Automotive leather: where the millions of extra square-feet will come from
25/03/2015
Speaking at a conference called The Future of Automotive Leather in Bordeaux on March 24, Mr Peters said growth projections in the automotive industry in general and in the premium segment in particular in the next five years suggest to him that demand for automotive leather could expand from two billion square-feet per year at the moment to three billion square-feet by 2020.
He pointed out that he found this projection of the maximum increase in capacity “aggressive”, but said many millions of extra square-feet of finished leather are certain to be required. This change will come in the context of hide availability remaining more or less constant at around 275 million hides per year.
Mr Peters, founder of consultancy DLP Advisors and a leatherbiz columnist, told the conference: “The pie will remain the same size, but automotive is going to take a 25% share of it [compared to around 16% at the moment] and those hides are going to have to come from somewhere else in the leather industry.”
He explained that the most likely source of the extra automotive leather will be
tanners who move their production away from footwear to focus on cars instead. And, while he insisted it would be “no big deal” for beamhouses to adapt to this shift, he said retanning represents a major restraint at the moment.
“There is simply not enough retanning capacity in the world at the moment to satisfy the level of demand we are going to see from automotive,” he continued. He predicted that tanners in Mexico will increase their retanning capacity and continue to grow as an important source of automotive leather and that China “will grow astronomically”.
In Brazil, already the most important source of crust for automotive, he said the change that will occur is that Brazilian tanners, keen to add more value to the hides their country will continue to produce in large volumes, will finish and cut large volumes of automotive leather too. In addition, Mr Peters said the US would become a source of crust and finished leather again too.
And because the principle of suppliers setting up close to automotive production facilities will continue, he also predicted that enterprising companies will soon be setting up new automotive tanneries in Hungary and India.
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