Why The American Leather Industry Is Having A Tough Time
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The American leather business is having a tough time. Consumers are increasingly switching to synthetic alternatives, and the trade war with China is hitting the industry hard. And as Darius Rafieyan and Cardiff Garcia of NPR's daily economics podcast The Indicator report, the slump in leather may also have a lot to do with America's love of hamburgers.
CARDIFF GARCIA, BYLINE: Leather has been a major industry in the United States since before there even was a thing called the United States. The first tanner set up shop in Jamestown in 1616. In the 1950s, the leather industry employed more than 300,000 people. Today that number is more like 25,000, and it's dropping every year.
DARIUS RAFIEYAN, BYLINE: And that's because leather prices have completely tanked. According to the U.S. Hide, Skin and Leather Association, an industry trade group, a hide that might have sold for $120 five years ago is going for about $33 today. So how did the leather industry get into the predicament it's in now? Well, the story starts back in 2014. Years of record-breaking drought had brought U.S. cattle inventories to a six-decade low. Beef prices were skyrocketing, and so people started switching from hamburgers and steaks to pork chops and chicken fingers. That meant fewer cows being slaughtered and fewer cow skins on the market.
GARCIA: Leather is a byproduct of the beef industry. When people eat less beef, there's fewer cow skins to go around. In 2014, leather prices were at an all-time high.
RAFIEYAN: And this was generally a good thing for leather producers. Sure, they were paying more for hides, but they could also charge a lot more for their finished goods. But Stephen Sothmann, president of the U.S. Hide, Skin and Leather Association, said that those high prices had an unintended consequence.
STEPHEN SOTHMANN: Designers got really good at taking leather out of their products, basically, because they saw those high prices and said, we need to find some alternative. And, you know, fast-forward five years later, and now leather's lost all that market share.
GARCIA: Meanwhile, the drought subsided, and the cattle industry came roaring back. Today Americans are eating more beef than ever, and that means that there is an abundance of cow skins on the market. But unfortunately, demand for leather has not come back in the same way.
RAFIEYAN: Matt Bressler at Wickett and Craig Tannery in Pennsylvania says that even with today's rock-bottom prices, fewer and fewer companies are willing to pay for real leather.
MATT BRESSLER: I mean, take a look around. Leather products are being used less and less.
RAFIEYAN: So even though prices are low, Matt is having to offer discounts to entice customers, which is further cutting into his already-thin margins. And as if all that wasn't bad enough, last year, the leather industry ran smack dab into a trade war.
GARCIA: Hides and leather are among the goods that were slapped with new tariffs last year. And since then, there has been a 35% decrease in the exports of hides to China. That is bad news for tanners like Matt.
BRESSLER: Do I worry about the hide market? Yeah. I'm not sure what's going to happen, though. We've never seen these types of numbers before.
GARCIA: Matt has already started offering steep discounts on every square foot of leather he sells. He worries that the industry may never bounce back, that the kind of high-end, artisanal, labor-intensive leather production that he has spent the last three decades mastering could be a dying art.
RAFIEYAN: Darius Rafieyan.
GARCIA: Cardiff Garcia, NPR News.
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