Tough times for tanners

The title of this survey could be used for almost anywhere in the world these days. The tanneries in the western world have been hard hit by long term recessions in the major consumer markets of the USA, Japan and Europe and to add to this have seen their production move eastwards, particularly to China. Ironically, even Chinese tanners are reported as experiencing difficulties. For Italy, two factors make this extra difficult for the country's leather industry. Firstly, they are used to being the leading country in terms of tanning, machinery technology, design and manufacture of leather footwear, clothing and leathergoods so they have further to fall. And secondly, the tannery sector represents a much higher investment and a larger role in Italian manufacturing generally, so there is more to lose. The general consensus of opinion seems to be that of the country's major tannery clusters, Arzignano is the most stable given that it is based on upholstery leather which is relatively unscathed at the moment. Santa Croce, home to chrome and veg tanned leathers for footwear and leathergoods, is expected to continue to lose some of its smaller tanneries; those who try to compete on cost and are not fashion leaders. The Santa Croce area is characterised by small and medium sized tanneries and represents 90% of sole leather production in the country, 80% of leather made in Italy and 35% of national production of leather for footwear, leathergoods and garments. And Solofra, which has a preponderance of garment leather manufacturers, will be the hardest hit. The skin sector has been under attack for the past few years and no real signs of recovery have been sighted. Add to this, the fact that everyone I spoke to predicted the demise of the Italian footwear factory producing lower cost shoes. Some believe that the USA will in future buy their Italian leather shoes made in China to take advantage of better quality leather but cheaper prices. At the heart of this assumption lies the fact that Italy is renowned for taking poor quality raw materials and converting them into desirable leathers. It is a skill that is 'in the blood' and cannot be copied. This prediction seems all the more certain given the huge deluge of Chinese footwear imports in the first two months of this year as a result of the ending WTO quotas on January 1, 2005. According to ANCI, the National Association of Italian Footwear Manufacturers, imports of shoes from China into Europe rose by an incredible 600%. Rossano Soldini, president of ANCI, said that the sheer volume of imports would destroy the Italian industry. The irony is that ANCI expected something of the sort but were accused of being alarmist. Now they hope that remedial steps will be taken by the Italian government and by Brussels. According to Soldani the entire European footwear industry is under attack with a possible loss of more than 12,500 companies and 320,000 employees in Europe and 103,500 jobs and 7,300 companies in Italy. And it isn't only the footwear industry which is suffering. While everybody considers the brand name Ferrari and its products as being typically Italian, Ferraro merchandising have introduced models of the Ferrari racecar to the market and these models were 'Made in China'. The matter is thought to be particularly outrageous because president of Ferrari, Luca Cordero di Montezemolo, is also president of the association of Italian industrialists. And if that wasn't enough, di Montezemolo has recently been awarded the 'Tapiro d'Oro', the golden ant-eater, which he has accepted with great embarrassment. He received the award because he is the president of the association and must, by definition, promote Made in Italy and defend Italian production, whereas for his own merchandising company he did his buying in China. For the second year running, the past year, 2004, was considered to be unfavourable for the Italian leather industry bringing with it a continuous and steady decline in prices and poor demand for finished goods which was reflected by less work for the tanners. According to Unionpelli, this was exacerbated by the shrinking value of the dollar against the euro. Slaughter for the period January to September 2004 amounted to 3,067,610 bovine and 9,826,224 pigs, both showing the same percentage increase of 0.8%. Figures for sheep and goats are not yet available. In production terms, during the same period, 87,437 tons of cattle were processed and 11,407 tons of calf. Foreign trade for the period January to October saw imports of cattle, buffalo and equine hides from countries outside the EU amounting to 101,433.74 tons and from within the European Union of 173,069.70. On the export front, 40,732.66 tons of bovine and equine hides were exported to countries outside the EU and 33,556.38 tons to other EU countries. Sheep and lambskins to the tune of 19,171.86 tons were imported from outside the euro zone and 2,335.57 tons from the region. Exports accounted for 2,732.25 tons to the rest of the world and 2,775.13 tons closer to home. Imports of goatskins from outside the EU amounted to 399.08 tons and from within the EU to 929.13 tons. Exports, on the other hand, were only 11.22 tons to countries outside the EU and 10.26 tons to the rest of the EU. Santa Croce sul'Arno Santa Croce is one of the three important industrial areas in Tuscany, the other two being the gold-district of Arezzo and the textile district of Prato. It is, of course, famous for its leather industry and the mayor of Santa Croce very kindly agreed to an interview with Leather International. Asked whether he was concerned after the recent visit of the Chinese Prime Minister that the Chinese might take the tannery cluster model in Santa Croce and become more competitive than the Italian leather producers Osvaldo Ciaponi admitted that the tanning industry in the Comprensorio del Cuoio, consisting of Ponte a Egola, Fucecchio, Castelfranco di Sotto and Santa Croce sull'Arno, as the area's industrial capital, is worried about the developments in the so-called newly developed markets amongst which China is the most important. This development was, however, 'foreseen and foreseeable and should not be considered as worrisome. It should be considered one of the elements to boost the Santa Croce tanning sector into re-affirming itself as the global leader in quality leather. 'China should not be seen as just an all-consuming competitor but as a target country for export, when other parts of the world might be exhausted or saturated. The Santa Croce area has a long standing tradition for the production of top quality leather and leather products for which China is becoming an important market. 'Wealthy Chinese are now demanding high quality, fashionable, designer consumer goods. Hence, if on the one hand our industry is suffering in terms of quantity of items of mass production, as we are unable to compete with China in that field, on the other hand the Chinese are important customers for high quality products, and that's the direction the Santa Croce leather industry is taking.' It will not be too long before China will have to face the problems connected with industrial pollution and, hence, the problems connected to wastewater treatment. It will have to face social problems such as better working conditions. This will lead to the point where China will have to measure itself against those conditions along with other countries like Italy. Asked if he was worried about the survival of the large number of tanneries in the area and, hence, the employment rate of the local workforce, Ciaponi expressed himself optimistically, while recognising that it is not easy at the moment. The conversion from low and medium quality to high quality is under way and almost all tanneries, small and large, are adjusting to the new situation. Certainly some tanneries will close as, for one or another reason, tanneries have also closed in the past. However, their workforce will be absorbed by those tanneries that have adjusted or will adjust to the new equilibrium. He does not foresee that relatively big tanneries will become bigger and absorb the smaller ones. Santa Croce will not have tanneries with a 1,000 workers, but rather between 20 and 100. All will remain in the traditional Santa Croce format. The solution is the creation of high fashion leathers and articles of top quality. Fashion designers are directly or indirectly active in this area and it is not easy as fashion changes quickly. One cannot simply follow but must anticipate fashion. The Santa Croce industry has already proven for some time that it is capable of adapting quickly to changing situations. A very important factor in this development is that the local institutions such as the municipal and regional authorities, the entrepreneurs and the labour unions, are not arguing from contra-positions but are collaborating with each other. This collaboration has already been positively tested in the years when the industry had to combat pollution. Municipal and, particularly, regional authorities cooperated closely with the industry and the trade unions, together finding the required solutions. With this extraordinary collaboration Santa Croce has become a forerunner in industrial research, innovation and the formation of the work force, which results in an environment friendly industry that produces high quality leathers. Though not denying that the area is experiencing a rather difficult time at the moment, Ciaponi says that there has been a small decline in the number of tanneries in the whole Comprensorio but this has not reached significant proportions. The workforce in the area remains at a steady level. Quantity wise the area produces less, but at the same time produces better. The good old times when workers produced for ten straight hours and 6 days a week are no more. Now the classic 5-day working week and 8-hour work day are the reality. The present situation is worrying, of course, particularly because this recession has lasted longer than any other crisis before. However, Santa Croce has emerged proudly from previous crisis situations. Ciaponi mentions the terrifying and disastrous flooding in 1966 when the tanneries seemed doomed. They literally emerged with renewed energy and with great success. The same happened when tanneries were closed when the pollution laws came into force. Santa Croce was severely hit by this crisis and some thought it would succumb but, again, it came out stronger than it went in. There is a saying in Italy, non c'è due senza tre, there is no two without three, and that also now the area will overcome the problems successfully. Ciaponi points out that the municipality of Santa Croce province is the institution closest to the industry. It actively participates in the dialogue between the industry and the labour force and acts as a point of reference. The more competent authorities are the region and the central government. In order to face the present crisis the most important initiative that has been launched is the establishment of the fashion round table (Tavolo Moda). This fashion round table comprises the municipality, the region, the industrial associations and the labour unions. It sustains the projects of the industrial conversion that is under way and also represents the industry with the central government. The conference will be held in Santa Croce during the first half in April and it will evaluate projects and proposals. The Region Toscana has made important resources available to the tune of e50 million to make this Tavola Moda a success, because fashion is the key. The Region Toscana is the most important partner as it represents the industry also outside Italy with promotions and offices abroad, not only in Europe as in Brussels but, especially, in the new export markets. One would wish that the central government would make similar efforts. The first reaction may be that high fashion is only a niche industry. That may be true when you confine the idea only to Italy, but when you project this to countries such as China, Russia, ex East-block countries, the United States, it will be understandable that there is still room to manoeuvre in the globalised world. Ciaponi was asked whether the industry specifically invests in new technologies for environment friendly leathers. He said that the industry keeps a keen eye on the development of such leather. The centralised water treatment plant, a jewel on the crown of the area, practically discharges clean water and, since the effluent is completely treated biologically, the classic nauseating smell has totally disappeared. A new institution has been launched, the Polo Tecnologico Conciario, PoTeCo, again a collaboration of all stakeholders, which has as its aim the continuous industrial development, the research for new production techniques, ever better effluent water treatment, and control of air pollution. The central effluent plant, Acquarno, researches continuously for better techniques. From the environmental point of view Santa Croce is almost perfect in all aspects: soil, water and air. Ciaponi says that Santa Croce has practically resolved the problem, but it does not lower its guard as it must maintain this high quality level. In fact, studies are under way to use the Santa Croce treatment plant for the effluent of three provinces, Pisa, Florence and Lucca, and this will rationalise the treatment of effluent from this rather large area. Treating effluent from other areas would be a source of income which would reduce the cost of effluent treatment for the Santa Croce tanners. The Santa Croce effluent plant was financed by the local industry, the central government first and later by the Region Toscana and lately also by the European Union. The plant is an absolute leader in the world and many tanning areas in the world, and not only China, are interested in the Santa Croce effluent technology which goes back some 40 years. Environmental protection Tackling the waste from its tanneries is just one area in which Italy excels. In order to meet the need for water pollution control, four water treatment centres were constructed in the 1970s¹. The method chosen was to construct centralised water treatment plants but at the time it was only possible to do this on a town by town basis which resulted in three large treatment plants just a few kilometers from each other along the bank of the River Arno. The largest plant was in Santa Croce where more than half of the tanneries were located and this became operative at the end of August 1974 which anticipated the relevant legislation by five years. 'On completion of the plant, the nearby tanning districts of Castelfranco and Fucecchio decided to connect their sewage pipes to the plant which led to the expansion of the Santa Croce sulll'Arno plant. Over the years a number of expansions and upgrades have occurred and at the end of the 1990s it was decided to again modernise the plant and develop a system known as 'all biological'. 'The essential difference between the treatment process adopted until the end of the 1990s and the new process relates to the transformation of the former initial chemico-physico stage to a new biological phase (see Figure 1). The study. completed in December 2001, led to the construction of two new tanks of around 15,000 m3 capacity each used together with the salvaged part of existing capacity for the first biological oxidation stage. 'Subsequent divisions involved in the process are not affected by structural intervention and have maintained their former capacities and functions. In particular, the old biological division, which currently operates as the second biological stage, continues to be used in exactly the same way as in the past, for both a further reduction in organic pollutant and to eliminate the ammoniated pollutant by the nitrification and denitrification processes. 'In this division, the only substantial modification introduced was the replacement of surface aeration rotors with micromesh membrane diffusers. This replacement has led to a series of advantages. The usable tank capacity has in fact increased due to the elimination of the deposit formed in the base; oxygen dissolution capacity has increased and aerosol emissions have been rapidly eliminated. 'In order to operate the plant under its new configuration, two gaseous oxygen plants have also been constructed to partly replace the old liquid oxygen storage.' After more than three years under the new configuration, the plant is considered to be operating completely satisfactorily. A reduction in the consumption of chemical reagents over the period from 2001-2004 has led to a drop in expenditure of more than 60%. Sludge production has dropped by more than 40%, which is particularly encouraging, and air quality has improved. In addition to the conversion to the 'all-biological' system, the sludge dehydration division was gradually phased out and replaced by a new plant known as Ecospansion. In this plant, sludge dehydration is carried out using centrifuges. Aquarno and Ecospansion are connected by pipework along which both the thickened sludge and the clarified water output from the centrifuges, which is returned to Aquarno for treatment, are pumped. The Ecospansion plant was constructed to convert water treatment sludge into reusable products in order to avoid waste dumping. The sludge is subjected to drying and heating and the resultant ash is currently being used for road-surfacing and as a filler in concrete production. Fleshings are converted to grease, proteins and fertilizers at the Consorzio Aquarno owned plant Consorzio SGS. Exhausted baths from chrome tanning are sent in tankers to another consortium owned plant, Consorzio Recupero Cromo, where the recovered chrome is returned for re-use in the tanning process. Nor does it end there. Agreement has already been reached with the Department of the Environment and local authorities in anticipation of more environmental regulations on their way. Central to the agreement is the concept of joint treatment of tannery and domestic waste in the tanning area. This will involve the construction of an aqueduct to supply tanneries with treated domestic wastewater. The second objective is to eliminate hazardous substances from industrial wastewater prior to combining it with household waste. This will lead to a radical transformation of current practices and 'a decisive step towards tanning industry environmental sustainability. 1. Aquarno Plant: the transformation to an 'all-biological' process by N Andreanini, A C Brogi and C Fiaschi, IULTCS Congress, Florence, March 2005