Last year, Türkiye had about 1,000 tanneries. During 2005, this dropped to about 400-600 and it is expected the slimmed-down industry will eventually be comprised of just 100 tanneries.&rtreturn;After 1998, some tanneries waited for the good times to roll again but realists accept that ‘now is normal’. The eleven specialist tannery zones promised, along with tens of thousands of jobs, proved to be populist fantasies. Istanbul’s Tuzla zone has about twelve or fifteen tanneries working and Izmir’s Menemen zone has about six or seven. As each has accredited waste treatment plants and is a duty-free trade zone, they have attracted other industries to fill up vacant tanneries. Corlu is the only zone given over almost exclusively to leather processing and has long been working more profitably and steadily to about 70% of capacity.&rtreturn;With leather stocks high everywhere and prices stubbornly unresponsive, there is nothing on which to inflate false hopes for tanners. Pioneer professionals, like Tanatar, Gunduz, Desa, Gunder, Alkan, Akdede and Yesiller, are the names that make up the backbone of Turkish leather. All of these have anticipated and adapted to global factors and have made design and quality core concepts of their business. &rtreturn;Garment exporters such as Pasha Deri, Sen Deri, Harmanli and Jean Guise/Tanatar are also formidable names in leather. Gondemir introduced fur to Türkiye and still pilot this sector well. What characterises the sector is increased diversification. Other articles in this edition (page 22) explain Harmanli’s lateral expansion plans, for example. This firm has become so gifted in design and innovation that they now face a mounting problem with pirates and trade name counterfeiters.&rtreturn;What is unchanged is that Turkish tanners are exploiting their mid-market, boutique niche. They cannot compete with mass market Asian garment producers; Europe remains an uncertain, if not stingy, market. So concentrating on mid to high-end quality, which they do well, makes good sense. Alarming credit sales bolster producers who also target the home market.&rtreturn;It is significant that surviving ‘names’ have finished higher education degrees, speak several languages and use their more qualified resources to counter low-wage competitors. They are as much innovative service companies as they are manufacturers. This distinguishes them from less efficient producers and is one reason the ‘big versus small’ tussle continues to weaken the leather sector. &rtreturn;Weaker firms shelter under fraternal associations and, when not at cross purposes, insist on solidarity. Big producers simply get on with their business using the superior talent at their disposal. It is larger fry that lament the passing of International Leather Days and the polished, professionalism it once brought to the industry.&rtreturn;Tanneries like Gunduz Kurk process between 6,000 and 7,000 raw lambskins per day and work eleven months of the year. &rtreturn;This is the only way to compete and survive. Yet, even at this level, profits are almost non-existent, single figure margins. &rtreturn;It does not take a genius to understand how aspiring tanneries who once worked half the year at one third of capacity could not turn a profit even with healthy order books. Hence the closures.&rtreturn;Statistics sometimes reinforce gloom but they don’t tell the whole story. For example, garment exports, by volume, appear static for the first six months of 2005. However, the value of exports has increased, indicating that prominent firms are becoming better at adding value. But, as has long been the case, what isn’t in the statistics is also telling. &rtreturn;Some legitimacy, or reining in, of the luggage trade from Türkiye to Russia was attempted with the ‘special invoice’ procedure effected between the two countries. But these often record inaccurate (lower) value of goods inwards to Russia. &rtreturn;Laws were enacted about 18 months ago but mainly for trade by air passengers. In a matter of months, TIR and land courier business mushroomed. Russians still come to seaside resorts like Antalya to buy leather jackets to sell on, often to cover the cost of a trip to sunny shores.&rtreturn;So-called ‘casual’ trade clocks up $2 billion for all categories of non-official leather exports. Bona fide export figures are only one third of the total, at about $1 billion. Both countries have work to do but their efforts still lean to off-the-record trade.&rtreturn;In last year’s Türkiye survey, Leather International observed that leather producers would have to be more nimble and outward bound. Some, in fact, bounded out of Türkiye altogether to set up in China and Russia. Tulpan Leather were created from a former bovine tannery north of Moscow by Türkiye’s Ismail Boy. Three of Türkiye’s volume footwear makers have inaugurated factories in Russia. One is Aymasan, who will trade under their previous Rockland brand name. Muya are also established shoe producers who see promise in manufacturing nearer to the market and eliminating import-export frustrations. &rtreturn;Most of Türkiye’s other shoe producers are mom-and-pop endeavours battling lower cost imports. The high-end, more productive makers have a better grasp of the market, employ highly skilled workers and contribute the bulk of $185 million worth of footwear exports. &rtreturn;Shoe leather tanners are working steadily and professionally within their niche. However, an eminent shoe leather tanner, based in Tuzla, was recently rumoured to be eyeing Russia.&rtreturn;The Donmez Group, from Izmir’s Menemen tannery zone, closed their tannery in 2004 and relocated to China. They took 15 technicians with them and process doubleface and nappa, and started with about 3,000 skins per day. They had few ideas and did not really know what to expect on their expatriate journey. Antilop is another Turkish name that migrated to China, this time as a leather trader.&rtreturn;Much of this bears out the current thinking about ‘old’ industries left behind in Europe, whilst the dynamic, innovative ones move east to less developed, but more sprightly markets. But it is wrong to think that cheap labour will continue as the magnet in these fertile hubs. &rtreturn;In fact, developing and nurturing human talent (and retaining it) and maximising people skills will be the next nettle for the global leather industry to grasp. A shortage of talented, specialised entrepreneurs in key manufacturing areas has already sent wages higher.&rtreturn;In October 2005, Türkiye began discussions to become a full member of the European Union. Entry talks caused a stir in Europe but probably will not make much difference to tanners. Despite being a member of the European Customs Union since 1996, globalisation has meant that tariffs, quotas and duties on the free movement of goods still impinge in non-beneficial ways. &rtreturn;Much of Turkish business believes they are already European anyway. More worrisome is Türkiye’s current account deficit of $20.7 billion (imports over exports) in the twelve months to last August, one of the largest deficits in the emerging market club.&rtreturn;There are still about 15 tannery machinery producers throughout Türkiye. But only a few, like Ozdersan in Izmir, who specialise in machinery for wool-on processing, can exist by tannery business alone. Most now have mixed business interests. Stalwarts like Yildirim Makina have digressed into other businesses. Türkiye can, nevertheless, offer attractive prices compared with Italy. But market shrinkage has modified machinery makers’ expectations, even though they can still attract high profile international customers like Nugget International in Texas and Henan Prosper of China.&rtreturn;For chemical producers, only two domestic and non multi-national firms, Sarchem and Verbo, make their mark in leather business. But even these rely on servicing other sectors, with leather a very small portion of business. &rtreturn;Although still a family-owned business, Sarchem have achieved remarkable success because of their global outlook, committed spending on R&D and skilful international marketing efforts.&rtreturn;Without exception, other chemical firms servicing Turkish tanners are the well-known big pharma, life science and multi-national names. &rtreturn;Cognis, for example, are owned by private equity funds and, in 2004, recorded sales of €3.07 billion and earnings (before audited adjustments) of €362 million.&rtreturn; Türkiye will host IULTCS’s second Euro congress from May 24-27, 2006. Cognis’ Dr Volkan Candar, with his key global connections, has had a responsible hand in this. For Turkish-based chemical companies, proximity to Russia’s estimated €30 million leather chemical potential is a persuasive drawing card. &rtreturn;Russian tanners have had no resident chemical suppliers and, with imports increasingly expensive, LANXESS and Cognis saw an opportunity to form a local partnership, known as Colan, who will supply the whole range of tanning and finishing chemicals direct.&rtreturn;Chemical companies still don’t know how they will absorb the extra costs of REACh. And tanners would be ostriches if they did not expect to shoulder some of the burden. What is clear, however, is that the image of tanning is still as a lowly and grubby industry that needs to clean itself up. &rtreturn;Few outside the industry seem to have noticed that many contemporary tanneries put the environment first and in Türkiye professional tanners have been committed to a wholesome image for over a decade.