Information obtained from the Argentine Tannery Association CICA indicates that the threat of tannery closures has receded since the height of the financial and business crisis in the country last January.
Tanneries are still well stocked with hides, mainly salted and in storage, as the kill was accelerated in reaction to the worst drought in 60 years which killed thousands of head.
The premature kill of smaller animals has led to a reduction in larger hides for upholstery and with many smaller hides now available, tanneries are reorienting their business towards footwear production.
The collapse in car sales world-wide has forces tanneries to diversify and change strategy instead of having all their eggs in one "automobile" basket. This transition has been accomplishes fairly seamlessly by the major players but in common with all tanneries, activity, sales and exports are all continuing at a lower level.
On balance more than 40% of all tannery staff and operatives were laid off and wages were supplemented by the national government to take strain off the all critical cash flow required to keep up and running.
Yoma. once Argentina’s second largest tannery and in debt to the national government for some USD 40 million after its owners abandoned it in 2007, is now operating at a much higher level than in the last three years. This is thanks to the new Brazilian owners, the Bom Retiro Group, which has revitalized operations there despite background financial difficulties. The Yoma tannery offers the only form of employment in the sector of La Rioja region where it is located, so this Brazilian inspired upturn there is good news for the workers and their families as well as the community as a whole.
It appears that export of all types of leather has remained fairly stable after the scare of contracts being cancelled and deliveries postponed since September 2008. CICA maintains that the number of hides being exported is steady but the amount of revenue has fallen drastically due to lower hide prices.
It appears that China has been a major buyer in order to build up its stocks as it has done in the case of other commodities, specifically copper and crude oil, as the prices collapsed in June 2008.
