Confidence in the future18 April 2006
Some businessmen have adapted to the new circumstances by opening 'virtual tanneries.' This means that they do not have their own tannery, merely a commercial office. The virtual tanner buys raw materials and sends them to a contract tannery to be processed. This gives the virtual tanner greater flexibility and security in a difficult market as there are no fixed costs involved. Others are adapting by taking their product to the heart of the emerging markets. Hong Kong and China are by far the biggest clients of Italian leather exports, taking 58% by weight in the period January to June 2005. With this in mind, several Italian tanners are setting up warehouses in Asia to better serve this key market. There are Chinese flags flying outside tanneries such as Calbe (Mastrotto group) among others, signifying this change in attitude. Environment Environment is the word on everyone's lips in Arzignano. Although to date there is no evidence of a relationship between the tanning industry and the health of the population, the possibility of a link is currently being investigated. Entitled 'Osservatorio Epidemiologico Delio Giacometti', the study is the result of the GIADA project and is a partnership between the local health authority, the City of Arzignano foundation and the Comune di Arzignano. President of the commission for industry in the Regione Veneto, Giuliana Fontanella, states that the incidence of allergies and respiratory problems among the area's inhabitants has come down in recent years. Fontanella says that over the past 15 years there has been continual investment in the sector to reduce the environmental impact, introduce new technology and improve safety and quality. For example, two years ago tanners were offered tax breaks to enable them to improve their machinery park. She adds that the region's environmental policy has sought to improve the quality of air and water, focusing on purification plants and the ability to sustain these economically. In order to restrict the amount of water consumed by the industry, a limit has been set for the maximum quantity of water to be treated. This has also encouraged tanneries to recycle their treated water wherever possible. All capacity has been allocated to existing tanners. It is not possible to purchase more, so anyone wishing to set up a tannery would have to buy another tannery's allowance, thus protecting the area from further demand/ development. A further environmental improvement concerns the disposal of sludge. Until recently, sludge generated in the area was deposited into a landfill. However, this practice has recently been banned by the European Union. Sludge must now be dried in an incinerator to reduce volume, saving space and killing bacteria. The new process implies a large amount of investment. Massimo Confente, Mayor of Chiampo, believes that one of the biggest concerns to residents, the smell generated by the tanning process, will be dealt with as a result of the project. The latest environmental initiative is the groundbreaking 'Acordo di programa', a ten year plan funded by the EU, Regione Veneto and the tanners themselves (contributing €30 million each). It is designed to reduce chrome, sulfate and chloride in effluent, thus improving the quality of the area's rivers. This vast investment in the future underlines the tanners' commitment to stay in Arzignano. According to Massimo Confente, the main objective of the Acordo di Programa is to improve the quality of the final outflow into rivers thus solving the problems caused by tannery effluent. The project includes investment in purification plants and sludge treatment. Stefano Fracasso, Mayor of Arzignano, is also dedicated to environmental matters having previously worked as environment secretary to City Hall (Asesore all'Ambiente). He adds that it is vital to focus on the global economic situation of the area and the Acordo di Programa does this through promoting viable and sustainable environmental solutions. This also encourages tanners to remain in the region instead of shifting production to the developing world as the agreement allows them to make plans for the next ten years, rather than having to seek permission to continue operating each year. Fracasso is proud of the leather industry and its legacy in the area and will do what he can to retain the industry. Giuliana Fontanella believes that Acordo di Programa will safeguard the environment and incentivise the industry. There are several other government initiatives to help the leather sector in the region. The Regione Veneto is also assisting the industry through a research programme to investigate where buyers of high quality leather products are located, enabling local producers to then target these potential clients. In an attempt to address the economic crisis hitting all industries across the region, Regione Veneto is investing in people. There are training programmes in place which target the general workforce, as well as a focus on people in their 40s and 50s who are unemployed, many of whom are women who have been made redundant as a result of the crisis in the textile industry. There is also a university level training programme involving Masters and other specialist courses underway to create a new generation of tannery managers who have the mindset to enable them to compete successfully in the new world market. Fontanella believes that the most secure future for the industry lies in unity. She explains that the latest set of guidelines from the European Union encouraged similar companies within a sector to form 'distretti'. These are groups of 8-10 companies who come together to jointly present their product to a particular market or share technical know-how. In 2003, Regione Veneto passed a law (known as the Pato di distretto) which offered support in the form of grants and low interest loans to companies which came together in this way. As of February 1, 2006, tanners are able to form 'distretti' with companies located outside their geographical area provided they have a similar focus. Linked to this is an incentive for r&d whereby companies can receive grants from the Regione Veneto, provided that their findings are then made available to others in the region. While politicians strongly advocate this unity, tanners themselves are more reluctant due to factors such as local rivalries. However, this kind of thinking is disappearing as the new generations of tannery managers take over. Fontanella believes they are more open minded than their predecessors as they have grown up in a more cosmopolitan environment. She told Leather International: 'Tanners must understand that working together as one they become stronger than their individual parts.' In this vein she advocates developing strong links with India as a future key market. Image Italians realise that it is nigh on impossible to make other countries compete with them on a level playing field in terms of respect for the environment, working conditions etc, so instead they seem to be striving to become a shining example of best practice. Both politicians and tanners are unanimous in their call for a marketing or image campaign to promote these 'ingredients' of Italian leather. Umberto Anzolin, president of the Arzignano Tanners' Association, believes that the sector should attempt to make buyers and clients more aware of the leather making process as well as the ethical implications so that they can make an informed decision when purchasing. Anzolin also suggests that brands are exploiting tanners, citing the following example: the price of raw hides and finished leather went down by 7% in 2004, but the finished product (eg a pair of shoes) increased in price by more than 11%. 'Where has this difference gone?' he demands. Ivan Negro of Conceria Italia is concerned about the damage being done to the image of Italian footwear by falsely labelled imports. The area's image campaign will also be promoting its natural advantages. According to Negro, the most important of these is the experience and know-how of the local workforce. Arzignano has all the necessary factors to produce quality leather with tanneries, chemical producers and machinery makers 'on site'. Most are agreed that expertise and flexibility to respond quickly to new fashions and turn production around to new items is a further advantage over other leather producing areas. Massimo Confente states that 'Arzignano offers diversity, can supply all types of leather and its companies are very flexible, able to change working processes very quickly to adapt to new fashion trends.' The future His counterpart in Arzignano, Stefano Fracasso, is optimistic about the future. He believes that mid-size companies which invest in r&d and organisation will be the most successful while smaller tanneries who align themselves with medium sized companies in 'filiare' will also fare well. To the region's tanners, brand is all. Many agree that the way to survive is to align oneself with a brand whether it be a car manufacturer for automotive leather tanners or luxury brand for leathergoods. One example is Conceria Italia who specialise in motorcycle leathers and have a close relationship with their target brands, supplying the big names such as Dainese. In order to combat the decline in demand that has affected the sector over the past five years, Conceria Italia have recruited a new researcher to investigate new finishing techniques with a brief of creating more resistant leather as well as investing in machinery. Fontanella believes that the future will see further contraction in the number of tanneries in operation. Ivan Negro predicts that contract tanners will be lost. Some fear that the region will become a symbolic 'heart' of the leather industry as major tanners relocate, leaving just the 'virtual tanneries' and commercial offices, while actual production is carried out on other continents. However, the concensus seems to be that the companies who remain have increased their production and have the vision to continue to grow in the future. The investment in new technology and the environment shows confidence in the region - for at least for the next ten years.