In the context of anti-Russian economic sanctions and actively rising jingoistic patriotism, they are increasingly talking about a ban on the import of foreign clothing and footwear in order to stimulate the development of domestic production. "Russia will shoe itself!" - write users of social networks, not paying attention to the insidious play on words. What is the real situation in the domestic leather and footwear industry and whether Russia, if necessary, will be able to shoe itself, Shoes Report tried to figure it out, using the materials provided to us by the Russian Union of Leatherworkers and Shoemakers.
The Russian leather industry is one of the oldest domestic industries, it arose at the beginning of the 1721th century, even during the reign of Peter the Great (the reformer tsar in XNUMX issued his Decree banning the export of raw hides "... so that boots would be made of Russian leather ..." and put the beginning of the birth of industry).
This segment of the light industry is the only one, at present, which completely works on Russian raw materials, provides natural leather for the production of footwear (including for the Armed Forces), leather goods, furniture, cars; is socially significant, since enterprises located in many regions of the country are often city-forming.
Many enterprises have a long history and good traditions in leather and shoe production. Of course, the industry has undergone reconstruction several times, but over the past two decades it has made a breakthrough: enterprises built before 1990 have been completely technically updated, a significant part of the obsolete equipment has been replaced by modern high-performance equipment that allows the production of competitive leather and shoes (up to 90% of materials are shoe industry), which are in demand among the population and abroad (export of leather and shoes is about 20% and 10%, respectively). At present, we have an updated domestic leather and footwear industry producing high-quality, competitive products.
Technologically, tanneries involve full-cycle processing, from raw hides to finished leather. In Russia today there are more than three dozen tanneries operating, producing over 220 million square meters. m genuine leather. A little more than half of the volume of raw materials is processed at two large plants, the remaining volumes are processed by medium and small enterprises. All tanneries are equipped with modern Italian, Czech and Spanish technological equipment.
Raw materials for the leather industry are animal waste - cattle hides and insignificant volumes of hides of pigs, goats and sheep. The leather of small cattle (goats, sheep) in the world is used little because of their small area, small thickness, specific properties and high processing costs, and blue leathers have become more used in the food industry. Contrary to numerous suggestions, replacing cattle hides with other types of raw materials is not possible on an industry-wide scale. Russia is not in the top ten in livestock and leathers processing, located in the 12-13 place.
In 2014, by a decree of the Government of Russia, leather raw materials and semi-finished products were included in the List of goods that are essential for the domestic market of the Russian Federation, along with milk, grain, etc. The reason for this decision was the high social and defense significance of the product.
Historically, Russian enterprises use only domestic raw materials. It is lower in cost than European and this allows you to issue a high-quality final product at a very reasonable price, in addition, the import of raw leathers is limited by veterinary rules, the specificity of goods during transportation, as well as the introduction of export bans in many commodity countries. In 2001, at the insistence of tanneries, a high, almost prohibitive, duty was imposed on the export of raw hides from Russia, and in the next 10 years, the leather and footwear industry was very actively developing, showing an annual increase in volumes from 13% to 17%. However, other processes went in parallel. The number of livestock is declining every year, the borders with the countries of the Customs Union have opened, under the terms of the WTO, duties on the export of leather semi-finished products have decreased and annually reduced on raw leathers. All this has led to an increase in the export of raw materials: raw leathers –– through the border of Kazakhstan and tanning semi-finished products to EU countries. For domestic production, resources were sorely lacking. Abroad, Russian raw materials are in high demand for a low selling price (50-60% lower than US and European prices) and good quality.
According to customs, in the 2012 year, 23,8 thousands of tons of semi-finished leather goods were exported from Russia, in 2013, already 27,4 thousand tons. In terms of raw materials, up to 30% of the best leather resources is exported, which leads to their shortage in the country. The main exporters of semi-finished products from Russia are raw material intermediary companies, simply speaking, resellers. Taking advantage of their position as raw material holders, they process it on a tolling basis at tanneries to a semi-finished product and export it mainly to Italy (up to 80%).
The smaller the resources, the lower the production of leather and shoes in the country. During 2012-2013, leather production decreased by 13,4%, leather shoes - by 14,7%. In 2014, there was no improvement. The current situation negatively affects the social aspect - employment in the industry. So, for the processing of a unit of raw materials to a semi-finished product, only one worker is needed, for the production of finished leather you need 6 people, and finished shoes need 24. The export of raw materials and semi-finished products leads to the loss of jobs.
According to statistics, in 2012-2013, the number of workers employed in this industry decreased by 7 thousand people, which increased social tensions in the regions and requires additional budgetary funds for unemployment benefits. According to a rough estimate, this amount is up to 490 million rubles annually.
In this situation, it seems obvious the search for new sources of raw materials, including the import of raw materials from abroad. But here, too, is not easy. The use of European and American raw materials (raw leathers and semi-finished products) is not possible for economic reasons: as mentioned above, Western prices for 50-60% are higher than Russian ones. In the cost of finished leather, the share of raw materials is about half, so its purchase at a price of 50-60% higher than Russian will increase the cost of leather by 30%. With a tannery profitability of approximately 5,5% and an increase in prime cost by 30%, production would be unprofitable. This will lead to massive bankruptcy of enterprises.
The import of resources from raw countries is also not possible due to the introduction in these countries of restrictions and prohibitions on the export of raw materials and semi-finished products (India, Uzbekistan, China, Argentina and other countries), as well as veterinary restrictions on imports to Russia.
Neighboring countries, members of the Customs Union, cannot be sources of resources for Russian enterprises. In Belarus and Kazakhstan, manufacturers themselves lack leather raw materials and purchase them in Russia, reducing their already small volumes in our domestic market. In addition, through Kazakhstan's open borders, Russian raw materials are massively exported for cash to Kyrgyzstan, and then to China, leaving their own Kazakhstani enterprises, which produce only semi-finished products and export it also through Kyrgyzstan to China, without raw materials.
In this situation, manufacturers of leather and shoes (RSKO) appealed to the Government of the Russian Federation with a demand to pay attention to the state of this segment of the light industry and take protective measures. In August 2014 of the year, a temporary ban was introduced (until 1 of April 2015 of the year) on the export of a leather semi-finished product from Russia. According to experts, the preservation of raw materials will stabilize the leather market, increase leather production for domestic consumption and save about 2,3 billion rubles for the state budget.
Almost all Russian leather shoes are made from domestic raw materials. The export turnover of leather and shoe products in 2014 amounted to about 260 million dollars, which confirms the competitiveness of Russian goods. The volume of leather goods production in Russia per year is over 220 million square meters. From them you can make 80-90 million pairs of shoes. This, of course, is not enough to shod the whole country. But the latest market trends are such that leather shoes account for only a quarter of consumption.
Everything is determined by customer demand. According to official figures, Russia annually consumes about 455 million pairs of shoes. Of these, Russian-made - 115 million pairs. Of the total volume of shoes consumed by Russians every year, leather shoes account for more than 100 million pairs, that is, slightly more than 20%. The remaining shoes are made of artificial, textile materials, plastic, rubber and felt. If textiles, rubber and felt are successfully produced in our country, we have no production of artificial materials for shoe upper and raw materials for shoe bottom. Therefore, manufacturers buy either these materials or their blanks abroad: in China, Turkey and other countries.
The situation in the Russian leather and footwear industry is complicated. The development of domestic production depends on various factors and has many different aspects, but the main ones are just two: the availability of raw materials and the creation of equal competition for all players in the Russian leather and footwear market.
The presence of imports on the Russian market is necessary, since this is competition and the forward movement of our industry. But it is precisely the unequal competition that has been taking place for many years that is the main brake on the development of Russian production. For example, for more than 10 years, ready-made leather has been imported into the country at the price of raw materials (less than 5 dollars / sq.m), and the average contract price for imported shoes does not exceed 11 dollars per pair, while the minimum retail prices have already exceeded 40- 50 dollars / pairs In such conditions, it is difficult for Russian enterprises to hold positions, constantly reducing their profitability.
In order for Russia to shod itself, it is necessary for the state to create equal competitive conditions for both imports and production, but for now it is economically inefficient to produce in Russia, so the situation requires active participation and support of the state.
The main tanneries of Russia
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