Leather Goods and Accessories
SIC 2386, 3151
NAICS 315292, 315992
This segment of the broader global leather industry produces various forms of leather apparel, including gloves, jackets, vests, and hats, and miscellaneous accessories such as belts, purses, and bags.
The global leather apparel industry produces within two broad categories: light leather and heavy leather. The category of light leather usually refers to the tanned skins that come from smaller animals and reptiles, known simply as skins, while the heavy leather distinction refers to leather that comes from larger species of animals, often called hides. Most apparel and accessories crafted by this industry come in both light and heavy leather styles, with heavy
generally being the more valuable form.
From 1999 to 2001, bovines yielded 10.99 billion square feet of light leather, of which 56 percent was used for shoes. Sheep and goat hides yielded 4.5 billion square feet of leather, most of which was used for clothing and accessories. According to the Food and Agricultural Organization of the United Nations (FAO), world production of bovine hides and skins increased by roughly 10 percent from the mid-1980s to 1999, with developing nations accounting for most of this growth. Asian nations, where tanning operations expanded significantly, produced more hides and skins than any other region by the early 2000s. World output of sheepskins rose by 4 percent during this period, while production of goatskins increased by more than 70 percent. In developing countries, goatskin output rose by about 76 percent, and it increased in developed countries by 15 percent.
In 2002, world bovine hide production was estimated by the FAO at a record 5.8 billion tons, an increase of 2 percent from 2001, when production fell by 1.7 percent. Production grew again in 2003, by an estimated 1.5 percent. The increase was considerably higher in developing countries, where higher rates of animal slaughter occurred. According to data from the International Council of Tanners, some 3.3 billion square feet of leather were used to make garments in 2000, which accounted for 18 percent of leather used throughout the world that year.
The leather goods and accessories industry is highly dependent on overall economic health and consumer spending. From 1989 to 1999, the major regions of economic growth—the developed economies of the United States, Western Europe, and Japan—still had not resumed earlier levels of demand despite economic recoveries. Demand strengthened somewhat, beginning in 2000 and the first half of 2001, as markets for light leather began to recover. But the global market for leather clothing and accessories was generally disappointing in 2002 and 2003, due to tepid economic growth and the impact of Severe Acute Respiratory Syndrome (SARS), which temporarily disrupted global trade. On the other hand, production of hides and skins increased, particularly in developing countries. Prices for hides and skins, however, declined through this period due primarily to falling demand in developed countries, which are the primary import markets for leather items.
One particular region exerting a significant downward impact on the production of light leather finished products consisted of the former planned economies of Eastern Europe and the new states that emerged from the breakup of the former Soviet Union. Throughout the region, economic conditions in general were in a state of prolonged decline or stagnation in the 1990s. Formerly producing a substantial amount of leather goods and accessories, these nations saw their production plummet 26.2 percent from 428.4 million square meters in 1991 to 316 million square meters in 1999 as government subsidies dried up and as local consumers were unable to sustain demand in the harsh transition to market economies.
Significant changes occurred in the industry after the 1990s. The Asian market as a whole was seen by industry observers as one of the preeminent future markets in the world industry, while African leather production surged in the late 1990s after a dramatic decline in production between 1990 and 1993. In the 1990s, South America also registered significant increases, with leather production growing 2.9 percent between 1990 and 1999, especially in Ecuador. Large regional declines, on the other hand, were recorded in the former planned economies of Eastern Europe and the Commonwealth of Independent States.
A pronounced trend that gained momentum beginning in the late 1950s was the shift in all leather producing activities from developed to developing economic regions. Not without periods of difficulty, much of this shift transpired due to a post-World War II climate of liberalized world trade jointly initiated by political authorities in the developed countries. Indicative of their export orientation, developing regions or countries such as Mexico, China, Korea, and Turkey, with a significant presence in the world leather industry, typically maintained a final leather product manufacturing capacity that exceeded domestic consumption. While many factors are responsible for these changes, environmental regulation was one of the major reasons for the migration of leather processing from the developed countries to developing countries. Between 1977 and 1996, global production of leather increased by 12.7 percent. Production in developing countries, especially of goat and sheep skins, grew 49.3 percent, while in developed countries it dropped by 7.5 percent. During the same period, developing countries' market share increased from 35.6 percent to 47.2 percent. Asia's production jumped some 94 percent during this period, while production in most developed countries declined. For example, North America's production dropped 12.1 percent while Europe's diminished by 16 percent from 1977 to 1996. Although production declined, net exports of bovine raw hides and skins from developed countries nearly tripled during the same period. Even in the area of leather-making machinery production—an activity once dominated solely by developed countries, particularly Italy and Germany—challenges emerged from countries such as China, India, South Korea, Taiwan, and Thailand.
In the 1990s important developments were under way in the arena of world trade, including renewed emphasis on broadening the scope of liberalized trade. Two key trade agreements that had potential to rejuvenate the leather industry were concluded in the first half of the decade: the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). Both agreements eased market access to many of the world's leading economies covering a wide range of merchandise. GATT stipulated a gradual phase-out of all protective tariffs and quotas and their complete elimination by 2005.
In North America, NAFTA was passed in 1994. It also called for a gradual reciprocal phase-out of tariffs placed on leather exports and imports between Mexico and the United States. Concurrently, members of the European Union continued to make strides throughout the decade toward unifying their respective economies. This initiative culminated in the 1999 rollout of monetary union, or the Euro, among a majority of the EU member states. In the long term, Europe's economic unification was expected to make market entry in its numerous distinct nations easier for exporters to the region. In addition, the establishment of the World Trade Organization (WTO) in 1995 provided nations with a cooperative forum for the creation and implementation of trade agreements and policies. Its membership grew to 147 nations in 2004, including many developing countries. The 1995 WTO Agreement on Agriculture promoted reforms centering on fair, market-oriented trading systems, detailing specific commitments to reduce support and protection in the areas of domestic support, export subsidies, and market access, and through the establishment of strengthened and more operationally effective GATT rules and disciplines.
The process of manufacturing gloves and leather apparel involves more or...
To continue reading
Request your trial