A mission for Accomplishment of a Comprehensive sector study
regarding the opportunities of Complementarities and Industrial
Integration in the Leather and Shoes Sector in the Member
Countries of the Agadir Agreement
( Egypt - Jordan - Morocco & Tunisia)
FINAL REPORT
Prepared by
Mahmoud Qattous and Terry McCallin
Amman, September 2009
T a b l e
of Contents
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
1.
Final Report
GENERAL FRAMEWORK
8
1.1.OBJECTIVE
8
1.2.OVERVIEW OF WORLD LEATHER PRODUCTS INDUSTRY.
8
1.2.1. THE INFLUENCE OF POPULATION
8
1.2.2.REGULATORY FACTORS
9
1.2.3. WORLD MARKET ORIENTATION
10
1.3.
11
FINANCIAL CRISIS
1.3.1.OVERVIEW
11
1.3.2. STRATEGY FOR SURVIVAL
12
1.4.
14
GLOBAL SOURCING
1.4.1. EUROPEAN MARKET TRADE CHARACTERISTICS – FOOTWEAR
15
1.4.2. LEATHER GOODS
19
1.4.3.HIDES AND SKINS AND LEATHER
20
2.
GLOBAL TRADE INDICATORS OF LEATHER INDUSTRY
21
2.1.
GLOBAL IMPORTS AND EXPORTS:
21
2.1.1.HIDES AND SKINS AND FINISHED LEATHER.
21
2.1.2. PERSONAL LEATHER GOODS
22
2.1.3. LEATHER FOOTWEAR
23
2.2.
EUROPEAN UNION IMPORTS AND EXPORTS
24
2.2.1.HIDES AND SKINS AND FINISHED LEATHER
24
2.2.2. PERSONAL LEATHER GOODS
25
2.2.3. LEATHER FOOTWEAR
26
2.3.
26
INTRA AGADIR TRADE
2.3.1.HIDES AND SKINS AND LEATHER
26
2.3.2. LEATHER GOODS
27
2.3.3. FOOTWEAR
27
2.3.4.RAW MATERIALS AND INPUTS
27
2.3.5.HIDES AND SKINS
29
3.AGADIR GROUP ANALYSIS
31
3.1.
31
JORDAN
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
3.1.1. INDUSTRIAL SETTING AND INSTITUTIONAL FRAMEWORK
31
3.1.2.NATURE OF THE SECTOR
31
3.1.3. TYPE AND SIZE OF COMPANIES
32
3.1.4. SECTOR TYPES OF PRODUCTION AND CHARACTERISTICS
33
3.1.5. INSTITUTIONS AND NUMBER OF WORKERS
34
3.1.6. PRODUCTION ADDED VALUE
34
3.1.7. FOREIGN DIRECT INVESTMENT (FDI)
35
3.1.8. COST OF PRODUCTION
36
3.1.9. FIELD VISITS – COMPANY PROFILES
36
3.1.10.STRENGTHS AND WEAKNESSES OF THE SECTOR
38
3.2.
39
TUNISIA
3.2.1. INDUSTRIAL SETTING AND INSTITUTIONAL FRAMEWORK
39
3.2.2.NATURE OF THE SECTOR
41
3.2.3. TYPE AND SIZE OF COMPANIES
41
3.2.4. SECTOR TYPES OF PRODUCTION AND CHARACTERISTICS
42
3.2.5. INSTITUTIONS AND NUMBER OF WORKERS
44
3.2.6. PRODUCTION ADDED VALUE
44
3.2.7. FOREIGN DIRECT INVESTMENT (FDI)
44
3.2.8. COST OF PRODUCTION
44
3.2.9. FIELD VISITS – COMPANY PROFILES
45
3.2.10.SWOT ANALYSIS
46
3.3.
47
MOROCCO
3.3.1. INDUSTRIAL SETTING AND INSTITUTIONAL FRAMEWORK
47
3.3.2.NATURE OF THE SECTOR
48
3.3.3. TYPE AND SIZE OF COMPANIES
49
3.3.4. SECTOR TYPES OF PRODUCTION AND CHARACTERISTICS
50
3.3.5. INSTITUTIONS AND NUMBER OF WORKERS
51
3.3.6. PRODUCTION ADDED VALUE
52
3.3.7. FOREIGN DIRECT INVESTMENT
52
3.3.8. COST OF PRODUCTION
52
3.3.9. FIELD VISITS – COMPANY PROFILES
52
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
3.3.10.SWOT ANALYSIS
54
3.4.
55
EGYPT
3.4.1. INDUSTRIAL SETTING AND INSTITUTIONAL FRAMEWORK
55
3.4.2.NATURE OF THE SECTOR
56
3.4.3. TYPE AND SIZE OF COMPANIES
57
3.4.4. SECTOR TYPES OF PRODUCTION AND CHARACTERISTICS
59
3.4.5. INSTITUTIONS AND NUMBER OF WORKERS
61
3.4.6. PRODUCTION ADDED VALUE
62
3.4.7. FOREIGN DIRECT INVESTMENT
62
3.4.8. COST OF PRODUCTION
62
3.4.9. FIELD VISITS – COMPANY PROFILES
63
3.4.10.SWOT ANALYSIS
66
3.5.
67
GROUP IMPACT FACTORS
3.5.1. PRODUCTIVITY
67
3.5.2. INDUSTRY ORGANISATION (ITALIAN METHOD)
68
3.5.3. BENCHMARKING
68
3.5.4. THE TURKISH MODEL
72
3.5.5. THE VIETNAMESE MODEL
74
3.5.6. IDENTIFICATION OF OPPORTUNITIES OF DIAGONAL ACCUMULATION OF
76
ORIGIN PROMOTING COOPERATION AMONG AGADIR COUNTRIES:
3.5.7. SUCCESS STORIES
78
4.
CONCLUSIONS
79
4.1.
SWOT ANALYSIS SUMMURY
79
4.2.DRAFT FINDINGS (RECOMMENDATIONS):
80
4.3.
COOPERATION POSSIBILITIES:
81
4.4.
AGADIR STRATEGIC PLAN:
82
5.
DEVELOPMENT OF STRATEGY
86
5.1.
INTRODUCTION
86
5.2.
FORMULATING A GENERIC STRATEGY FOR THE GROUP
87
6.
ACTION PLAN
93
6.1.
ASPECT 1 - PRODUCTION
93
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
6.1.1. LEATHER
93
6.1.2. FOOTWEAR
97
6.1.3. PERSONAL LEATHER GOODS
102
6.2.
105
ASPECT 2 - MARKETING
6.2.1. LEATHER
105
6.2.2. FOOTWEAR
107
6.2.3. PERSONAL LEATHER GOODS
121
6.3.
ASPECT 3 – INVESTMENT
125
7.
SUMMARY OF ACTION PLAN
132
7.1.
PRODUCTION
132
7.2.
MARKETING
137
7.3.
INVESTMENT
140
7.4.
ACTIONS REQUIRED FOR THE AGADIR ZONE ARTISAN HANDCRAFT
SECTOR
141
8.
PRIORITISATION OF ACTION PLAN
142
8.1.
SHORT AND MEDIUM TERMS PLAN
142
8.2.
LONG TERM
145
Table of Annexes
ANNEX I
145
1. GLOBAL IMPORTS AND EXPORTS ALL LEATHER PRODUCTS
145
ANNEX II
169
1. EU IMPORTS AND EXPORTS ALL LEATHER PRODUCTS
169
ANNEX III
177
1. GLOBAL TRADE OF AGADIR COUNTRIES’ LEATHER PRODUCTS
177
ANNEX IV: 2008 UPDATE OF AGADIR TRADE STATISTICS
195
1.EXPORT & IMPORT OF THE AGADIR LEATHER & FOOTWEAR SECTOR IN 2008
195
2.GROWTH OF EXPORT & IMPORT OF THE AGADIR LEATHER & FOOTWEAR
SECTOR FROM 2007 TO 2008 IN % :
195
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
1.GENERAL FRAMEWORK
1.1.Objective.
This study aims at:
●
●
●
●
1.1.
Diagnosing cooperation fields between the 4 member countries (Morocco, Tunisia, Egypt and Jordan) of
the Agadir Agreement through analyzing the possibilities of Complementarities and Industrial Integration
in the Leather and Shoes Sector.
Enhancing regional trade exchanges between the Agadir Agreement member countries.
Boosting exports towards the European Union in the Leather and Shoes sector.
Attracting European and other foreign investments towards the Agadir Agreement member countries.
Overview of World Leather Products Industry.
Every country in the world has a leather products industry in one form or another and every country is a market for
finished goods, the biggest of which is footwear. The manufacture of products, especially footwear, pulls through the
development of the tanning industry. Tanners and leather products manufacturers are mutually interdependent.
Most of the world population has some sort of foot covering. Even people in the poorest of African and Asian
countries manage to obtain some sort of shoe. As populations increase and living standards rise so does the demand
for shoes. This may not be the case for leather goods, bags, wallets, belts, garments etc. as they are more of a “luxury”
item than a necessity. The growth in this sub sector tends to lag behind footwear.
With the rapid urbanisation, particularly in developing countries, there will be more demand for footwear and personal
leather goods (PLG) of better quality. The days of turning out cheap products will be over in the next 5 – 10 years.
The biggest manufacturer in the leather industry; China, has brought this about by selling products on a price basis
of such inferior quality (mostly out of synthetics) that there has been a reaction against them by consumers. This is
also true for other Far East suppliers; namely Viet Nam, Hong Kong, and to some extent Indonesia. However in this
context China is in the process of upgrading its products and changing its image of a mass producer of cheap inferior
quality synthetic products to better quality leather items.
1.2.1. The Influence of Population
Today the world population is over 6.5 billion and is expected to cross the 9.0 billion threshold by 2050. In global
terms population growth will be highest in the Indian sub continent and Asia mainly China. The population in Europe
is predicted to decline. Africa and Latin America will increase. North America will show a moderate increase.
population reference bureau (USA)
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
The expanding markets for leather products by potential customers in terms of size rather than per capita consumption
are:● Asia
● Africa
● India
● China.
Those showing only modest growth are:● Europe
● Latin America
● North America
The average world annual growth rate for the next 6 years is estimated at 1.125% per annum. During the next 15 years
the population over 55 is predicted to increase by 35.1% in Europe.
For manufacturers of leather products and shoemakers in particular, the shift in the age demographics from a relatively
young population to an ageing one is significant. This will entail new marketing plans, techniques and products to
appeal to this particular market segment, based around comfort, value for money and conservative styling.
1.2.2. Regulatory Factors
The personal leather goods and footwear manufacturing industries are regarded as environmentally friendly ones.
Very little problem waste is generated in the manufacture of products. Many thermoplastic materials are recycled
including the newer developments in toe puff and counter materials. Solvents are used in sprays and cement attaching.
However these are being replaced by water based finishes and adhesives. The result of this clean technology is that
there are few extra regulations imposed on the industry.
The tanning industry produces large amounts of solid and liquid but as technology improves this becomes less and
less.
The European Union has its own rules. Azo dyes, PCP’s and nickel derivatives (all potential chemical carcinogens)
are forbidden in leather. PETA (people for the ethical treatment of animals) have lobbied hard in the leather goods
industry to the extent that some buyers refuse to order shoes made with Indian leather particularly in Germany. For
some years the EU has been pushing for an eco label to be used on all footwear signifying its ethical and non polluting
origins. This is a voluntary code at present. It is a law and requirement in the EU market that each half pair of shoes
must have a ”pictogramme” on them identifying what materials the uppers, linings and soles are made from. This is
to stop the practice of passing off some materials as real leather.
All packaging that is imported to the EU must be recyclable and be strong enough to maintain necessary standards of
safety (outside cartons must not disintegrate during transport).
A recent development has been the introduction of the REACH programme in 2007 which concerns the Registration,
Evaluation, Authorisation and restriction of CHemicals. It came into force on 1st June 2007 and replaces a number
of European Directives and Regulations with a single system. It has several aims among them:
●
To make the people who place chemicals on the market manufacturers and importers responsible for
understanding and managing the risks associated with their use.
●
REACH applies to substances manufactured or imported into the EU in quantities of 1 tonne per year
or more. Generally, it applies to all individual chemical substances on their own, in preparations or in
articles.
This is a complicated system for the control of potentially hazardous chemicals used in manufacturing. Consulting
companies have sprung up who will guide organisations through the new regulations and there are many web sites
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
available. A dialogue should be opened with suppliers to see what is required of leather product manufacturers in
terms of registration. There is an implied threat if no registration is done where needed then products will be banned
from the EU market.
However the tanning industry is essentially based on the chemicals used in production. REACH has probably more
relevance in this sub sector compared to footwear, and PLG.
1.2.3. World Market Orientation
The manufacturing of leather products takes place in the East with the major market being in the West. The main
consuming markets in the world for leather products are Europe (27); the biggest, and North America. These areas
are the target markets for many leather products manufacturers who aspire to be exporters.
The footwear manufacturing industry (which is a barometer of the rest of the leather products manufacturing industry)
in these areas has declined year after year for the past 20 years, as they loose the battle with imports. Per capita
consumption in recent years has shown a very modest increase.
The effects of imports have been to decimate the local manufacturing industries. Only in certain special situations
has the local industry still managed to survive. In Europe, the Italian manufacturing industry survives because of
innovation in terms of being the world fashion leader. Product development, design, and styling still has its heart in
Italy. (Although for sports footwear this also occurs in USA). Spain and Portugal only just survive because of a lower
cost base than Italy. France, Germany, UK and USA are struggling to survive in niche markets. However all these
industries are showing declines in manufacturing year after year as imports take a larger market share.
The difficulties in Europe and to a certain extent the difficulties in China, produce an opportunity for the manufacturers
in the Agadir countries to capture new customers and / or attract new Foreign Direct Investments (FDI). The trend
in market supply is for smaller orders; more often, of different styles. The countries are close to the biggest market
in the world and have strong relationships with Italy, France and Spain, and to a lesser extent with Germany, UK,
Benelux and Portugal.
China has recently been forced by international pressure to re-value its currency, labour shortages are developing in
the east of the country and wage rates are increasing. The EU currently has anti dumping legislation in place against
China which is predicted to be extended for another two years, it imports leather, and it can also be difficult to deal
with and is unpopular with buyers. Companies buy from China because they have to not because they want to.
However China is not going to stand still. It is already developing new “Shoe Cities” to encourage more efficient
manufacturing. It has opened a warehouse in Spain. It is alleged it has plans to open retail shops in Europe.
Other players in the international market are also developing their industries, notably India and Viet Nam. India
has not yet reached its potential on the world market. It is also building new shoe cities aimed at the export market.
Leading footwear players like Adidas, Puma and Nike are likely to shift some of their purchasing and production
from China to India over the next three years.
In December 2008 The Indian government has approved plans to build a footwear complex and footwear components
park in Chennai. The government will invest $3 million in the complex and $2.1 million in the components’ park.
A Footwear Design and Development Institute is also being established in Chennai and is expected to be up and
running by the 2010-11. The government has also approved proposals to establish a leather goods park in Kolkata,
West Bengal ($1.1 million) and a leather complex in Andhra Pradesh ($ 6.2 million).
India has witnessed promising technology inflow and foreign direct investments. The entire leather sector is now
“de-licensed” and “de-reserved”, paving the way for expansion on modern lines with state-of-the-art machinery and
equipment.
10
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
The Vietnamese footwear industry is targeting export growth of 12%–13% in 2009 according to the Leather and
Footwear Association. Vietnam is now targeting the Africa and the Middle East markets.
The manufacturers in the Agadir countries can replace Far East supply with products produced nearer to the market
by flexible production techniques. However to develop more Business to Business (B2B) opportunities in Europe,
time is of the essence for Agadir Countries before the Far East / India suppliers re-group.
1.3.
Financial Crisis
1.3.1.Overview
Strategic economists say the current crisis is going to be more difficult than first expected. World economic growth
is expected to slow sharply, with the UK (-2.9%) among the hardest
GROWTH IN 2009
Country
World
China
India
Brazil
EU27
UK
USA
IMF estimates
GDP Growth Rate
0.5%
6.7%
5.1%
1.8%
-2.0%
-2.9%
-1.6%
Developing countries such as China and India should fare better.
Reports from Thailand say that the country’s footwear exports to the US, one of its most important export destinations,
have fallen dramatically. Figures show that shoe exports to the US previously accounted for 35% of Thailand’s total
shoe production, but now accounts for just 27%. As a result, many Thailand exporters have decided to turn their
attention to countries in the EU. Exports to EU countries now account for 40% of the country’s total footwear
production.
Many footwear manufacturers have also shifted from low-end shoe production to medium and high-end production
in order to appeal to markets looking for better quality shoes. This constitutes a threat to Agadir Countries.
China and India are already taking steps to shore up their leather products industries with extra incentives for exporters
somewhat against the spirit of the WTO/GATT agreements.
The director general of Spain’s labour ministry, has told the country’s footwear industry that the first payments
under a support package first announced in October 2007 will become available during the month of March 2008.
The Spanish government was firmly committed to the so-called Footwear Plan, which will make specialist training
available to workers in the footwear industry and help employers keep workers (especially older workers) on during
economically challenging times. In all, the government has promised to make US$ 59 million available to the
industry.
Portugal is to invest $1.2 million in the textile and leather industries in an attempt to boost exports by investments in
technology, training and marketing.
It can be seen therefore from the above examples that the competition in the world market is going to get fiercer than
before as more and more countries assist their leather industries, creating a very challenging market place for the
Agadir Countries.
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
11
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
According to Tunisia’s National Leather and Footwear Federation (FNCC), the value of exports from both
sectors from the country has fallen by 11% since November. Most export-focused producers in Tunisia
concentrate around 95% of their efforts on the European market, which has been badly hit by the economic
downturn, leading to fewer orders and fewer sales. Some Tunisian companies have seen sales decline by 2025% and some have closed down. Tunisia is the strongest country of the Agadir group. The fact that it is being
negatively impacted in this way will mean the other countries will probably be affected more seriously.
Entrepreneurs are reluctant to discuss in detail the state of business especially if they are having problems. However
evidence from visits in Tunis suggests that shoe manufacturers are suffering a down turn of up to 50% in production
levels. Manufacturers of personal leather goods also report declines but at a less severe level of 30%. Both industry
sub sectors are developing new products in order to gain new sales.
One well developed tannery in Tunisia which is export oriented is planning for a reduction of 20% in sales for
2009/10.
Most of Egypt’s business in tanning is geared to export to semi processed leather. These companies have been
affected by the decline in world export markets, reporting a 20-40% decline in orders. This brings them close to the
breakeven point and in some cases beyond.
Shoe factories are less affected because they are mostly geared to the local market. One major footwear exporter in
Egypt has experienced a 30% drop in orders even allowing for the fact that FOB prices have been lowered by 1015%. Other companies in more specialized market segments are surviving well in export (and local) local markets
e.g. childrens’ footwear.
The companies in leather goods sector which export show a mixed picture with some companies holding up well
and others showing a decline in activity of 30 – 50 % depending on which market they serve and which products
they make. Manufacturers of ladies bags for export to Europe are surviving well. Makers of small leather goods,
briefcases etc have problems especially in the duty free market.
The tanneries in Morocco are facing great difficulties being exporters of semi finished leather. Production in the sub
sector is down by around 40% for those companies still operating. 2 large tanneries remain idle.
Evidence from visits to the footwear manufacturing sector suggests that business here on exports is also down by 3040%. In leather goods the picture is mixed. Those companies operating in niche markets with specialist products are
holding their place in the market. The others in the main stream are showing declines of up to 50% in sales.
The trading part of Jordan’s industry seems to be holding up well as evidenced by the trade statistics, especially in the
area of travel bags, satchels etc. which are traded in the region rather than the depressed markets of Europe.
Shoe manufacturing is also holding up well geared to the local and regional markets. Niche markets are the key here
with industrial safety boots and medical shoes doing well with expansion plans for 2009.
1.3.2. Strategy for Survival
In some ways the Agadir Countries have advantages that should be exploited. The proximity to the EU market with
the short/short production scenario referred to above should be built upon. European distributors are running lean
inventories of stock in their warehouses. They will require supply and manufacture of small and frequent orders of a
variety of products, styles and colours. This advantage should be aggressively marketed in Europe.
Companies must protect their market share as much as they can. To do this they will probably need financial assistance
and Government and banks should be willing to make soft loans to allow this to happen. Governments should be
lobbied to for the need to provide new easier loan guarantee schemes that cover the exporters to the EU. It is
expected that the EU distributors will be asking for more financial incentives and facilitation in payment as the crisis
continues.
12
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
No doubt business activity in spite of all stimulus packages on offer is going to decline. (See Tunisian experience
above). Companies should be prepared for this and stress testing their operations so that they know to what level
business can decline to without causing catastrophe.
Agadir companies, as a matter of some urgency, should now consider the Pan Agadir market of 130 million consumers.
They should claim this market as their own. Now is the time to look for other markets to augment the inevitable
decline in Europe.
The individual leather associations in the 4 countries should monitor the leather products market to ensure there is no
threat of dumping from Far East suppliers. Any customs loopholes or non legitimate repackaging practices that may
appear for imports from other nearby areas should be addressed.
New innovative products now need to be developed using different manufacturing techniques to reduce costs.
The engineering of products should be studied to reduce the amount of materials used, speed up production, increase
productivity and further reduce costs. (See shoes in particular made by Clarks, Ecco, Nike, Addidas etc).
Niche marketing is another powerful tool for survival. Many companies in the Agadir Group are allied mostly to the
fashion side of the market by their contractors. The grey market is increasing year on year. There are many segments
to this sub market. It should be investigated with an open mind to seek out opportunities which could help in filling
the gaps left by the decline in the fashion business.
Ø
SURVIVAL STRATEGIES
Develop short / short manufacturing
Do not loose customers – protect market share
Consider more penetration of Pan Agadir market
Consider regional market through Jordan
Monitor local markets for unfair import practices
Niche marketing overseas and local
Strict financial controls (stress test(
Crash programme on cost reduction and increase productivity
More financial facilities and extended loan guarantee schemes by Governments and Banks
For the future industrialists should take on board the lessons to be learned from this experience. It is less difficult
to survive this type of market crash if a company is diversified. Relying on 1 market segment as a strategy is fine in
expanding economies. Companies should now question the benefits of sub contracting. This has served the industry
well for a number of years but now perhaps it is time for a rethink.
Other market segments, countries, and regions should be investigated. Reliance totally on 1 export market has some
risks. Many companies take the view that a strong local market presence is a prerequisite for exporting.
Technological levels are also important to give production diversity, cost reduction and increases in productivity.
Investing in new technology in market downturns can be a difficult concept to implement but the future is for lean
manufacturing. Companies need to gear up for this and keep abreast of developments as they arise. There has to be
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
13
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
a continual investment in technology rather than investment holidays just because the market is buoyant and profits
are rising.
Along with technology there needs to be a quick reaction, just in time reliable supply chain for raw materials.
Intimate relationships have to be built with suppliers. The supply chain must be managed either in partnership or by
self sufficiency by vertically integrating.
New products are required. Niche marketing insulates companies to an extent from market downturns. They are
usually less competitive and large companies tend to ignore them. Making “me too” products is not the answer.
STRATEGIES FOR FUTURE
Ø
Market diversification local, region, export
Market segmentation
New innovative products (CAD1) by segment
Niche markets
Upgrade manufacturing with new technology (CAM2)
Managed supply chain for raw materials
Increase quality levels
Reduce prices
Reduce costs (see technology above)
Increase productivity – set targets
1.4.
Global Sourcing
Over the years, sourcing companies have become more expert at managing the supply chain. However, even now
allowing for advances in international inventory management, it still takes up months or more from inception to get a
leather good into a retail shop. Much is said about the shorter and shorter lead times demanded by retailers. Presently
the system used, manufacturing in the east and selling in the west mitigates against this. Lead times have come down
from 18 months to 6 months. But 6 months is still a risky time frame when dealing with a seasonal, fashion driven
commodity.
According to the Management Consultancies Association, cutting supply chain costs along with improving efficiency
and productivity is top priority for 94% of organisations. Long supply chains equals increased costs.
In the case of the leather products industry, footwear and other leather goods are the result of an integrated industrial
value chain, where the quality and commercial success of both intermediate and end products is determined by many
different factors in the stages of the chain. For example:
■
■
■
■
14
the selection and purchase of raw materials and components
the production processes
marketing, distribution and sales
by consumer demand both at home and abroad
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
The following illustrates the various factors concerned with product, technology and market that drive the trends
observed in the global Leather and Leather Products Industry.
Many of the factors listed are the consequence of the globalisation of markets and of sourcing through subcontracting,
joint ventures or direct relocation of manufacturing activities from leather producers of industrialised countries to
developing countries. Decision making on the localization of outsourcing in the developing countries depends on the
availability of raw materials, lower wage scales and the abundance of trained labour.
However the Agadir Countries have an additional inbuilt advantage over their competitors in the global market – their
proximity to the European and CIS markets. As mentioned above, supply chains are being forced to shorten by current
economic conditions. The future will demand shorter and shorter lead times in periods of weeks rather than months
with shipments direct to retail shops of smaller and smaller quantities. Agadir Countries are next to the markets but to
exploit this they will need to upgrade their technology and communications to cope with the new demands.
1.4.1. European Market Trade Characteristics – footwear
The EU27 market is the biggest in the world. It is difficult to penetrate but not impossible. Opportunities now are
better than they have been for some time even allowing for the current financial crisis.
Total EU27 footwear consumption was estimated at US$ 67,072 million in 2006. The average EU consumption per
capita was US$ 135 or 4.3 pairs. People in the Netherlands, Portugal, Austria, Denmark, the United Kingdom and
France were spending most on footwear, while Bulgarians, Romanians and Hungarians spent the least.
EU consumption grew between 2002 and 2006 by an annual average of 1.9%, from US$ 62,324 to US$ 67,072
million. In volume terms the overall increase was 2.2% per annum on average reflecting the serious price competition
in the market.
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Final Report
Source CBI
The above graph illustrates the growth trends in the market over a 5 year period.
In some of the EU15 countries (UK, France, Benelux, Spain, Portugal, Greece), the footwear market is polarising into
lower quality/price and higher quality/price sectors, whereas in the new EU member states (Czech Republic, Poland,
Hungary) a mid-range quality/price sector seems to be developing
In the main the EU footwear market in the near future will be influenced by the demand for healthy and comfortable
footwear, especially for the growing number of older people, because of the ageing population.
There will be a continued shift from formal to casual footwear, especially in the EU15 countries. The demand
for formal footwear in the new EU member states with a rising middle class and more women at work will also
increase.
In 2006, the turnover of the 26,000 footwear manufacturers in the EU27 was valued at US$ 34,890 million, of which
an estimated 65% was outdoor leather footwear. Italy, Spain and Portugal accounted for 67% of EU production. From
the new EU member states, Romania accounted for almost 10% of the value of production and 12% of production
volume. Poland and Slovakia were also sizeable footwear producers.
By volume, EU footwear production decreased between 2002 and 2006 from 994 to 727 million pairs with decreases in
most countries, except for Romania and Bulgaria. Even the Eastern EU countries are now being seriously challenged
by Asian producers.
In 2007 the EU accounted for 5% of global footwear production (by number of pairs) and that figure is forecast to
continue to fall, despite “anti-dumping” protectionist measures by the EU against the largest Asian producers, China
and Vietnam. The downward trend in value and production over a 5 year period is shown by the following:
Source CBI
16
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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In 2007 imports were valued at US$ 34,905 million, 2,942 million pairs. Germany, France, Italy and the UK were
the largest importing countries. Between 2002 to 2006 and 2007 all EU countries increased their imports of footwear.
Overall, total EU footwear imports rose in this period by an annual average of about 1% in value and by 3% in
volume as a result of more imports of cheap footwear.
Footwear with leather uppers, formed nearly 60% of the value of EU imports (34% by volume), which grew by 5.5%
year on year between 2002 and 2007. Within this product group, casual outdoor footwear represented over 50%.
In 2006 EU footwear imports were 501 million pairs from countries such as China, Vietnam, India, Indonesia, Brazil,
Thailand, Morocco and Tunisia worth US$ 7,194 million.
The top four importers were UK, Germany, Italy and France.
In 2007, around half of EU imports came from other EU countries by value, but just 34% by volume. The leading
suppliers to the EU were Italy, Germany and Romania, as well as suppliers with high re-exports such as Belgium and
the Netherlands. The world suppliers extra EU are shown in the following chart:
Top 10 Extra EU-27 suppliers (in 1000 pairs)
2004
World
China
Vietnam
India
Indonesia
Brazil
Turkey
Thailand
Tunisia
Morocco
Source Eurostat
2005
1.661.659 1.929.858
883.654 1.310.841
298.089
270.108
52.084
52.789
60.259
51.081
28.251
31.495
38.731
30.251
33.719
28.324
17.766
19.771
14.670
14.712
2006
2007
2.096.155 2.504.729
1.487.581 1.845.010
256.692
277.124
60.696
65.983
54.725
63.125
32.717
35.428
27.543
30.134
27.905
28.976
20.478
22.914
15.350
16.532
Share
% growth
% growth
of 2007
20042006-2007 2007
imports
100.0
19,5
50,7
73,7
24,0
108,8
11,1
8,0
-7,0
2,6
8,7
26,7
2,5
15,3
4,8
1,4
8,3
25,4
1,2
9,4
-22,2
1,2
3,8
-14,1
0,9
11,9
29,0
0,7
7,7
12,7
EU exports to the world (i.e.excluding intra EU27 trade) increased between 2004 and 2007 from US$ 6597 million to
US$ 7477million (13.3%) and 0.9% in volume from 168.9 to 170.5 million pairs as the following chart illustrates.
Top 10 Extra EU-27 export markets (in 1000 pairs)
2004
World
USA
Switzerland
Russia
Norway
Ukraine
Turkey
Japan
Croatia
Canada
U.A.Emirates
168.929
55.069
22.449
10.108
7.667
4.631
5,636
7.163
5.050
6.923
2.798
Mahmoud Qattous and Terry McCallin
2005
160.563
42.595
20.493
12.198
8.595
6.426
6.363
7.145
5.249
6.776
3.010
2006
164.793
38.681
22.155
14.410
7.713
6.213
6.790
7.351
5.631
6.185
3.240
2007
170.472
32.506
22.250
18.160
7.990
7.775
7.271
6.557
6.455
5.485
4.202
Share of
% growth
% growth
2007 exports 2006-2007 2004-2007
100.0
3,4
0,9
19,1
-16,0
-41,0
13,1
0,4
-0,9
10,7
26,0
79,7
4,7
3,6
4,2
4,6
25,1
67,9
4,3
7,1
29,0
3,8
-10,8
-8,5
3,8
14,6
27,8
3,2
-11,3
-20,8
2,5
29,7
50,2
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1.4.1.1 Footwear Distribution Channels
Most footwear is supplied in most EU countries through the traditional route, which is from manufacturer to importer/
wholesaler to retailer. Southern EU countries (Italy, Spain, Greece) and the new EU member states (Poland, Slovakia,
Hungary) continue to have many small footwear shops. In the middle and northern EU (Germany, Austria) countries
many small footwear retailers join a buying group, which negotiates directly with (overseas) manufacturers.
In France, Germany and the United Kingdom, there are also large footwear retailers operating local chain or franchised
stores, although some of these are having difficulties in recent times.
In 2006, there were an estimated 55,000 footwear retail outlets in the EU. Footwear
retailing has become more diversified. Consumers can nowadays buy footwear in many
different ways, for example at a retail outlet (footwear shop, chain store, sports shop,
clothing shop, discounter, hypermarket etc.), at a market stall, a factory outlet or on the Internet.
The past few years has seen the continuing growth of discount footwear retailers, but to some extent, especially in
the younger market segment the growing importance of fashion in footwear has resulted in the wider availability of
footwear in other types of outlets, particularly clothing retailers.
The following gives an indication of the types of outlets and their significance to the Agadir group.
OUTLET
TYPE
COUNTRY
QUALITY PROFILE
AGADIR
ANWR
Buying group
Germany
Medium high
yes
Euroshoe
Buying group
Benelux
Medium low
possible
Deichmann
Chain stores
Medium Low
possible
Salamander
Chain stores
Germany and
Northern Europe
Germany and
Northern Europe
Medium high
yes
C. J. Clark
Chain stores
World wide
Medium high
yes
Eram
Chain stores
France
Medium
yes
Andre
Chain stores
France
Medium
yes
Coim
Department stores
Italy
Medium high
yes
Ecco
Manufacturer with
shops
Europe wide
High
no
Shoe Zone
Chain stores
UK
Low
no
Stead and Simpson
Chain stores
UK
Medium
yes
Gardiner
Wholesaler
UK
Medium
yes
Carrefour
Super/hyper
World wide
Medium low
possible
Metro
Super/hyper
Worldwide
Medium low
Possible
Bata
Chain stores
World wide
Medium
yes
Marks & Spencer
Department stores
Mostly UK
Medium
yes
●
●
●
18
ANWR (Ariston Nord West Ring) is a large buying group representing 1,700 retailers with 4,500 shops.
Euroshoe has 530 shops
Deichmann operates their shops under their own name and have over 2,500 shops
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●
●
●
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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C and J Clark is the largest retailer of conventional shoes, (excluding sports footwear) in the world.
Bata is another international retailer with a buying office in Italy.
The supermarkets and hypermarkets tend to be in the low to medium quality levels and buy in large
volumes.
Footwear specialists
Chain stores*
Buying groups
Independents
Non-specialists
Department stores
Super/Hypermarkets
Sports shops
Clothing shops
Internet/mail order
Others**
Germany
France
UK
Italy
Spain
Netherl.
Belgium
51%
22
22
7
49%
16
4
13
7
5
4
56%
24
13
19
44%
3
8
20
4
5
4
43%
33
3
7
57%
3
5
16
28
4
1
57%
8
12
37
43%
4
6
12
6
2
13
70%
15
9
46
30%
11
3
8
4
1
3
77%
38
29
10
23%
3
2
11
3
1
3
74%
31
23
20
26%
2
3
10
5
1
5
* Includes multiples, franchised stores and chains
** Includes market stalls and factory outlets
Source Euromonitor
The following chart shows the market share of varying types of distributors of footwear to the consumers.
●
●
●
●
●
●
So called footwear specialists have the largest market share with chain stores being the largest group except
for Italy and Spain where independent shops predominate.
Buying groups are important in Germany, Benelux and to some extent France.
Clothing shops are important in the UK especially for the younger fashion element.
Department store are relatively important in Germany only
Sports shops are of course specialist outlets
Footwear distribution is diversified. There are many different outlets.
With personal leather goods the pattern is very similar to footwear. There are specialist shops for all leather garments
and accessories. Department stores have in shop areas dedicated to PLG. Quality levels tend to be high. Some
footwear shops sell hand bags which complement womens shoes.
14.2.Leather Goods
Although the leather goods market is smaller than the predominant footwear market it is still a 50 billion US dollar
market in world terms. In Europe the biggest individual markets are the biggest economies – Germany, France, UK
and Italy. The market in these countries is segmented in the medium to high quality end. Cheaper products tend to be
made from synthetics and imported from the Far East and to some extent India.
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Ladies bags are becoming a more important accessory to compliment clothing fashion. Some years ago a bag was
viewed as a necessity rather than a fashion statement. Bags no longer have to match shoes in an ensemble but become
an item in their own right. A similar scene applies to ladies belts. The leather goods market in Europe is dynamic
in that it is gaining more importance in growing in absolute numbers. In this respect it currently more active than
footwear even allowing for the fact that footwear is a 60% bigger market in world terms.
The active markets for leather goods in Europe are the following major importers:
Trade Map ITC Unit: thousand of US$
The above chart represents the size of the various markets during 2007. The Comtrade Trade Map analysis shows the
following
●
●
●
EU imports represented 35 % of Global imports
EU imports of leading importers are highly increasing particularly Italy with an yearly import growth of 19
% , Spain 16 %, Netherlands 15 %, France 14 %, United Kingdom 13 %
EU small importers (Denmark, Ireland and Finland) registered a high import growth respectively of 21 %,
23 % and 17 % per year during the period 2003-2007.
1.4.3. Hides and Skins and Leather
Europe is an active trader in hides, skins and leather. The majority of products traded are for export markets. Much
of the trade is in semi processed leather for finishing in Europe (particularly Italy and Spain), re –exporting to the Far
East and for domestic consumption. The market trend is upwards with business increasing year on year up to 2007.
The trends are:
Trade Map ITC Unit: thousand of US$
20
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GLOBAL TRADE INDICATORS of LEATHER INDUSTRY
The following gives an indication of the trade flows, both imports and exports, of the various sub sectors within the
industry. The statistics all come from the ITC Comtrade Data Base for 2007.
2.1. Global imports and exports:
2.1.1. Hides and Skins and Finished leather.
There are many types of finished leather available to the industry. The hide or skin of any animal, reptile or fish can
be tanned into finished leather. Many of the exotics e.g. reptiles such as snake, crocodile, Nile perch etc are used for
small leather products or as appliqués on larger products. For the most part cow and calf leather are commonly used
in the leather products industry and represent 23% of global production.
The types of leather and their common uses are as follows:
FINISHED LEATHER
Cow
Calf
Buffalo
Baby buffalo
Sheep
Goat
Pig
Exotics
COMMON USE
shoe uppers, personal leather goods, upholstery, saddles, travel bags
Shoe uppers, personal leather goods, garments, gloves,
Industrial footwear uppers, some shoe uppers
Shoe uppers, personal leather goods
Shoe linings, garments, gloves, personal leather goods
As above
Shoe linings, upholstery, travel bags, shoe uppers
Appliques, gloves, hand bags, etc
The chart below indicates the total activity for the three sub sectors.
Global trade indicators in 2007 imports of hides, skins, finished leather.
From Annex I which shows more details regarding Global imports during the years 2003 – 2007 it is clear that:
●
●
Global imports of hides and skins and leather is slowly increasing by 5 % a year during the period 20032007.
The world top six importers are major producers and exporters of footwear and leather goods: China, Italy,
Hong Kong, Germany, Korea, and Viet Nam. They represent 56% of the global demand.
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The chart below indicates the total activity for the three sub sectors.
Global trade indicators in 2007 exports of hides, skins, finished leather.
From Annex I, it is clear that:
●
●
●
●
World trade in finished leather, hides and skins exports grew in value by 5% between 2003 – 2007, similar
to imports.
The leading exporting country is Italy with16 % of global exports. Italy is a world leader in finished leather
not only for its own needs but also on the global market.
USA is second with a market share of 10 %, Brazil 4th with 7%, Germany 5th with a share of 4 %.
China is a large importer of leather rather than exporter, in order to meet the needs of its expanding
manufacturing industry of footwear and leather goods.
2.1.2.Personal Leather Goods
Global trade indicators in 2007 imports of leather goods:
Annex I shows that:
●
World trade in leather goods grew at an annual rate of 12% from 2003 – 2007.
●
The six leading importers are developed countries that represent 59 % of global imports.
●
USA is the biggest market with a 22% share.
●
France, Germany and UK have a market share of 18% between them representing approximately 6%
each.
22
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Global trade indicators in 2007 exports of leather goods:
Annex I shows that:
●
World trade in export of leather goods grew in value at an annual rate of 11% between 2003-2007
●
The leading exporter is China with a market share of 32 %. Italy has a market share of 12 % followed by
France with 9 % and Germany 4 %. India has a 3% share
●
The five leading exporting countries of leather goods represented 74 % of global exports.
2.1.3.Leather Footwear
Global trade indicators in 2007 imports of leather footwear:
Annex I shows that:
●
World import trade increased by 10% per year from 2003-2007
●
EU27 accounts for 44% of world imports
●
USA accounts for 23% of world imports
●
EU 15 imports represent 40 % of world imports. Their imports increased year on year (from 8 to 20%
during 2003-2007) despite only a moderate increase in consumption (2%).
●
The biggest EU importers are Germany, France, Italy, UK, Belgium, Spain, Netherlands, (see above).
●
The target market for Agadir countries are Germany, France, Italy, UK, Belgium, Spain and Netherlands,
for the following main reasons:
■ Agadir exports to EU countries are free of taxes. ■ Germany, France, Italy, UK, Belgium, Spain and Netherlands represent 34 % of the Global demand.
■ Their demand is higher than that of USA (23%)
■
Their demand is dynamic with a yearly increase of 8 to 20 % from 2003 to 2007.
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Final Report
Global trade indicators in 2007 exports of leather footwear:
Annex I shows that:
●
●
●
●
●
●
2.2.
World export trade increased by 10% per year from 2003-2007, same as for imports.
China is leading the global exporters with a market share of 30 %, while Italy has 13%, Vietnam 7%, and
the others less than 5%
EU countries are still leading exporters particularly Italy ranking second exporter followed by Belgium 5th,
Germany 6th, Spain 7th, Brazil 8th and France 9th.
The export growth rate of China is 19%. Vietnam and India have an annual growth rate of 13 % and 18 %
respectively and are far higher than that of Italy, Spain and Portugal (respectively 5%, 3% and 2%).
The big competitors for the Agadir countries are China and Vietnam in the price sensitive segment.
Italy in the high quality segment as its market share in global exports is high and “made in Italy” is highly
appreciated by consumers.
European Union Imports and Exports
2.2.1. Hides and Skins and Finished Leather
European Union trade indicators in 2007 imports of hides, skins and finished leather
Annex II shows that: ●
●
Italy is by far the biggest importer of semi processed leather followed by Germany
Romania and Spain are also significant importers of semi finished leather.
European Union trade indicators in 2007 exports of hides, skins and finished leather
24
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Annex II shows that:
●
The four major EU exporting countries export finished leather rather than hides and skins.
●
Italy is the largest exporter in the world with a 16.4% share. Germany has a 4% world share.
●
France and Spain are around 2%.
●
All major exporting countries also trade intra EU with Italy being the most active.
2.2.2.Personal Leather Goods
European Union trade indicators in 2007 imports of personal leather goods
Annex II indicates that the:
●
EU imports represent 35 % of Global imports
●
EU imports are increasing particularly Italy with a yearly import growth in value of 19 % between 20032007, while Spain achieved 16 % growth, France 14%, United Kingdom 13 % and Germany 10%.
European Union trade indicators in 2007 exports of personal leather goods
Annex II shows that:
●
EU exports represent 35 % of global exports the same as imports
●
The leading EU exporters are Italy, France and Germany, representing 25 % of Global exports ●
The leading EU exporters had an annual growth rate of 18 % for Italy and Germany, 14 % for France during
2003-2007.
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2.2.3.Leather Footwear
European Union trade indicators in 2007 imports of leather footwear
Annex II shows that:
●
●
●
●
Germany is the biggest importer of footwear in the EU27
France, Italy and UK have similar sized markets for imports.
Imports come mostly from China ,12.1%, Viet Nam , and 7.1%, India 3.7%
There is also a strong intra EU trade with the importing countries buying mostly from Italy, Netherlands and
Belgium
European Union trade indicators in 2007 exports of leather footwear
Annex II indicates that:
●
●
2.3.
Italy is the biggest exporter of footwear, with intra EU exports representing 15.3% of the EU market.
Belgium and the Netherlands supply 13.7% of intra EU trade
Germany exports 1.8% of high quality footwear to other EU countries
Intra Agadir Trade
2.3.1. Hides and skins and leather
Intra Agadir trade indicators in 2007 of hides, skins and finished leather
26
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●
●
●
●
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Morocco is the biggest trader in leather raw materials intra Agadir
Egypt is active in semi processed materials
Tunisia has a relatively same level of activity as Egypt. Jordan has only a small trade in wet blue leather
2.3.2Leather Goods
Agadir trade indicators in 2007 of leather goods
●
There is only negligible trade between the Agadir countries in this category
2.3.3. Footwear
Agadir trade indicators in 2007 of footwear
●
Tunisia has some activity in this area but in actuality the intra Agadir trade in footwear is very small at
present.
2.3.4. Raw materials and inputs
The Agadir countries use many types of raw materials and inputs in their production processes. All 4 countries use
the same things, some are directly imported, some are available locally and some are manufactured locally. The
following charts represents the major inputs required for the various sub sectors of the industry and highlights the
possible complementarities and co-operation opportunities available to the group.
MATERIAL
AVAILABILITY
IMPORT/LOCAL
COMPLIMENTARITIES
Raw hides and skins
All 4 countries
Export banned from
Morocco, Tunisia, Egypt.
Traded by Jordan
Jordan has the advantage in this
commodity and can trade inter Agadir
Semi processed
leather, (wet blue).
All 4 countries
Locally made. Export banned
by Tunisia and Morocco
Can be traded intra Agadir by Egypt
and Jordan
Finished leather for
uppers and leather
goods
Egypt has biggest
capacity
Tunisia has finished
leather Morocco also
but less, Jordan limited
types
Locally made and
imported from Europe and
world
Finished leather can be traded
between all 4 countries of local
production. Is suitable for a number
of products
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Finished leather for
garments
Available in Egypt
Tunisia and Morocco
Final Report
Locally made. Some
imported for re- exports of
goods
Can be traded intra Agadir
Locally made
Can be traded intra Agadir
Locally made
Only suitable for local markets not for
export
Sole leather (bends)
Egypt, Tunisia and
Morocco from sheep
and goat
Egypt from buffalo
No cow leather
Stitched uppers
In all 4 countries
Locally made
Can be traded intra Agadir
Threads
In all 4 countries.
Mostly imported from Far
East and Europe. Stocked by
local traders
Not much benefit inter Agadir
Trade unless supplied by a powerful
importer on behalf of the zone.
Needles
In all 4 countries,
needles for simple
machines freely
available, for
sophisticated machines
have to be imported
from Europe
Mostly imported from Far
East and Europe. Stocked by
local traders
Not much benefit inter Agadir
Trade unless supplied by a powerful
importer on behalf of the zone.
Toe puff and counter
sheets
From traders in all 4
countries
Certain imported types
locally available in market,
other directly imported by
factories
No real advantage in Agadir trade
unless supplied by a powerful
importer on behalf of the zone
Ancillary materials:
Eyelets, laces, buckles,
elastic, velcro, handles,
locks, clasps, etc
From traders in all 4
countries
Certain imported types
locally available in market,
other directly imported by
factories
No real advantage in Agadir trade
unless supplied by a powerful
importer / trader on behalf of the
Agadir Group
Steel shanks
From traders in all 4
countries.
Some locally made of
indifferent quality
Some standard shapes
imported from Europe of
good quality. Bespoke shapes
have to be imported
No real advantage in Agadir trade
unless supplied by a powerful
importer / trader on behalf of the
Agadir Group
tacks and nails,
Hand tacks available
locally. Specialist
nails(buttress heel nails,
lasting machine tacks)
must be imported
Certain imported types
locally available in market,
other directly imported by
factories
No real advantage in Agadir trade
unless supplied by a powerful
importer / trader on behalf of the
Agadir Group
Rubber vulcanised
sheets for soles
Egypt
Locally made
Modern plant with capacity to
trade intra Agadir to quality levels
demanded.
Unit sole moulds
Egypt
Locally made in Egypt but of
poor quality and limited types
suitable only for simple soles.
Majority of moulds imported
from Italy, Spain and Far East
Egypt moulds can be traded where
suitable. Egypt should upgrade its
technology. There are companies
available who can do the upgrading
necessary
Unit soles injection
moulded
In all 4 countries. Egypt
has large capacity and
variations of materials.
Jordan much less,
Tunisia and Morocco
have smaller plants
Locally made. Some up to
date fashion items imported
from Italy / Turkey
Possible trade from Egypt to others
Available in all 4
countries
Good quality products locally
made with resin rubber in all
4 countries. Cow leather bend
soles of excellent quality
available from Tunisia and to
some extent, Morocco
All soles can be traded inter Agadir.
Lining leather
Unit soles built up
28
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Insole and reinforcing
boards for PLG
Made in Egypt only
Locally in Egypt, imported in
other countries
Egypt could supply the region. Some
upgrading necessary
Adhesives
Made in Egypt and
some types in Tunisia
and Morocco
Local and better quality
imported
Manufacture needs to be upgraded
before intra Agadir trade
Lasts
Made in Egypt, Tunisia
and Morocco
Local and better quality
imported
New plants in Egypt and Tunisia offer
better quality products which can be
traded intra Agadir
Packaging, boxes,
cartons, tissue paper
Available locally
Local manufacture is
possible. Specifications
should be to EU norms.
Could be traded Inter Agadir
depending on commercial
environment.
●
The biggest item in terms of need and sales volume is finished leather. This should be developed for intra
Agadir trade. Semi processed trade is only a stop gap.
Bend leather for soles is of minor importance because of low volumes for intra Agadir trade
Stitched uppers has potential depending on which country is the most productive and cost conscious. All
shoe manufacturers need this item.
Unit soles depend on moulds for manufacture. Most of these are produced in Italy. Egyptian manufacture
need to be upgraded by Joint Venture investment.
The Egyptian plants for the manufacture of sheet materials, insoles and soles could supply all countries.
Lasts need to be properly engineered and graded and made from plastic not wood.
An Agadir Trading House for materials should be studied as a commercial opportunity for a private investor,
either as a new venture or in addition to the business of a current investor.
●
●
●
●
●
●
2.3.5. Hides and Skins
Hides and skins are the commodity at the beginning of the supply chain in the manufacture of leather products. H
and S are traded in the same way as any other commodity and the trade tends to be opaque in nature and world wide.
Every country with an animal population inevitably has hides and skins as a natural resource.
If hides within one country but from different areas distinguish one from another, it is obvious that hides from different
continents and different climates have significant differences. It is virtually impossible to list all the characteristics of
each origin and thus a table that highlights the differences between origins is impossible to develop. However to give
an example we can summarize and very generally compare a wet salted cattle hide from the US east coast with a wet
salted hide from a bovine of the same age, let us say 2 years old, from Bangladesh.
United States
Bangladesh
Breed
Western
No hump
Zebu/Brahman
Hump
Farm/feedlot
Yes
Thick hide
No
Thin hide
Insect/parasite
protection
Yes
Few scars
No
Many scars
Average weight
20 kgs
Grain
Coarse grain
Split
Good
Flaying marks and holes No
15 kgs
Machine flay
Fine grain
Not so good
Yes
Fibre structure
Firm
Loose
Brand marks
Likely
Unlikely or few
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Unfortunately there is no such thing as a clearly defined international standard. An international standard
or norm is virtually impossible, because each region of origin has its own characteristics in terms of natural
and manmade defects, and in terms of the characteristics of the hide or skin themselves. Therefore you can
expect a certain standard only within a well defined area. Suppliers within a defined area can determine their
own standard as well, but that personalised standard more or less reflects the regions standard, and is usually a
refinement. The US National Hide Association published in 1979 a booklet “Hides and Skins” prepared by their
Education Committee. This booklet is an excellent guide laying down the general basic rules for the production
and preparation of cattle hides and calfskins in the United States. This guide can form the basis for all wet salted
hides and skins all over the world if properly used with common sense and adapted to regional requirements.
There is a general consensus on one basic rule: any defect presenting itself on a bovine hide within 10 cm from the
outer edge of the hide is not considered a defect. Any defect further than 10 cm from the outer edge counts in full as
a flaw
Unido have developed in collaboration with FAO a very useful guideline for the selection of East African hides
and skins. This came under the Africa Regional Leather Programme US/RAF88/100 and US/RAF/98/200. It
deals mainly with dry hides and skins which are becoming less common, but nevertheless the guidelines if used
as such and with consideration and adapted to each region, are an excellent selection basis for African origins.
The following link leads you to these selection standards: Unido H&S_Standards.pdf Previously the market was predominantly in Europe, currently the market is shifting to the Indian
subcontinent and in particular on the Far East, with the People’s Republic of China as the major market.
Europe tend to buy and transform high quality raw materials, other markets concentrating on low and medium quality
raw material.
Country/Continent
Latin America
Africa
Kenya
Near East
Far East
P.R. of China
North America
Europe
Italy
Spain
Former USSR
Import 1988
68.600
11.300
200
29.800
554.000
197.600
41.000
1.019.600
382.700
59.900
1.300
Export 1988
18.700
38.400
1.400
20.300
102.500
76.700
765.200
698.800
19.300
14.600
78.700
Import 2005
91.000
3.500
200
43.300
1.125.900
805.400
88.400
811.100
347.200
39.700
64.100
Export 2005
47.600
55.400
4.500
21.100
150.300
102.800
744.700
829.100
61.400
59.800
115.200
(source FAO World Statistical Compendium for raw hides and skins 2005)
From the table above shows the quantities of raw wet salted bovine hides and skins (calf) that have been imported
and exported in a number of countries and continents. The difference between 1988 and 2005 both in imports and
exports indicates the market trends.
The trend will be that mass produced leathers of low and average quality in simple basic colours will be produced in
countries like China, India, Pakistan, Egypt. Sophisticated high quality leathers specifically aimed at the high fashion
market will be produced in Europe and particularly in Italy. Upholstery leathers will probably be produced mainly in
South Africa and South America.
Agadir Countries will emerge as competitors to the tanning industry in the Indian subcontinent, whereas
the Sub Saharan tanning industry will probably continue to suffer from the unavailability of raw materials
as these will continue to be exported to the Far East rather than being processed in the countries of origin.
30
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
With the continued development of the Agadir tanning capacity particularly for finished leather, especially in Egypt,
the tanning sub sector has a good opportunity not only to supply the zone but also to be a significant world player.
3.AGADIR GROUP ANALYSIS
3.1.
Jordan
3.1.1. Industrial Setting and Institutional Framework
Jordan is classified by the World Bank as a “lower middle income country.” The per capita GDP, as reported by
the International Monetary Fund (IMF), was $2,533 for 2006. According to Jordan’s Department of Statistics, the
unemployment rate in 2006 was 13% of the economically active population.
The rate of inflation in 2006 was 6.3%; the currency has been stable with an exchange rate fixed to the U.S. dollar
since 1995 at JD 0.708-0.710 to the dollar. In 2006, Jordan significantly reduced its debt to GDP ratio to 73.2% of
GDP.
The manufacturing sector in Jordan is mainly operated by the private sector. The commercial banks operating in
Jordan are private and the foreign currency, exchanges and transportation markets are free. The Jordanian market is
open and with the high share for the private sector. With regard to foreign investment, Jordan has a big competitive
advantage in comparison with China and Eastern European countries and even Morocco and Tunisia.
Jordan created an industrial modernization program (Jordan Upgrading and Modernisation Programme – JUMP)
which enabled four footwear manufacturers and the biggest tannery to join the qualifying program. However, only
two shoe manufacturers decided to implement their upgrading plans.
New investments in international transportation, customs facilitation, and information technologies (internet, egovernment) will contribute to improving communications between buyers and sellers and shortening delivery times.
It is expected that confidence between importers and exporters will increase. But the exiguity of the port of Aqaba
may preclude the fulfillment of the expected quick delivery time.
Jordan concluded many trade agreements including one in particular of great importance to the Agadir Agreement. This
is the Trade Agreement with the EU which enables Jordan to export products free of custom duties to Europe. These
products must be produced in Jordan using domestic input material or EU input which is considered as Jordanian.
The second agreement is the Free Trade Agreement with the United States which allows the entry of Jordanian
exports to the US market free of customs duties also.
3.1.2.Nature of the Sector
The leather products sector in Jordan which is mainly footwear, has suffered in recent years due in the main to the
surge in imports from China, plus Europe and neighbouring countries. In spite of safeguard measures on imports from
China being introduced; 2JD for synthetic shoes and 5JD for leather shoes, the market for local manufacturers has
improved only marginally. Customs loopholes need to be addressed to ensure the same rules apply to all and ensure
fairness in the market.
The study done by the Euro – Jordanian Action for the Development of Enterprise (EJADA), in 2005 on the footwear
industry in Jordan lists the per capita consumption of shoes between 1.40 and 3.11 per year depending on the economic
status of the consumer. With a current population estimated at 6 million plus this would give a base local market of
8.4 million to 18.7 million pairs of shoes per annum. Recent evidence suggests the market size is at the high end of
the scale.
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The manufacture of personal leather goods (PLG) sub sector is a very minor player in the leather products industry.
Most of the product offered in retail shops is imported and in many cases made from synthetic materials. There are
no reliable statistics as to the number of workshops in the sub sector.
There is quite a dynamic shoe components industry in Jordan supplying the conventional and Micro, Small and Medium
Sized Enterprises (MSME’s). This side of the industry has contracted with the general decline in manufacturing.
However survivors are doing a good job and make a quality product.
Leather supply to the industry comes from the only tannery producing finished leather on an intermittent basis but this
is of a limited product range. Other leathers are supplied by traders who source from neighbouring countries. Some
companies import their leather directly for their own needs.
It should be mentioned that the leather products manufacturing sector in Jordan suffers from a penal cash flow.
Manufacturers can supply products to their customers and in return, as a means of payment, receive post dated
cheques for up to 9 months in the future. Needless to say there is a high incidence of bounced cheques. The result of
this system is manufacturers are strapped for cash and working capital consequently it inhibits their ability to take
advantage of commercial opportunities as they arise.
The Agadir agreement provides for a common market for goods and raw materials between the 4 countries which are
traded without duty and taxes. Previously, imports of leather into Jordan were subject to 30% duty. This is now zero
from Egypt, Tunisia and Morocco. (However it has to be said it is also zero from other countries particularly India).
This is a big advantage to the local industry. Over 60% of the cost of a shoe is leather. Major components particularly
soles, secondary raw materials and components can also be sourced duty free from the Agadir Countries.
The Agadir Agreement will open new supply routes. Jordan has relatively small manufacturing units which can be
turned to advantage. (Most Italian shoe companies employ less than 12 workers). By co-operation, products can be
developed on a low cost operating base at competitive prices. Some inputs are needed on technology, design and
factory management. Human resources need to be improved by training operators in more modern manufacturing
techniques. Niche marketing is the key - making a product that does not compete directly with the Chinese. There
is evidence that hand stitched moccasins, mens‘ and ladies‘ comfort shoes with a degree of hand stitching are shoes
in demand. The Chinese do not like to make these types as the construction does not lend itself to mass production.
Components, cut parts, stitched uppers, soles, etc can be sourced intra Agadir and the product manufactured in
Jordan. They can be sold on the local market or exported.
Jordan is also a transit hub for many products re-exported to the region. It has good close links to the Gulf States. It
has a great potential to be the hub for Agadir manufacturers who can export their leather products to Jordan for reexport to Gulf markets.
3.1.3. Type and Size of Companies
According to the Jordan Footwear and Leather Industries Association there are about 13 manufacturing companies in
the mechanised sector. However they are operating at low capacities (about 30 – 50%). The newly formed association
is in the process of conducting a survey on the ground of the manufacturing industry to establish the true size of the
sector.
At present it is known that the semi mechanised and MSME‘s sectors comprise about 40 registered companies and
100’s of smaller ones.
The Companies Control Directorate of the Ministry of Industry and Trade (MIT)lists 11 companies in the tanning
sector. Of these 2 companies are listed as processing leather to the wet blue stage, 5 are listed as hides and skins
traders, 2 listed as leather garments producers, 1 manufactures dyestuffs and there is 1 tannery manufacturing finished
leather.
32
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Some of the previous mechanised companies identified by EJADA and JUMP in 2005 are continuing to manufacture
conventional shoes in a similar manner as before. However one company has moved out of the country and one large
company temporally interrupted production.
Certain companies began to recognise the extremely competitive nature of the local market for conventional shoes
and diversified out of it into growth niche markets. There is now a company in Jordan successfully producing safety
footwear to ISO approved standards and has the CE mark of the European Union, and one successfully producing
medical comfort working footwear. These companies are set on a growth path and have increased their annual turnover
in the past three years. The safety company is exporting to regional markets and the medical footwear company has
plans to do likewise. These are the success stories of the industry and an example for others to follow. They have also
been accepted by the CBI (Centre for the Promotion of Imports from developing countries, The Netherlands) in their
3 year export (from Jordan) promotion training programme.
3.1.4. Sector Types of Production and Characteristics
Jordan starts at the beginning of the production value chain in that it collects and trades in raw hides and skins some
for the local market and some for export. The only active tannery also processes these into semi finished products
(wet blue) which are then exported.
Further production is in the form of footwear for various segments notably dress/casual shoes for men and women,
safety footwear, military and industrial boots and specialised medical shoes. There is little production in the way of
handbags, belts wallets etc and virtually no leather garment manufacturing.
Production values from the department of statistics, Jordan, for the following categories are given as:
Production in Jordan by sector 2007
Source: Department of Statistics Jordan
Trade Statistics:
All the following charts use Comtrade Statistics
Imports to Jordan 2007
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Exports from Jordan 2007
Re - exports from Jordan 2007
Imports from EU to Jordan 2007
Exports from Jordan to EU 2007
3.1.5. Institutions and Number of Workers
In 2007, the Jordanian Leather and Shoes sector counted 137 enterprises employing a total number of workers of
1800.
3.1.6.Production Added Value
In 2006 and 2007, the production value added for leather preparation and tanning was 19.1% & 29.3% respectively,
while for travel and hand bags and other leather products it reached 43.3% & 43.2% respectively. On the other hand,
the manufacturing of shoes value added was 37.2% & 38.1% in 2006 and 2007 respectively.
34
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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3.1.7. Foreign Direct Investment (FDI)
Jordan is uniquely placed in the region and among the Agadir Countries being the hub for communications with the
Gulf States, the surrounding countries of Iraq, Syria, Lebanon and Palestine.
It should be noted that Jordan has also set up Qualified Industrial Zones (QIZ’s) for trade with USA particularly
in the textile industry which have been very successful. Investors come from China, Pakistan, India and Turkey.
The investment is around US $987 million in the QIZ’s. The QIZ’s helped to establish an export culture among
entrepreneurs in Jordan.
Jordan therefore has an advantage among the Agadir countries to act as a conduit for products made in the region and
exported, assembled in Jordan and exported or manufactured as subcontractors and exported. Tunisia and Morocco
and to some extent Egypt are not a strong as Jordan in servicing these markets. There is also a perceived willingness
for entrepreneurs in the other 3 countries to work in co-operation with Jordan to develop these markets hence creating
significant FDI in the country.
Despite the difficulties in the local leather products market, Jordan is having some success in attracting foreign direct
investment in the Leather Products Sector.
The large tannery previously established in the country has continued to operate after its major customer suffered
a decline in business. The tannery continues to produce finished leather, in a limited range, for the local market for
conventional footwear plus the industrial segment.
In order to utilise the facility and investment more effectively the tannery has contracted with Spanish Investors
to operate the machinery and produce semi processed leather up to the wet blue stage. This is then exported to
Europe. The investors pay a monthly rent to the company in return for the use of the machinery and supply their own
technicians and raw materials.
The system works well and could be the prelude to further significant foreign investment in the company.
The other major investment in the tanning sector is the establishment of a large tannery in Ma’an. This investment was
helped by benign Government regulations for the allocation of land and the future tax regime. The project is being
implemented by an investor from Lebanon who previously operated a tannery in Beirut. One of the oldest tanneries
in the region (established in 1808), it eventually became surrounded by the city due to urban sprawl which created
problems with the environment. The security factor was another reason for deciding to relocate the business.
The tannery is being built with an initial capacity of 6 million square feet of cow hides and 1.5 million square feet
of goat and sheep skins. The production will start with semi processed, progress to crust and then to finished. The
finished leather will be aimed at the quality end rather than cheaper materials and will have a capacity of 21,000
square feet per day. Markets are predominantly Europe, in particular Italy, where the company has good contacts
from its previous operations. The sourcing of raw hides and skins is a world wide business and the company is also
well versed in the supply chain management of this critical area of the tanning industry. Future plans are for the
establishment of a shoe factory also aimed at export. This would create a vertically integrated company which will
have a competitive advantage on the world markets, particularly to Europe. In the initial start up phase the company
will invest US $ 7 million and employ 100 people. It is estimated that the tannery will be in operation by the 4th
quarter of this year.
Jordan therefore has successfully developed a good reputation in the Agadir countries as a place to operate from. This
is significant. Business people need this confidence factor to induce them to invest their time, money and expertise.
From this base, a strategy can be devised to encourage more FDI in the leather products sector.
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3.1.8. Cost of Production
The basic costs of production for shoe manufacturing operations in Jordan are shown in the following table. These
figures will also be typical for PLG manufacture.
Unit U. S. $ Year 2007
Labour rates per month
(factory operators)
Labour rates per hour
(factory operators)
Electricity per KWH
210 to 520
(unskilled to skilled)
Natural Gas per m3
Construction cost per m2
0.41
250
Cost of land per m2
20 – 70 (from South to Amman)
Transportation per km
$500 per 20’ container & $300 per truck (from Aqaba to Amman)
2.0 to 2.89
0.06
3.1.9. Field Visits – Company Profiles
Al Manara
●
●
●
●
●
●
●
●
●
Manufacturer of double density PU sole leather upper safety boots. ISO and SATRA approved CE mark.
Production 70,000 pairs per year
Capacity 500 pairs per day
Employs 35 people
Entered into Centre for Promoting Imports to Netherland (CBI) programme for export opportunities to
Europe
Imports “zuggrain” buffalo leather from India
Styling and design work done in Italy
Uses robots in production
Exports to Gulf States and supplies local market.
Target
●
●
●
●
●
●
●
Originally supplier of components to local market
Now manufactures for a niche market – medical footwear – to doctors, nurses, pharmacies etc.
Uses and is developing brand name “Artteko”
Production from 120 to 160 pairs per day
Imports PU coated leather.
Enrolled in CBI programme
Developing Scandinavian markets for exports
Arab Leather Manufacturing Co
●
●
●
●
●
36
Bespoke made to order mens' dress shoes about 10 pairs per month
Dress casual shoes 800 pairs per month
Employees 13
Was active in the past with medical footwear particularly diabetic shoes. Now significantly declined.
Interested in component purchase from Agadir countries to assemble in Jordan for onward sales.
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Al Mithaq
●
●
●
●
Component manufacturer of built up soles and insoles.
Supplies local market
Capacity 2,400 soles in 8 hours, 2,400 insoles in 8 hours
Interested in importing resin rubber sheets from Egypt. Presently importing from Europe.
Jordan Tanning Company
●
●
●
●
●
●
●
Large capacity for manufacture of industrial, military and uniform footwear.
Is in the process of reforming operations
Fully mechanised factory with PU injection moulding and vulcanising machinery
At present 22 workers (were 150).
Targeting 300 pairs uniform shoes and 800 military boots pairs per day
Renting out tannery operations to Spanish investors
Will import uppers from India and Egypt
Leather Industries Association
●
●
●
●
●
●
Welcomes possibilities of co-operation with Agadir countries
Need “get to know you” meetings with other countries’ industrialists
Assistance with trade fairs
Buyer seller meetings
Study on training needs
Associations to lobby Governments
JUMP
● Conducted diagnostic studies and upgrading plans for 4 footwear manufacturing companies and the largest
tannery. Only 2 footwear companies started implementing their upgrading plans
● Funds marketing and promotion activities like participation in fairs and conducting market research
● Funded the establishment of export consortiums in other sectors.
Tannery Albert
●
●
●
●
New tannery being built in Ma'an
Investment 7 million US$
Target 6 million square feet hides and 1.5 million square feet goat and sheep skins per year.
Should begin operation 4th quarter 2009
The complete list of all registered companies can be found in the web – site of the Companies Control Department
according to the following link: www.ccd.gov.jo
Then choose Companies Data Base, then under Company Inquiry select by Aims; where you put tanning, or
manufacture of footwear or travel bags ...etc.
However, the information in this site is not updated since it contains only the data of companies at the registry date
which usually change when the company starts working.
Another more reliable source would be the Leather and Shoes Manufacturing Association in Jordan where 46
companies are registered. The contact person is Mr. Talal Ghazawi; the head of the association, Mobile: 00962
795507955
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3.1.10. Strengths and Weaknesses of the Sector
This analysis takes account of the main factors that impact on the industry. It highlights those areas that need to be
addressed (positive and negative) for the industry to move forward with the aim of integration to take advantage of
the opportunities offered by the Agadir Agreement.
Sometimes it is believed by entrepreneurs that the current capabilities of the industry are inadequate when facing the
future due to global forces over which they have no control. This reflects a certain lack of experience and confidence
when dealing with expansion plans and the international market. The SWOT framework highlights the industry
strengths, which are often taken for granted, which in reality are its competitive advantage. It also helps to identify
the major weaknesses which can and should be eliminated
The strengths (and weaknesses) analysis was focused on the main areas of activity in the sector namely marketing,
manufacturing, human resources and finance.
By analyzing these elements a road map can be drawn up which enables the industry to take action to exploit the
strengths it has and to correct the weaknesses. This will lead to a clearer evaluation of the resources that are available
(or which must be acquired) to ensure that actions can be carried out to enable the industry to take advantage of the
Agadir opportunities.
There is no doubt that the industry has a number of strengths available to it in the marketing and manufacturing
areas offset by some weaknesses which can be relatively easily corrected. The human resources and financial areas
come out as not being quite as strong. Lack of good factory floor supervision and a mixed picture of experience and
entrepreneurial flair by managers show signs of weakness. The financial capital base of the industry has been eroded
over time by the difficulties in operating in the local market.
However there are opportunities available to the industry especially in co-operation with other enterprises in the
Agadir countries who are looking beyond Europe for new markets.
As it is well known, the industry relies on good quality leather to be successful. The development of the tanning
industry in Jordan will help considerably in this endeavor.
38
Leather and Shoes Sector
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Details of the SWOT analysis therefore are as follows:
SWOT ANALYSIS JORDAN
STRENGTHS
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Party to Agadir agreement
Free Trade Agreement (FTA) with Europe
Proximity to Europe
Able to communicate effectively
Raw materials imported duty free
Excess production capacity
Small flexible factories
Quality levels achieved
Reasonable productivity
Relatively low wages
Currency pegged to US$
Access to working capital
Trade Association
Available labour
WEAKNESSES
■
■
■
■
■
■
■
■
■
■
■
■
3.2.
Knowledge of overseas markets
Product development
Competitive pricing
Alternative constructions
Production management
Cost control
Shop floor supervision
Lack of qualified technicians
Labour training
Management vision
Capital needs
Cash flow
OPPORTUNITIES
●
●
●
●
●
●
●
●
●
Upgrade technology
Hub for Gulf Region
Niche marketing
Trade links with Agadir partners
Develop finished leather
Jordan as a resource
Develop transport links
Develop programme for FDI/JV
Training scheme industry wide
THREATS
■ Unwillingness to change
■ Established norms in global markets not
accepted
■ Finished leather
■ Sales techniques
■ Lack of capital
■ Negative exchange rates
■ Artificial barriers to Agadir trade
TUNISIA
3.2.1. Industrial Setting and Institutional Framework
Since 1987, Tunisia was and still involved in trade liberalization through the dismantling of non-tariff barrier to trade,
investment licenses and price control and the freeing of the economy. Tunisia adheres to GATT and founder member
of the WTO. Tunisia is now fully implementing the Free Trade Agreement with the EU according to which European
manufactured products are imported free of customs duties and Tunisian products are exported to Europe free of
duties. These products must be produced in Tunisia using domestic input materials or EU input which is considered as
Tunisian. The above agreements have been the back bone of the Tunisian Export and Foreign Development Policies
as well.
Tunisia also signed several bilateral agreements with Turkey, Egypt, Morocco, Jordan, Iraq and Libya. Tunisia also
signed the Arab Free Trade Agreement.
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39
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
Since the first implementation of the Tunisian Adjustment Program (TAP) the Government took serious steps toward
the development of a stable and, definitely supportive environment for Small and Medium – Sized Enterprises
(SME’s) development.
In 2007, Tunisia had 121 industrial zones distributed all over the country covering a surface of 3,807 hectares and
offering several facilities.
The 11th economic development plan (2007-2011) aimed at the achievement of 31 industrial zones covering 650
hectares to reach a total area of 4,500 hectares in 2011.
The government created equally seven techno poles and seven cyber parks in a number of regions, each devoted to a
given area of specialization.
Macroeconomic stability, the openness of the economy, the key role played by the private sector and market forces
(degree of competition), and the quality of the infrastructure are the corner stones for a suitable strategy of development
of the Leather and Shoes Sector (LSS) in Tunisia.
The most important comparative advantage of the Tunisian LSS is the supportive environment and the high quality
of the supporting institutions which enable the sector to move from the manufacturing of mass consumer products to
high quality and added value ones.
The sector enjoys professional support from:
■ The Technical Center for Leather and Shoes “CNCC”, which offers services to keep up with technological
advances and studies, technical assistance, analysis and testing, styles, models and fashion design, training
and international cooperation.
■ The National Leather and Shoes Federation “UTECA”.
■ The Vocational Training and Applied Techniques Centers in Leather and Shoes Sector (CSFTAC) which
provide practical training for different specialties in the sector including qualified technicians in the
industry, design, manufacturing techniques, shop floor management, stitching and sewing, and machine
maintenance.
■ The Center for Export Promotion (CEPEX) and Foreign Markets Penetration Programme (FAMEX) delivering
assistance in export promotion activities, market research, and participation in trade fairs and missions. Until
March 2009, twenty two Leather and Shoes companies benefited from FAMEX II.
■ The Foreign Investment Promotion Agency (FIPA) developing FDI and delivering assistance for foreign
investors
■ The Industry Promotion Agency (IPA)
The CNCC is the focal point for the implementation of the National Upgrading Programme which is covering
technical assistance, policy support and institutional building:
■ Developing strategies and upgrading plans and providing action plans to boost companies’ competitiveness
■ Expertise and analysis of defects and research projects on leather products and processes.
■ Assistance for the implementation and the organization of a design office within the companies.
■ Trends analysis and assistance in fashion collection design and trends
■ Organisation of training courses for specific purposes either outdoors or indoors for companies, including
assisting them to set up and carry out training programs.
■ Partnership with other foreign technical centers and other international organizations (EU, UNIDOetc.).
Young graduates of Tunisian engineering schools and training centers are available to meet the growing need of
skilled labor to boost innovation and develop new products and technologies.
According to the Global Competitiveness Report 2008-2009, Tunisia was ranked 10th on the world in the availability
of scientists and engineers quality, while Jordan, Italy, Egypt, Turkey and Morocco came 39th, 45th, 47th, 59th, and 68th
respectively.
According to the National Agency for Employment and Independent Work, Tunisia’s vocational training system
included 135 public centers throughout the country, which provided training for more than 100,000 trainees in more
than 336 specialties covering the full range of economic sectors.
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Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Tunisia has acquired an advanced position (quantitatively and qualitatively) in the area of staff training. In Tunisia,
full training support (free of charge) is provided to enterprises with less than 100 workers. In addition to a subsidy
of 50% of the training costs if is related to the introduction of new technology, and the training system is supported
by the private sector through co-ordination and partnership. The private sector pays contributions of 1% of the total
salaries of its employees and is offering the possibility to reimburse costs of training through fiscal deductions.
3.2.2.Nature of the Sector
The leather products sector in Tunisia has enormous potential. Of the four Agadir countries it has by far the biggest
exporting to the EU industry. The sector has a well developed footwear industry. The manufacturing of leather products
is well established with companies ranging from small to intermediate technology factories to fully mechanised
operations.
Leather products range from personal leather goods, bags and briefcases, leather garments and footwear. The
manufacture of shoes is the largest of the sub sectors by some accounts representing more than 70% of the industry
total companies.
In 1972, the industry benefited from the Government decision which allowed the foreign direct investments.
Footwear factories in particular worked in making uppers as subcontractors to French and other foreign companies.
All raw materials and inputs were imported at the beginning. In 1995, Industry qualifying programmes started and the
development of the industry reached a stage to manufacture a complete pair of shoes (starting from year 2000).
The largest sub sector is footwear production. This is split between mechanised and semi mechanised businesses. The
sector is composed of totally foreign investments/companies, joint – venture companies and Tunisian companies.
The mechanised factories have capacities from 800 to 3000 pairs per day but many are operating at anything from
40 – 60% of this.
Most of the inputs required to make a pair of shoes of any of the major types, dress, casual, ladies high heels, sandals
and slippers are available from local market. However, better quality mechanised factories import their own basic raw
materials. Sometimes their subcontractors ask for outsourcing their materials from Europe.
The personal leather goods and garments sub sector has some excellent companies producing a quality product much
of it for export to Europe.
The nature of the sector therefore is one of transition from being 100% dependent on EU partners and directed
towards export into a less degree of dependency and exporting to regional countries as well, supported by an enabling
industrial environment.
3.2.3. Type and Size of Companies
The Leather and Shoes Industries sector comprises 309 enterprises that employ 10 or more persons. Among these
enterprises, 212 are producing entirely for export.
Breakdown of enterprises with 10 or more employees by activity and regime
Activity
Dressing and tanning of leather
Shoes and shoe uppers
Luggage and leather goods
Leather clothing
Total
TE*
163
36
13
212
TE: Totally exporting; OTE: Other than totally exporting
Source: Industry Promotion Agency -2008
OTE*
11
60
14
12
97
Total
11
223
50
25
309
Note: Some enterprises are engaged in several activities.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
The contribution of the sector in the number of companies of the manufacturing sector is as following:
2007
Manufacturing sectors
Leather & Shoes sector
Share
*TE
2670
212
% 7.9
*OTE
3032
97
% 3.2
Total
5702
309
% 5.4
Source: Industry Promotion Agency – 2008
3.2.4. Sector Types of Production and Characteristics
The production of the Leather and Shoes Industries sector was valued at 905 million US $ in 2007, versus 779 million
US $ in 2003.
The production growth during the period is as follows:
Unit: million US $
2003
2004
2005
2006
2007
Production
779
779
783
815
905
Figures: at current price.
Source: MDIC
The more enlightened footwear manufacturing companies tend to focus more on the market, export or local, rather
than production. One producer has successfully developed a niche market for innovative safety footwear and is very
successful on the export market. The company exports 100% of its production to France.
Another shoe manufacturer of men’s and ladies dress and casual shoes has successfully managed to produce his own
styles and he uses rink technology also. Currently, he has his own stores in Tunisia (12) and Kuwait (3). He is also
willing to export to Agadir countries and willing to discuss different scenarios of cooperation with Jordan in specific
as being very close to the Iraqi market.
Another producer of high quality personal leather goods; hand bags, belts, and wallets, is successful in exporting 50%
of his production to France, Italy, Belgium, Netherlands and Germany. He can produce 500 bags and 1000 belts per
week. He is interested in having leather and accessories (Buckles) from Egypt. He is also interested to sell his brands
exclusively in Arab Countries, which presents a good opportunity for him through Agadir Agreement.
Another shoe manufacturer of ladies’ shoes based on comfort relaxation products. He exports to France and produces
in good quality and volume. He is willing to export to Jordan and the region.
In the components industry, a good example is a sole, insole and heels manufacturer who produces in high quality
and volume (1300 – 1500 pairs per day). He exports mainly to his subcontractors in Italy and France. However, he
is currently in negotiations with the Algerian Army to produce 30,000 pairs of soles. He imports the leather for soles
from Italy when the quality is of concern, and imports from Mexico for cheaper prices. His preferred minimum order
is 2,000 – 2,500 pairs.
There is a modern tannery outside Tunis with a capacity to produce 1 million square feet per month of cow hides and
1 million square feet per month of sheep and goats. It exports 80% of its production to the EU market (France, Italy,
and Spain) and Turkey, Hong Kong, China. However, it imports its hides and skins from USA, Spain, UK, Algeria
and sometimes wet blue from Egypt. It can deliver to any Agadir Country small order sizes within 3-4 weeks.
42
Leather and Shoes Sector
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Tunisia trade indicators - imports of hides and skins and leather in 2007
All Sources of Data are ITC calculations based on COMTRADE statistics.
● Italy and France exports mostly finished leather for their sub contracting operations
● Spain and Germany are similar but smaller
● Although not on the chart it should be noted that Egypt exports wet blue and crust (US$ 997,000)
● Morocco also exports to Tunisia (US$ 1,374,000)
Tunisia trade indicators - exports of hides and skins and leather in 2007
●
●
●
●
Italy and Turkey are the largest importers of Tunisian leather
Tunisia sells to its competitors; China and India
Egypt imports finished leather
Also not on chart, Jordan imports very small amount of finished leather (US$ 97,000)
Exports
Exports from the Leather and Shoes Industries sector were valued at 616 million US $ in 2007, versus 416 million
US $ in 2002. Average annual growth is around 8%. The exports from totally exporting enterprises represent 90% of sector exports.
85% of exports are from the shoes and shoe uppers products, followed by the leather goods and clothing sub-sectors
(12%) and leather and hides (3 %).
The contribution of the sector to the exportation of manufacturing sector is as follows:
In million USD
Manufacturing sectors
Leather and Shoes
Contribution (share)
2007
11,211
616
5.5 %
Source: National Institute of Statistics (INS)
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
3.2.5. Institutions and Number of Workers
The Leather and Shoes Industries enterprises with 10 or more employees account for 30,214 sector jobs, of which
26,763 persons are employed by totally exporting enterprises. The contribution of the sector in the employment of total active population and that of the manufacturing sector is
as follows:
Employment
Active population
Manufacturing sector
Leather and Shoes
Share of LS in active population
Share of LS in manufacturing sector
2007
3 085 100
477 825
30 214
1%
6%
Source: Industry Promotion Agency - June 2008
3.2.6.Production Added Value
Average added value for the sector is 368 million US $ in 2007. The contribution of added value in that of the
manufacturing sector is of 11 % in 2007
The contribution of the sector in Gross Domestic Production is as follows:
In Million USD
GDP
Leather and Shoes
Contribution (share)
2007
19529
368
2%
3.2.7. Foreign Direct Investment (FDI)
Investment in the Leather and Shoes Industries sector was valued at 21.3 million US $ in 2007, versus 19.1 million
US $ in 2002.
The investment growth during the period 2002 - 2007 is as follows:
$Unit:million US
2002
2003
2004
2005
2006
2007
Investment
19.1
19.1
17.7
18.4
18.4
21.3
Source: MDIC
The sector counts 154 companies with foreign participation of which 109 are 100% foreign owned.
The breakdown of the number of companies per nationality is as follows:
Source: Industry Promotion Agency - June 2008
3.2.8. Cost of Production
The basic costs of production for shoe manufacturing operations in Tunisia are shown in the following table. These
figures will also be typical for PLG manufacture.
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Unit U. S. $ Year 2007
Labour rates per month (factory operators)
Labour rates per hour (factory operators)
Electricity per KWH
Diesel – litre
Heavy Fuel Oil - tonne
Water – cubic meter
Construction cost per m2
Cost of land per m2
Transportation per km
250
1.39
0.1
0.56
215
0.1 – 0.6 depending on consumption volume
150
3–6 (inside Industrial Estates)15–48 outside.
$525 per 20’ container to northern EU ports
3.2.9. Field Visits – Company Profiles
SOPROTIC
●
●
●
●
●
Manufacturer of ladies' shoes based on comfort relaxation products
Production capacity 2,000 to 2,500 pairs per day
Production Employs 250 people
Exports to France
Willing to export to Jordan and the region
SOPIC
●
●
●
●
Manufacturer of innovative safety footwear
Production capacity 1000 – 2500 pairs per day
Employs 220 people+ 80 sub contractors when needed
Exports 100% of its production to France
Tanneries Megisseries du Maghreb
● Modern tannery located in Grombalia outside Tunis
● Capacity: 1 million square feet per month of cow hides and 1 million square feet per month of sheep and
goats
● Exports 80% of its production to mainly the EU market (France, Italy, and Spain) and Turkey, Hong Kong,
and China
● Imports its hides and skins from USA, Spain, UK, Algeria and sometimes wet blue from Egypt
● Can deliver to any Agadir Country small order sizes within 3-4 weeks.
SIMAP
●
●
●
●
●
Manufacturer of high quality personal leather goods; hand bags, belts, and wallets
Exports 50% of his production to France, Italy, Belgium, Netherlands and Germany
Capacity: can produce 500 bags and 1000 belts per week
Interested in having leather and accessories (Buckles) from Egypt
Interested to sell his brands exclusively in Arab Countries, which presents a good opportunity for him through
Agadir Agreement
Societe Chaussures - Jancel
● Manufacturer of ladies and Children shoes
● Started producing for the local market. Currently exports 80% of its production
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
45
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
●
●
●
●
Final Report
Capacity 500 pairs per day
Employs 120 people; 100 in production
Minimum order that he prefers is 500 pairs. However, can accept a pilot order of 300 pairs
Delivery time: 4-6 weeks
STE COMMERCIALE IND D’ACCESSOIRE DE CHAUSSURES (SCIAC)
●
●
●
●
●
Manufacture of footwear parts (soles, heels, insoles etc.).
Produces in high quality and volume; 1300 – 1500 pairs per day
Exports 70% of production; mainly to subcontractors in Italy and France
At present 45 employees (35 in production).
Imports the leather for soles from Italy when the quality is of concern, and imports from Mexico for cheaper
prices
● Started negotiations with the Algerian Army to produce 30,000 pairs of soles
● Preferred minimum order is 2,000 – 2,500 pairs
● A shoes manufacturer from Egypt contacted him for replacing his Turkish source of soles and insoles.
STE SEVIL
Another shoe manufacturer of men’s and ladies dress and casual shoes has successfully managed to produce his own
styles and he uses rink technology also. Currently, he has his own stores in Tunisia (12) and Kuwait (3). He is also
willing to export to Agadir countries and willing to discuss different scenarios of cooperation with Jordan in specific
as being very close to the Iraqi market.
● Manufacture of men's and ladies dress and casual shoes
● Uses rink technology
● Developed a software that controls the complete supply chain (raw materials and inputs, manufacturing, and
warehouse)
● Capacity: 1500 pairs per day. Currently produces 700 pairs per day
● Employs 150; 130 in production
● Successfully managed to produce his own styles
● Have his own stores in Tunisia (12) and Kuwait (3)
● Willing to export to Agadir countries and willing to discuss different scenarios of cooperation with Jordan in
specific as being very close to the Iraqi market
The National Leather and Shoes Federation “UTECA”
● Welcomes possibilities of co-operation with Agadir countries
● Need “get to know you” meetings with other countries’ industrialists
● Assistance with trade fairs
● Buyer seller meetings
● Provided historical background on the development of the sector
● Discussed the methodology and their expectations of the study
● Discussed the schedule of field visits
The complete list of all sector companies can be found in the web – site of the Industry Promotion Agency according
to the following link: www.tunisindustry.net.tn/en/dbi.asp
3.2.10. SWOT Analysis
This analysis takes account of the main factors that impact on the industry. It highlights those areas that need to be
addressed (positive and negative) for the industry to move forward with the aim of integration to take advantage of
the opportunities offered by the Agadir Agreement.
The strengths (and weaknesses) analysis focuses on the main areas of activity in the sector namely marketing,
manufacturing, human resources and finance.
By analyzing these elements a road map can be drawn up which enables the industry to take action to exploit the
46
Leather and Shoes Sector
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
strengths it has and to correct the weaknesses. This will lead to a clearer evaluation of the resources that are available
(or which must be acquired) to ensure that actions can be carried out to enable the industry to take advantage of the
Agadir opportunities.
There is no doubt that the industry has large number of strengths available to it in the marketing and manufacturing
areas offset by some weaknesses which can be relatively easily corrected. The human resources and financial areas
come out as not being quite as strong. Lack of good factory floor supervision and a mixed picture of experience and
entrepreneurial flair by managers show signs of weakness.
However there are opportunities available to the industry especially in co-operation with other enterprises in the
Agadir countries who are looking beyond Europe for new markets.
Details of the SWOT analysis therefore are as follows:
SWOT ANALYSIS TUNISIA
STRENGTHS
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Party to Agadir agreement
Free Trade Agreement (FTA) with Europe
Proximity to Europe
Knowledge of overseas markets
Express cargo service to Europe
Able to communicate effectively
Raw materials imported duty free
Excess production capacity
Small flexible factories
Quality levels achieved
Reasonable productivity
Relatively low wages
Access to working capital
Trade Associations
Available labour
WEAKNESSES
●
●
●
●
●
●
●
●
●
3.3.
Product development
Competitive pricing
Alternative constructions
Production management
Cost control
Shop floor supervision
Management vision
Capital needs
Cash flow
OPPORTUNITIES
●
●
●
●
●
●
Upgrade technology
Niche marketing
Trade links with Agadir partners
Develop finished leather
Tunisia as a resource
Develop transport links
THREATS
● Unwillingness to change
● Established norms in global markets not
accepted
● Finished leather
● Sales techniques
● Lack of capital
● Negative exchange rates
● Artificial barriers to Agadir trade
Morocco
3.3.1. Industrial Setting and Institutional Framework
Morocco is preparing to become a major player in the world leather trade through a specific strategy of repositioning
and re-launching, hinged on developing diversified, competitive, quality goods.
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
In fact, the country’s great tradition in the art of leather work and the declared intention of re-launching what is
considered by the Moroccan Government as a strategic sector, are the strong drivers behind a series of development
projects aiming to get the maximum yield of this sector.
The emergency plan of the Moroccan economy launched in 2006 took into consideration the strong potential for
development of the leather and shoes sector linked to exports and made it top priority, and worthy of large investments
aimed at updating of the production processes, personnel training, and promotion on international markets. The
main actors are the Moroccan Federation of Leather Industries (FEDIC) and the Centre for Moroccan Promotion of
Exports (CMPE) which are implementing a series of initiatives aimed at improving not only the production capacities
of manufacturers, but also help develop creativity, upgrade quality, response, flexibility and service. The objective is
to respond promptly to the new demands of markets and consumers.
One of the prime objectives in the strategy of the CMPE and FEDIC to promote made in Morocco in International
markets is the development of creative products with strong added value.
Morocco’s leather and shoes sector is also benefiting from substantial government support on different levels including
modernization, training, and development through providing an adequate investment environment, encouraging the
private sector to enrol in the leather and shoes manufacturing and production qualifying process in order to reach an
integrated and sustainable development. Besides the presence of a professional and efficient organizations as well as
executive administrations that provide efficient support.
With support of the Ministry of Education and the Agency of the Professional Training and Work Promotion (OFPPT),
the FEDIC implemented a well-organised action plan aimed at satisfying the needs of the companies working in the
sector in terms of labour skills. The plan includes, among other things, the reactivation of the existing OFPPT centres
and the Institute Superieur de Tannerie et de Transformation du Cuir (ISTTC) in Casablanca, the creation of a training
institute in FAS, the development of an existing centre in Tangier, the training of 24 teams of experts for managing
the production in ESITH, the organisation of apprenticeship courses for training production technicians, and opening
of a training centre for stylists.
The ISTTC has two branches in Casablanca; each having 520 students/trainees.
According to the new industrial policy, the major reform lines focus on the three following areas:
● Change in the overall environment: this included improving the legislation, creating commercial courts,
setting a law that governs and organizes entrepreneurships and companies, facilitates administrative and
financial procedures, and creates employment records.
● Industry development system: upgrading industrial zones, and creating regional centres for investment.
● Upgrading leather and shoe production: encouraging the use of computers and innovative technologies.
Morocco’s membership in the World Trade Organization (WTO) contributed, besides liberalizing the economy in
providing an adequate environment to attract foreign investments.
For European investors, Morocco presents many advantages: geographical proximity, good manufacturing and
leather processing tradition, skilled labour and political stability. Morocco also has simplified commercial and custom
procedures and free bilateral and multilateral trade agreements with European Union, United States of America,
Turkey, Tunisia, Egypt and Jordan plus Agadir which allows origin accumulation with the other three countries.
3.3.2.Nature of the Sector
The leather products sector in Morocco has enormous potential which has never been fully realised. Of the four
Agadir countries it has by far the oldest traditional industry. The sector has a well developed hides and skins collection
service, there are many tanneries producing leather up to wet blue, crust and finished. The manufacturing of leather
products is well established with companies ranging from simple workshops (artisan enterprises) to intermediate
technology factories to fully mechanised operations.
48
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
The leather and shoes sector is comprised of 358 enterprises producing different kinds of leather products ranging
from personal leather goods, bags and briefcases, leather garments and footwear. The manufacture of shoes is largest
of the sub sectors.
Subcontracting is still predominant in Moroccan industry. However, market research done by FEDIC reveals the
need to move from subcontracting to co-contracting in order to better meet the demands of a fully evolving market,
and hence Moroccan producers need to adopt themselves to the new provisioning strategy of the retail outlets and
distributors who are increasingly favour suppliers capable of offering global solutions that range from the purchasing
of raw materials to the definition of the style, and the fine-tuning of the product techniques. On the other hand,
there are already some Moroccan producers who have created their own brands for selling their products in the
international market.
The largest sub sector is footwear production. This is split between mechanised and semi or hand operated businesses.
At present, Morocco exports about 20 million pairs of shoes yearly, most of these are made under contract for
international brands.
In 2007, Moroccan footwear exports reached a value of 276 million US$, showing a growth rate of 20% over the
previous year. The majority of orders came from France, then Spain, Italy and Germany.
Over the last ten years, local manufacturers have considerably improved and upgraded the quality of their products
through training programmes and technical assistance by the Moroccan Centre for Leather Technology (CMTC),
and by technological investments. These efforts were done to distance themselves from Asian competitors. The same
can be said of the other two subsectors; those of leather garments and personal leather goods that together include
over a hundred enterprises which export their high quality products all to the EU market. In this area also, there are
numerous international brands that have opened production units or moved their manufacture to Morocco, such as
Pierre Cardin and Louis Vuitton. In 2007, almost 400,000 articles between bags and accessories were exported for a
value around 32 million US$. The biggest buyers were France, Spain and Switzerland. Exports of leather garments
amounted to 26 million US$ and went mainly to Spain, France and the Netherlands.
Another strategic subsector, focus of important modernisation projects, is the tanning industry which counts to 58
enterprises whose exports of leather reached a value of 26 million US$ in 2007, most of which were to the Portugal,
Italy and France.
With an objective to integrate the leather and shoes sector, the focus now is on creating industrial parks dedicated
to leather in Casablanca (decided on the site), Fez (commencement) and Marrakesh (feasibility study) where the
majority of tanneries will be grouped in modern and functional sites.
3.3.3. Type and Size of Companies
The mechanised footwear factories have capacities from 800 to 3000 pairs per day but many are operating at anything
from 30 – 60% of this.
Most of the inputs required to make a pair of shoes of any of the major types, dress, casual, ladies high heels, sandals
and slippers are available from local market. However, better quality mechanised factories import their own basic
raw materials. Sometimes their subcontractors ask for outsourcing their materials from Europe.
The personal leather goods and garments sub sector has some excellent companies producing a quality product much
of it for export to Europe. Some of the leather used is sourced locally which is of excellent quality. The structure of
the PLG sub sector is similar to footwear in that there are many small workshops producing goods by hand with a
handful of professionally managed operations.
The nature of the sector therefore is one of transition from being hampered by the industrial environment which made
it difficult to progress to a situation in the near future where the industry will have the opportunity to modernise, at
least as a manufacturing base.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Final Report
The more enlightened footwear manufacturing companies tend to focus more on the market, export or local, rather
than production. One producer has successfully developed a niche market and a successful brand name for high
– end men’s shoes made by the Good-Year Welted method (80% classic and 20% sport). This brand is very active
in distribution, indeed he have two franchises operating in Brussels, one in Netherlands, two in Casablanca and
Marrakesh and two in the Ivory Coast. The company exports 70% of its production to Germany, Belgium, Switzerland,
Italy and Sweden.
Another shoe manufacturer of ladies’ and baby’s shoes based on comfort relaxation products. He exports to the EU
and US markets and produces in good quality and large volume (2000 pairs daily).
A well established men’s, women’s and children’s shoe factory, produces middle to high quality shoes and exports
to France, Spain and USA. His production could reach up to 3000 pairs daily. His products could be easily marketed
in Jordan.
Another enlightened manufacturer who produces leather goods and natural leather garments for men and women has
started producing high quality fur garments in 2008. He produces under his own two brands; one for bags and another
for leather garments. His production capacity is around 8,000 pieces of leather goods and 11,000 of leather garments
per year. He exports 75% of his production to Spain, Italy, France, USA and the Middle East.
Another producer of high quality personal leather goods; ladies’ hand bags, belts, and travel bags, is successful
in exporting 98% of his production to France. He is also successful in using local leather (50%) in his products.
He produces 3,000 pieces per month. However, his high production costs could be lowered if he shifts to be more
mechanised.
3.3.4. Sector Types of Production and Characteristics
The supply chain for the leather industry starts from the collection of raw hides and skins. The tanning of leather
currently has some problems in the finished product in that the industry until recently has concentrated on processing
up to the crust stage. There is a lack of technical knowledge and experience in continuing the process up to finished
leather suitable for leather product manufacturing for export markets.
The manufacture of finished products is dominated by footwear although Morocco has a reputation for personal leather
goods manufacture. The various sub - sectors continue to show healthy growth in manufacturing and exporting.
Export:
Before 2001/2002, the exports were mainly to Europe (70%) and Libyan (25-30%) markets. However, after the
release of UN embargo on Libya, the Moroccan exports started facing some problems.
In its efforts to improve the cooperation between indigenous manufacturers, the Moroccan Exporters Association
(ASMEX) with assistance of UNIDO launched an Export Consortium Project aiming at supporting the enterprises to
export as a group under one Consortia. The funding started in 2006 and the funding for each Consortia can reach US$
82,715 divided over 3 years; in the first year US$ 11,816 are allocated for the establishment of the Consortia and the
remaining US$ 70,899 are divided equally over the three years on promotional activities with a subsidy share up to
70%, 60%, and 50% for each respective year.
Exported products
Leathers and skins
Leather goods
Leather clothes
Value of exported products US$ 216,703,635
17,794,196
35,519,652
21,618,111
% of total sector exports
74.29%
6.1%
12.17%
7.41%
Main customers
France - Spain Germany
Spain - Portugal - China
France - Portugal
- Spain
Spain - France
– Netherlands
50
Leather and Shoes Sector
Shoes
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Imports of leather products are mostly in the form of finished leather because of the lack of good quality material
available from local tanneries. The second highest sub sector is footwear mostly from China and higher quality
products from Italy. The import situation is represented by the following:
Imported Product
Value in US$
% of total sector imports
Exporting countries
Shoes
30,288,102
21.1%
China - Italy
Leathers and skins
107,127,203
74.59%
Spain – France - Italy
Crust leather
6,191,818
4.31%
Spain - France
Here-below are the main customers of the Moroccan leather industry classed per sector branch for the year 2006. For
the crust leather and leather, exported values are so low to be taken into consideration.
Shoes
Country
FRANCE
SPAIN
GERMANY
ITALY
UNITED STATES
OTHERS
Value (US$)
79,041,224
75,172,063
33,127,598
16,690,150
3,090,801
10,507,578
Leather garments
Country
SPAIN
FRANCE
NETHERLANDS
ITALY
GREAT BRITAIN
UNITED STATES
OTHERS
Value (US$)
10,059,109
4,027,486
3,639,463
1,483,432
953,271
936,905
610,801
Small leather goods, bags and travel goods
COUNTRY
FRANCE
PORTUGAL
SPAIN
SWITZERLAND
)U.E.B.L (ECONOMIC UNION OF BELGIUM AND LEXUMBOURG
ITALY
GREAT BRITAIN
NETHERLANDS
OTHERS
$Value (US(
12,589,611
9,263,516
6,640,549
2,496,736
1,566,858
1,001,700
440,741
307,925
1,363,761
3.3.5. Institutions and Number of Workers
The companies operating in the leather products manufacturing sector are estimated by FEDIC (Moroccan Federation
of Leather Industries) as follows
Number of firms
Personnel
of turnover of the leather sector %
Shoes Tanneries
234
58
153 14 1662
71,02% 15,63%
Leather goods
45
1569
7,34%
Leather clothes
21
823
6,01%
Total
358
207 18
100%
There are 358 production units in Morocco employing 18,200 people.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Final Report
3.3.6.Production Added Value
According to FEDIC the added value in the various sectors in US$ is as follows:
Shoes Added value (US$) 82,903,750
Tanneries 13,124,617
Leather goods 8,114,744
Leather garments
4,392,436
Total
108,535,428
3.3.7. Foreign Direct Investment
From the Ministry of Industry investment in the leather manufacturing sector in 2005 was 11.8 million US$ and in
2006 it declined to 10.2 million US$.
3.3.8. Cost of Production
The basic costs of production for shoe manufacturing operations in Morocco are shown in the following table. These
figures will also be typical for PLG manufacture.
Unit U. S. $ Year 2007
Labour rates per month
(factory operators)
300
Labour rates per hour
(factory operators)
1.67
Electricity per KWH
0.13
Water – cubic meter
0.23 to 0.99depending
on consumption
Construction cost per m2
200
Cost of land per m2
42
Transportation
- Cost of 90 cubic meter loaded truck for export from Casablanca to Valencia
(Spain)
- Cost 90 cubic meter loaded truck for import from Valencia to Casablanca
3220
2100
3.3.9. Field Visits – Company Profiles
BENSON SHOES
●
●
●
●
●
●
Manufacturer of high–end men's shoes characterised by Good-Year construction
Produces 80% classic shoes and 20% sport
Started producing a womens' line with a masculine style. It collaborates with a Spanish designer
Production 160 / 170 pairs per day
Employs 70 people
Very active in distribution; have two franchises operating in Brussels, one in Netherlands, two in Casablanca
and Marrakesh and two in the Ivory Coast
● Exports to France 70% of its production to Germany, Belgium, Switzerland, Italy and Sweden.
● Imports leather from France and leather soles from Belgium
● Succeeded to make shoes in Italy under his brand name
52
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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● Sells 15% less than Spanish and Portuguese companies
● An Egyptian shoe manufacturer showed interest to contact him to discuss possible cooperation
UNIVERS CUIR
●
●
●
●
Manufacturer of PLG; mainly for stationary and gifts
Newly established factory; only 2 years
Small production volume
Promotes its products through the internet
MACHA
Another shoe manufacturer of ladies’ and baby’s shoes based on comfort relaxation products. He exports to the EU
and US markets and produces in good quality and large volume (2000 pairs daily).
●
●
●
●
●
Manufacturer of ladies' and baby's shoes based on comfort relaxation products
Exports the EU and US markets
Capacity: can produce 2400 pairs per day, actual is 2000 pairs daily
Employs 150 people
Not happy with previous experiences with Jordan and Tunisia
COROC and FREEWAY
● Manufacturer of leather goods and natural leather garments for men and women. Leather goods include hand
and travel bags, travel boxes, stationary gifts and small items of PLG ● Started producing high quality fur garments in 2008
● produces under own brands; COROC for bags and FREEWAY for leather garments
● Capacity: around 8,000 pieces of leather goods and 11,000 pieces of leather garments per year
● Employs 90 people
● Exports to Spain, Italy, France, USA and the Middle East (90% from FREEWAY products and 70% of
COROC products)
SELECT DIFUSSION
●
●
●
●
●
●
Manufacture of men's, women's and children's shoes
Produces middle to high quality shoes
Exports to France, Spain and USA
Capacity: 3000 pairs per day. Currently produces 2000 including making uppers in external factories
At present 170 employees (150 in production)
Produces under own brands; ATTICO for children and LOLITA REPUBLIK foe women
TANNERIES MOHAMMEDIA
●
●
●
●
●
●
Large, Modern tannery located outside Casablanca
Exports crust and finished leather only
Imported its hides and skins from KSA and Algeria (now not possible), Libya, and Iraq
Its ex-factory prices range from US$ 2.1 – 2.8 per square foot
The company currently operating at 1/3 of its capacity
Some problems in the product quality were noticed
MARTAL
● Manufacture of high quality personal leather goods; ladies' hand bags, belts, and travel bags
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Final Report
● Exports 98% of total production to France only
● Uses local leather in 50% of the production and imports the rest from France, Italy, and Hong Kong (2%
only) depending on client's request
● Capacity: 3000 pieces per month
● Employs 136 people; 130 in production
● The high production costs could be lowered if can shift to be more mechanised
The Moroccan Federation of Leather Industries (FEDIC)
● Provided historical background on the development of the sector
● Welcomed possibilities of co-operation with Agadir countries
● Need “get to know you” meetings with other countries’ industrialists
● Assistance with trade fairs
The complete list of the sector companies can be found in the portal of the Ministry of Industry and Trade and Modern
Technologies by following the link shown below: http://www.mcinet.gov.ma/mciweb/mciweb/qpq.jsp
Then choose Secteur d’activité « industrie du cuir et de la chaussure »
Where lists of 343 companies appear, and by clicking on a company name you get more details. The information is
available in French only.
3.3.10. SWOT Analysis
This analysis takes account of the main factors that impact on the industry. It highlights those areas that need to be
addressed (positive and negative) for the industry to move forward with the aim of integration to take advantage of
the opportunities offered by the Agadir Agreement.
The strengths (and weaknesses), opportunities and threats analysis focuses on the main areas of activity in the sector
namely marketing, manufacturing, human resources and finance. By analyzing these elements a road map can be
drawn up which enables the industry to take action to exploit the strengths it has and to correct the weaknesses. This
will lead to a clearer evaluation of the resources that are available (or which must be acquired) to ensure that actions
can be carried out to enable the industry to take advantage of the Agadir opportunities.
54
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
SWOT ANALYSIS – MOROCCO
STRENGTHS
●
●
●
●
●
●
●
●
●
Party to Agadir agreement
Proximity to Europe
Local availability of leather
Express cargo services to Europe
Government Agencies support
Excess production capacity
Small flexible factories
Availability of labour
Trade Association
WEAKNESSES
■
■
■
■
■
■
■
■
3.4.
Product development
Competitive pricing
Niche marketing
Alternative constructions
Production management
Cost control
CAD systems
Shop floor supervision
OPPORTUNITIES
●
●
●
●
●
●
●
●
●
New leather cities
Upgrade technology (CAD/CAM)
Marketing plan with Government Agencies
Niche marketing
Trade links with Agadir partners
Develop finished leather
Advertise Morocco as a resource
Develop transport links with EU
Training scheme industry wide
THREATS
■ Leather cities take longer to develop
■ Unwillingness to change
■ Established norms in global markets not
accepted
■ Finished leather not up to standard
■ Sales techniques lacking
■ Lack of capital
■ Negative exchange rates
■ Artificial barriers to Agadir trade
Egypt
3.4.1. Industrial Setting and Institutional Framework
The Government of Egypt has focussed on the leather products industry in all its sub sectors as a priority in the
economic development of the Country. Many of the world’s developed leather industries either have had or continue
to have Government support in their development e.g. China, India, Vietnam, Brazil, Italy and to some extent EU
with its anti dumping legislation with China.
The Egyptian industry therefore has a good opportunity to emerge into a world player. The timing is apposite in that
the current lower level of commerce in the sector gives time for plans to be implemented.
The plan to re-locate the tanneries to the new “leather city” at Rubeiky in Badr City is an excellent plan. It will
provide for a new environmentally friendly situation covering the whole supply chain. It will also include a modern
technology centre, design centre, vocational training school and testing facilities. The whole operation should be
implemented within 5 years.
The footwear and personal leather goods manufacturing sub sectors are replicating the same plan for their side of the
industry. The new facility will be in 10th of Ramadan City not far from the tannery cluster.
These two developments alone will provide an integrated industry with a short, flexible supply chain which will be
necessary for the years to come. The industrial setting for the industry is better now than it has ever been.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Final Report
The industry is also supported by many institutional agencies all with helpful programmes. The Leather Chamber
is now very active in its support for the industry and it in turn can call on the help of Government Ministries and
subsidiaries of them for help in training to export promotion.
3.4.2.Nature of the Sector
The leather products sector in Egypt has enormous potential which has never been fully realised. Of the four Agadir
countries it has by far the biggest industry. The sector has a well developed hides and skins collection service, there
are many tanneries producing leather up to wet blue, crust and finished. The manufacturing of leather products is well
established with companies ranging from simple workshops (artisan enterprises) to intermediate technology factories
to fully mechanised operations.
Leather products range from personal leather goods, bags and briefcases, leather garments and footwear. The
manufacture of shoes is the largest of the sub sectors by some accounts representing 85% of the industry total
activity.
Today the industry has a number of restraints in the various sub sectors. There is ample supply of cow, buffalo, sheep
and goat hides and skins in the country. However the primary raw material required namely finished leather seems
not to be freely available in the country. There are many tanneries particularly in old Cairo but they operate in very
difficult conditions, 70% of their production being wet blue, an easily exported product. Little finished leather is
manufactured. It is difficult for the tanneries to improve their situation because of the environment they are in. They
are not allowed to move their operations to green field sites because of environmental concerns. The one tannery that
has been able to set up outside Cairo is an example of what is possible if the conditions are right. This tannery is run
on ultra modern lines, is clean, environmentally friendly and very successful. However at present this type of move
is not available to the other enterprises.
However there are advanced plans to build a new “Leather City” outside Cairo, custom built for the tanning industry
which will incorporate a central effluent control facility. The investment will be in the order of U.S. $ 8 million. The
new facility when completed will be able to house up to 550 tanneries employing around 25,000 workers finishing
about 300 million square feet of leather per annum. Many of these will obviously be quite small but will serve as sub
contractors for the larger companies. This project will provide the much needed stimulus for the tanners and enable
them to operate their facilities in a modern and efficient manner. The consequence of this will be more and better
finished leather which will pull through the rest of the leather products industry and provide a much needed stimulus
to exports. The first tanneries to move to the new facility are expected in the 4th quarter of 2009.
The largest sub sector is footwear production. This is split between mechanised and semi or hand operated businesses.
The majority of footwear produced in Egypt is by MSME’s. This sector produces (up to 95%) of total output of
around 75 million pairs per year. This is done in relatively small workshops producing anything from 5 to 50 pairs
per day. Quality levels are indifferent and manufacturing techniques are not far above that of a shoe repairer. Having
said this, the finished product looks quite acceptable but has poor wearing properties.
The mechanised factories have capacities from 800 to 3000 pairs per day but many are operating at anything from
30 – 50% of this. They have been operating at low levels of capacity from some years which has made it difficult to
invest in the latest technological improvements.
Most of the inputs required to make a pair of shoes of any of the major types, dress, casual, ladies high heels, sandals
and slippers are available from merchants in Cairo. The quality of the inputs is relatively low in order to keep costs
down which, reflects the lack of purchasing power of the mass market. Better quality mechanised factories import
their own basic raw materials.
The personal leather goods and garments sub sector has some excellent companies producing a quality product much
of it for export to Europe or through duty free shops. Much of the leather used is sourced locally and is of excellent
quality. It proves the point that good leather can be obtained from local tanneries if the tanner and manufacturer
56
Leather and Shoes Sector
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
work together in developing the required specifications and pay a fair price for so doing. The structure of the PLG
sub sector is similar to footwear in that there are many small workshops producing goods by hand with a handful of
professionally managed operations.
The nature of the sector therefore is one of transition from being hampered by the industrial environment which made
it difficult to progress to a situation in the near future where the industry will have the opportunity to modernise, at
least as a manufacturing base.
3.4.3. Type and Size of Companies
The footwear sub sector of the leather industry in Egypt comprises over 3300 units with a production of around 75
million pairs and a capacity base of 120 million pairs per annum.
Current Manufacturing Capacity
Million Pairs per year 120
Annual Production
Million Pairs 75
Export Capacity
Million Pairs 50
Ex- East Block Countries and Russia , Euro Countries , Arab and African Countries
Export Markets
No of Export Oriented Factories
Factories 60
No of Medium to Small Factories
Factories 200 Production Units employing less than 10 workers
production units 3000
Source: Chamber of Leather Industry
The export oriented factories tend to be fully mechanised. The medium to small factories are semi mechanised up to
the point of lasting with some finishing machines. The small production units by and large are hand operations with
some simple sewing machines and sole presses.
The more enlightened footwear manufacturing companies tend to focus more on the market, export or local, rather
than production. One producer has successfully developed a niche market and a successful brand name for innovative
childrens’ footwear and is very successful on the local market. The company exports 50% of its production to Northern
Europe (a less crowded market than middle Europe). It also has opened opportunities in Jordan for export there and
re – export to other regional markets.
Another shoe manufacturer of mens’ dress and casual shoes has exploited the fact that the local market tends to lag
behind that of Europe. It contracts with an Italian manufacturer to purchase all its manufacturing equipment (lasts,
patterns, and cutting dies) from the previous season. This means they are the first on the local market with new
designs and have a product that is made to Italian specifications. They are also aiming to exploit this strategy intra
Agadir.
Another company, an ex Bally licensee, is producing top quality all leather mens’ dress shoes (leather uppers, lining
and insole) with local quality leather. They are now in contact with a sole supplier in Tunisia to source their soles
there rather than from the present supplier form Turkey.
A well established mens’ shoe factory, traditionally producing middle of the road dress shoes has implemented a
new construction with a high degree of hand work which does not compete directly with the Chinese. This shoe is in
demand in Europe for the grey market. This is a successful strategy for entering into the larger EU27 markets. Mahmoud Qattous and Terry McCallin
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Final Report
There are approximately 300 tanneries located in Old Cairo near the city centre producing mostly wet blue cow and
buffalo hides and similarly sheep and goat skins for export and some finished leather for the local market. There is one
modern tannery outside Cairo with a capacity to produce 6,000 pieces per day of cow and calf leather, approximately
120,000 ft2. The tanning sector is as follows:
Total Production: 149 Million square feet – Finished Leather for Uppers per annum
Type
Square Feet
Percentage
Cow Hides
Buffalo
Camel
Calf
Sheep
Goat
Total
75499740
39652000
9810800
10207104
13941400
310776
149421820
50.53%
26.54%
6.57%
6.83%
9.33%
0.21%
100%
Source: Chamber of Leather Industry
Number of Tanneries: 300
Total Labour Force: 15000
Export Markets: Spain, Italy, Cyprus, Greece, Libya, China, Saudi Arabia, UAE
In leather goods there are over 1500 production enterprises. About 50 companies supply the quality market locally
and for export mostly to Europe and the Gulf States.
It is worth noting that a successful leather garment manufacturer has upgraded its production facility by developing in
house costing software and has invested in a state of the art CAD system. This successfully controls the costs, styles
and fit of the finished product making them competitive on the world market.
A very good example of a successfully managed company is one making small leather products of the highest quality
from local leather and selling them in the duty free shop market, one of the most demanding in the world but one of
the most profitable. Because of its quality and fanatical attention to detail the company exports to the high end Gulf
market and into the EU15 markets.
No of Export Oriented Factories
Small factories or production units
25 Factories
1500
Export Products
Wallets–Purses–Attaché and Business Bags Gifts,
Souvenirs and Advertising items of genuine leather
Leather Goods
Ladies Bags ,Casual and Classic Belts, Men ,Ladies
and Children Leather Garments according to latest
fashion trends. Home and Car Upholstery
Export Markets
Germany and other EU Countries, Arab and African
Countries, USA and Canada, Russia
Source: Chamber of Leather Industry
The other enterprises are small units making lower quality products on offer to the local market.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
3.4.4. Sector Types of Production and Characteristics
The supply chain for the leather industry starts from the collection of raw hides and skins. Much of this is done by
private slaughter rather than mechanised abattoirs. Manual flaying of the hides and skins besides using traditional
inventory techniques and transportation means create defects on the flesh side producing lower quality materials.
Some estimates put this problem at 30% of the total collections, representing a serious loss to the industry. However
the remaining 70% of hides and skins are of good quality.
The hides and skins business is a commodity trading business and tends to be global in its nature with prices
fluctuating in a similar manner to say coffee or tea. Occasionally it is better to import and vice versa depending on
market conditions. Egypt is no exception to this methodology consequently sometimes, when expedient, it imports
raw hides and skins.
From the ITC Comtrade data base 2007; trade map analysis Spain and Bosnia represent over 90% of Egypt’s imports
of this commodity.
Exports are relatively minor as they are discouraged by Government policy. However small amounts have been
exported to Italy which representing 70% + of the total, and to a major competitor; India which represents almost
20% of the total.
Egypt trade indicators - imports of hides and skins and leather in 2007
●
●
●
●
Spain mostly exports raw hides and skins to Egypt
Italy exports mostly finished leather
Bosnia trades in raw hides and skins
Lebanon, Tunisia and Syria are all exporting finished leather to Egypt.
Egypt trade indicators - exports of hides and skins and leather in 2007
●
●
●
●
●
Spain imports semi processed and some finished leather mostly from 1 tannery in Egypt
Italy imports semi processed leather
Portugal is similar to Italy
China and India import semi processed leather also
Turkey is a smaller market for semi processed leather
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Egypt trade indicators - imports of leather goods in 2007
Imports of leather goods are dominated by China at over 70% of the total. Imports from other countries are minor.
Egypt trade indicators - exports of leather goods in 2007
Exports of leather goods mostly take place to Italy and Belgium; 21% and 26% of total exports respectively.
Egypt trade indicators - imports of footwear 2007
Imports of shoes into Egypt, not surprisingly, are dominated by China at over 76% of the total. This is followed by
Italy with about 12% and Brazil with 1.8%. Other trading partners are 1% or less.
Egypt trade indicators - exports of footwear in 2007
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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The export of shoes is dominated by one market – Italy. This market is mostly supplied by one exporting footwear
company in Egypt. Italy represents over 60% of shoe exports. France is the next biggest market with a 9% share,
followed by Saudi Arabia with 4.5%.
Agadir Countries are exported to in a minor way. Jordan takes 2.4% of the total, followed by Tunisia with 0.1%.
Morocco is negligible.
3.4.5. Institutions and Number of Workers
From the Chamber of Leather published information there are approximately 300 tanneries of one sort or another in
“Old Cairo” employing 15,000 workers. (There is 1 large tannery outside this environment employing approximately
600 workers).
The footwear sub sector is located mostly in Cairo and the surrounding cities of 6th of October and 10th of Ramadan.
There is a relatively strong presence in Alexandria. In these locations there are 60 mechanised or largely mechanised
factories. Employment levels in this sector are from 4,800 to 7,200 workers.
Again from Chamber information, there are about 200 smaller workshops in the Country each employing 5 – 30
workers. There are 3,000 MSME’s which employ 5 – 15 workers.
The IMC study (IMC/PS-38) done on the footwear and leather industry in Egypt in 2006 agrees with the formal
sector outline above but lists the small and micro workshops as being in the order of 19,000 – 27,000 units providing
jobs for 42,000 to 60,000 people. (This would include the various workshops producing components and ancillary
parts).
The Chamber lists the leather goods sector as comprising 50 factories and 1500 small production units whereas the
IMC study suggests 23 factories and between 500 – 1,900 workshops employing 5 workers or less. Total workers in
the sub sector could be in the order of 6,000 workers.
The leather garments sub sector is represented by 9 companies employing from 20 – 60 workers on average, for an
estimated total of 420 workers. Small units number around 100 and employ about 5 people each for a total of 500
workers. This is derived from the Chamber and the IMC study.
RECAPITULATION
SECTOR
TANNERIES
Old Cairo
Modern Tanneries
FOOTWEAR
Mechanised
Semi mechanised
Small units
LEATHER GOODS
Mechanised
Small Units
LEATHER GARMENTS
Mechanised
Small units
TOTAL
Mahmoud Qattous and Terry McCallin
PRODUCTION UNITS
TOTAL EMPLOYED
WORKERS
300
1
15,000
600
60
200
3,000 – 27,000
4,800 – 7,200
1,000 – 6,000
30,000 – 60,000
23 – 50
500 – 1900
1,265 – 6,000
1,750 – 6,650
9
100
4,139 – 29,620
180 – 540
500
55,095 – 102,490
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3.4.6.Production Added Value
According to the IMC study done in 2006, the production value added for footwear was 30%, while for travel
and hand bags it was 35%. In small leather goods it reached 65%. On the other hand, the manufacturing of leather
garments value added was 20%.
3.4.7. Foreign Direct Investment
Stemming from broad based institutional and structural reforms implemented by the Government, the Egyptian
economy is continuing on its strong growth path for the third consecutive year; bringing in the confidence of local and
international investors. The Egyptian economy achieved real growth of 7.2% (market prices) during the course of the
first semester of 2007/08 (7.5% at cost level), and is expected to witness a similar growth pattern for the entire year,
slightly higher than the 7.1% achieved in FY 2006/07, but up from 4.1% just half a decade ago in 2003/04. (Source
Ministry of Finance).
Recent indicators assure that such growth is gaining momentum as well as sustainability. As sources of economic
growth are becoming more diversified - with the manufacturing sector leading the current growth wave, productivity
and per capita income are increasing. With the increased confidence in Egypt’s economic sustainability, annual net
FDI inflows reached US$ 11.1 billion in FY 2006/07 (8.5% of GDP) up from US$ 6.1 billion a year before. Greenfield
investment represents more than 46 percent of net FDI inflows witnessed in FY 2006/07. It is noteworthy that net FDI
inflows during the period July-March 2007/2008 increased to record US$ 11.3 billion up from US$ 9 billion during
the same period last year, with net Greenfield investments (oil exclusive) increasing by some 40% during the same
period.
As far as the leather industry is concerned there have been in recent years some investment and some current projects.
The large footwear company in Ismailia in the free trade zone has been a success story for Egypt exporting 100% of
its production. Current plans are to increase capacity for export and start a new operation for the domestic market.
There is an independent investor from Turkey who is currently assessing the possibility of starting a new modern last
making facility in Egypt.
There are other opportunities in the leather sector, particularly components to upgrade the current product line either
by Joint Venture (JV) or by FDI.
3.4.8. Cost of Production
The basic costs of production for shoe manufacturing operations in Egypt are given in the following table. These
figures will also be typical for PLG manufacture.
Unit U. S. $ Year 2007
Labour rates per month
(factory operators)
Labour rates per hour
(factory operators)
Electricity per KWH
100 to 400
Natural Gas per cubic meter
Diesel per litre
Water per cubic meter
Construction cost per square meter
Cost of land per square meter
Transportation
0.04
0.15
0.09
150
18
$450 per 20’ container (from Alexandria to Europe)
62
Leather and Shoes Sector
0.55 to 2.2
0.048
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3.4.9. Field Visits – Company Profiles
El Shark Tannery
●
●
●
●
●
●
●
Manufactures cow, buffalo and baby buffalo leather
Wet blue, crust and finished
Export oriented; exports about 90% of production
Produces approximately 7- 8,000 square feet per month
Exports wet blue and crust to Italy, Spain and Portugal
Has exported to Agadir countries (Tunisia)
Has 60 - 65 workers in production
Baramki Group
●
●
●
●
●
Large company producing vulcanised rubber products.
Produces 20 - 25 tonnes rubber sheets per week for soling
Large product range of many different effects
Exports to Africa, Italy and Tunisia
Is in talks for possible JV with company in Tunisia
Bruno Shoe Factory
●
●
●
●
Manufacturer of mens' dress shoes for local market
Largely mechanised installation
Capacity 300 – 400 pairs per day
Actual production 150 – 200 pairs per day
Ell Gonih Tannery
●
●
●
●
●
●
●
●
Manufacturer of semi processed leather
Export oriented; exports 80% to Europe
Exports consist of 80% wet blue and 20% crust
Remaining production goes to local market
Capacity is 600,000 square feet per month 50% crust, 50% wet blue
Current capacity utilisation is 40 – 45% of nominal capacity
Has exported to Tunisia
Planning on installing finishing plant as next phase of expansion
Chamber of the Leather Industry and the Leather Export Council
●
●
●
●
●
●
●
New leather city can be open to FDI especially Tunisia
Interested to have information about Tunisian Footwear and Moroccan Leather and Footwear
New vocational training centre set up in Cairo
Discussed methodology of project and gave views
Promoting Agadir Leather Products via International Marketing Company
Interested in intra Agadir chamber meetings
Establishment of a data base for the industry intra Agadir
Egyptian - Italian Company
● Manufacturer of mens' dress/casual shoes and “Gulf” sandals
● Capacity 1,200 pairs per day. Actual 50% of this
● Employs 130 workers
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● Makes hand stitched Clarks type shoes
● Also McKay stitch
● Both constructions a good niche market
Farag Leather Products
●
●
●
●
●
Manufacturer of high quality ladies bags
100% for export; Belgium, Italy, and France
Output is variable from 100 to 500 pieces per day
Employs on average 120 workers
Has plan to start complimentary shoe manufacturing company producing 500 pairs per day of Timberland
type boots 100% for export to Italy – Nassr Free Zone City .
Armando Shoe Factory
●
●
●
●
●
●
●
Manufacturer of high quality mens' dress shoes.
Ex Bally licensee
Produces 100 pairs per day
Semi mechanised plant
Employs 20 people
Wants to contact Benson Shoe in Casablanca to discuss possible cooperation
Has contacted SCIAC Company in Tunisia for built up leather unit soles.
Piel Color Tannery
●
●
●
●
Large ultra modern tannery outside Cairo (allegedly number 6 in the world for size)
Operates in Free Trade Zone
Produces 6,000 pieces per day cow and calf leather from wet blue, crust and finished
100% export oriented; mostly to Spain
Leather International
●
●
●
●
●
●
●
Large shoe factory operating in Free Trade Zone at Ismailia
100% export mostly to Italy, also Germany and France
Manufactures 3,000 pairs per day of mens' and ladies casual cement lasted shoes
Employs 980 people
He has his own internal training section / workshop
Imports most leather and soles from Italy
Expansion plans for new company outside of free trade zone producing 50% for local market and 50% for
export at 1,500 pairs per day of sport footwear, employing 550 people
Shoepedic
●
●
●
●
●
●
●
●
64
Specialist manufacturer of high quality childrens' shoes and sandals
Production 800 – 1000 pairs per day of shoes
Employs 110 workers
50% production for export and 50% for local market
Exports to Germany, Scandinavia, Benelux
Has own retail shops in Cairo
Exported shoes to Jordan, 3000 pairs yearly and is willing to export more through other agents
Styling, design and pattern work done by two associated Italian Studios.
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Alfa Leather Company
●
●
●
●
●
●
Manufacturer of high quality mens' personal leather goods, briefcases, and promotional items
Export oriented to Benelux, Italy, Germany and UK
Uses local leather where possible
Components / accessories from Italy and China
Production variable but he achieved 120,000 pieces per 3 months under special order.
Employs from 60 to 120 workers as needed.
Match for Leather Products
●
●
●
●
●
●
Manufacturer of ladies unique bags and watch straps
Export oriented to UK and Canada
Also makes for tourist markets in Egypt
Capacity about 2,000 bags per month
Employs 17 – 35 women in a village outside Cairo
Buys local leather
Egypt Shoes
●
●
●
●
●
●
Semi mechanised factory for mens' sandals and dress shoes
Capacity 400 pairs of sandals or 120 pairs of shoes per day. Currently, operating at about 50% of this
Employs 13 people
Export oriented to Saudi Arabia, Kenya, and Yemen
Exports represent 30% of production
Has alternative larger mechanised production facility outside Cairo on Alexandria road not at present in
operation.
Three Angels Genuine Leather
●
●
●
●
●
●
Manufacturer of very high quality personal leather goods
Wallets, briefcases, ladies bags and promotional items
Exports through duty free sales in Cairo and Kuwait
Exports also to EU direct
Capacity 7,000 – 8,000 pieces per month
Employs 50 – 60 people
Industrial Modernisation Centre (IMC)
●
●
●
●
Discussed broad principals of report
New leather cities progress
Recruitment of foreign experts to assist industry
Interested to have Intra Agadir database of consultants and experts, also twinning initiatives with similar
centres in Agadir Countries
● Benchmarking
● Development of finished leather
Elegant Fashion
●
●
●
●
Manufacturer of mens' and ladies' leather garments
Modern mechanised factory
Utilises CAD
Sophisticated costing system by computer – in house developed
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● Sells mostly in local market
● Was between seasons at time of visit
● Very interested in international marketing company as IPO (initial public offering)
Top Group
●
●
●
●
●
●
●
●
●
●
Produces mens' and women's classic and casual shoes
Capacity 6,000 pairs per month, actual production 4,000
Employs 65 workers
Has 6 shops where he sells his products and imported ones also
Exports only 10% mainly to Saudi Arabia and Yemen
Uses only local leather
Buys previous European season styles and tooling from an associate in Italy
Is one of the first on the local market with new fashions
Has trouble free technical problems in manufacture because of Italian shoe engineering
Is market leader in fashion on local market
Geem
●
●
●
●
●
●
Manufacturer of mens' casual shoes and sandals
Employs 45 workers
Uses local leather
Exports to Syria, Jordan, Iraq, South Africa, Kuwait, KSA, Zambia, and Kenya
His prices are accepted by the local market (120 – 250 E£). 25% less for Wholesaler's price
Most problems are in Marketing, lack of skilled labour, employee training centres / schools, and inconsistency
of leather quality and inputs
Riviera Group
●
●
●
●
●
●
●
●
●
Large manufacturer of shoe components
Manufacturer of cellulose insole boards and injection moulded unit soles
Sole in Polyurethane, Thermoplastic Rubber and Poly Vinyl Chloride
Also produces shank boards and adhesives
Produces 4,700 tonnes per annum cellulose boards (3.6 million sheets), 1,900 tonnes shank boards (635,000
sheets)
Sole production capacity 3,000 to 5,000 pairs per day
Employs 200 workers
Is currently installing new plant for leather board producing 3,000 tonnes per year.
Now has excess capacity and is planning to export, particularly to Agadir countries.
The complete list of all registered companies can be found by contacting the Head of the Leather Export Council of
Egypt on the following address: 3.4.10. SWOT Analysis
This analysis takes account of the main factors that impact on the industry. It highlights those areas that need to be
addressed (positive and negative) for the industry to move forward with the aim of integration to take advantage of
the opportunities offered by the Agadir Agreement.
The strengths (and weaknesses), opportunities and threats analysis focuses on the main areas of activity in the sector
namely marketing, manufacturing, human resources and finance. By analyzing these elements a road map can be
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drawn up which enables the industry to take action to exploit the strengths it has and to correct the weaknesses. This
will lead to a clearer evaluation of the resources that are available (or which must be acquired) to ensure that actions
can be carried out to enable the industry to take advantage of the Agadir opportunities.
SWOT ANALYSIS – EGYPT
STRENGTHS
●
●
●
●
●
●
●
●
●
●
●
Party to Agadir agreement
Proximity to Europe
Local availability of leather
Express cargo services to Europe
Government Agencies support
Excess production capacity
Small flexible factories
Availability of labour
Currency pegged to US$
Trade Association
Cost reduction programmes
WEAKNESSES
■
■
■
■
■
■
■
■
■
3.5.
Knowledge of overseas markets
Product development
Competitive pricing
Niche marketing
Alternative constructions
Production management
Cost control
CAD systems
Shop floor supervision
OPPORTUNITIES
●
●
●
●
●
●
●
●
●
●
New leather cities
Upgrade technology (CAD/CAM)
Marketing plan with Government Agencies
Niche marketing
International marketing company
Trade links with Agadir partners
Develop finished leather
Advertise Egypt as a resource
Develop transport links with EU
Develop programme for FDI/JV in component
supply
● Training scheme industry wide
THREATS
■
■
■
■
■
■
■
■
Leather cities take longer to develop
Unwillingness to change
Established norms in global markets not accepted
Finished leather not up to standard
Sales techniques lacking
Lack of capital
Negative exchange rates
Artificial barriers to Agadir trade
Group Impact Factors
3.5.1.Productivity
In order to make a comparison and to indicate the competitiveness of the Agadir countries the following productivity
chart was compiled. The figures refer to the footwear manufacturing industries in the various countries. These figures
were taken from various sources and in some cases extrapolated to give a fair estimate of the situation in the different
countries. All the figures come from industry sources.
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PRODUCTIVITY
Country
France
Spain
European Average
Italy
Tunisia
India
Morocco
Egypt
Viet Nam
Jordan
Best practice highly automated plant
Number of Pairs per Worker per Day
(8 hours)
18.1
17.7
13.8
13.0
10.6
7.8
5.9
5.0
4.1
n/a
26 – 28
● European countries are the most productive because of their better organisation and use of technology
● Tunisia ranks well due to the development of its industry with European technical inputs over time
● Viet Nam shows a low productivity level but remains competitive because of its low labour rates.
3.5.2. Industry Organisation (Italian Method)
Much has been said of the Italian model for the production of leather products, particularly footwear. The Italian
system revolves round the co-operation of small companies working together in partnership. The majority of Italian
shoe company’s employ less than 12 people. There are between 6,000 and 9,000 companies in the sector.
The success of the Italian industry is due to this clustering process where companies share out the various stages of
production to different small workshops. Namely one company would produce uppers, another do the lasting and
another do the finishing. The shoes would then be marketed by a cooperative representing the small producers. The
major market in Italy is still independent retailers who take small quantities rather than mass marketers.
The industry in Italy also benefits from a very vibrant, innovative components manufacturing and tanning industry
which serves the producers and is in close proximity to their plants. Most of the shoe machines are developed in Italy
together with new technical developments year on year. There also is the inbuilt Italian flair for fashion and styling
which is a cultural phenomenon.
The Italian industry is successful therefore because its structure is built around three things:
● Clustering
● Component supply and tanneries
● Design
Italy is the driver of fashion, styling and innovation. It leads the world in this aspect of production and has done for
many years. It gives the industry a competitive advantage and provides value to its customers. This co-operative
method of manufacturing and marketing works well in Italy. However it relies on the total trust and support of each
member of the cluster. It has been tried in other countries but has not been successfully replicated outside of Italy.
3.5.3. Benchmarking
There are many benefits of benchmarking. Commonly benchmarking is done by individual companies against their
peers. In this case we are taking a more general approach and are benchmarking certain countries with the Agadir
Group. This will give a guide to performance levels as they pertain today country by country compared with the
Group.
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For the Agadir group it was decided to benchmark their performance with the following countries
● Turkey
● Vietnam
● India
● Italy
In order to get a better understanding of present performance and to get a picture as to the performance levels of the
Agadir Countries versus the benchmarked countries, the following chart was produced. The information is empirical
in nature and reflects the opinions of the consultants. Three broad areas of comparison were used with sub headings
for each:
● Marketing
● Technical aspects of Leather Products Manufacturing
● Human Resources
For each category being benchmarked a score was given to each country (from 1 – 10): 1 represented very poor and
10 represented excellent, anything in between represented an improvement from 1.
INDICATOR
Measurement
Category
Best Practice Indicators
COUNTRY
Agadir
Turkey
Viet
Nam
India
Italy
Marketing
Product Development
Continuous access to fashion forward
information in real time
6
6
5
5
9
Price Vs. quality
Allows or exceeds normal retail margins,
high specification through whole product
6
6
8
7
7
Exhibitions
European International, regular attendance
over many years
5
5
5
6
9
Comfort factor, reliability, implicit trust
6
4
6
4
7
Logistics (proximity to
market, efficiency)
3 – 5 days door to door delivery. Drop
shipments
8
6
2
2
9
Technical
Production facilities
All mechanised where possible. CAD
4
5
5
8
Technical innovation
Continuously investing in new techniques
CAM, robots, automation
4
5
5
4
8
Leather availability
Local, all varieties, high quality finishing,
laboratory tested
7
7
4
5
9
Unit soles, insole and sole sheets, reinforcing,
adhesives
3
7
7
6
9
Available from shop floor to degree level
8
5
5
7
6
Abundant and disciplined
6
6
8
8
5
Output per operator to international norms
4
6
7
6
8
Labour rates
Lowest possible
7
5
8
8
4
Shop floor management
Trained, workshop organisation, cost control
4
5
7
6
8
Available, active, generous terms
7
6
8
8
6
Image as a resource
Ancillary raw materials
availability
Human Resources
Training facilities
Availability of labour
Productivity
Government support
Export promotion agencies
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Industry chamber
Managed by professionals committed to
industry betterment
7
6
5
8
7
Research and Development
agencies
Exist, hyper active, links to international
peers and academia
7
5
5
7
8
Foreign Investment
Promotion Agencies
Exist, support local industry by FDI
7
5
5
6
5
Lack of Bureaucracy
Regulation kept to a minimum, open market
philosophy
6
5
6
4
7
112
105
111
112
139
2
5
4
2
1
TOTAL SCORE
RANK
The above table in chart form is as follows:
The table summarises all the bencsummarises all the Benchmarks whmarks where the following ere the following
observations are made:
● It is hardly surprising that Italy comes out the top country in this comparison. It is the world leader in many
aspects of the leather products industry and is in fact the benchmark that other countries should strive for.
● The Agadir Group comes out well in the comparison in that it is better than Turkey and is equal to Viet
Nam and India. However this can be a bit misleading in that the object for the Agadir Group should be to
outperform these two countries who are major competitors.
● From this benchmark study, Marketing should be improved by the Group to exploit its comparative advantage
of closeness to the EU markets. This means that the Group needs to increase its efforts in product development
and exhibitions participation, in addition to improving its quality and competitive prices.
● Its technical capabilities are in danger of lagging behind recent developments. Here there should be emphasis
and research done on how to improve the capabilities of the production processes. As mentioned the future
need will be for flexible production done quickly. This has to include the option of automation.
● The Agadir countries should continue its efforts in finishing its leather with high quality. However, the Group
should do extensive efforts to ensure the availability of Ancillary raw materials.
● The Agadir Countries come out neutral in Human Resources. However weaknesses show up in labour
productivity levels and shop floor management. This makes more burdens on each country of Agadir Group
to pay more attention to its labour discipline and productivity. Fortunately, all countries started vocational
training reform programs.
● Government support for the Agadir Group is good which should encourage enlightened entrepreneurs with
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vision to invest in their companies and so benefit the region as a whole. However, the Governments in the 4
countries are requested to keep this momentum of their support especially during the current global financial
crises.
The ranking of the countries benchmarked against each other is as follows:
Agadir countries should consider the following:● Italy is the world leader in the leather products industry particularly footwear. The main reasons it is the
world leader is:
■
■
■
■
■
Original ideas and styling
Innovative components supply industry
Any type of finished leather available
Manufacturing expertise
Marketing expertise
● Italy is the number one exporter of medium to high and high quality products. Its disadvantage is the high
labour costs in spite of high productivity plus the general cost of manufacturing in Europe. Viet Nam is a
smaller version of China but is beginning to change its strategy to try and become a flexible producer.
However its distance from the major markets for leather products (EU27 and USA) gives it an inherent
disadvantage.
● India is beginning to emerge as a world player. It is developing its supply lines to become more efficient and
attracting FDI in component supply. At present it does not have the design expertise required for Europe and
USA. It has a good supply of leather of certain types up to 1.4 mm thickness.
● In the case of Turkey Tunisia Morocco and Egypt perform quite well with the exception of component
supply. Here Turkey has the advantage.
● Tunisia and Morocco, being the two more developed industries in the Agadir Group because of their established
sub contracting roles to European marketers, have a marketing advantage which should be exploited in the
future for product development. They gain the fashion knowledge from their partners. This coupled with
flexible production units and their proximity to Europe gives them an advantage over Viet Nam, India (and
China).
● However both Morocco and Tunisia are in danger of surrendering their competitive advantages because of
the greater demand in the future for finished leather to be available locally to cope with the new flexible
production environment. They also need to develop their component supply industry and implement new
shoe engineering techniques in production and constructions, to reduce costs.
● Tunisia and Morocco have invested in training and research institutes for their industry. In this they are ahead
China does not have great expertise in styling or design. It imports leather. Its marketing is based mainly on low selling
prices. The manufacturing philosophy is to employ cheap labour to solve production problems or increase output. It does howeever have an efficient component supply industry. Exporting high volumes cheaply is an unsustainable strategy for the future
where quick manufacturing times are required for smaller orders with short delivery times. China is far away from the major
markets.
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of Viet Nam and India. However they now need re-evaluate the schemes available in the two countries in
the light of the forthcoming trends in the manufacturing environment. There is a special need for shop floor
supervisors in Tunisia and Morocco. This problem needs to be addressed because India could easily catch up
in training and research.
● Egypt has the perceived advantage of an ample supply of leather to support the manufacturing industry in the
country and potentially the region. It had the advantage over Viet Nam and to an extent Turkey. (Also China).
However India continues to upgrade its tanning industry. Egypt has the new tannery city under development
(as has India). It will be a race as to who achieves significant commercial advantage first.
● Egypt has the potential to develop into a low cost producer if it concentrates on developing its manufacturing
expertise. Ample supply of labour is available. New manufacturing techniques have to be devised to keep up
with developments in Viet Nam and India who are more production oriented. India and Viet Nam have higher
productivity making them competitive in the world market. Egypt also has to exploit its closeness to Europe
more.
● The leather products industry in Jordan is the weakest of the 4 Agadir Countries. They lag behind all of the
benchmarked countries in nearly all aspects. They do however have a marketing advantage in that it can be
a hub for distribution of products to the region.
3.5.4. The Turkish Model
Sector overview and performance
The Turkish leather sector, which has a history going back 500 years, is an important player
in the global leather industry. The Turkish leather industry which occupies a prominent place in the Turkish economy
has been developing by combining new technology and its historical background. The industry has a share of 1% of
the country’s GDP, 2.3% of total industrial production and 1.5% of registered manufacturing employment.
At present, there are five organised leather industry zones in Turkey. In addition, eight organised leather industry zones
are under construction. The sector produces according to international standards and is becoming more sensitive to
health and the environment; about 90 % of the production is based on health and environmental standards. Until the
1970’s and 1980’s the industry was comprised mostly of small workshops located in apartment buildings in the old
part of Istanbul, Ankara etc. These have now been moved to the leather industry zones.
The leather products industry is one of Turkey’s leading export sectors. The export figure of the leather sector for
2008 was about US $ 1.3 billion. This figure is actually higher if the touristic trade and so called “bag trade “ are
taken into consideration. Export to EU countries accounts for 40% of the total leather, PLG and footwear export. The
main markets are:
● Russia 32%
● Germany 11%
● France 6%
● USA 5%
The major export product groups for the leather products industry are:
●
●
●
●
Saddlery and garments 38%
Fur and fur coats 33%
Footwear 21%
Hides and skins and leather 8%
Traders from neighbouring ex Soviet countries travel across the border in busses and purchase goods which are taken
back in travel bags for reselling in their own countries.
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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The Turkish leather industry has taken an important position in the global leather and leather products industry.
Turkey claims it is third in the world’s export of leather and leather products in terms of quantity. It is also ranked
among the top 10 fur exporting countries. It is also ranked 3rd in Europe after Italy and Spain in terms of production
capacity.
Of the 13 planned Leather Industrial Organized Zones to operate in Turkey, they are located mostly in the Marmara
and Aegean regions. There are more than 3,000 producer companies dealing with exports throughout Turkey.
Turkey has tended to specialise in leather garments. It produces about 1.2% of the worlds leather clothing. It is among
the worlds major producers of fur coats.
A majority of the industry’s raw materials are imported. These are converted into high value products many of
which are exported. In order to consolidate its present position Government is prioritizing marketing, research and
development, design and educating the workforce.
Turkey is now marketing itself as a major resource for leather products. In addition to domestic fairs, national
participation has been organized to international fairs in an effort to promote an image of ingenuity and reliability as
a producing nation.
The primary advantages that the Turkish industry has are very similar to the Agadir Group:
●
●
●
●
●
●
●
Close to the main markets – EU and Russia
Short Short manufacturing
Short delivery times (proximity to Europe)
Qualified labour resources
Complies with EU regulations
Innovation
Modern working conditions and practices.
The export/import performance of Turkey in the important sub sectors is as follows:
U. S $
CATEGORY
41 Leather H & S
Export
Import
42 P. L. G.
Export
Import
64 Footwear
Export
Import
Comtrade
2006
2007
2008
102,611,612
566,317,622
120,162,021
609,641,649
121,070,629
518,293,169
360,531,353
365,134,818
409,486,069
470,841,505
451,604,093
537,422,859
237,069,400
569,928,759
316,739,641
672,917,487
344,889,810
514,969,515
In 2008 Turkey traded with the Agadir zone as follows:
U. S $
CATEGORY
41 Leather H & S
Export
Mahmoud Qattous and Terry McCallin
2008
Egypt
Morocco
Tunisia
Jordan
110,274
71,513
12,853
151,662
Leather and Shoes Sector
73
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Import
42 P. L. G.
Export
Import
64 Footwear
Export
Import
Comtrade
Final Report
5,212,814
1,667,846
3,285,878
0
2,389,022
127,583
292,841
146,899
229,370
218,683
211,600
804
1,118,247
92,976
414,487
3,021,287
282,836
749,675
1,061,568
1,352
3.5.5. The Vietnamese Model
Sector overview and performance
Vietnam has 450 leather and footwear enterprises employing 600,000 workers. Of these about 180 are mechanised
modern plants the rest are small workshop oriented enterprises.
According to the General Statistics Office of Vietnam, the country expected to achieve US$2 billion in export revenue
from leather and footwear products in the first half of 2009, or some 8.7% lower than that in the same period last year.
There is a target for export revenue of US$5 billion for 2009, 10% more than last year. According to the statistics
from Vietnam Leather and Footwear Association (LEFASO), shoe export value slowed 10% to 1.3 billion U.S. dollars
in the first four months over the same period of last year, particularly exports to Britain, Japan and EU countries.
Considering the weak demand in international markets and the shrinkage in shoe exports, Vietnamese shoemakers
are revising the production and export program according to the actual situation. The top priority will be given to
technical innovation, new product designs, and personnel training, so as to improve the quality of footwear offered.
Many domestic leather and footwear companies face fierce competition from imported footwear, particularly from
China. The domestic leather and footwear enterprises have a market share of 30% of the domestic market compared
to 70% in previous years.
The structure of the industry is as follows:
Exports
Capacity
Footwear
Leather
Bags
Labour force
Estimated turnover 2010
Type of Companies
State owned
Limited company
Joint venture
100% foreign owned
Stock companies
Others
Sub Sectors
Shoes
Tanning
Components
Bags, PLG, luggage
Repairs
4.767 billion US$
750 million pairs
130 million square feet
88 million pieces
610,000 people
6.2 billion US$
3
103
9
21
47
3
153
14
10
6
3
LEFASO
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However, the country has to import 60% of materials from China, Taiwan, Thailand and Korea. The country’s
footwear enterprises were weak in establishing stable supply chains, building connections between leather and
footwear companies and maintaining relationships with domestic material suppliers.
The country’s biggest centre to supply raw materials and accessories to the footwear, leather goods and garment
sectors was built in May 2009 which will help ease the over-reliance of local manufacturers on imported materials.
The first phase of the centre will become a world-class hub for local and international suppliers. The centre will
include a wholesale market covering 11,000 square meters and likely accommodating 650 stalls, a section of offices
and showrooms covering 4,500 square meters, and a bonded warehouse of 18,000 square meters able to store up to
20,000 tons of goods. The centre will also provide supporting services including banking and customs, and trade
promotion activities. It is expected to house hundreds of local and foreign suppliers of leather products, footwear and
textile-garment materials.
In spite of the difficulties brought on by the economic crisis, Vietnam is still active in attracting co-operation with foreign
companies. Nine leather and footwear enterprises from Switzerland, the U.K. and Chile have expressed wish to join
hands with Vietnamese partners in the field according to Ho Chi Minh City’s Leather and Footwear Association. Also
two retail companies from the U.K. are seeking Vietnamese suppliers of leather bags and suitcases. Six Chilean
importers seeking suppliers of childrens footwear, leather gloves and slippers and one from Switzerland is seeking
a supplier of ladies leather shoes.
The primary advantages that the Viet Nam industry has are:
● Low cost base
● Chinese and Taiwan Investors
● Qualified labour resources
● Export oriented
● Innovation
● Modern working conditions and practices.
The export/import performance of Viet Nam in the important sub sectors is as follows:5
U. S $
CATEGORY
41 Leather H & S
Export
Import
42 P. L. G.
Export
Import
64 Footwear
Export
Import
2005
2006
2007
51,539,811
734,331,890
73,400,979
776,711,904
173,284,128
933,705,507
366,566,660
15,813,806
376,694,194
17,951,110
483,003,816
29,096,258
3,078,615,645
278,298,541
3,654,749,526
230,793,63
4,076,198,601
203,976,568
In 2007 Viet Nam traded with the Agadir zone as follows:
CATEGORY
Leather H & S 41
Export
Import
.P. L. G 42
Export
Import
Egypt
Morocco
0
431,276
80,220
0
2007
Tunisia
Jordan
0
0
0
3,570
0
0
33,794
0
3,017
0
2,825
3,798
5 Figures for 2008 are not yet available from Comtrade
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75
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
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Footwear 64
Export
Import
Final Report
646,727
0
390,318
0
110,166
0
16,956
0
3.5.6. Identification of opportunities of diagonal accumulation of origin promoting cooperation among
Agadir countries:
The Agadir Agreement, which came into force in March 2007, is a free trade agreement between four Arab countries;
Tunisia, Jordan, Morocco and Egypt. The Agreement allows exemption of import customs duties amongst its members
and the EU complying with the Pan-EUROMED Rules of Origin that allow for diagonal accumulation of origin
amongst its member countries and EU countries for sufficiently worked or processed products
The newly introduced concept of the Pan-Euro-Med accumulation system provided an untapped potential for
diagonal accumulation between the European and the Mediterranean partners. However, this system prerequisites
harmonization of rules of origin as per the Euro-Med rules, as well as signing a Free Trade Agreement between
concerned countries. The recent Agadir initiative falls under this umbrella thus enlarging the sourcing possibilities
between the four Agadir countries (Jordan, Egypt, Tunisia and Morocco) for accumulation of origin for exports to
the EU
Diagonal accumulation operates between more than two countries provided that they have signed Free Trade Agreements
containing identical rules of origin and a provision for accumulation between them. Diagonal accumulation is the
system operation in the Pan-European Zone. Similar to bilateral accumulation, only originating products or materials
can benefit from diagonal accumulation.
For the purposes of Article2 of the Pan – Euro-Med Accumulation regulations, “products which are not wholly
obtained shall be considered to be sufficiently worked or processed when the conditions set out in the list in Annex
II are fulfilled”.
“Non-originating materials which according to the conditions set out in the list in Annex II, shall not be used in the
manufacture of a product may nevertheless be used, provided that:
(a) their total value dose not exceed 10% of the ex-works price of the product;
(b) any of the percentages given in the list for the maximum value of non-originating materials are not exceeded
by virtue of this paragraph.
The Annex II lists stipulate for footwear, leather and leather goods the following:
HS heading
Description of Product
Working or processing, carried out on non-originating
materials, which confers originating status
(1)
(2)
(3)
Footwear, gaiters and the like;
parts of such articles; for
Manufacture from materials
of any heading, except from
assemblies of uppers sole
components of heading
6406
Ex Chapter
64
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Mahmoud Qattous and Terry McCallin
Final Report
6406
Parts of footwear (including
uppers whether or not attached
to soles others than outer
soles): removable insoles, heel
cushions and similar articles;
gaiters, leggings and similar
articles and parts thereof
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Manufacture from materials
of any heading, except that
of the product
According to the above table any footwear product gets the originating status in using any non-originating materials
in the manufacture of the product except assemblies of uppers and sole components. Accordingly any footwear
product or uppers manufactured in Tunisia, Morocco, Jordan or Egypt will get the origin status whatever the origin
of the leather or parts of footwear used for the manufacturing of the product except assemblies of uppers and sole
components. As there are no significant exporters of assemblies of uppers and sole components in Agadir countries,
the diagonal accumulation of origin will rarely? apply for footwear products and parts of footwear.
HS heading Description of Product
Working or processing, carried out on non-originating
materials, which confers originating status
(1)
(3)
(2)
(4)
Ex Chapter Raw hides and skins (other than Manufacture from materials of any
41
fur skins) and leather, except for heading, except that of the product
Ex 4102
Raw skins of sheep lambs,
without wool on
4104 to
4106
Tanned or crust hides and skins
Re tanning of tanned leather or
without wool or hair on, whether
Manufacture from materials of any
or not split, but not further
heading, except that of the product
prepared
4107,4112
and 4113
Leather further prepared after
tanning or crusting, including
Manufacture from materials of any
parchment-dressed leather,
heading , except headings 4104 to
without wool or hair on, whether
4113
or not split, other than leather of
heading 4114
Ex 4114
Patent leather and patent
laminated leather, metallised
leather
Mahmoud Qattous and Terry McCallin
Removal of wool from sheep or
lamb skins, with wool on
Manufacture from materials of
headings 4104 to 4106, 4107, 4112
or 4113, provided that their total
value does not exceed 50% of the
ex-works price of the product
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Final Report
According to the above table leather further prepared after tanning or crusting of headings 4107, 4112 and 4113
should not be manufactured from non-originating semi-finished leather to get the originating status. In reverse,
leather further prepared of headings 4107, 4112 and 4113 manufactured in Tunisia or Morocco from semi-Egyptian
finished leather will get the originating status through diagonal accumulation of origin. Accordingly, the promotion
of the Agadir agreement among tanning factories in Agadir countries will increase their sourcing from Egypt of wet
blue leather to be further processed and exported free of customs duties to the EU through diagonal accumulation of
origin
3.5.7. Success Stories
Currently, there are relatively few completed success stories. There are, however, a fair number of projects in their early
stages which hopefully will be a total success by the end of this study. Besides, there are a series of other important
events which can be considered success stories in that they contribute to strengthening the enabling environment for
intra-Agadir integration. Accordingly, success stories are divided into these two groups:
3.5.7.1 Success stories that help create an investment-friendly enabling environment for intraAgadir integration
● Sourcing raw leather from Jordan to Egypt under Agadir Agreement.
● Establishing a new tannery in Jordan with Arab investment ($7 million). ● The new trend by some producers in Agadir countries to develop new competitive products in demand in the
European market (safety footwear, medical comfort footwear, children's footwear), which is an example of
the ability of Agadir producers to practice niche marketing.
● Exporting stylish comfort children's footwear from Egypt to Jordan, with the possibility of expanding this
product in the Jordanian market- niche marketing.
● A strong tendency to build industrial cities specialized in leather industries in both Egypt and Morocco. The
first of which is expected to be up and running soon in Egypt.
● The success of a men's shoe factory in developing innovative high-quality products under its own brand
name, marketing them in its stores in Casablanca and Marrakech, as well as marketing them in franchises
operating in Brussels, Netherlands and the Ivory Coast.
● The possibility of establishing a shoe lasts factory in Egypt with foreign investment, noting that there are
currently factories in Egypt, Tunisia and Morocco, but are insufficient in terms of type and volume of
production.
● A Tunisian leather products factory is interested in sourcing hides and skins from Egypt.
● Starting Tunisian-Jordanian talks to market men's and women's footwear in Jordan.
● The success of a footwear manufacturer in developing products of its own designs and opening stores under
its name in Tunisia and Kuwait.
3.5.7.2 Success stories and ongoing (preliminary) projects
● Submitting a formal request to the National Center for Leather and Shoes (CNCC) in Tunisia to help
Jordan Footwear and Leather Industries Association in establishing a similar center in Jordan and providing
counseling to promote the leather and footwear sector in Jordan, especially in the areas of training and
design.
● Starting talks to establish a shoe factory in Egypt with the participation of Tunisia, Jordan and Egypt. It is
planned that the factory starts selling its products in Egyptian and Jordanian markets, then expands later to
export outside Agadir countries.
● The possibility to supply Tunisia and Jordan with sole and insole boards, which are currently manufactured
in Egypt- samples were exchanged during the field survey.
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● A sample of Egyptian leather used to manufacture safety shoes was delivered to a Jordanian factory.
● An Egyptian men's shoe factory is interested in acquiring heels, soles and insoles from Tunisia- Negociation
has started between the manufacturers. ● An Egyptian men's shoe factory is interested in cooperating with a Moroccan factory which produces highquality Good Year welted men's dress shoes.
4.Conclusions
4.1.
SWOT ANALYSIS SUMMURY
Egypt
Jordan
Morocco
Tunisia
4139
137
1500
450
92826
8692
25509
28247
Leather import
10531
624
106204
285545
L Prod export
5297
3220
61685
94,346
L Prod import
65176
17861
40167
27,222
Footwear export
21069
4225
348641
608039
Number of
enterprises (1)
Leather export
Footwear import
126968
41876
95312
141,624
Trade balance
-83483
-44224
253328.5
276241
Labor
55095
1800
15000
40000
Productivity
5
NA
5.9
10.6
Wage/hour
1.1
2.7
1.67
1.39
KW/Hour
0.048
0.06
0.13
0.1
Proximity to Gulf
countries
Importance of niche
market oriented
production
Flexibility and short
term delivery
Flexibility and short
term delivery
24th footwear supplier
of the World
30th footwear supplier of
the World
Importance of the local market
Export of high quality
footwear produced in
low quantities adapting
to the fast changing of
fashion
Export of high quality
footwear produced in
low quantities adapting
to the fast changing of
fashion
Availability of raw
skin and leather
Availability of raw skin
and leather
Possible benefits from
Egyptian wet blue
leather to achieve
accumulation of origins
at export to the EU
Possible benefits from
Egyptian wet blue
leather to achieve
accumulation of origins
at export to the EU
To shift from a local
market oriented
production to an
export oriented one
To face dumping practices
coming from imports
Availability of quality
leather and accessories
Availability of quality
leather and accessories
Subcontracting
Subcontracting
Subcontracting
Subcontracting
Design and
marketing
Design and marketing
Design and marketing
Design and marketing
Vocational training
Vocational training
Achieving high quality
Achieving high quality
Production costs
Main advantages
Challenges
Competitive
towards China
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Specializations
Final Report
Productivity
Productivity similar than
that of Italy
Achieving high
Productivity similar
than that of Italy
Achieving high
Productivity similar than
that of Italy
Wet blue leather
Raw hides
leather footwear
leather footwear
Footwear for Agadir
local market
Safety and medical shoes
Leather bags
Leather bags
(1) Companies employing more than 10 workers in Morocco and Tunisia
(2) Imports and Exports and Trade Balance are in thousands of USD, year 2008
(3) Statistics Source are ITC trade Map for Egypt, Tunisia, and Jordan and Moroccan Office des changes for
Morocco
4.2.
Draft Findings (Recommendations):
v The EU27 market is the biggest in the world. It is difficult to penetrate but not impossible. As mentioned
above opportunities now are better than they have been for some time notwithstanding the current financial
crisis which may play reasonably well for Agadir countries.One of the fall outs of the crisis is to manage
the supply chain more efficiently. The current climate of short lead times and small orders means that the
closer the resource to the market which has a flexible production unit is a recipe for success. China, Vietnam,
Indonesia, India are a long way away. Agadir Countries have an inbuilt advantage in this respect.
v According, to the international market analysis, the targets for Agadir countries are Germany, France, Italy,
UK, Belgium, Spain and Netherlands, for the following main reasons:
▪ Agadir exports to EU countries are free of customs duties ▪ Germany, France, Italy, UK, Belgium, Spain and Netherlands are responsible of 34 % of the Global
demand.
▪ Their demand is higher than that of USA (23%)
▪ Their demand is very active with a yearly increase from 8 to 20 %
v In some of the EU15 countries (UK, France, Benelux, Spain, Portugal, Greece), the footwear market is
polarising into lower quality/price and higher quality/price sectors, whereas in the new EU member states
(Czech Republic, Poland, Hungary) a mid-range quality/price sector seems to be developing
v At same time the EU footwear market in the near future will be influenced by the demand for healthy and
comfortable footwear, especially for the growing number of older people, because of the ageing population.
v There will be a continued shift from formal to casual footwear, especially in the EU15 countries. The demand
for formal footwear in the new EU member states with a rising middle class and more women at work will
also increase.
v The past few years has seen the continuing growth of discount footwear retailers, but to some extent, especially
in the younger more fashionable market segment this has resulted in the wider availability of footwear in
other types of outlets, particularly clothing retailers.
v Opportunities for exporters from Agadir countries:
▪ Opportunities exist in the premium part of the market, particularly in the supply of good quality leather
footwear in small series to differentiate Agadir supply from that of Vietnam and China who are very
competitive in the mass consumer segment. Here it is important to demonstrate design capabilities and
sensitivity to the fashion demands of the EU market place.
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▪
There is still a demand for fashion footwear continues to grow, but design capabilities and sensitivity to
the changing fashion needs of the market is required to be able to show a point of difference especially
▪
The enlarged EU market will not provide in the short more opportunities to Agadir countries. Eastern
EU markets are less driven by fashion. It is difficult to export to Eastern EU countries as their imports
are limited and still big footwear producers and not yet interested in delocalisation
As the EU footwear industry looks for ways to cut its costs, there will be opportunities created by
forming working partnerships. The best form of partnership is likely to be with an EU company with a
similar outlook to Agadir's entrepreneurs' and one that operates in a niche market, e.g. children’ footwear,
sandals, health footwear, outsized shoes and orthopaedic footwear.
▪
4.3.
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
in the rapidly growing grey market.
Cooperation Possibilities:
v Tunisia and Morocco could benefit from the Agadir Agreement and the Arab Free trade Agreement to
effectively source their leather from Egypt. Saudi Arabia and Syria.
v By the accumulation of the rules of origin in order to increase exports towards Europe (bilateral accumulation
of the rules of origin) - Tunisia and Morocco imports of the semi-finished leather are very high. The promotion
of the Agadir agreement among tanning factories in Agadir countries will increase their sourcing from Egypt
of wet blue leather to be further processed and exported free of taxes to the EU through diagonal cumulation
of origin.
v Tunisia, Morocco and Jordan can outsource the sheets for Soles and Insoles from Egypt.
v Egypt can outsource leather unit soles Shoes and Insoles from Tunisia and finished shoes from Morocco.
v Jordan and Egypt could attract more Pan Agadir Direct Investments (PADI) due to proximity to Iraq and
other Gulf states.
v The Agadir 4 countries have around 130 million people which mean a powerful market of about 300 million
pairs of shoes annually from different quality and price levels. Currently, none of the 4 countries is self
dependent on meeting its market needs. The cooperation could take different forms from trade to industrial
cooperation (subcontracting, assembling, joint – ventures, training on manufacturing and designs...).
v Improving the components industry in Egypt will benefit both Egypt and Agadir countries to lower cost of
imported components such as sheets, soles, insoles, adhesives, lasts, zippers…etc.
v Jordan and Egypt are already working on niche markets for footwear products such as safety shoes, health
and comfort shoes, and stylish and healthy children’s shoes. This is another area of cooperation between both
countries.
v Establish a shareholding company to distribute all Agadir leather and shoes products in the region, and
initially the EU. This company will be empowered to open franchises, set and outsource its designs and
fashions, give subcontracts to different suppliers from Agadir countries based on price and quality not quotas.
It is assumed to have a chief executive officer (CEO) outside from the owners who knows how to market
and promote its products effectively. The manufacturers may be shareholders but the management would be
independent.
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4.4.
Final Report
Agadir Strategic Plan:
Before setting the strategic objectives and recommendations which will be presented in the second report
(Strategy and Work Plan), it is possible to draw broad lines of the possible cooperation development policies
between the 4 countries inside the Agadir zone. It is common to build decisions based on past analysis and
conclusions dealing respectively with the following:
- The situation and strengths and weaknesses of the four countries.
- Demand structure and market forecast.
- International competition.
There will be four levels of cooperation for the proposed strategy dealing with the following:
- Trade exchanges between <Agadir countries> – Intra trade
- Industrial and commercial investments
- «Competitive» cooperation
- Going international – Towards Globalization
1. Trade exchanges between Agadir countries – Intra Trade Development Programme
This will take into consideration all approved recommendations regarding the cooperation possibilities and
accumulation of rules of origin discussed earlier in this report.
2. Industrial and trade partnership:
This may take different forms in trade or industrial partnerships as discussed above in the findings and
recommendations. However the most predicted scenarios would be as follows:
Identification of opportunities to create new industrial projects in the Agadir member states individually or
collectively based on the analysis of the regional imports from the E.U of Leather and Shoes.
Identification of new industrial projects where integration and complementarities in the Leather and Shoes
sector in the Agadir countries is possible, and henceforth, promoting exports of these projects in the E.U
market.
This part of the strategy will provide some ideas regarding attracting more foreign direct investments (FDI)
and/or pan Agadir direct investments (PADI).
3. Technical Assistance Development Program - Technical Cooperation: professional, technological,
and informational, trains...;
The third subject of the Strategy is to develop the competitiveness of the Leather and Shoes sector in Agadir
zone This is aimed at focusing on comparative advantages and remedying weaknesses through common
actions with fixed objectives set by the group. This will offer the sector the best possible environment to face
the double challenge of international competition and the changing demand on local and global markets.
For the purpose of achieving this, the action plan must address the following priorities, as much as it is
politically possible, to add skills to generate added value:.
I- Human resources development
The Human Resources Development plan to be proposed aims, especially in the industrial field, at enabling
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the transition from sub contracting operations to co - contracting and the final producer. This requires
addressing the following issues:
- Ensuring the upgrading of skills of operators to a level where they can be productive enough to enter the
EU markets
- Training or improving the factory floor technicians and supervisors capacities
- Training or improving the designers capabilities
- Training in achieving higher levels of financial management
The companies’ marketing capabilities in the four countries turned out to be very weak in general and the
need for modern skills is urgently required. This will require great efforts to employ and train, marketing and
export managers.
In order to encourage training efforts, the action plan will propose the following;
- Link the high training institutions in the four countries so as to open the door of permanent dialogue about
educational programs or curriculum
- Organize events and study tours among the Agadir countries on training of trainers
- Give recommendations to current reform programs of the vocational training projects in some of the 4
countries based on successful results in the other countries.
- Establish Agadir Footwear Institute for Middle and Senior management training
II- DESIGN RESEARCH & DEVELOPMENT
Mastering of new information and communication technologies is a strategic issue for the Leather and Shoes
sector in the four countries. These techniques are very necessary for improving international competition of
the sector. Innovation, having a visionary management, industrial organization, logistics, communications
CAD/CAM managing product life cycle, enterprise resource planning, computer assisted production
management systems, agent relations management, are subjects that need to be mastered.
PLEASE ADD SOME INPUTS REGARDING DESIGN
DESIGN
The leather products industry tends to be driven by design and innovation. The centre for this is undoubtedly
in Italy. It is necessary therefore for the Agadir countries to have access to this information in real time.
Linkages have to be established with fashion and design centers in Italy on a pan Agadir basis through the
various chambers. This will give the manufacturing companies a competitive advantage and present to their
clients a key customer value.
In addition, recommendations will be submitted to improve the quality and innovation of the production in
the Agadir zone. This includes improving R&D activities while relying on the technical centers in the region
to establish cooperation and collaboration and create economies of scale as well as sensitizing to initiate
stronger partnership with European labs, technical centers, engineering schools and universities.
III CREATION OF A DATA BASE ON EXPORT AND SOURCING OPPORTUNITIES:
4. Export Development Program - Encouraging a common export plan
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The objectives of the Program are:
■ To consolidate the positions in traditional markets and to reach out to new markets, in order to stabilize first
the current market share of the four countries and then to increase it significantly. This export plan entails
market research, communication, export promotion policy and organisation.
■ To search for opportunities to establish industrial and commercial associations within the Agadir agreement
in the Leather and Shoes industry in order to promote export and competition.
■ To reach new markets inside proposed EU targets (UK, Portugal, Belgium and Holland) and outside Europe,
such as Gulf states, and other MENA countries.
For each country of Agadir, export is considered the main driver for growth. This is for many reasons Among
them, preferential agreements, the existence of raw materials, geographic proximity, the implementation of a
complementary development environment and the cost factors. The proposed program will take consideration
of specific needs and differences of the four countries; examples are:
- The privilege front position of Morocco and Tunisia in the EU market
- The exclusive front position of Jordan in the Iraqi and Gulf States markets
- The quasi front position of Egypt in the MENA markets.
Accordingly the export development action plan will:
● Conduct a feasibility study for possible FDI or JV for the establishment of a new business producing soles/
moulds/lasts/adhesives. All items that are weak points in the supply chain of the leather products industry in
all four countries.
● Establish a data base of experts, resources and common contacts for all companies in the region.
● Conduct a fitting survey: In order to give Agadir countries a competitive advantage in the regional markets of
over 300 million people conduct a last survey to design a properly fitting last for the footwear consumers. This
series of lasts would then be superior to anything from China or from Europe leading to a more acceptable
and marketable product.
● Improve international transportation among Agadir countries: In order for intra Agadir trade to develop
seamlessly transportation links have to be improved.
● Participation in International Fairs
As a necessary extension to global marketing efforts Agadir companies must attend European international fairs to
gain exposure, experience and eventually secure orders. In order to be effective attendance at selected fairs has to be
over a minimum of 3 years (twice per year). A more effective approach is over 5 years.
By their very nature attendance at overseas fairs is an expensive operation for any company let alone one that is
just starting on the international market. In fact the only way for this form (of effective) marketing to proceed is by
support from Government and Trade agencies. The Agadir Countries have this support from their own individual
countries. However a more integrated approach would be more effective in combining resources to have an Agadir
Group presence at selected shows.
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Attendance at a show should not be a “turn up and show” basis. Market research should be done before participating
in the selected show. If not already done, the show should be visited before showing to get a feel for it. There should
be a plan with clear implementable objectives for attendance and a clear plan for follow up after the show. Obviously
a budget should be allocated.
Of the international shows that are available to the Agadir Countries the following have merit.
Expo Riva Schuh, Riva del Garda, Italy, January and June each year.
Shoes and some complementary bags
Meet in Africa Cairo, Egypt, February
All leather products
Linea Pelle + Simac Tanning Tech, Bologna Italy, April, October
International Exhibition Of leathers, accessories, components and synthetic products and models for footwear, leather
goods, leatherwear and furnishing.
In October the show is joined with Simac an international exhibition of machines and technologies for footwear,
leather goods and tanning industry.
GDS Dusseldorf, Germany September
Biggest international shoe show in the world
MIPEL Milan Italy May and September
International Showcase for leather goods. Twice a year, in a prestigious setting - the city of Milan, one of the fashion
capitals in the world - the best creations in leather , fabric and alternative materials, for all seasons of the year, are
presented. The aim is to highlight and promote the image of leather goods produced all around the world and, in
particular, Italian-made goods. The exhibitors meet their most important counterparts, dealers and the media, and can
also take part in special events, conferences and round tables in a pleasant, elegant environment.
MICAM Milan, Italy May September
International footwear fair
MIDEC Paris, France, April September
International footwear fair
Salon de la maroquinerie. Paris France February,September
International leather goods fair
The following show should be visited if possible for market research purposes (not for exhibiting) APLF Hong Kong April
Fashion Access - Handbags, Travelware, Footwear, Leather Garments and Fashion Accessories is a comprehensive
event that covers a wide range of lifestyle fashion.
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AGADIR TRADE FAIRS
Morocco, Tunisia and Egypt all have their own leather fairs with an international focus. Under the spirit of the Agadir
Agreement in order for the fairs to be more effective in the international market, particularly Europe, they should be
subsumed into one larger unit under the Agadir umbrella.
This new Agadir Fair should then alternate year on year in the four countries.
5.DEVELOPMENT OF STRATEGY
5.1.
Introduction
The study has highlighted the challenges facing the sector in the quest to uplift the performance of the industry in
the 4 countries so that it will be prepared for the business environment that will exist going forward. The strategy
therefore has to address the need to achieve the stated goals of the study so that the industry will be in a strong
position to react to world competition. These goals are:
●
●
●
●
Increase exports to Europe
Enhance regional trade
Industry co-operation and integration in the 4 countries
Attract Foreign Direct Investment
Strategy and its subsequent action plan therefore need to be articulated for the above goals. The strategic plan suggests
a way forward that the Agadir group should be taking. It gives the direction but cannot foretell exactly how the
current business environment will evolve in the future. The commercial environment at the moment is unprecedented
in modern times.
The analyses presented in the first phase report reviewed:
● The EU demand structure, the global competitive situation and the position of Agadir countries in this
regard.
● The situation, performances, strengths and weaknesses and challenges of the leather and shoes sector in each
of the four countries signatories of the Agadir Agreement;
This analysis showed that trade exchanges for Leather and Shoes and cross-investments between the four countries
are very weak and below the aspirations of the Governments of the four countries. Although complementarities
accumulating strengths, competencies, and resources of the four countries are very promising of improved global
competitiveness of the zone vis-à-vis international competition. Sector’s entrepreneurs are not fully informed on
Leather and Shoes market and manufacturing capacities in the zone neither aware on cooperation opportunities
offered by the implementation of the Agadir
Agreement.
This analysis showed also, competitive advantages of Agadir zones as well as challenges. These are summarized
below:
Tunisia and Morocco have the following competitive advantages:
● Are a well established exporters of footwear, leather goods and some semi finished leather to the EU
● Have a marketing advantage which should be exploited in the future for product development.
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● They gain the fashion knowledge from their EU partners. This coupled with flexible production units and
their proximity to Europe gives them an advantage over Viet Nam, India, and China
● Endowed with a business environment conducive to export development
● Have invested in training and research institutes for their industry
● Ample supply of qualified labor
Egypt has the following competitive advantages:
● An ample supply of leather to support the manufacturing industry in the country and potentially the region
enabling flexible production environment
● Egypt surplus of wet blue and crust leather could be imported by Tunisian and Moroccan tanneries within
the preferential origin accumulation in order to increase their competitiveness and gain new market shares
for export.
● The potential to develop into a low cost producer if it concentrates on developing its manufacturing
expertise
● Ample supply of labor
Jordan has the following competitive advantages
● Smaller flexible shoe manufacturing units which have specialised in niche products.
● Has good trade links with countries of the region more so than the other members of the Agadir zone.
● Has a marketing advantage in that it can be a hub for distribution of products and sourcing of leather to and
from the region.
Agadir countries are facing the following challenges:
● Morocco and Tunisia are in danger of surrendering their competitive advantages because of the greater
demand in the future for finished leather to be available locally to cope with the new flexible production
environment.
● They need to develop their component supply industry and implement new shoe engineering techniques in
production and constructions, to reduce costs.
● There is a special need for shop floor supervisors in all four countries. This problem needs to be addressed
because India could easily catch up in training and research.
● There is a need to upgrade their tanning industry to continue their efforts in finishing their leather with high
quality.
● There is a need to upgrade export capabilities of domestic market oriented companies
● There is a need to widen their value chain in exporting finished products and enhancing their marketing and
design capabilities
● The need to improve the capabilities of the production process to include the option of automation.
5.2.
Formulating a Generic Strategy for the Group
From the SWOT analysis and the findings and conclusions, an analysis of the business environment can be done
which will point the way to deciding the critical elements of the strategic plan. The plan must be SMART i.e.:● Specific to the industry
● Measurable in the sense that tangible results can be quantified
● Achievable in the sense that the planned results are possible
● Relevant in the sense that they are recognised as meaningful by the
entrepreneurs of the industry
● Time specific - projecting ahead up to 3 – 5 years.
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Because of the current business climate the plan needs to be viewed dynamically and strategic innovation has to be
practiced to modify the plan, its objectives and actions as and when new issues occur in the operational area of the
Agadir Group.
Using the business analysis tool of STEEP, this analysis will revolve around:●
●
●
●
●
Social – cultural factors – human resources available in the 4 countries
Technology – the extent to which this is used, underused and updated
Economic environment – the state of the target Agadir markets
Ecological factors especially pertaining to the tannery sector.
Political / Legal or Regulatory assistance available to the industry in the
4 countries.
This will reveal the core competences of the Agadir industry showing the competitive advantages and the key industry
success factors as follows:
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From the Business Environment and Industrial Setting which was presented in phase 1 of the report for each country, the results of the
STEEP Analysis is shown below:
Social Environment
The following factors were identified that were likely to have an effect on companies of Agadir countries:
• Cultural values towards employment impact on the business, i.e., frequent absence resulting in high employee turnover and
absence of workers
• low appreciation of leather products by citizens of Agadir countries - poor leather culture
• Good male workers are hard to motivate for this type of work, whereas women tend to quit work after marriage
• Poor attitudes towards work. Workers appear to be less productive
• Inadequate specialized labour training
• Governments of Agadir countries have vocational training reform programs which will benefit all manufacturing sectors
Governments of Agadir countries should improve the current vocational training schemes and programs to develop a stronger business
culture to facilitate economic growth.
Technological Environment
The following factors weve identified as likely to have an effect on the business:
• New equipment is available on the international market for the production of medium high quality leather products and
components.
• Some incentive schemes are available for the purchase of new capital equipment. Most of these schemes focus on capital
extensive investments and locally produced machinery.
• Trend to establish specialised Leather Cities.
• Short – short manufacturing is a necessity by all EU sub or co-contractors
• Excess production capacity
• Small flexible factories
• Quality levels achieved
• Reasonable productivity
• Need to improve finished leather
• Sufficient supply of leather and components. However, quality of locally produced components needs to be improved.
Business owners in the 4 countries should recognize the importance of technological improvements to their production process, and in
particular in relation to modern technology and manufacturing techniques. Also, improvement of artisan production techniques is needed.
They should gear themselves to technological challenges of their businesses.
Economic Environment
The following factors were identified as likely to have an effect on the business:
• Economic slowdown and Global financial crises
• The free trade agreement between the 4 countries and the EU provides good potential to improve the industry in the 4 countries
• High investment costs
• With the current financial crises, access to finance will be harder
• Nearly Stable local currency in the 4 countries
• Levels of disposable income were shrinking as more people were losing jobs.
Business owners need continuously to review the economic environment to strategize on any new purchases to be made at the right time.
Their current target market (EU) is adversely affected by the current financial crisis which provides opportunity to Agadir countries over
other competitors if can meet new trends in technology and manufacturing techniques.
Ecological Environment
The following factors were identified as likely to have an effect on the businesses:
• The REACH programme will be implemented soon or later which might affect the tanning industry
• Employee safety and occupational health is priority to EU
• Recyclable packaging is also a priority for the EU
• Voluntary “eco label” for leather products sold in EU
• Governments of Agadir countries are imposing more environment control measures specially on tanning industry.
Business owners need to follow changes in EU and Government regulations to preserve the environment for long–term sustainability of
the industry. This will enhance the image of their products in the EU market.
Political/Legal Environment
The following factors were identified as likely to have an effect on the business:
• Relative political stability
• Respect and protection of individuals’ property rights under the constitution.
• Changes in tax laws, which make submission of tax returns a cumbersome exercise.
• Rival producers need to instigate legal action over content labelling details
• Anti-dumping measures against Chinese products should be considered by the 4 countries as a unity
• Strong enabling environment via Governments’ and associations’ support
Business Owners need to benefit from the current enabling environment and Governmental support to capitalize on their current market
shares and expand it.
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A distillation of the foregoing analysis produces the following business environment and structure of the Agadir
Group:
However, what is still missing now is the overall strategic direction of the businesses in Agadir Zone to achieve the
study stated growth goals. The overall strategic direction is the broad overarching approach the business adopts in
order to build on its distinctive competencies / strategic advantages, so as to make those into sustainable competitive
advantages. Hence, there is a need for an overall strategy that gives the strategic thrust for successful competition,
increase in market share and business growth.
Essentially, Companies working in Agadir Zone have two basic choices. The first relates to the product. In relation to
the product, a company can decide to offer a standard product or a product that is different to what competitors offer,
that is, a differentiated product. The second choice relates to the market. A company can decide to offer a product to
the entire market or to a segment of the market, i.e., a particular customer group. If one combines these two options
that gives the following four generic strategies:
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A low cost strategy an enterprise adopts to achieve the low(est) cost in production by striving to be an overall lowcost provider of a product / service that appeals to a broad range of customers.
Businesses should realize that the strategic target is low cost relative to competitors, not absolute low cost.
A differentiation strategy: an enterprise offers a product that is different or perceived to be different by the customer
from a standard product available on the market. It implies adding value to the product. It seeks to differentiate the
company’s product offering from rivals in ways that will appeal to a broad range of buyers. These become attractive
when buyers’ needs and preferences are too diverse to be fully satisfied by a standard product.
Focused or market niche strategy based on lower cost: an enterprise adopts to offer products to a narrow buyer
segment and out-competing rivals on the basis of lower cost.
Focused or market niche strategy based on differentiation: an entrepreneur adapts to offering niche members a
product customized to their tastes and requirements.
Stuck in the middle!
The above four strategies indicate that one would have to choose one of them. Many companies have tried to
combine some of the above strategies. Porter called this being ‘stuck in the middle’. The logic behind following
one generic strategy is that a strategy aimed at achieving cost leadership precludes the capital investment required
for a differentiation strategy. Porter argues that the middle of the road is not possible and leads to below-average
performance. There is, however, evidence to suggest that firms combining a low cost and differentiation strategy can
be successful. Honda, for example, operated on a low cost (and low price) strategy for substantial time, but gradually
differentiated its products successfully. Volvo operated for a long time on the basis of a differentiation strategy (high
quality specific features at a premium price), but gradually introduced a low cost strategy with more straightforward
cars produced at low cost.
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Nevertheless, being clear about one’s generic strategy is important as it provides the basis for the way a business
positions itself in the market.
The Strategy
The Agadir cooperation strategy for the leather and footwear sector is to promote regional integration that sum the
competitive advantages of each of the four countries signatories of the Agadir Agreement to meet sector’s challenges
of competitiveness towards low cost Asian countries and responsiveness to the new globalization requirements.
The cooperation strategy is also to market the Agadir zone as a zone of excellence for EU footwear sourcing and FDI
location.
Therefore, it is highly recommended that Agadir countries need to follow a Differentiation Strategy and encourage
their companies to develop niche products.
The action plan therefore revolves around three major aspects of strategy:● Production
● Marketing
● Investment
6.ACTION PLAN
6.1. Aspect 1 - Production
In practical terms the Agadir Group companies should take the opportunity under this project to organise themselves
so that they are in a position to be able to manufacture the various products required for interAgadir Trade to a level
of efficiency, quality and competitiveness that satisfies the B2B and consumer markets in the various countries.
Establishing themselves in the pan Agadir market will also strengthen the offer the companies can make to the EU
markets.
6.1.1.Leather
i. Integration and Supply Opportunities
Egypt is the power house in the Agadir region for the production of leather. It has the largest production capacity of
the 4 countries. However most of the leather produced by the Egyptian tanning sub sector is semi finished (either wet
blue or crust with some pickled skins). Recently however there has been a marked swing to going to the next stage
and producing finished leather.
Tunisia and Morocco have traditionally relied on imports of finished leather from European sub contracting partners
to convert into leather products. Presently tanneries in Tunisia and Morocco are being encouraged by Government
to produce good quality finished leather for export or local production rather than concentrating on semi finished
products. This is a good strategy and will help the leather goods manufacturing sub sectors to improve their efficiency
of supply by having a local supplier of finished leather rather than relying on imports. Taking into account the
availability of quality semi-finished leather in Egypt the intra-trade development should focus on developing a
process of vertical integration which strengthens the supply chain which can then react efficiently to the new short
short supply requirements.
Jordan is a small player in leather manufacture with 1 tannery in operation which can produce leather through to
finished.
The opportunity for intra Agadir trade therefore lies with the production of finished leather. The development of
finished leather needs to be accelerated as much as possible and trade will help satisfy this objective. The ability to
manufacture finished leather to satisfy market needs is a key performance indicator for the development of the Agadir
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tanning industry. It will also go a long way in import substitution in the sub or co contracting sphere giving increases
in volume to the industry which is currently operating below capacity.
The first phase analysis established that finished leather made in Tunisia or Morocco from Egyptian semi processed
leather will get the originating status through diagonal accumulation of origin. Thus, the promotion of the Agadir
agreement among tanning factories in Agadir countries will increase their sourcing from Egypt of wet blue leather
to be further processed into finished. (This could also be exported free of customs duties to the EU through diagonal
accumulation of origin.) Taking into account the high availability of leather in Egypt, this diagonal accumulation
would impact substantially in the development of the intra-trade among Agadir countries.
In order to achieve integration and find supply opportunities the following actions should be carried out:
Action
Responsibility
Resources
Meeting of Tanners Associations to decide
areas of co-operation, integration and
supply requirements
Tanners Associations
Export Promotion Agencies in 4 countries
Market research to determine types of
finished leather required in each country
especially for import substitution.
Fact finding tour by potential exporters
Tanners associations
Export Promotion Agencies
The Tanners
Decide what types that can be produced
with current technology by evaluation of
current manufacturing plants
The Tanners
Decide which types in demand that
cannot be produced but could be with new technology by evaluation of current
manufacturing plant
The Tanners
Decide on most appropriate market
segments (which type of leather to be used
in each subsector of the leather and shoes
sector) :
Cow Shoes
Sheep
PLG
Goat
Garment
The Tanners
Country associations, in co-operation with Export Promotion Agencies to plan, cofinance with individual companies, and
organize a study tour for each of the four
countries to the others.
Companies to be pre-selected as to
suitability and commitment
Contact machinery manufacturers
Contact chemical suppliers
Contact machinery manufacturers
Contact chemical suppliers
Company management in house strategic
thinking
ii. Cost Competitiveness
The trend in the tanning industry in the Agadir Countries to develop the capability to produce finished leather needs
to be managed carefully to maintain its position as a competitive manufacturer. The industry has achieved this in the
field of semi processed leather. Egypt particularly starts from a low overhead base which will help in competitiveness
in finished leather. It also has good access to water, which is a major problem in Jordan.
The competitiveness of the industry revolves around the normal management concerns of overheads and labour rates
and in the case of leather, the basic raw material (raw hides and skins). There is also a significant cost in chemicals,
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most of which are imported.
Purchasing raw hides and skins locally is obviously preferable to importation. It has been inferred by the industry
that the collection of raw hides and skins is not as efficient as it might be and that there is a wastage factor in all
countries.
The physical structure of tanneries in the zone varies from country to country. Egypt has difficult operating conditions
in Old Cairo, Tunisia has modern structures, Morocco has a combination of both and Jordan’s one operating tannery
is relatively modern. The proposed moves to “Tanning Cities” by the Governments of Egypt and Morocco will help
in this problem by reducing costs. It will also encourage the tanners to invest in up to date machinery which will also
have an impact in reducing costs.
In order to maintain cost competitiveness, the following actions should be carried out:
Action
Responsibility
Each Country to commission a study on hides
and skins collection with an emphasis on
reducing waste
Tanners Associations
Create an international data base on sourcing,
suppliers, and prices of the major chemicals
required in tanning
Tanners Associations
Take advantage of the new leather cities as
an opportunity to re-organise production
processes to reduce costs
The Tanning Companies
Hold an Agadir Group seminar on the latest
tanning techniques with a view to reducing
costs
Tanners Associations
The Tanning Companies
Resources
Central Government support
ATU support
Central Government support
ATU support
Business development agencies offering
preferential inducements for capital
investment
Invitations to international chemical and
machinery companies to attend the seminar
iii. Quality Improvement
The quality of leather depends to a large extent on the quality of the hides and skins collected. At this primary source
there needs to be controlled slaughtering and flaying techniques to avoid defects which could then be transferred
into finished leather. Also raw hides and skins have to be stabilized as soon as possible after slaughter preferably
by wet salting. The control and improvement in this sub sector will have a major positive impact on down stream
operations.
The quality of finished leather is commonly classified by grades from I (the top) to V (the lowest) and prices reflect
this. A key performance indicator here would be to have this system implemented in the Agadir zone. It would
produce transparence in trade which in the short to medium term would benefit all players.
In order to improve quality, the following actions should be carried out:
Action
Responsibility
In conjunction with the study above further work
should study slaughtering and preservation techniques
with the object of upgrading the raw material.
Tanners Associations
Introduce an Agadir wide classification system for
finished leather
Tanners Associations
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In conjunction with the Agadir group seminar above
further work should study the latest finishing techniques
iv.
Tanners Associations
The Tanning Companies
Government support agencies and
Tanners
Productivity Improvement
The tanning industry is relatively labour intensive. One important measure of productivity is the number of pieces
processed per month with a given number direct labour; pieces per man per month. In the global market place tanners
need to keep this ratio as high as possible. It is difficult to get accurate figures as to what is the actual performance in
the Agadir tanning industry due to the present difficult operating conditions. Empirical evidence obtained from visits
to tanneries suggests that productivity is near the following
Tannery
Pieces per Man per Month
A
40
B
99
C
119
D
229
E
280
F
800
*Robiki
1000
* This is the new leather city being established outside Cairo. The executive plan is calling for the above productivity
level. The key performance indicator for tanning productivity would be to get within 90% of this figure. The impact
of increasing productivity to this level would be huge by reducing costs and possibly prices enormously.
Agadir tanners need to develop a productivity improvement scheme to ensure they are performing as well as if not
better than the rest of the world.
In order to improve productivity, the following actions should be carried out:
Action
Responsibility
Resources
Feasibility studies on man versus machine for
productivity gains
The Tanning Companies
In house management
Benchmarking productivity best practices in Spain,
Italy, India and Turkey
The Tanning Companies
Government support agencies and
Tanning companies
Implement a productivity improvement drive
The Tanning Companies
Government support agencies and
Tanning companies
v. Training
Tanning is essentially a chemical process. Therefore there is a continuous need for technical personnel to be kept
abreast of the latest developments in the chemistry.
Shop floor supervisors need to be aware of the latest techniques developed in manufacturing. Laboratory personnel
also have to be aware of new chemicals and how they should be used. Research and development personnel are
critical in using their knowledge to develop new manufacturing techniques, new products and improvements to
existing products, in order to give the company a competitive advantage.
Enhancement of the knowledge of these people is not a luxury but is essential for the well being and success of the
companies.
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
However, the 4 countries are encouraged first to benefit from any experiences found in any country. Morocco and
Tunisia were the beginners to establish specialized training centers for Tanning and Footwear manufacturing.
In order to implement training, the following actions should be carried out:
Action
Assist any country from Agadir Zone who is interested
to establish specialized training center in the Leather
and shoes industry.
Shop floor supervisors, laboratory technicians and
research and development personnel should attend the
proposed seminar above
Selected and appropriate personnel to attend the
Linea Pelle leather show in Italy to study the latest
developments on display.
Develop up to date specialized training program in the
tanning industry benefiting from what will be presented
by the international chemical and machinery companies
during the seminar and the leather show above
Responsibility
Resources
Individual Leather and
shoes associations
Government support agencies
Any country form the 4 countries
who have advanced experience in
this field
The Tanning Companies
Government support agencies
ATU
The Tanning Companies
Individual country development
agencies
ATU
Tanning associations and
Tanning companies of the
4 countries
Government support agencies
ATU
6.1.2. Footwear
i. Integration and Supply Opportunities
As has been shown in the body of the report the level of trade in footwear leather products and leather sub sectors
is relatively minor. An intra-trade development plan is needed targeting to reach an intra-Agadir minimum trade
value of 50 million euros in 2011. This target is reachable due especially to the leather availability in Egypt and the
interesting export potentialities of footwear in each of the four countries.
Taking into account the availability of quality semi-finished leather in Egypt the intra-trade development should
focus on developing a process of vertical integration allowing reinforcing the performances of the supply chain for
an optimized response to the short circuit short requirements.
The first phase report identified the potentialities of footwear in each of the four countries that could build on a
industrial and trade partnership.
These potentialities are:
● Established Agadir exporters mostly from Tunisia and Morocco have demonstrated an increasing
capability to respond to the short circuit short requirements in shifting the production process from
mass production to small series and exporting high quality products that can satisfy the requirements
of the high revenue consumers’ segment of the Agadir zone.
● Egypt, thanks to low production costs, has demonstrated its competitiveness in Agadir local market
to replace increased Agadir footwear imports from China.
● Tunisia, Morocco and Jordan can outsource the sheets for Soles and Insoles from Egypt.
● Egypt can outsource leather unit soles from Tunisia and finished shoes from Morocco.
● Jordan could benefit from their its proximity to and existing distribution channel in Gulf countries
and Iraq to re-export footwear and leather products to these countries.
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There are many constructions and types of footwear in all the major segments available somewhere in the 4 countries.
This is one of their strengths. Niche markets offer good opportunities for those companies prepared to invest in them
in terms of product development. Among the most marketable products for niche markets are:
● Industrial / safety footwear
● Medical / orthopaedic shoes
● St. Crispin construction
● McKay stitched moccasins
● Ladies ballerinas
● Goodyear welted
● Mec val side wall stitch
A market research for each of the above mentioned project needs to be carried out by interested companies. This
research should concentrate on the marketing mix:
● The type of footwear to be sold
● Price points at factory, wholesale and retail level
● Distribution methods
● Promotion techniques
The market research is crucial for success in establishing inter Agadir country trade. Companies must work with their
export promotion agencies, their associations to plan a meaningful study tour. From the results of the market research
companies can plan a strategy with objectives, actions and an implementing budget.
A key performance indicator for this exercise will be the extent to which inter Agadir integration and supply will
replace imports especially from the Far East. This will have a major positive impact on the economies of the 4
countries. Targets should be set say by reducing imports by 15% in three years.
In order to achieve integration and find supply opportunities the following actions should be carried out:
Action
Responsibility
Export promotion agencies
Research the market in all four countries,
Fact finding tour by potential exporters
Country associations
Individual manufacturing
companies
Resources
Country associations, in co-operation
with export promotion agency to
plan and co- finance with individual
companies to organize a study tour for
each of the four countries to the others.
Companies to be pre-selected as to
suitability and commitment
Decide target market by country and
analyse results of tour
Companies with inputs from
Associations
Brain storming sessions with
Associations
Reasoned decision from experiences from
fact finding tour, decide type of product to
be manufactured
Companies
Using information obtained from study
tour
Set targets for import substitution
Associations
Companies
Government Ministries
Export promotion agencies
ii. Cost Competitiveness
The market’s current trend towards the development and rapid evolution of fashion products and the manufacturing
of small series, requires more capital to finance raw materials, the investment in technological equipment CAD/CAM
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and automatic cutting etc.
The investment in computer aided manufacturing and design will reduce costs as less labor will be needed to do any
given task.
Sourcing of basic raw materials from Egypt in the form of insoles and unit soles should also reduce costs by replacing
International imports.
Shoe production in the zone is quite competitive in cost. However this is no cause for complacency. Costs can be
reduced further by new production techniques which will impact positively on the industry. A key performance
indicator would be to get as close as possible, say 75 – 85%, of Far East costs in like for like products.
There is also a need to develop a trade facilitation program to improve port logistics and transport. This is an important
factor to encourage cooperation between member countries in the area of logistics to reduce shipping costs.
Hold an Agadir conference grouping Agadir supporting institutions to initiate and agree on a cooperation program
with related co-financing system
In order to maintain cost competitiveness, the following actions should be carried out:
Action
Responsibility
Resources
Study current production techniques with a
view to re- engineering them
Companies
Consider alternative labour and material
saving constructions
Companies
Visit SIMAC show in Italy for research on
latest machinery and equipment available
Associations
Companies
Research suppliers of raw materials and
components in Agadir countries with a view
to reduce import substitution and lower
costs
Export promotion agencies
Business development agencies
Associations
Associations
Companies
Association experts
Companies own management
Agadir Group meeting to formulate policy
on logistics and export finance for cost
competitiveness
Associations
Companies
In house management
Association experts
In house management
Association experts
ATU
Export Development Banks
Export promotion agencies
Business development agencies
iii. Quality Improvement
The manufacturers in the Agadir zone produce footwear according to their chosen market segments. The result is
they make shoes to a quality standard that is demanded by that particular segment. Generally the workmanship of the
finished product is at acceptable levels.
Quality levels are determined largely by the components used – types of leather, different soling materials (from PVC
to PU to built up leather) and ancillaries (insoles, counter, toepuff, lining etc).
In spite of the best efforts of the manufacturers there is a quality image problem that needs to be addressed.
It is strongly recommended to build and promote a strong image for the Agadir Footwear Sector focused on the
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idea that the sector has a positive competitiveness, an attractive resource of complementarities and a manufacturer
of quality products. This image will be built from the success stories and developed within a media plan integrating
especially a press information campaign inside and outside Agadir.
To support the above mentioned campaign and in order to give Agadir countries a competitive advantage in the
regional markets of over 300 million people it is needed to conduct a “last survey”. The objective is to design a
properly fitting last for the footwear consumers. This series of lasts would then be superior to anything from China or
from Europe leading to a higher quality and more marketable product.
Inside Agadir we could use the media in the four countries, the websites of Agadir supporting institutions, and the
suggested Agadir news letter and Agadir Portal. (See under marketing).
Outside we could use the services of Shoe Intelligence that is a (subscription based) regularly information bulletin on
the shoe industry in the EU (http://www.shoeintelligence.com)
Although an awareness campaign targeting the Agadir consumers, highlighting the quality of Agadir products
compared to Chinese products,and the virtue of leather and its availability in quantity and quality in the Agadir zone,
the awareness campaign should target equally the introduction of the culture of consuming leather among Agadir
consumers.
There should be a certification process as well as the enforcement an anti- counterfeiting regulations preventing any
breach of the country of origin quality certification.
In terms of quality enhancement success will be judged by the degree consumers buy local rather than the equivalent
imported product. This will be the key performance indicator. Local manufacturers should also eliminate the practice
of plagiarising international brands.
In order to improve quality, the following actions should be carried out:
Action
Responsibility
Resources
Media campaign
Associations
Companies
ATU
Export promotion agencies
Introducing the leather culture
Associations
Companies
ATU
Export promotion agencies
iv. Productivity Improvement
As was mentioned in the body of the report, productivity as measured by the number of pairs produced per operator
in 8 hours varies between the 4 countries. Tunisia has the highest productivity with 10.6 pairs, Morocco with 5.9 pairs
and Egypt with 5 pairs. Jordan figures were not available.
Industry best practice in a highly automated plant is between 26 and 28 pairs. The European average is 13.8 pairs.
A key performance indicator for the industry would be at least to get to the European average and then plan to go
beyond this.
Apart from the skill and diligence of operators, shop floor organisation in a shoe factory has an important part to play
in productivity enhancement. The following factors impact on productivity:
● Factory layout (rink systems etc)
● Attachments to machines (thread cutting, needle positioning etc)
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Automatic machines
Robots
Time and motion study
CAD
Constructions used.
The Agadir Group companies have a good opportunity to increase productivity as they start from a relatively low
base. Productivity gains are very much down to management to provide an environment where operators can improve
their performance.
It should be recognised that even small producers (500 pairs per day) can benefit from the investment in automated
machinery. The aim should be to embrace lean manufacturing practices.
In order to improve productivity, the following actions should be carried out:
Action
Responsibility
Resources
Critically assess current manufacturing
practices
Company Management
Experts from Associations
In house experts
ATU international experts
Re-design and re-engineer operational areas
Company Management
Experts from Associations
In house experts
ATU international experts
Conduct feasibility study into automated
and semi automated machinery and
equipment
Company Management
Experts from Associations
In house experts
ATU international experts
Attend the SIMAC international footwear
and leather goods machinery show
Associations
Management
ATU
Business development agencies
Associations
Analyse and consider new, less labour
intensive constructions
Company Management
In house
Set productivity targets
Company Management
In house
v. Training
Tunisia and Morocco have invested in training and research institutes and Egypt and Jordan are developing theirs.
Training schemes need to be brought into line with the needs of a modern industry which has changed in recent years.
(Short – short, lean manufacturing).
Training should be aimed primarily at closing room operators (stitchers) and shop floor supervisors. In a shoe
manufacturing environment these are the critical people.
Sewing machine operators can have a big impact, if trained and organised well, on productivity and cost reduction.
They should be able to operate the machines at optimum speeds – up to 2,000 stitches per minute. This is a key
performance indicator.
Another key performance indicator in training is the retention of labour i.e. low turnover, especially at the operator
level.
Shop floor supervisors need professional training (not just promoting the best operators). To be effective they must
understand:
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Loading of operators
Cost control
Time and motion study
Shoe engineering and technology
Pattern cutters need to be trained on pantograph and CAD systems.
There is also a need for management to be trained in the aspects of marketing and selling techniques.
In order to implement training, the following actions should be carried out:
Action
Responsibility
Resources
Review training courses available from institutions
for relevance and quality needs of the modern
industry
Ministries
Associations
The institutions
Corresponding training institutes
in Europe
Adjust where necessary
Assess the quality of instructors
Ministries
Associations
Ministries
Associations
The institutions
The institutions
Benchmark the attainment levels of trainees to
European levels
Ministries
Associations
The institutions
Corresponding training institutes
in Europe
Hold seminars on marketing and selling for
management
Associations
ATU
International consultancies
6.1.3.Personal Leather Goods
i. Integration and Supply Opportunities
Personal leather goods are a bit more difficult to trade in between the Agadir countries. These products tend to be
viewed more of a “luxury” item rather than a necessity (like a pair of shoes). Items made in the 4 countries tend to
be of medium- high to high quality. The target markets for the products manufactured therefore will reflect those
consumers in the higher income brackets. There are limited opportunities for integration and supply opportunities in
the intra Agadir market. There is little that can be added in value to the current product lines which give them a key
customer value in the markets of the four countries which are not already satisfied by local manufacturers.
In order to verify the above assumptions market research needs to be carried out in a similar way to footwear as well
as the activities to be carried out for the achievement of the market research and its implementation by companies.
In order to achieve integration and find supply opportunities the following actions should be carried out:
Action
Responsibility
Export promotion agencies
Research the market in all four countries,
Fact finding tour by potential exporters
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Country associations
Individual manufacturing
companies
Resources
Country associations, in co-operation with
export promotion agency to plan and cofinance with individual companies to organize
a study tour for each of the four countries to the
others.
Companies to be pre-selected as to suitability
and commitment
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ii.
Cost Competitiveness
The two main factors that impact competitiveness in manufacturing personal leather goods are direct labour costs
and price and utilisation of leather.
Minimum labour rates are set by Government and vary from country to country in the zone. Companies pay what
they need to attract and retain skilled staff. Labour rates paid by zone companies are as follows (2007):
Country
Egypt
Jordan
Tunisia
Morocco
U.S.$ per Hour U.S.$ per Month
0.55 - 2.20
100 - 400
2.00 - 2.89
210 - 520
1.39
250
1.67
300
These rates are competitive on their own and provides a good base for manufacturing companies to control costs
The quality of leather required for PLG tends to be relatively high due to the market segments served and can
sometimes impact on the competitiveness of the industry due to its higher cost. It is essential therefore that proper,
accurate and keen costing allowances are adopted to keep the costs down. Allowances are most accurate when
derived from CAD systems.
In order to maintain cost competitiveness, the following actions should be carried out:
Action
Responsibility
Resources
Study current production techniques with a view to reengineering them with time and motion studies
Companies
In house management
Association experts
Visit linea pelle show in Italy for research on latest
machinery and equipment available
Associations
Companies
Export promotion agencies
Business development agencies
Associations
Investigate the use of CAD especially for ladies bags
production
Associations
Companies
Business development agencies
Associations
iii.
Quality Improvement
The quality levels of PLG produced in the Agadir zone are excellent. Good quality leather is used and workmanship,
which is craft based rather than operating machinery, is also of a high standard. The need is to maintain these
standards.
In order to improve quality, the following actions should be carried out:
Action
Maintain standards and strive for further
improvement
Responsibility
Management
Resources
In house
iv. Productivity Improvement
Many of the operations done in the making of leather goods are done by hand. The exceptions being stitching and
some machine cutting operations. As technology improves there are more small machines developed to replace hand
operations – doing them quicker and more accurately.
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Production methods need to be continually assessed comparing the results of batch working versus production line
working.
The application of fair incentive schemes can also lead to productivity gains. As a key performance indicator targets
should be set for productivity gains to achieve a competitive advantage in an industry where cost are similar in all
four countries.
In order to improve productivity, the following actions should be carried out:
Action
Responsibility
Resources
Critically assess current manufacturing
practices by time and motion study
Company Management
Experts from Associations
In house experts
ATU international experts
Conduct feasibility study into automated
and semi automated machinery and
equipment
Experts from Associations
In house experts
ATU international experts
ATU
Business development agencies
Associations
In house
Company Management
Attend the SIMAC international footwear
and leather goods machinery show
Associations
Management
Set productivity targets
Company Management
v. Training
Training should be aimed at stitchers and pattern makers. These are two critical areas in PLG manufacturing. Good
performance here has a large impact on reducing costs by increasing productivity.
Sewing machine operators can have a big impact, if trained and organised well, on productivity and cost reduction.
They should be able to operate the machines at optimum speeds – up to 2,000 stitches per minute. This is a key
performance indicator.
Pattern cutters operating CAD systems can produce patters that use the minimum amount of leather and also engineer
them so that they fit together without problems in manufacturing operations.
Shop floor supervisors need a good knowledge of time and motion study in order to organise work flow for the best
possible outcome.
In order to implement training, the following actions should be carried out:
Action
Responsibility
Resources
Review training courses available from
institutions for relevance and quality
needs of the modern industry in stitching
operations
Ministries
Associations
The institutions
Corresponding training institutes in
Europe
Train pattern cutters in CAD operation
Company management
Associations
Machinery suppliers
Invest in and train up supervisors in time
and motion study
Company management
Associations
Independent consultants
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6.2.
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Aspect 2 - Marketing
Behind every good marketing plan there is an equally good or better production facility. By implementing the action
plan described above under production, the Agadir Group companies will be in a position to implement the actions
for a successful strategic marketing plan which will have a positive impact on the economies of the 4 countries. The
emphasis for the plan is on the Agadir Market to enhance regional trade followed by opportunities to increase exports
to Europe.
6.2.1.Leather
i. Product Development
Presently most of the export of leather to the EU is wet blue primarily from Egypt. There is insignificant trade in raw
hides and skins. Tunisia and Morocco are being encouraged by their Governments to export finished leather rather
than semi processed as in the past. Egypt has a desire also to enter into the finished leather market.
The future strategy therefore would be to gradually move into leather finishing. However the leather products
manufacturing business in EU continues to decline year on year with more and more manufacturers turning themselves
into importers or closing down completely. This means in effect the market for finished leather in the EU is in decline.
However there still are traders and tanners who trade internationally as re-exporters and still provide a market for
exports.
The biggest potential for finished leather is through providing finished leather to local leather products manufacturers
who in turn export their products. This would provide the biggest benefit to the Agadir Group.
The finishing of leather is more of an art than science. Therefore to produce good quality finished leather requires
some experience and technicians can learn the techniques either by trial and error or from experienced leather finishing
technicians. In the case of the Agadir zone the process of acquiring knowledge needs to be speeded up.
Types of products that should be developed by the technicians are the following:
PRODUCT
BUFFALO
Full Grain
Corrected Grain
Aniline
Dry Milled
Nubuk
Industrial / military
BUFF
CALF
COW
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
CALF
ü
ü
ü
ü
In order to implement product development the following actions should be carried out:
Action
Responsibility
Resources
Analyse the machinery and equipment
available for finishing
Companies
Company management
Machinery suppliers
Chemical suppliers
Assess the technical knowledge of
technicians
Companies
Company management
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Train technicians to the required standard
Field international consultants on finishing
for 12 months over a 3 year period.
Final Report
Companies
Training institutions
Associations
ATU
Business development agencies
Companies
ATU
Business development agencies
Companies
ATU
Business development agencies
International agencies
Seminar – see under quality improvement
Visit European chemical suppliers for
information on finishing techniques.
Combine with visit to Linea Pelle
Sponsor study tours to EU finishing
tanneries and chemical suppliers for
technicians
ii. Promotion
Having made the strategic decision to develop finished leather and that this leather becomes a reality, this information
needs to be disseminated in the Agadir zone to the leather product manufacturers. The main message for promotion is
that finished leather is now available from tanners in the zone and that they are “open for business” with the emphasis
on import substitution, better service and keener prices than that which can be found outside the zone.
The static tools for promotion are:
● A leather manufacture data base for the zone
● The production of a Company DVD complimented by a company
brochure
● Attendance at inter Agadir footwear and leather shows
● Representation on the proposed Agadir portal (see under footwear).
The active tools for promotion are
● Appointment of Agents in all 4 countries
● Management travel to potential clients in all 4 countries
The key performance indicators for finished leather should be the measurement of increased trade. At present this is
at a low base. A target should be set to increase the trade by a certain percentage say by 30 % over three years.
As far as Europe is concerned this should be only a stepping stone to promote finished leather to the larger shoe
producing areas in the world namely the Far East. Promotion should be aimed at European tanners and export agents
particularly in Italy and Spain who are active in Far East markets as well as domestically. The Linea Pelle show in
Italy is a good forum for this.
Actions required for promotion are as follows:
Action
Responsibility
Resources
Set up of “Agadir”Leather Database
The Associations
The Companies
Export Promotion Agencies
ATU
Design of a Brochure and DVD on the Agadir
zone Leather (& Footwear) sector
The Associations
The Companies
Export Promotion Agencies
ATU
Agadir leather pavilion in local leather shows in 4
countries
The Associations
The Companies
Export Promotion Agencies
ATU
Creation of Agadir Leather (and Footwear) Portal
The Associations
The Companies
Export Promotion Agencies
ATU
Seek out sales agents in the 4 countries
The Companies
In house
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Management sales missions to all 4 countries
The Companies
In House
ATU
Export promotion agencies
Agadir selling pavilion aimed at EU and beyond
at the Linea Pelle show.
The Companies
The Associations
ATU
Export promotion agencies
iii. Distribution
The advent of short short manufacturing in the client companies of the tanners puts more emphasis on the tanners’
ability to deliver finished leather quickly. Buffer stocks of the most popular types of crust should be kept ready for
immediate finishing on demand. Even buffer stocks of certain finished leather can be kept for immediate supply.
The acceptance of smaller orders of colours by type of leather should be welcomed say 1,500 ft2. However Tanners
should maintain the principal of made to order rather than holding stocks.
Distribution therefore for finished leather should concentrate on developing the ability for quick delivery for the short
short era.
The above also applies to the European markets of Italy and Spain.
Actions required for distribution are as follows:
Action
Responsibility
Resources
Arrange finishing section in tannery to react to rapid
deliveries
The Companies
In house
6.2.2. Footwear
i. Product Development
Initially there are certain things an exporter should be aware of when considering selling into both the Agadir market
and EU markets. Although these regulations refer mostly to the EU companies would be well advised to apply them
also to the regional market. These are:
● Labelling. There has to be a label attached to the shoe showing the
composition of its component parts
● Environmental issues, REACH, Azo dyes etc referred to earlier in this
report
● Regulations on materials used from endangered species (CITES)
● Recyclable packaging materials
● Anti dumping regulations
The marketing efforts of the Agdir Countries will be aimed primarily to the region and after a period of assimilation
and a better economic climate, to Europe.
To avoid duplication of effort, product development work for shoes should combine what is needed in regional
markets for the short term and what is needed in Europe in the medium term. It is fair to say that most ideas for
product development are initiated in Europe. The markets in all four countries reflect the styles, trends and designs
coming from Europe. Product development therefore should be international in approach and not just pan Agadir.
The international aspect of product development should concentrate on the 2 larger markets of the EU namely UK
and Germany followed by Benelux as a secondary target. An understanding of the various markets needs and wants
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has to be acquired before sensible product development is started. To recap the markets are:
●
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Egypt
Morocco
Tunisia
Jordan
Arab Region
UK
Germany
Benelux
The combined product development effort therefore should progress by logical steps by implementing the following
actions.
STEP 1
Action
Research the market in all four Agadir
countries. Fact finding tour by potential
exporters. Special attention in Jordan for
re-exporting opportunities
Study tour and market survey to UK,
Germany and Belgium
Responsibility
Export promotion agencies
Country associations
Individual manufacturing
companies
Country associations, in
co-operation with export
promotion agency to
plan and co- finance with
individual companies to
organize a tour
Companies to be preselected as to suitability
and commitment
Resources
Country associations, in co-operation with
export promotion agency to plan and cofinance with individual companies to organize
a study tour for each of the four countries to the
others.
Companies to be pre-selected as to suitability
and commitment
ATU
Export promotion agencies
Country associations Individual manufacturing
companies
The raw materials, machinery and equipment necessary to develop products have to be easily available in order to
accommodate short – short manufacturing. One source of this information is the Linea Pelle + SIMAC show held in
Italy. This is an International Exhibition of leathers, accessories, components and synthetic products and models for
footwear and leather goods. In October the show is joined with Simac an international exhibition of machines and
technologies for footwear, leather goods and tanning industry.
Weak points in the supply chain of the leather products industry in all four countries are soles / moulds / lasts /
adhesives. Conduct a feasibility study for the establishment of a new business producing.
STEP 2
Action
Responsibility
Resources
Visit Linea Pelle show
Associations
Companies
Export promotion agencies
ATU
Study for the establishment of a new business
producing soles / moulds / lasts / adhesives in an
Agadir country
Trade associations
ATU
Apart from existing shoe types which companies should be continuously updating consideration should be given
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to developing newer offerings for the various markets. Supply opportunities were found in Agadir markets (see
above) which are complimentary to EU markets. Niche marketing which is a key strategy reveals certain market
characteristics.
The British market represents a good potential market for the Agadir zone footwear exporters due to the importance
of their imports, their cultural interactions particularly with Egypt and Jordan, and the high potential exports from
Tunisia and Morocco not exploited yet. The UK footwear imports have one of the highest share out of the total EU
imports; as well and due to the high production costs, the market has undergone large changes that led to outsourcing,
and forced many importers to source from close suppliers such as Morocco, Tunisia and Eastern Europe. The UK
market is also benign in that it is well used to imports and is not fighting to save a local, dieing, manufacturing
industry in the way Italy, Spain and to some extent France are. The market is wide – it has many segments – from low
quality to the highest quality brand names.
The German market is more restricted in its purchasing methods compared to UK. It tends to be more “up market” in
quality from medium quality +. However the recent influx of immigrants from Eastern Europe has created a market
for cheaper lower quality shoes and leather products.
Tunisia and Morocco have good contacts with Italy, France and Spain mostly through sub contracting. This business
should be continued in the normal way. At this time in order not to dilute the effort required to set up new export
markets, concentration should be on the Agadir market and after consolidation here, the two large EU markets - UK
as the primary target and Germany as the secondary should be addressed.
Segmentation of the UK market is exceptionally wide. Reasonable, simple, leather footwear can be bought at retail
level for as little as $16. At the top end of the market welted footwear sells for over $400 per pair.
The market in terms of volume and ease of penetration is the so called “grey market” – people in the age group 45+
years with the core target being the 55 – 75 years segment. There is also an active market in childrens footwear of
medium to medium - high quality. Industrial and safety footwear at the medium quality and less technical specification
selling to self employed construction workers is another active market. At the high end of the market goodyear welted
mens footwear is also in demand and has been for many years. There is also a market for orthopaedic type shoes
particularly for women who have to be on their feet all day for work eg nurses, retail assistants, cleaners etc.
Germany has the largest population in Europe with approximately 85 million people. It fluctuates with the UK in
terms of market volume for shoes sold for the number one slot. This reflects the economic conditions in the two
countries.
Segmentation in the German market tends to be narrower than UK. German consumers demand at least medium up
to high quality footwear. Men buy about 50% of shoes sold and women 31%, 19%, is childrens footwear. Of the total
conventional (i.e. non sport) shoes sold 41% have leather uppers and non leather soles.
There also is a significant “grey market” in Germany similar to the UK which requires sensible, comfort casual shoes,
for men and women. Brands like Seibel, Reiker, Gabor, Ara and Sioux are popular.
There is also a significant market for so called health footwear with brand names like Birkenstok, Bama, Dr Scholl
and Ganter.
The safety, industrial footwear market tends to be determined by technical products which strictly conform the EU
standards (and particularly the German DIN standards). There is not a market (as there is in the UK) for industrial
footwear of less technical specifications.
Childrens footwear tend to be of a good quality standard with brand names like Elefanten, Ricosta and Salamander
popular.
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The products therefore for the German market are very similar to the UK with the difference of higher quality levels
and less styling. The market tends to be more conservative in its outlook.
The market for footwear in the Netherlands, Belgium and Luxemburg tend to be linked together because individually
they are relatively small markets.
The import market (i.e. the market for Agadir exporters) is dominated by traders who supply locally and re-export
to the rest of Europe and beyond. The market tends to be at the low to medium end which Agadir manufacturers
can easily cope with. The traders also buy from Italy for re –export and local supply so there is a distinct possibility
that Agadir producers may already servicing the Benelux market through third parties. They look for keen prices for
volume business.
An agent based in Germany could easily service the Benelux market as well as Germany on behalf of Agadir companies.
For the Agadir Group, at present this is a peripheral market and most marketing efforts should be concentrated on
UK and Germany.
Types of products that should be developed are the following:
PRODUCT
AGADIR UK
ü
Hand stitched, flexible, comfort fitting moccasins, McKay
stitched soles
Mens casual shoes , comfort, padded leather uppers, soft
soles, comfort fitting lasts
St Crispin construction hand stitched soles
Womens with same specs as mens
Ladies comfort ballerinas
Soft, flexible,comfort,strobel constructions
Childrens medium quality leather shoes and sandals
ü
ü
ü
ü
ü
ü
ü
Industrial boots and shoes
Mens Goodyear welted shoes
Work oriented, stress relieving, comfort footwear for ladies
Stitch out construction
Mec Val side wall stitched
(ü) = Can be marketed but with difficulty
ü
ü
GERMANY
BENELUX
ü
ü
ü
ü
ü
ü
ü
ü
ü
(ü)
ü
ü
ü
ü
ü
ü
ü
(ü)
ü
ü
ü
ü
ü
ü
ü
ü
ü
(ü)
ü
ü
ü
ü
ü
STEP3
Action
Research and design a shoeline for Agadir, UK and
German markets. Product development function
Responsibility
Resources
Fashion forward
information from
Associations,
Possible co-financing for
services of international
design studio
Utilise local and/or international
designers
Companies
Associations
Export promotion agencies
The key performance indicator of market penetration should be tracked. With new shoelines developed by enlightened,
unique product development, increases in inter Agadir exports will be achieved. Presently inter Agadir exports are
at a low level. An aggressive target should be set country by country for increased trade over a 3 year period up by
say 30%.
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
ii. Promotion
As with product development promotion should be directed towards the Agadir zone as the priority market and
followed by the EU markets of UK, Germany and Benelux. It has been mentioned that there should be an awareness
campaign particularly to Agadir consumers on the availability of quality leather products from Agadir leather product
manufacturing companies. This is also part of promotion and compliments this aspect.
One reason for the small volume of inter Agadir trade is the lack of circulation of pertinent information between the
entrepreneurs of the four countries. The creation of an Agadir database available on line on an Agadir portal and
accessible to the business community will alleviate this weakness and will contribute to boost trade among Agadir
countries.
A search engine will give access to information starting from criteria such as:
● Country: Egypt, Jordan, Morocco, Tunisia
● Company names and trade names
● Brand
● Activities/products: tanning, leather footwear, component, leather goods
manufacturer, importer-wholesaler, footwear distributor
● Functions: subcontracting, co-contracting, own label etc
● Turnover
● Special equipment
● Design capabilities
● Lead times
To compliment the above the design of a brochure and DVD on the Agadir zone footwear (and other the other sub
sectors) is necessary. This should be done in Arabic and English
This brochure and the DVD will be systematically used during the sector’s trade events (conferences, seminars,
shows.) and ATU promotion activities . It will also be widely disseminated by Agadir supporting institutions and
trade and investment representatives which can take part in the promotion of the Agadir zone abroad as well as to the
zone’s companies who will use it for their individual promotion.
As a spin off from the brochure and DVD the creation of a virtual Agadir exhibition would be a helpful marketing
tool.
This would be a B2B electronically matching” system“ through the creation of an Agadir virtual exhibition web site
where Agadir manufacturers and traders could present their product collection with related data technical sheet for
each exhibit as well as commercial conditions.
As an umbrella electronic promotional aid, a new Agadir Footwear (and Leather) Portal should be set up. This will
not only promote the Agdir companies to the local Agadir markets but also help in promotion to Europe.
This Portal which would be designed by the associations with guidance from the ATU This portal will aim to:
● Disseminate valuable information on the leather and footwear sector in the four
countries.
● Market the zone internationally and among the Agadir zone in presenting the
opportunities offered by the Agadir Agreement and the success stories.
● Develop export and FDI with European Union and among Agadir countries by
publicising Agadir companies and encouraging the exchange of information.
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Consequently, the site will:
● Provide current and pertinent information on the sector in the four countries (factors’
costs and the sector’s features in the four countries)
● Facilitate the online access to other professional and public sites published in the
Agadir zone and internationally, through hypertexts links
● Provide hyperlinks with web-site and portals of ATU, EU commission and sector
technical centres, business associations and supporting institutions
● To present information on the Agadir agreement, EU-Agadir countries agreements
trade and quality regulation (origin, customs, standards, labeling, etc) of the four
countries as well as their export and investment policies( incentives, trade shows,
training, laboratory and design capabilities, etc.)
● Provide hyper links with specialized international web sites providing technology
watch and sector news ● Host the sector’s newsletter that will be published monthly and will relate to four
countries Leather & Footwear news. It will provide pertinent information on change
in regulations, on organized and planned sector exhibitions, company information,
markets and distribution, international news, FDI, consultant and professional
views, etc… The newsletter would hold a discussion forum and would be available
in English and Arabic.
● Integrate a detailed directory of the four countries’ Leather & Footwear sector with
a multi-criteria search engine
● Establish hyper links and or host web-sites of individual companies offering intratrade and supporting services among Agadir countries
● Allow to Agadir companies and EU clients the access to Agadir data base after
entering password and complete information about the online visitor’s identity. This
information will be integrated in the data bases of “clients” and “suppliers”.
● Allow to Agadir companies and EU clients the access on-line to trade and
subcontracting opportunities.
● The site will be manage one of the 4 country associations by appointing an IT
manager who must have good knowledge of the sector but also of web design
techniques. The marketing of portal world wide and the establishment of links with
international leather and footwear portals is a prerequisite for the outreaching of
substantial outcomes.
Apart from these published and electronic methods of promotion there need to be human interaction to establish
business and trading agreements. One of the better ways of doing this is by shows where companies can show their
products and meet potential clients.
The development of supporting services in the Agadir zone
To achieve this co ordinate the participation of Agadir Leather and footwear companies in the Tunisia, Egypt and
Morocco national Leather and Footwear Shows. Morocco, Tunisia and Egypt all have their own leather fairs with
an international focus. Under the spirit of the Agadir Agreement in order for the fairs to be more effective in the
international market, particularly Europe, they should be subsumed in the long run into one larger unit under the
Agadir umbrella. However, in the short run it is needed to build on existing fairs.
It will consist of the organizing Agadir stands gathering companies from countries others than those from the
organizing country. In this respect, ATU in cooperation with Agadir Leather & Footwear Organisation and Agadir
export promotion centres, may contribute in carrying out the following:
● Organise Agadir stand including companies from Jordan, Egypt and Tunisia in
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Morocco Leather Show “Maroc Cuir- Salon International Du Cuir”Date: Oct. 8-10,
09, Web site: http://www.marocuir.ma/
● Organise Agadir pavilion including companies from Jordan, Egypt and Morocco in
a Tunisian Leather Show “PROMO Cuir” organized in Tunisia on May 2010.
● Also organize an Agadir Leather stand in “Meet in Africa” Cairo, Egypt, February
2010
For Jordan, currently there are no international fairs. However, the Jordanian Leather Industries Association is
planning to organize in cooperation with JUMP on July 2-4, 09 the first Jordanian specialized fair in leather and
Footwear products. It will be local and invitations were sent to representatives from all the Arab countries to attend.
It aims at raising the awareness of the customers about Jordanian leather industries. Within the organization of this
event, a seminar could be devoted to Agadir co operation. Next year, the Association will establish the Jordanian
Leather Industries Fair. This will be directed towards Arabic participation with an Agadir leather stand.
To facilitate the participation of Agadir companies, preferential conditions should be granted to them and promotional
activities should be carried out by the individual country associations.
To ensure successful results, ATU in cooperation with supporting institutions should conduct the following:
● A proper awareness campaign targeting sector representatives and leaders to attract
Agadir zone companies to participate in the Show.
● Prior exchange between Agadir participants of company profiles
● Organize a buyer seller meeting to support commercial contact
● A seminar on Agadir cooperation to discuss the facilitation of Agadir intra-trade.
Promotion, which is a form of advertising, needs to be judged as to how effective it is in producing the desired results
from making what can be substantial financial investments. Key performance indicators should be established for
the promotion plan and the impact they will have on the economies of the zone. One simple way is to set expected
(achievable) targets by expecting an increase in exports of footwear by a given percent say 5% in year 1, 10% in year
2, and so on. These achieved targets in market penetration will have a hugely positive impact on local economies.
Actions required for inter Agadir promotion are as follows:
Action
Set up of “Agadir”Leather & Footwear Database
Design of a Brochure and DVD on the Agadir zone
Footwear(& Leather) sector
Creation of a virtual Agadir exhibition
Creation of Agadir Leather and Footwear Portal
Set up a monthly Agadir Newsletter
Agadir pavilion in local leather shows in 4 countries
Set performance targets
Responsibility
Resources
The Associations
The Companies
The Associations
The Companies
The Associations
The Companies
Export Promotion Agencies
ATU
Export Promotion Agencies
ATU
Export Promotion Agencies
ATU
The Associations
The Companies
Export Promotion Agencies
ATU
The Associations
The Companies
The Associations
The Companies
The Associations
The Companies
Export Promotion Agencies
ATU
Export Promotion Agencies
ATU
Export Promotion Agencies
ATU
In the medium term promotion should also be carried out to aid penetration of the targeted EU markets.
The first phase report recommended the need for Agadir countries to focus on UK, France, Italy, Spain, Germany
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and Benelux (Belgium, Holland). Most of Agadir exports are now focusing on Italy, France and Spain. The study
emphasized the need to diversify the export markets to include other European markets such as UK, Germany and
Belgium
To achieve these goals, the strategy and action plan highlighted the need for a promotional and awareness campaign
in the European markets to promote the Agadir zone exports. In this respect, it is suggested to organize a road some
EU targeted countries as well as to co-participate in European International exhibitions.
There are two shoe shows in the UK which are not particularly useful for exporters. British buyers tend to travel to
overseas shoe shows particularly, the GDS (Germany) and Riva del Garda (Italy). However the proven promotion tool
of a local road show has been successful in the UK particularly in the textiles sector. It has the advantage of having
face to face meetings with interested buyers rather than being one of thousands of exhibitors in an international show.
Attendance at international shows is expensive and to be effective exporters need to show their products twice per
year for at least three years. A road show is more cost effective.
The road show is considered an innovative way in export promotion and has proved to be very successful for many
exporting countries such as Turkey, China, and Viet Nam.
The road show involves taking a number of companies to the targeted market, to exhibit their products and potentials.
One-to-one meetings with major importers and buyers are also conducted. It differs from the specialized trade shows
by the following:
● It attracts better media attention
● It reflects a positive image about the Agadir zone footwear industry for the major
buyers and importers in the UK market.
● It offers an opportunity for the participation of many enterprises with different
products.
For the road show to achieve its maximum effect the road show timing should coincide with the sourcing schedule of
the importers and the buyers as well as the timing of Footwear exhibitions in Europe.
The road show design should focus primarily on selecting the right type and number of participating companies,
selection criteria for choosing companies should be in place prior to the show. However, the number of companies
exhibiting each product category should be (3-5) to allow a choice variety and increase professional visitors’
interests.
The place for the road show should be selected with great care in order to make sure to attract the right buyers.
Usually, it should take place in a large hall in one of the large hotels or specialized showrooms.
Prior to the commencement of the road show, a number of preparatory steps should take place as follows:
● A detailed study on the UK market regarding its potential, consumer tastes, in addition
to targeted importers and investors should take place. Practical recommendations on
how to make the show a success and how to do business with the importers in the
UK market should also be given. The outcome of the study should be disseminated
to the relevant stakeholders in the sector.
● A proper awareness campaign should be conducted to attract Agadir zone companies
to participate in the road show. The applications should be screened and the companies
selected according to a pre-defined criteria to guarantee the good presentation of the
Agadir zone footwear sector.
● For the road show to be successful, great attention should be given to the designs of
the exhibited products, Agadir zone companies should be supported with technical
expertise from the UK market to develop their products according to the designs and
fashion trends required in the this market.
● Field visits should be conducted to the main stores in the UK market to investigate
prices and quality of competing products.
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● A very thorough promotional campaign should be prepared and implemented to
guarantee the proper attendance of the road show and the quality of attendees, the
campaign is intended to include the following activities:
● Invite specialized reporters from the UK market three months prior to the show
to visit some enterprises within the sector to write articles about its strengths and
achievements. However, this activity aims at preparing the buyers and sellers to
encourage them to visit the show and do business with the Agadir zone enterprises
● Conduct a rigorous media campaign in the specialized magazines in the sector using
advertisements and promotional articles.
● Send invitations on three stages targeting the largest number of distributors, importers
and distributors within the UK market.
Follow up through direct contact or by phone with distributors and importers
to encourage them to visit the Show.
● A press conference should be arranged with presentations by sector representatives,
testimonials from investors and major foreign buyers through which the Agadir zone
economic achievements and Investment Climate are presented.
It is anticipated that a senior international expert is needed for 2 months period in six months duration and four
Agadir consultants for one month each to assist ATU and the sector representatives of each Agadir member country
to prepare the road show and to follow up on its results.
The international expert and the Agadir experts will accomplish the following activities:
● Conduct a market study for the UK market to identify the export potential, consumer
tastes, in addition to targeted importers and investors.
● Conduct seminars to present the findings of the study and their impact on the road
show preparations to the different stakeholders in the footwear sector.
● Conduct an awareness campaign for the footwear sector on the benefits of the road
show to attract Agadir zone companies to participate in the road show.
● Define selection criteria to be utilized to screen companies’ applications and
guarantee the good presentation of the Agadir zone footwear sector.
● Conduct field visits to stores in the UK market to investigate prices and quality of
competing products.
● Advise the participating companies on the best price ranges and designs and fashions.
However, the consultant should be able to identify a designer from the UK market
that can help the Agadir zone companies to develop the designs of their products
according to the tastes of the UK consumers.
● Work with the Agadir zone companies to prepare their products and samples for the
road show.
● Work closely with sector representatives and ATU to implement the promotional
campaign associated with the road show and advice on the promotional activities
with the highest impact.
Moreover, the associated promotional campaign is suggested to be the responsibility of sector representatives that can
coordinate all the promotional efforts in order to attract the right audiences for the road show activities.
Germany hosts the largest and most significant shoe show in the world – the GDS in Düsseldorf. (gds-online.com). It
is held twice per year in March and September. Budding exporters to the German market need to exhibit at this show
2 times yearly for at least three years to be effective. At the show priority should be given to finding a suitable sales
agent in Germany.
The study tour to UK, as part of the build up to the road show, should also include Germany on its itinerary. The
footwear manufacturers interested in export to Germany should join the study tour as observers for market research
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purposes.
Companies need to develop their own brochures and flyers and advertise their intentions in one or more of the trade
press in Germany.
● Schukurier
● Shoez
● Schumarkt
It is anticipated that a senior international expert is needed for 1 month period in six months duration and four Agadir
consultants for 15 days each to assist ATU and the sector representatives of each Agadir member country to prepare
the Agadir participation in GDS
The international expert and the Agadir experts will accomplish the following activities:
● Conduct an awareness campaign for the footwear sector on the benefits of the GDS
show to attract Agadir zone companies to participate in the trade fair.
● Define selection criteria to be utilized to screen companies’ applications and
guarantee the good presentation of the Agadir zone footwear sector.
● Advise the participating companies on the best price ranges and designs and
fashions.
● Work with the Agadir zone companies to prepare their products and samples for this
show.
● Work closely with sector representatives and ATU to implement the promotional
campaign associated with the trade show and advice on the promotional activities
with the highest impact.
● During the event the Consultant should assist ATU and Agadir supporting institutions
to organize promotional operations : An open door event where invited, Agadir
Ministers of Trade, representatives of German Government in charge of international
cooperation, German leather and footwear associations, representatives of retailers,
German footwear importers, representatives of German footwear supporting
services (designers, …) and representatives of media. A press conference should
also be held during this promotional event.
● Organisation during the event of B2B meetings between potential partners
“International Trading companies” as well as with chambers of commerce,
representatives of professional organizations, technical centers and training and
fashion institutes.
● These meetings should lead to the signing of trade agreements, partnership
agreements and cooperation agreements relating to for example vocational training,
the transfer of laboratories or production activities towards the Agadir zone
Belgium represents a special case as it is also the seat of the European Union. The strategy and action plan highlighted
the need for a promotional and awareness campaign in the European markets to attract investments and joint ventures
as well as promote the Agadir zone exports. In this respect, it is suggested to organize a road show and FDI mission
in Brussels, Belgium
This road show and FDI mission will target the export development to the Belgium market as well EU footwear
association and financing institutions. The Belgium market represents a good potential market for the Agadir zone
footwear exporters due to the importance of their imports, the position of Belgium as an important re-exporter to the
EU and the similarities of the Belgium consumer behavior to the French and German market with which Tunisia
and Morocco have an export experience. The presence of EU supporting institutions in Brussels will offer also an
important opportunity to promote FDI and raise EU financing support to the Agadir footwear sector.
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To develop exports to Europe Agadir companies would be well advised to attend selected European international
fairs twice a year over a minimum of 3 years.
By their very nature attendance at overseas fairs is an expensive operation for any company let alone as well as for
National Government support. However a more integrated approach would be more effective in combining resources
to have an Agadir Group presence at selected shows.
Attendance at a show should be anticipated by a plan with clear implemental objectives and an allocated budget
which will be financed according the co-financing system of the Agadir cooperation action plan.
Of the international shows that are available to the Agadir Countries the following have merit.
● Expo Riva Schuh, Riva del Garda, Italy, January and June each year:
This show is dedicated to Shoes and some complementary bags
● Linea Pelle + Simac Tanning Tech, Bologna Italy, April, October International
Exhibition of leathers, accessories, components and synthetic products and models
for footwear, leather goods, leatherwear and furnishing. In October the show is joined
with Simac an international exhibition of machines and technologies for footwear,
leather goods and tanning industry.
● MIPEL, Milan Italy, May and September. International
Showcase for leather goods. Twice a year, in a prestigious setting - the city of
Milan, one of the fashion capitals in the world - the best creations in leather, fabric
and alternative materials, for all seasons of the year, are presented. The aim is to
highlight and promote the image of leather goods produced all around the world
and, in particular, Italian-made goods. The exhibitors meet their most important
counterparts, dealers and the media, and can also take part in special events,
conferences and round tables in a pleasant, elegant environment.
During these events it is recommended to perform the following:
● An “Agadir partnership” event should be systematically organized during these
shows. It will consist of connecting commercial/industrial partners who would have
been identified
● A promotional campaign should be performed developing the image of the “Agadir”
Leather and shoes sector within the European Business Community and informing
international clients and potential partners on the sector, and particularly on the
participating companies.
● Each operation should have to be preceded by a briefing concerning show participants
features and relevant recommendations for potential participants
Actions required for Agadir promotion in EU are as follows:
Action
Responsibility
Resources
Organize a road show
to the UK
Associations
Companies
Export Promotion Agencies
ATU
Attend the GDS shoe show
Associations
Companies
Export Promotion Agencies
ATU
Organize a Footwear Road Show & FDI and Finance raising
mission in Brussels Belgium
Associations
Companies
Export Promotion Agencies
ATU
Organize the participation of Agadir Leather and footwear
companies in International Exhibitions
Associations
Companies
Export Promotion Agencies
ATU
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iii. Distribution
The project is concerned with distribution methods intra Agadir and distribution methods in Europe.
Intra Agadir distribution has various methods open to the companies. It is up to individual companies to decide which
method or methods they feel comfortable with for implementation.
Partnership
Developing a relationship with a complimentary manufacturer in another country and using their existing base
for distribution. The reciprocal relationship can mean manufacturing and distributing each others products in their
respective local market or directly importing finished products for distribution.
Vertical Marketing
Seeking out a wholesaler in the respective export market and using the wholesaler to distribute the product.
Agency Sales
Seeking out a sales agent who solicits orders for importation and distribution from a variety of customers from retail
chains, wholesalers, large retailers, Government Agencies, industrial companies, service industry (hotels, hospitals
etc). Works on a sole agency basis with the manufacturer.
Franchising
If a company has a brand. Set up franchise retail shops or shops within a shop.
Catalogue Stores
Set up small warehouses with a sales counter in front. Print catalogues or flyers with the footwear on offer. Keep stock
of shoes in the warehouse and on display at the counter. Sell shoes to members of the public in minimum quantities
only – say 1 carton at wholesale prices. These customers then become de facto mini wholesalers.
Distribution Company
Carry out a feasibility study for establishing a shareholding company to distribute all Agadir leather and shoes
products in the region, This company will be empowered to open franchises, set and outsource its designs and
fashions, give subcontracts to different suppliers from Agadir countries based on price and quality not quotas. It is
assumed to have a chief executive officer (CEO) outside from the owners who knows how to market and promote its
products effectively. The manufacturers may be shareholders but the management would be independent.
Actions required for inter Agadir distribution are as follows:
Action
Responsibility
Resources
Evaluate method of distribution that company feels
comfortable with
Company Management
In house
Under the fact finding tour evaluate the options for
distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
Feasibility study for establishing a distribution chain
Companies
Associations
Export promotion Agencies
Country Associations
ATU
For distribution in Europe there are multiple choices available to exporters to the UK. It has a wide variety of
importers and few buying groups which means there are many more customers available.
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The biggest sellers of footwear are the chain stores which represent 43% of all sales. Example of importers are:
CHAIN STORES
C and J Clarks
Stead and Simpson
Russel and Bromley
Jones Bootmaker
Faith Shoes
Benson Shoe
DEPARTMENT STORES
Marks and Spencer
Debenhams
British Home Stores
John Lewis
House of Frazer
Coop
WHOLESALERS
Brevit Reiker
Magnus and Warren
H. R. Marrum
Newmans Footwear
Gardiner Brothers
Patrick Shoes
DISTRIBUTORS
Pentland Industries
Peter Black
Kidderminster Shoe
Independent retailers can be found from the Independent Footwear Retailers Association and further information
from the British Footwear Association. (Both have web sites).
Phoenix and Bolton Bros are two companies which specialise in orthopaedic footwear.
There are only about 20 footwear manufacturers left in the UK mostly involved with Goodyear welted construction
so little opportunity for sub contracting except for specialist Goodyear welted companies in the Agadir region.
Selling prices at the retail level are what guides the selling price from the exporting factories. Generally the retailer
requires a margin of profit on the selling price of a minimum of 45%. This would be for a recognised branded
product. Unbranded products or minor brands would require a margin of 50%. The higher the margin the retailer can
make the higher the chances of an export order.
In this mix there is a wholesaler or distributor who provides the footwear to the shops. This company requires a
minimum of 30% margin on the CIF price of the shoes. (The wholesaler and or distributor can sometimes be the same
company as the retailer, none the less the margin is still required).
Starting with the research done at retail level for selling prices for similar shoes that are planned to be exported, using
the above margins, exporters can calculate what a competitive and acceptable FOB selling price should be.
The most popular price points at retail in the UK are between £35 and £60 (approximately euros 40 – 70). This would
give a factory FOB price of around euros 11 to 19.
There is no magic formula on how to approach these companies. Advertising for an agent is a good first step in
entering the market. A good agent will ease entry into potential customers and make the export process quicker.
However good agents only deal with equally good factories.
Direct introductory letter to the import company principle or potential agent, with a short profile of the Agadir
company and an overview of the product range with price indicators is helpful. In the letter information of why
it would be beneficial to deal with Agadir with unique selling propostions and key customer values is necessary.
Mentioning a web site, including a professionally produced catalogue or brochure, even a sample shoe(s) will separate
one company from another. Invitation to visit stand at a trade fair. Whatever happens there has to be a plan to follow
progressive steps until a face to face meeting is achieved.
In terms of customer preference the wholesalers are probably the easiest targets. They have their customer list and
buy in smaller quantities which matches up with the abilities of the Agadir manufacturers.
There are not as many sales openings in Germany as there are in the UK. The buying of footwear is dominated
by buying groups with thousands of shops and large chains in turn with thousands which in effect means fewer
customers to sell to. There are smaller retail chains and manufacturers (or ex manufacturers who import under their
brands). The smaller chains are easier to sell into although Deichmann, with over 2,000 shops has an affinity to do
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business with developing countries. Department stores tend to be at the low end volume segment of the market and
difficult to supply against low cost producing countries. Examples of the major buyers are:
BUYING GROUPS
RETAIL CHAINS
*Ariston Nord West Ring
*Garant Schue+Mode
Diechmann
Salamander
Breuninger
Schuhhof
Ceka
Roland-Schuhe
Hamm- Reno
M A N U FA C T U R I N G
IMPORTERS
Salamander
Gabor
Reiker
Seibel
Sioux
Ara
DEPARTMENT STORES
Karstadt
Kauthof
Lidl
Metro
Aldi
* These companies have been having a difficult time recently due to the financial crisis.
Birkenstok, Bama and Gauter specialise in health footwear.
Information can be found at the association of traders, manufacturers and exporters at hds-schuh.de.
As mentioned above, there is no particularly recommended way to approach these customers. Companies need to
develop their own techniques for this. An approach similar to that outlined for the UK would be a good point of
reference.
The principles of pricing for the German market are the same as the UK. Possibly the prices like for like are slightly
higher in Germany. This means that all players in the value chain can get a little more profit. However the German
market is more demanding and the higher prices sometimes reflect higher levels of service and quality.
Retail selling prices therefore require the 50%+ margin of profit on the selling price and the wholesaler requires the
30% margin.
For getting detailed information on EU importers the following sources are available:
● An Indian company called Exim Infotek publishes a directory of European
importers of all types (http://www.eximinfo.com).
● A good link to wholesalers and wholesale prices in the UK is the Footwear
and Shoe UK Wholesale Suppliers Directory (http://www.the- wholesaler.
co.uk)
Actions required for EU distribution are as follows:
Action
Responsibility
Resources
Define profile, job description and TOR for an
agency agreement
Company management
In house
Legal representation
Export promotion agencies
Seek out agents in potential markets
UK at the road show and GDS
Germany at the GDS
Benelux at the GDS
Company Management
Export promotion agencies
ATU
Companies
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
6.2.3.Personal Leather Goods
i. Product Development
Leather goods manufacturing can be broadly categorised into 5 groups.
Group
Ladies bags
Small leather goods
Percentage of Market
Item
30 - 40
Medium /higher, elegant fashion
Classic fashion
Young look
Functional
25 – 30
Wallets, purses, bill folds, stationery items,
keyholders, camera cases, phone cases etc
2 levels
High quality – upper market segment
Medium quality – corporate giveaways
Mens items
10
Brief cases, attaché cases, shoulder bags, folios,
overnight bags, toilet bags
Luggage
10
Bags, trunks, suitcases
Belts
7 – 10
Mens and ladies, sometimes become a fashion item
Watch straps
Apart from the above there is a plethora of other items that can be made from leather if there is a demand.
Ladies bags is a dynamic market and unlike footwear, has shown considerable growth in recent years. Of necessity
ladies bags made from leather, because of cost structures, need to be in the medium to high quality fashion segments.
Ladies bags are in high demand in the EU markets becoming a fashion statement this also translates to an extent to
the Agadir markets, at the same levels.
The leather goods industry has developed from a craft base to where it is today. However much of the manufacturing
has remained at a craft level with few mechanized factories. Most factories are at best semi mechanized and rely to
a large extent on the skills of the hand workers. The successful manufacturers are those which have mechanized as
much as possible.
From a product development point of view factories should assess their production processes and transform from a
batch hand worked system to a machine operated production line system. The SIMAC machinery show in Italy has
on display the latest developments in manufacturing techniques.
Successful operations also specialize in a particular type of product – ladies bags – mens briefcases – corporate
givaways, etc. This brings in economies of scale and increases in productivity. A smaller product line usually means
better product development through specialization.
Ladies bags, the biggest market, is subject to fashion as are belts in recent times and product development here must
keep up with the trends. Fashion forward information is needed. This information is available at international shows
such as Mipel in Italy and to some extent from the internet.
Leather products consist of a large product range, nonetheless there are certain categories worth considering for
action which have a demand. All these items lend themselves to international markets be they inter Agadir or EU.
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●
●
●
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Ladies bags
Ladies belts
Mens shoulder bags
Lap top bags
A key performance indicator in product development would be the degree to which a factory can change its production
from craft based to machine based with the consequent savings in costs the impact of which would give them a
considerable competitive advantage.
Actions required for product development are as follows:
Action
Responsibility
Resources
Assess production methods with a view to mechanize.
Visit Simac show in Italy for latest machinery
developments
Company Management
Business upgrading programmes
ATU
Consider specialization by product line
Company Management
In house
Get fashion forward information for ladies bags and
belts. Visit Mipel show in Italy.
Company Management
Export promotion agencies
ATU
Companies
ii. Promotion
The promotion of personal leather goods should follow the same mechanisms as footwear. In fact certain leather
goods are also sold in footwear shops, namely ladies bags and to some extent belts.
The volume of inter Agadir trade will be less in leather goods than footwear as leather goods really are aimed at the
top end of the Agadir markets. There are more opportunities in Europe where the buying power is greater.
For Agadir PLG, promotion should run in conjunction with the footwear action plan as outlined above. The Company
DVD and brochures should be designed and produced. The companies should be an integral part of the electronic
advertising plan. They should attend the Agadir country leather shows.
Actions required for inter Agadir promotion are as follows:
Action
Responsibility
Resources
Be part of the “Agadir”Leather & Footwear Database
The Associations
The Companies
Export Promotion Agencies
ATU
Design of a Brochure and DVD on the Agadir zone PLG
sector
The Associations
The Companies
Export Promotion Agencies
ATU
Be part of the creation of a virtual Agadir exhibition
The Associations
The Companies
Export Promotion Agencies
ATU
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Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Be part of the creation of Agadir Leather and Footwear
Portal
The Associations
The Companies
Export Promotion Agencies
ATU
Be part of the set up a monthly Agadir Newsletter
The Associations
The Companies
Export Promotion Agencies
ATU
Agadir pavilion in local leather shows in 4 countries
The Associations
The Companies
Export Promotion Agencies
ATU
Promotion to the EU should follow conventional lines. Two things are required vis the attendance at international
shows and the appointment of sales agents. Attendance at the shows should be used to sell products and also attract
established sales agents. Show attendance should be over a minimum of three years twice per year to be effective and
produce results. The key performance indicator here would be the increase in export orders from the point of first
show attendance.
Actions required for EU promotion are as follows:
Action
Responsibility
Resources
Attend international show. Choose between Mipel and
Offenbach
Company Management
Export Promotion Agencies
ATU
Seek out sales agents
Company Management
Advertise at show
Advertise in Trade Press
iii. Distribution
As with footwear the project is concerned with distribution options intra Agadir and Europe.
Intra Agadir distribution has various methods open to the companies. It is up to individual companies to decide which
method or methods they feel comfortable with for implementation.
It is probably not sensible for PLG companies to utilise the catalogue stores option. To recap the options are:
● Partnership
● Vertical marketing
● Agency sales
● Franchising
● Distribution company
Actions required for inter Agadir distribution are as follows:
Action
Responsibility
Resources
Evaluate method of distribution that company feels
comfortable with
Company Management
In house
Under the fact finding tour evaluate the options for
distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
Feasibility study for establishing a distribution chain
Companies
Associations
Export promotion Agencies
Country Associations
ATU
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As far as the EU is concerned the route from manufacturers to consumers in the EU trade for leather goods is
varied. There is a clear distinction between specialist distribution, where the product is handled by intermediaries
(agents, buying groups) and retailers who primarily deal with different types of leather goods, and non-specialist
distribution. In non-specialist distribution, leather goods are just one of a (wide) range of products handled by
the companies in question. However, there are differences between the segments. For luggage (suitcases and
briefcases), specialist channels remain important, as specialists tend to provide more display space. This is not
easy for a non-specialist. For bags and small leather accessories there is a wide distribution network, which
includes sales by all sorts of other shops. For all segments, department stores take up a large proportion of retail
sales.
TYPICAL DISTRIBUTION STRUCTURE FOR LEATHER GOODS IN EU
From the above for Agadir companies importers and/or wholesalers probably offer the best opportunity for
distribution.
By buying on their own account importers takes title to the goods and ar responsible for
their onward sale and distribution. Importers usually buy and sell the goods, take care of import/export procedures
and hold items in stock. Many importers sell directly to specialist retailers, department stores, sports or clothing shops
through permanent exhibition centres. Others have their own sales staff that visit retailers on a regular basis and take
orders.
The importer has contacts in the local market, knows the trends and can supply considerable information and guidance
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to the overseas manufacturer. The development of a successful working relationship between manufacturer and
importer can lead to a high level of co-operation with regard to appropriate designs for the market, new trends, use
of materials and quality requirements. Some importers also act as wholesalers.
Wholesalers often supply independent or specialist luggage and leather accessories shops and play a major role in the
supply of a particular type or style. They usually specialise e.g. ladies’ bags or laptop cases, or in travel goods, but
they often carry a wide variety of products. Wholesale margins have traditionally been quite high, but their influence
is diminishing due to the increasing dominance of large retailers and the increasing acceptance of online trade.
A secondary form of distribution would be through selling agents They usually work on a contract and commission
basis for one or more manufacturers. Some sell from stock supplied on consignment by the exporter in order to meet
their clients’ short-term demand. If an agent builds up his own stock, he is in fact functioning as a wholesaler or
distributor.
Information on wholesalers and selling agents can be found at www.eximfo.com a company which publishes lists of
operators in various countries on a subscription basis.
Examples of distributors in the EU of various types are as follows:
CHAIN STORES
DEPT. STORES
IMPORTERS
BUYING GROUPS
Accessorize, UK
Karstadt, Germany
Samsonite, Belgium
Goldkrone,
Germany
Claires Accessories, UK
Kaufhof, Germany
Bags etc, UK
Assima, Germany
Zara, Spain
El Corte Ingles, Spain
Rimowa, Germany
Lecombi, Germany
Next, UK
Galleries Lafayette, Fr
Top Shop, UK
John Lewis, UK
Mango, Spain
Coim, Italy
C and A, Belgium
Actions required for EU distribution are as follows:
Action
Responsibility
Resources
Evaluate method of distribution that
company feels comfortable with
Company Management
In house
Under the fact finding tours evaluate the
options for distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
6.3.
Aspect 3 – Investment
Before talking about potential investments or presenting the actions needed to attract more investments either intra
Agadir or Foreign Direct Investments (FDI), the following annual production quantities are presented in each of the
4 countries so investors could estimate the Agadir market size and potential investment opportunities according to
phase 1 report:
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Annual Production Quantities
Leather production
Egypt
Jordan
Type
Square feet
Morocco
Tunisia*
Beef
74.434.680
3.000.000
27.272.725
-
Buffalo
47.352.600
-
-
-
Camel
9.307.250
-
-
-
Veal/small calf
10.801.200
-
-
-
Sheep
15.042.400
4.500.000
76.546.757
-
Goat
3.167.160
2.250.000
11.789.472
-
Imported leather
22.500.000
-
-
-
-
9.000.000
-
-
182.605.290
18.750.00 ***
115.608.954
-
70 million
Half million
-
-
Merino (imported
Australian sheep skin)**
Total
Footwear production (pair
per year)
Source: Chambers of Industry and professional associations in the four countries *****
*:
All data obtained from Tunisia are in Tunisian dinar, and can not be converted in this table because they
reflect only the quantities produced.
**: They are all exported as raw hides from Jordan.
***: Jordan exports 80% of local raw hides and tans only 20% in the only tannery currently existing, or about 2
million square feet annually.
****: None of the four countries provided any data on production quantities of clothing and personal leather
goods.
*****: The above mentioned data were obtained from leather associations and leather industries in the four
countries, which contacted the relevant ministries in their countries.
The following table shows some of the potentials in the four countries in terms of potential investments, which
depend on the availability of the industry’s basic materials, the existence of industrial zones specialized in leather
and other leather industries, the availability of water, energy and labor at affordable prices and sufficient quantities,
the availability of the required technical expertise and the adequate supply of components.
Country
Raw
hides
Specialized
cities
Industry's basic materials
(1)
Water
Energy
Labor
Technical
expertise
Jordan
***
Not available
**
*
*
*
**
Egypt
*****
****
****
*****
*****
****
***
Morocco
*****
***
****
****
***
****
****
Tunisia
****
Not available
****
****
****
****
****
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(1) Like raw hides or half-processed leather, salt, lime, pigments, chromium, oils, fillers in the case of tanning,
tanned leather and components in the case of footwear and other leather industries.
(2) In this classification, * means weak and ***** means the strongest country of the group.
(3) In regards of basic resources, like water, energy and labor, two factors were taken into account: the availability
and the competition in terms of cost and quality.
(4) Technical expertise includes knowledge of manufacturing and design methods, keeping up to date with
fashion trends, providing high-level specialized vocational training and knowledge of export markets.
The information contained in the above table was concluded based on the results of the first phase of the study, but
it is only a preliminary analysis that can be more useful when feasibility studies and other investment studies, which
will be recommended here later, are conducted.
A-Development of investment intra-agadir countries
1. Encouraging the creation of platforms for trade houses and big integrating projects focused
on leather and footwear in Agadir countries:
The international market’s current trend towards the demand for finished products, the development and rapid
evolution of fashion products and the manufacturing of small series, requires more capital to finance raw materials,
the investment in technological equipment (CAD/CAM and automatic cutting and quilting), creation and design,
marketing and training workforce.
This characteristic contradicts with the dimension of subcontractor SMEs and the existing businesses, which don’t
have enough equity capital to buy sophisticated equipment and suffer from lack of working capital, which in turn
forces them to work as subcontractors for the ordering parties, providing them with raw materials.
To repair this, it is important to create big platforms in Agadir area or international trade companies (Trade House)
and streamline the relationship between subcontractors and ordering parties.
The platforms should have substantial financial resources to finance the acquisition of new technologies, the
procurement of quality raw materials, highly qualified technical staff, the creation of new collections and promotion
abroad.
Given the high risks associated with these platforms, the governments of Agadir Agreement Member Countries can
grant these platforms the same advantages as those given to priority industrial projects.
The establishment of partnership relations between subcontractors and ordering parties and improving the management
of subcontractors are necessary conditions for the success of platform development project.
To that end, it is necessary to encourage the creation of a new generation of subcontractors by supporting the
investment platforms in subsidiary subcontractors in the form of consortia and by increasing the funding granted to
subcontractors’ contracts.
It is also necessary to:
 Promote the certification of subcontractors, supervisors and auditors.  Develop an accreditation system for internationally recognized certification bodies in Agadir
countries.
 Establish a promotion, extranet and video conference program with subcontractors to enable
them to work in networks with ordering parties.
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Creating integrated projects for tanning and finishing quality leather
Although Egypt is a big exporter of semi-finished leather, Agadir area is poorly integrated vertically compared to the
competition.
To limit the impact of this competition advantage, it is necessary to improve the conditions and quality of finished
leather supply by encouraging the creation of leather finishing projects.
With the exception of the existence of some high-end leather finishers, especially in Tunisia, the leather finishing
sector is weak in Agadir area.
Given the high risks associated with these investments, the governments can grant Agadir area investors and foreign
investors additional advantages, such as aids for the construction of industrial space and other benefits to be negotiated
case by case according to the technological contribution of the developer.
To attract these developers, it is also necessary to emphasize the importance of the needs of exporting companies in
Agadir area of quality leather.
Identification of new industrial projects where integration and complementarities in the Leather and Shoes sector in
the Agadir countries is possible, and henceforth, promoting exports of these projects in the E.U market.
3.
Carry out a feasibility studies of identified opportunities of investment in Agadir countries and
particularly for the creation of footwear industrial parks offering all needed facilities for Footwear
Micro and SMEs: tanning facilities and supporting services.
4. Developing in Agadir Supporting services projects:
Creating in Agadir supporting services that cover:
● The marketing
● The quality and design
● The Information Technology 5. Creating a database of projects and make it available to the investors in the area:
Creating this database will be accomplished through conducting opportunity studies of the investment projects in
Agadir area.
These opportunity studies will study demand and supply in Agadir area, determine the available export possibilities
and the best locations for the projects, as well as the profitability of the current investments.
They focus on high potential sectors such as finished leather, high-end leather footwear, specialized footwear for
niche markets (orthopaedic and safety footwear) and the manufacture of footwear components.
6.
Developing an investment promotion plan in Agadir area
Organizing publicity campaigns to promote the production in Agadir area in foreign media (specialized journals,
television programs presenting companies that successfully produced and exported quality products for the top three
companies in the best designer and best exporter contests).
Developing cooperation agreements with all professional associations and organizations which encourage investment
and foreign trade, and the targeted countries in the European Union.
Organizing missions to explore foreign investment opportunities in Agadir countries, highlighting the advantages
offered by Agadir area.
Organizing an open door day between European platforms, support organizations, investor, European distributors and
industrial distributors and financiers in Agadir area and the Gulf countries.
B-Development of FDI:
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Besides the national FDI development program, developing of an FDI development program that include:
● Negotiating with EU countries to establish credit lines to finance short-term operations (purchase
of raw materials, funding subcontracting operations and other services) performed in Agadir area.
● Develop an investment funding program in Agadir area:
1. Asking the European Investment Bank’s help in setting up a guarantee fund to finance regional
investment projects and an intra-Agadir investment development fund to encourage joint projects in the area.
2.
Develop credit insurance mechanisms for exports at the regional level:
 Promote a regional export credit insurance system to strengthen the partnership between the
national export credit insurance organizations on the one hand and between these organizations
and their European insurers and reinsurers counterparties on the other.
 Consider the advisability of establishing a regional export credit insurance company.
 Expand the export credit insurance system to include the purchases completed for the purpose
of export.
 Investment Development Action Plan
Actions
Responsibility
Funding
Agadir
countries
Agadir
countries
Provide incentives for the creation of platforms
Business Associations
Provide incentives for investment in tanning & finishing
Business Associations
Creation of Ideas of projects’ Data base
ATU
EU
Conduct feasibility studies for identified opportunities and particularly for
the creation of footwear industrial parks dedicated to Footwear Micro and
SMEs and including tanning facilities and supporting services
Business Associations
Agadir
countries
Creation of supporting services projects
Business Associations
FDI promotion mission in the EU & Gulf countries
Business Associations
Establish feasibility study of the investment financing supporting system and
Action Plan
Business Associations
Agadir
countries
Agadir
countries
Agadir
countries
C- Agadir Artisan Leather Crafts Subsector:
Handcraft production is a major form of employment and in the Agadir countries and constitutes a significant part
of their export economies. The escalating number of small businesses turning to handcraft production is unlikely to
decline significantly in the future. Artisans have been identified as the second largest sector of rural employment after
agriculture in the region.
Artisan production has thrived because handcrafted products offer distinct advantages:
●
●
●
●
minimal start-up capital
flexible work hours
the ability to work at home
freedom to manage one’s own business.
Unlike many other forms of labour, artisan production can also enable a degree of labour autonomy for those who
have limited access to the cash economy. As a means of livelihood, handcrafts provide an ideal avenue for creative,
independent entrepreneurs.
According to the Creative Economy Report 2008, arts and crafts are the only creative industry where developing
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countries have a leading position in the global market. For this creative sector, developing-country exports nearly
doubled in ten years, increasing from $7.7 billion in 1996 to $13.8 billion in 2005, accounting for 60% of total world
exports of creative goods. Tourism and the expansion of leisure and art markets will continue to contribute to the
dynamism of arts and crafts in the world market.
The report also quantified international trade in arts and crafts as totaling $23.2 billion in 2005. The report further
states: “The global market for arts and crafts is expanding and clearly is not negligible; world exports increased
31% during the period 2000-2005, from $17.7 billion in 2000 to $23.2 billion in 2005. Arts and crafts are the most
important creative industry for export earnings in developing countries”.
The Moroccan Ministry in charge of handcrafts evaluates the number of persons considered as craftspeople in the
country to be 20% of the active population. There are 2 million full-time craftspeople, approximately 1 million
families living at least partially from handcrafts, and 4,390 exporters.
Tunisia in terms of crafts production counts 300,000 craftspeople (11% of the active population) of which 2/3 work
on a part-time basis (4 working hours a day). Their production accounts for an average of 3.8% of the Gross Domestic
Income and ensures an annual income of US $2,400 per household (an average of 5 members).
One of the major problems the Agadir artisans have is in distributing, marketing and selling their work. In order to
reach an export market, most artisans work through a traditional distribution channel. The traditional distribution
channel consists of artisans, exporters, wholesale importers, retailers and consumers.
In this distribution channel structure, artisans are responsible for producing products and transporting them to an
exporter.
UNCTAD, UNDP Special Unit for South-South Cooperation, 2008, Creative Economy Report.
Adapted from USAID “Building a profitable craft business”
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In addition to quality control, packing the product and transporting goods to the port of exit, the exporter has the
responsibility to market the products to wholesalers or retailers:
●
●
●
●
producing a catalog
establishing and selling at FOB prices
sales meetings with wholesalers and retailers
maintaining an in-country showroom
The wholesaler then exhibits in international trade shows, selling the products to retailers at wholesale prices. In
order to be a successful wholesaler, these businesses should have a website, full product catalog, and incur all the
cost associated with trade show exhibition, which include inventory procurement, transportation to the show, booth
display, marketing collateral such as hang tags, brochures and product catalogues.
Because of increased technology, ease of communication, and more shipping options globally, this traditional
distribution channel is flattening. Artisans are becoming more sophisticated and taking on the responsibility of not
only producing products, but also exporting them. Additionally, more retailers, even independent retailers and small
shops, are buying directly from artisans and taking on importing responsibilities. This flattening distribution channel
does put a small incremental amount of profit into the hands of artisan exporters and retailer importers, however
it is important to note that even though a player is removed from the distribution channel, the responsibilities and
associated costs are not removed.
For the leather product artisans working in the Agadir zone they should concentrate on certain aspects of the business
in order to remain competitive, survive and prosper in the global economy. These are:
● Product Development
● Streamlined Production to provide economies of scale and to speed up delivery times.
● Quality Control
● Marketing / Distribution in working towards developing a direct distribution channel as above.
Actions required for the Agadir Zone Artisan Handcraft sector:
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Action
Responsibility
Resources
Protect Agadir Handicraft products through their
registration in the international intellectual property
record as done for Tunisian and Moroccan sandals
(balgha and countra)
Agadir Intellectual
property Institutions
Central Government support
Move to a flattened distribution channel
Associations,
entrepreneurs
Central Government support
ATU support
Product Development improvement
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
Improve production techniques and quality
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
Develop marketing plan based on above chart
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
7.SUMMARY OF ACTION PLAN
7.1.PRODUCTION
A.Leather
Cost Competitiveness
Action
Responsibility
Each Country to commission a study on hides and
skins collection with an emphasis on reducing waste
Tanners Associations
Create an international data base on sourcing,
suppliers, and prices of the major chemicals required
in tanning
Tanners Associations
Take advantage of the new leather cities as an
opportunity to re-organise production processes to
reduce costs
The Tanning Companies
Hold an Agadir Group seminar on the latest tanning
techniques with a view to reducing costs
Meeting of Tanners Associations to decide areas of
co-operation, integration and supply requirements
Tanners Associations
The Tanning Companies
Tanners Associations
Resources
Central Government support
ATU support
Central Government support
ATU support
Business development agencies
offering preferential inducements
for capital investment
Invitations to international
chemical and machinery companies
to attend the seminar
Export Promotion Agencies in 4
countries
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Action
Market research to determine types of finished
leather required in each country especially for import
substitution.
Fact finding tour by potential exporters
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Responsibility
Tanners associations
Export Promotion
Agencies
The Tanners
Resources
Country associations, in cooperation with Export Promotion
Agencies to plan, co- finance with
individual companies, and organize
a study tour for each of the four
countries to the others.
Companies to be pre-selected as to
suitability and commitment
Decide what types that can be produced with current
technology by evaluation of current manufacturing
plants
The Tanners
Contact machinery manufacturers
Contact chemical suppliers
Decide which types in demand that cannot be produced
but could be with new technology by evaluation of
current manufacturing plant
The Tanners
Contact machinery manufacturers
Contact chemical suppliers
The Tanners
Company management in house
strategic thinking
Action
Responsibility
Resources
In conjunction with the study above further work
should study slaughtering and preservation techniques
with the object of upgrading the raw material.
Tanners Associations
Central Government support
Introduce an Agadir wide classification system for
finished leather
Tanners Associations
Central Government support
ATU support
In conjunction with the Agadir group seminar above
further work should study the latest finishing techniques
Tanners Associations
The Tanning Companies
Government support agencies and
Tanners
Action
Responsibility
Resources
Feasibility studies on man versus machine for
productivity gains
The Tanning Companies
In house management
Benchmarking productivity best practices in Spain,
Italy, India and Turkey
The Tanning Companies
Government support agencies and
Tanning companies
Implement a productivity improvement drive
The Tanning Companies
Government support agencies and
Tanning companies
Decide on most appropriate market segments (which
type of leather to be used in each subsector of the
leather and shoes sector) :
Cow Shoes
Sheep
PLG
Goat
Garment
Quality Improvement
Productivity Improvement
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Training
Action
Responsibility
Assist any country from Agadir Zone who is interested
to establish specialized training center in the Leather
and shoes industry.
Individual Leather and
shoes associations
Shop floor supervisors, laboratory technicians and
research and development personnel should attend the
proposed seminar above
The Tanning Companies
Selected and appropriate personnel to attend the
Linea Pelle leather show in Italy to study the latest
developments on display.
The Tanning Companies
Develop up to date specialized training program in the
tanning industry benefiting from what will be presented
by the international chemical and machinery companies
during the seminar and the leather show above
Tanning associations and
Tanning companies of the
4 countries
Resources
Government support agencies
Any country form the 4 countries
who have advanced experience in
this field
Government support agencies
ATU
Individual country development
agencies
ATU
Government support agencies
ATU
B. Footwear
Integration and Supply Opportunities
Action
Responsibility
Export promotion agencies
Resources
Country associations, in co-operation with
export promotion agency to plan and cofinance with individual companies to organize
a study tour for each of the four countries to the
others.
Companies to be pre-selected as to suitability
and commitment
Research the market in all four countries,
Fact finding tour by potential exporters
Country associations
Decide target market by country and
analyse results of tour
Companies with inputs
from Associations
Brain storming sessions with Associations
Reasoned decision from experiences from
fact finding tour, decide type of product to
be manufactured
Companies
Using information obtained from study tour
Set targets for import substitution
Associations
Companies
Government Ministries
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Individual manufacturing
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Export promotion agencies
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Cost Competitiveness
Action
Responsibility
Resources
Study current production techniques with a view to
re- engineering them
Companies
In house management
Association experts
Consider alternative labour and material saving
constructions
Companies
In house management
Association experts
Visit SIMAC show in Italy for research on latest
machinery and equipment available
Associations
Companies
Export promotion agencies
Business development agencies
Associations
Research suppliers of raw materials and
components in Agadir countries with a view to
reduce import substitution and lower costs
Associations
Companies
Association experts
Companies own management
Agadir Group meeting to formulate policy
on logistics and export finance for cost
competitiveness
Associations
Companies
ATU
Export Development Banks
Export promotion agencies
Business development agencies
Media campaign introducing the leather culture
Associations
Companies
ATU
Export promotion agencies
Productivity Improvement
Action
Responsibility
Critically assess current manufacturing practices
Company Management
Re-design and re-engineer operational areas
Company Management
Conduct feasibility study into automated and semi
automated machinery and equipment
Company Management
Resources
Experts from Associations
In house experts
ATU international experts
Experts from Associations
In house experts
ATU international experts
Experts from Associations
In house experts
ATU international experts
Analyse and consider new, less labour intensive
constructions
Company Management
In house
Set productivity targets
Company Management
In house
Training
Action
Responsibility
Resources
Review training courses available from institutions for
relevance and quality needs of the modern industry
Ministries
Associations
The institutions
Corresponding training institutes
in Europe
Adjust where necessary
Assess the quality of instructors
Ministries
Associations
Ministries
Associations
Benchmark the attainment levels of trainees to European
levels
Ministries
Associations
Hold seminars on marketing and selling for management
Associations
Mahmoud Qattous and Terry McCallin
The institutions
The institutions
The institutions
Corresponding training institutes
in Europe
ATU
International consultancies
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C.Personal Leather Goods
Integration and Supply Opportunities
Action
Responsibility
Export promotion agencies
Research the market in all four countries,
Fact finding tour by potential exporters
Creation of Center of excellence in design
and creation for leather goods industry
in each Agadir country and initiate
cooperation between these institutions
through the creation of a coordination
committee
Country associations
Individual manufacturing
companies
Industrial development
agencies
Country associations
Resources
Country associations, in co-operation with
export promotion agency to plan and cofinance with individual companies to organize
a study tour for each of the four countries to the
others.
Companies to be pre-selected as to suitability
and commitment
Industrial development agencies
Cost Competitiveness
Action
Responsibility
Resources
Study current production techniques with a view to
re- engineering them with time and motion studies
Companies
In house management
Association experts
Visit linea pelle show in Italy for research on latest
machinery and equipment available
Associations
Companies
Export promotion agencies
Business development agencies
Associations
Investigate the use of CAD especially for ladies
bags production
Associations
Companies
Business development agencies
Associations
Responsibility
Resources
Productivity Improvement
Action
Critically assess current manufacturing
practices by time and motion study
Conduct feasibility study into automated
and semi automated machinery and
equipment
Company Management
Company Management
Experts from Associations
In house experts
ATU international experts
Experts from Associations
In house experts
ATU international experts
Attend the SIMAC international footwear
and leather goods machinery show
Associations
Management
ATU
Business development agencies
Associations
Set productivity targets
Company Management
In house
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Training
Action
Responsibility
Resources
Review training courses available from institutions for
relevance and quality needs of the modern industry in
stitching operations
Ministries
Associations
The institutions
Corresponding training institutes in
Europe
Train pattern cutters in CAD operation
Company management
Associations
Machinery suppliers
Invest in and train up supervisors in time and motion
study
Company management
Associations
Independent consultants
7.2.MARKETING
A.Leather & Footwear
Product Development
Action
Responsibility
Resources
Visit Linea Pelle show
Associations
Companies
Export promotion agencies
ATU
Study for the establishment of a new business
producing soles / moulds / lasts / adhesives in an
Agadir country
Trade associations
ATU
Research and design a shoeline for Agadir, UK and
German markets. Product development function
Fashion forward
information from
Associations,
Possible co-financing for
services of international
design studio
Utilise local and/or international
designers
Companies
Associations
Export promotion agencies
Analyse the machinery and equipment available
for finishing
Companies
Company management
Machinery suppliers
Chemical suppliers
Assess the technical knowledge of technicians
Companies
Company management
Train technicians to the required standard
Field international consultants on finishing for 12
months over a 3 year period.
Companies
Training institutions
Associations
ATU
Business development agencies
Visit European chemical suppliers for information
on finishing techniques. Combine with visit to
Linea Pelle
Companies
ATU
Business development agencies
Sponsor study tours to EU finishing tanneries and
chemical suppliers for technicians
Companies
ATU
Business development agencies
International agencies
Export promotion agencies
Country associations
Individual manufacturing
companies
Country associations, in co-operation
with export promotion agency to
plan and co- finance with individual
companies to organize a study tour for
each of the four countries to the others.
Companies to be pre-selected as to
suitability and commitment
Research the market in all four Agadir countries.
Fact finding tour by potential exporters. Special
attention in Jordan for re-exporting opportunities
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Study tour and market survey to UK, Germany and
Belgium
Final Report
Country associations, in
co-operation with export
promotion agency to
plan and co- finance with
individual companies to
organize a tour
Companies to be preselected as to suitability
and commitment
ATU
Export promotion agencies
Country associations Individual
manufacturing companies
Actions required for inter Agadir promotion:
Action
Responsibility
Resources
Set up of “Agadir”Leather & Footwear Database
The Associations
The Companies
Export Promotion Agencies
ATU
The Associations
The Companies
Export Promotion Agencies
ATU
Creation of a virtual Agadir exhibition
The Associations
The Companies
Export Promotion Agencies
ATU
Creation of Agadir Leather and Footwear Portal
The Associations
The Companies
Export Promotion Agencies
ATU
Set up a quaterly Agadir Newsletter
The Associations
The Companies
Export Promotion Agencies
ATU
Agadir pavilion in local leather shows in 4 countries
The Associations
The Companies
Export Promotion Agencies
ATU
Set performance targets
The Associations
The Companies
Export Promotion Agencies
ATU
Design of a Brochure and DVD on the Agadir zone
Footwear(& Leather) sector
Actions required for Agadir promotion in EU:
Action
Responsibility
Resources
Organize a road show
to the UK
Associations
Companies
Export Promotion Agencies
ATU
Attend the GDS shoe show
Associations
Companies
Export Promotion Agencies
ATU
Organize a Footwear Road Show & FDI and
Finance raising mission in Brussels Belgium
Associations
Companies
Export Promotion Agencies
ATU
Organize the participation of Agadir Leather and
footwear companies in International Exhibitions
Associations
Companies
Export Promotion Agencies
ATU
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Actions required for inter Agadir distribution:
Action
Responsibility
Resources
Evaluate method of distribution that company feels
comfortable with
Company Management
In house
Under the fact finding tour evaluate the options for
distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
Actions required for EU distribution:
Action
Responsibility
Resources
Define profile, job description and TOR for an agency
agreement
Company management
In house
Legal representation
Export promotion agencies
Seek out agents in potential markets
UK , Germany and Benelux
Company Management
Export promotion agencies
ATU
Companies
B. Personal Leather Goods
Actions required for product development:
Action
Responsibility
Resources
Assess production methods with a view to mechanize.
Visit Simac show in Italy for latest machinery
developments
Company Management
Business upgrading programmes
ATU
Consider specialization by product line
Company Management
In house
Get fashion forward information for ladies bags and
belts. Visit Mipel show in Italy.
Company Management
Export promotion agencies
ATU
Companies
Actions required for EU promotion are as follows:
Action
Responsibility
Attend international show. Choose between Mipel
and Offenbach
Company Management
Seek out sales agents
Company Management
Resources
Export Promotion Agencies
ATU
Advertise at show
Advertise in Trade Press
Actions required for inter Agadir distribution are as follows:
Action
Responsibility
Resources
Evaluate method of distribution that company feels
comfortable with
Company Management
In house
Under the fact finding tour evaluate the options for
distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
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Feasibility study for establishing a distribution chain
Companies
Associations
Export promotion Agencies
Country Associations
ATU
Actions required for EU distribution are as follows:
Action
Responsibility
Resources
Evaluate method of distribution that company feels
comfortable with
Company Management
In house
Under the fact finding tours evaluate the options for
distribution in the field
Company Management
Export promotion Agencies
Country Associations
ATU
7.3.INVESTMENT
Investment Development Action Plan
Investment Development Action Plan
Actions
Responsibility
Funding
Develop an Investment Development Program targeting Agadir
investors
Concerned Agadir
Government Agencies
Agadir countries
Promote the creation of complementing projects dedicated to
tanning and finishing of high quality leather
Business Associations &
Industrial Development
Institutions
Agadir countries
Creation of Ideas of projects’ Data base
ATU
EU
Conduct feasibility studies for identified opportunities and
particularly for the creation of footwear industrial parks
dedicated to Footwear Micro and SMEs and including tanning
facilities and supporting services
Business Associations
Agadir countries
Perform a feasibility study for the setting up of industrial park
dedicated to Micro, Small and Medium Enterprises
Business Associations
Agadir countries (Business
Development Centres)
Provide incentives for the creation of platforms
Business Associations
Agadir countries
Provide incentives for investment in tanning & finishing
Business Associations
Agadir countries
Creation of supporting services projects
Business Associations
Agadir countries
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FDI promotion mission in the EU & Gulf countries
Business Associations
Agadir countries
Establish feasibility study of the investment financing
supporting system and Action Plan
Business Associations
Agadir countries
7.4. Actions required for the Agadir Zone Artisan Handcraft sector
Action
Responsibility
Resources
Protect Agadir Handicraft products through
their registration in the international
intellectual property record as done for
Tunisian and Moroccan sandals (balgha and
countra)
Agadir Intellectual
property Institutions
Central Government support
Move to a flattened distribution channel
Associations,
entrepreneurs
Central Government support
ATU support
Product Development improvement
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
Improve production techniques and quality
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
Develop marketing plan based on above chart
Associations,
entrepreneurs
Central Government support
International consultants
ATU support
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Final Report
8.PRIORITISATION OF ACTION PLAN
8.1.
Short and Medium terms plan
Before discussing the plan, it should be noted that the private sector stresses the need to develop a program to
facilitate trade and improve logistic services, transport and ports, as well as facilitating the granting of visas for
businessmen in Agadir countries. This is an important factor in encouraging cooperation among member states in the
fields of transport and provision in order to reduce shipping cost and promote professional cooperation in the sector
in Agadir area.
To this end, it is suggested to use the findings and recommendations of the transport study undertaken by Agadir
Technical Unit (ATU).
The representatives of the private sector stressed the importance of specialization for the successful implementation
of the plan. Therefore, the companies in Agadir area should focus and specialize in certain types and industries in
their sub-sectors to become more competitive and thus increase export opportunities.
Proposed Recommendation
The Responsible Body
Expected Budget
Professional associations in
Agadir countries financed by their
governments. These associations should
hold coordination meetings, conduct
the necessary studies and identify the
expected costs of this plan
25 thousand
(for the study)
First: Tanning and Leather
01- The study recommends the adoption of a
three-dimensional plan on the national level for
the tanning sector that takes the following into
consideration:
•
•
•
Switching from hand slaughter to machine
slaughter in the slaughterhouses
Building leather warehouses in the Arab
countries
Providing reliable and well equipped
transport to ensure proper leather
preservation
02- Organizing and holding joint coordination
meetings and developing a cooperation
framework among professional associations
which represent the tanning industry in order
to identify potential areas of cooperation and
integration and supply needs and establish
committee for permanent consultation
Professional associations
03- Creating a digital data bank on the suppliers
and the main chemical materials needed in
tanning industry and make it accessible online
(Agadir Technical Unit gate)
Agadir Technical Unit
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25 thousand
30 thousand
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04- Considering the new leather cities as an
opportunity to reorganize production processes
to reduce costs and promote cross-investments in
this area
Agencies for supporting the industry
and promoting investment in Agadir
countries
20 thousand
05- Increasing professional meetings between
private sector companies in the leather sector to
further identify the market needs in each country
Professional associations
25 thousand
06- Harmonizing standards by agreeing on
a broad classification system in Agadir for
final leather within the framework of technical
cooperation
Professional associations and Agadir
Technical Unit
35 thousand
07- Exchanging experiences between the four
countries in the area of training and the possible
development of joint training programs
Professional associations with support
from the agencies and programs for
supporting the industry in Agadir
countries
100 thousand
08- Organizing and holding joint coordination
meetings and developing a cooperation
framework among professional associations,
which represent the sectors of footwear and
personal leather goods in order to identify
potential areas of cooperation and integration
and supply needs and establish committee for
permanent consultation
Professional associations
25 thousand
09- Increasing professional meetings between
private sector companies in the sectors of
footwear and personal leather goods to further
identify the market needs in each country
Professional associations
25 thousand
Agadir Technical Unit
Around the same cost
mentioned earlier
in the tanning and
leather plan of 30
thousand Euro
11- Developing an action plan to train
companies operating in the sectors of footwear
and personal leather goods in Agadir area similar
to the Tunisian-Moroccan experience, within the
framework of technical cooperation
Professional associations with support
from existing rehabilitation programs in
their countries
5 thousand for each
company eligible
for support from
rehabilitation
programs in the four
countries
12- Promoting partnership projects
Professional associations
25 thousand
13- Encouraging international trade between
merchants in the four countries
Professional associations with support
from relevant government agencies
25 thousand
14- Cross-participation in exhibitions organized
in Agadir countries
Professional associations and Agadir
Technical Unit
30 thousand for each
exhibition
Second: footwear and Personal Leather Goods
10- Creating a digital data bank on the suppliers
and the main materials needed in manufacturing
footwear and personal leather goods and make it
accessible online (Agadir Technical Unit gate)
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15- Participating in specialized exhibitions
in Europe, to be chosen by the professional
associations in coordination with Agadir
Technical Unit
Final Report
Professional associations
Agadir Technical Unit
The relevant government agencies in
the four countries
200 thousand for
each exhibition
16- Developing a technical cooperation
program between the bodies responsible for
traditional and heritage crafts to further promote
these products in the markets of Agadir member
states as well as in the European Union
The bodies responsible for craft
industries in the four countries
100 thousand
17- Protecting the traditional and heritage crafts
by registering brands at the international level
like the Tunisian «cuntra» and the Moroccan
«belgha»
The bodies responsible for craft
industries in the four countries
50 thousand
Third: Handicraft Products
Fourth: Investment
18- Creating an investment digital map on the
promising projects in the sectors, and make it
available to investors in the region
19- Analyzing investment opportunities in
regional projects in the leather, footwear and
other leather products
144
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Professional associations
Agadir Technical Unit
Institutions charged with supporting the
industry and encouraging/ promoting
investment in the four countries in
coordination with the professional
associations
25 thousand
100 thousand
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8.2. Long term
The various proposals and recommendations of this study can be categorized according to a schedule that takes into
account the available resources and the willingness of various parties. It is suggested to authorize the ratification of
the proposed plan for implementation over the coming years.
ANNEX I
1.
Global Imports and Exports All Leather Products
Designation
Global export in
million of US $
Share
4101
Raw skins of cattle
4,664,794
15
4102
Raw skins of sheep
994,499
3
4103
Raw skins of goat
534,295
2
4104
Prepared leather of cattle
7,063,069
23
4105
Prepared leather of sheep
530,869
2
4106
Prepared leather of goat
45,8587
1.5
4107
Prepared leather of reptile, porcine and others
12,666,010
41
4112
Finished leather of sheep after tanning
1,003,938
3
4113
Finished leather of goat after tanning
1,817,903
6
4114
Finished chamois leather
770,386
2.5
4115
Finished reproduced leather
351,407
1
Total
30,855,757
100
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● 20 % of exports are raw skins, 67 % are semi-finished leather and 10 % are constituted of
finished leather
● The leading raw skin exported product is raw skin of cattle
● The leading semi-finished exported product are leather of cattle and leather of porcine, reptile
and others
● The leading exported finished leather products are goat, chamois leather and finished reproduced
leather
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Final Report
HIDES, SKINS and LEATHER
1.1.1
Global imports hides, skins and leather:
The Global imports of hides, skins and leather during the period 2003-2007 is as follows:
Trade Indicators
Importers
Value
imported
in 2007,
in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth in
value between 20032007, %
Annual growth in
value between 20062007, %
Share in
world
imports, %
World
29,492,510
1,497,264
5
6
100
China
5,964,674
-4,787,713
12
7
20.22
Italy
4,219,962
845,500
7
10
14.31
Hong Kong
3,568,065
-621,176
3
-8
12.1
Germany
1,046,123
175,938
8
6
3.55
Korea
903,355
-47,713
-2
5
3.06
Viet Nam
851,306
-689,233
13
22
2.89
Romania
850,554
-736,224
5
3
2.88
USA
848,715
2,216,066
0
-4
2.88
Spain
782,626
-59,579
-1
18
2.65
Mexico
744,111
-46,6426
-4
-12
2.52
Tunisia
256,706
-231,160
11
33
0.87
Morocco
115,045
-91,194
12
6
0.39
Egypt
1,5245
13,0471
68
59
0.05
Jordan
610
7,149
-15
-12
0
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● Global imports of skin and leather is slowly increasing by 5 % a year during the period 2003-2007.
Most producing countries of leather are producers of footwear and leather goods
● The world top ten importers are global leading producers and exporters of footwear: China, Italy,
Hong Kong, Germany, Korea, Viet Nam, Romania, EU countries, USA and Japan. They represented
67 % of the global demand
● The biggest Agadir countries importers are Tunisia and Morocco that are the leading exporters of
footwear of Agadir member states
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Global exports hides, skins and leather:
The Global exports of skin and leather during the period 2003-2007 is as follows:
Trade Indicators
Exporters
Value
exported in
2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth in value
between 2003-2007, %
Annual
growth
in value
between
2006-2007,
%
Share in
world
exports, %
World
30,989,770
1,497,264
5
6
100
Italy
5,065,462
845,500
5
4
16.35
USA
3,064,781
2,,216,066
4
7
9.89
Hong Kong
2,946,889
-621,176
3
-8
9.51
Brazil
2,193,931
2,035,844
20
17
7.08
Germany
1,222,061
175,938
4
8
3.94
China
1,176,961
-4,787,713
3
-33
3.8
Argentina
969,481
923,759
7
9
3.13
Australia
914,383
820,034
4
14
2.95
Korea
855,642
-47,713
-5
3
2.76
Chinese Taipei
833,384
283,738
1
5
2.69
India
805,164
391,157
10
9
2.6
France
775,369
205,319
3
13
2.5
Spain
723,047
-59,579
5
8
2.33
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● With a significant positive Trade Balance, EU developed countries and USA are the leading
exporting countries particularly Italy ranking by far the first exporter with16 % of Global exports
followed by USA second with a market share of 10 %, Germany 5th with a share of 4 %. This is
due to the specialisation of developed countries in high quality finished leather while delocalising
the production of uppers, footwear and leather goods in developing countries.
● China is lagging in the sixth position with a huge negative Trade Balance. China is massively
importing leather to meet the needs of its expanding industry of footwear and leather goods.
● Brazil ranking 4th, Argentina 7th and Australia 8th are also in good position with a very important
positive trade balance due to the importance of their production of livestock and related production
of raw skin
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Final Report
Global exports of raw cow hides:
The Global exports of raw hides of cattle during the period 2003-2007 are as follows:
Exporters
Value
exported
in 2007,
in USD
thousand
Trade
balance in
2007 in USD
thousand
Annual
growth
in value
between
2003-2007,
%
Annual growth in
quantity between
2003-2007, %
Annual growth
in value between
2006-2007, %
Share in
world
exports, %
World
4,664,794
-76,927
2
1
8
100
USA
1,774,511
1,724,417
3
14
38.04
France
350,160
314,955
5
10
6
7.51
Australia
294,882
293,881
8
31
6.32
Canada
282,233
277,733
9
12
6
6.05
Germany
245,435
80,891
6
1
-10
5.26
Netherlands
195,008
87,608
4
1
4.18
Hong Kong
153,518
-51,194
-13
-15
-4
3.29
UK
119,872
58,785
7
-4
5
2.57
Ireland
116,378
116,163
13
11
11
2.49
Italy
108,996
-786,939
2
7
-11
2.34
Spain
107,543
42,270
9
-2
-4
2.31
Egypt
6,715
-1,590
10
3
-28
0.14
Jordan
686
686
-3
-15
6
0.01
Tunisia
55
-1,885
0
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● Global export of raw hides of cattle is very low as most developing countries are establishing
their own transformation capacities of raw hides
● USA is the leading global exporter of raw hides of cattle followed by France, Australia, Canada,
Germany, Netherlands, Hong Kong, United Kingdom, Ireland, Italy and Spain.
● The leading global exporters are those who are big producer of meat and exporting raw hides
as a by product and the mostly experiencing the delocalisation of their leather to developing
countries.
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Global exports of finished cow leather
The Global exports of finished cow leather during the period 2003-2007 is as follows:
Exporters
Value
exported
in 2007,
in USD
thousand
Annual
growth
in value
between
2003-2007,
%
Trade
balance in
2007 in USD
thousand
Annual growth in
quantity between
2003-2007, %
Annual growth
in value between
2006-2007, %
Share in
world
exports,
%
World
7,063,069
711,921
6
0
3
100
Brazil
1,081,930
1,002,502
18
10
20
15.32
Argentina
697,628
667,210
11
3
15
9.88
USA
677,147
581,786
11
3
9.59
Italy
531,044
-917,218
-3
9
-10
7.52
Hong Kong
444,407
-99,133
-6
-17
-34
6.29
Taipei
396,528
174,378
0
7
4
5.61
Kazakhstan
338,069
337,950
59
5
54
4.79
Australia
211,299
175,040
-9
-6
2.99
Thailand
188,197
-6,8341
36
17
20
2.66
Ukraine
182,099
166,721
23
10
9
2.58
Egypt
99,040
98,331
12
4
22
1.4
Morocco
740
-878
16
351
0.01
Jordan
450
430
103
26
0.01
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The leading global exporters of prepared cow leather are big producers of meat who has a high
transformation capacities of raw skin as a by-product.
● Some developing countries are also high exporters of prepared cow leather such as Kazakhstan,
Thailand, Ukraine and Egypt
● Exports of Morocco, Jordan and Tunisia are not significant
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Global exports of finished leather of porcine, reptile and others
The Global exports of prepared leather of porcine, reptile and others during the period 2003-2007 is as follows:
Exporters
Value
exported in
2007, in USD
thousand
Trade balance in 2007
in USD thousand
World
12,666,010
485,712
8
4
100
Italy
3,238,515
2,527,388
7
2
25.57
Hong Kong
1,884,057
-275,862
7
-5
14.87
Brazil
1,069,608
1,048,119
23
14
8.44
China
840,295
-1,788,198
9
-35
6.63
Germany
695,123
2,2951
6
13
5.49
Korea
601,405
410,433
-3
4
4.75
Austria
484,810
418,037
13
63
3.83
India
404,773
363,287
31
25
3.2
USA
338,993
-242,910
9
17
2.68
Argentina
257,186
251,511
0
-5
2.03
Thailand
230,749
153,343
-5
36
1.82
Egypt
28,363
26,022
46
19
0.22
Tunisia
7,992
-104,250
14
0
0.06
Morocco
3,074
-80,649
31
3
0.02
Jordan
20
-99
11
0
Annual growth in
value between 20032007, %
Annual growth
in value between
2006-2007, %
Share in
world
exports, %
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The export leader is Italy with a market share of 26 %
● The leading global exporters are developed countries who are big producers of meat and have a
high transformation capacities of raw skin as a meat by-product.
● Some developing countries are also high exporters of prepared leather of porcine such as Brazil,
China, India, Thailand, and Egypt
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Global export of finished leather of sheep
The Global exports of finished ovine leather during the period 2003-2007 are as follows
Exporters
Annual
growth in
value between
2006-2007, %
Share in
world
exports, %
0
-2
100
129,521
-4
-6
26.72
109,864
-56,555
0
2
10.94
Nigeria
92,072
92,072
18
9
9.17
Korea
69,934
20,155
-20
-19
6.97
Spain
68,786
36,203
2
4
6.85
India
66,917
65,642
45
29
6.67
Free Zones
58,569
57,022
20
4
5.83
France
54,941
33,638
7
6
5.47
China
36,577
-106,998
-8
-8
3.64
UK
33,088
27,009
-5
-16
3.3
Pakistan
31,037
30,083
19
3.09
Tunisia
7,622
3,043
-7
-1
0.76
Egypt
2,491
891
109
65
0.25
Morocco
2,266
635
-8
-11
0.23
Value exported
in 2007, in
USD thousand
Trade balance in 2007 in
USD thousand
World
1,003,938
151,491
Italy
268,242
Hong Kong
Annual growth in
quantity between
2003-2007, %
Trade Map ITC Unit: thousand of US$
● The above table shows that the leading exporters of finished sheep leather are EU developed
countries particularly the Italy who is leading the global exports with a market share of 27 %.
● However some developing countries such as India and Pakistan are knowing a high increase of their
exports
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Final Report
Global export of finished leather of goat:
The Global exports of finished leather of goat during the period 2003-2007 is as follows:
Trade Indicators 4113
Exporters
Value
exported in
2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual
growth
in value
between
2003-2007, %
Annual
growth in
quantity
between 20032007, %
Annual
growth
in value
between
2006-2007,
%
Share in
world
exports, %
World
1,817,903
170,255
13
4
10
100
Italy
2,85,712
-26,601
19
15
39
15.72
China
2,24,758
43,617
16
6
-10
12.36
Hong Kong
184,977
-59,806
11
13
1
10.18
Pakistan
184,116
183,407
29
31
10.13
India
169,377
165,217
21
20
8
9.32
Taiwan
115,417
109,107
8
-8
-1
6.35
Nigeria
87,619
87,180
25
9
22
4.82
South Africa
65,062
59,275
18
21
8
3.58
France
61,754
11,657
9
3
36
3.4
Singapore
56,374
51,682
27
18
33
3.1
Germany
45,950
-11,568
0
-3
19
2.53
USA
43,630
-13,974
-8
-20
2.4
Spain
39,108
-70,573
17
17
8
2.15
Morocco
9,178
-7,020
165
126
132
0.5
Egypt
814
670
49
-28
0.04
Tunisia
181
-6,799
-29
-62
-83
0.01
Trade Map ITC Unit: thousand of US$
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● The above table shows that the leading exporters of finished leather of goat are EU developed
countries.
● However some developing countries such as China, Pakistan, India, Nigeria and South Africa are
experiencing a high increase of their exports with an yearly rate of growth respectively of 16, 29, 21,
25 and 18 %
1.1.8
Global exports of finished chamois leather:
The Global exports of finished chamois leather during the period 2003-2007 is as follows:
Trade Indicators4114
Exporters
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth
in value between
2003-2007, %
Annual growth
in value between
2006-2007, %
Share in world
exports, %
World
770,386
37,365
1
28
100
Italy
389,802
370,472
11
29
50.6
Korea
74,121
71,647
-10
-3
9.62
USA
55,283
42,527
-39
684
7.18
Dom Republic
50,959
50,887
977
18
6.61
Hong Kong
34,382
5,800
7
72
4.46
Mexico
18,461
-183,150
22
-9
2.4
Spain
16,615
-10,736
-13
7
2.16
China
15,160
-99,734
-5
-33
1.97
Brazil
13,587
10,286
20
28
1.76
Slovenia
11,228
-6,096
280
79
1.46
Romania
9,184
-29,727
-6
-26
1.19
France
7,931
-14,997
12
41
1.03
Tunisia
6,296
-33,307
10
52
0.82
Morocco
2,319
-4,170
-24
50
0.3
Egypt
350
-548
171
29
0.05
Jordan
1
-270
0
Trade Map ITC Unit: thousand of US$
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The above table shows the following:
1.1.9
Global exports of finished reproduced leather:
The Global exports of finished reproduced leather during the period 2003-2007 is as follows:
Trade Indicators 4115
Exporters
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth
in value between
2003-2007, %
Annual growth in
value between 20062007, %
Share in world
exports, %
World
351,407
-26,633
-1
-21
100
Hong Kong
80,389
-81,681
9
18
22.88
Germany
47,422
42,817
-1
3
13.49
Italy
41,704
28,976
-7
7
11.87
Mexico
39,283
37,408
-1
-73
11.18
Taiwan
23,810
21,838
-43
6
6.78
USA
18,528
6,994
-9
-28
5.27
Spain
15,417
11,085
30
14
4.39
Rep Korea
11,079
5,774
-2
-6
3.15
Brazil
9,088
7,943
39
62
2.59
UK
8,527
7,162
22
7
2.43
Poland
7,081
5,416
42
9
2.02
France
5,741
2,098
-17
-20
1.63
Tunisia
658
-43,809
-9
-45
0.19
Egypt
89
-46
1171
0.03
Jordan
22
-43
5
0.01
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The leading exporters of finished reproduced leather are developed countries that represented 75 %
of global exports: Hong Kong, Germany, France, Italy, Mexico, Taipei, USA, and Spain
● Global Export growth rate is negative
● Global Export growth of Brazil, France, UK, Rep of Korea and Spain are highly increasing
respectively with an yearly rate of 26, 23, 20, 13 and 11 %
● Agadir exports are not significant
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1.2LEATHER GOODS
1.2.1
Global exports personal leather goods
The Global exports of leather goods during the period 2003-2007 are as follows:
Trade Indicators42
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
World
44,098,580
-5329356
11
14
100
China
14,229,340
1,372,0730
10
15
32
Hong Kong
6,210,732
138,8942
7
7
14
Italy
5,226,103
2,565,853
18
24
12
France
4,054,379
1,078,839
14
12
9
Germany
1,579,214
-1,306,077
18
20
4
India
1,328,002
1,263,538
8
9
3
Belgium
1,224,423
117,927
12
15
3
USA
1,131,856
-9,579,754
15
-2
2.6
Viet Nam
772,991
725,823
13
22
2
UK
733,304
-2,061,774
13
22
1.7
Exporters
Annual growth
in value between
2003-2007, %
Annual growth
in value between
2006-2007, %
Share in world
exports, %
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The ten leading exporters of leather goods represented 84 % of global exports
● The five leading exporting countries of leather goods represented 72 % of global exports.
● The first leading exporter is China with a market share of 32 %, followed by Hong Kong with 14 %,
then Italy with 13 % followed by France with 9 % and Germany 4 %.
● The global leading exporters are Asian developing countries with 51 % of global exports, followed
by developed countries with a market share of 33 %
● Leading developed countries registered an annual export growth during the period 2003-2007 higher
than that of global exports whereas leading developing countries registered a lower increase.
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Final Report
Global imports personal Leather Goods
The Global imports of leather goods during the period 2003-2007 are as follows:
Importers
World
USA
Japan
Hong Kong
France
Germany
UK
Italy
Spain
Canada
Belgium
Value imported
in 2007, in USD
thousand
49,427,930
10,711,610
4,941,468
4,821,790
2,975,540
2,885,291
2,795,078
2,660,250
1,546,686
1,107,008
1,106,496
Trade balance
in 2007 in USD
thousand
-5,329,356
-9,579,754
-4,880,867
1,388,942
1,078,839
-1,306,077
-2,061,774
2,565,853
-873,480
-930,133
117,927
12
7
8
6
14
10
13
19
16
14
10
Trade Indicators
Annual
growth
Annual growth
in value
in
value between
between
2006-2007,
%
2003-2007,
%
15
6
6
10
25
16
22
22
20
15
18
Share in world
imports, %
100
21.67
10
9.76
6.02
5.84
5.65
5.38
3.13
2.24
2.24
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The ten leading importers are developed countries that represented 72 % of global imports
1.2.3
Global exports of leather goods carried in pocket or handbag
The Global exports of leather articles carried in pocket during the period 2003-2007 are as follows:
420231 Articles carried in pocket or handbag, with outer surface of leather Exporters
World
France
China
Hong Kong
Italy
India
Germany
Switzerland
Spain
UK
Thailand
Value
exported
in 2007,
in USD
thousand
3,149,370
1,132,827
447,894
364,559
356,977
258,000
121,513
94,080
93,404
51,488
32,238
Trade
balance
in 2007
in USD
thousand
688,511
968,932
424,024
42,194
209,822
256,095
-61,207
14,319
41,593
-80,186
26,562
Annual
growth in
value between
2003-2007, %
18
27
22
8
21
7
22
19
-8
37
15
Annual
growth in
quantity
between 20032007, %
-7
19
13
10
-26
19
15
-7
35
7
Annual
growth
in value
between
2006-2007,
%
27
35
21
13
42
12
31
8
20
36
38
Share in world
exports, %
100
35.97
14.22
11.58
11.33
8.19
3.86
2.99
2.97
1.63
1.02
Trade Map ITC Unit: thousand of US$
156
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The above table shows the following:
● France is the leading exporter with a market share of 36 % of global exports followed by
China with a market share of 14 %, Hong Kong 12 %, Italy 11 % and India 8 %
● The ten leading global exporters are EU developed countries and Asian developing
countries
● Global exports are highly increasing with an yearly rate of growth of 18 %
● UK, France, Germany, China, Italy and Switzerland registered respectively an yearly export
growth of 37 %, 27 %, 22 %, 22 %, 21 % and 19 % higher than that of the global exports.
India.
● Hong Kong and Thailand registered a lower increase
1.2.4
Global exports leather handbags
The Global exports of leather handbags during the period 2003-2007 is as follows
Exporters
World
Italy
France
Hong Kong
China
India
Switzerland
Germany
UK
Spain
USA
Romania
Morocco
Tunisia
Egypt
Jordan
Value
exported in
2007, in
USD
thousand
5,580,430
2,081,774
864,334
848,560
633,183
209,599
101,657
99,113
89,007
83,404
74,072
55,803
13,730
13,456
1,740
98
Trade balance
in 2007 in
USD
thousand
-8,423
1,631,051
277,144
56,903
567,098
204,644
-61,265
-106,614
-308,757
-44,981
-1,126,381
46,063
10,178
11,575
-271
-84
Annual
growth
in value
between
2003-2007, %
22
23
17
20
41
10
32
22
53
9
12
16
15
-2
26
22
Annual
growth
in value
between
2006-2007%
22
29
8
20
22
6
75
15
44
32
-22
32
15
21
70
216
Share in world
exports, %
100
37.3
15.49
15.21
11.35
3.76
1.82
1.78
1.59
1.49
1.33
1
0.25
0.24
0.03
0
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● Italy is the leading exporter , with a market share of 37 % of global exports followed by
France with a market share of 16 %
● Italy and France covered 53 % of the Global demand
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1.2.5
Final Report
Global exporters of leather executive cases and briefcases
The Global exports of leather executive cases and brief-cases during the period 2003-2007 is as follows
Exporters
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth
in value
between 20032007, %
World
957,606
206,582
10
11
100
China
369,921
355,061
7
15
38.63
Italy
141,357
92,292
25
33
14.76
France
89,049
54,353
6
-26
9.3
Hong Kong
67,217
-2,798
8
5
7.02
India
42,060
39,798
38
9
4.39
Germany
38,125
584
17
38
3.98
UK
28,610
-60,965
4
3
2.99
Mexico
18,364
13,588
0
-2
1.92
USA
18,271
-83,524
-1
-18
1.91
Spain
14,149
-10,029
4
55
1.48
Morocco
3,343
2,938
2
9
0.35
Tunisia
1,421
1,338
-10
-11
0.15
Egypt
239
-521
7
-33
0.02
Jordan
24
-330
-28
-8
0
Annual growth in
value between 20062007, %
Share in world
exports, %
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● China is the leading exporter of executive and brief-cases, with a market share of 39 % of
global exports followed by Italy with a market share of 15 % then by France 9 %
● China, Italy and France covered 63 % of the Global demand
● Italy and France are specialised in the fancy high quality segment with an unit value
respectively of US$ 126 and US$ 190 whereas China and India are specialised in the mass
consumer segment with an unit value of US$ 48.
158
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1.2.6 Global exporters of leather accessories
The Global exports of leather accessories during the period 2003-2007 is as follows:
Exporters
World
China
France
Mexico
Hungary
USA
Poland
Austria
Italy
Brazil
Argentina
Value exported
in 2007, in
USD thousand
Trade balance
in 2007 in USD
thousand
2,563,598
613,348
255,893
149,407
148,286
142,583
136,906
90,307
90,179
86,803
84,922
962,442
521,382
205,089
316
76,303
-13,111
68,800
71,878
48,330
82,955
84,193
Annual growth
in value
between 20062007, %
3
3
-12
17
30
-40
52
1
-8
-12
35
Annual growth in
value between 20032007, %
10
18
11
30
22
16
-3
-19
5
-1
24
Trade Map ITC Unit: thousand of US$
Share in world
exports, %
100
23.93
9.98
5.83
5.78
5.56
5.34
3.52
3.52
3.39
3.31
The above table shows the following:
● China is the leading exporter, with a market share of 24 % of global exports followed by
France with a market share of 10 %.
● China and France covered 39 % of the Global demand
● France is specialised in the fancy high quality segment with an unit value respectively of
US$ 214 whereas China is specialised in the mass consumer segment with an unit value of
US$ 11.
1.2.7
Global exporters of leather apparel
The Global exports of leather apparel during the period 2003-2007 is as follows:
Exporters
orld
China
Italy
Hong Kong
Pakistan
India
Germany
France
USA
Turkey
Netherlands
Value exported
in 2007, in USD
thousand
8,479,044
2,567,748
1,150,341
703,054
666,691
529,247
430,283
305,472
279,096
238,307
169,958
Annual
growth in
value between
2003-2007, %
Trade balance
in 2007 in USD
thousand
171,411
2,505,517
723,797
197,838
663,730
523,736
-342,891
-199,911
-1,729,535
192,080
-57,641
1
-10
14
3
13
4
12
12
22
-4
15
Trade Map ITC Unit: thousand of US$
The above table shows the following:
Mahmoud Qattous and Terry McCallin
Annual growth in
value between 20062007, %
4
-11
24
2
8
5
22
10
31
13
29
Share in
world exports,
%
100
30.28
13.57
8.29
7.86
6.24
5.07
3.6
3.29
2.81
2
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● China is the leading exporter of leather apparel, with a market share of 31 % of global
exports followed by Italy with a market share of 14 %
● China and Italy covered 45 % of the Global demand
● Italy is specialised in the fancy high quality segment with an unit value of US$ 143 whereas
China is specialised in the mass consumer segment with an unit value of US$ 40.
1.3
FOOTWEAR
The table shows that footwear with leather uppers represented the biggest share of global exports at nearly 60 %.
Designation
Waterproof footwear
6401
6402
6403
6404
6405
6406
Total
Footwear with rubber/plastic uppers
Footwear with leather upper
Footwear with textile upper
Special footwear
Parts of footwear
1.3.1
Global export in million of US $
1
17
46
9
3
7
83
Share
1%
20 %
56 %
11 %
4%
8%
100 %
Global exports of footwear
Trade Indicators 64
Value
exported
in 2007, in
USD
thousand
Trade
balance
in 2007 in
USD
thousand
Annual growth
in value between
2003-2007, %
World
83,620,420
-4,542,288
10
12
100
China
25,305,590
24,579,090
19
16
30.26
Italy
10,711,020
5,333,101
5
9
12.81
Viet Nam
6,144,136
5,891,693
13
13
7.35
Hong Kong
5,962,447
826,384
1
-1
7.13
Belgium
3,396,171
826,120
18
14
4.06
Germany
3,271,395
-3,105,882
15
15
3.91
Spain
2,626,815
106,474
3
14
3.14
Brazil
2,038,057
1,815,789
5
4
2.44
France
1,984,034
-3,735,725
11
18
2.37
Netherlands
1,842,887
-507,985
12
15
2.2
Portugal
180,1224
1,102,923
2
13
2.15
Romania
1,782,507
1,140,083
6
5
2.13
Indonesia
1,637,959
1,556,050
9
2
1.96
India
1,412,039
1,272,471
18
14
1.69
Exporters
Annual growth in
value between 20062007, %
Share in world
exports, %
Trade Map ITC Unit: thousand of US$
160
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A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
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The above table shows the following:
● A high increase of exports coming from developing countries through the development of the
delocalisation of the production process from high cost labour countries to low cost labour
countries: China is leading the Global exporters with a market share of 30 %; Vietnam, Indonesia
and India are ranking respectively third, 13th and 14th exporter
● EU developed countries are still leading exporters particularly Italy ranking second exporter
followed by Belgium 5th , Germany 6th , Spain 7th , and France 8th
● Romania still equally in a good position (12th ) despite the fact that Romanian exports are showing
a slow increase since its accession to the EU
● Export growth of China, Vietnam and India with an annual growth rate respectively of 19 %,
13 % and 18 % are by far higher than that of Italy, Spain and Portugal(respectively 5%, 3% and
2%)
Accordingly, the Agadir countries’ competitors are mostly:
● China and Vietnam in the price sensitive segment as they have a high market share, 30 & 7 %,
and their export growth are also very high, 19% and 13 % per year.
● Italy in the high quality segment as its market share in the Global export is still high and the
“label produced in Italy” is highly appreciated every where.
1.3.2
Global imports of footwear
Trade Indicators 64
Importers
World
USA
Germany
France
Italy
UK
Hong Kong
Japan
Belgium
Spain
Netherlands
Value
imported in
2007, in USD
thousand
88,162,710
20,404,470
6,377,277
5,719,759
5,377,919
5,338,129
5,136,063
4,096,788
2,570,051
2,520,341
2,350,872
Trade balance in 2007 in
USD thousand
-4,542,288
-19,517,050
-3,105,882
-3,735,725
5,333,101
-4,272,993
826,384
-4,031,023
826,120
106,474
-507,985
Annual growth in
value between 20032007, %
10
6
8
8
9
7
1
8
11
20
17
Annual
Share in
growth in
world
value between
imports, %
2006-2007, %
10
100
1
23.14
7
7.23
14
6.49
5
6.1
6
6.05
-2
5.83
7
4.65
24
2.92
16
2.86
16
2.67
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● World imports are highly increasing by 10 % a year during the period 2003-2007
● The world top ten importers are developed countries: The EU countries, USA and Japan which
represent 68 % of the global demand
● The EU 27 countries imports represent 44 % of world imports
● The EU 15 countries imports represent 40 % of world imports. Their imports are highly increasing(from
8 to 20%) despite only a moderate increase in consumption(2%) this is due to an increase of their
imports from developing countries
● Most EU imports are to EU15 and represent 40 % of Global imports whereas imports to new EU
members are very limited, 4% of Global imports
● The biggest EU importers are Germany, France, Italy, UK, Belgium, Spain, Netherlands which
represents 34% of Global imports shows a high increase of their imports: from 8 % to 20 % a year
during the period 2003-2007
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1.3.3
Final Report
Exports of footwear with leather upper (6405)
The Global exports of footwear with leather upper during the period 2003-2007 are as follows:
xporters
World
China
Italy
Hong Kong
Viet Nam
Germany
Belgium
Spain
Portugal
Brazil
Netherlands
France
Indonesia
India
Roumania
UK
Thailand
Denmark
Slovakia
Austria
Tunisia
Morocco
Turkey
Egypt
Jordan
Value exported
2003
Value exported
2004
29 759 424
5 279 301
5 998 846
3 449 418
663 045
1 281 678
712 657
1 678 672
1 394 529
1 283 666
685 822
748 409
721 621
501 900
691 457
479 198
440 900
331 947
251 141
416 936
146 814
129 969
74 697
16 983
156
32 494 852
6 248 522
6 373 195
3 351 548
761 358
1 482 547
679 572
1 726 770
1 407 032
1 456 114
815 791
863 497
817 777
565 320
769 415
541 087
450 775
376 038
304 466
449 653
228 051
132 803
92 808
18 181
123
Value
Exported
2005
36 402 936
7 990 087
6 387 064
3 737 798
898 042
1 679 846
967 472
1 571 039
1 269 818
1 507 747
1 042 302
927 512
909 876
751 793
858 293
596 998
562 744
408 788
327 365
489 803
258 345
157 098
106 919
19 329
133
Value
exported
2006
39 949 260
8 697 711
6 895 967
3 753 259
1 266 839
1 873 415
1 428 927
1 634 869
1 294 981
1 450 942
1 117 058
1 037 021
1 144 826
908 778
929 304
665 443
622 752
480 596
349 792
490 238
275 937
152 576
47 626
24 403
233
Value
exported
2007
46 233 028
9 433 576
7 922 096
3 731 803
3 179 710
2 068 301
1 826 797
1 817 854
1 494 180
1 397 517
1 214 213
1 187 797
1 150 492
1 044 946
1 023 263
729 962
596 264
586 872
518 487
504 064
357 837
193 915
71 799
19 658
872
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● China is leading the global exports of footwear with leather uppers
● Italy still in good position in this segment; the second. The gap with China still limited compared
to other segments . Italy has been the global leader up to 2004.
● Tunisia is ranking the 17th exporter in the Global market followed by Morocco ranking 26th
● Tunisia has the highest market share 0.7% of the Global exports followed by Morocco 0.4 %
whereas the market share of Egypt and Jordan are insignificant, 0.03 and 0.01%
● The Tunisian, Moroccan and Jordanian export growth, respectively 12, 11 and 15 %, are higher
than that of the global market, 10 %
● The Egyptian export growth, 7 % is lower than that of the Global export.
162
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1.3.4 Exports of footwear with rubber /plastic upper (6402)
The Global exports of footwear with rubber/plastic upper during the period 2003-2007 are as follows:
Exporters
Value exported
2003
Value exported
2004
Value
Exported
2005
Value
exported
2006
Value
exported
2007
World
China
Viet Nam
Hong Kong
Belgium
Italy
Germany
Morocco
Tunisia
Jordan
Egypt
10,361,865
4,653, 986
349,083
1,633,137
537,641
666,534
199,820
762
1,655
229
417
11,644 ,748
5,554,458
316,158
1,652,861
600,808
743,204
284,746
1,696
1,191
416
639
13,028, 632
6,667,186
321,168
1,668,825
835,867
640,764
357,763
1,309
5,713
273
334
14,601,389
7,860,345
510, 472
1,540,042
859 ,662
653,044
394,978
3,581
7,680
379
281
17,411,592
9,166,902
1,679,274
1,436,698
887, 272
707,822
522,825
7,868
5,755
373
222
Trade Map ITC Unit: thousand of US$
1.3.5
Export of Waterproof footwear (6401)
The Global exports of waterproof footwear during the period 2003-2007 are as follows:
Exporters
Value exported
2003
Value exported
2004
Value exported 2005
Value
exported
2006
Value
exported
2007
World
China
Italy
France
Netherlands
Portugal
Romania
Equador
Canada
UK
Belgium
Morocco
Tunisia
Jordan
Egypt
561 000
136 703
76 306
28 713
18 686
17 615
3 266
8 302
16 215
11 016
8 031
3 710
4
168
29
663 044
153 914
77 743
29 714
20 742
20 722
6 973
10 745
21 353
14 038
9 966
3 298
4
94
42
756 742
196 273
77 654
30 877
31 488
19 089
8 021
12 173
25 910
15 634
9 724
5 048
3
145
36
750 709
219 475
87 276
35 333
29 648
19 370
10 301
14 774
14 656
13 558
11 365
8 740
176
127
9
838 171
273 268
92 123
44 411
33 115
24 964
24 888
19 168
19 026
18 980
18 091
4 644
981
203
19
Trade Map ITC Unit: thousand of US$
The above table shows that global exports are limited in this segment. Third of global exports are coming from China
and 11% from Italy whereas exports from other countries are very limited particularly those coming from Agadir
countries
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1.3.6. Export of Footwear with textile upper
Exporters
Value
exported
2003
Value exported 2004
Value exported 2005
Value
exported
2006
Value
exported
2007
World
China
Viet Nam
Belgium
Italy
Hong-Kong
Germany
Spain
France
Netherlands
Tunisia
Morocco
Egypt
5 308 787
1 612 084
659 479
585 655
331 394
316 263
167 276
234 269
137 539
140 935
13 655
5 691
97
6 470 069
1 874 334
1 154 765
624 355
424 502
310 902
226 378
218 053
164 898
196 458
20 301
8 083
320
7 327 592
2 380 480
1 411 017
682 570
427 767
350 126
248 223
242 666
167 098
146 101
17 839
8 207
351
8 157 397
2 876 681
1 484 107
645 837
473 854
321 894
301 140
265 542
198 060
166 324
4 999
5 962
366
9 021 552
3 474 317
1 117 365
624 153
566 185
399 158
364 695
311 606
268 314
264 607
7 644
5 404
345
Trade Map ITC Unit: thousand of US$
The above table shows that Exports from China and Vietnam are predominant in the global exports. They represented
50 % of Global exports whereas exports from other countries are very limited particularly those coming from Agadir
countries
1.3.7 Export of Special footwear:
The Global exports of special footwear during the period 2003-2007 are as follows:
Exporters
Value exported
in 2007, in USD
thousand
Trade balance in 2007
in USD thousand
Annual growth
in value
between 20032007, %
Annual growth in value
between 2006-2007, %
Share in
world
exports, %
World
China
Italy
Romania
Spain
Portugal
Poland
Viet Nam
3,238,546
1,789,707
152,070
123,553
88,793
83,146
75,677
71,433
-91,757
1,78,7555
78,789
115,131
30,786
64,466
66,491
69,508
14
24
-6
-2
3
8
4
29
19
32
12
-25
14
20
7
7
100
55.26
4.7
3.82
2.74
2.57
2.34
2.21
Hong Kong
USA
Morocco
Tunisia
Jordan
Egypt
67,984
67,221
32,537
22,738
2,827
675
20,796
-1,466,201
29,342
22,320
-15,184
-1,192
10
18
32
21
13
23
-5
49
15
9
42
192
2.1
2.08
1
0.7
0.09
0.02
Trade Map ITC Unit: thousand of US$
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The above table shows that Exports from China and Vietnam are predominant in the global exports. They represent
55 % of Global exports whereas exports from other countries are very limited particularly those coming from Agadir
countries. However it is to note that Agadir countries exports of this segment are highly rising particularly that of
Morocco 32 %, Tunisia 21 % and Egypt 23 %. Global exports are also increasing (14 %) higher than that of the whole
footwear sector, 10 %.
1.3.8
Export of Parts of footwear (6406)
The Global exports of footwear parts during the period 2003-2007 are as follows:
Value
exported in
2007
in USD
thousand
Trade
balance
2007
in USD
thousand
Annual
growth in
value between
2003-2007, %
Annual
growth in
value between
2006-2007, %
Share in world
exports, %
World
6508164
609956
4
4
100
China
1167816
868753
24
46
17.94
Italy
1069084
165791
-2
-23
16.43
Romania
388180
50495
-4
-10
5.96
Korea
370806
259151
3
-1
5.7
Hong Kong
322801
68410
2
-3
4.96
India
289836
231258
10
19
4.45
Germany
272204
-138078
9
10
4.18
Taiwan
240609
209170
-4
-6
3.7
USA
205980
-159354
5
-13
3.16
Spain
186343
54747
8
16
2.86
Tunisia
180862
66742
2
13
2.78
France
143507
-103132
-1
1
2.21
Brazil
126307
113545
13
22
1.94
Albania
123124
81578
0
4
1.89
Bulgaria
103684
46626
1
11
1.59
Morocco
94364
39160
7
23
1.45
Egypt
1442
-27098
51
46
0.02
Jordan
166
-2240
-37
1283
0
Exporters
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The leading exporting countries of footwear parts are China with a market share of 18 %, followed
by Italy with 16.5 % and Romania with 6 %
● Among Agadir countries, Tunisia is the leading exporter of footwear parts, ranking 11th followed by
Morocco ranking 14th
● Jordan exports of footwear parts are very limited
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1.3.9
Final Report
Export of Footwear uppers
The Global exports of footwear uppers during the period 2003-2007 are as follows
Exporters
Value
exported
in 2007
Trade
Balance
in 2007
Growth in
%
2003-07
Growth in %
2006-07
Share in %
World
2,940,599
267,708
4
13
100
China
Romania
India
Tunisia
Italy
Albania
Bulgaria
Germany
621,202
314,728
268,604
175,930
159,588
113,086
92,766
91,703
583,477
231,191
262,054
145,423
-573,886
87,678
73,663
-122,769
21
-6
10
1
4
-2
3
13
40
-15
22
12
19
3
15
7
21.13
10.7
9.13
5.98
5.43
3.85
3.15
3.12
Brazil
85,709
81,718
13
32
2.91
Serbia
Bosnia
Morocco
Egypt
Jordan
83,915
70,008
69,416
1,105
61
74,528
62,,081
48,775
-14,359
-869
77
0
49
34
22
11
63
1425
2.85
2.38
2.36
0.04
0
$Trade Map ITC
Unit: thousand of US
The above table shows the followings:
● The leading exporters of uppers are mostly from developing countries
● China with a market share of 21 % , Romania with 11 %, India 9 % and Tunisia 6 % covered 47 %
of Global exports of uppers
● The labor intensive uppers are more and more subcontracted in developing countries
● The export growth of Tunisia and Romania is slowly increasing or dropping as they are more and
more producing finished products.
1.3.10
Export of Footwear Unit soles
The Global exports of footwear unit soles during the period 2003-2007 are as follows:
Value
exported
in 2007,
in USD
thousand
Trade
balance
in 2007
in USD
thousand
Annual growth in value
between 2003-2007, %
Annual growth in value
between 2006-2007, %
Share in world
exports, %
World
China
Italy
Hong Kong
1,292,314
378,176
312,486
120,543
10,079
302,538
268,118
24,093
6
31
2
2
16
62
4
-3
100
29.26
24.18
9.33
Taiwan
63,331
55,146
4
-7
4.9
Spain
Germany
France
42,169
36,463
36,000
18,875
-11,854
629
-2
-6
-2
18
-8
-6
3.26
2.82
2.79
Exporters
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Romania
Portugal
Austria
Morocco
Tunisia
Egypt
Jordan
26,267
26,209
19,353
10,993
1,899
210
55
-111,889
-1,826
-7,554
-9,045
-18,332
-10,930
-946
6
0
-2
71
16
50
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14
2
4
131
-30
-21
1733
2.03
2.03
1.5
0.85
0.15
0.02
0
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The leading exporting countries of footwear parts are China with a market share of
29 %, followed by Italy with 24 %.
● Among Agadir countries, Morocco is the leading exporter of unit soles, with a high growth of 71 %
a year during the period 2003-2007
● Jordan and Egyptians exports of unit soles are very limited
1.3.11
Export of Other Footwear parts (heels and insoles)
The Global exports of other footwear parts during the period 2003-2007 are as followings:
Exporters
Value exported
in 2007, in USD
thousand
Trade
balance
in 2007
in USD
thousand
Annual growth in value
between 2003-2007, %
Annual
growth in
value between
2006-2007, %
Share in world
exports, %
World
2,257,253
325,951
3
-11
100
Italy
595,196
470,576
-5
-38
26.37
Korea
288,986
280,783
5
1
12.8
China
164,372
-20,289
24
37
7.28
USA
153,095
18,368
4
-20
6.78
Germany
143,471
-3,816
13
17
6.36
Taiwan
137,464
128,681
-5
-4
6.09
Hong Kong
135,239
26,435
8
-2
5.99
Spain
123,737
83,256
12
20
5.48
France
85,625
5,686
-2
0
3.79
Romania
46,912
-68,689
6
23
2.08
Morocco
13,953
-320
87
46
0.62
Tunisia
3,033
-60,332
21
91
0.13
Egypt
126
-1,687
58
193
0.01
Jordan
22
-375
-55
340
0
Trade Map ITC Unit: thousand of US$
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The above table shows the followings:
● The leading exporting countries of other footwear parts is Italy with a market share of 26 %,
● Among Agadir countries, Morocco is the leading exporter of other footwear parts, with a high export growth, 87 % a year
● Jordan and Egyptian exports of other footwear parts are very limited
1.3.12
Imports of uppers
The Global imports of footwear uppers during the period 2003-2007 are as follows:
Value imported
in 2007, in USD
thousand
Trade
balance in
2007 in USD
thousand
Annual
growth in
value between
2003-2007, %
Annual growth in value
between 2006-2007, %
Share in world
imports, %
World
2,672,891
267,708
1
4
100
Italy
733,474
-573,886
-4
-13
27.44
Japan
223,078
-210,216
11
14
8.35
Germany
214,472
-122,769
4
2
8.02
USA
155,401
-121,232
-4
-6
5.81
France
131,093
-109,305
-7
9
4.9
Slovakia
129,312
-6,1783
25
41
4.84
Korea
95,617
-31,780
3
1
3.58
Portugal
85,703
-69,051
-2
21
3.21
Romania
83,537
231,191
11
33
3.13
Spain
67,665
-49,015
24
4
2.53
Importers
Trade Map ITC Unit: thousand of US$
The above table shows the follows:
● The leading importers of footwear parts are developed countries (Italy, Germany, France, Portugal,
Spain, USA and Japan) that are still a high producers of footwear while subcontracting the uppers in
developing countries
● Slovakia and Romania are also important importers of uppers
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ANNEX II
1.
EU Imports and Exports All Leather Products
1.1HIDES, SKINS and LEATHER
1.1.1
European imports of hides, skins and leather.
For the imports of hides, skins and leather during the period 2003-2007 see the statistics presented in Annex I under
“global” section 1.1.1. This also gives information for Europe.
1.1.2
European exports of hides, skins and leather.
For the exports of hides, skins and leather during the period 2003-2007 see the statistics presented in Annex I under
“global” section 1.1.2. This also gives information for Europe.
1.2LEATHER GOODS
1.2.1
Europe imports personal leather goods
The Europe imports of leather goods during the period 2003-2007 are as follows:
Trade Indicators
Importers
World
France
Germany
UK
Italy
Spain
Belgium
Netherlands
Austria
Sweden
Denmark
Greece
Portugal
Ireland
Finland
Value
imported in
2007, in USD
thousand
49,427,930
2,975,540
2,885,291
2,795,078
2,660,250
1,546,686
1,106,496
882,171
500,306
398,077
391,200
353,613
286,269
231,175
198,371
Trade balance in 2007
in USD thousand
-5,329,356
1,078,839
-1,306,077
-2,061,774
2,565,853
-873,480
117,927
-205,470
-276,284
-233,528
-155,551
-325,560
-227,826
-160,200
-153,087
Annual growth in value
between 2003-2007, %
12
14
10
13
19
16
10
15
9
14
21
12
11
23
17
Trade Map ITC Unit: thousand of US$
Annual
growth
in value
between
2006-2007,
%
15
25
16
22
22
20
18
21
24
14
4
25
34
53
14
Share in world
imports, %
100
6.02
5.84
5.65
5.38
3.13
2.24
1.78
1.01
0.81
0.79
0.72
0.58
0.47
0.4
The above table shows the following:
● EU imports represented 35 % of Global imports
● EU imports of leading importers are highly increasing particularly Italy with an yearly import growth
of 19 % , Spain 16 %, Netherlands 15 %, France 14 %, United Kingdom 13 %
● EU small importers (Denmark, Ireland and Finland) registered a high import growth respectively of 21 %, 23 % and 17 % per year during the period 2003-2007.
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1.2.2
Final Report
Europe exports personal leather goods
The EU exports of leather goods during the period 2003-2007 is as follows:
Trade Indicators42
Exporters
World
Italy
France
Germany
Belgium
UK
Netherlands
Spain
Denmark
Austria
Value exported
in 2007, in
USD thousand
Trade balance
in 2007 in
USD thousand
Annual growth in
value between 20032007, %
44,098,580
5,226,103
4,054,379
1,579,214
1,224,423
733,304
676,701
673,206
235,649
224,022
-5,329,356
2,565,853
1,078,839
-1,306,077
117,927
-206,1774
-205,470
-873,480
-155,551
-276,284
11
18
14
18
12
13
20
11
30
-4
Share in
world
exports, %
Annual growth in value
between 2006-2007, %
14
24
12
20
15
22
34
25
29
12
100
12
9
4
3
2
2
2
0.5
0.5
Trade Map ITC Unit: thousand of US$
The above table shows the following:
●
●
●
EU exports represented 35 % of global exports
The leading EU exporters are Italy, France and Germany, representing 25 % of Global exports Export growth of EU leading exporters (18 % for Italy and Germany, 14 % for France) are higher
than that of the global exports (11 %)
1.3 FOOTWEAR
1.3.1
European exports of footwear
For the exports of footwear during the period 2003-2007 see the statistics presented in Annex I under “global” section
1.3.1. and 1.3.3 . This also gives information for Europe.
1.3.2
European imports of footwear
For the imports of footwear during the period 2003-2007 see the statistics presented in Annex I under “global” section
1.3.2. and 1.3.12 . This also gives information for Europe.
1.3.3
Analysis of European demand for Footwear
From the international market analysis, the market target for Agadir countries are Germany, France, Italy, UK,
Belgium, Spain and Netherlands, for the following main reasons:
● Agadir exports to EU countries are free of taxes they could export free
● Germany, France, Italy, UK, Belgium, Spain and Netherlands are responsible of 34 % of the Global
demand.
● Their demand is higher than that of USA (23%)
● Their demand is very active with an yearly increase from 8 to 20 %
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1.3.3.1 Italy
The breakdown of Italian imports by origin is as follows:
Exporters
World
Romania
China
Belgium
Tunisia
India
Netherlands
France
Indonesia
Viet Nam
Bosnia and Herzegovina
Morocco
Imported
Imported
Imported value Imported value in
value in 2003 value in 2004
in 2005
2006
1,754,960
596,299
70,151
50,873
117,740
48,185
52,385
58,871
30,834
128,323
55,760
14,926
2,030,403
616,424
85,581
60,490
95,432
75,918
149,371
66,230
32,593
115,550
57,130
14,869
2,395,795
662,225
287,060
83,538
119,761
86,382
149,741
80,198
47,151
143,669
58,005
16,049
2,722,779
725,244
307,560
146,438
125,011
129,589
132,400
106,608
74,946
107,298
78,694
16,805
Imported value in
2007
2,911,705
556,242
300,551
255,433
176,786
157,983
137,500
131,000
104,968
103,207
96,892
19,168
Trade Map ITC Unit: thousand of US$
The above table shows the following :
● The five leading exporters to Italy are Romania, followed by China, Belgium, Tunisian and
India.
● Romanian Export Growth to Italy is decreasing since Romania’s access to the EU
● Chinese, Tunisian, Belgium, Indian, French and Indonesian export growth is increasing
● Morocco with a limited market share is ranking 25th in the Italian Imports
1.3.3.2. France
The breakdown of French imports by origin is as follows:
Exporters
World
Italy
Portugal
China
Spain
Viet Nam
Indonesia
Tunisia
Germany
India
Morocco
Imported
value in 2003
2,315,038
674,563
290,651
173,656
295,633
205,410
56,049
59,964
43,816
34,690
55,781
Imported value in
2004
2,545,464
754,024
326,860
165,063
304,538
210,090
46,084
79,846
60,878
50,467
55,185
Imported value in
2005
2,875,479
799,891
342,716
339,451
296,202
229,209
79,137
85,684
79,804
62,704
47,148
Trade Map ITC Unit: thousand of US$
Imported
value in 2006
Imported
value in 2007
3,094,087
852,845
378,553
351,352
277,726
258,059
130,433
115,986
101,008
83,348
51,602
3,435,999
969,929
454,362
374,699
294,667
261,017
151,903
126,934
118,530
110,094
70,770
The above table shows the following:
● The ten leading exporters to France are Italy, 1st , followed by Portugal, second, China 3rd, Spain
4th, Viet Nam 5th, Indonesia 6th, Tunisia 7th, Germany 8th, India 9th and Morocco 10th
● Except for Spain, export growth of the exporting countries is increasing
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1.3.3.3 Germany
The breakdown of German imports by origin is as follows:
Exporters
World
Italy
China
Viet Nam
Portugal
India
Slovakia
Romania
Indonesia
Austria
Spain
Morocco
Tunisia
Imported
value in 2003
2,979,166
666,455
168,366
294,334
286,612
107,787
139,439
138,929
79,069
197,381
156,329
49,156
34,509
Imported
value in 2004
3,156,665
644,739
211,218
376,880
238,084
149,000
116,611
165,116
75,600
193,118
137,181
55,599
38,993
Imported value in
2005
3,567,642
654,641
529,029
395,666
239,026
166,913
188,094
181,183
78,605
195,509
117,574
64,803
49,331
Imported value in
2006
3,773,725
704,429
545,096
385,408
276,473
189,381
178,500
190,712
108,258
175,287
93,569
83,885
43,573
Imported
value in 2007
3,852,121
754,945
469,560
379,522
292,777
229,884
196,176
191,501
155,746
133,666
90,150
82,719
54,893
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The eleven leading exporters to Germany are Italy first, China second, Viet Nam third, Portugal 4th,
India 5th, Slovakia 6th, Romania 7th, Indonesia 8th , Austria 9th , Spain 10th , and Morocco 11th .
● Romanian and Slovakian Export Growth to Germany are slowing or decreasing since Romania and
Slovakia access to the EU
● Italian, Indian, Portuguese and Indonesian export growth is increasing whereas Chinese, Vietnamese
and Austrian exports are decreasing
● Tunisia ranks 18th in the German Imports
1.3.3.4. UK
The breakdown of UK imports by origin is as follows:
Exporters
World
Italy
China
Viet Nam
India
Netherlands
Brazil
Spain
Belgium
Portugal
Germany
Indonesia
Tunisia
Imported value in 2003
2,658,687
480,196
196,592
395,708
152,009
201,003
109,619
210,510
79,862
282,137
89,882
78,838
9,666
Imported value
in 2004
3,123,471
524,163
244,015
531,631
191,371
248,569
146,537
235,019
74,726
275,921
115,977
82,469
22,415
Imported
Imported
Imported
value in 2005 value in 2006 value in 2007
3,261,744
463,494
581,291
493,323
193,902
284,360
183,407
180,851
95,752
199,863
127,736
84,462
24,268
3,292,863
414,014
547,363
461,119
205,591
261,673
210,148
151,991
218,205
172,577
143,553
117,003
17,344
3,403,148
518,220
496,185
419,900
253,697
233,040
229,735
170,650
169,861
169,100
146,802
125,615
22,622
Trade Map ITC Unit: thousand of US$
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The above table shows the following:
● The ten leading exporters to UK are Italy first, China second, Viet Nam third, India 4th, Netherlands
5th, Brazil 6th, Belgium 7th, Portugal 8th , Germany 9th , and Indonesia 10th .
● Romanian and Slovakian Export Growth to UK are slowing or decreasing since Romanian and
Slovakian access to the EU
● Italian, Indian, German and Indonesian Export growth are increasing whereas Chinese,
Vietnamese and Spanish exports are decreasing
● Tunisia is ranking 19th in the UK Imports
● Moroccan exports are not significant at US$132,000
1.3.3.5 Spain
The breakdown of Spanish imports by origin is as follows:
Exporters
World
China
Italy
Viet Nam
Netherlands
Portugal
Indonesia
India
France
Brazil
Morocco
Thailand
Belgium
United Kingdom
Germany
Hong Kong
Macau
Tunisia
Imported value in
2003
648,960
75,568
85,699
101,348
72,459
55,128
41,892
14,238
29,869
15,946
18,041
27,206
7,228
15,966
17,784
1,326
2,685
10,985
Imported value in
2004
778,492
87,708
109,734
131,427
90,073
70,356
36,990
22,576
33,325
28,655
16,732
23,189
3,655
13,233
17,369
1,086
10,096
10,966
Imported
value in 2005
1,010,313
230,142
132,894
142,341
106,667
78,608
38,327
30,822
44,400
45,086
25,786
24,773
3,826
17,694
16,580
2,099
1,771
13,658
Imported
value in 2006
1,188,079
271,797
161,867
132,130
123,399
79,361
57,126
53,349
45,847
49,955
29,999
28,874
14,916
17,740
19,601
8,992
10,098
14,924
Imported
value in 2007
1,320,425
264,281
198,386
139,280
112,778
98,847
83,760
62,372
56,823
51,989
36,365
32,955
26,648
23,379
23,082
20,932
14,742
14,547
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● The ten leading exporters to Spain are China first, Italy second, Viet Nam third, Netherlands 4th,
Portugal 5th, Indonesia 6th, India 7th, France 8th , Brazil 9th , and Morocco 10th .
● Moroccan, Italian, Indian, German and Indonesian export growth is increasing whereas Chinese,
and Vietnamese export growth is sluggish.
● Tunisia ranks 17th in imports to Spain
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1.3.3.6 Belgium
The breakdown of Belgium imports by origin is as follows:
Exporters
World
China
Italy
Netherlands
Viet Nam
Indonesia
France
Germany
Thailand
Spain
India
Tunisia
Imported value in
2003
863,864
90,210
183,289
107,321
114,494
45,006
81,518
64,430
32,940
44,767
9,421
1,757
Imported value in
2004
951,836
79,667
204,431
139,160
121,241
49,562
90,711
72,012
36,438
44,137
12,148
2,206
Imported value
in 2005
1,125,350
169,924
220,499
172,113
126,016
62,561
88,921
76,059
51,181
42,568
15,990
3,711
Trade Map ITC Unit: thousand of US$
Imported
value in 2006
1,226,713
214,162
229,753
182,284
130,269
76,338
89,368
72,563
68,932
37,884
24,442
4,429
Imported
value in 2007
1,525,574
274,502
267,925
232,996
153,329
129,041
101,272
82,619
77,652
43,525
39,260
3,369
The above table shows the following:
● The ten leading exporters to Belgium are China first, Italy second, Netherlands third, Viet Nam
4th, Indonesia 5th, France 6th, Germany 7th, Thailand 8th , Spain9th and India 10th .
● Except Spain, export growth of exporting countries is increasing ● Tunisia ranks 22th in imports to Belgium
1.3.3.7Netherlands
The breakdown of Dutch imports by origin is as follows:
Exporters
World
China
Italy
Belgium
Germany
Portugal
Viet Nam
United Kingdom
Indonesia
India
Brazil
Imported
value in 2003
833,487
105,402
167,666
27,701
77,776
105,858
61,650
16,775
22,954
14,214
20,385
Imported value
in 2004
974,113
161,051
182,145
41,803
85,532
110,654
95,045
13,033
28,366
20,027
22,135
Imported value in
2005
1,139,751
222,800
178,105
159,986
87,161
115,331
88,699
19,293
33,056
21,105
34,395
Trade Map ITC Unit: thousand of US$
Imported value in
2006
1,280,596
188,152
174,073
244,005
149,987
128,594
44,290
42,990
46,610
30,462
40,673
Imported value
in 2007
1,456,225
239,561
199,216
193,740
164,447
142,946
86,479
69,785
67,413
46,475
42,653
The above table shows the following:
● The ten leading exporters to Netherlands are China first, Italy second, Belgium third, Germany
4th, Portugal 5th, Viet Nam 6th, UK 7th, Indonesia 8th , India 9th , and Brazil10th .
● Except Belgium and Brazil, export growth of exporting countries is increasing 1.3.4
Analysis of European Demand for Uppers
Italy, Germany and France are the most important importers of uppers due to the delocalisation of their production
to developing countries of labour intensive items such as uppers.
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1.3.4.1Italy
The breakdown of Italian imports by origin is as follows:
Exporters
World
Romania
Tunisia
Albania
Serbia
India
Bulgaria
Bosnia
Macedonia
Croatia
Ukraine
China
Poland
Hungary
Morocco
Imported value in
2003
911,066
377,850
89,001
100,707
0
54,949
82,971
21,328
15,781
15,680
5,634
10,939
15,328
1,356
3,092
Imported value in
2004
823,672
334,324
79,045
106,117
0
46,164
73,003
27,132
19,077
12,178
5,192
10,997
17,701
11,375
2,351
Imported
value in 2005
752,082
285,003
69,520
97,999
0
42,761
75,830
22,920
24,578
9,628
6,018
11,398
15,847
6,293
1,702
Trade Map ITC Unit: thousand of US$
The above table shows the following:
● Italian imports are decreasing
● Exports of Romania and Bulgaria are decreasing
● Tunisian, Ukrainian, Hungarian and Moroccan exports are increasing
● Exports from other exporters are sluggish
● Tunisia is ranking second and Morocco 14th
Imported
value in 2006
839,237
298,332
88,338
100,498
55,187
63,513
83,610
28,331
21,956
13,327
11,018
16,985
8,106
6,703
4,664
Imported
value in 2007
733,474
151,935
102,164
98,161
75,443
67,846
55,203
33,465
33,118
21,255
17,483
17,057
15,122
7,324
7,005
1.3.4.2 Germany
The breakdown of German imports by origin is as followings:
Exporters
World
India
Viet Nam
Brazil
Indonesia
Bosnia and Herzegovina
Romania
Hungary
Portugal
Croatia
China
Morocco
Slovakia
Ukraine
Colombia
Poland
Czech Republic
Tunisia
Imported
Imported
Imported value in
value in 2003 value in 2004
2005
186,924
33,501
89
13,185
13,993
7,308
9,616
24,977
28,661
8,656
1,909
409
9,355
219
1,675
1,357
3,613
1,569
181,259
36,429
655
15,121
10,214
8,506
10,339
17,113
35,894
10,309
4,086
853
4,863
88
1,688
1,741
1,613
1,209
180,936
35,226
12,683
12,998
13,010
10,092
16,120
14,939
30,093
9,018
8,295
373
547
462
1,274
474
660
1,118
Trade Map ITC Unit: thousand of US$
Imported value in
2006
209,933
41,467
35,405
20,145
20,159
12,507
20,864
14,142
16,690
9,375
11,011
297
157
1,147
981
1,425
482
1,156
Imported value in
2007
214,472
45,651
34,710
21,535
20,706
18,718
16,547
13,927
13,631
12,733
5,826
2,178
1,352
1,311
1,288
993
777
635
The above table shows the following:
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●
●
●
●
●
Final Report
German imports are increasing
Exports of Romania, Bulgaria are decreasing
Most of German imports are from East European and Asian countries
Exports from other exporters are sluggish
Morocco is ranking 11th and Tunisia 17th
1.3.4.3France
The breakdown of French imports by origin is as follows:
Exporters
World
Tunisia
India
Morocco
Slovakia
Portugal
Czech Republic
China
Bosnia and Herzegovina
Bulgaria
Imported value in
2003
161,988
63,736
18,870
45,021
6,838
13,403
456
1,484
137
0
Imported value in
2004
155,385
58,748
26,832
38,427
9,083
9,106
1,718
1,442
245
1
Imported value in
2005
133,309
45,492
27,108
26,685
12,410
7,933
2,836
2,261
829
0
Trade Map ITC Unit: thousand of US$
Imported
value in 2006
119,808
40,184
30,665
20,214
7,381
7,002
3,303
3,113
1,730
0
Imported
value in 2007
131,093
43,427
34,839
21,105
9,321
6,252
3,455
2,819
2,215
1,533
The above table shows the following:
● French imports are decreasing
● Exports of India and Czech republic are increasing
● Portuguese, Tunisian and Moroccan exports are decreasing
● Tunisia is ranking first and Morocco 3th
1.3.4.4 Spain
The breakdown of Spanish imports by origin is as follows:
Exporters
World
India
Romania
Morocco
Tunisia
Colombia
Sri Lanka
Brazil
Imported
value in 2003
26,659
16,974
2,766
632
154
605
0
518
Imported
value in 2004
48,429
26,645
5,308
4,744
2,384
1,569
0
1,953
Imported
value in 2005
60,199
29,317
9,033
5,293
5,081
2,930
138
3,236
Imported value in
2006
64,851
26,770
8,267
8,680
5,753
3,914
2,131
559
Trade Map ITC Unit: thousand of US$
The above table shows the following:
Imported value in
2007
67,665
26,714
9,716
7,662
7,484
4,407
2,890
2,580
● Morocco and Tunisia supply equal amounts to Spain but are small compared with the purchase
by Spain from India.
● India supplies 40% of the Spanish market
● Morocco and Tunisia have a 11% share each.
176
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ANNEX III
1.
Global Trade of Agadir Countries’ Leather Products
1.1HIDES, SKINS and LEATHER
1.1.1
The Agadir countries exports of leather, hides and skins during the period 2003-2007 are as follows:
Trade Indicators
Egypt
Tunisia
Morocco
145,716
25,546
23,851
130,471
-231,160
-91,194
15
4
19
Annual
growth
in value
between
2006-2007,
%
10
49
30
Saudi Arabia
111,683
109,405
16
49
0.36
Syria
63,486
60,897
3
36
0.2
Exporters
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Source: Trade Map ITC
Annual
growth in
value between
2003-2007, %
Share in
world
exports, %
0.47
0.08
0.08
Unit: thousand of US$
The above table shows the following:
● Egypt, Saudi Arabia and Syrian Arab Republic are important net exporters of leather due equally
to the importance of their production of meat.
● Tunisia and Morocco are exporters of leather but with an important negative trade balance.
There are massively importing leather to support their emerging footwear and leather goods
industry
● Accordingly, Tunisia and Morocco could benefit from the Agadir Agreement and the Arab Free
trade Agreement to effectively source their leather from Egypt, Saudi Arabia and Syria.
1.1.2
Exports of Agadir countries from hides, skins and leather to the EU
Country
2005
Jordan
652
Egypt
74,487
Morocco
8,708
Tunisia
11,503
Unit: thousand of US$
Year
2006
2007
435
8
92,192
110,807
13,253
17,820
6,851
10,756
Source: Trade Map ITC
● Egypt is by far the biggest exporter of semi processed leather to the EU
● Morocco and Tunisia have relatively low exports to EU
● Jordan’s trade is negligible.
1.1.3
Imports of Agadir countries from hides, skins and leather from the EU:
Country
2005
Jordan
46
Egypt
5,610
Year
2006
168
2007
114
7,785
11,350
Morocco
84,710
104,499
108,174
Tunisia
158,006
177,400
233,099
Unit: thousand of US$ Source: Trade Map ITC
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● Tunisia is a large importer of finished leather to service its sub - contracting system. Much
of this leather is re – exported in the form of finished goods
● Morocco has a very similar system to Tunisia, only smaller
● Egypt imports leather usually for its export oriented companies
● Jordan’s trade is very small.
The following charts show the import and export of hides and skins by the 4 countries in the Agadir Group.Egypt.
These statistics come from the UN statistics division data base and are published under http://data.un.org. These
statistics are different from the ITC Comtrade Trade Map statistics which have been used above and elsewhere in the
report.
These statistics have the advantage that they show the detailed breakdown by industrial code for the various
commodities in the sub sector. They provide a useful guide as to the trends in the trade during the last three years.
The information comes from information passed to the UN by member countries. Information, if required, for other
countries (Morocco, Tunisia and Jordan), can be accessed at the above web sight.
JORDAN - IMPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
2006
2006
729
5,501
24,000
Bovine skins, whole, raw
410121
Bovine hides, whole, fresh or wet-salted
410122
Butts and bends, bovine, fresh or wet salted
410129
Hide sections, bovine, nes, fresh or wet
salted
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool on, except
Persian
49,365
410221
Sheep or lamb skins pickled, without wool
48,181
410229
Sheep or lamb skins, raw, except pickled, no
wool
410310
Goat or kid hides and skins, raw, nes
410390
Raw hide/skins except bovine/equine/sheep/
goat/reptile
410410
Bovine skin leather whole
410421
Bovine leather, vegetable pretanned except
whole skins
Leather and Shoes Sector
2008
13,470
410110
178
2007
Trade Kgs. (000’)
3,909
48,000
2008
10,000
44,000
60,014
6,075
2007
182,751
62,860
137,478
200
Mahmoud Qattous and Terry McCallin
Final Report
410422
Bovine leather, otherwise pretanned except
whole skin
99,271
410429
Bovine and equine leather, tanned or
retanned ,nes
51,615
410431
Bovine or equine leather full or split grain,
nes
410439
Bovine and equine leather, nes
410511
Sheep or lamb skin leather, vegetable pretanned
410519
Sheep or lamb skin leather, tanned or
retanned, nes
410520
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6,088
20,418
29,928
33,752
23,615
14,595
84,928
88,152
Sheep or lamb skin leather, nes
4,463
38,111
3,878
410612
Goat or kid skin leather otherwise pretanned
4,227
410619
Goat or kid skin leather, tanned or retanned,
nes
410620
Goat or kid skin leather , nes
410710
Swine leather
410721
Reptile leather, vegetable, pretanned
410790
37,270
811
1,649
2,693
3,074
1,020
9,830
9,993
329
24,108
151
587
1,058
230
17,631
19,780
858
Leather of animals, nes
192,089
17,254
410800
Chamois (including combination chamois)
leather
35,763
410900
Patent leather, metallised leather
142,923
270,709
58,217
34,637
28,261
1,813
411000
Parings and other waste of leather
411100
Composition leather in slabs, sheets or strip
9,385
65,034
204,281
1,296
14,998
37,698
28,884
14,782
1,661
JORDAN - EXPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
2006
2007
2008
2006
2007
2008
746,221
628,000
731,000
797,640
83,000
46,500
410110
Bovine skins, whole, raw
542,690
642,981
410121
Bovine hides, whole, fresh or
wet-salted
87,041
43,409
410122
Butts and bends, bovine, fresh
or wet salted
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410129
Hide sections, bovine, nes, fresh
or wet salted
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
410221
Sheep or lamb skins pickled,
without wool
410229
Sheep or lamb skins, raw,
except pickled, no wool
410310
Goat or kid hides and skins,
raw, nes
410320
Reptile skins raw
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
410410
Bovine skin leather whole
410421
Bovine leather, vegetable
pretanned except whole skins
410422
Bovine leather otherwise
pretanned except whole skin
410429
Bovine and equine leather,
tanned or retanned ,nes
410431
Bovine or equine leather full or
split grain, nes
410439
Bovine and equine leather, nes
410511
Sheep or lamb skin leather,
vegetable pre-tanned
410512
Sheep or lamb skin leather ,
otherwise pretanned
410519
Sheep or lamb skin leather,
tanned or retanned, nes
410520
Sheep or lamb skin leather, nes
410611
Goat or kid skin leather
vegetable pretanned
410612
Goat or kid skin leather
otherwise pretanned
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
180
Leather and Shoes Sector
Final Report
18,025
40,000
264,980
1,251,250
4,083,493
335,000
1,522,710
4,694,500
1,922,154
2,010,143
584,697
2,424,410
2,378,500
737,500
137,721
92,523
124,000
104,000
518,063
285,630
532,000
582,500
2,633,738
241,666
3,411,720
383,350
226,452
242,000
390,935
358,294
450,066
542,619
1,735
17,631
20,169
14,385
282,395
1,102,897
236,031
20
25,000
9,180
22,000
27,000
110,000
2,244,400
1,236,000
761,000
785,500
406,500
355,500
88,141
25,515
104,610
1,788,661
1,033,387
625,887
736,938
329,261
331,284
755,260
184,350
Mahmoud Qattous and Terry McCallin
Final Report
410710
Swine leather
410721
Reptile leather, vegetable,
pretanned
410729
Reptile leather other than
vegetable pretanned
410790
Leather of animals, nes
410800
Chamois (including
combination chamois) leather
410900
Patent leather, metallised leather
11,707
411000
Parings and other waste of
leather
21,017
411100
Composition leather in slabs,
sheets or strip
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17,604
47,775
17,000
9,596
26,000
2,710
153,852
1,073
39,816
4,660
6,000
1,022
46,940
12,645
22,399
28,000
TUNISIA - IMPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
Trade Kgs. (000’)
2006
2007
2008
2006
2007
2008
410110
Bovine skins, whole, raw
922,088
1,479,955
617,959
42,662
203,001
40,045
410121
Bovine hides, whole, fresh or
wet-salted
696,777
338,662
662,391
433,163
220,991
163,473
410122
Butts and bends, bovine, fresh
or wet salted
410129
Hide sections, bovine, nes, fresh
or wet salted
105,001
121,113
93,225
23,469
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
410221
Sheep or lamb skins pickled,
without wool
410229
Sheep or lamb skins, raw,
except pickled, no wool
410310
Goat or kid hides and skins,
raw, nes
Mahmoud Qattous and Terry McCallin
64,971
42,915
2,856,993
32,714
631,789
1,728,384
20,394
268,652
137,124
56,763
183,374
7,222
32,100
17,916
21,987
397
204
228
101,338
172,908
220,789
76,390
Leather and Shoes Sector
181
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410320
Reptile skins raw
95,903
444,673
77,125
909
20,856
11,436
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
714,608
275,295
499,224
38,016
57,333
83,900
410410
Bovine skin leather whole
410421
Bovine leather, vegetable
pretanned except whole skins
410422
Bovine leather, otherwise
pretanned except whole skin
754,944
1,126,935
125,857
34,253
410429
Bovine and equine leather,
tanned or retanned ,nes
1,640,851
2,268,704
3,515,176
483,318
661,911
622,517
410431
Bovine or equine leather full or
split grain, nes
77,876,703
95,240,271
113,510,203
3,431,954
3,710,994
4,071,516
410439
Bovine and equine leather, nes
25,961,976
30,498,615
33,647,621
1,188,149
1,398,570
1,674,346
410511
Sheep or lamb skin leather,
vegetable pre-tanned
410512
Sheep or lamb skin leather,
otherwise pretanned
355,122
339,806
44,654
100,854
410519
Sheep or lamb skin leather,
tanned or retanned, nes
410520
Sheep or lamb skin leather, nes
410612
Goat or kid skin leather
otherwise pretanned
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
3,498,282
6,732,602
3,157,236
129,723
311,057
150,006
410710
Swine leather
1,469,709
2,010,009
876,988
118,704
135,853
104,142
410721
Reptile leather, vegetable,
pretanned
410729
Reptile leather, other than
vegetable pretanned
21,555
120,287
19,640
404
5,583
554
410790
Leather of animals, nes
451,468
38,958
265,326
19,579
38,958
9,701
410800
Chamois (including
combination chamois) leather
1,550,402
2,579,607
3,684,915
59,658
96,446
128,608
182
Leather and Shoes Sector
1,619,684
7,235,695
30,868,443
56,267
59,280
47,830,559
188,990
313,822
1,084,636
2,000
2,695
41,222
1,367,544
9,020
Mahmoud Qattous and Terry McCallin
Final Report
410900
Patent leather, metallised leather
411000
Parings and other waste of
leather
411100
Composition leather in slabs,
sheets or strip
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
35,690,981
37,023,063
35,962,080
3,255,606
3,008,948
2,646,514
62,107
123,218
95,313
44,188
66,148
24,878
31,346,396
44,343,569
1,288,476
1,220,323
1,410,690
1,288,476
TUNISIA - EXPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
2006
2007
Trade Kgs. (000’)
2008
2006
2007
410110
Bovine skins, whole, raw
42,229
700
410121
Bovine hides, whole, fresh or
wet-salted
12,466
14,000
410122
Butts and bends, bovine, fresh
or wet salted
410129
Hide sections, bovine, nes, fresh
or wet salted
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
129,981
410221
Sheep or lamb skins pickled,
without wool
100,499
410229
Sheep or lamb skins, raw,
except pickled, no wool
410310
Goat or kid hides and skins,
raw, nes
410320
Reptile skins raw
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
410410
Bovine skin leather whole
410421
Bovine leather, vegetable
pretanned except whole skins
410422
Bovine leather, otherwise
pretanned except whole skin
410429
Bovine and equine leather,
tanned or retanned ,nes
Mahmoud Qattous and Terry McCallin
43,140
19,423
22,300
1,299
60
397
30
95,327
2008
242,141
11,000
5,635
99,410
Leather and Shoes Sector
183
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
410431
Bovine or equine leather full or
split grain, nes
1,010,765
1,272,360
886,835
40,459
56,723
104,120
410439
Bovine and equine leather, nes
6,998,453
6,719,524
8,045,250
289,228
306,961
410,770
410511
Sheep or lamb skin leather,
vegetable pre-tanned
410512
Sheep or lamb skin leather,
otherwise pretanned
50,977
2,740,705
11,550
766,125
410519
Sheep or lamb skin leather,
tanned or retanned, nes
410520
Sheep or lamb skin leather, nes
410612
Goat or kid skin leather
otherwise pretanned
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
410710
Swine leather
410721
Reptile leather, vegetable,
pretanned
410729
Reptile leather, other than
vegetable pretanned
410790
Leather of animals, nes
410800
Chamois (including
combination chamois) leather
1,140,251
2,479,461
1,917,513
95,393
397,151
259,621
410900
Patent leather, metallised leather
2,999,890
3,816,317
3,994,929
1,760,760
1,805,548
551,607
411000
Parings and other waste of
leather
63,150
135,035
25,383
226,632
467,601
261,776
411100
Composition leather in slabs,
sheets or strip
1,134,191
522,869
230,151
107,819
10,101
5,732
3,943,696
2,267,330
7,624,081
6,843,904
99,883
980,650
194,935
227,625
254,869
57,300
157,066
1,067,981
180,748
1,940,943
40,000
28,328
4,413
405,953
35
294
MOROCCO - IMPORT OF HIDES AND SKINS
Comm.
Code
410110
410121
410122
410129
184
Commodity
Bovine skins, whole, raw
Bovine hides, whole, fresh or
wet-salted
Butts and bends, bovine, fresh
or wet salted
Hide sections, bovine, nes, fresh
or wet salted
Leather and Shoes Sector
Trade US $ (000’)
2006
2007
5,432,850
1,251,342
Trade Kgs. (000’)
2008*
2006
2007
2,754,974
29,688
4,012
9,605
2008*
90
3,375
Mahmoud Qattous and Terry McCallin
Final Report
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
410221
410229
410310
Sheep or lamb skins, raw wool
on, except Persian
Sheep or lamb skins pickled,
without wool
Sheep or lamb skins, raw,
except pickled, no wool
Goat or kid hides and skins,
raw, nes
410320
Reptile skins raw
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
410410
Bovine skin leather whole
410421
Bovine leather, vegetable
pretanned except whole skins
410422
410429
410431
410439
410511
410512
410519
410520
410612
410619
Bovine leather, otherwise
pretanned except whole skin
Bovine and equine leather,
tanned or retanned ,nes
Bovine or equine leather full or
split grain, nes
Bovine and equine leather, nes
Sheep or lamb skin leather,
vegetable pre-tanned
Sheep or lamb skin leather,
otherwise pretanned
Sheep or lamb skin leather,
tanned or retanned, nes
Sheep or lamb skin leather, nes
Goat or kid skin leather
otherwise pretanned
Goat or kid skin leather, tanned
or retanned, nes
16,399
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
118,532
66,785
114,016
2,604
5,050
840
1,736
10
21
13,134
983
4,056
1,772
468,892
1,739,423
191,195
423,174
3,530
45,196
66
2,978
92,507
84,757
9,016
5,777
60,049,647
64,239,284
2,474,370
2,512,956
18,301,748
20,971,888
857,947
943,468
328,862
108,617
8,009
4,108
1,728,952
2,322,139
72,478
70,849
123,647
11,291
1,867
325
410620
Goat or kid skin leather , nes
3,483,322
5,345,421
74,984
109,755
410710
Swine leather
8,044,139
8,456,989
429,026
411,817
85,785
27,470
340
362
4,054,297
3,222,706
1,019,651
371,643
410721
410729
410790
Reptile leather, vegetable,
pretanned
Reptile leather, other than
vegetable pretanned
Leather of animals, nes
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
185
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
410800
Chamois (including
combination chamois) leather
410900
Patent leather, metallised leather
411000
411100
Parings and other waste of
leather
Composition leather in slabs,
sheets or strip
Final Report
537,248
98,864
22,271
3,034
4,865,171
6,390,625
203,602
249,892
21,939
2,950
1,853
858
1,101,283
598,140
211,462
219,258
* 2008 statistics not available
MOROCCO - EXPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
2006
410110
Bovine skins, whole, raw
410121
Bovine hides, whole, fresh or
wet-salted
410122
Butts and bends, bovine, fresh or
wet salted
410129
Hide sections, bovine, nes, fresh
or wet salted
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
410221
Sheep or lamb skins pickled,
without wool
410229
Sheep or lamb skins, raw, except
pickled, no wool
410310
Goat or kid hides and skins, raw,
nes
410320
Reptile skins raw
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
410410
Bovine skin leather whole
186
Leather and Shoes Sector
2007
16,608
22,075
Trade Kgs. (000’)
2008*
2006
2007
2008*
16,884
298,168
6,940
31,563
Mahmoud Qattous and Terry McCallin
Final Report
410421
Bovine leather, vegetable
pretanned except whole skins
410422
Bovine leather, otherwise
pretanned except whole skin
410429
Bovine and equine leather, tanned
or retanned ,nes
410431
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
5,748
2,335
1,310
94
Bovine or equine leather full or
split grain, nes
1,797,520
1,825,611
45,833
50,007
410439
Bovine and equine leather, nes
1,336,087
1,986,656
67,311
92,767
410511
Sheep or lamb skin leather,
vegetable pre-tanned
410512
Sheep or lamb skin leather,
otherwise pretanned
1,026
15,162
8
632
410519
Sheep or lamb skin leather,
tanned or retanned, nes
410520
Sheep or lamb skin leather, nes
2,745,823
7,552,174
83,611
220,430
410612
Goat or kid skin leather otherwise
pretanned
22,276
3,765
192
84
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
60,783
565,032
1,817
15,174
410710
Swine leather
117,467
131,708
3,794
4,034
410721
Reptile leather, vegetable,
pretanned
410729
Reptile leather, other than
vegetable pretanned
410790
Leather of animals, nes
9,511,235
9,143,317
429,624
208,589
410800
Chamois (including combination
chamois) leather
6,828
113,785
61
1,618
410900
Patent leather, metallised leather
1,533,696
2,205,547
52,275
73,771
411000
Parings and other waste of leather
26,801
7,739
28,558
7,442
411100
Composition leather in slabs,
sheets or strip
1,193,099
49
16,119
14
* 2008 statistics not available
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
187
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
EGYPT - IMPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
Trade Kgs. (000’)
2006
2007
2008
2006
2007
2008
410110
Bovine skins, whole, raw
56
28
2,224
28
13
600
410121
Bovine hides, whole, fresh or
wet-salted
121
436
5,079
71
236
1,408
410122
Butts and bends, bovine, fresh
or wet salted
22
67
-
-
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
410221
Sheep or lamb skins pickled,
without wool
410229
63
55
2,563
509
-
1,289
-
1,091
1,483
54
234
Sheep or lamb skins, raw,
except pickled, no wool
584
323
410310
Goat or kid hides and skins,
raw, nes
96
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
72
410410
Bovine skin leather whole
410421
Bovine leather, vegetable
pretanned except whole skins
410429
Bovine and equine leather,
tanned or retanned ,nes
434
62
410431
Bovine or equine leather full or
split grain, nes
330
17
410439
Bovine and equine leather, nes
453
16
410511
Sheep or lamb skin leather,
vegetable pre-tanned
410519
Sheep or lamb skin leather,
tanned or retanned, nes
188
Leather and Shoes Sector
33
7
6
633
14
51
-
113
64
234
10
0.5
18
6
615
115
0.6
1
162
271
104
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
410520
Sheep or lamb skin leather, nes
20
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
410710
Swine leather
410721
Reptile leather, vegetable,
pretanned
410790
Leather of animals, nes
410800
Chamois (including
combination chamois) leather
54
41
410900
Patent leather, metallised leather
24
2
411000
Parings and other waste of
leather
411100
Composition leather in slabs,
sheets or strip
8
384
-
0.1
0.1
2
0.3
21
0.6
5
11
105
9
1
-
465
0.8
-
66
6
14
12
4
10
6
337
122
324
55
26
40
EGYPT - EXPORT OF HIDES AND SKINS
Comm.
Code
Commodity
Trade US $ (000’)
2006
2007
2008
2006
2007
2008
44
553
50
26
124
105
21
410110
Bovine skins, whole, raw
90
410121
Bovine hides, whole, fresh or
wet-salted
35
410122
Butts and bends, bovine, fresh
or wet salted
410130
Bovine hides, raw, nes
410140
Equine hides and skins raw
410210
Sheep or lamb skins, raw wool
on, except Persian
Mahmoud Qattous and Terry McCallin
Trade Kgs. (000’)
49
37
14
-
214
62
220
34
34
Leather and Shoes Sector
189
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Final Report
410221
Sheep or lamb skins pickled,
without wool
410229
Sheep or lamb skins, raw,
except pickled, no wool
9
410310
Goat or kid hides and skins,
raw, nes
33
410320
Reptile skins raw
51
26
0.8
2
410390
Raw hide/skins except bovine/
equine/sheep/goat/reptile
610
604
-
234
410410
Bovine skin leather whole
410421
653
315
7
179
4
14
76
3
7
9,550
2
-
Bovine leather, vegetable
pretanned except whole skins
4,510
7,301
-
-
410422
Bovine leather otherwise
pretanned except whole skin
3,830
4,502
1,171
1,346
410429
Bovine and equine leather,
tanned or retanned ,nes
410431
Bovine or equine leather full or
split grain, nes
410439
Bovine and equine leather, nes
10,405
13,156
410511
Sheep or lamb skin leather,
vegetable pre-tanned
1,060
438
410512
Sheep or lamb skin leather ,
otherwise pretanned
410519
Sheep or lamb skin leather,
tanned or retanned, nes
255
410520
Sheep or lamb skin leather, nes
0.7
3
410611
Goat or kid skin leather
vegetable pretanned
81
410612
Goat or kid skin leather
otherwise pretanned
410619
Goat or kid skin leather, tanned
or retanned, nes
410620
Goat or kid skin leather , nes
190
Leather and Shoes Sector
72
8,009
23
2,107
859
5,506
81
-
866
-
-
33
1,424
5
989
-
2,323
-
-
433
-
-
11
23
0.5
-
441
154
-
-
341
763
269
587
186
192
Mahmoud Qattous and Terry McCallin
Final Report
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
410710
Swine leather
36
17
410721
Reptile leather, vegetable,
pretanned
410729
Reptile leather other than
vegetable pretanned
410790
Leather of animals, nes
410800
Chamois (including
combination chamois) leather
0.5
1
410900
Patent leather, metallised leather
427
152
411000
Parings and other waste of
leather
411100
Composition leather in slabs,
sheets or strip
211
88
78
177
60
79
-
115
41
-
31
20
5
1.2LEATHER GOODS
1.2.1
Agadir countries exports of Leather Goods
Trade Indicators42
Exporters
Value
exported in
2007, in USD
thousand
Trade balance in 2007
in USD thousand
Annual growth
in value between
2006-2007, %
Annual growth in value
between 2003-2007, %
Share in
world
exports, %
World
44,098,580
-5,329,356
11
14
100
Tunisia
78,538
54,772
9
31
0.18
Morocco
59,461
18,589
5
-7
0.13
Egypt
5,165
-44,615
28
1
0.01
Jordan
2,164
-11,137
36
63
0
Source: Trade Map ITC
Unit: thousand of US$
The most exported leather goods by Agadir countries are:
● Leather articles carried in pocket or handbag, leather handbags, leather executive cases,
leather accessories and leather apparel articles.
Mahmoud Qattous and Terry McCallin
Leather and Shoes Sector
191
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of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
1.2.2
Final Report
Leather articles carried in pocket or handbag
The following table shows Agadir exports of leather articles carried in pocket
Value
exported in
2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
World
3,149,370
688,511
18
27
100
Morocco
3,146
2,798
21
118
0.1
Tunisia
1,998
1,898
-23
45
0.06
Egypt
338
-614
23
-2
0.01
Jordan
3
-67
0
Exporters
Annual growth in
value between 20062007, %
Annual growth in value
between 2003-2007, %
Source: Trade Map ITC
Share in world
exports, %
Unit: thousand of US$
The above table shows the following:
● Global demand growth of leather articles carried in pocket is very high; 18 % per year
● Moroccan exports are limited but with the highest market share in the Agadir Area (0.1 %)
with a higher annual growth than that of the global growth which is 21 %
● Egypt and Jordan exports are not significant
1.2.3
Agadir exports of leather handbags
Agadir exports of leather handbags are as follows:
Exporters
Value exported
in 2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
Annual growth in
value between 20032007, %
Annual growth in
value between 20062007, %
Share in world
exports, %
World
5,580,430
-8,423
22
22
100
Morocco
13,730
10,178
15
15
0.25
Tunisia
13,456
11,575
-2
21
0.24
Egypt
1,740
-271
26
70
0.03
Jordan
98
-84
22
216
0
Source: Trade Map ITC
Unit: thousand of US$
The above table shows the following:
● Global demand growth of leather handbags is very high; 22 % per year
● Moroccan and Tunisian exports are limited but with the highest market share in the Agadir
Area (0.25 %) and a lower growth rate than that of the global.
● Egypt and Jordan exports are not significant but the highest in growth rate.
192
Leather and Shoes Sector
Mahmoud Qattous and Terry McCallin
Final Report
1.2.4
A mission for Accomplishment of a Comprehensive sector study regarding the opportunities
of Complementarities and Industrial Integration in the Leather and Shoes Sector in the
Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
Agadir exports of leather executive and brief-cases
Agadir exports of leather executive and brief-cases are as follows:
Exporters
Value exported
in 2007, in
USD thousand
World
Morocco
Tunisia
Egypt
Jordan
957,606
3,343
1,421
239
24
Source: Trade Map ITC
Trade balance
in 2007 in USD
thousand
206,582
2,938
1,338
-521
-330
Unit value
(USD/
unit)
34,722
23,055
36,436
3,414
Annual growth
in value between
2003-2007, %
10
2
-10
7
-28
Unit: thousand of US$
Annual growth
in value between
2006-2007, %
11
9
-11
-33
-8
Share in
world
exports, %
100
0.35
0.15
0.02
0
The above table shows the following:
● Global demand growth of leather executive and brief-cases is important; 10 % per year
● Moroccan and Tunisian exports are limited but with the highest market share in the Agadir
Area (0.35 % and 0.15 % respectively) and a lower growth rate than that of the global
● Egypt and Jordan exports are not significant
1.2.5
Agadir exports of leather accessories
Agadir exports of leather accessories are as follows:
'World
2,563,598
962,442
Annual
growth
in value
between
2003-2007,
%
10
'Tunisia
14,716
3,002
26,185
31
43
0.57
'Morocco
3,200
-5,936
21,918
20
-24
0.12
'Egypt
733
-324
23,645
52
-52
0.03
'Jordan
19
-468
-15
-78
0
Exporters
Value
exported in 2007,
in USD thousand
Trade balance in 2007
in USD thousand
Source: Trade Map ITC
Unit value
(USD/unit)
Annual
growth
in value
between
20062007, %
3
100
Share in
world
exports, %
Unit: thousand of US$
The above table shows the following:
● Global demand growth of leather accessories is appreciable; 10 % per year
● Tunisian exports are limited but with the highest market share in the Agadir Area (0.6 %) and
a higher growth; 31 % than that of the global growth rate
● Egypt and Jordan exports are not significant
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1.2.6
Final Report
Agadir exports of leather apparel
Agadir exports of leather apparel are as follows:
Exporters
World
Morocco
Tunisia
Egypt
Jordan
Value
exported in
2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
8,479,044
28,557
24,352
248
129
Source: Trade Map ITC
171,411
17,292
19,720
-4,519
-2,075
Unit value
)(USD/unit
Annual growth
in value between
% ,2003-2007
32,951
39,066
48,998
11,273
8,063
Unit: thousand of US$
1
-1
7
-9
17
Annual
growth
in value
between
2006% ,2007
4
16
11
-33
-36
Share in world
% ,exports
100
0.34
0.29
0
0
The above table shows the following:
● Global demand growth of leather apparel is very limited; 1 % per year
● Moroccan and Tunisian exports are limited but with the highest market share in the Agadir Area
(0.3 %) with a higher growth rate than that of the globe
● Egypt and Jordan exports are not significant
1.3
FOOTWEAR
1.3.1
Agadir countries exports of footwear
The following table shows footwear exports footwear during the period 2003-2007:
Trade Indicators 64
Value
exported in
2007, in USD
thousand
Trade balance
in 2007 in USD
thousand
World
83,620,420
-4,542,288
10
12
100
Tunisia
Morocco
Egypt
Jordan
575,817
338,732
22,369
4,820
449,597
240,892
-77,419
-28,474
12
11
7
15
22
23
-11
58
0.69
0.41
0.03
0.01
Exporters
Source: Trade Map ITC
Annual growth
in value between
2003-2007, %
Annual growth
in value between
2006-2007, %
Unit: thousand of US$
Share in world
exports, %
The above table shows the following:
● Tunisia ranks the 24th exporter in the Global market followed by Morocco 30th, Egypt 78th
and Jordan 97th
● Among Agadir countries, Tunisia has the highest market share (0.7%) of the Global exports
followed by Morocco (0.4 %) whereas the market share of Egypt and Jordan are insignificant,
0.03 and 0.01% respectively
● The Tunisian, Moroccan and Jordanian export growth rates are, respectively 12%, 11% and 15
%. These are higher than that of the global market; 10 %
● The Egyptian export growth; 7 % is lower than that of the Global export.
194
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Final Report
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Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)
ANNEX IV: 2008 Update of Agadir Trade Statistics
For this annex and along all this report all used data are in thousands of US $ and the source is ITC trade Map, except
when it is expressly mentioned a different unit or source.
1.
Export & Import of the Agadir Leather & Footwear Sector in 2008
Unit: Thousand of US $
Egypt
Jordan
Morocco
Tunisia
Leather & hides Export
92826
8692
25509
28247
Leather & hides Import
10531
624
106204
285545
Leather goods export
5297
3220
61685
94,346
Leather goods import
65176
17861
40167
27,222
Foot wear export
21069
4225
348641
608039
Footwear Import
126968
41876
95312
141,624
A long this report, all data are in thousands of US $ and the Source is ITC Trade Map
2.Growth of Export & Import of the Agadir Leather & Footwear Sector from 2007 to 2008 in % :
The export and import in 2008 compared to that of 2007 registered the following growth:
Leather & hides Export
Leather & hides Import
Leather goods export
Leather goods import
Foot wear export
Footwear Import
Egypt
Jordan
Morocco
Tunisia
-36
-38
-2
30
-10
24
12
2
49
34
-12
26
7
-8
4
-2
3
-3
11
11
17
15
6
12
The above table shows that Jordan and Egypt registered a decrease of their footwear export due to the impact of the
global crisis whereas Tunisia & Morocco achieved an increase of their export. This is due to that some Tunisian and
Moroccan manufacturers succeeded to shift to the production of fancy shoes in small series enabling Tunisia and
Morocco to resist more to the Global crisis.
3.1.List of importing markets for leather goods exported by Tunisia
Importers
'World
‘Italy
‘France
‘Germany
‘Belgium
‘United Kingdom
‘Spain
‘Morocco
Mahmoud Qattous and Terry McCallin
78,538
26,444
24,445
20,882
2,710
603
334
67
Exported value in 2007
Exported value in 2008
94,346
36,225
32,512
17,999
3,373
421
172
132
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3.2.List of supplying markets for leather goods imported by Tunisia:
Exporters
‘World
‘Italy
‘France
‘China
‘Spain
‘Germany
‘Portugal
‘Morocco
23,766
9,779
3,716
2,790
1,531
993
2,312
384
Imported value in 2007
27,222
10,006
4,813
3,103
1,775
1,583
1,217
42
Imported value in 2008
3.3.List of supplying markets for Raw hides and leather imported by Tunisia:
Exporters
‘World
‘Italy
‘France
‘Germany
‘India
‘Spain
‘Morocco
‘Egypt
‘Greece
‘China
Imported value in 2007
256706
141848
71027
7355
11551
7830
1374
997
14
183
Imported value in 2008
285545
155804
75551
18113
10410
6345
1210
342
333
249
3.4.List of importing markets for Raw hides and leather exported by Tunisia
‘World
‘Italy
‘Turkey
‘China
‘India
‘France
‘Spain
‘Morocco
‘Egypt
Importers
25546
8956
4927
1598
783
691
852
0
867
Exported value in 2007
28247
9075
4069
2383
1572
1538
1120
169
79
Exported value in 2008
3.5.Tunisian footwear import origin during 2007&2008:
‘World
‘Italy
‘France
‘Germany
‘India
‘China
‘Spain
‘Viet Nam
‘Morocco
‘Egypt
196
Exporters
Leather and Shoes Sector
Imported value in 2007
126,220
71,853
30,601
1,094
8,330
4,471
3,539
1,647
101
14
141,624
77,649
29,691
12,612
6,207
4,885
3,746
2,509
56
0
Imported value in 2008
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3.6.Tunisian footwear export destination during 2007&2008:
Importers
‘World
‘Italy
‘France
‘Germany
‘United Kingdom
‘Spain
‘Morocco
‘Netherlands
‘Egypt
‘Jordan
Exported value in 2007
575817
271630
186454
55140
20797
24350
2079
2189
70
15
608039
304022
185778
66933
17623
16783
2981
2419
153
7
Exported value in 2008
4.1.List of supplying markets for Raw hides and leather imported by Egypt
Exporters
‘Total
‘Italy
‘Greece
‘Germany
‘Jordan
‘Tunisia
Imported value in 2007
16995
4256
45
550
111
867
Imported value in 2008
10531
6472
1347
395
290
79
4.2.List of importing markets for Raw hides and leather exported by Egypt
Importers
‘Total
‘Italy
‘India
‘Hong Kong (SARC)
‘China
‘Turkey
‘Brazil
‘Pakistan
‘Greece
‘Tunisia
‘Jordan
Exported value in 2007
146023
40492
12276
8363
5755
2460
1126
147
1001
997
1
92826
40157
15585
11860
8372
5213
5010
1859
1203
342
9
Exported value in 2008
4.3.List of supplying markets for leather goods imported by Egypt
Exporters
‘Total
‘China
‘Italy
‘Turkey
‘Germany
‘France
‘India
‘Jordan
Imported value in
2004
19250
14868
913
132
634
491
137
0
Mahmoud Qattous and Terry McCallin
Imported value in
2005
27501
20592
1410
253
611
937
247
2
Imported value
in 2006
39030
29138
1964
447
1166
1029
220
0
Imported
value in 2007
50143
36046
3352
932
2312
1795
314
0
Imported value in
2008
65176
47027
4670
2389
2124
2067
1727
187
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4.4.List of importing markets for leather goods exported by Egypt
Importers
Exported value in 2007
Exported value in 2008
‘Total
5396
5297
‘Belgium
1349
1592
‘Italy
1090
1469
‘Jordan
322
508
‘France
128
311
‘United Kingdom
152
281
4.5.List of importing markets for Footwear exported by Egypt
Importers
Exported value in 2007
Exported value in 2008
‘Total
23423
21069
‘Italy
13558
14908
‘Greece
799
1916
‘Norway
576
1361
‘France
1985
788
‘Jordan
543
364
4.6.List of supplying markets for Footwear imported by Egypt
Exporters
‘Total
‘China
‘Italy
‘United Kingdom
‘Jordan
‘Tunisia
Imported value in 2007
102405
75890
11740
1317
0
70
Imported value in 2008
126968
99728
13689
1872
189
153
5.1.List of supplying markets for Raw hides and leather imported by Jordan
Exporters
‘World
‘Australia
‘India
‘Italy
‘Egypt
Imported value in 2007
610
60
286
96
1
Imported value in 2008
624
176
159
73
9
5.2.List of main importing markets for Raw hides and leather exported by Jordan
Importers
‘World
‘Turkey
‘Syrian Arab Republic
‘China
‘Egypt
‘Italy
198
Leather and Shoes Sector
Exported value in 2007
7759
3783
1137
1925
111
0
Exported value in 2008
8692
3478
2862
988
290
188
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5.3.List of supplying markets for leather goods imported by Jordan
Exporters
Imported value in 2007
13301
9551
519
246
208
322
12
1
‘World
‘China
‘Italy
‘Syrian Arab Republic
‘Germany
‘Egypt
‘Tunisia
‘Morocco
Imported value in 2008
17861
12203
872
618
539
508
38
9
5.4.List of importing markets for leather goods exported by Jordan
Importers
Exported value in 2007
‘World
‘Free Zones
‘Lebanon
‘Egypt
‘Germany
2164
1905
42
0
0
Exported value in 2008
3220
2017
596
187
2
5.5.List of importing markets for Footwear exported by Jordan
Importers
Exported value in 2007
Exported value in 2008
‘World
4820
4225
‘Free Zones
2498
1548
‘Iraq
777
953
‘Bahrain
6
601
‘Egypt
0
189
‘Saudi Arabia
194
118
5.6.List of supplying markets for Footwear imported by Jordan
Exporters
Imported value in 2007
Imported value in 2008
‘World
33294
41876
‘China
20040
11193
‘Hong Kong (SARC)
233
9034
‘Syrian Arab Republic
1781
3679
‘Italy
1230
1135
‘Spain
927
995
‘India
621
860
‘Egypt
543
364
‘Tunisia
47
38
‘Morocco
3
12
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6.Moroccan Export & Import of the leather & footwear sector in 2008
Import in 000’DH
Export in 000’DH
Import in 000’US $
Export in 000’
US $
Leather &
hides
849633
204071
106204.125
25508.875
Leather
goods
321332
493479
40166.5
61684.875
Footwear
762499
2789127
95312.375
348640.875
Source: Office des Changes, Morocco
7. The detailed import and export charts of hides and skins:
The detailed import and export charts of hides and skins in Annex 4, show that Jordan exports of sheep and lamb
skin, raw wool on are important US $ 4,083,493 whereas Tunisian & Egyptian imports are respectively US $ 631786
and1,483,000 that could be an importunity to improve intra-trade among agadir countries. Tunisia, which is a big
importer of sheep and lamb skin leather US $47,830,559 could import a part from Jordan which is exporting in 2008,
US $1,033,387 from this item.
Although, this table identifies important opportunities of Agadir intra-trade:
NSH
code
Commodity
410429
Bovine and equine leather, tanned or retanned ,nes
410431
Bovine or equine leather full or split grain, nes
410439
Bovine and equine leather, nes
410519
Sheep or lamb skin leather, tanned or retanned, nes
410520
Sheep or lamb skin leather, nes
410620
Moroccan
Imports
2007
Egypt Export
2008
Tunisian imports
2008
8,009,000
3,515,176
859,000
113,510,203
64,239,284
5,506,000
33,647,621
20,971,888
989,000
1,619,684
108,617
2,323,000
47,830,559
2,322,139
Goat or kid skin leather , nes
763,000
3,157,236
5,345,421
410900
Patent leather, metallised leather
427,000
35,962,080
6,390,625
411100
Composition leather in slabs, sheets or strip
115,000
1,288,476
598,140
Unit : USD
Agadir Intra-Trade in Annex 3 enables us to formulate the followings:
● Jordan should concentrate on niche markets and high quality products to export to Agadir countries
and EU. The industry has been hampered by imports from low cost Asian countries and it is no
more possible for Jordan to compete in the mass consumer segment. Target products may include
safety and medical shoes, high design leather shoes for the EU market and the finishing of leather
to increase the value chain of the tanning process and the processing of raw skins available in
important quantities.
● Morocco and Tunisia could increase their intra-trade in footwear and leather bags knowing a high
increase of imports from the EU.
● Tunisia, Morocco and Jordan could replace their increased imports of footwear from China, Vietnam
and India by their imports from Egypt endowed with lower production cost.
200
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