By Mathu Jeyaloganathan, Undergraduate student at the Richard Ivey School of Business
The underlying principles of recycling and their relevance in a business model can be used to revive local economies.
The concept of reusing human resources and abandoned physical assets if applied correctly can be the catalyst towards increasing economic activity. Archer Groupe located in Romans-sur-Isère in Drome, France is a prime example of a successful application of this unique concept.
The past 30 years has seen the emergence of recycling as a method to help save the environment. The basic principle of recycling is the idea that unused products or waste can be processed into something useful. Local and national governments, NGO's and private companies have all demonstrated some level of commitment to recycling, whether it has been through the implementation of citywide recycling programs, or the encouragement of employees to use reusable water bottles. With all its success, maybe the notion of recycling shouldn't just be restricted to the environment - maybe it is time to start looking at recycling as a method in which to save local economies.
Romans-sur-Isère was once a town that thrived on the luxury shoe manufacturing industry. Major luxury leather shoe companies used the town as a location for production, employing residents and equipping them with specialized skills and techniques needed to succeed in the industry. However, companies have realized the advantages of outsourcing production to countries that provide substantially lower labor costs. Slowly but surely, almost 200 manufacturing facilities were shut down in Romans-sur-Isère, leaving many locals unemployed.
Many cities and towns that once developed around a single company or industry often find it very difficult to reinvigorate their local economy once companies leave town. Residents migrate to other towns to obtain work elsewhere, and slowly the local demand for goods and services decreases. The local economy shrinks and keeps on shrinking. However, this was not the case in Romans-sur-Isère.
In 2007, Chevalier bought the remnants of a luxury shoe manufacturing facility. He recruited local residents with specific skills to work in the factory, producing luxury leather shoes and sold them through the Archer Groupe brand Made in Romans. The shoes are marketed as ethical luxury shoes, focusing on conveying the message that Made in Romans shoes are produced in France by French people. With the recent emergence of trends in sustainability and ethically sourced products, the company has had much success, with demand for their products exceeding the supply in the last few years.
Previously on the cusp of collapse, the local economy now has some fuel. Christophe Chevalier used the basic principle of recycling to create a business model for a social enterprise. He took existing physical assets that would have otherwise been completely unused and combined them with human assets to create a completely new enterprise. The company he created offered employment opportunities for specialized workers while at the same time creating a profit that could stimulate the local economy.
A business model based on recycling old assets, if applied correctly, has the potential to create new opportunities in many local economies that are faced with a similar situation to Romans-sur-Isère.
This two part series will continue with an analysis to see whether similar business models can be used to invigorate an economically crawling town in southern Ontario, Canada, which heavily relies on the automotive industry.
Mathu Jeyaloganathan is a writer for Student Reporter. We are a journalism incubator and online media outlet, providing media coverage of events and featuring current topics in management and economics around the world.
This post is part of a series produced by The Huffington Post and the Schwab Foundation for Social Entrepreneurship, in recognition of the latter's Social Entrepreneurs Class of 2013. To see all the post in the series, click here.
For more of our work, visit us on studentreporter.org.