Eastern promise produces confidence2 December 2001
Overview The year 2000 was a good year for the global shoe and leathergoods industries. The recovery was also confirmed by the good performance of the tanning, shoe and leathergoods machinery sectors. The increase in sales of consumer goods almost always promotes and provides an incentive for investing in manufacturing machinery and equipment. Figures from Istat, the Italian statistics institute, regarding machine exports for the first nine months of 2000, show a general increase of 15.6%. Looking at the individual manufacturing sectors in detail, we see that there were considerable increases in the exports of leathergoods machinery (+29.3%) and spare parts (+28.1%). Not to be underestimated were the increases in the exports of shoe machinery (+16.6%) and tannery machinery (+8.7%). But which countries are doing the most investing in Italian technology? Sales of tannery machinery increased to South America, especially to Brazil (+42.4%). Exports to Asian countries also increased generally, particularly to countries where tanning is a traditional vocation: South Korea +92.9%, India +42.8% and also China +72.9%, thus confirming that the development of the shoe manufacturing industry provides the 'development motor' for the tanning industry and relative sectors. The shoe machinery manufacturing industry was able to take good advantage of the development of the Chinese shoe industry with an increase in exports amounting to 10%. Furthermore, it also regained terrain in India (+74%), Thailand (+158%) and Taiwan (+155%). While exports to western countries, Spain and Portugal in particular, decreased, the delocalising of manufacturing in Eastern Europe increased, especially in Romania, where shoe machinery export sales amounted to 25.3 billion lire. As regards to the import of leathergoods machinery, China and Hong Kong were the leaders with an increase 23.1% for 1999. Given the increase in the shoe and leathergoods supplies from Chinese manufacturers, the Italian industry have inevitably had to turn their attention to Asia. They have increased the volume and quality of the investments made to the oriental shoe manufacturers. Considering Europe's maturity and the trend of uncertainty that characterises South America, the Asian market is one that will continue to grow. Q Do you think that Asia will remain the largest growth area for the industry? How will this impact on your business? I am thinking about your involvement with Allforshoes (China). A In the absence of a crystal ball we must stick to the facts. These show that the growth of the Chinese manufacturing industry is continuing, in the lower and medium-low production bracket of course. The alternatives are Vietnam, Thailand, Indonesia, etc. Will this trend stop? At what level? It is impossible to say! Clearly, alongside an Asian manufacturing system that produces two thirds of the footwear sold in the world, we can also see the growth of a leather, accessory, component and machinery industry. Assomac decided they should be present, organising a trade fair - Allforshoes - last December in Wenzhou, one of the Chinese footwear districts with the highest growth factor. Assomac also wish to keep the fair market under control, avoiding total dependency on Chinese organisations, which could be penalising. The important thing is to keep the sector under control, relinquishing perhaps the purely mechanical skills and developing those of information technology and research. Q What aspect of the leather industry causes you most concern at the moment? A At the macro-economic level we are still awaiting things in the globalisation process to settle down. I mean that major barriers still exist between the leather and the end product, limiting the free circulation of raw materials and manufactured goods. A lack of reciprocal commercial attitudes creates anomalous situations that cannot be controlled by economic and market laws. Within this context long term programming is impossible. We trust the work of the World Trade Organisation (WTO) will bring more certainty, especially after the People's Republic of China joins the world trade body - something that seems imminent. Q What do you see as the biggest challenges currently facing your members? Why? A Assomac members are footwear, leathergoods and tanning machinery manufacturers. These are different business realities, each one with specific problems and needs. However, all our members feel today that they must help their customers take a correct approach to technology. The use of technology does not end with the purchase of the single machine but with consideration of all the machines in the plant, their use and maintenance. With this overall approach to technology, a company can turn it into a competitive advantage. Technical mastery of the machine must be seen on the basis of a company's specific needs. Lastly, the concept of technology should be extended to the production plant as a whole. In this way technology becomes a know-how acquired day after day, using interaction with production to personalise the machine and, hence, the company itself. Managing to metabolise and make customers understand this long-term business philosophy is a great challenge, but it is also the only way to continue to play a role in the sector. Q Are you optimistic about the long-term manufacturing prospects for (a) your members (b) the Italian industry in general, in Italy? Or will more move offshore? A Without a good dose of rational optimism it is difficult to be entrepreneurs, especially in difficult times. We have said that the year 2000 showed interesting signs of recovery that were confirmed and this justifies the optimism. The Italian manufacturing industry uses de-localisation in a sustained manner, even though the debate is in progress and not all share this view. Although initially delocalisation mainly uses old generation machinery, sooner or later the companies in question will be forced to update their technology to remain competitive. Meanwhile, an unusual situation has developed: upper processing has the greatest impact on the cost of labour and this has been resolved with delocalisation; as a result the demand for technology concerns the design and finishing phases. Therefore, there will be an increasing use of external processing especially for medium-bracket goods. The processing of top-bracket items or, at least, the phases with the greatest added value, can be kept in the industrially advanced countries. Q How much do the vagaries of fashion affect the business? Is there much traded in fashion? A In recent months we have seen a game of inter-company mingling featuring some of the most prestigious names in the leather sector - Rossimoda, Baldinini, Sergio Rossi, Vittorio Pollini, Mario Cerutti - and the luxury and fashion names - Vuitton, Gucci, Ferretti, Burani. Together, they are trying to optimise their presence on the world market. These unions contain the answer to the second part of your question: there is more trade in fashion and there will always be more. That is how the fashion business works, the concept of change is implicit. In particular, the globalisation of the fashion offer will be a success; it is no accident that the best performances are achieved by the big luxury names, who offer clothing, footwear, leathergoods, glasses and sundry accessories. You can even say that, in extreme cases, fashion influences technology. Just think of the importance of the bottom in Prada footwear - that has certainly influenced sole technology. Q Customers expect to be served faster, get information faster and have products available at the right price at the right time. How do your members achieve this aim? A Customers also expect post-sales assistance. Assomac members are well aware of the importance of service and after operating for years on the world's markets have, at their own expense, learnt how to act. Today, new technology has also come into play and been correctly interpreted, ie as a new aid towards a more precise and prompt service. For their part, Assomac have created a leather sector technology portal that can be visited at the web address [http://www.assomac.it] and can also be reached from the Assomac fair sites [http://www.simac-fair.it] and [http://www.tanning-tech.it]. This interacts with the sites of individual companies to produce a fast, integrated and comprehensive information and communications system. Q What countries and markets are likely to provide the growth for Assomac members? A No country lacks interest for Italian leather technology manufacturers. Assomac members export to more than 130 countries. The most interesting areas are those in Asia, Latin America and North Africa, but old Europe and North America should not be underestimated either. Clearly, every area has its own peculiarities and specific requirements. Q Last year you spoke about the training programmes that Assomac were involved in. How are they coming along? A They are proceeding according to plan and to the needs that emerge in our international meetings with the representatives of footwear and leathergoods manufacturing countries. Assomac, for their part, are stepping up diplomatic activities in an attempt to identify the areas most interested in developing the leather-footwear system and to offer their services as a training partner. The association are also completing the translation, into six languages, of their thirteen professional training 'notebooks' on the leather sector. These are educational books that Assomac have compiled to provide teachers with the necessary aids for the correct preparation of their pupils. Q Are there any developments or areas within Assomac that you would like to bring to our reader's attention? A All areas are of equal interest. Simac 2001 seems to have benefited from the favourable economic trend. A light breeze of optimism continues to blow at the beginning of this year over all the leather sectors. Four months before the event, stand bookings have already reached last year's levels. Unfortunately we have only been able to secure an extra thousand square metres (in pavilion 38) compared with last year and not all the many requests to enlarge stands have been met - there may therefore be a vertical extension of Simac, with some stands on two levels. Despite some joint bookings, the final number of exhibitors should exceed that of last year. As ever, there is a large presence of international associations and bodies, but the greatest expectations are for the official delegations, still being decided. These come from countries developing in the footwear and leathergoods industries and their visit is organised and co-ordinated with the assistance of the Italian Trade Commission (ICE). At this level, business often coincides with co-operation. As we await the final figures and the other events linked to the fair, remembering its international nature and its coincidence with Lineapelle, we know we can predict another highly successful Simac. Assomac welcomes requests for information and suggestions from your readers and will pass them on to our members who will certainly make use of all the suggestions they receive.