Sustainability and vertical integration

Here’s an interesting story at the intersection of supply chain strategy and sustainability. The LA Times reports that Taylor Guitars has bought an ebony mill in Cameroon (Taylor Guitars buys ebony mill, pitches sustainable wood, Jun 7).

For Taylor Guitars, which has used ebony from Cameroon for many years, the chance to ensure a steady supply of legal ebony was too good to pass up, Taylor said in an interview.

The company teamed late last year with Madrid firm Madinter Trade, which sells tone woods for musical instruments, to buy the Crelicam mill outside of Yaounde, the capital of Cameroon. The purchase wasn’t officially announced until late last month.

Taylor said it’s been a difficult process bringing the mill’s wood sourcing and operations up to what he and his partners consider acceptable. The mill’s subcontractors, for example, typically cut down 10 trees to find one with all black wood, Taylor said. He agreed to boost their pay to get them to deliver that ebony that had been considered undesirable.

There are some interesting motives behind this move. 

One is simply regulatory compliance. One of Taylor’s main competitors is Gibson Guitars and they have been raided multiple times because the Feds have suspected they have knowingly imported illegally harvest wood. (Gibson has vehemently denied these allegations.) Stepping in and buying its supplier allows Taylor greater visibility into where its materials are coming from and (presumably) prevents fewer disputes with Federal officials over whether the all rules have been followed.

A second issue is just making sure that they can get materials they need.

Ebony and other exotic woods coveted for building musical instruments are also among the world’s most endangered and protected… ”We are living in a time when almost all of the wood species we use in guitars are stressed beyond belief,” said Taylor, who co-founded Taylor Guitars in 1974. “It’s almost like we have an obligation to do this.”

This is not dissimilar to Tiffany’s backward integrating to assure its supply of diamonds (see this post). A key difference, though, is that Tiffany’s is not banking on redefining what customers expect in a diamond. Taylor is looking to educate guitar players about the properties of ebony.

Ebony is the wood of preference for the fingerboards of guitars and other stringed instruments. Once fairly widespread in the Americas, Africa and Asia, most mature ebony trees in India, Sri Lanka, Indonesia and Madagascar have been removed, according to Greenpeace, which blames the depletion on global demand from a variety of industries combined with poor forestry practices. …

In the case of ebony, for example, if a tree is cut down and if the wood isn’t the deep black that customers prefer, “they just leave it. To them, it’s no good,” said Scott Paul, who ran Greenpeace’s forest campaign for 14 years before leaving recently to take a job at a biotech company where he is exploring alternative uses for bamboo.

Who knew that the color of ebony wood varied so much? According to Taylor, the color does not impact its acoustic qualities. Thus they can get their mill investment to really pay off it they can convince customers to accept more variation in the color of fingerboards and loggers to bring in — as opposed to abandoning — off-color logs.