In the past, leather has been classed as a luxury item but in more recent years in the automotive sector, in particular, it has become more of a commodity, parallel to what has happened to leather used in furniture. In the automotive industry, apart from in the most basic and medium low ranges, many cars have had leather fitted as standard. Figure 1 shows that demand for hides for the automotive industry increased during the last seven years, before the current financial crisis induced a sharp fall in demand for cars. Indeed, hide usage in Asia doubled in the seven years, mostly due to production in China increasing dramatically. The current depression has had an obvious effect on the demand for hides in the past twelve months (to March 09), which is evidenced by a 25% fall globally. All areas of the world have been affected, but there has been a notable downturn in the Americas.
If we look at the developments within each region, further trends are revealed. Figure 2 suggests the UK industry to be in permanent decline, suffering a 50% fall in demand between 2001 and 2008 from an already low base. However, we think it has reached a steady level now but, yes, there was a sharp decline earlier in the decade – now more in line with the comment on Germany (Leather International, May 2009, pages 6 & 8). Demand in Central Europe seems stable, with output in Austria showing an increase compared with 2001, while the German industry has flat-lined through the decade. As ever, Italy has had a turbulent decade, with a 300% increase in demand through the first half of the ’00s, and a 50% decline in the last three years. The huge increase in the early part of the decade was due to the changeover of some furniture leather tanners to auto as furniture declined. The decline in Italy in more recent years is due to some, but not all, furniture tanners not being specialised enough to adapt to this change.
The South African industry has also seen significant falls in production recently, although there have been some peaks and hide usage is only slightly lower than at the beginning of the century.

Largest change
The significant changes in hide trading have been in the Americas and Asia. Figures 3 and 4 indicate that volatile trading was seen throughout the decade. The US industry has suffered badly over the past four years especially: hide demand has fallen by over 75% in that time. As a contrast, the Mexican industry saw a dramatic increase in hide usage over the first seven years of the ’00s, with about 30,000 hides/day being used in 2007 compared with just 7,000 in 2001. However, the current slump has hit the Mexican industry hard with a 33% fall in usage during 2007/08. The Mexican industry has suffered directly as a result of declining car sales in the US which also includes many Japanese branded cars produced in and for the US market. Most of this leather is made in Mexico.
In Asia, the general trend is the same, although the surge in Chinese production rather masks this. And it is the Chinese market that stands out – from little or no hide use in 2003, by 2007 20,000 hides/day were being processed. It should be noted that this halved in 2008. The other country suffering in Asia is South Korea, but the decline there has been more gradual, beginning in 2005 as production has shifted to other destinations particularly, China.
While these trends suggest an automotive leather industry in crisis, is that actually true? Looking at the usage of hides in 2008, the figures are roughly comparable to those used in 2001. Indeed the volume in Asia has doubled. So, there was a boom in automotive leather usage in the mid ‘00s. However, there are obvious problems: production was 30% down globally in the first quarter of 2009; the motor industry is in deep recession, with extended closure of car plants, and US OEMs are in serious trouble. Unfortunately, due to the boom in the mid-’00s there is a huge over-capacity for auto leather production. This over stocked supply chain, coupled with extremely low consumer confidence, volatile exchange rates, and a lack of money for credit, suggest the picture is bleak. There has been a general trend to move to cheaper hide sources as the auto leather prices have continued to drop.
The auto leather producers have not been helped by the practise of ‘decontenting’. This has become common practice within the auto industry: increase profits by removing standard features and making them extras and, unfortunately, the leather industry is one of those suffering.

Looking ahead
So, what can be done? Well, there are precedents. After the oil crises of the ‘70s, leather came back into fashion for car upholstery as a way of giving the motorist added value to their car, so could the same happen again? With initiatives on the correct labelling of leather content, the leather option is being used to try and boost car sales with Honda UK and Ford US leading the way. However, there are still many problems to overcome.
The top-end of the market wants better quality leathers, yet with a myriad of conflicting properties: better anti-soiling yet more aniline; better abrasion, more breathable, and above all a more natural look and feel. In the long term, quality prevails, and as we saw in the ‘80-90s with chrome replacement leathers, it is the chemical manufacturers who can offer the solutions, but:
• The perception of leather has taken a knock recently, especially upholstery and the problems with dimethyl fumarate. This has cheapened the image of leather in the consumers’ minds, and led to designers looking at other materials;
• Ironically, drastic cuts in the supply-chain are giving producers short-term problems of demand, yet the significant drop in hide prices has yet to pass down the supply chain. Paradoxically, recent trends show that hide prices are already moving up for the auto grade hides
• In summary, the industry can look forward with some optimism, as cheap is usually only good in the short-term. Quality eventually wins through and leather can provide the automotive manufacturer and end-user with a high quality, durable, product. But, the only way to do this is to meet, and possibly exceed, the criteria set for us by this high-end demand. This increase in performance obviously has to be coupled with factors outside the
tanners’ control, eg an improvement in the current economic climate. But the know-how of the chemical manufacturers and tanneries is crucial, and working together to provide the required product, and to help the OEMs with guidance, is the way forward. It will probably mean more consolidation in leather manufacturing and chemical suppliers, but there is no other way if leather is to remain the automotive upholstery of choice.