Local sources report that the Turkish tanning and leather footwear industries have been under serious pressure for the past three years with the domestic footwear industry suffering the most. The reasons for this are multiple.
Firstly, the Turkish lira has remained relatively strong in real terms. Manufacturers have also faced higher labour and energy costs compared with countries such as China, Vietnam, Indonesia and more recently Egypt.
Meanwhile, there has been a contraction in orders from many businesses in Europe as well as a decline in demand from domestic consumer buyers. Turkey is no longer seen as a “low cost” manufacturer compared with many countries in Asia and the quality as well as quantity of goods made locally is deemed by some buyers as inferior.
Tanners also complain that leather quality has decreased due to the import of live animals from other countries and changes to breeding methods. Hides and skins are found with more cuts, wire marks and insect damage than in the past, which is lowering overall raw material and finished leather quality.
The domestic leather garment sector has shrunk in size and demand for fur and leather clothing in Europe has decreased with fewer sheep and lamb skins made into garments.
In the domestic tanning sector, few are operating near full capacity and there is a shift towards smaller batch orders rather than high volumes. Tanners are also reducing their raw material stock inventory as global prices are low and this also helps with cashflow. While demand for footwear and garment leather have contracted, production of finished leather for furniture, equestrian, technical and leather goods leathers is more resilient.
A number of the larger tanners also own gelatine plants and buy cheap hides from South America. This is an income stream that is keeping some of them going.
The latest bovine, caprine and ovine prices can be found in the latest SauerReport, but the main concern for tanners is around raw material quality, especially for higher grade cattle hides. For sheep and lambs, the recent Eid al-Adha festival period brought a glut of material to the market. However, with prices remaining at low levels, the cost of collection and preservation meant that many skins were simply discarded and never entered the leather supply chain. There are far fewer tanners processing ovine skins in Turkey today compared with the recent past.
To find out more about the raw materials market and prices for leather visit The Sauer Report or contact Clare Worton at clare@edifydigitalmedia.com for a free sample report.
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