GERMAN PERSPECTIVE - 14.04.20
What happened this week? Lockdowns and restrictions around the globe will continue for a while. Safety is still the most important factor. It is clear that isolation is the only valid tool we have; there is no better option than physical distancing. But like everything in life, there will be consequences. The politicians are managing the present. The history books will tell us what has been right and what has been wrong, because only with hindsight will be able to assess.
Living conditions of individuals around the globe are different and so are the consequences on daily life. Social tensions in dense communities, general living conditions in slums, poverty and the healthcare available make a big difference to how people can handle the situation.
The long-term consequences are starting to be discussed: when ethics and morals meet politics and money it becomes an explosive cocktail. Priorities vary according to living conditions, religion, wealth or political preferences.
The leather pipeline has been hit from various directions and the consequences beginning to surface. Large retailers and brands are pushing their problems back into the pipeline. It is obvious that they cannot discuss the next season, but it's hard to accept that many of them are simply walking away from their obligations they have. If nobody respects binding legal agreements they shouldn’t be surprised if their customers walk away one day too.
Henry Ford once said that you can only sell your product when you give people work and pay them. There is plenty of trouble around, but some corporations with deep pockets think they can handle it like the banks did in 2008. This makes the situation unpredictable.
In China tanners are trying to start production again, but they are realising that many of their domestic and export customers have cancelled the orders or postponed deliveries. To obtain new sales is almost impossible. They again tempted by the low prices for raw material, when they buy it is more due to the low price than a real need.
In Europe everything is paralysed and most people are waiting for any sign of easing conditions. Without a clear picture for an exit strategy or an organised way of keeping production and retail afloat it is going to have a pretty bad.
Prices continue to bounce all over the place and the level depends on the desperation of the seller rather than a functioning market. There is always somebody who is willing to buy hides at buyers’ conditions.
The Kill: The kill has fallen substantially, and Easter will cut numbers too.
What do we expect: Nobody can expect a fundamental change any time soon. We have to see what decisions will be taken. The lack of timeframe means various supply chains will collapse with bad long term consequences for many.
