The French Leather Industry is one of the beacons of the ‘Made in France’ label – which generated some 9.3 billion euros of exports in 2016 – and is a strategic sector of activity for France.
The world leader in calf leather and exotic leather, third largest exporter of leather goods and raw hides in the world, fourth largest exporter of leather articles taking all categories into account, the industry includes 9,400 companies, employs 130,000 people and generates a turnover of 25 billion euros.
Since the 1980s, the sector has positioned itself on the high-end and luxury segments, and this has allowed the French industry to successfully overcome the challenges posed by globalisation. French companies, both large and small, boast exceptional savoir-faire, truly a living heritage, but also a remarkable capacity for modernisation. This blend of tradition and innovation is the reason for its reputation for excellence on the global market.
A cross-industry organisation, the Conseil National du Cuir represents the entire leather sector (consisting of some 20 federations covering livestock keeping, the production and tanning of hides, and the manufacture and retail of finished products). At a time when the competitiveness of firms and the observed decline in the French industrial fabric are central issues in the public debate, the CNC is seeking to support the leather industry and offer it plenty of opportunities to develop.
This electoral period is a prime moment for raising awareness among political decision-makers about the 10 proposals included in the White Paper from the French Leather Industry.
More competitiveness in France and abroad
Each year, an earmarked tax is collected from companies in the leather sector, as well as from imports. The purpose of this tax is to fund programmes encouraging innovation or preserving French expertise, developing exports and supporting young designers. This tax benefits small and medium-sized companies in priority.
The leather sector has grown rapidly in recent years thanks to the dynamism of its industrial companies (+38% in turnover in five years). But the income ceiling voted in 2011 means that the profession cannot benefit from this increase in tax revenue as the surplus is seized by the national treasury. As a result, the leather sector has been deprived of some 4.6 million euros in four years!
The sector calls for the ceiling on this earmarked tax to be removed, freeing up crucial capital for increasing the international performance of leather industry SMEs and for the development of research and innovation.
More quality raw materials to keep pace with the growth in our industries
French calf leather is of exceptional quality and has made France one of the world leaders in the sector. Yet, less than 20% of French skins are tanned into leather that meets the quality criteria of the luxury industry. Over the last 25 years, the number of French calf skins available to the industry has been halved, while demand never ceases to increase.
This situation is not only due to a decline in meat consumption in France (4% per year) but also to mechanical injuries suffered during the livestock raising period, certain conditions of transport and the presence of parasites including ringworm. These defects mean that the skins are unsuitable for the production of first-choice leathers.
The leather sector would like to see livestock farmers receiving support with works to create or modernise their farms, as well as assistance to better protect the animals’ skins and extension of vaccination against ringworm to the entire herd, in order to assist the upstream professionals.
Ensure the survival of existing companies and support young entrepreneurs
For too many years, the shortage of buyers prepared to take over a company meant that businesses in the sector closed and sub-contractors disappeared, taking their savoir-faire with them, while few young designers ventured into the French market for fear of being unable to ensure their company’s survival.
To address these growth challenges, the profession created an association - ADC au-delà du cuir - providing support for the development of young labels, chosen for the innovative nature of their projects, through the provision of coaching and financial assistance. A guarantee fund was also created by the Conseil National du Cuir and the French Footwear Federation. It facilitates access to bank loans for young entrepreneurs and accelerates their development.
But these initiatives are not enough. The industry proposes to encourage the investment of individuals or investment funds in the SME’s of the sector by modifying “unlisted” taxation, which would allow legal persons who invest in the takeover or creation of businesses to deduct from their income any eventual losses incurred from their investment, in the same way that any profits are included in their taxable income.
Better structured training programmes and preserved savoir-faire
In recent years, companies in the leather industry have been seeking to recruit young people who have acquired training in the leather professions. The leather goods sector continues to create jobs, while the footwear sector, after several years of decline, is now looking for young employees to replace the large number of staff reaching retirement age. In response to this situation, existing training courses, although very numerous, are not always well-adapted and are located far from the regions where the jobs are situated.
In order to improve our training system and make it more coherent both from a geographic perspective as well as in terms of training programmes, the CNC would like to develop a “general leather training course”. This would make the sector more attractive and would give young people practical knowledge about all the leather professions. This basic training could then be completed by specialisation in the field according to the aptitude of the students and the needs of the profession.
Protect the word “leather” and strengthen the fight against counterfeiting
The consumer is increasingly confronted with products made with materials produced from fruit or vegetable fibres yet labelled as “leather”.
The Conseil National du Cuir would like to issue a reminder that the use of the word “leather” is governed by decree 2010-29 of 8 January 2010 in application of article L.214-1 of the consumer code: “The term ‘leather’ only applies to material obtained from animal skin which is then transformed to render it rot-proof”. The aim of this being to provide consumers with more information and ensure that they are not mislead.
However, a number of companies in the sector have noted that this decree does not take into account products imported from elsewhere in Europe then sold in shops or over the internet.
This situation is highly unfavourable for French companies because it represents a distortion of competition.
Consequently, CNC has decided to act with the firmest determination against this form of unfair competition, which appropriates the use of the word ‘leather’.
France has a vast and binding legal framework in terms of the fight against the scourge of counterfeiting but is the third worst affected country in the world. Counterfeiting is another manifestation of unfair competition and represents a loss of some 40,000 jobs per year. In addition, the trafficking of fraudulent products can represent a danger to the health and safety of consumers.
Companies who are victims of counterfeiting have problems protecting their patents, brands and designs. In practice, this is due to poor use of counterfeit-seizing powers, but also minimal sanctions against counterfeiters. The consequence of this is that the sale of counterfeit products in France continues to be an easy and risk-free source of income for traffickers.
The Conseil National du Cuir would like to see a certain number of measures taken to effectively fight against counterfeiting. These include: strengthening the competencies of courts in the area of intellectual property rights, by ensuring there are magistrates specialised in this area; creating a one-stop shop in charge of centralising the processing of consumer complaints, in conjunction with the holders of the intellectual property rights and the online payment operators; and the creation of a “duty of diligence” for internet retailers with regards to counterfeit products.
A legislative and regulatory framework that is better adapted to the development of trade (traditional and online retail) of leather articles.
As is the case with all players in the distribution sectors, leather goods retailers are facing a profound shake-up of their sector: multi-channel transformation of their sales methods with the development of online shopping, which represents 15% of sales of personal equipment; a transformation in consumer behaviour, as consumers are now able compare at any time, almost instantaneously, the quality, price, environmental and social impact of products; transformation of cities with the apparently irreversible decline in high streets of mid-sized towns (the commercial vacancy rate stands at more than 10%).
In light of this revolution, the Conseil National du Conseil believes that a new trade policy should be based around the following three pillars:
- Facilitating a balanced development of different forms of trade, in particular developing greater tax equity irrespective of the retail mode.
- Encouraging recruitment in the retail sector by lowering the cost of unskilled work, making greater use of vocational training and apprenticeships, and reassessing the surcharges caused by the threshold effect.
- Simplifying operating procedures for businesses struggling with the constant increase of regulations. Any trader is potentially at risk of breaking the law, particularly with regards to labour law.
Frank Boehly, President of the Conseil National du Cuir:
“The French leather industry continues its remarkable development, which has allowed France to shine around the world. Yet the businesses of this sector are subject to constraints that undermine them.
We ask our future political decision-makers to take into consideration our proposals so that our sector, made stronger and more competitive, can create businesses and jobs in France and continue to be one of the finest ambassadors of French savoir-faire around the world.”