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Leather tanners have suffered over the past five years. Falling demand from auto, footwear and furniture manufacturers caused double-digit drops in revenue. The industry will stabilize over the coming years, as demand returns slowly, particularly in the global footwear market. However, price-conscious consumers will increasingly favor substitute products made from cheaper materials, such as vinyl and plastic. In addition, competition from imports will continue to pressure domestic operations. For these reasons, industry research firm IBISWorld has added a report on the Leather Tanning & Finishing industry to its growing industry report collection.
Los Angeles, CA (PRWEB) August 05, 2012
The Leather Tanning and Finishing industry suffered during the five years to 2012. Low disposable income during the recession led consumers to tighten budgets and buy fewer leather luxury items, such as handbags, says IBISWorld industry analyst Olivia Tang. Instead, people substituted products made of less expensive materials like faux leather. In addition, consumers delayed durable goods purchases from downstream industries like household furniture manufacturing and car and automobile manufacturing. However, rising demand beginning in 2010, coupled with a 24.0% spike in hide prices during the same year, caused revenue to skyrocket 61.9%. This effect softened previous revenue declines. Consequently, from 2007 to 2012, revenue is anticipated to fall 1.0% per year on average to $1.8 billion, including a 1.5% drop in 2012 due to intensifying competition from imports and substitute products. US leather tanners remain the world's largest exporter of leather in 2012, according to the US Hide Association. US firms often export hides to lower-cost countries for further processing, and then reimport the finished leather. Additionally, US firms supply leather to the increasing number of overseas downstream manufacturers. Therefore, exports as a share of revenue are expected increase.
However, US firms struggle when competing with low-cost tanners abroad that supply leather at a cheaper price. Imports as a share of domestic demand are expected to grow from 2007 to 2012. Also, firms face price pressures from rising operating costs and poor downstream demand. As a result, industry profit declined. The Leather Tanning and Finishing industry is mostly made of up small enterprises – namely non-employers – that generate a miniscule portion of revenue. The large proportion of non-employers and smaller firms demonstrates the highly fragmented nature of the industry. The largest firm is Everett Smith Group Ltd. The highly competitive nature of this industry and a high level of competing imports will continue to pressure participants to develop high-quality products, increase market share and maintain profitability, continues Tang. Industry concentration is expected to increase in the future, as existing tanneries shut down and remaining companies merge operations.
During the five years to 2017, the industry will continue to endure revenue declines, though at a slower rate than in the previous five years. Many leather tanning and finishing operators will exit the industry to locate closer to downstream manufacturers abroad. These manufacturers will then source from other leather tanning firms abroad at the expense of US firms, hurting revenue. However, recovery in downstream industries, such as car and automobile manufacturing and furniture manufacturing, is forecast to soften declines for leather tanners. In the five years to 2017, IBISWorld projects revenue to fall. For more information, visit IBISWorld’s Leather Tanning and Finishing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry are involved in the following activities: tanning, currying and finishing hides and skins; having others process hides and skins on a contract basis; and dying and finishing furs. Firms in this industry generally purchase or obtain raw skins from slaughterhouses and treat and dye them to create finished leather.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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