All the positive signs for the Orient are being counteracted by the negative signs in Europe. It seems that the European tanning industry—particularly the upholstery section—is in another round of restructuring and is losing further ground globally. This has not been helped by the weaker $ which is down almost 8% compared with the first quarter of 2006. More and more finished leather and leather products from South America and Asia are flooding into Europe and taking away further domestic potential from the local industry, not to mention problems in the export markets. So, if the fundamentals do not change in the near future, further shrinkage in the production capacity across Europe seems to be inevitable.

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