Exports drive Italian tanners

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
D
espite a prolonged economic crisis from 2008-09, the
Italian tanning industry has managed to increase its
output, especially in international markets. It is a
world leader behind China in the production of
finished leathers, and supplies the most important luxury
brands all over the world. The latest production and export
data show an increase compared with pre-crisis levels.
Around 30% of all finished leathers exported around the world
are “Made in Italy”, what has become a benchmark for quality
and state-of-the-art environmental safeguards allowing Italian
made leather to position itself at the higher end of the market.
There are approximately 10,000 tanneries in the world with
an estimated US$50 billion turnover. According to figures from
the Italian Tanners’ Association (UNIC), from this total 1,300
are Italian companies with a US$5.3 billion turnover and 9% of
the global total workforce in the sector. Leather exports to 121
different international destinations contribute to 75% of the
total turnover. The footwear industry is the largest buyer of
Italian leather followed by leather goods, furniture upholstery
and automotive leathers. Table 1 highlights the increasing
number of Leather Working Group (LWG) rated tanneries from
Italy underlining its shift toward sustainable processing.
The Italian tannery cluster model is seen as a benchmark for
the industry and has become a blueprint copied all over the
world. There are three main clusters in Italy: one in the
table 1
Northern region of Veneto, in the Valle del Chiampo; another in
Tuscany, between Pisa and Florence; and a third one in
Campania, in the province of Avellino. Each of the three
districts has invested heavily in modern central effluent
treatment plants and environmental controls.
UNIC industry data
Last June, the Italian Tanners’ Association (UNIC) held its 69th
Annual General Meeting in Milan. During the meeting, the
industry data for the sector performance in 2014 was
published. Last year, the sector produced 126.7 million sq m of
leather with a total value of €5 billion. The volume was slightly
down (-1.7%) but the total value registered an increase (+1.5%).
Total exports of leather were up 2.3%, worth €3.9 billion and
accounting for 76% of the total production.
In terms of end-uses, the footwear industry comes first,
registering a 2.3% decline in volume (figure 1). The leather goods’
segment saw an increase of 1.4%, mainly due to ongoing demand in
high-end and luxury segments, where Italian tanners are the global
leaders. Conversely, the furniture upholstery segment witnessed an
8% decline in volume despite the excellent results of many furniture
brands in 2014 (as reported in ILM July-August page 44). The
footwear and the furniture sectors include the Russian Federation
as one its main markets and the current conflict has had a major
impact on production as well as exports.
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
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2%
5%
On a more positive note,
2014 saw some of the
declines replaced by
additional demand from
the automotive leather
sector. According to the
UNIC figures,
automotive leather
17%
production rose by 5.6%.
Unsurprisingly, most
of the leather made in
Italy last year was used
in the medium-high
product ranges (30%),
followed by medium
quality market segments
(23%). Both areas remained
stable compared with 2013
data. The high and premium
ranges account for 22% and 17%
of the production respectively,
underlining the growing demand for
higher value and the premium luxury
brands’ use of Italian made leathers. This is
also reflected in growth rates of +2.5% for
high and +5% for premium leathers. The
medium-low ranges recorded a slight
decrease (0.8%), accounting for 8% of the
production. The data confirms that higher
end leather makers in the Italian tanning
industry are in the best position for growth,
based on quality, design and fashion (see
figure 2). Like other developed countries,
Italy is not competitive when compared in
terms of low manufacturing cost bases.
Raw material issues
Analysis by UNIC, based on the balance
sheets of the top 175 tanneries which
account for 76% of the national output, has
highlighted the impact of the well
documented rise in costs of raw hides and
skins and semi processed leather
(wet-blue, crust), an overall 9%
increase compared with 2013. The
result of record raw material
prices was a reduction in
profits and operating
margins for tanners. Italy
buys 93% of its raw
material requirements
from outside the
23%
country. In 2014,
817,000 tons of raw
hides and skins, and
semi-processed leather
were imported from 120
different origins, down
4% compared with the
previous year.
A total of 324,087 tons
of various types of semi
and finished leathers was
exported from Italy, with a
value of €3.95 billion.
Finished and sole leathers
constituted the most exported
item, accounting for 138,405 tons
26
september/october 2015
9%
Figure 1 - Leather production
volume by end-use (2014).
Source: UNIC
n Footwear
Leather goods
n Furniture
n Car interior
n Garments and gloves
n Others
n
24%
Unsurprisingly,
most of the leather
made in Italy last
year was used in the
medium-high product
ranges (30%)
followed by medium
quality market
segments (23%)
8%
17%
Figure 2. Italian leather
production by value segment
(2014). Source: UNIC
Premium
n High
n Medium-High
n Medium
n Low
n
30%
and worth €3.48 billion.
Leather exports within the
European Community,
considering both the 15
historical and the 13
recently added
members, accounted
for 52% of the total,
43%
followed by 26% to the
Far East, 7% to the
Russian and Balkan
regions and 6% to
NAFTA countries (U.S,
Canada and Mexico).
Looking at the breakdown
of the regional
destinations, China and
Hong Kong were the first
markets for the Italian
products. Romania was the
second as many Italian producers
moved their productions to this
country, increasing the exports to it. (See
figure 3 and 4)
Veneto tanning district
Numbers and history: within a 130 sq km
radius this territory houses the largest
tanning district in Europe and is the
leading production centre in Italy with the
highest number of employees. It comprises
the town of Arzignano and the area around
Chiampo, including Crespadoro,
Montebello, Montorso, Zermeghedo and
Montecchio Maggiore.
The first tanning activity in the region
dates back to the 1300s, in the area of
Bassano del Grappa. The industry started
to develop after the Second World War,
expanding to become the first revenue
making industry in the region. Two very
different corporate models coexist. On the
one hand, there is a handful of larger
firms such as Gruppo Mastrotto,
Gruppo Peretti, Rino Mastrotto
and Gruppo Dani, and, on the
other hand, there is a large
quantity of smaller and
medium sized enterprises.
All of these are supported
by a strong local supply
network of raw
materials, leather
chemicals and
machinery, many of
which are global market
leaders in their field.
The Veneto region
22%
hosts 468 tanneries with
a registered turnover of
€2.7 billion in 2013.
Many of the tanners are
specialised in mediumlarge size bovine hides
destined to both furniture and
automotive interiors’
upholstery, footwear upper and
leather goods.
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Treatment plants - Veneto
Figure 3. Leather export value by destination/region (2004-14).
The Veneto district has one of the oldest, but still efficiently
running, central effluent treatment plants. Inaugurated in 1978,
it represented a huge cost at the time but became a symbol of
what local municipalities and tanneries could do together in
the interest of the environment. The plant is able to treat 30,000
sq m of industrial effluents and 8-10,000 sq m of civil sewage
daily, processing up to 50,000 tonnes of dried sludge per year.
Acque del Chiampo, the plant’s managing company, also runs
nine recycling and landfill sites.
table 2
Leather export per typology (2014)
Typology
Value
€ 000,000
Tons
Large bovine
2,727.2
+2.5%
217.5
Small bovine
447.4
+0.2%
78.2
Sheep
200.7
-10.2%
4.1
Goat
75.4
-17.2%
2.1
Reptile
64.9
-2.6%
0.1
Pigs
30.6
+4.8%
2.0
Other animals
44.4
-5.8%
2.4
Chamois
102.1
+24.8%
4.3
Patent
266.7
+19.1%
13.4
Fur
113.9
-17.0%
0.8
4,073.2
+1.6%
324.8
Total
28
Var. 2013/14
september/october 2015
Source: UNIC – ISTAT (Italian National Statistical Office)
Current development
According to the “The Triveneto Districts Monitor”, an
economic publication of the Italian bank Intesa San Paolo, 2014
was a good year for the tanning industry, especially for exports
from the Veneto region which has a higher average trend than
the overall Italian figure. Exports grew to key markets such as
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
segment of the Riviera del Brenta, a world-renowned
footwear centre, registered record levels of exports in
Value
2014 that overtook the 2007-08 values.
The tanners in Veneto have recently created their
Var. 2013/14
own regional association which also includes traders,
chemical and machinery producers, the treatment
+0.3%
plant operator as well as by-product processors. Called
“Distretto della Pelle” (Leather District), the 90
-6.9%
companies that comprise the association have
-16.8%
appointed the industrial economist and researcher
from the Cà Foscari University, Dr Paolo Gurisatti, to
-10.4%
run the association. In an interview with ILM, he
focused on the future difficulties and challenges facing
-11.2%
the tanning industry, especially in what concerns the
+3.3%
environment. “If we all work together it is easier. For
example, if we are not able to extract heavy metals
+3.4%
from the effluents, we all have a talk together, tanners,
chemists and machinery producers, to find a way to
+24.2%
simplify the process”, he explained. The members share
ideas for dealing with waste, such as reusing the wastes
+19.6%
as fertilisers or other biological nutrients for farming.
+0.8%
Through cooperation with the Stazione
Sperimentale, based in Naples and headed by Dr Paolo
-1.0%
Gurisatti, the Veneto leather association has
established a two-year post-degree course in three
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The Greek situation, and the consequent
higher education centres in the area. The
weakening of the Euro, is mainly seen as a
aim of the project is to train the next
good opportunity for Italian and European
generation of tannery technicians with a
manufacturers to become increasingly more
strong focus on the environment. One of
competitive in international markets.
the major benefits of the courses will be the
“Despite the fact that Greece seems to have
presence of a teaching staff comprised of
found an agreement with Europe, I believe
50% by technicians and engineers having
the financial market has already served the
experience in the industry.
repercussions of this sad situation. The
Another area the association has engaged
current weakness of the Euro is to be
with is improving the health and safety and
interpreted as a positive factor that allows
working conditions in the tanneries.
us, Italian and European producers, to be
“Following the changes made, we have seen
increasingly more interesting in the global
a decrease in the number of lung diseases
market”, said Giancarlo Dani, President of
among the workers, after shifting some
Gruppo Dani. However, Luca Pretto, from
finishing operations from spray guns or
Conceria Pasubio says: “The possible loss of
solvent varnishing machines”, says
trust in the euro currency and in Europe
Gurisatti. “We want to maintain the
itself, combined with the possibility that
traditions and methods but within a
this is a non-reversible choice, is creating a
modern context, highlighting an ethical
state of uncertainty which, in the best case
code, reporting regulations and
scenario, defers and reduces the customers’
environmental protection. We want any bad
Giancarlo Dani, Gruppo Dani
propensity to purchase and this is not good
behaviour to be well stopped before we
for the Italian economy”.
have an environmental disaster to deal with”, he added.
The situation in Russia, due to the ongoing tensions in
Ukraine and the trade restrictions, has had a negative impact
Leading tanners - Veneto
on tanners in Italy. Many leather makers are having a hard time
ILM asked some of the most important Veneto based tanners
as the Russian Federation is among the top five export markets,
for their opinions on the current challenges facing the industry.
accounting for €866 million in 2013. Many believe the situation
The tanners in Veneto see their district as the strongest in the
has been badly managed and the quick action adopted by the
country, however, they also told ILM that many segments have
EU has impacted negatively on Italy’s tanners. “Wars only lead
slowed down considerably in 2015. According to them, the
to death while peace, on the contrary, brings us prosperity”,
footwear and fashion sectors (leather goods), in particular,
stated Giancarlo Dani.
have decreased by 40% and 30% respectively. Much of this is
However, the slowing down of the BRIC economies is not a
linked to the high raw materials prices and the subsequent
major concern for the Veneto tanners interviewed by ILM. “I
finished leather price peaks seen at the end of last year. Many
don’t believe that the current slowing down of the BRICs could
now see the current price levels as more “normal”. The recent
influence the Italian leather market, not on an export level nor
decline in raw materials prices should attract many returning,
for production. Leather is a precious material, a mix of quality,
and maybe some new, customers who moved away from
uniqueness and beauty”, added Dani.
leather when prices became too high.
Central treatment plant in Arzignano
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and San Miniato. It has a drying plant for
sludge converting it into brick production or
for agriculture as a fertilizer.
Consorzio Recupero Cromo (Chrome
Recycling Consortium) is a private company
comprising 120 tanneries to recycle
chromium liquors. The recovered chrome is
returned to the tanners for re-use. The
recovery plant is able to process 21,000 kg/
day of basic chromium sulphate and removes
chromium waste from tannery sludge.
Consorzio S.G.S. is a private company
with 230 member tanners supplying waste
fleshings. It processes 70,000 tons of
fleshings per year.
China and its slowing economy could have
repercussions for Italian exports and
production but, in general, leather is believed
to be a precious enough material for
international producers to keep asking for it.
Finally, ILM also asked the Veneto
tanners what key characteristics a company
should have to survive in an increasingly
globalised world. To Gianfranco Delle Mese,
from Conceria Montebello, “a company
should continuously evolve with flexibility.
To create value, it should create efficiencies
that improve the product and make it less
expensive and focus on the total quality of
the system, creativity, service and
technology”.
Tuscany tanning district
Recent developments
Numbers and history: With its 300
tanneries, the Tuscan cluster includes Santa Croce sull’Arno,
Bientina, Castelfranco di Sotto, Montopoli Val d’Arno, San
Miniato, Santa Maria a Monte within the province of Pisa, and
Fucecchio in the Florentine province.
The first tanning settlements date back to the mid-800s, but
the development that really transformed the region began in
the 1950-60s. Tuscan tanners account for 28% of the national
turnover and are characterised by a high level of craftsmanship,
with a particular focus on higher end fashion. Production is
focused on small-medium sized cattle and calfskins for
footwear, leather goods and sole leather. There is a sub-cluster
with the region that focuses on sole leather, located in San
Miniato and Ponte a Egola.
The Tuscan tanners have also established two leather
promotion consortia: Cuoio di Toscana (Tuscan Leather) and
Vera Pelle Italiana Conciata al Vegetale (Real Italian Vegetable
Tanned Leather) that created the brand “Pelle di Toscana”, a
recognition given to the best companies according to both
social and environmental criteria. The area is famous for high
quality, natural vegetable tanned leathers.
Treatment plants - Tuscany
In the past ten years, the tanners in the area
have increased their production output.
According to data from Intesa San Paolo bank, exports from the
Florentine leather and footwear segments during 2014 reached
a record figure of €3.1 billion, growing 11.8% and accounting
for almost 25% of the “Made in Tuscany” exports. The main
export markets are the U.S., which registered a 10.9% increase,
while Russia and South Korea have declined 14.7% and 6.6%
respectively.
Stefano Caponi, Superior Tannery
The current circumstances have
cooled down compared to the recent
past. After an important recovery in
the past 4-5 years, the demand is
slowing down this year.
A double-digit growth of 16.7% for the leather and footwear
segment in Arezzo was achieved with the U.S. being the first
destination, accounting for €164 million. However, tanners in
the district experienced a decline in output of 6.8% from the
Santa Croce sull’Arno area.
The Tuscan district has made environmental sustainability a key.
The cooperation between public administration and tanners has
led to the construction of treatment plants with both private and
Leading tanners - Tuscany
public investments. Six different complementary companies
The raw material price decreases of the past months is a “blast
manage the treatment plants in the area.
of oxygen” for many, but is seen as temporary since the general
Consorzio Depuratore di Santa Croce sull’Arno (Santa Croce
trend for lower meat consumption will decrease the availability
sull’Arno Treatment Plant Consortium) covers 474 companies.
of hides and skins if there is an upswing of production in the
Consorzio Aquarno Spa (Aquarno Consortium) is a mainly
Autumn. “I doubt we’ll see the same decrease in Autumn,
private consortium, running the
mainly because the drop in beef
treatment plant at Santa Croce which
consumption means there will be an
purifies around 4 million sq m of
increasingly low availability of raw hides
industrial waste plus 1 million sq m of
on the market”, commented Franco
civil waste per year, within the
Donati, President of Assoconciatori.
Municipalities of Santa Croce,
If the Greek situation is less of a
Castelfranco and Fucecchio.
concern, the continuing sanctions to
Ecoespanso Srl is a mainly private
Russia are defined as a “disaster” as
company with the aim of developing,
Russian countermeasures are having a
constructing and running the treatment
direct impact on the fashion and
of waste sludge produced by the cluster
footwear segments.
treatment plants. It has an annual
The slowing down of the BRIC nations,
capacity of 100-120,000 tons, which are
in particular Russia and China, is
transformed in inert material to be
penalising exports. However, Stefano
re-used for other productive processes
Caponi, President of Superior Tannery,
without having to dispose in landfill.
pointed out that “the growth peak has
Consorzio Cuoiodepur is a mainly private
already been reached and we were aware
company that runs the treatment plant for
that this would have happened,
Salvatore Mercogliano, General Secretary,
155 tanneries located around Ponte a Egola
eventually”.
UNIC, the Italian Tanners’ Association
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september/october 2015
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17%
The tanners in Tuscany
confirmed the importance
of flexibility as one of the
key characteristics for a
successful company, but
Caponi underlined two
other factors. “I believe
that establishing a goal,
a target, is crucial as
well as working for, and
with, the client to satisfy
the demands of one’s
own market end,
whatever this is”.
Campania tanning
district
Figure 4. Major export
destinations for Italian leather
by value 2014. Source: UNIC
36%
elaborations on ISTAT data (Italian
National Statistical Office)
China and Hong Kong
n Romania n Spain
n Germany n France
n Portugal n U.S. n Poland
n Vietnam n Tunisia
n Others
9%
n
3%
Numbers and history: There
are two main tanning centres in
3%
Campania, one centre in Solofra,
4%
5%
in the province of Avellino, and
another in Grumo Nevano-Aversa,
between the provinces of Naples and
Caserta. Some records date the first tanning
settlements in the area of Solofra back to the Samnites
period. The roots of the tanning industry date back to the
Middle Ages and several coexisting factors explain the choice
of the region: abundance of water, the presence of chestnut
woods and an excellent geographical position thanks to the
proximity of the commercial ports of Naples and Salerno.
Solofra’s territory covers an area of 115 sq km in the southwestern province of Avellino. The cluster includes the
municipalities of Montoro Inferiore, Montoro Superiore and
Serino with around 400 companies between tanneries, tier-1s
and garment manufacturer representing a turnover of €1.5
billion, with a strong focus on sheep and goatskins.
The cluster of Grumo Nevano-Aversa is in the centre of the
region, between Naples and Caserta, covering an area of almost
160 sq km. Its origin, however, is to be found in the city of
Grumo Nevano.
5%
7%
established in 1984 under
the umbrella company
Co.Di.So., the former
manager of the treatment
plant before COGEI. The
current situation
remains unclear to this
day.
Current
developments
The Solofra tanning
district today produces
all types of leather but is
particularly known for the
production of small skins.
6%
Unlike the other two major
clusters, tanners in the region
work more for the domestic
5%
market, but exports are growing.
With regards to the environment,
the local produces have created the
eco-compatibility brand “Distretto
conciario di Solofra”.
Leading tanners - Campania
The southern tanning district works closely with luxury brands
which have lowered the number of orders compared with
recent years. Tanners in the area contacted by ILM said to be
cautiously optimistic because they believe orders and
production will return shortly. “The current circumstances
have cooled down compared to the recent past. After an
important recovery in the past 4-5 years, the demand is slowing
down this year, some big firms having declared to prefer to
empty the warehouses prior to restarting supply. Luckily, it’s
not a trend that concerns all the major brands”, said Giovanni
Russo, President of Russo di Casandrino.
The tanners report that raw material price decreases have, so
far, been barely felt and fed through. In fact, they claim that
some types and/or origins of skins have even increased their
prices but, as some explained, the raw materials’ market is
complex and subject to speculation, hugely affecting prices.
Treatment plants - Campania
Tanners engaged in producing leather for the footwear segment
The environmental situation in Campania is an extremely
describe the Russian situation as a “frontal clash” and a big mistake.
delicate matter. Since the 1970s, there has been a much
The tanning industry in the area has been strongly hit by the
publicised illegal dumping of industrial waste and toxic and
Russian export ban on footwear. They blame Northern European
nuclear refuses in the countryside, often followed by fires that
countries for almost never taking into account the interests of the
released harmful substances into the soil and the air. Moreover,
Southern countries within the EU. According to Giovanni Russo, “to
since mid-1990s, municipal and industrial solid waste was
Italian tanners, Russia is a main supply market
dumped into overfilled landfills. Despite the
of semi finished wet-blue, which has been
countless measures employed by the region
blocked since last October due to the export
and the state to solve the situation, the
ban imposed by local authorities. They
problem reached a peak in December 2007,
legitimise their actions saying it is a
when municipal workers refused to pick up
safeguarding measure for their local tanneries
any waste as it was deemed too dangerous.
and footwear producers, but it is hard to think
The situation has been partially solved only
there is no link with the European sanctions
in 2012, by shipping the garbage to an
and the current climate”.
incinerator in Rotterdam, the Netherlands.
The Greek situation and weaker euro are
The situation with the treatment plants in
seen both as an opportunity and an
the tanning cluster is almost as complicated
inconvenience. The weaker euro is positive
as the domestic garbage collection. In April
for the non-European exports, however, it
2015, COGEI, a company that has been
has had a negative impact on the purchase
running the treatment plant of Carpisano
of raw materials outside the EU borders.
since 2010, found itself in dispute with the
Tanners contacted by ILM were also
local authorities. After a period of
concerned about the double-digit slowing
uncertainty, the tanners requested to run
exports to the Chinese market, their main
the treatment plant themselves just like in
export destination.
Veneto and Tuscany, under the association
New President of UNIC, Giovanni
Co.De.So., a consortium of tanners
Russo of Russo di Casandrino
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september/october 2015
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