Howe Leather have laid off 65 workers after the company lost a contract with local vehicle manufacturers Mitsubishi. Last September Holden switched their leather business to South Africa, where automotive leather production attracts government subsidies.
US leather companies, Seton Company and Eagle Ottawa, have operations in South Africa and it is believed Eagle Ottawa recently gained the contract to supply Mitsubishi with leather seat covers. Group chief finance officer Graeme Monkhouse said the loss of the contract came as Howe was feeling the effects of the seasonal downturn in the European vehicle market, adding: ‘The whole situation is fraught with irony. Eagle Ottawa was one of the companies that started the WTO case against Howe some time back. The US company took Howe to the WTO over the government’s export facilitation scheme and, later, over a low-interest loan from the government. The matter had been raised with the federal government and trade minister Mark Vaile was talking to his South African counterpart. The Mitsubishi contract comprised about 5% of production. Despite the setback at Howe, the profit forecast of A$17 million (US$11.3 million) for the year just ended still holds.
