Leather Tanning and Finishing

SIC 3111

Companies in this industry

Industry report:

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.

Industry Snapshot

Leather tanning and finishing in the United States was a billion-dollar industry in the late 2000s. 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 have acquired smaller ones. Competition from overseas leather tanners, especially in developing nations, adversely affected the industry in the United States.

Leather tanning in the United States is primarily the work of privately held companies. The 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. New York has the most companies engaged in leather tanning and finishing, followed by California, Massachusetts, Texas, Wisconsin, and Pennsylvania.

Worldwide demand for leather tanning and finishing began to wane as the economy worsened in mid-2008. In one article published by Leather International in December 2008, the value of hides and skins was expected to fall nearly 50 percent as demand for both leather and leather products in the U.S. and Europe fell dramatically.

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 by being 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 then used to 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 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, which is 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 dates to 6000 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. 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 less expensive, 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 10 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 a 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 the many smaller operations had, since they could better maintain heavy, expensive machinery and a large workforce. 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 in leather. The Depression, followed by post-World War II competition from synthetics, caused the number of tanneries to continue to shrink. 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 lower labor costs and less strict 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.

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 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 continued to make the industry more cost-effective and helped 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 is expected to 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 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. Furthermore, the 1990 Clean Air Act and other strict federal standards that curb the emission of volatile organic compounds into the air 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 was 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.

Trade Values.
Although U.S. leather exports grew consistently through the mid-1990s from $705 million in 1992 to $950 million in 1997, the trend did not last through the end 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. Nevertheless, 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.

The role of imports continued to grow in the late 1990s. By 1999, U.S. leather imports were valued at over $1.2 billion, up from $1 billion in 1996. Moreover, according to Charles Myers, president of Leather Industries of America (an association of leather tanners and related industries), 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 U.S. 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 U.S. 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. During the late 1990s and early 2000s, the tanning and finishing leather industry continued a downward trend, with the total value of shipments falling from over $3.5 billion in 1997 to $1.9 billion by 2002.

According to the International Council of Tanners, in the mid-2000s the global use of leather products was over 19 billion square feet annually. Footwear accounted for more than half of all leather products (56 percent), followed by furniture (12.5 percent), garments (11.4 percent), automotive (6.3 percent), and gloves (4.4 percent). Other leather products accounted for the remainder of uses. The value of the global leather finishing industry totaled more than $43.8 billion.

During late 2003 and early 2004 the industry was temporarily brought to a standstill when, in December 2003, tissue from a U.S. cow initially tested positive for BSE, commonly known as Mad Cow Disease. Taiwan and South Korea, among others, immediately imposed a ban on U.S. imports. The industry feared serious consequences, but later tests cleared the cow of any disease, and disaster was adverted.

In 2005, the value of U.S. shipments for the tanning and leather finishing industry was $1.98 billion. U.S. slaughter numbers dropped significantly during 2004 due to low cull numbers, as well as the absence of cows from Canada, which reported a confirmed case of BSE, costing the Canadian industry an estimated $1.9 billion in lost revenue. Slaughter numbers declined more than 3 million head, or 9 percent, from 2003 to 2004, but hide prices did not move higher despite the tightened supply. Many tanners, especially in Asia, responded to price pressures by purchasing cheaper raw materials, primarily from South America, thus bypassing the higher-grade, higher-priced U.S. products. Although these hides are poorer in quality, Don Ohsman noted in Leather International, "It is adequate to meet consumer demand and, even more important, to create a finished product that meets retail price points."

Demand for high-grade leather, once a symbol of prestige, has been in many cases effectively replaced for a demand for lower-grade leather. Thus, although supply has tightened, the U.S. prices remain relatively low. Overcapacity also negatively affects industry pricing. Shelagh Davy noted in Leather International, "It has been postulated that if 50 percent of tanneries were to close, there would be enough business left for the remaining 50 percent to make a reasonable profit margin."

Current Conditions

According to industry statistics, there were an estimated 673 establishments engaged in tanning, currying, and finishing raw or cured hides and skins into leather valued at $1.01 billion in 2008 with industry-wide employment of 16,200 workers. California, New York, Texas, and Wisconsin were home to the majority of tanning and leather finishing manufacturers with Wisconsin responsible for $646.8 million of the industry total.

Leather tanning and finishing shipped $53.8 million in products, while manufacturers of leather accessory products shipped $32.5 million and leather tanneries shipped $676.2 million.

In the late 2000s, worldwide demand for leather products reached 22,930 billion square feet annually based on figures released by the International Council of Tanners. Footwear consumed 11,925 million square feet; followed by furniture (3,210 million square feet); automotive (2,340 million square feet); garments (2,290 million square feet); other leather products (2,155 million square feet); and gloves (1,010 million square feet).

While hide demand for the automobile industry thrived over the past seven years, the ongoing economic meltdown that began in mid-2008 resulted in global demand plummeting 30 percent during the first quarter of 2009. "All areas of the world have been affected, but there has been a notable downturn in the Americas," as published in Leather International in November 2009.

Industry Leaders

Albert Trostel and Sons Co. was major player in the U.S. leather industry during the mid-2000s. A Milwaukee-based company, Albert Trostel was owned by Everett Smith Group, whose annual revenues in 2008 were approximately $627.3 million. Albert Trostel and Sons 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.

Prime Tanning, Inc., located in Berwick, Maine, had production facilities at both its home location and in Springfield, Missouri, where it operated the largest blueing tannery in the United States. The company produced leather for apparel, upholstery, footwear, and accessories. Privately held Prime Tanning had estimated sales in the mid-2000s of $231 million and employed more than 1,100 people. Prime Tanning, Inc. merged with Cudahy Tanning in Milwaukee, Wisconsin, and Irving Tanning in Hartland, Maine, in May 2008. Following the merger, the combined companies took on the name Prime Tanning, creating the largest leather producer in North America, with revenues exceeding $250 million. Prime Tanning was acquired by National Beef Leathers, LLC, in March of 2009.

Workforce

In 2005, 6,000 employees worked in domestic leather tanning and finishing, down more than 15,000 in the late 1990s. The lower numbers reflect widespread industry consolidation as well as increased mechanization. About 4,700 of these were production laborers, who earned an average wage of $16.62 an hour. The leading state for employment in the mid-2000s was Pennsylvania, which was home to approximately 1,365 workers in the leather tanning business. Michigan was the only other state that supported more than 1,000 employees in the industry. California and New York also had a significant number of tanneries, but the majority employed fewer than 20 workers.

America and the World

In 2004, Mexico was the primary export location for U.S. leather tanning. The value of shipments to Mexico was $549.7 million, followed by Hong Kong with $177.5 million; Japan, $144.7 million; China, $96.5 million; Italy, $90.5 million; Taiwan, $46.8 million; Dominican Republic, $40.5 million; Korea, $36 million; and Canada, $31.8 million. Total export value in 2004 equaled $1.29 billion. Whereas exports to some countries, including Korea, Canada, and Taiwan, declined over the five-year period from 1999 to 2004, other countries, including China, Hong Kong, and Japan, increased U.S. import numbers.

In 2004, imports to the United States of leather tanning goods were $2.2 billion. Imports were dominated by Mexico, which shipped $1.37 billion of leather tanning goods into the United States in 2004. Other importers into the United States included Italy ($204 million), Brazil ($144.3 million), and Argentina ($142.3 million). The United States primarily sold high-end, high-quality leather, whereas the global demand for leather goods was much stronger in low-end, low-quality leather. The leading producers of leather goods, ranked by production totals, in the mid-2000s were China, India, Italy, Korea, and the United States.

The U.S. exports more than 90 percent of its hides and skins, with China and Hong Kong becoming leading importers. Exports from India and Vietnam were showing promise for the industry. According to the U.S. Hide, Skin and Leather Association, "In an ever increasing global marketplace and difficult economic times, our exports and trade agreements will be ever more important."

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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