Robert Bell writes: Years ago I worked in a company called Irish Leathers in a place called Carrick-on-Suir in Ireland. I followed the process through from the livestock in the surrounding fields; the slaughter house; raw skin collection and then, the production of wet blue hides before the finishing process began. The colouring and plate machines would give the hides texture either to be sent off to agents for sale elsewhere or, to local workshops to make into bags, jackets or other fashion items. This week in India, I worked through the process with someone from the industry in Tamil Nadu and, as we drew the process sequence as above the parallels were clear – in terms of the process but, that is where the parallel ends – Plunder and Pollack is no more and the Indian leather industry is gathering momentum to be a catalyst and a beacon industry transforming branding, operations, the environmental agenda and livelihoods in India and other Emerging and Developing economies.
The Indian Leather industry is vital for the Indian economy with its substantial export earnings and strong growth potential. Revenues have grown from $2,495 million in 2004-5 to $ 3,598 million in 2008-9 and, the industry employed 2.5 m people rising to an estimated 3.5 million this year – most of whom are in the highly fragmented primary processing and flaying phase. An estimated 75% of this production capacity is from small scale cottage and artisans – the informal sector; and this needs to be addressed in terms of skills and the financing of much needed technological and environmental improvements.
In terms of ouput, the footwear segment is the driver of the industry and India is second only to China with a market share of 13 per cent of the global total of16 billion pairs. Overall, India produces 2 billion pairs and exports an estimated 115 million pairs. There are aggressive plans to increase footwear production and exports from $1.53 billion to well over $3 billion by 2013-14. This will take a significant effort to build on recent upgrades of machinery to world class equipment manned by highly skilled technicians.
India produces over 2.5 billion square feet of leather per year – which is 10 per cent of the global market – and is the 5th largest exporter of leather goods and accessories. Currently, the industry is being transformed with fresh thinking on business development split into two areas – strategic and operational.
In strategic terms, there is a significant need for a more professional grasp of design requirements overseas. Having said that there is clear evidence that various players are building capability to match the very best. Years back, I used to buy my business bags from Coach in the USA and recently, I replaced it with a terrific design from Fabindia – a brilliant exponent of things Indian and, inclusive growth strategies. Hidesign is another illustration of innovative design as is output from Auroville – both from Pondicherry. All of these brands pay increased attention to detail in production techniques and add quality of accessories to the superb finish of the leather itself. Couple with innovative packaging the look and feel is of a more sophisticated offering set to match any brand on the world stage.
Hidesign is a recognised leader in the research of the ecological use of vegetable tanned leathers for its leather goods. Their website illustrates how they have learned from the centuries old skills of tanning with natural seeds and barks. This has a significant ecological impact. Almost all leathers today are chrome tanned and coated by heavy finishes which is one of the worst polluters. Vegetable tanning greatly reduces the hazards of environmental pollution. This process uses natural extracts from barks of Wattle trees and Myrobalam seeds found in local forests of South India. It takes almost 30 days to cure these leathers while chemically treated chrome leathers are made in 4-5 days. Then, to finish the look off accessories have been upgraded and these are made of solid brass instead of zinc alloys. This minimises electro plating.
The Hidesign factory at Pondicherry is another element in this quality and ecologically sound platform. Designed and built by Ray Meeker, the well known low cost ecological building expert who has built ponds, waterfalls and streams into the layout of the factory. No asbestos is used anywhere in the factory and all waste water at the factory goes through filtration and is reused. All waste material is also separated and reused or sold for reuse.
In operational terms priorities start with optimising the sourcing of raw materials and closer collaboration with the meat processing industry has been developed to ensure quality raw materials and, increase levels of import substitution. In parallel, the industry is addressing a range of environmental issues in terms of effluent and, energy utilisation – though the key issue is to standardise across the States and clear up current fragmentation. This project is coordinated by the BDS (Business Development Service) and Entrepreneurship Development of India (EDI) and supported by SIDBI.
The leather cluster in Tamil Nadu accounts for 60 per cent of India’s output with Chennai generating 25 per cent of the total and the rest coming from areas such as Ambur, Vaniyambadi, Pernampet, Vellore and Ranipet near the City and over 50 per cent of production concentrated in the Palar Valley in the northern part of the state. In revenues, this represents over £500 million and is considered by UNIDO one of the most dynamic clusters worldwide. The region employs over 50,000 people directly working in or for 150 small tanneries and nearly 300 SMEs. The tanning process employs about 15,000 and footwear over 25,000 people and women accounting for 70 per cent of the workforce.
The industry has seen a significant shift in recent years from exporting raw materials to added value design based products and, as the work of various pioneering brands featured above illustrates Indian leather goods have been transformed and this will provide a significant platform to develop the industry and, hopefully, for this to become a beacon of global standards for other industries with a significant formal and informal mix in their operational roots. In particular, there is no better example of how going green can be part of the added value that will raise India’s profile on the world stage.
This is an important argument against those who think of environmental concerns adding cost to the process when, in fact, improved infrastructure, logistics techniques and skills can transform economic, social and environmental outcomes in a significant way. In terms of world trade, these developments in the Indian leather industry are demonstrating how to add value in an emerging economy and not rest content to be the raw material supplier for more developed economies. And this trickle could become a flood.
Article by: Rob Bell, Transformational Logistics Blog