Export-oriented growth continues in a sector on track to record its third consecutive yearly increase
Technology, niche productions, innovation and research but above all international markets. These are the indicators highlighted by data circulated by the Ufficio Studi Assomac on January-November 2015 exports for the footwear, leather-goods and tanning machinery industries.
The first statistic to emerge is yet another rise in the sector’s exports. After a 2012 in the negative, both 2013 (+15%) and 2014 (+11%) recorded growths and 2015 will end with a positive figure, although not quite so high. The increase for the first 11 months of 2015 is equal to 1.7%, lower than the previous years’ trend but this is because of strong growth in the previous years.
Seen in perspective, the albeit limited increase for 2015 is positive because it is the third one in a row and for the fact that the trend improved in the last months of the year. After a subdued first six months, the situation improved drastically, taking overall exports back into positive figures and, more importantly, recording a lower concentration in tanning machinery (-4.7%) and a marked acceleration in the footwear industry’s sales abroad (+12.3%).
The overall result (including synthetic-footwear and other machinery) is exports that, in just 11 months of 2015, reached the threshold of Euro 390 million. If the growth continues in the last period, this could easily break through the 430 million Euro mark, following a record 422 million achieved last year.
“Compared with last year, the rise in exports seems confirmed again for 2015 but it is less uniform – says Gabriella Marchioni Bocca, Assomac and Simac Tanning Tech President. The growth is patchy across different divisions, both in market and company terms. Regarding the latter, we are undeniably facing a structural change in the competitive system, a change that requires different set-ups and organizations from the past. It does not appear in the export data but our investigations tell us that there has, for some time now, been a polarization of certain company sizes. The best performances are coming from the big firms (turnover Euro 10 million plus) and small companies (turnover Euro 1-5 million) whereas micro and medium-sized companies are suffering.”
Company size provides a telling key to the interpretation of a firm’s economic result, also as regards exports. In other words, the most successful companies seem split into two clear-cut groups: large firms, which certainly deliver the best performance, and small ones, which are above average in terms of profitability.
“In such a turbulent context as today’s, developing a business strategy aimed at increasing operational size seems to pay off – comments Amilcare Baccini, Simac Tanning Tech CEO. The largest companies have greater financial and commercial means to face multiple markets and develop the marketing policies that are ever more important in today’s market, where the offer and foreign competition are steadily growing with low-cost products. On the other hand, small companies that have grown beyond the size of the micro company and can focus their attention on niche technologies benefit from their flexible and adaptable productions, which are recognised and rewarded by the market.”
At market level, however, for the two main divisions, we see confirmation of the trend recorded in 2014 with Europe being a highly attractive market area for both tanning and footwear machinery.
Europe represents the second sales market for tanning machinery with 28.7% of Italy’s exports in that division; in the January-November 2015 period it reached a share of nearly Euro 36.8 million out of a total of almost Euro 129 million. Compared with the same period of the previous year, exports to Europe are showing a growth of 24.5%, a far bigger increase that seen on all the other markets.
By contrast, European purchases remain mostly stable for traditional footwear machinery (excluding synthetic-footwear machinery). At first glance, this might suggest a negative result, also given the large increases recorded in other markets (Asia +32.1% and America +35.6%). Vice versa, it is remarkable considering that, standing at more than Euro 50 million, the European market represents more than 52.9% of all exports (Euro 95.9 million) in the first 11 months of 2015. Another fact that explains the less positive result of the European market for this division is the strong growth in the same period of 2014 (+18.3%) and so the high values achieved in that period are the point of comparison for 2015.
As regards footwear machinery, moreover, we are witnessing an Orientalization of exports: the share of Asia as a reference market has grown steadily for two seasons. A 32.2% increase in January-November 2015 follows the 30.9% growth in the same period of 2014 and further eroded the European market share.
These data reveal two different trends: on the one hand, technology is clearly following the world production of semi-finished and finished products, shifting to the markets where the demand is greatest.
“The increase in the Asian market share is certainly positive news – comments Gabriella Marchioni Bocca, Assomac and Simac Tanning Tech President. It demonstrates that our companies remain competitive in areas where many of them have been present for years. It also shows that, despite having smaller operations than our foreign competitors, we still manage to implement effective international sales strategies.”
The second factor highlighted is that Europe is investing in footwear and tanning technology again after an interval of some years.
“The European continent’s resumed purchase of machinery prompts interesting thoughts on the re-allocation of production worldwide – says Amilcare Baccini, Simac Tanning Tech CEO. We must not, of course, think that globalization has triggered a reverse march but should realize that the scenario is simply a complex reality that deserves careful reading on our part. We must ask ourselves whether this still weak return of certain productions requires more than just new technology in the form of structurally different technology and whether the pre- and post-sales service factor is offering key competition leverage for this very new and growing demand. It is increasingly clear, for example, that the large-volume industry is being flanked by an industry requiring speed, flexibility and industrial costs even for tiny productions.”
“Over and above the absolute values expressed by our sector, we represent an important link in the value chain of the fashion sector – ends Gabriella Marchioni Bocca, Assomac and Simac Tanning Tech President. The constant exchange of ideas with our clients makes us more than just machinery suppliers; we are technology partners, technology that works to make the creative ideas of fashion designers and creative directors industrially feasible. In this sense, Italy is recognised as the absolute leader and that is precisely where we must continue to build our competitive advantage."