"Leather Industry Capability Map"
Leather Industry Capability Map The Australian Industry The Australian leather industry consists of bovine (cattle), kangaroo and sheepskin tanning industries (either part or fully processed). The overall leather industry employs around 2700 people in Australia and has close to $1 billion in revenue. The vast majority of this is from the export of pre-tanned or raw hides which in 2010 was close to $700 million. Production Leather is a textile product made from the skin of animals that has been chemically treated or ‘tanned’ to give it desirable properties such as resilience, flexibility and a whole range of specifications that can be required by end users. The main raw material for leather, the skins or hides, is essentially a by-product of animals slaughtered for meat. A typical skin in its raw state is worth only a fraction of the total value of an animal, so livestock are slaughtered according to market conditions for meat rather than the demand for leather. Australia has large herds of cattle and sheep as well as a large wild kangaroo population giving it a natural advantage in the availability, locally, of a naturally recurring raw material resource which constitutes a significant proportion of the total cost of production. Australia produces approximately 8 million cattle, 24 million sheep and 1.5 million kangaroo hides per annum based on available slaughter numbers. However, Australian finished leather producers must compete with international manufacturers for the raw and semi-processed or wet blue hides. As overseas manufacturers can produce leather cheaper than domestic manufacturers it puts a price pressure on local manufacturers who may find it difficult to match prices for raw hides. Australian manufacturers are subject to stringent environmental controls, and given the heavy use of chemicals in the tanning process, the cost of compliance is a real impact. Competitors in developing countries with lower environmental standards have a large competitive advantage in terms of price. Although leather manufacturing is a capital intensive process, higher labour costs than developing countries also leads to increased costs which makes it difficult to compete on the international market. In order to compete with lower cost countries, Australian wet blue processors have been at the forefront of developing and adopting the latest technology. This has included initiatives such as; the recycling of chrome, reducing processing times to increase productivity and the use of effluent by-products as fertiliser. In terms of finished leather, the Australian industry has been at the forefront of developing performance leather for automotive and footwear use. Typical Leather Manufacturing Process RAW/SALTED HIDES Soaking and Crust Buffing washing Trimming Liming and Staking unhairing Crust Grading and Storage Fleshing Vacuum Drying and Conditioning Finishing Deliming, Setting Bating and Pickling FINISHED LEATHER Pickle Retan, Dying Grading, and Fatliquoring Trimming, Storage Trimming Chrome or Vegetable Tanning Shaving Sold as wet-blue or process to finished leather Sammying and Grading Grading is done as a quality control step throughout the manufacturing process. Imperfections in hides such as punctures, scratches and scars decrease the quality of the finished product and determine the use for which it is most suitable. Throughout the process, hides are continually graded to achieve the best use of skins. Hides usually arrive at the tannery from nearby abattoirs but at some larger and more integrated operations some hide processing is carried out on site. Soaking and washing The skin is soaked and washed to remove dirt and blood from the hides, as well as restoring moisture and removing salt if the hides were salted. Liming and unhairing By adding lime and sulphur compound the hair is removed from the skin Fleshing During this process tissue, flesh and fat remnants are removed Deliming, Bating and Pickling During bating and pickling the skins are treated with acid and salt in preparation for tanning. Deliming removes the lime and alkaline chemicals in the limed hide. Bating involves adding enzymes to clean the grain surface and further destroy any remaining hair roots and pigments. In the pickling stage, sulphuric acid, water and salt are added. This enables the hides to receive the tanning chemicals. The hides are in a preserved state after this step. Pickle Grading, Trimming, Storage Hides are graded on quality, trimmed down and stored until they can be tanned in the next step, as they are now preserved and won’t deteriorate. Chrome Tanning Uses chromium in the form of basic chromium sulphate. In the raw state chrome tanned skins are blue and therefore referred to as "wet blue". Chrome tanning is a fast process taking less than a day and produces a stretchable leather which is excellent for use in handbags and garments. Australia only has a few remaining large chrome tanneries. Recent rationalisation is a result of increased competitive pressures and reduction in incentive schemes. Firms that undertake this process include Walfertan, Austanners and Packer Leather. Vegetable Tanning The alternative process to chrome tanning is vegetable tanning which uses tannins which occur naturally in the bark and leaves of many plants. Hides are stretched on frames and immersed for several weeks in vats. Vegetable tanned hide is flexible and is used for items such luggage and furniture. Sammying and Grading Sammying involves removing water from the hides Shaving Leather is shaved down to the required thickness. Trimming The hide is trimmed to remove unwanted edges. Retan, Dying and Fatliquoring Dying confers a desired colour to the leather and fatliqouring involves using a chemical reagent to soften the leather, adding back some lost moisture. These processes can be seen as ‘retanning’ procedures. Setting The leather is laid out flat in preparation for drying. Vacuum Drying and Conditioning Hides are vacuum-dried to remove all moisture and conditioned. Staking When hides arrive at this stage of processing they are very stiff and following drying, the leather is mechanically staked in order to soften it. Further processes take place in preparation for finishing. Crust Trimming The leather is trimmed again. Buffing Hides which have been damaged and have imperfections can be smoothed by mechanical sanding to improve final appearance and assist in the application of coatings. Leathers which have undergone buffing are known as corrected grain. Crust Grading and Storage Leather is graded again, according to quality and stored. Finishing Here the leather is given its final surface treatment and look. Through processes of base coat, colouring, embossing, ironing the leather becomes, depending on the demands of fashion, matt or shiny, two-tone or uni-coloured, smooth or grained. The art of finishing lies in working in wafer-thin layers without disturbing the natural look of the leather and its characteristics such as suppleness and breathability. Current state of the industry Over the past 30 or so years, the leather industry has undergone a major rationalisation with only a few large operators remaining in the market. This has been caused partly by shifting global market conditions and partly by changes in government policy. These remaining companies have been successful in competing on export markets by investing in the latest equipment and technology and being innovative in their approach to product development and marketing. Critical and Essential Manufacturing base Due to the nature of the leather supply chain, Australia will always have the facilities to produce raw hides and semi processed hides as early stage inputs to production. Hides are sourced from animals slaughtered for meat and the supply is largely independent of demand for leather. As hides quickly degrade, they must be processed or semi processed close to the site of slaughter, whether it is salting or wet-blue. There has been some loss of wet blue capacity in Australia over the last decade as government incentives have decreased and presently the majority of hides are exported as salted hides. There are only a few finished leather producers left in Australia, as Australian producers cannot easily compete on cost with imported commodity leathers. Australia’s manufacturing is based around specialty and performance leathers such as kangaroo leather, which has superior characteristics in terms of its high strength, light weight and durability. Remaining Australian leather producers have, by necessity, developed supply chains to ensure supply of hides and chemicals. Chemical supply can be an issue though as they need to be imported and many Australian companies are price takers rather than makers so margins can be eroded. Major Firms A.I. Topper Employs approximately 300 people located in New South Wales, Queensland, South Australia and Victoria. A.I.Topper operate two wetblue tanneries, Gunnedah Leather Processors and Walfertan Processors, with a total wetblue capacity of 28,000 hides per week. A.I.Topper also operate the largest kangaroo pickling plant with a capacity of 25,000 skins per week, as well as processing significant volumes of salted hides. Packer Leather Located in Queensland. Packer Leather brings in green hides as well as leather at other stages of its production. Packer leather produces mainly finished kangaroo leather products with a variety of finishes. New Wave Leathers (Nippon Meat Packers Australia) Located in Toowoomba, Queensland The facility processes green hides to wet blue mainly supplied from Nippon Meat Packers Australia group abattoirs with a wide range of hide selections and weights. Nippon is one of the major players in the animal processing market place and produces many by-products in addition to wet blue hides. Cassino Tanners (Northern Co-operative Meat Company Ltd) Located Casino NSW. The Northern Co-operative Meat Company Ltd operates a tannery as part of its integrated processing service. Casino Hide Tanners processes hides from green through to wet blue leather and products are mainly exported to Italy and Asia. Austanners Located in Victoria, Austanners produce a wide range of finished leather for a range of markets including footwear, belting and industrial leather. Lorris Hassall Operates wet blue cattle tannery in Geelong, Victoria. Operates a kangaroo leather processing facility on the Central coast of NSW. Southern Hide Produces salted brine-cured hides and skins including cattle, calf, goat, deer and kangaroo. Wet-blue processing is outsourced to Walfertan. Howe Leather Located in Victoria. Howe Leather supplies leather to automotive manufacturers in Asia, Europe, North America and Australia. From leather processing and finishing facilities in Victoria and offshore component cutting plants in China and Slovakia, Howe produces quality automotive leather for a strong and regionally diverse customer base including major vehicle manufacturers such as Land Rover, VW, Audi, Nissan, Toyota, GM and Ford.