1812. Commodity prices fell and stayed low for a long

time1850 Alfred apprenticed to Lamport and Holt, well known Liverpool merchant house1850s Liverpool merchants began to replace sailing ships with small steam ones1857 Alfred Booth went to New York. Worked for Liverpool merchants Rathbone & Co1859-1862 Bad harvests in UK lead to food imports from US through to 651860 Elder Mr Booth died1860 Walden (USA) and Alfred Booth (Liverpool, UK) founded company to import light

leather from UK to USA, 57 Broad Street, New York1861-1865 US Civil War1863 Walden becomes incapacitated and Walden and Booth dissolved.

Alfred Booth and Company, Liverpool and Booth and Company, New Yorkestablished. This New Booth partnership formed, shipping light leather to US.Two products: Sumac tanned sheep from Bermondsey for shoe uppers, andpickled grains and fleshes from Turneys of Trent Bridge, Boots of Leicester, andJohnston at Bootle

1863 Issue of confederate loan1863 Open office in Liverpool 5 India Buildings1864 Decided to enter the steamship business. Plan to sail to North Brazil ports,

Cear, Maranham, Para (now called Fortaleza, So Luiz, and Belem): returncargoes would be cotton, sugar and coffee. Plus a mail contract if possible. Theconstruction of two steamships, the Augustineand the Jeromewas planned

1865 Booth US trade had a good year1865 Turneys agreed to ship to US on consignment1865 Contracts placed for first 2 Booth ships, Augustinelaunched1866 Feb 15th first Augustine voyage to Brazil Voyage lost GBP3 but obtained 10k

annual contract for mail from the Brazilians1867 Brazil/Paraguay War ends1867 Alfred Booth married Lydia Butler1860-1890 US population doubled1869-1871 Alfred Booth stayed in the US1870 Franco-Prussian war breaks out1870 Charles married Mary Macaulay

1870 Office opened in Boston to build on success of Roan business (pickled foreignsheepskins) 141 Purchase Street, Boston. Mr Gaenslen went to be manager

1877 Office opened in London to deal with French and Belgian sheep suppliersFenchurch Street

1877 Kent and Stevens tannery in Gloversville hit by Stevens fraud. Booths owed$70,000. Booths pay off creditors and back John Kent. John Kent is theleather scientist who developed fatliquoring and the Dongola tannage

1879 Problem of unsold stocks of roans lead to opening of showroom in New York,Frankfurt Street

1879 Dongola tannage successful and Booths began buying dried goat and kangarooskins for it

1879 Liverpool offices moved From 5 India Buildings to 14 Castle Street

20


21/22

1880 Launch of Daisy Kid Cear goat tanned with Dongola Tannage to make animitation kid

1880 Augustus Schultz started work with Julius Kuttner in Booth Gloversville onperfecting chrome tanning

1881 Booth Steamship Co Ltd formally incorporated, began looking at Brazil-New York

Trade1882 Nuneaton Leather Co founded when Booths needed to make something out of the

roans1884 Augustus Schultz had two chrome tanning patents issued1886 John Kent died1887 Alfred Booth retired1889 Schultz two chrome patents passed to Franco-American company Messrs

Blumenthal Blumenthal then passed patents to Marcus Beebe and R.Foederer& Co in Philadelphia.Philadelphia tanners began working widely in chrome

1890 First serious marketing of chrome tanned leather under the brand name"Surpass" by Booth and Company in a joint venture with J.P.Mathieu ofPhiladelphia USA. (A small production under the name Vici kid did precede it)

1893 Formation of United States Leather Company, the largest US Company everformed

1894 Booth Gloversville tannery started chrome tanning for goat and kangaroo1896 Daily output at J.P.Mathieu rose to 600-700 doz1898 Daily output at J.P.Mathieu rose to 1000-1200 doz1898 Introduction of enamel process by George S Wolff to copy patent leather. Sold

by Booths as ideal. Wolff Process Leather Company, Summerdale Station,Philadelphia & Reading R.R. "One of the greatest and finest leather factories in

the world, especially equipped for producing "Ideal Leather," a non-breakableenamelled leather patented by George S. Wolff, founder and president of thecompany. The entire output is handled by Booth & Co., N.Y."

1899 Warehouse set up for Surpass UK and European sales in 50, St Thomas Street,Bermondsey.

1899 Joseph Turney Wood discovers artificial bates1902 Sales office opened in St. Louis (701 Lucas Avenue) to deal with the growing

shoe industry, quickly followed by Cincinnati and Rochester1903 Daily output at J.P.Mathieu rose to 15001904 Booths supported building Wolff Process Leather Company. In Summerdale

near Philadelphia

1905 Booths move to complete purchase of J.P.Mathieu and change name to SurpassLeather

1915 Lusitania sinks in the Atlantic and was likely attacked since carrying arms underthe name of Booth sheepskins. Paul Crompton and his family were on board. Hewas VP of Surpass Leather Company, and a partner in the firm of Alfred Boothand Company and a director of the Booth Steamship Company

1920 Booth established UK links to Pavlova Leather a gloving tannery in Abingdon,Wade and Co in Nottingham to chrome tan kid for the boot and shoe industry,and consolidated and interest in glue and gelatine through a holding in B. Cannonand Company. Lincoln.

1920 British Leather Manufacturers Research Association Founded1921 Alfred Booth and Company purchases the Pavlova Leather Company of Abingdon,

England.

21


22/22

1922 Tanners Council of America established in New York1938 Gloversville closed

Strike in Gloversville1942 Gloversville buildings sold1948 Booth purchase Melrose Tannery in Beverley, Yorkshire

The New Chemical Tannage Three

Documents

Transcript of The New Chemical Tannage Three