In the glow of a red laser light, Ulysses Delgado watches a sophisticated machine turn a leather hide into pieces for a truck interior, cutting around all the misadventures that befell that particular cow — the branding burns, barbed wire scars, insect bites.
The Lectra Versalis cutting machine, recently installed at Katzkin Leather Inc., wastes less leather and requires less energy to run than older versions, said Delgado, an engineer at the Montebello company. But mostly, Delgado loves the speed.
"Twice as fast as the other cutters we have," Delgado said. "Like magic."
Katzkin is betting that its new cutter will boost productivity and propel the company to its best sales in its nearly 30-year history of making seat covers for cars, trucks and sport utility vehicles.
At more than $500,000, the machine purchase represents a huge investment for the 400-employee company, but it's only the first phase.
"We have stepped up in technology," said Mitch Hubbard, Katzkin's creative director. "We have four other older cutting machines. We are going to phase them out and we'll be doing twice as much work."
Katzkin is doing what a lot of other U.S. manufacturers have been avoiding: buying more sophisticated machinery to boost production.
That's one reason, economists said, why U.S. productivity has shown such tepid gains. The productivity of U.S. workers increased at an annual rate of 0.5% during the first quarter of 2013, the Bureau of Labor Statistics recently reported.
"What U.S. manufacturers need to do is compete on productivity," said Cliff Waldman, senior economist with the Manufacturers Alliance for Productivity and Innovation. "Other countries compete with cheap labor. We have to be more productive. If you want that, you have to innovate."
Jordan Speer, editor in chief of Apparel Magazine, has seen the Lectra Versalis in action.
"An automated machine like this," she said, "can really give a company an advantage by saving labor costs and material costs."
Savings are important to Katzkin executives, who are constantly fending off lower-cost competitors in the U.S. and abroad, said David Giddings, the company's marketing vice president.
The business model for the company is to provide affordable luxury for car buyers who aren't willing to settle for cloth seats but don't want to upgrade to higher-priced models with luxury interior packages. Advanced machines enable Katzkin to make a high-quality product at a just-in-time manufacturing pace, Giddings said.
"We know more customers want leather, but feel they can't afford it," Giddings said. "This is why we exist. There is a huge potential market out there, and we have only scratched the tip of that iceberg."
Katzkin's leather packages, which include the seats, side panels and center console, have a suggested retail price of $1,995. The company is projecting record sales this year of $73 million, up from $53 million in 2009.
But cost is only part of the equation. If a prospective buyer asks for a leather interior in a showroom car that came with cloth, speed of delivery is crucial, Hubbard said.
"The simple truth of it is that the dealership feels they have to have the leather immediately," he said. "The salesman feels 'You are interrupting my sale. Get me the leather before the customer changes his mind.' So, we have to fill that order fast."
Katzkin orders made in the morning at a car dealership are usually ready for express air freight shipping later the same day. Customers also can order Katzkin interiors through its website and get them installed through a network of 2,000 operations across the U.S.
"Every order is made up of 200 parts that have to be cut, combined, sewn, inspected, packed and shipped," Giddings said. "All of that has to take place within several hours."
Katzkin supplies leather interiors to automakers such as Chrysler, Ford and Dodge as well as retailer CarMax Inc. A deal made with Rawlings Sporting Goods Co. enables baseball fanatics to have a baseball-glove-colored leather interior with the Rawlings logo.
"Automakers spend a lot of time thinking about the outside of a car," said David O'Connell, Katzkin's chief designer. "But that's not so important. It's like dating. The interior is like marriage. It's where you're going to be spending most of your time with your car."
Katzkin's employees make 500 to 800 leather interiors a day in the company's 130,000-square-foot factory, but the process doesn't start with the cutters.
First, the hides, which come from South America, are hung on wooden supports to remove wrinkles.
Hubbard said that only the faces of their product are leather. The sides and the back are vinyl, with a grain added to match the leather. Foam of varying thickness is also used.
Supplementing the machinery are 22 teams of four to six sewers and assemblers. Hubbard said the teams "specialize in certain patterns only. They might do all of the Toyota cars. They are experts on those particular patterns."
The last step is the embroidery department, where personalized logos, crests, state flags and more can be added.
"You don't have to settle for a boring interior," Giddings said. "You can have an affordable design that matches the personality of your vehicle."