Leather Tanning and Finishing

SIC 3111
LEATHER TANNING AND FINISHING

This category includes establishments primarily engaged in tanning, currying, and finishing raw or cured hides and skins into leather. Converters and dealers who buy hides, skins, or leather for processing under contracts with tanners and/or finishers are also included in this category.

NAICS Code(s)

316110 (Leather and Hide Tanning and Finishing)

Industry Snapshot

Leather tanning and finishing in the United States is a multibillion dollar industry. According to the United States Census Bureau, the dollar value of U.S. leather industry shipments in 2000 was $3.16 billion, down from $3.57 billion in 1997. In the United States, automotive upholstery and casual footwear make up most of the leather market. The number of companies engaged in leather tanning and finishing has declined since the 1980s, as larger firms acquired smaller ones. The number of U.S. tanning and finishing establishments decreased from 342 in the early 1980s to 328 in the late 1990s. Competition from overseas leather tanners—especially in developing nations—has adversely affected the industry in the United States.

Leather tanning in the United States is primarily the work of privately held companies. The vast majority of the leather processed in the United States is cattle hide. So-called specialty leathers—including deer, calf, pig, goat, sheep, lamb, kangaroo, and various reptiles—represent only about 5 percent. With 72 establishments, New York has the most companies engaged in leather tanning and finishing. Massachusetts, California, Texas, Wisconsin, Pennsylvania, North Carolina, and New Jersey are each home to more than ten tanneries.

Organization and Structure

Leather tanning is a process in which chemical agents and extracts are applied to various types of hides and skins in order to prevent rotting. Not all tanneries follow the same method of processing hides into leather. However, the process described here is used by the majority. First, the hides must be prepared for tanning at the packing house. This includes unhairing (a lime solution loosens the hair, making removal easier), fleshing (cleaning off the inner side of the hides), and bating (removing the lime from the hides). Next, the skins and hides are cured—salted or soaked in brine to preserve them until they reach the tannery. Once at the tannery, the hides are soaked to remove the salt. Two primary methods are used to then convert the raw material into leather: chrome tanning and vegetable tanning. The method used depends on the intended use of the leather. Chrome tanning, which involves the use of soluble chromium salts such as chromium sulfate, is used primarily to tan leather for the upper parts of shoes. Vegetable tanning, which uses tannic acid, is used to tan heavy leather for shoe soles, bags, straps, harnesses, and other products used in industrial equipment. Chrome tanning is the most widely used method in the United States.

Several basic stages are involved in the tanning process. First, the underlying layer of the hide is "split" off and shaved to uniform thickness. Tanning drums are then used to saturate the hides in the tanning solution, which preserves the hide and adds strength. The hides are tanned again, where dyes and oils are added to provide, color, softness, and durability. Then the hide must be stretched and dried to remove all excess moisture. At this point, the leather is firm, flat, and ready to be trimmed. Finally, the hide is conditioned and finished. The finishing process involves softening the hide mechanically, spraying final colors onto the leather to meet customer requirements, and embossing to the required texture.

Background and Development

Tanning—the process that turns raw animal hides into the soft, pliable, and enduring material called leather—is one of the world's oldest industries. Recovered specimens of leather tents and shoes date as far back as 6,000 B.C., and ancient Egyptian carvings show tanners at work. Early Romans used leather not only for shoes, shields, and harnesses, but also as currency. As the centuries passed, tanning grew into a highly developed art. Twelfth-century England gave rise to tanners' guilds, and in America, early settlers learned that tanning was not new to the Native Americans. Advances in the chemical and mechanical processes of tanning and the invention of the thermometer and hydrometer—for measuring density—opened up the industry worldwide and brought tanning from the realm of the arts to the sciences.

The Leather Industry in America. The first English leather worker to come to the New World was a shoemaker named Experience Miller. Miller arrived in Plymouth Colony in 1624 and soon found that the Native Americans used bark tanning to preserve cattle and other hides. The abundance of deer hides and water resources in the colonies led to the development of a flourishing tanning industry. By 1650 there were more than 50 tanneries in Massachusetts alone. Early colonial tanneries were small and often moved when the vegetable tanning materials or the source of hides in one area were exhausted. The first tanning machine used in the United States was a stone mill used to grind tree bark. It was invented by Peter Minuit, Governor of New Amsterdam. By 1800 there were 2,000 tanneries in the United States.

Technological innovations in the nineteenth century increased production. In 1805 Sir Humphry Davey, an Englishman, discovered that many trees other than oak could be used in the tanning process. The hemlock, mimosa, chestnut, and ash were also used, since all were abundant in the United States. An American, Samuel Parker, further advanced the tanning industry in 1809 by inventing a machine to split hides. Prior to this, it took one man a whole day to split four hides. With the aid of Parker's invention, one man could split 100 hides in one day. These developments made leather cheaper, opening the leather market to all classes. In 1884 August Schultz discovered that chromium salts could be used in the tanning process instead of vegetable material. This method, perfected ten years later by Martin Dennis, allowed more attractive and flexible leathers to be produced at a faster rate.

Other procedural changes and inventions, including a machine to remove hair and flesh from the skins, gave the U.S. leather industry an added boost by increasing the supply of leather. By the end of the nineteenth century, tanneries had begun to consolidate. The larger tanneries produced more goods than had the many smaller operations, since they could better maintain heavy, expensive machinery and a large work force. In 1899, 1,306 tanneries produced leather valued at $204 million, versus 6,664 tanneries producing only $40 million worth of leather in 1850. Integration and growth continued into the twentieth century. In 1919, 680 tanneries produced $900 million worth of leather. The number of tanneries continued to shrink with the slowdown of the Depression and the competition from synthetics after World War II. In the 1970s the decline in meat consumption further decreased the availability of hides for tanning, which in turn began increasing the cost of leather worldwide.

Beginning in the 1970s, the United States's role as a leather tanner and processor began to lessen. Although the United States was the leading producer of bovine hides, the manufacturing costs of converting these hides into leather rose. As a result, developing nations—with their lower labor costs and weaker environmental regulations—gained a greater share of leather tanning business. According to Leather, "to an increasing extent, developing countries import raw hides and skins from developed countries for processing, manufacturing, and re-exporting as value-added products to developed countries." In 1992 imported leather goods were valued at $631 million.

Current Conditions

The role of imports continued to grow in the late 1990s. By 1999 U.S. leather imports totaled over $1.2 billion, up from $1 billion in 1996. Moreover, as Charles Myers, president of Leather Industries of America, Inc., (an association of leather tanners and related industries) noted, the tanning industry—which once produced primarily for U.S. markets—had become an aggressive exporter. "We now export more raw material than finished product to countries that can finish more cheaply than we can, and we have a very small domestic customer base."

In the tanning and finishing leather industry in the United States, automotive upholstery was a growth sector in the late 1990s. As leather seats and leather interiors became more commonplace in American automobiles, the market for upholstery leather boomed. In the late 1990s upholstery product shipments topped $1 billion, up from about $682 million in the early 1990s. Although footwear manufacturers remained an important market for American leather tanners, the industry was hurt by the Asian financial collapse of 1997, which dampened demand for leather shoes. Furthermore, leather tanners in developing nations gained a greater share of the footwear market.

Total industry shipments declined from $3.57 billion in 1997 to $3.31 billion in 1998 and to $3.15 billion in 1999, before recovering marginally to $3.16 billion in 2000. The cost of materials fell from $2.19 billion in 1997 to $1.95 billion in 2000. Over the same time period, employment in the industry grew from 14,898 to 15,214.

Industry Leaders

One of the leading leather tanners in the late 1990s was the Milwaukee, Wisconsin-based United States Leather, Inc. The company, which produced finished leather for shoes, furniture, and car makers, sold its goods under several brand names—including Lackawanna Leather, Pfister & Vogel, A.L. Gebhardt, and A.R. Clarke. Although United States Leather had 1998 sales of over $250 million, the company had been hit hard by a slump in the footwear and specialty leather business. In 1996 United States Leather closed its Trading Division, which dealt with unfinished hides and their by-products. In 1998 United States Leather survived a short period in Chapter 11 Bankruptcy proceedings.

Albert Trostel and Sons Co. was another major player in the U.S. leather industry. Also a Milwaukee-based company, Albert Trostel was owned by Evertt Smith Group. Albert Trostel's estimated 1998 sales of $500 million were due in part to the flourishing market for automotive leather. The company primarily produced leather seats and interiors for car makers, as well as custom leather seals and precision-molded leather components for car companies. With more than 3,500 employees, Albert Trostel rounded out its operations with the production of leather for use in furniture.

Workforce

The industry is unionized, but also highly mechanized. In 2000, 15,214 employees worked in domestic leather tanning and finishing. Roughly 12,250 of these were production laborers, who earned an average wage of $13.21 per hour, up from the $11.62 reported in 1996. The leading state for employment in the late 1990s was Pennsylvania, which was home to 2,332 workers in the leather tanning business. Massachusetts, New York, and Wisconsin each supported over 1,000 employees in the industry.

Associated work for the tanning industry lay in the fields of chemistry and environmental management. The outlook for leather workers depends upon the continued demand for leather products and the availability of hides.

America and the World

Although U.S. leather exports grew consistently through the mid-1990s—from $705 million in 1992 to $950 million in 1997—this trend did not last through the close of the decade. U.S. exports fell nearly 11 percent from 1997 to 1998. Industry experts in the early 1990s had been optimistic about the role of the United States in the export of treated leather products. But cheap labor in developing nations meant that leather tanning was increasingly moved abroad. As Leather explained, "tanning and leather manufacturing industries have been shifting to developing nations, where manufacturing costs are lower." U.S. exports to Japan fell 48.7 percent from 1997 to 1998, and during the same period, exports to Austria, Germany, and Taiwan dropped 82.5 percent, 41 percent, and 28 percent, respectively.

According to Charles Myers: "U.S. automobile upholstery leather tanners are expanding offshore and constructing cutting operations in Mexico, South Africa and Europe following the movement of their auto manufacturing customers into these areas. In addition, there is considerable potential for the U.S. in Asia, where a number of U.S. tanneries have located factories and warehouses. This strategy positions major American footwear leather tanners closer to where their U.S. and European customers are sourcing shoes."

Finished leather imports continued to rise in the United States, accounting for $1.18 billion in 1998, up from $1.16 billion in 1997. Mexico was the leading importer in 1998, with $614 million of goods (up 17.9 percent from 1997). While Argentina and Italy remained the second and third largest importers in 1998, products from Columbia, Thailand, and Brazil increased substantially—34.3 percent, 22.7 percent, and 10 percent, respectively.

Research and Technology

Innovations. The leather tanning industry began a series of technological innovations in the late 1970s and 1980s in response to the need to assess the effect of tanning chemicals used on the environment. The Leather Industries of America Research Laboratory, based in Cincinnati, Ohio, worked on changes relating to the chemical aspects of hide processing.

Research support continues to make the industry more cost-effective and helps it respond to demands made by environmental protection laws passed in the 1980s and 1990s. The U.S. tanning industry spends millions of dollars each year in research and development, and fierce competition from abroad will fuel the need for U.S. companies to develop state-of-the-art equipment, new technologies, and leathers. In addition to studies performed by individual firms, the Leather Industries of America Research Laboratory conducts ongoing industry research.

Environmental Issues. The leather tanning and finishing industry must meet Environmental Protection Agency (EPA) waste standards on three fronts: liquid, solid, and air. In 1985 the EPA established new standards to control pretreatment of the liquid wastes that tanners discharge indirectly to publicly owned waste treatment facilities. These standards applied to waste acidity and to wastes containing sulfides and chromium. All tanners discharging directly into waterways were required to operate with the EPA-approved National Discharge Elimination System (NDES) permits. The EPA standards for this group required control of conventional pollutants such as solids and biological oxygen as well as sulfides, chromium, and acidity. Further, the 1990 Clean Air Act and other strict federal standards curbing the emission of volatile organic compounds into the air have encouraged the industry to develop low-solvent or solvent-free finishing technologies.

In 1992 waste scrap leather and tannery sludge that contained chromium was exempt from hazardous waste regulation. Tanning systems that recycled chromium had been developed and were widely used throughout the industry to reduce the amount of chromium that appeared in the final waste. There had been talk of removing the exemption on waste from leather products, which would force the leather industry to come up with new techniques for the disposal of those products. However, in 1995, the EPA did a retrospective study on the industry's effluent guidelines and pollution prevention progress. The study found that the industry had taken major steps in modifying the chrome tanning process in order to get more of the chromium into the leather and less in the waste. Through these measures, chromium fixation was increased from 50 percent in 1982 to 90 percent in 1995. In addition, the industry's water use was reduced by 50 percent.