Consolidation is projected over the next five years, in line with the industry's declining life cycle stage
Melbourne, Australia (PRWEB) June 22, 2014
Leather and Leather Substitute Product Manufacturing in Australia has struggled significantly over the past five years. Industry performance has been affected by falling demand for leather tanning, fur dressing and leather product manufacturing and less demand from downstream clothing and footwear manufacturers. Companies have also been affected by real household discretionary income levels and the strength of the Australian dollar. Industry operators export a majority of Australia's animal hides and skins to China. A large number of finished leather products such as belts, wallets and handbags are also imported from China. Industry revenue is estimated to decline at a compound annual 4.1% over the five years through 2013-14, due to declining demand from downstream manufacturers and a strong trade-weighted index. However, revenue is estimated to rise by 2.5% in 2013-14 to reach $541.9 million, as greater slaughter volumes will increase the supply of animal hides and skins. Over the past five years, the industry has displayed a consolidation trend, with large companies acquiring smaller firms in order to increase market share concentration. According to IBISWorld industry analyst Spencer Little, “Exports have grown substantially over this period, due to rising demand from export markets, primarily in China.”
Over the next five years, the industry is projected to continue struggling. Companies will face high levels of competition from import markets and substitute goods. Lower demand from downstream clothing and footwear manufacturers will also contribute to the industry's poor performance. Revenue is forecast to decrease over the five years through 2018-19. Key export markets, particularly in China, are anticipated to demand high levels of tanned animal hides and skins that require further processing. “Consolidation is also projected over the next five years, in line with the industry's declining life cycle stage,” says Little.
The Leather and Leather Substitute Product Manufacturing industry displays a medium level of market share concentration. A I Topper & Co has a relatively large market share concentration due to its vertically-integrated business model for animal hide and skin tanning, processing, finishing and distribution. The moderate labour intensity of production techniques means that there are a number of small operators in the industry. On average, most companies have fewer than five employees per enterprise and produce relatively low volumes. The major players in the industry are A I Topper & Co Pty Ltd and Schaffer Corporation Limited.
For more information, visit IBISWorld’s Leather and Leather Substitute Product Manufacturing report in Australia industry page.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau.
IBISWorld industry Report Key Topics
Firms in this industry primarily tan, curry, dress, finish, dye, emboss and stamp leather and animal hides, skins and fur. Companies are also involved in the production of fellmongered, pelt or slipe wool. Industry operators also manufacture leather or synthetic leather handbags, wallets, luggage, saddles and harnesses. This industry excludes leather clothing and footwear manufacturing.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.