Automotive leather remains strong

12 September 2004

As the American tanning industry closed the book for 2003, ever the optimist, the US tanner looked forward to new challenges, opportunities and plain hard work, despite the loss of much of his traditional domestic customer base. Government estimates of annual footwear production in the US hover somewhere around 40 million pairs, of which 20 million are slippers. Contrast this with the 1.6 billion pairs that were imported into the US in 2003, of which 1.6 billion originated in China. On the upholstery front, automotive leather upholstery production was again strong for American producers, while furniture leather production continued to shrink. Much of the leather was imported from South America at the low end and from Europe at the high end. In addition, US furniture manufacturing continued to decline due to increasing amounts of furniture imported from China. Mexico is still the major market for the US in both exports and imports of leather, most of which fall in the automotive upholstery categories. The year 2003 ended with US exports to Mexico at the $403 million mark and imports from Mexico at the $1.4 billion level. These numbers should continue to increase in the foreseeable future. Total leather exports for 2003 were at the $1.2 billion level. The new Leather Research Laboratory at the University of Cincinnati had a record-setting array of analytical services for the industry's producers and users. In addition, the laboratory is sponsoring a record four seminars during 2004. Ever vigilant in the regulatory arena, the expertise of the laboratory staff complements the work of the LIA's environmental team in addressing the many issues arising worldwide that may have a potential impact in the US. This is a time when the US leather industry must be especially vigilant in the trade arena. The trend is to enter into new free trade agreements around the globe, most often with developing countries. At the close of 2003, many determined and innovative people and organisations remained active in the American industry despite severe economic duress. Events occurring thousands of miles away, driven by low-wage players, have impacted not only on the leather industry but also on other manufacturing industries. Towards the end of last year, one of America's most important automotive upholstery leather tanners, Garden State Tanning decided to change their name to GST AutoLeather Inc to better reflect the focus of their business. Their ties with Garden State, New Jersey, ended in 2000 when their former owner, US Industries, spun off a group of companies. There have been a number of changes in personnel in recent years and their president and ceo resigned recently and has been replaced by Dennis Hiller. For the future, the company plan to increase production in China, where the leather is destined primarily for cars manufactured in China. In October 2002, the company announced that they had joined forces with two Chinese companies, the Richina Group and Shanghai Light Industry Holdings to build an automotive leather finishing plant in Shanghai. It is expected to reach full capacity of 50 million sq ft by 2006. Also at the end of last year, the US hide industry was hit by the discovery of a dairy cow, slaughtered on December 9, which was deemed to be the first case of BSE in the country. It later transpired that the cow was of Canadian origin but US beef and hides were hit by embargoes from many countries until the matter was resolved. Despite this, only 22% of the US population were reported as changing their buying habits, according to a Colorado State University study. Even during the scare, consumer confidence remained high. At the beginning of June this year, USDA began their expanded BSE testing programme, with the goal of testing 200,000-260,000 cattle over the next year-to-eighteen months. At the end of the same month, USDA were able to announce that two animals, which preliminary tests indicated were positive for BSE, had later been proved negative at the government laboratory in Ames, Iowa. Chemical specialists Atlas are expanding their factory site in Newark, New Jersey, which will provide a purpose-built, fully-equipped pilot plant alongside their existing production, laboratory and office facilities. Construction is scheduled for completion this year. In addition, Atlas have focused on locating staff close to major international markets. From July, they have had staff located permanently in China, as well as in other key markets.

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