Better to relate than legislate

The Redwood Blog
Published:  21 July, 2015
Mike Redwood

When we began Leather Naturally! a lot of cynics loudly stated that all we would do was create more leather sales and raise the price of a material in limited supply to no one's benefit. It was a hugely flawed point of view then and it is shown to be a nonsense now by the current correction going on in the raw material market. 

However many prices fluctuate, leather is a valuable material, and the long term limited supply available to meet the demands of a growing population - and a population growing more wealthy - means that the price of both the raw material and the leather we make from it will always be high, and require us to manage the process of production and marketing of it very carefully.

Right now a lot of discussion is going on about new rules and regulations to get buyers and sellers to behave better at these times when prices are moving, and when any slips can be fatal for tanners who work on narrow margins and weak balance sheets. With the excellent work done over the years by ICHSLTA, our industry has good contracts and probably needs to work harder to get them more widely used rather than trying to solve bad behaviour by more legislation.

One thing that is apparent is that since the loss of the hide auctions a lot of transparency has been lost from our industry and consequently we have become more dependent on the newsletters from various organisations. Well researched, these can be useful in providing the statistical context to help tanners with decisions, but when they move into prediction and speculation we have a problem. At least part of what we have been watching has been a bubble created by synthetic excitement around the supply and demand equation and by a drift away from rational thinking.

It would be much better for tanners to integrate themselves into a network of long term relationships with both suppliers and customers where are all agreed in advance on how to manage price fluctuations as they arise. If the tanner works only on a transactional basis, trying to outsmart the market, then problems will certainly follow. Indeed, given the nature and inherent value of leather, the idea of it being traded transactionally, like a commodity, is alien. Here lies the real problem - we still tan too much leather into standard commodity like materials. This is the tanners' biggest error. Getting away from commodity production, working much more closely with customers on product development and building new services around delivery and costing procedures will eliminate the need for legislative approaches and build much stronger relationships.

And to support all this, leather certainly does need a strong industry promotional campaign to place correctly at the top of consumers’ mind against all the plastics and textiles that try to dethrone it through false advertising. 

 Listen to the podcast here:

Better_Relate_than_Legislate.mp3

Mike Redwood

mike@internationalleathermaker.com

Follow Mike Redwood on twitter: @michaelredwood

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