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Latin CEO: Executive Strategies for the Americas, August, 2001 by Sally Bowen
IN THE LOFTY SHEDS of the Arequipa-based Michell textile factory -- the world's largest alpaca-spinning plant -- nimble-fingered Andean women bend age-old skills to a traditional task: sorting fleece by touch. They swiftly pick through bales of the rough, unwashed fiber, rolling it between their fingers and tossing it into different piles.
Most of the women have grown up alongside alpacas, one of South America's several variations of camel. Hundreds of thousands of peasant farmers in Peru's high Andean departments of Puno and Junin depend on the animal both for the occasional cash its fleece earns and for meat, an otherwise rare commodity at their tables. For first-world consumers, alpaca is one of today's most desirable fashion fabrics.
Alpaca comes in about 18 natural shades, ranging from snowy white to camel to jet black. The fiber is classified in microns -- baby, which makes the softest, lightest and most expensive garments, is in the 22-23 micron range, while coarser varieties like huarizo can go up to 30 microns. The average human hair is around 100 microns, underlining the expertise of the sorters.
"This is what makes alpaca different from most other textiles," says Gonzalo Zuniga, Michell's operations manager. "We combine traditional skills with modem technology Both are equally important."
CEO Michael Michell, son of company founder Frank Michell, is often seen in the sheds, chatting with sorters. His British accent makes him an unlikely standard-bearer for a characteristically Peruvian product. But Michell, like his pioneering father, has the Andes in his blood.
Frank Michell came to the Peruvian highlands following World War I, during which he served with Britain's Royal Flying Corps. He was originally attracted by chinchillas, whose fur made fashionable coats at the time. In Puno, 15,000 feet above sea level, he became a hunter and trader, bartering alcohol for alpaca skins with the local Indian population.
Through visits to the "big city" of Arequipa, Frank Michell formed a business relationship with Casa Stafford, southern Peru's main alpaca exporter and general trading house since 1823. Years later, he married Stafford's daughter and settled down in Arequipa. By the late 1940s, Michell had set up his first alpaca combing and spinning mill with machinery imported from Britain. Most of his alpaca fiber was destined for the textile mills of northern England.
Today in the city of Arequipa, the name Michell is synonymous with alpaca. Michael flirted with other business ventures, but alpaca always pulled him back. Three years ago, he gave up a major interest in Coca-Cola's local bottling operation to return to his family roots as CEO of the company his father began. Since then, he has consolidated more than half-a-dozen plants scattered around the Arequipa-Tacna area into one re-engineered operation. He also purchased Mallkini, a vast alpaca ranch located more than 4,000 meters above sea level in the hinterland of Puno, which Michell uses to genetically improve alpaca stock. Last year the company's revenues reached US$32 million.
Efficiency and competitiveness have sharply increased. The company has introduced a quality program; the same combing and spinning machines that produced 170 tons of fiber a month three years ago are now churning out 350 tons. While textile machinery has changed little, computers introduced over the past three years now allow Michell managers to measure exactly how one machine or one operator performs against another. Computer monitoring means machine operators are rewarded for exceptional productivity -- with a crate of evaporated milk. "It's popular with the men because their wives see they've done well," Zuniga explains.
Michell, say his managers, is the company's biggest asset and an unusual CEO for Peru. "He knows alpaca through and through but he knows other businesses, including banking. He shares that knowledge with us, and it helps us become better managers," says Zuniga.
Michell has several other business sidelines. Currently he's turning around a sugarcane business, which was formerly a state-owned cooperative, near Arequipa. He also has a vending machine business and a cochineal dye processing company.
But alpaca remains the core of the Michell empire. "I love it," says Michell. He admits, however, "Peru still scares me. There are so many opportunities; you can really build something. But there are no exits. Who'll want to buy from you if you want to get out?" That's one reason, perhaps, that so many Peruvian businesses are still passed from one generation to another.
COPYRIGHT 2001 Americas Publishing Group
COPYRIGHT 2003 Gale Group | 
