Heaping the pressure on the leather industry

Redwood Comment
Published:  05 February, 2020
Dr Mike Redwood

If ever there was a time to find ways to do things differently, and remotely, now is that time.

With rising costs in China and new perspectives on sustainability and global supply chains having started to be redesigned some time ago, as well as layered on top of that tariff battles with the U.S., and before we could make sense of the medium and long-term implications, we have an outbreak of the corona virus that has brought China to a halt. Given the relatively fragile state of the leather industry, this is the last thing we want. It is hard to contemplate the fact that the world’s second largest economy is largely closed for business, and travel to and from it largely halted.

Despite all the changes of the last few years, China remains integrated into a huge proportion of global supply networks. The move by Hyundai to run down production of cars in its South Korean plants because the Chinese factories supplying parts remain shut is the first of many big interruptions we shall see.

This will continue for a while yet. Reopening a factory in China too early and have an even minor outbreak will lead to closure, quarantine, deep cleaning and much of the rest of the year lost, with huge cash flow implications. So the return to business as normal will be cautious.

With factories in China closed and travel to and from China disrupted, the season is being disrupted, with developers not even being able to work and samples not being produced.

Trade shows have also been hit with Shanghai shows for February all postponed, including the influential yarn show Spinexpo. More significant for leather is the postponement by American Events of the NE Materials Show scheduled for February 5th and 6th and the NW Materials Show planned for February 12th and 13th. The first three months of the year are important ones for trade shows in our industry, with a wide variety of major events around the world. Some, like Lineapelle and APLF, are vital leather industry meeting points and others are more related to the marketplace.

From the current news, a decision on postponing APLF will be made in the next two weeks, but it does not look hopeful. If it does squeak through, numbers will certainly be down as many travellers stay home. On the other hand, Lineapelle, which is still viable without Asian or American visitors, is still going ahead, and it looks as though every effort will be made to keep it so.

All this does little to help the battle against the competition and misguided journalists pandering the vegan agenda, nor the weakness in the overall level of trade. Consumers will not be rushing to shop in a climate of fear, and manufacturers who cannot produce will not be ordering material as they guard their cash. The industry as a whole and every tannery and stakeholder within it will have to reassess every aspect of where they stand and dig deep into creative thinking to work out how to keep advancing while travel is interrupted and elements of both demand and supply are missing. Finding ways to exploit channels that are not impacted by China, new ways of virtually developing articles and exciting customers ahead of the situation being resolved are all required. With this in mind, we should remember that most of the plastic that calls itself “synthetic leather” comes from China, and while China does produce a lot of leather, it does not dominate tanning itself in the way it does so many other sectors. Countries like Italy and India refused to concede market share as the Chinese tanning sector grew. Now is the moment to flex some muscle and regain market share for leather.

Mike Redwood
February 5, 2020

mike@internationalleathermaker.com
Follow Dr Mike Redwood on twitter: @michaelredwood

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