With a number of tanners still active in the U.S., there are some challenges ahead.
For example, they must seek to combine operations to cut costs. They must unite with other tanners so that production will fill one tannery and the other must close. None of the options available are bright; they are a matter of survival.
But what of suppliers to tanners, the hide segment and the chemical suppliers.
Because hides are the result of demands for meat, it is doubtful that hide availability will grow at any remarkable rate; it will be by percentage points only. But if the U.S. tanning industry can’t use more hides, what then?
Packers have been turning to exports to rid themselves of surplus hides. They are exporting both wet blues and wet salted hides. While hide exports are going to some 60 countries around the world, 90% of the hides are going to eight Asian countries, and of this number, 70 % are going to only four countries, with Korea being the largest buyer of U.S. hides, followed by China, Taiwan and Hong Kong. However, many of the hides being sent to Hong Kong are re-exported to China. Therefore, if exports to China and Hong Kong are added together, China is the largest market for U.S. hides. Of the hides going into China, some 80% are whole hides to meet the needs of upholstery leathers, garment leathers and leather goods, such as handbags and computer carrying cases.
In 2001 China imported from the U.S. 530,472 hides and skins, while in 2002 the numbers jumped about 62% to 861,622. Hong Kong, on the other hand, imported in 2001 246,180 hides and skins, but in 2002 the numbers dropped about 1.5% to 242,702 pieces. Sales of U.S. hides to Taiwan, however, dropped drastically in 2002. In 2001, Taiwan imported 206,776 hides, while in 2002 the number dropped to 92,543.
Korea also witnessed a substantial drop in hide imports from the U.S. In 2001 Korea imported 316,538. hides, but in 2002 brought in less than half that amount, 102,854.
Because there can not be too much growth in the packing business (meat demand runs the volumes) other steps must be taken to improve profits.
What will be seen here will be more concentrations in packers, where larger packers will be buying smaller packers to hold or improve the profit line, or even closing the smallest or least profitable plant to keep the others in the company working.
Most of the international chemical companies have facilities in China and India, but continue to operate facilities in the U.S. to meet demands. It is the chemical companies that are helping U.S. firms to remain solvent. They are offering technical help to keep costs down as well as helping to introduce new leathers.
With new chemicals and technology, U.S. tanners have improved their production and variety of upholstery leathers, the most viable of the U.S. tanning production. Even with more orders for military footwear, and new boots being developed for the military, the footwear side of the industry will continue to struggle to maintain production levels as well as profitability.
