2016 in review – Leather industry experts take stock4 December 2016
Leading figures from across the international leather industry detail to Leather International how their companies fared during the last 12 months of mixed fortunes, and make their predictions for the new year.
Lectra’s partners were able to deploy wide-scale projects, such as the set-up and organisation of a leather competence centre; creation of an in-house leather cutting room and a complete overhaul of the manufacturing process. Local events in China, Poland, Italy, the US, the UK, Lectra’s annual VIP Furniture event in France, and its first digital event provided an opportunity for the firm to share its vision on a number of subjects important to upholstered furniture manufacturers, such as Industry 4.0 and technology’s role in optimising the design process.
Anticipating trends is an enduring challenge for Lectra. Millennials, China’s transformation into a consumer-driven market, digitalisation and the emergence of Industry 4.0 are four mega-trends. Manufacturers around the world, in response to Lectra’s global market survey, reported that quicker deliveries, downward pressure on prices, labour shortages and increasing competition were the top four challenges. Smart technology and connected devices provide an opportunity for companies to surmount these challenges by increasing productivity and savings, streamlining processes, and managing smaller, more diverse orders.
Ketty Le Henaff-Pillet
It has been a successful year for Hüni Process Controls, particularly in terms of the broadening of its focus from technology and the quality of its wide range of drums, process control and automation, to include sustainability, safety and environment, giving extra momentum to the already significant results obtained by its clients for the quality of their leathers.
Hüni automation and process controls actively help to avoid human error and workplace accidents by ensuring that workers don’t get in touch with dangerous and corrosive chemicals. Further to the known liquid chemical dosing systems, PRODOMIX, PRODODOS and ACIDMIX, Hüni offers now also a wide range of powder products that are designed to be easy and safe to use in bulk in the beamhouse. Hüni process control and automation stops water and chemicals being wasted: its new jumbo drum technology significantly reduces energy consumption by up to 50%. Less water, fewer chemicals and less energy, all to the benefit of the environment.
Leather Naturally!, UK
Most of the events since the launch of Leather Naturally! were foreseeable, although many potential supporters opposed promoting leather as unnecessary because of the limited supply of raw material. Reality hit home in 2016, and the unprepared were caught out. Leather has competition in every sector, and alternative materials are getting better, technically and commercially. China is moving from a cheap producer to a middle-class consumer nation, with many ramifications. The internet is changing the behaviour and expectations of consumers, and this is further driven by urbanisation and shifting generations. Most of all, the industry has come under sustained attack from animal rights campaigners and vegans.
Promoting leather’s sustainable benefits is a painstaking, long-term business. We need to be relentless, and we need all aspects of the industry and all individuals to play their part. Building the messaging, making the communications, completing the websites, talking in schools, and more. At the same time, tanners must remember that leather does not become a commodity on its own; it does so because we make it so. If leather is to succeed in this new fast, competitive and combative world, tanners need to be always upgrading and making every skin and hide into something consumers will truly value.
Stahl achieved substantial, organic growth and completed two important acquisitions. Viswaat’s Leather Chemicals business strengthened and expanded Stahl’s market position in India, Pakistan and Bangladesh, while Eagle Performance Products business added technology and product diversification. We also continued to take steps toward a more transparent and sustainable industry, from the success of innovative products, and by obtaining distrubution rights for Proviera-Probiotics. Stahl Neo products exceed the requirements of zero-discharge hazardous chemicals (ZDHC) and the manufacturing restricted substances list (MRSL). It also became a value chain affiliate of the ZDHC Foundation.
Stahl also opened new facilities in other countries, including the Center of Excellence for Shoes & Leather Goods in Italy, as well as application labs in India and Pakistan. To stimulate education and share knowledge with clients and future talents, it expanded Stahl Campus to the Americas and Asia. In November, the firm teamed up with other industry leaders to host ReVeal: a model for transparency in the calf leather supply chain. Feedback from the attending tanneries, NGOs and consumer brands was very positive, which is why Stahl is proud to announce that it will be further developing ReVeal in 2017.
Huub van Beijeren
Smit & zoon, Netherlands
Smit & zoon celebrated its 195th anniversary in a remarkable year for the firm. So many years of success are only possible whan a company has strong people on its side, and the ability to adapt to changing market conditions and demands. This means collaborating with partners and customers to make higher quality, greener leather, while having a positive effect on people in and around leathermaking. This necessity has been demonstrated by increasing OEM and brand requirements, tannery moves and a number of shutdowns.
A family-owned company with a long-term focus, Smit & zoon’s business is always focused on the next generation. Its CSR ambition to play a catalysing role in making the leather value chain largely sustainable by 2025 is in line with that. Nice examples of putting this ambition into action in 2016 included the launch of the Tannery of the Future tool and the Safe use of Chemicals workshops that were hosted for Smit & zoon’s Turkish, African, Iranian and Pakistani agents and customers. Getting agents and customers fully aligned with the firm’s CSR ambition is a priority, and will remain so in 2017.
Sustainability also is a key element in product innovation. Last year, Smit & zoon’s wet-end launches included the Safetan MW005, a formaldehyde-free retanning agent that improves grain tightness and waterproof uniformity. Another new product is the LA915, a concentrated lanoline based fatliquor that provides leathers with a warm and waxy handle, reduces water absorption and adds notable fullness to any fatliquor combination. Smit & zoon’s finishing division developed a new range of universal pigments that followed the latest market trends and were suitable for all kinds of applications, anionic and cationic. The Basemask series forms another interesting finishing novelty that enables an easy upgrade of leathers, masking all defects while leaving an extraordinary natural look. Creating a better cutting yield, Basemask will also create a uniform surface, which is the ideal starting point for all successive applications.
Hans van Haars
Year after year, the objectives of the Brazilian Leather project run through matters of technical improvements, design qualification and sustainability. Combined with a strong commercial promotion, the project saw great success in 2016. We’ve had major adhesions to the Brazilian Leather Sustainability Certification (CSCB), the start of project Design na Pele’s third edition, and outstanding participation in the world’s most important exhibitions. Despite every difficulty presented by the international market – especially in footwear sector and with the fall in leather prices – we reach the end of the year in a positive scenario and full of optimism for 2017.
José Fernando Bello
UBM Asia, Hong Kong
This year was important for the leather sector, as competition with synthetics and performance materials heated up. Demand for footwear leather declined, but the automotive and upholstery sectors continued to drive demand as auto sales continued to rise – especially in China. In line with its vision of serving the international fashion and leather sectors, APLF took the historic step of rebranding the components sector of the fair in order to dovetail it with the expanding sports/casual trend that is sweeping Asia, particularly China. At the same time, new dates were announced for the 2018 and 2019 events that will both be held in mid-March, avoiding proximity with the Easter holidays.
Forecasting the outlook for the leather sector in 2017 is not as straightforward as it might have been, since the incoming Trump administration is looking to reshore jobs and distance itself from globalisation, and has adopted a protectionist stance that could endanger free-trade agreements such as NAFTA, Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).
Nevertheless, despite this changing backdrop, leading participants of the leather industry remain bullish, as leathermaking is adapting itself to new consumer and fashion patterns. The aim is to serve the needs of brands that are manufacturing fast-fashion items to satisfy customer and competitive demands.
The whole industry chain achieved steady growth between January and September 2016, while exports decreased. Sales revenue rose by 3.4% year-on-year to $156.4 billion, but the growth rate was down 2.9%. Exports closed at $57 billion, down by 12.4% compared with same period last year and 12.5% from August, while imports decreased by 10.1% year-on-year to $6.6 billion.
In the tanning industry, medium and large tanneries produced 510 million square metres of finished leather, up by 1.7% from last year. Imports of semi-finished leather was 500,000t and $1.1 billion, down by 11.2 and 22.7% respectively, while finished leather was 99,000t and $1.56 billion, a decrease of 20.6 and 23.6% respectively.
The sales revenue generated from medium and large footwear enterprises reached $84.6 billion, rising 5.9% year-on-year. In regard to leather shoes, the total volume produced by large and medium companies reached 3.3 billion pairs, up by 1.7% compared with same period last year. Footwear exports totalled 7.1 billion pairs and $33.9 billion by value, down by 6.2 and 13.2% respectively year-on-year. Footwear imports reached 83 million pairs and $2.01 billion, up by 14.1% and 8.7% year-on-year.
China has undergone double-digit growth in economy in the last 20 years, and it is impossible for the Asian nation to maintain such high-speed growth, as internal and external situations have changed significantly. China is now going into a transition period in which its economy is shifting from focusing on export and investment-led growth to one that is driven by consumption. The challenges this will being include:
- shifting from a quantity-oriented to a technology and innovation-driven model, which needs a lot of investment
- dealing with stricter requirements for pollution control, where much more upgraded cleaner technologies and equipment are needed
- becoming more automated: as labour costs rise, automatic, digital and ‘intelligent’ machinery is more in demand
- adapting to modern consumer habits, with increased online consumption forcing manufacturers to develop new sales and promotional channels.
Car production and sales in China last year grew by 3.3% and 4.7% growth respectively, and it is anticipated that the sales of automobiles in 2016 will increase by 6% from last year, and keep growing in 2017.
This will create good opportunities for automotive leather. It is forecasted that in 2017, either production volume, or number of tanneries will remain at, or slightly above, 2016 levels in terms of light leather output.