Reduced access to artesian water and the strong baht are damaging the Thai leather industry, according to Yutakiat Kiatsamutara, president of Thai Tanning Industry Association.

Mr Kiatsamutara explained that exports from tanneries were losing money as prices were usually quoted three months in advance in US dollars. He went on to say that the Mineral Resources Department's efforts to discourage use of artesian water had caused problems as the water pressure from tap supplies was too low and the high chlorine level damaged the leather. Also, the four million baht cost of drilling for artesian supplies was too steep. Further, the government, which is worried about the drawing of artesian water contributing to land subsidence, plans to raise the charge for artesian supplies in phases until it is more expensive than tap water.

The association has urged the department for a long time to allow tanneries, most of which are in Samut Prakan, to continue using artesian water, or as an alternative pumpwater from a nearby canal. So far neither scheme has brought a response.

Because of the squeeze on the industry, fewer than 200 tanneries nationwide are now in operation, compared with 300 a few years ago, and of the 145 still in operating in Samut Prakan only 80 are operating normally. 40 make goods to order only and the rest have been leased to foreigners to ease financial burdens.

Leather exports had been projected to grow by 8% this year from 20 billion baht last. As of June, however, shipments had shrunk by 10% because of the strengthening baht. Mr Kiatsamutara said. Apparently, tough competition from China and the current slow pace of global economic development has compounded the industry’s difficulties.