Management of crisis

Looking back over world events in the last few years, it seems to me that the 'management of change' has now become the 'management of crisis'. Never a year goes past without something, somewhere, turning the trade upside down. This year, I hardly need to elaborate on the European spread of foot and mouth disease and BSE, the recession in the USA and elsewhere, the Japanese economic crisis and last, but certainly not least, the terrorist attacks in New York and Washington on September 11, with their global impact. Modern technology has reduced world time and distance to 'global village' level. Today, we are constantly being affected by international events, financial, political and geophysical. Our businesses have to bear the brunt of this. Remember the $100 US hide last year? Never had this been heard of before! The reason? The markets thought the spread of European FMD and BSE would severely reduce global hide supplies. As you know, mass market leather production has shifted to Asia. China's recent entry to the WTO can only reinforce that country's aggressive position. Underlining this, the US Trade Report says the value of US whole hide exports to China went up to $327 million during 2001 - a 76% increase over last year - whilst to Hong Kong/ China they increased by 171%. Australia, also, admits that China now dominates their sheepskin market. But, in all this, let us not think that Europe has been knocked out of the marketplace! Europe still has 'state of the art' tanneries producing first class material. Europe still maintains a technical lead that is at the cutting edge. Scandinavia still has some of the finest hides in the world. And imagine the unimaginable: a new pigskin tannery in Germany ten years after pigskin production had been phased out in that country! The world still looks to Italy for a lead in fashion design whilst Türkiye - in the queue for EU membership - is both regaining and strengthening its position as a world leader in 'doubleface'. All of which must go a long way to explain why the Semaine Internationale du Cuir launched a new exhibition in Paris focusing on quality, creativity and fashion. This exhibition has been very well received by the European industry. After last year's collapses in the financial markets, you might well think that demand for high grade material will drop drastically. But may I quote figures produced by Merrill Lynch and Cap Gemini Ernst Young: 'High net worth individuals' (defined as persons with investable assets in excess of $1 million) currently number some 26 million worldwide. Today, their wealth is estimated at $29 trillion. By the year 2005, it is expected to have risen to nearly $40 trillion, which must be music to the ears of, say, 'the big three' in brand names: France's LVMH (Louis Vuitton Moët Hennessey), Switzerland's Richemont and Italy's Gucci Group. However, more significantly, there is a new type of luxury goods' consumer who promises to expand the market dramatically: the middle market consumer trading up to higher levels of quality, taste and aspiration. That trend is also being seen in Asia. Despite economic recession, the recent boom in consumer spending seen in America and certain other western countries has generated a record drawdown of inventories. The bad news is that this drawdown has been financed by allowing the down town shoppers, taking advantage of the lowest interest rates for years, unprecedented levels of credit.