MARKET REPORT Italy Exports drive Italian tanners A statistical overview of the tanning industry’s current status, from the point of view of Europe’s largest leather maker. In this report, ILM’s Giorgia Airaghi includes interviews with some of Italy’s leading tanners from the three main tanning districts espite a prolonged economic crisis from 2008-09, the Northern region of Veneto, in the Valle del Chiampo; another in Italian tanning industry has managed to increase its Tuscany, between Pisa and Florence; and a third one in output, especially in international markets. It is a Campania, in the province of Avellino. Each of the three world leader behind China in the production of districts has invested heavily in modern central effluent Dfinished leathers, and supplies the most important luxury treatment plants and environmental controls. brands all over the world. The latest production and export data show an increase compared with pre-crisis levels. UNIC industry data Around 30% of all finished leathers exported around the world Last June, the Italian Tanners’ Association (UNIC) held its 69th are “Made in Italy”, what has become a benchmark for quality Annual General Meeting in Milan. During the meeting, the and state-of-the-art environmental safeguards allowing Italian industry data for the sector performance in 2014 was made leather to position itself at the higher end of the market. published. Last year, the sector produced 126.7 million sq m of There are approximately 10,000 tanneries in the world with leather with a total value of €5 billion. The volume was slightly an estimated US$50 billion turnover. According to figures from down (-1.7%) but the total value registered an increase (+1.5%). the Italian Tanners’ Association (UNIC), from this total 1,300 Total exports of leather were up 2.3%, worth €3.9 billion and are Italian companies with a US$5.3 billion turnover and 9% of accounting for 76% of the total production. the global total workforce in the sector. Leather exports to 121 In terms of end-uses, the footwear industry comes first, different international destinations contribute to 75% of the registering a 2.3% decline in volume (figure 1). The leather goods’ total turnover. The footwear industry is the largest buyer of segment saw an increase of 1.4%, mainly due to ongoing demand in Italian leather followed by leather goods, furniture upholstery high-end and luxury segments, where Italian tanners are the global and automotive leathers. Table 1 highlights the increasing leaders. Conversely, the furniture upholstery segment witnessed an number of Leather Working Group (LWG) rated tanneries from 8% decline in volume despite the excellent results of many furniture Italy underlining its shift toward sustainable processing. brands in 2014 (as reported in ILM July-August page 44). The The Italian tannery cluster model is seen as a benchmark for footwear and the furniture sectors include the Russian Federation the industry and has become a blueprint copied all over the as one its main markets and the current conflict has had a major world. There are three main clusters in Italy: one in the impact on production as well as exports. table 1 Italian LWG rated tanneries Conceria Caravaggio – Tuscany Gold Rated Conceria Montebello – Veneto Gold Rated 3C Lavorazioni Pelli – Veneto Silver Rated Artigiano Del Cuoio – Tuscany Silver Rated Conceria Dingo – Tuscany Silver Rated Conceria Martina – Tuscany Silver Rated Conceria Nuova Impala – Tuscany Silver Rated Sifur Conceria – Tuscany Silver Rated Scamosceria del Brenta – Veneto Audited Gorge of Valle del Chiampo 24 september/october 2015 www.internationalleathermaker.com MARKET REPORT Italy 2% 5% On a more positive note, 9% and worth €3.48 billion. 2014 saw some of the Leather exports within the declines replaced by European Community, additional demand from considering both the 15 the automotive leather Figure 1 - Leather production historical and the 13 sector. According to the volume by end-use (2014). recently added UNIC figures, Source: UNIC members, accounted automotive leather 43% for 52% of the total, production rose by 5.6%. 17% n Footwear followed by 26% to the Unsurprisingly, most n Leather goods Far East, 7% to the of the leather made in n Furniture Russian and Balkan Italy last year was used n Car interior regions and 6% to in the medium-high n Garments and gloves NAFTA countries (U.S, product ranges (30%), n Others Canada and Mexico). followed by medium Looking at the breakdown quality market segments of the regional (23%). Both areas remained destinations, China and stable compared with 2013 Hong Kong were the first data. The high and premium 24% markets for the Italian ranges account for 22% and 17% products. Romania was the of the production respectively, second as many Italian producers underlining the growing demand for moved their productions to this higher value and the premium luxury country, increasing the exports to it. (See brands’ use of Italian made leathers. This is figure 3 and 4) also reflected in growth rates of +2.5% for high and +5% for premium leathers. The Unsurprisingly, Veneto tanning district medium-low ranges recorded a slight Numbers and history: within a 130 sq km decrease (0.8%), accounting for 8% of the most of the leather radius this territory houses the largest production. The data confirms that higher made in Italy last tanning district in Europe and is the end leather makers in the Italian tanning leading production centre in Italy with the industry are in the best position for growth, year was used in the highest number of employees. It comprises based on quality, design and fashion (see medium-high product the town of Arzignano and the area around figure 2). Like other developed countries, Chiampo, including Crespadoro, Italy is not competitive when compared in ranges (30%) Montebello, Montorso, Zermeghedo and terms of low manufacturing cost bases. Montecchio Maggiore. followed by medium The first tanning activity in the region Raw material issues quality market dates back to the 1300s, in the area of Analysis by UNIC, based on the balance Bassano del Grappa. The industry started sheets of the top 175 tanneries which segments (23%) to develop after the Second World War, account for 76% of the national output, has expanding to become the first revenue highlighted the impact of the well making industry in the region. Two very documented rise in costs of raw hides and different corporate models coexist. On the skins and semi processed leather one hand, there is a handful of larger (wet-blue, crust), an overall 9% firms such as Gruppo Mastrotto, increase compared with 2013. The 8% Gruppo Peretti, Rino Mastrotto result of record raw material and Gruppo Dani, and, on the prices was a reduction in 17% other hand, there is a large profits and operating quantity of smaller and margins for tanners. Italy medium sized enterprises. buys 93% of its raw All of these are supported material requirements by a strong local supply from outside the 23% Figure 2. Italian leather network of raw country. In 2014, production by value segment materials, leather 817,000 tons of raw (2014). Source: UNIC chemicals and hides and skins, and machinery, many of semi-processed leather n Premium which are global market were imported from 120 n High leaders in their field. different origins, down n Medium-High 22% The Veneto region 4% compared with the n Medium hosts 468 tanneries with previous year. n Low a registered turnover of A total of 324,087 tons €2.7 billion in 2013. of various types of semi Many of the tanners are and finished leathers was specialised in medium- exported from Italy, with a large size bovine hides value of €3.95 billion. destined to both furniture and Finished and sole leathers 30% automotive interiors’ constituted the most exported upholstery, footwear upper and item, accounting for 138,405 tons leather goods. 26 september/october 2015 www.internationalleathermaker.com MARKET REPORT Vietnam Treatment plants - Veneto Figure 3. Leather export value by destination/region (2004-14). The Veneto district has one of the oldest, but still efficiently Source: UNIC – ISTAT (Italian National Statistical Office) running, central effluent treatment plants. Inaugurated in 1978, it represented a huge cost at the time but became a symbol of Current development what local municipalities and tanneries could do together in According to the “The Triveneto Districts Monitor”, an the interest of the environment. The plant is able to treat 30,000 economic publication of the Italian bank Intesa San Paolo, 2014 sq m of industrial effluents and 8-10,000 sq m of civil sewage was a good year for the tanning industry, especially for exports daily, processing up to 50,000 tonnes of dried sludge per year. from the Veneto region which has a higher average trend than Acque del Chiampo, the plant’s managing company, also runs the overall Italian figure. Exports grew to key markets such as nine recycling and landfill sites. the United States, Germany, United Kingdom and Spain, while lower growth was reported in new markets such as Russia and Ukraine (pre-Russia/Ukraine crisis). Tanning production in Arzignano and the leather shoes table 2 Leather export per typology (2014) segment of the Riviera del Brenta, a world-renowned footwear centre, registered record levels of exports in Value Value 2014 that overtook the 2007-08 values. Typology € 000,000 Var. 2013/14 Tons Var. 2013/14 The tanners in Veneto have recently created their own regional association which also includes traders, Large bovine 2,727.2 +2.5% 217.5 +0.3% chemical and machinery producers, the treatment plant operator as well as by-product processors.