ICT witness further industry decline24 August 2005
In his report, president Kozo Tokunaga emphasised that ICT was going through a period of change and the council was looking closely at what they achieve and what they want from the organisation. He expressed the hope that progress would be made towards agreeing a continuing role and shape for ICT in the future. The future of the number 6 contract and how this would be pursued with ICHSLTA was an important focus of the meeting. Tokunaga believes that the international contract has an important role to play as a basis for orderly trade and that it would be easier to convince the trade to use it more widely if it were simplified. However, current users are concerned that there should be no destabilisation of existing trade agreements. The relationship with ICHSLTA appears to have moved forward and ICT aimed to build on that over the course of the Hong Kong fair. As part of the discussion with Cotance members, ICT agreed to review their doctrine on free trade and see if they can reach a common position on trading issues. The development of a social and ethical code of practice for ICT members had been discussed at a previous meeting, the objective of which is to assist companies in protecting and promoting the image of the industry. This is currently under consideration by members. The ICT also has a new international liaison function within a range of international bodies including ICHSLTA, ISO, FAO, UNEP and Unido. President Tokunaga highlighted the following core problems common to all tanners: * the state of the market for tanners - as both buyers and sellers * environmental issues, consumer legislation and customers' requirements * the image and perception of the industry * raw material price volatility, availability and quality, along with the impact of animal diseases, globalisation and the consequent shifts in capacity and markets and related international trade pressures He continued: 'With these and the ever-present pressures on international trading, we need to continue to learn from each other's experiences, help each other where possible and as an organisation continue to explore ways to encourage and promote operating a broad framework that can assist our industry worldwide.' Su Chaoying, China, told delegates that the Chinese leather industry had faced difficulties in 2004 due to an increase in fuel prices coupled with a rise in labour costs. In 2004, the average cost of labour increased from RMB1,000 (US$120) per month to over RMB1,500 (US$180) today. Chinese production of finished leather reached 500 million sq ft, showing a slight increase on the previous year. Exports of Chinese leather and leathergoods in 2004 had increased by 16% on the previous year. Footwear exports had reached US$14.6 billion. Bülent Hazer, a board member of the Turkish Leather Industrialists association said that the difficulties affecting the industry in 2004 were not as severe in Türkiye as in other countries. The industry consists of 1,200 tanners and Türkiye is the largest exporter of doubleface and sheep nappa. Labour costs in Türkiye average US$500-600 per month and Hazer stated that this made competing with China very difficult. Helmutt Schmidt gave Austria's country report. Of the six Austrian tanneries, only three remain open for business. All three are involved in automotive leathers. This sector of the industry is stronger than others but is still not particularly healthy. All three of the tanneries offer a cut to pattern service which allows them to export ready made seats. 100% of production is exported to clients such as the European automotive and US and Australian leather industries. Reinhard Schneider of Germany told delegates of the closure of a major wet-blue unit at one of Germany's largest tanneries. Turnover across Germany is down 15% to e484 million due to lower raw materials prices and lower levels of production. The domestic market is very depressed. The government is beginning reforms to counteract the high price of labour for industry in general. Further closures are predicted among smaller tanneries. The German industry is facing strong competition from wet-blue tanneries in Eastern European countries such as Poland and the Czech Republic, as these areas currently have lower production costs and less stringent environmental regulations. This will change, however, as these countries join the EU, and an increase in displacement to locations such as the Ukraine is expected. To counter this, the German industry has begun to concentrate more on finishing and the higher value end of the market for automotive leathers. The furniture sector has had a very difficult 2004 and production has decreased by 10% with strong competition faced from Latin America. The weakness of the dollar against the euro has made exports increasingly difficult. The shoe sector has only six tanneries left, serving niche markets. Further concentration of the industry is predicted for the future. The US representative Bob Schnebel, president of Leather Industries of America, told delegates that Mexico is the major trading partner of the USA. However, there have been significant increases in exports of wet-blue to Hong Kong and China. China features prominently in imports to the USA. In 2004, the USA imported 1.8 billion pairs of footwear, 1.5 billion of which was from China. The UK leather industry has experienced a 15% reduction in the number of employees. There are now 2,300 people employed in 30 tanneries. Three of these tanneries represent 50% of all employees and turnover. The UK leather industry concentrates on niche products so that almost every tannery makes something different, which leads to good opportunities for co-operation. UK production is 85% bovine and 15% ovine. In 2004, the last remaining clothing tanner in Northern Ireland closed. There are now no leather producers in Ireland and only one fellmonger remains in the UK. The weakness of the dollar is affecting tanners with a US or Far East customer base while those who focus on the euro zone are doing much better. Exports of bovine wet-blue are still good. Large numbers of raw hides are being exported to China. The UK produces 3.2 million raw hides per year. Ireland produces 2.2 million raw hides per year. At the meeting, the draft code of conduct was ratified as an official ICT draft and national associations were asked to endorse it and encourage members to adhere to it. It is described as a defence for the industry when challenged by consumers or animal rights activists. The code of conduct covers areas such as labour, working hours and conditions, collective bargaining, non-discrimination, environmental standards and animal welfare.