Sounds so easy!

Who hasn’t come across someone in the execution of his or her work, who thought he’d be able to make a financial killing by becoming a cattle farmer, or a hide and skin trader or agent, or a tanner, not to speak of finished leather merchants or shoe manufacturers who, according to a lot of outsiders, are all supposed to make wagon loads of money practically without getting out of bed in the morning.
The most common approach is the one that informs you by email or fax, that ‘we have so many raw hides and skins, that are so cheap, which we throw away, that we need to transform these into leather. We want to set up a tannery. Please send your offer’. The hides and skins that are available, are always of excellent quality, practically the best in the world. And of course for good measure you simply put up a shed next door and, olé, you have your own shoe factory with people lining up outside your front door to buy the shoes. Upstream it’s even easier as people believe that having a cow or a sheep or a goat means having money in the bank. It’s actually so simple: in fact you just pick up a cow, find her an active (and attractive) bull ready to do ‘the job’ and after a short wait there is your next generation, free of charge. All you have to do then is to have the calf graze, let it grow by itself and by the time you have the charcoal glowing your steak is on the table, the skin ready for processing and the money in your account.
Hides and skins are really dirt-cheap these days, and I can’t remember when they were any cheaper during the last 35-40 years. Unsold stocks around the world are said to be huge and in Europe I am told abattoirs pay in order to have the hides picked up by the collectors who only less than a year ago had to pay in order to get the same hides. This situation actually gives proof that hides and skins are a by-product of the meat industry, and all the tree huggers and PETA lovers should by now get it into their heads that each day animals are killed for their meat and the hides are of no consequence in that process. The meat is consumed and in times like these, the hides are stocked, unsold.
So in this crisis period it would be great starting a new tannery, because there is an abundance of raw materials, which are cheap. A new tannery doesn’t have the burden of an existing tannery that has expensive raw stocks and it has the advantage that machine manufacturers are more than willing to take a sharp look at their prices in order to keep their workers on the job. Fortunately or unfortunately starting a new tannery is not that easy. The first and foremost requirement is money, which serves to develop the project, have a factory building constructed, buy machines and have them installed together with the electrical, hydraulic and pneumatic plants. Then you need to add an effluent plant. All together a medium tannery that will produce half a million square foot of finished leather per month will cost somewhere between $3-4 million, depending whether you buy brand new or reconditioned machines and whether you cut corners in terms of workers’ safety and effluent treatment.
It obviously also depends where you construct the tannery and with what construction materials. An important consideration now is the application of modern technologies in terms of energy conservation, recycling etc. A Limeblast on energy conservation is in the pipeline for after the summer.
However, those who write the emails or faxes with the intention of buying a tannery off the shelf, probably think that with some loose change they can buy a fully fledged tannery and when they hear the actual amount necessary to invest, and the time necessary before production can start, all of a sudden they disappear. The easiest thing to test whether an enquiry is serious in its intent or not is to ask the author for a deposit of $5-10,000 in order to make a project study. 99.99% of all interested parties suddenly disappear without trace. In short there is a lot curiosity but very little serious intent.
In other cases large amounts of money are actually being invested in tannery projects by people who don’t have an inkling about the tanning business, ‘associates’ of those that ask for offers for new tanneries, but who have had the opportunity and capacity to generate funds, in many cases public funds. When the source of money dries up and the going becomes tougher, these tanneries unavoidably end up closing down, leaving all those newly bought and sometimes not even installed machines unused and gathering dust. In Africa, as there were in the former Soviet Union at the end of the communist empire, there are a large number of such tanneries, the notorious white elephants of which many have been built with public money, financed and/or donated by western governments or international organisations.
Even in theoretically viable existing tanneries, when the money flow dries up many slowly die because there are no funds for the purchase of spare parts or general maintenance. Lack of funds makes tanners decide to operate machines without maintenance until they break down, not realising that repairs are far more expensive than maintenance. Obviously machines that do not function properly produce bad quality. Bad quality generates claims and reduced prices. In short one enters into a vicious cycle, which gets you deeper and deeper into the slump.
One way or another, tannery business and all the industries around it, like any other industry, is for the experts! Those that know how to manage a tannery, those that have a vision, will survive and prosper.
I would like to back-up a quote from Ron Sauer during his seminar during APLF in Hong Kong (see Leather International, May 2009, page 30): ‘this industry doesn’t want to pay for the whistles and bells that it needs in order to properly function and for its proper representation. The existing organisations are defunct and are only names that look back at long standing traditions, doing nothing.’ I took a shot at ICT and ICSHLTA several years ago and was told that I was out of line. Reality shows that I was right. Ron’s idea to set up a new industrial organisation with new faces and new ideas without the baggage of the past would be a winner, but who is going to organise this?

Sam Setter
samsetter2009@gmail.com