International tanners get together14 July 2008
The International Council of Tanners held their annual meeting on March 30 in Hong Kong. Labelling and REACH regulations were the main subjects of discussion.
Labelling and designation of leather and leather products It is a clear role of ICT to protect the image of leather and a key aspect of this is to promote the correct labelling and description of leather and leather products. Labelling and designation of leather is an issue of particular concern for all automotive leather tanners. Following an exploratory meeting of automotive leather tanners in January, a presentation was made to the ICT meeting so that the subject could be formally considered and a proposed strategy put forward for eventual adoption by members as an ICT guideline. In Hong Kong, the secretary gave a presentation on the background to labelling and designation of leather and leather products based on the guidelines already used in various countries. Mike Tomkin of Stahl was unable to attend the meeting, but his presentation was delivered by Mike Parsons. It illustrated the changes in production and market shares of automotive leathers, tracing the expansion since 1980, and especially since 2000 in the number of companies now producing. The conclusion was that despite growth, the market was under pressure. The top end of the market (less than 20%) wanted better leather, with improved performance characteristics, but the bottom end was interested primarily in price and was vulnerable to alternatives and substitution. It was also felt that there was confusion in the marketplace because of the way the term leather was used in some cases, and some action by the leather industry was appropriate to protect the reputation of leather and to promote proper descriptions. Work was continuing on reviewing current practice, and a follow up meeting of interested parties was planned to try to take the matter forward. Country reports - UK The UK industry comprises seven big tanneries, four medium sized tanneries, and around twelve smaller units. Despite there being only one or two companies operating in each sector, total production is around $700 million, with about $500 million exported. The sector has a balance of trade surplus (hides, skins and leather) of $200 million. Demand is described as ‘reasonable' in the car, furniture, gloving sectors, but footwear and chamois leathers are facing more difficulties. The year has been dominated by two issues: the sterling/ dollar exchange rate, which has hit exporters to dollar areas hard; and the outbreak of foot and mouth disease, which caused ongoing disruption for exports to some markets (notably China) because of problems in the supply of health certificates. While the UK is now officially FMD free, problems with exports to some markets continue. The share of leather production is as follows: upholstery 43%, footwear 26%, leathergoods 1%, ‘other' including gloving and clothing 30%. (About 50% of hides processed are traded as wet-blue or crust). There is a clear trend of outsourcing of certain activities with examples of the supply of part processed leather from Ethiopia, for finishing for gloving leather, and outsourcing bulk bovine production to Taiwan; agreements with a Chinese tannery to finish leather in China for use in the automotive industry (in China), and outsourcing of finishing and cutting of export crust to Hungary. The final BSE controls on OCDS hides - from animals born before August 1996, have been removed and these hides can be traded and exported after processing. After three years, the total number of hides in this category are estimated at 365,000. Germany Cattle slaughter in Germany was down by 1.9% to 3.4 million head. Production of calf skins was 312,000 down 8.5%. The total bovine herd was further reduced to 12.5 million head, down 0.5%. Due to a higher demand for milk in the world market a stabilising of the herd may occur. German tanners saw a reduction of turnover in the last year by 9% to e420 million. 60% of turnover was directly exported. Leather prices remained fairly stable. Slight decreases in bovine hide prices have been countered by increasing chemicals and energy costs. Production of finished leather was 12 million sq m, about 70% of which is upholstery for automotive and furniture markets, 20% for footwear and the remainder for leathergoods and garments. The furniture market was particularly competitive in the low and middle segments with office furniture doing better than upholstery. Calf and bovine leather sales for various leathergoods increased, as did small quantities of goat and sheep leather produced for domestic niche markets. The import of raw hides and skins increased in volume and value by 30% in 2007 to e140 million. Exports went down by 3% to e134 million. Major export markets include Poland, Hungary, Austria, Hong Kong, Romania, Bulgaria, France, Portugal and the Czech Republic, Slovakia and the US. Leather is imported from Italy, Uruguay, Austria, Poland, India, Brazil, Netherlands, Pakistan, USA, China. Shoe sales in Germany have been stagnating for the fourth consecutive year and the mild winter did not help. However, the upholstery sector had positive results after the last three years of recession. The automotive industry continues to be one of the most dynamic and important sectors, with domestic production of passenger cars up 5.8%. Seat production is shifting to Eastern Europe and Asia with major first tier suppliers to follow. Brazil Brazil's share of the global bovine leather market was over 13% in 2006, equivalent to 40 million hides. In 2007, for the first time ever, revenue from Brazilian leather exports exceeded that of the local footwear industry by 15%, thus consolidating its importance within the country's economy. The main destinations of Brazilian leather were Asia (35%), Italy (28%) and the USA (11%). Over 60% of exported leather went to the furniture and automotive upholstery sector. In 2008, the slaughter of bovine cattle is likely to drop 10% reducing raw material offer to approximately 36 million hides. USA Leather Industries of America believe that leather production in the United States continues to decline as tanning capacity is shut down either through business failure or consolidation. However, exports increased slightly and imports decreased slightly in 2007. Leather exports to China increased significantly, while exports to Italy, Hong Kong and Japan declined. Wet-blue continues to be the largest single US leather export commodity. China China's leather and footwear industries achieved growth in 2007 but the rate of growth slowed compared with the previous year. The output of finished leather was 680 million sq m, up 9% on the previous year. Exports of wet-blue were down 54% compared with the previous year, as were exports of finished leather (down 32%). Exports of raw hides and skins were also down 50%. Exports of Chinese footwear were down for the first time in a decade. In terms of environmental protection, ‘New standards of pollutants for leather and fur making industries' are expected in 2008. Limits for ammonia nitrogen and COD will be 65 mg/l and 200 mg/l respectively, until 2011. New tanneries are required to work to standard two, under which limits are 35 and 160 mg/l respectively. All tanners will be expected to work to the stricter levels as of 2011. This legislation will encourage tanneries to relocate to tanning clusters with established effluent treatment facilities. According to CLIA, tanneries whose annual production capacity is less than 50,000 bovine hides are being forced to close down. New labour laws came into effect in 2007 and this is expected to increase production costs. Wage costs alone have increased 20% in 2007.