Lower demand from downstream clothing and footwear manufacturers will likely contribute to the industry's struggle.
Melbourne, Australia (PRWEB) April 24, 2015
Operators in the Leather and Leather Substitute Product Manufacturing industry in Australia have struggled significantly over the past five years. Revenue is primarily driven by demand from clothing and footwear manufacturers and personal accessory retailers. Industry revenue is estimated to decline at an annualised 4.7% over the five years through 2014-15. According to IBISWorld industry analyst Tommy Wu, “Revenue has been affected by falling demand from downstream clothing and footwear manufacturers.” While leather is a key input for these manufacturers, it also competes with other fabrics and materials. Despite falling revenue, rising real household income, which tends to increase spending on discretionary products, and greater export demand for industry products, mainly from China, has helped curb the industry's decline.
Companies have been affected by the strength of the Australian dollar over much of the past five years, with industry operators exporting a majority of Australia's animal hides and skins to China. Exports have grown substantially over this period, due to rising demand from overseas, particularly China. “The strength of the Australian dollar has also increased the competitiveness of import products, further contributing to the rising competitive pressures within the industry,” says Wu. As a result, revenue is estimated to fall by 1.0% in 2014-15, to reach $562.5 million. Consolidation has also occurred because of this, with larger companies acquiring smaller firms to increase market share. The industry displays a medium level of market share concentration. Major players include A I Topper & Co Pty Ltd and Schaffer Corporation Limited.
Over the next five years, the industry is projected to continue its decline. Operators in the industry face significant competition from import markets and substitute goods. Additionally, lower demand from downstream clothing and footwear manufacturers will likely contribute to the industry's struggle. High levels of international trade are expected for the Leather and Leather Substitute Product Manufacturing industry, with both import and export levels forecast to grow. Key export markets, particularly China, are projected to demand high levels of tanned animal hides and skins that require further processing. Consolidation is also expected to continue over the next five years.
For more information, visit IBISWorld’s Leather and Leather Substitute Product Manufacturing industry in Australia report page.
Firms in this industry primarily tan, finish and dye leather and animal hides, skins and fur. Companies are also involved in the production of sheepskin and slipe wool. Industry operators manufacture leather or synthetic leather handbags, wallets, suitcases, saddles and harnesses. This industry excludes leather clothing and footwear manufacturing.
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