Connolly Leather Fights Back You don't have to buy a Rolls anymore to get it

LONDON - Anthony Hussey is a funny guy. With his British accent and a gentleman's charm, he is always ready with a witty phrase. For instance: "We don't really have a family tree - it's more like a family bramble."

When his family business, the renowned U.K.-based Connolly Leather, was struggling with the concept of JIT (just-in-time) delivery, he came up with the term "NQIT," for "not quite in time."

Here's another gem Mr. Hussey delivers with a perfectly straight face: "If you have proper leather in a car there is no doubt about it that you should drive stark naked because it's the only way to truly appreciate it," he says. "But it's impractical."

Humor is a good thing, but it only gets you so far in the auto industry. Mr. Hussey, a director at Connolly, knows this. Until recently, life at Connolly Leather was downright gloomy, even for a company that appoints the world's finest automobiles (Rolls-Royce, Aston Martin, Bentley and Ferrari), the Concorde and British Parliament with top-grade leather.

Much larger U.S. leather suppliers, including Eagle Ottawa and Seton, were horning in on Connolly's hallmark automotive business by expanding their European presence. Connolly had even lost Rover business to Eagle Ottawa after BMW AG bought the British carmaker in 1994.

Connolly decided to fight back by expanding at home and abroad and by offering leather for high-er-volume, lower-priced vehicles. The company opened a plant in South Africa 18 months ago and just started building a new plant in England that can easily finish 20,000 hides a week.

The strategy is working so far. New U.S. business is coming in: Dodge Viper, Pontiac Bonneville and, most recently the Lincoln Continental, which had been supplied by Eagle Ottawa. And Connolly also has regained some Rover business.

Connolly will expand its relationship with its biggest customer, Jaguar, when it supplies leather for the new high-volume S-Type sedan.

Now is a good time for any company supplying leather interiors for automotive, at least in the U.S. The number of passenger cars equipped with leather seats rose sharply from 15.7% in 1997 to 21.1% last year, according to WAW sister publication, Ward's Automotive Reports.

Mr. Hussey estimates that the auto industry worldwide consumes about 2 billion cowhides a year. And the forecast is decidedly upbeat. Leather prices have been going down, making the material available on a growing number of lower-priced vehicles. Yet it still has the panache of a high-cost extra. And companies such as Eagle Ottawa are pitching bold textures and bright colors in a bid for younger, or more adventurous buyers.

In this era of consolidation, it's surprising that Connolly has remained independent and family-owned so long - for more than 100 years. Five years ago, Eagle Ottawa made an unsuccessful bid to buy Connolly.

But how is it that Connolly can compete with Eagle Ottawa on price and even win the Continental business? Surely, it was not easy - nor very lucrative - given the exchange rates against a strong British pound.

Actually, Mr. Hussey says Connolly has always been price-competitive, but only its rarefied customer base knew it. Potential new customers have been finding Connolly's low bids surprising, he says.

And Mr. Hussey has been finding out how nice it is to laugh once again.