Bags of cash from cast-offs Green credentials: Daniel (left) and Markus Freitag say the use of recycled materials has been key to their brand In a high-ceilinged factory in Zurich, old truck tarpaulins are being spread out to be cut up and stitched into idiosyncratic, colourful bags. Destined for sale across Switzerland, the rest of Europe and more recently Japan and the US, their popularity has spread far beyond the cycle couriers who first appreciated their practical stylishness and ecological appeal. Daniel and Markus Freitag, the two brothers who founded and run the company that designs and makes the bags, expect this year's sales to reach about 300,000 items - including some computer and phone cases. IN Entrepreneurship "People like us for various reasons," says Daniel, at 41 the older brother by a year. Our buyers tend to be urban types, often working in the creative industries, like advertising or graphics. They like our functional design and appreciate the quality that comes with manufacturing in Switzerland. The brothers say Freitag's green credentials are also a crucial factor in its success. As well as the tarpaulins, almost all the materials they use are recycled, while each workspace in the factory has its own bicycle rack. Customers know we don't advertise or spend money on celebrity endorsements. They recognise and appreciate the honesty of our range," Daniel says. Dressed casually and with the lean physique of keen cyclists, the brothers are speaking next to a small staff kit­chen at the factory. Eating tangerines rather than biscuits with their coffee, they explain how they steadily built a highly labour-intensive business employing 130 people not in low-wage Asia or economical eastern Europe but in Switzerland, where pay is about as high as it gets and the Swiss franc has long been a one-way upwards bet. One Freitag bag is in the permanent design collection of the Museum of Modern Art in New York. Developing a cult status has been essential to overcoming the disadvantages of manufacturing relatively low-priced items in high-cost Switzerland. In fact, the Freitag story is not unlike that of Swatch watches - a relatively inexpensive Swiss product that should, in theory, have been manufactured elsewhere. As with Swatch, many Freitag owners develop strong affinities with the brand and build up collections, pay more for certain styles or bespoke versions and communicate regularly with the company and fellow owners online. Freitag's contrarian, anti-establishment image is underpinned by a genuine ecological commitment. Both founders are committed to green issues and still cycle to work. Neither has altered his modest lifestyle. Profits have been reinvested in the business because the brothers wish to retain independence and eschew outside financing as far as possible. "Our biggest initial investment was SFr2,300 - our combined savings at the time - for an industrial sewing machine," says Daniel. Later, the brothers borrowed SFr20,000 from their parents to fund expansion. A Freitag messenger bag Only twice have they resorted to a bank loan: first to finance their landmark store in Zurich, which comprises a stacked pile of freight containers, and more recently to help equip their new factory. There are now nine stores, including outlets in New York and Tokyo. Profits are a carefully guarded secret but revenues this year seem likely to approach SFr30m. The brothers got the idea for making bags out of old tarpaulins nearly 20 years ago. "We were both keen cyclists but suitable waterproof bags weren't available," says Markus. His brother takes up the story: "I was studying display advertising, Markus was on a course in graphic design. His shared student flat looked over the Zurich flyover that carries much of the transalpine truck traffic. Somehow, seeing all those trucks, and knowing there was a gap in the market, inspiration bloomed. They approached hauliers for worn vinyl, which the brothers washed in the bathtub at Markus's flat - to the dismay of fellow residents. Friends helped cut the material to a pattern and sew it into tough, distinctive and unusual bags. Business grew briskly by word of mouth. Then, after a write-up in a local newspaper, the brothers approached retailers and the idea caught on more generally. Maybe it was a bit like worn jeans. I call it the beauty of imperfection," says Markus. It would actually be much cheaper to make bags out of new vinyl. But people seem to appreciate the patina of wear and feel good about buying something recycled. Basing the product on a second-hand material certainly complicates manufacturing. Superfluous items such as buckles and belts are removed by hand from the tarpaulins, which are cut into strips and washed in industrial-scale machines that are a far cry from that original bathtub. Once dried in equally massive driers, the vinyl is cut to pattern and stored in colour combined batches. The original bag from the Fundamental line, which is still the best-selling, has since been complemented by a more expensive and more obviously fashion-influenced range, the Reference collection. The new line is less colourful and eschews the basic range's utilitarian Velcro fasteners and straps made from used seat belts in favour of recycled metal buckles and vinyl handles. But a key sales pitch for all the Freitag bags is that no two are the same. Even today, with output spiralling, each item is unique - thanks partly to the use of bits of text or logos that come printed on the original tarpaulin. Although prices for the basic line of bags and accessories range from SFr25 ($27) to SFr398, the Reference collection ranges from SFr75 to SFr560. The lack of outside finance has not impeded growth. Sales have risen by a steady 20-25 per cent a year after the initial take-off. Profits have been more variable, but adequate for their self- financing ethos. "It has always been crucial to us to remain as independent as possible," they say. The stress on independence has, however, been tempered by some management realism. Daniel is more focused on commercial matters, while Markus's attention is more on the conceptual side. "We function in different ways, and are different characters, but we complement each other," Markus says. But both realised early on the wisdom of having someone besides the founders to run the day-to-day business. In 2000, when they employed 12 people, they appointed their first chief executive. "We decided we should focus on the creative side and on supervision," says Daniel. We are co-owners and comprise the board. But although there were no problems, we thought others might be better qualified operationally. Their first CEO, Immanuel Streuli, former head of production, stayed 10 years. Freitag's biggest constraint on growth is finding enough suitable tarpaulin, especially in the more exotic colours or designs. No fewer than three employees are devoted full-time to finding raw materials, including by hanging around in truck stops. "Access to the raw material has always been our biggest barrier," the brothers say.