Protectionism problems

When I interviewed Mr Mercogliano in March 2000 he was pessimistic about the year 2000. However, this time he was more upbeat. 'The end of 2000 turned out to be better than expected,' he said. 'By the end of the year, there was a 24% increase in Italian leather production, and at the moment I hope 2001 will also be a good year.' There are still clouds on the horizon. The main one is the poor supply of raw materials caused by the BSE crisis. The problem, Mercogliano said, is that while hide prices are increasing, the tanners are unable to increase their prices, because of competition. 'Customers resist any increase in prices, especially in today's market', he said. 'The biggest challenge facing many tanners is to get their customers to accept the new prices.' 'However, basically we are confident for 2001. The lesson is that crises and recovery are faster than in the past. The global economy gives speed to the development of recovery, 'Overall, the Italian industry is in good shape and the supply industry, the machinery and chemical companies, are also in good shape.' Mercogliano then outlined the individual sectors stating that the green shoots of recovery, seemingly lacking this time last year, had actually turned into buds, with the leather garments sector the first to recover their markets. This sector was followed by leathergoods, shoes and finally car upholstery, which actually showed a slight decrease in performance 'but is substantially stable.' He thought that the future problems for the industry lay in a reduction in red meat consumption. This coupled with the negative effects of the global economy, which made the effects of the BSE crisis more resounding around the world, led to a 60% fall in consumption. 'Unic have tried to get together with the slaughterhouses and farmers to promote red meat eating. However, although they understand the image problem, they do not want the responsibility or have the money for such a promotion.' On the image front more and more tanners are obtaining a ICEC certification, whether it be 9000 or 14000. Protectionism Given the reduced supply of usable material, tanners need to go out of the EU to source their hides but 'this causes problems because, for instance, Brazil has imposed a duty on wet-blue, Poland and the Czech Republic prohibit the free export of raw material and India has imposed a 60% tax on wet-blue exports. There is a resurgence in protectionism, with countries such as Russia joining in as well. 'Trade with Russia is still much less than it was, but last year there was a 180% increase in exports of leather to the CIS compared with the previous year. This accounted for about e40 million (US$36 million), but is still well down on the 1980s.' On the subject of protectionism, Mercogliano was fiercely critical of the EU. 'First for protectionism are the European Union with the common agricultural policy (CAP)', he said. CAP is one of the toughest protectionist rackets in the world, with millions of Euros going to farmers to protect their livelihood. 'For instance, if we could import meat from Argentina, then the importation of hides as well would be easy, but the CAP stops all this. 'In fact, Unic have asked the EU to allow Argentinian meat into Europe', Mercogliano said. He estimated that 40-50% of the world's raw material has some sort of protectionism on it. LP-Online Lineapelle on-line is a must for the exhibitors to the show. 'Leather people are still not interested in the net, but we are transferring LP-Online onto the web with some cameras on the stands at Lineapelle', Mercogliano said. This will enable people to log-on and see the stands without attending the fair. By the end of 2001, Unic hope that all exhibitor stands will be on-line and further ahead they hope that Lineapelle will be 'live' all year round. 'The idea is that companies will change their exhibits every so often, so that visitors can come to the show better prepared.' The ultimate idea is to cable up all the stands so that Lineapelle can be piped into the visitor's workplace or wherever they want to see it.