Leather+Global+UCV

8/20/2019 Leather+Global+UCV

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LEATHER www.eenpact.eu


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EENPACT- LEATHER SECTOR REPORT

The strategy objective of this task was to have a first approach to the offer and demand sides ofEnvironmental services in the project areas. For performing this activity it was also necessary toobtain the starting situation of the adopted environmental measures in support of SMEs in theleather sector. This report provides inputs for policy makers about environmental needs in theleather industry in the consortium countries.As required by the call for proposal, in each project area a survey was carried out for having aclear and wide situation with regard to the relevant Environmental support of the SMEs. Inparticular the survey concerned the public schemes (funding sources and modalities, ongoing and

planned tasks, types of expertise, use of human resources, etc.) and private initiatives (actors,Environmental Service Providers (ESPs), level of competences and expertise, capacity/work force,service range, costs to SMEs, etc.)

Involving all the partnership, the project Coordinator (CCIA) prepared a common factsheet fordriving the activities at national and local scale, the European dimension was included in eachproject area. Each partner was in charge for national and local survey.

The Environmental legislation and standards applied in the leather industry sector are included inthe countries fact sheets as well. A summary of these fact-sheets and an analysis of the results isperformed in part II - Fact sheets from countries. For what concerns the private sectors, an onlinesurvey was carried out in the EEN-PACT partner countries and their results about the

environmental demand and offer of the leather industry sector are shown in part III – EEN- PACTsurvey on environmental services.


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1. Fact sheets from Europe

I. The Leather Industry in Europe

A. Definition

Leather tanning covers the treatment of raw materials; it is the conversion of raw hide or skin, arotten material, into leather, a stable material so that it can be used in the manufacture of a widerange of consumer products.The leather tanning industry uses hides and skins – by products of the meat and dairy industry -which would otherwise have to be disposed of by other means, such as landfills and incineration.Leather is the tanning sector's fundamental output. It is an intermediate industrial product, with

applications in downstream sectors of the consumer goods industry. Footwear, garment, furniture,automotive and leather goods industries are the most important outlets for EU tanners' production.The processing of hides and skins also generates other by-products which find outlets in severalindustry sectors such as pet and animal food production, fine chemicals including photography andcosmetics, and soil conditioning and fertilisers.

B. Key Figures

• The EU tanneries are generally small family businesses.• The regional concentrations are marked, and industry often plays a key role in the

local economy as the main creator of jobs and wealth.


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Evolution of the leather industry In The Europe of 27

Leather/Tanning 2005 2006 2007 2008 Number of enterprises 3 780 3 710 C 4 000 Turnover (€M) 9 000 10 671 10 343 9 540

Production value (€M)

9 000

10 699

10 365

9 228Value added at factor cost (€M)

1 800

1 957

1 975

1 728Number of persons employed 54 000 51 900 50 800 50 700 C: ConfidentialSource: Eurostat (2005 data are estimated)

Leather goods 2005 2006 2007 2008 Number of enterprises 14 507 14 158 13.924 12.561 Turnover (€m) 10 000 10 330 12.097 11.723 Production value (€m) 9 000 9 828 11.514 10.650 Value added at factor cost (€m) 2 800 3 028 3.465 3.154 Number of persons employed 105 000 108 800 108.500 97.800

Source: Eurostat (2005 data are estimated)

In the context of global competitiveness, particular attention is devoted to the opportunities andrisks for the European leather tanning industry in an enlarged European Union.The integration of leather and tanning businesses of new Member States is ongoing and willinduce further structural adjustment, not least because one of the main advantages of the newMember States - low labour costs - is bound to decrease over time.

The leather tanning industry is a global industry, and EU tanners depend highly on access to rawmaterials and to export markets. Even if, in general, the share of the EU in the world markets istending to shrink with the development of the leather industry in other regions of the world such asAsia and the Americas, the EU tanning industry is still the world's largest supplier of leather in theinternational market place. (1)

(1) http://ec.europa.eu/enterprise/sectors/leather/index_fr.htm

Production of Leather in a word

25%

75%

Europe is an important player in the international trade of leather as it represents 25% of the worldproduction of leather and it is also the largest and most dynamic consumer market of leathergoods. (2)

(2) http://www.euroleather.com/french_brochure.htm

25% Europe

75% Rest of the world


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C. The single market and the European directive

Although there is no specific European directive to the tanning industry, this sector is still affectedby several environmental guidelines concerning the use of chemicals, marketing, the use ofhazardous substances and the use of animal by-products.

The single market is one of the greatest achievements of the European Union. It has a direct andgrowing influence on the leather industry because citizens and businesses can benefit in variousways: more job creations and business opportunities, more choice of goods and services, lowerprices, job mobility and international competitiveness.

There is no specific directive to the leather and tanning industry, however, several guidelines haveimplications for the sector. The main environmental Directive concerning this sector is directlyDirective 96/61/EC on the prevention and integrated reduction of pollution.

Other guidelines for this industry include Directive 76/769/EEC relating to restrictions on theplacing on the market and use of certain dangerous substances and preparations and its

amendments, in particular Directive 2002/61/EC on azo dyes. Directive 2003/53/EC on therestriction of the marketing and use of certain dangerous substances and preparations(nonylphenol, nonylphenol ethoxylate and cement) has also implications for the treatment ofleather.

The new REACH Regulation on chemicals affects also the leather industry, which uses manychemical preparations downstream. More information on this point are available in the Environmentsection.

The raw hides and skins are materials of animal origin used outside the food chain: they aretherefore subject to Regulation (EC) No 1774/2002 laying down health rules concerning animal by-products not intended for human consumption. To facilitate effective management of animal by-

products while maintaining the current high degree of protection against potential risks to publichealth, animal health and the environment, the European Commission proposed a revision of thisregulation in 2008.It will establish clearer rules and define a more general framework of requirements appropriate tothe risks associated with these products. The proposal has currently being discussed by theEuropean Parliament and the Council.

There are no specific Directives for the leather tanning sector but several Directives haveimplications for the industry, in particular regarding its impact on consumer health, the environmentand animal health.

D. Directive on integrated pollution prevention and control (IPPC)

• Directive 96/61/EC concerning integrated pollution prevention and control.• Codified version: Directive 2008/1/EC.• Proposal for a Directive on industrial emissions (integrated pollution prevention and

control): COM(2007) 844 final.Directives on dangerous substances and preparations

• Directive 76/769/EEC: restrictions on the marketing and use of certain dangeroussubstances and preparations.

• Directive 2002/61/EC: azocolourants.• Directive 2003/53/EC: nonylphenol, nonylphenol ethoxylate and cement.

Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemical substances(REACH)

• Regulation (EC) No 1907/2006, amendments and implementation legislation related toREACH

Regulation on animal by-products not intended for human consumption


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• Regulation (EC) No 1774/2002 • Consolidated version of the animal by-products regulation and other legislation on this

issue Water Framework Directive

E. The importance of the leather industry

European tanners are essential in the global leather industry, but the international markets confrontnew challenges.

The EU is a major player in the international leather market. To ensure the competitiveness of theleather industry, the EU is working to reduce barriers to imports of raw materials and finishedproducts to access foreign markets.

While, in general, the global market share of the EU tends to decrease following the developmentof the leather industry in other parts of the world such as Asia and America, the European industryLeather retains its position as world's largest producer on the international market.

The leather industry and tanning has an international dimension, and European tanners are highlydependent on access to raw materials and export markets. However, they often encounter barriersin these processes (or other trade barriers).

European tanners may face two types of trade barriers. First, barriers to export of finishedproducts, and moreover barriers preventing access to raw materials. These are specific to theleather and tanning industries.These trade barriers are the most troublesome because their consequences are considerable onthe competitiveness of European tanners.

Since access to raw materials has become more difficult in Europe (following a recent fall in the

rate of slaughter and beef production), it is essential to be able to access these materials outsidethe EU. Many countries maintain, however, bans and restrictions on the export of raw hides andskins. Improved conditions of market access is expected primarily in the WTO, where theEuropean Commission advocates a complete withdrawal of all export restrictions imposed by somemembers (China, Argentina, Brazil, Indonesia, Pakistan, India, etc..).To ensure the European industries fair access to raw materials they need, the EuropeanCommission has developed an integrated strategy presented in its Communication on the initiative"Raw" in November 2008.

European tanners are exposed to increasing competition from many countries, including countrieswith low cost labor. In this context, a fair and reciprocal market is essential to allow Europeantanners to find markets for their products.

Now, the European market is open to imports from virtually free world. European rights includevery low import rules and tariff barriers are nonexistent. However, European players still face manytrade barriers (including high import duties and tariffs or other barriers, such as excessive labelingor certification requirements) outside the EU.


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F. Segmentation in the Euro zone, Leather and Footwear (leather and leather products)

Source: Xerfi

G. Distribution of the tanning industry in the EU

As regards the sector of finished leather:• Italy is the leading country in Europe in terms of number of establishments, number of

employees, production and sales.• France, Germany and the UK, virtually the rest of the leather industry in the EU.• Other EU member states have also a leather industry dynamics, especially that of Portugal

seems particularly promising.

In 1997 Italy alone accounted for 65% of EC production and 15% of world production.• Italy has about 2,400 tanneries,• Spain about 255,• 100 Portugal• Germany less than 40.

Production units in Italy are generally much smaller than in other countries.


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Source : European Commission, reference document on the Best Available Techniques. Tanningof leathers and skins.

H. The leather industry and environmental aspects

The main environmental measures on the leather industry include Directive 96/61/EC on theprevention and reduction integrated pollution (IPPC), Directive 2000/60/EC establishing aframework for Community action in the field of water, and REACH.

To maintain their competitiveness in the global market, European manufacturers of leather shouldreach a more efficient use of their raw materials and avoid wasting collagenous material (hides andskins) which are a valuable raw material for other industries and agriculture.By-products should be reused / recycled or processed into new products of higher value.

Thus, European tanners are currently guiding their production towards higher quality leathers thefashion industry is attracting their attention. Modernization of the industry also affects allinvestments made by European tanners in favor of environmental protection, waste reduction,

recycling, recovery of secondary raw materials, etc…Environmental regulation has a significant impact on the leather and tanning industry, whichestimates the share of costs of environmental protection to about 5% of total operational costs.

The main environmental Directive regarding directly the leather and tanning industry is theDirective 96/61/EC on the prevention and reduction integrated pollution (IPPC), which is subject totanneries with raw hides and skins having a treatment capacity exceeding 12 tons of finishedproducts per day. The European IPPC Bureau organizes this exchange of information andpublishes BREF documents which the Member States must take into account when determiningbest available practices in general or in individual cases. BREF for the tanning of raw hides andskins, adopted in 2003, is currently being revised following substantial changes (i.e. Chromesludge, gas emissions, the Directive on VOC Directive on NPE ).

Concerning plans for watershed management (Directive 2000/60/EC on a common framework forCommunity action in the field of water), the industry must take steps to reduce water pollution if


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effluent from a tannery wants to contribute to pollute a body of water, preventing compliance withthe criteria of "good status" of waters.

Using many chemical preparations downstream industry is also affected by the new REACHRegulation on chemicals. The vulnerability of certain chemicals, which are sold at low volume butwhose role is essential to the production of leather, provokes specific risks to the sector, such aspotentially high costs of reformulation, a market withdrawal or delay problems of marketing.However, REACH can also benefit companies by promoting innovation in the chemicals sectorrelated to leather.

I. Evolution of the Leather Industry(1)

The leather industry and leather products represents 0.91% of total manufacturing production,0.88% in value and 1.67% in employment (2001, EU-25).In recent years, the number of businesses and jobs in the sector has declined, the turnover in theleather industry has also fallen. In the leather value chain, the value of exports is increasing,showing a movement towards market niches with higher added value.

Export volumes, however, decrease rapidly and the sector's potential is often hampered by difficultaccess to important markets. Within the EU, the weight of several new Member States in terms ofemployment in the field of leather and leather products is high in terms of sales or value added,indicating clear that this is a highly labor intensive. The industry considers the quality of rawmaterials to the EU as the best for specific products. Access to European raw materials becomesmore difficult (slaughter rate and beef production have dropped in recent years), access to rawmaterials outside Europe is crucial.Tanners and manufacturers of leather products in the EU are turning to a production-qualityproducts. However, countries with lower production costs are constantly improving their quality andexpanding their product line.Leather producers in the EU are therefore faced with similar challenges as other industries wherecompetitive factors are especially research and innovation, skills and quality, design and value-

added, knowledge and expertise, and better access to third country markets.

a. Knowledge

The main technological challenge for the leather industry is to focus on higher value added and toturn products, processes, materials and organizations eco-efficient and sustainable. A significanteffort on research and expertise is necessary to achieve these objectives in terms of businessmodels, new materials, better manufacturing processes, etc..

The leather industry and leather products would benefit from vocational training programs. Themajor factors of competitiveness consist of research and innovation, skills and quality, design andvalue-added, knowledge and know-how. The legislative proposal for origin marking is of particular

interest for the sector, which is in favor of compulsory marking of origin for imports.

b. Competition

The sector is composed of small, highly diversified in terms of products and fragmented in terms ofcompanies (since 1990, only two concentrations were studied by the Commission). The area issubjected to horizontal legislation on state aid and has no specific legislation in this area.


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c. Regulation

There is no specific directive to the leather sector but several horizontal directives have an impacton the industry (especially environmental legislation concerning the sector of leather tanning).Industry and trade unions calling for EU legislation to harmonize different labeling systems forleather products are in force in some Member States. In this context, the Commission serviceshave asked the trade associations to provide examples of different national labeling and resultingproblems.

d. Environment

The impact of environmental regulations is very important in the sector. The industry estimates thatthe costs of environmental protection amounted to 5% of total operational costs. To remaincompetitive in the global marketplace, European leather producers must exploit more efficientlytheir raw materials and avoid wasting collagenous material (skins) that are valuable raw materialsfor other industries and agriculture. The loss of raw materials creates waste, which has significant

negative consequences in terms of cost and environmental protection. The products should beeither reused / recycled or converted into new higher value products.

Plans for river basin management (Water Framework Directive 2000/60/EC) oblige the leatherindustry to take steps to reduce pollution of the water when the discharge of a site contributes topollution of water volume, which is a non-compliance with the criteria of "good status".The main environmental Directive directly to the leather tanning industry is Directive 96/61/ECconcerning integrated prevention and reduction of pollution facilities. The European IPPC Bureauorganizes this exchange of information and produces reference documents (BREFs) whichMember States must take into account when determining best available techniques generally or inspecific cases.

The BREF for tanning hides was adopted in February 2003. Revision may be necessary due tosignificant new developments (i.e. sludge containing chromium, air emissions, VOC Directive,Directive NPE). The sector is subject to the potential impact of REACH, as it is a majordownstream user of a wide variety of chemical preparations.

Given the similarities in terms of technology, firm size, competitive pressure and heavy use ofchemicals, the industry could face risks similar to those of the textile industry regarding thevulnerability of low-volume chemicals that are essential for production and products of leather,adjustment costs and potentially significant problems within commercialization. The industry alsofears that the provision of REACH on "substances in articles" may create a competitivedisadvantage vis-à-vis non-EU companies.

e. External competitiveness increase.

The main export markets are EU emerging economies that have developed a large productioncapacity of leather goods: Hong Kong (18%), Romania, China and the United States, while muchof the imported semi-processed leather (wet-blue) are from Brazil (14.5%) and U.S. (6%). Importsof finished leather come mainly from India, Pakistan, Argentina and Brazil. The EU's trade balanceis negative in value. However, exports remain at previous levels thanks to the high quality andproduct design. Many countries, however, maintain prohibitions and restrictions on exports of rawhides, i.e. Argentina, Brazil, India, Morocco, Thailand and Nigeria (with Brazil and Nigeria, the EUhas its biggest bilateral deficit in this sector).

In addition, the increased purchasing power of Asian competitors in global markets of rawmaterials affects the price and availability of raw materials to the detriment of EU tanners andmany developing countries. The main export markets of the EU for leather products are Japan(27%) and U.S. (19.7%), while most imported leather goods originate from China (60 %) and India


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(10.5%), resulting in a trade deficit since 1999. Counterfeiting and piracy are problems for theEuropean leather industry to face (especially from China and India).

Concerted efforts between industry and public authorities are necessary in the circumstances asprovided, for example, in the action strategy recently adopted EU-US for the application ofintellectual property rights in third countries.

The two main concerns for the industry are access to raw materials and market access. Access toEuropean raw materials becomes more difficult (slaughter rate and beef production have droppedin recent years), access to raw materials outside Europe is crucial. As part of the Doha Round, andbilateral negotiations, the European Commission supports the Global Elimination of all export taxesin the various Member States of the WTO (China, Argentina, Indonesia, Pakistan, India).Regarding the market access of leather and leather products, leather industry community is oftenfaced with high trade barriers (import tariffs and high tariff and nontariff measures such as of overlyburdensome requirements concerning labeling or certification) in third countries while the EUmarkets are open for almost unlimited imports from all over the world.

China and India account for 70% of EU imports but rank as the 20th and 35th of EU markets,which is partly explained by their tariffs on leather products in the EU. Improvements in marketaccess are expected and foremost the WTO. The Doha Development Agenda (DDA) is inparticular the framework for overall reductions of tariffs that should be set.

Greater attention to corporate social responsibility (CSR) in the sector could help establish a levelplaying field in international trade and promote sustainable business relationships in the sector.

f. Employment and geographical dimension

The sector is concentrated in the southern EU and the socio-economic life of certain regionsdepends largely on the industry.

Italy, which employs over 30,000 people, is by far the largest producer of leather. It is followed bySpain. Italy is also the largest producer of leather products with 34% of employment. It is followedby France, which represents nearly 18% of employment. Together, these two countries representover 50% of jobs, businesses and sales of leather products sector. Spain ranks third inemployment. The new Member States must also face significant challenges in restructuring andadjustment process that can lead to difficult situations at local and regional levels.

A European social dialogue for the leather tanning industry was started in 1999 so that the socialpartners to address the common challenges of 'ethics' sector through the development of a code ofconduct based on human fundamental, the promotion of sustainable development and respect forthe environment and the identification of skills and improvement of vocational training. There is nosocial dialogue committee for the sector of leather products.

(1) Source: © Communautés européennes, 2006

J. Environmental developments in the leather industry

a. Cleaner water, cleaner environment

In the majority of production, the leather is tanned with chromium, the chemical used to coat othermetals with a layer of gloss finish which does not tarnish. Tan hides with chromium salts provides asoft, supple leather that can be dyed in many colors.

By reducing the amount of these salts to exact quantities required to ensure the quality thatconsumers expect from a leather product, the amount of chromium released into water used for theprocess of tanning hides was reduced by more than 90 %.


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b. An alternative energy waste products

Only 20% of the skin of animals are transformed into leather.Currently, the excess of fat and tissue resulting from the tanning process are processed in biogasplants that use a fermentation process to transform this waste into an alternative fuel.

Technologies have also been developed to convert waste of untanned skin in organic derivativessuch as gelatin, glue and other protein products.

c. Water, a precious resource

Formerly, many processes of leather tanning required large amounts of water. However, sincewater has become a scarce resource in some parts of Europe, the leather industry has revised itsworking methods in order to avoid waste.

In recent decades, science has helped the leather industry to reduce its water consumption by over60% through the development of new cleaning techniques, use of batch processes in clean

technology, instead of flushing and improved water management.d. The air quality

Unfortunately, the leather industry can affect air quality in the vicinity of tanneries. One of theproblems of the leather industry lies in the use of organic solvents during the finishing phase of themanufacturing process.

Science has led to the leather industry to reduce emissions of organic solvents in air of 90% formost types of leather. This reduction is due to the introduction of better systems combined withnew and more environmentally friendly finishes.

e. Hair today, tomorrow organic fertilizers

One of the first stages of tanning is to remove hair from the skin using a disintegrating agent suchas sulfur. These organic wastes accumulate in the wastewater and them could be sent to the localsewage treatment plant.

Scientists have developed a new process that reduces waste by 50% dehairing. Instead ofdissolving the hair of the skins, they are kept intact for use as fertilizer in agriculture, which reducesthe use of synthetic fertilizers to stimulate plant growth.

K. The Network TANNET

TANNET - A network of professional leather.In April 1998, the European leather industry has created a network called TANNET linking the“tanners” representatives, suppliers and customers as well as academic and government tocoordinate research in the field of leather.

As early as February 2002, the network had over 280 members who had identified priorities forresearch for the leather industry and submitted more than 20 research proposals to the leaders ofEuropean research programs and development.


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2. Fact sheets from countries

This section presents a short fact sheets summary. The information includes the quantity ofenterprises in the leather industry sector, the adoption of international standards, EEN-PACTPublic Procurement, and Public funded schemes to support SMEs.

ROMANIA

Specific Data about Leather Industry

Western Region

From an industrial point of view, the western region is structured as it follows: mining andquarrying, steel, metallurgy and machine building, mainly in counties Caras-Severin, Hunedoara

and Nadrag town from Timis county and manufacturing industry, mainly in counties Timis andArad.The mining and steel industry from Caras Severin and Hunedoara counties was badly affectedafter 1989 by sector restructuring, accompanied by massive personnel layoffs. The economicdecline of these two counties has been mitigated in recent years by the development of processingindustry, mainly in lohn system, as well as construction and transport sector. Timis and Aradcounties industry is characterized by a greater diversification of industries, especiallymanufacturing. After 1989 the decline took place in the food industry, chemical industry and heavyindustry. In the recent years it can be observed a reinvigoration of manufacturing industry, drivenby significant foreign investment.

Leather industry includes manufacture of wearing apparel, leather, furs, footwear and leathergoods. In 2002, the industry achieved a rate of 5.4% of turnover in regional industry, with 13.0% ofthe total number of employees. Investments made in 2002 represent 4.7% of total investmentsmade in industry.

NORTH Eastern

I. GENERAL INTRODUCTION TO THE SECTOR IN INVOLVED COUNTRIES (SECTOROVERVIEW)

Leather-footwear is a dynamic sector in the national economy with the following performances: employ a significant workforce, mainly women; contributes to social stability is represented in all counties; holds a significant share in the export economy; contribute to a positive balance of foreign trade balance of the country.

Footwear sector occupies the first place for exports made to the EU market in Central and EasternEuropean countries, third place in countries outside the Community and ninth place in the world.

Exports of goods in leather in Romania1 (mil euro) 2007 2008 2009 2010 2011Leather and footwear 120,3 110,1 82,3 105,2 111,9

1 . 1 200, 200, 2010, 2011, 2012. , . ..


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Imports of goods in leather in Romania2 (mil euro) 2007 2008 2009 2010 2011Leather and footwear 128,3 114,3 83,0 79,3 103,0

In 2007 light industry (textile, clothing and leather-footwear) made the following shares inRomania's macroeconomic indicators:3

2.72% of GDP; 5.2% of industrial production; 18.42% of Romania's exports; 9.2% of total imports in Romania; 23.35% of employees of all employees in the industry; in these industries operating in early 2008 over 11,500 companies in which: about 6300 in the clothing industry; about 2950 in the textile industry; about 2250 in the leather industry - footwear.

In 2007, compared with 2001, exports of goods of light industry grew by 19.6% lower than the totalincrease in exports, which increased 2-3 times over the same period. This increase is mainly dueto increase to 84.6% of exports of goods of textile industry, but also to increase exports of goods ofleather and footwear industry by 27.4%. Instead of exports of goods clothing industry increased byonly 3.2%.4

II. NUMBER OF COMPANIES IN THE SECTOR

2.1 Number of companies in the sector in 2011:

Number of companies Leather andfootwear

Total

TOTAL 2276 11563Large companies 61 299Medium enterprises 357 1276Small enterprises 571 2376Micro enterprises 1287 7621

2.2 Structure of SMEs in the textile and leather industry by Romania regions (%)5

RegionsNorthEast(1)

SouthEast(2)

South(3)

SouthWest(4)

Vest(5)

NorthWest(6)

Centre (7)

Bucharest (8)

TotalTextileandleatherindustry 17,59 9,58 9,14 5,87 10,03 18,44 13,91 15,44 100%

2 200, 200, 2010.

. 3 , 20, 200,

, , . 4 . , .

5 , ,

. ..


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2.3 North-East Region companies from the sector.6

Sub-sectors

Numberof active

local uni

t

Turnove

r(millioneuro)

Averagenumber

ofemployee

s

Gross

Investments (millioneuro)

Netinvestment

s(millioneuro)

Tanning and dressing ofleather, manufacture ofluggage, handbags, saddler and harness; dressingand dyeing of fur

208 66,06 5258 5,79 3,16

2.4 Number of economic agents in the counties of North – East Region.7

Bacau Iasi Neamt Suceava Botosani Vaslui TotalTextile andleatherindustry

163 261 240 148 37 86 935

2.5 Companies’ turnover, income and loss in textile and leather industry in the North -East Region counties.

MillionEuro

8

Bacau Iasi Neamt Suceava Botosani Vaslui Total

Turnover 62.982.060 94.430.313 140.094.701 71.922.906 33.722.430 51.215.929 454.368.339

Income 4.243.378 6.151.655 9.898.176 2.000.160 8.761.293 3.128.400 34.183.061

Loss 643.078 919.563 5.160.217 932.498 234.934 445.396 8.335.686

( , .

, .

2011 1 4,3 .


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III. NUMBER OF EMPLOYEES IN THE SECTOR

The three main elements (textiles, garments, leather and footwear respectively) light industry is animportant sector of national economy, both by long tradition in export activity, but also the main

employer in the industry (in 2007 the average number of light industry employees represent aboutone third of the average number of employees in manufacturing industry). In Romania, lightindustry is represented in almost all regions, but there is a certain concentration in four regions:Northwest, Northeast, Center and Bucharest, which include 65% of enterprises and 58% of totalemployment. By number of employees, the first 5 companies cumulated 4.4% in the clothingindustry and 7.3% in leather and footwear industry, light industry structure prevailing in micro andsmall enterprises.

3.1 Number of employees in the sector in January month of 2007-2011 years.9

Thousands of employees

Sub-sectors2008 2009 2010 2011 2012

Manufacture of textile 36,9 30,5 23,3 23,5 27,6Manufacture of cloths 229,9 194,5 155,0 143,0 142,0Leather and footwear 76,1 60,0 49,1 48,0 49,8

3.2 Number of employees in the North – East Region by counties.

Number ofemployees

Bacau Iasi Neamt Suceava Botosani Vaslui Total

Textile and leatherindustry 5.752 7.027 5.812 3.810 3.190 3.745 27.591

. 1 200, 200, 2010, 2011, 2012 . , .


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3.3 Average gross earnings in the industry at national level.

EuroSub-sectors 2007 2008 2009 2010 2011 2012

Manufacture of textile 185,11 222,79 269,06 314,41 354,18 362,55Manufacture of cloths 167,67 200 231,39 245,34 274,18 291,62Leather and footwear 168,13 208,37 246,97 259,53 292,79 309,30

IV. GOVERNMENT’S INVOLVEMENT IN THE SECTOR

Proposed measures to increase the competitiveness of light industry in the context ofincreasing competition in international markets by the Romania Government:

Standards of quality, environmental, social, occupational safety and eco-label by supportingfunding in 50% of the Ministry of Economy, Program in increasing the competitiveness of

industrial products according to GD 1510/2008 (which replaced the HG 1247/2005), withdirect consequence on sales volume growth in western European chain stores. During2003 – 2008, 1766 projects were supported by economic operators in manufacturing whichhas been granted financial support from the state budget in the Program for increasing thecompetitiveness of industrial products, worth 133.8 million lei;

Instruments to support development and improvement of the economic agents (GD1510/2008 was increased amount of state aid fund, part of the minims threshold of 200,000Euro).

Promoting research and development issues specific to the sector in order to achieve highadded value products and the competitiveness of textile and apparel industry;

Improving industrial management activities by providing research results; Improving export promotion tools:

Opening of offices and warehouse type consignment of export markets with high potential; Simplifying procedures for participation in international fairs; Strengthening control in Customs to stop entry into the country and selling to underpricing

of specific products light industry, in order to avoid unfair competition; Increasing the rigor of checks made by the authorities in collaboration with employers, in

order to eradicate illegal labor; Increasing the role of employers in negotiating tariffs for utilities and services in free-market

conditions, as is the practice in other EU countries;

Increase SME access to financing through grants and loan guarantees; Exploring the establishment of clusters (clusters competitive) in light industry, especially in

areas with surplus labor, together with county councils and Regional DevelopmentAgencies, professional associations and employers;

Increase SME access to financing through subsidized guarantees and loans;

V. SPECIFIC REGULATIONS IN INVOLVED COUNTRIES

Leather sector – footwear: Directive 94/11/EC on labeling materials used in the main components of footwear for sale to

consumers.


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Government Decision no. 26/2002 on establishing the conditions for labeling of materialsused in the main components of footwear for sale to consumers (published innr.67/30.01.2002 MO).

VI. STAKEHOLDERS IN THE SECTOR IN INVOLVED COUNTRIES

6.1 Ministry of Economy, Commerce and Business Environment of Romania, DirectorateGeneral for Industrial Policy and Competitiveness.

6.2 National Research & Development Institute for Textiles and Leather.The National Research & Development Institute for Textiles and Leather, Bucharest wasestablished in 1996, by the merging of the Textile Research Institute with the Leather-FootwearResearch Institute. INCDTP develops RDI activities having a fundamental and applicativecharacter, small and short series micro production, consultancy andtechnical assistance services: laboratory investigation and testing, quality management,certification and inspection, editing and publishing of specialty literature (the magazine “TextileIndustry”, ISI rated , „Revista de Pielarie-Incaltaminte” (The Leather & Footwear Magazine),

CNCSIS rated B+, books, manuals, catalogues and dictionaries.

6.3 FEPAIUS - Federation of Textiles, Clothing and Leather participates in formation ofother entities employers, national and international organizations can join. FEPAIUS activity: organize, in cooperation with the Ministry of Economy, Trade and Business Environment,

Romanian Center for the Promotion of trade and FDI participation in international fairsRomanian companies including: CPD Dusseldorf, Moscow Fashion Expo, Heimtextil, FashionUk, Pret a Porter, Texworld , The Train New York, Zoom By Fatex;

organizes trade missions in Germany, Canada, France; organize in collaboration with national fairs SC EXPOCONFINTEX SA Clothing Shoes

"CONFINTEX" in cities such as Iasi, Brasov, Focsani, Constanta, Sibiu, Oradea, Bucharest andConstanta CCINA fairs TINIMTEX with;

presents in collaboration with the Design for Textile, Garment and Leather fashion trendsthrough best-known collections presentation Romanian brands on the occasion of National Fair"TINIMTEX" mother;

influence change laws and executive decisions influenced develop partnerships with international associations of France, Italy, Spain, Belgium, Germany; is involved in all social dialogue committees at the ministerial level.

6.4 Chambers of Commerce and Industry of Bacau, Iasi, Suceava, Botosani, Neamt and

Vaslui counties, which have the following duties: represents and defends the interests of the business community in relation with the Romanian

authorities and similar organizations abroad; conclude protocols with local authorities and county and regional structures, which are

obligated to assist law, in order to achieve the purpose for which it was founded and realizethey initiate actions in favor of economic development territory;

supports its members in economic relations with official representatives of other countries,consulates and foreign bodies, like the Chamber;

presents the authorized institutions upon request or on its own initiative, in consultation withmembers, proposals for promoting draft legislation of interest;

attend meetings of committees, councils and committees or created to authorities / publicbodies and local and county along regional structures and inform members;


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collaborate with state institutions, with partners from public and / or private home and abroad inorder to fulfill its duties;

elaborate studies on the economic evolution of the county / region by its own means, incollaboration, as appropriate, with other partners in the public domain and / or private;

provides government and public authorities, on its own initiative or upon request, information

and reasoned opinions on issues concerning general interests of economy; draw up an annual report on the county's economy; draw up working procedures on its own activity; realize and manage the business infrastructure of county interest: science and technology

industrial parks, business incubators and technology transfer and information technologycenters, business centers, shopping centers, exhibition centers, virtual markets, commoditiesexchanges and securities houses auction;

support and conduct research and development in the interests of the business community; organize fairs, exhibitions, shows, business forums, economic partnership actions at home and

abroad and supports the participation of traders at fairs and exhibitions abroad;

conducts information and documentation in the interest of its members and county economy;

6.5 Business Association of Light Industry Employee from Bacau with the mainadjectives as:

defending the interests of its members in relations with state and non-governmentalinstitutions at local, regional and national level.

partnership development between members; support and promote members' interests.

According to the objectives mentioned above, there have been organized meetings with themanufactures of light industry as well a number of problems have been identified: generated by current economic and financial situation; by legal and tax issues; referring to labor relations; in relations with local authorities and institutions involved in authorization and control of

economic agent’s activities.

6.6 Cluster: NORTH EAST ASTRICO Association NORTH EAST ASTRICO Association is an industry group of producers of yarn and knitting in theNorth-Eastern region. Currently Astrico Northeast Association executive is in charge of the NorthEast Cluster Astrico. The advantages of working with North East ASTRICO group can include:technical equipment that allows a wide range of products:

specialized staff trained and experienced in working with customers on foreign markets; ensuring the delivery times and competitive prices; muse of certified raw material quality (ECOTEX); can provide raw material for manufactured articles featuring the RIFIL SA, prices for complete product (wire, labor, accessories, packaging) delivery to the buyer

(including transportation); location in a geographical area easily accessible, close to the European road E 85; international airports in the region: Bacau, Iasi, Suceava.

VII. SUB-SECTORS:

manufacture of textile; manufacture of cloths;


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tanning and dressing of leather, manufacture of luggage, handbags, saddler and harness;dressing and dyeing of fur.

VIII. TRENDS IN DEVELOPMENT: friendly regulations on innovation;

an educational system to support industrial change; a financial system for textile innovation adaptation; standardization in support of innovation; capacity for effective management of technological change and innovative.

IX. SPECIFIC PROBLEMS IN INVOLVED COUNTRIES: low wages at the moment that would result in lower light industry attractiveness for active

processing activity; the price of utilities such consequences in work contract (electricity, gas etc.); appreciation against major currencies in international direct effects on the competitiveness

of export products; lower level of implementation of the European quality standards, environmental, social,

occupational safety and decent work still to sell product to the EU, U.S., etc.

X. SPECIFIC ACTIONS IN INVOLVED COUNTRIES

Romanian Government's measures to stimulate growth economic andeconomic interests of the population

- Applicable in sectors of textiles, clothing, leather, shoes –

Measures to support and stimulate economic growth: Allocation of 10.2 billion euro investment (for value. Entire economy) representing 20% of

the budget for 2009 and 7% of GDP; Improving mechanisms of absorption of European funds; Tax-exempt reinvested profit since the quarter of 2009 (0.12% of GDP); Credit Guarantee Fund for SMEs to become operational; Budgetary provision for promotion of exports at least on par with 2008 (0.04% of GDP)< Changing public tariff for railway infrastructure (TUI) with reference ton / km; Supplementing the budget allocation for research and development at the first adjustment

budget in 2009;

Inclusion in the general consolidated budget of the revenues of the state governmentagencies and institutions;

Measures for financing the economy and increasing liquidity: Payment of debt by central and local administrations to business operators (1.33% of

GDP); Capitalization of CEC (0.16% of GDP); Accelerating the process of absorption of European funds and improving public

procurement law to become more flexible; Adoption law public-private partnership for increasing private investment in infrastructure;

Compensation VAT with other taxes payable to the state budget both in the month followingthe month when he called refinancing, and after the statutory period of 45 days; Social measures worth 1.04 billion lei (260 million euros) for the entire economy:


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Different approach to technical income during unemployment (for up to 3 months) in termsof employer and employee (0.02% of GDP);

50% support continuing professional development expenses for employees andunemployed (0.002% of GDP);

Triggering mechanism of consultation with social partners on welfare growth in 2009 (from

April 15, 2009 Government and unions to discuss the law on salaries in the budgetarysystem only);

Extension to three months of unemployment for 2009;From March 1, 2009 sectorial committees for training institutions will gain the status of publicutilities (0.03% of GDP)

GREECE

1.1 General introduction

The leather and tannery industry is a traditional sector of the Greek manufacturing industry. Yet ithas been facing very serious problem during the past years. These problems are related mainly tothe following:

• Small size of the majority of leather production units in Greece (family businesses) thus notable to deal with strong competition;

• Competition from products of other EU countries and (poorer quality but cheaper) ofChinese origin;

• Lack of suitable infrastructure;• Environmental impact;• Direct dependence on footwear and finished leather articles sectors, which are also incrisis.

2.1.1 Facts and figures


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1.2 Sector stakeholders

Government institutions

The relevant government bodies listed below constitute the regulatory framework and supportinfrastructure for the leather industry:

• General Chemical State Laboratory of Greece www.gcsl.gr/index.asp?a_id=136;• Ministry of Environment, Energy and Climate Change www.ypeka.gr ;• Ministry of Development, Competitiveness and Shipping www.ypoian.gr (Greek only)

Associations• Pan-Hellenic Federation of Leather Industries; President: I.KYRIDIS

Address: Piraeus 180 & Lamias, Tavros, 17778 AthensTel: 0030 210 346 3167 - Fax: 0030 210 346 1434

Associations in related sectors

• Association of Greek Chemists www.eex.gr (Greek only);• Hellenic Association of Chemical Engineers;

Address: 99 Aristidou, Kallithea 17672 Attiki, GreeceTel: 0030 210 953 0292 - Fax: 0030 210 953 6777

• Hellenic Association of Chemical Industries www.haci.gr/english/index_en.htm.

1.3 Clusters

No specific sectorial clusters currently exist for the leather industry, although the transferral ofleather production units to industrial parks in Greece has assisted in concentrating this industrialactivity in specific locations.

1.4 Scientific institutions

Scientific research and studies related to the paper sector are conducted by the relevantdepartment of the following higher education establishment:

• Department of Chemistry (Sector of Chemical Technology & Industrial Chemistry), AristotleUniversity of Thessaloniki, www.chem.auth.gr/index.php

Various laboratories have been established, including one dealing with the specific issues ofEnvironmental Pollution Control, giving the Department the widest possible area for educationaland research activities.

• School of Chemical Engineering, National Technical University of Athenswww.chemeng.ntua.gr/index.php?lang_change=en

Research activities cover the following areas: coloration, paper making, environmental pollutioncontrol.

1.5 Workforce

The majority of leather production units in Greece are of small size. They are mostly familybusinesses and are not capable of dealing with the increasing and strong competition they havehad to face over the last few years. The specific problems related to the workforce in the leather

sector in Greece are twofold. On the one hand, leather and tanning industries are experiencingdifficulties in finding skilled workers. This has an impact on the productiveness of the companies,and in turn on their competitiveness. On the other hand, due to the economic crisis, companieshave had to restructure their operations which has meant a significant reduction in the workforce,


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leading to further impact on their production levels and their competitiveness. These problems areparticularly acute in this sector since the leather industry is in overall decline in Greece.

1.6 Regulations

With the increasing emphasis being placed in recent years on EU legislation aimed at reducing theharmful effects of industry on the environment, leather producers in Greece have to face more andmore strict regulations regarding the presence of environmentally-harmful substances in wasteeffluents from their factories. The EC Directive 2002/61/EC regarding the restrictions on themarketing and use of the dangerous substance azocolorant, notably in the leather and tanningindustry, was transposed into national legislation in 2003 by the Greek Law FEK 1045B. Inaddition, the EC Directive 2003/53/EC regarding the restrictions on the marketing and use of thedangerous substance such as heavy metals and aromatic phenol ethoxylates, notably in theleather and tanning industry, was transposed into national legislation in 2004 by the Greek LawFEK 910B.

1.7 Infrastructure

The leather production process requires energy, water supply and is harmful for the environment.All the above require installations and infrastructures that exist only in a few Industrial Areas. Sincethe leather sector is an energy-intensive industry, access to a cheap energy supply is of vitalimportance for Greek companies in this field in order to reduce the high production costs. A cheapfuel supply such as natural gas would be an ideal solution to this major problem, however this isnot currently accessible to Greek companies. The EU institutional framework for the operation oftanneries is very strict (due to the environmental impact) and the Greek units are unable to meetthe relevant specifications with the existing installations and infrastructures available. In addition,the procedure required for companies to follow in order to obtain environmental licensing(obligatory certification related to environmental impact) is extremely time-consuming and there is

no one-stop service available in order to make this process simpler, faster and more accessible forcompanies.

1.8 Training needs

It is clear that in order to develop, the leather industry needs specialized and well trainedpersonnel. Education in the tannery sector is almost non-existent in Greece, whether at thesecondary or the tertiary education level. Moreover, concerning training and life-long learning ofhuman resources, apart from a few sporadic seminars (mainly from private initiatives) that havebeen carried out in the past, there is currently no infrastructure and no procedure that may ensurethe development of the human resources in this sector.The workforce in the leather industry requires specific training in new technical needs and

improved production methods in order to meet today’s requirements. The personnel also has veryspecialized training needs related to industrial waste. The workers in this sector require specialisedknowledge and skills in terms of the safe handling of tanning agents containing chromium. Specificknowledge related to water and effluent management is also very important.

1.9 Environmental impact

The single major issue faced by the leather and tanning industry that takes absolute priority interms of its impact on the environment relates to the disposal of heavy metal (chromium) present inthe waste effluents from the chrome tanning process. This method is an integral part of the leathertreatment procedure and as yet there are no alternative solutions available in order to avoid theuse of chrome-based products in the tanning process. The disposal of wastewater effluents fromthe dyeing, finishing and pre-treatment processes used in the production of leather for a variety ofuses (clothing, footwear, furnishing, etc.) results in large amounts of chromium metals in theindustrial waste produced. Chromium is considered to a major toxic pollutant and water authorities


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in all European countries impose very strict limits of the level of waste effluents from leatherproduction. Waste produced by the leather and tanning industry also contain significant amounts ofaliphatic organic compounds found in fat-liquors used in the finishing of leather articles. In addition,waste water from the production of leather also includes dyes such as acid and metal complexdyes which give rise to colour waste that needs to be treated for colour removal. Organic loads inleather production effluents also give rise to high Biological Oxygen Demand (BOD) and ChemicalOxygen Demand (COD) values. The activated sludge produced in waste treatment plants containshigh amounts of chromium, thus sludge disposal is also a major concern.

1.10 Specific actions

Initiatives takenRecently some efforts have been made in Greece in order to set up modern units in IndustrialAreas with the necessary infrastructure (energy, water supply, waste treatment). However only afew such units currently exist (representing only 10% of the domestic production) compared to theoverall number of Greek leather production and tannery units. The transferral of leather production

units to industrial parks in Greece has also assisted in concentrating this industrial activity inspecific locations. In terms of the general context of initiatives taken to boost entrepreneurship, thefollowing table provides a summary of the funding programmes set up in Greece:-


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Actions plannedTaking into consideration the significant impact the leather and tanning industry has on theenvironment, important measures need to be taken in terms of ‘clean’ energy supply andconsumption, as well as waste water management. As yet no specific actions have been taken.

Best practices


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Certain companies in the leather sector in Greece have invested in installing a biochemicalwastewater treatment system in their production unit in order to handle and process their wastewater effluents more effectively and thus reduce the harmful effect on the environment.

1.11 Specific regulations

Regulatory frameworkThe following table provides information on the general regulatory framework related toenvironmental issues, particularly referring to waste management:

Changes to be madeImportant and fundamental changes to the general corporate legal framework in Greece need tobe made in order to assist leather producers to face the various entrepreneurial challenges andserious environmental issues. Laws on taxation are particularly inhibitive and need vital reviewingin order to lighten the burden on companies. A reduction in taxation imposed on companies’ profitswill encourage enterprises to maintain operations in Greece and not to relocate to neighbouringBalkan countries. In addition, a reduction in employee insurance costs would also help companiesto rechannel resources into other areas of their business, such as improved production processes.More flexible employment laws in order to allow vital corporate restructuring and labour reallocation

according to companies’ needs would also provide a more favourable business context. For theleather industry in particular, a reduction in industrial invoices for energy consumption is a majorpriority for this energy-intensive sector.


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1.12 Suggestions for further actions

Further measures need to be taken in order to boost the leather and tanning industryand provide greater support to producers in Greece, as follows:

• Measures to improve production capacity in order to help companies be more competitive• Measures to reduce production costs• Access to cheap ‘clean’ energy source• Reduction of VAT• More rapid return of VAT owed by the State to export companies• Greater access to funding and finance tools (for example through the banking system)• Reduction of local community charges imposed on companies in municipality areas• Installation – relocation in organized Industrial Zones around Greece, equipped with the

necessary infrastructure• Investments to achieve energy recuperation• Implementation of novel modern technologies for effluent treatment such as ultra filtration

methods which allow re-use of water and thus reduce the impact on the environment• Establishment of Joint Ventures, to support enterprises in dealing with increasing

competition and to create economies of scale• Use of new technologies to create new opportunities in terms of production and further

improve product quality• Establishment of education / training structures to provide knowledge on new technologies

and modern production methods, as well as on management and marketing.

LITHUANIA

1. General sector overview

Textile, knitting, leather and paper sectors in Lithuania cannot be considered as main sectors.Despite of increase of textile and paper sectors in Lithuania in period 2008 – 2011, together theycreated 3% of Lithuanian GDP (see Figure 1).

Figure 1. Textile, clothing and paper products sectors share in Lithuania's GDPSource: Statistics Department of Lithuania


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There was a decrease of number of enterprises in knitting sector (Figure 2). The main factor wasfinancial and economic crisis and increased costs for personnel as well as energy costs. Numberof companies in textile sector remains the same because part of contractors from Western Europemoved their contracts to Lithuania from China. That was influenced of decreasing demand in theirdomestic markets as well as higher flexibility by Lithuanian companies. There was a significantdecrease of leather producers because of increasing lack of specialists and more strict ecologicalrequirements. Most of leather producers are family owned businesses, located in rural areas andsmall towns, so part of the owners switched their activities towards other businesses. Number ofpaper producers remained almost the same.

Figure 2. Number of companies in textile, clothing and paper, and its product sectors.Source: Statistics Department of Lithuania

Traditionally, knitting, textile and leather subsectors are connected into one – textile sector. It’soutput was 4% of total industrial output in year 2011 (Figure 3). Paper subsector is part of woodprocessing and furniture sector. Separately, paper production was 1,3% of total industrialproduction in Lithuania.

Figure 3. Textile, clothing and paper products sectors share in Lithuanian industry.


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Source: Statistics Department of Lithuania

One of the main reasons of industrial output growth was export. Part of export increased from 75%(2008) up to 78% (2011) in textiles, from 72% (2008) to more than 80% (2011) in knitting of

apparel (Figure 4). Leather and paper production was more domestic oriented. Despite of this fact,there was increase in these sectors from around 43% up to 58% and 53% in a year 2011respectively. All sectors, except knitting, have overcome output level in peak year 2008. Output oftextiles was around 320 mill EUR, paper production – 257 mill. EUR, leather production – 38 mill.EUR, however knitting did not reached level of 2008.

Figure 4. Production output of textile, clothing and paper products sectorsSource: Statistics Department of Lithuania

There was 12718 persons employed in textile sector (01 01 2009), half of them were employed inlarge companies, another third – in medium companies (Figure 5).

Figure 5. Number of employees and the size distribution of companies in the textile sector.Source: Statistics Department of Lithuania


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There was 31063 persons employed in knitting at the same date (Figure 6), from which one thirdwas employed in both large and medium companies, one fifth was employed in small companies,which had from 10 to 49 employees.

Figure 6. Number of employees and the size distribution of companies in the knitting sector.Source: Statistics Department of Lithuania

There was 1501 person working in leather industry (Figure 7) and two thirds of them was employedin small and medium family owned businesses, located in rural regions and small towns inLithuania.

Figure 7. Number of employees and the size distribution of companies in the leather sector.Source: Statistics Department of Lithuania


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At the same time, there was 3341 person occupied in paper industry (Figure 8), half of them wasemployed in large companies, another half in SME‘s.

Figure 8. Number of employees and the size distribution of companies in the paper sector.Source: Statistics Department of Lithuania

Despite the crisis, favourable trends remain in the paper industry and its products in Lithuania. Itsproduction doubled in size from 2005 (Figure 9). Industry enjoys two new paper plants opened inthe year 2011. Grigiškės group has been transformed for deeper specialization of its units.Recovered "Kaunas paper" factory, formerly "Petrašiūnai paper mill." For many years this plantproduced high-quality paper for encyclopaedias. Now the company produces from waste paperand successfully exports wrapping paper. It expects to reach 30 million LTL turnover this year.Recent projects established and functioning of secondary raw materials (waste paper) collecting

and buying company "Klaipeda Recycling." "Grigiškės group, the parent company of Baltwood hasmoved production of fibre board to its daughter company and began to specialize only in tissueproduction. There are plans to focus in the packaging paper and board production of Baltwoodcompany, located in Klaip ėda. It is expected that after the conversion Baltwood product saleswill grow from 23.4 million LTL last year to 99 million LTL this year. All Grigišk ės group hasreached 308 million LTL turnover. This year the group has predicted 322 million LTL turnover and15 million LTL profit. Klaipėda cardboard and Kaunas paper plants announced their plans toacquire new technological equipment in the near future in order to increase production. Fromforeign capital and joint ventures in Lithuania the largest is Smurfit Kappa (25 million LTL turnover),Grafobal Vilnius (28 million LTL), Stora Enso Packaging (Kaunas).

Figure 9. Textile, clothing and paper products sectors production index in comparison with 2005. (=100) Source: Statistics Department of Lithuania


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Leather and textile products in 2008 and 2011 was unchanged compared with 2005. (Figure 9).The main reason - both textile and leather industry requires a lot of raw materials, naturalresources and labour intensive industries. E.g., in leather production raw materials accounted for50% to 70% of production costs (2005), labour cost - from 7 to 15%, chemicals - about 10%,energy consumption - about 3% of production costs. Currently, was slight decrease of rawmaterials part, but increased labour costs and energy costs. Lithuania currently has 4 leatherprocessing factories. The main concentration of the industry's position – Šiauliai city, where are 3plants, “TDL ODA”, “Šiaulių stumbras”, “Odos gaminiai ir Ko”. “Natūrali oda” is located in Kėdainiai.Fur processing plants are much smaller and leave more modest ecological footprint. Textilecompanies largest concentration is in Kaunas city, the largest of which - "Klasikinė tekstilė","Omniteksas", "Garlita", "Audimas", "Dana ir Ko", "Kauno Baltija".

Figure 10. Textile, clothing and paper products sectors production index in comparison withprevious year. Source: Statistics Department of Lithuania

Recently, growth has slowed in all sectors (Figure 10) because of continuing financial problems inkey export markets. Despite the economic factors, paper and value-added textile productssuccessfully increase the volume. Clothing and leather production sector development in Lithuaniais unlikely due to rising costs of workers (apparel) and requiring large investments in environmentalstandards.

2. Stakeholders in Lithuania

Ministry of EconomyTextile institute of the Centre of Physical Sciences and Technology. The goal - to ensure country's

international level competence in natural sciences and technology, participate in research anddevelopment projects, programs, collaborate with business, government and civil societyrepresentatives, to carry out research and development of outsourced work, to providemethodological, methodological and other support.

•••• Lithuanian Apparel and Textile Industry Association (LATIA)•••• Association “Lietuvos mediena” (Lithuanian Forest Cluster)•••• Association of Leather Producers in Lithuania•••• Lithuanian Packagers Association•••• Kaunas University of Technology (KTU)


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3. Specific problems and initiatives More and more increasing problem for all sectors in Lithuania is lack of qualified engineers

and technicians. Since textile and leather sectors are less attractive that others, they facedifficulties in getting technicians and engineers with sufficient competence because of highersalaries in other industries. This is continuing gap, which is likely to increase in the nearest future.

Despite of liberal business conditions, extremely free economy, liberalization of labour lawis still on the discussion agenda of all groups of interests within the country.Lithuania went through the centralization process of all waste management by creating 10

regional recycling centres (Figure 11) with branch of hazardous waste recycling nearby Šiauliai(North Lithuania).

Figure 11. Scheme of regional waste management centres in Lithuania.Source: Statistics Department of Lithuania

According to financial memorandum from European Commission No. 2003/LT/16/P/PE/017Lithuania has closed old leather recycling plant in Aukštrakiai, near Šiauliai. Currently, activities areundertaken by company “Toksika”, which is enough for current output of waste from leatherprocessing, since main four leather producers have their own spare utilization capacities.There is a significant increase of social responsibility among businesses of these particular sectorby implementing modern environmental technologies, management. This is particularly visible inbigger companies, which leave more significant ecological footprint.

ITALY

CENTRAL SOUTH ITALY

In 2011 the active enterprises in Italy are 22.178. In the 7 Consortium regions the activeenterprises are 4.402, equal to the 19,85% of the national total (source: Movimprese).

The last available statistics on the companies’ structure in Italy (2008), based on the sectioning perEmployees Bracket, states that Micro enterprises (0-9 employee) are the majority in terms of unit

(76,33% of the national total) and employees (26,64% of the national total), although at this datado not correspond the major level of turnover.


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Employees Bracket 0-9 10-19 20-49 50-249 250 e più Total

N°of Industries 13.124 2.553 1.149 342 25 17.193

N°of Employees 40.890 34.612 33.757 30.518 13.731 153.508

Turnover

(thousand of Euro)

4.630.876 4.583.234 5.564.375 7.460.966 5.294.739 27.534.190

(source: ISTAT)

In the 7 Consortium Regions, we have the following situation (the last column shows thepercentage compare to the national total):

% on Italy

N°of Industries 3.340 19,43

N°of Employees 23.355 15,21

Turnover (thousand of Euro) 3.171.370 11,52

(source: ISTAT)

With regard to the Italian foreign trade, the 2011 trade balance remain positive and performs aconsiderable increase, due to a major increase of exports compared to 2010.

2010 2011 Var. %

Export 13.353.028.400 15.541.178.979 16,39

Import 7.855.234.812 8.858.941.601 12,78

Balance 5.497.793.588 6.682.237.378 21,54

(source: ISTAT-COEWEB)

In the 7 Consortium regions, the positive trade balance of 2010 it’s confirmed, although it has to benoted a considerable decrease in 2011, due to a major increase of imports compared to 2010.

2010 2011 Var. %

Export 910.736.425 946.659.662 3,94

Import 764.544.234 828.609.291 8,38

Balance 146.192.191 118.050.371 -19,25

(source: ISTAT-COEWEB)

Sector’s Stakeholders in the involved countries

Responsible governmental institutions

At governmental level, in Italy there are three Ministries which deal with environmental issues:

Ministry of the Environment and Territory and Sea


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The Italian Ministry of Environment and Territory, as required by its institutive law (law 349/1986),is actively engaged in the field of education for environment and sustainable development,especially focusing on promoting public awareness. Education is considered a crucial tool tosupport environmental and sustainable development policies, aiming at promoting publicconsciousness of environmental matters and behaviours in harmony with the nature and humanbeings.

Ministry of HealthThe Ministry of Health has an important role in the environmental field because has been identifiedas the competent authority at national level in the management of the REACH (EuropeanCommunity Regulation on chemicals and their safe use - EC 1907/2006), which aim is to improvethe protection of human health and the environment through the better and earlier identification ofthe intrinsic properties of chemical substances.The Ministry works in consultation with the Ministry of the Environment, Land and Sea, the Ministryof Economic Development and the Department for European Policies.

Ministry of Economic Development

The Ministry of Economic Development is responsible for a wide variety of policies, includingeconomic development and cohesion, energy and mineral resources, telecommunications,internationalisation and business incentives.

Worthy of note is the ISPRA- Institute for Environmental Protection and Research- body of theMinistry of the Environment and Territory and Sea. It carries out technical and scientific activities ofnational interest, linked to the mission of protection of the environment, by means the elaboration,assessment and promotion of programs of divulgation and training on environmental protection.The Institute also provides technical coordination of environmental training activities to theRegional and Provincial Agencies for the protection of the environment (ARPA).ARPAs are the Italian environmental protection agencies, one for each region of Italy (excludingTrentino-Alto Adige/Südtirol, which has been split for the two Autonomous Provinces of Trento and

Bolzano). The agencies are under regional or provincial administration and their main role is thenatural environmental protection of Italy, with the task of keep under control the naturalenvironment and verify environmental regulations.Other OrganizationsIn Italy the Chambers of Commerce have an important role in environmental issues. Infect theyprovide environmental administrative and informative services (i.e. adaptation to Europeanregulations). In this respect very important is the role of Ecocerved - a society partner of ItalianChambers of Commerce that works in the field of information systems for the environment.Ecocerved develops activities to support Italian Chambers of Commerce, Regional Unions,Associations, enterprises, etc… in fulfilling the many tasks required by national and Europeanenvironmental legislation, and to this end, designs, builds and manages information systems onbehalf of the Chamber System (www.ecocerved.it).

Associations

The main associations in the sector of leather active in Italy are the following:

LEATHER

ANCI: is the National Association of Italian Footwear Manufacturers. Member of Confindustria -

General Confederation of Italian Industry, it aims at sustaining, promoting and developing thefootwear industry “Made in Italy” providing complete service. It plays a determining role in theaffirmation and consolidation of this key sector of Italian industry. A sector which has grownexponentially in recent times, adding value to the Italian tradition in the manufacture of leather


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goods. Anci’s aim is to support, promote and protect the interests of the Italian shoe manufacturingindustry. Today ANCI associates are 750 members (www.ancionline.com/ ).

AIMPES: is the Italian Association of manufacturers of leather and leather-substitute products. Itrepresents all the most important manufacturers of leather and synthetic products at every level;promotes development and professional training in the sector and it co-ordinates initiatives thatraise the profile of Italian fashion leather production (www.aimpes.it).

UNIC: is the National Union of the Tanning Industry. Represents private enterprises in the tanningindustry, regardless of company size. At national level, UNIC is part of the General Confederationof Italian Industry (Confindustria). At European level, it is affiliated to the Confederation of NationalAssociations of Tanners and Dressers of the European Community (COTANCE). At internationallevel, UNIC is affiliated to the International Council of Tanners (ICT). Its Conciaricerca Italia service is worthy of note; this entity carries out research into new and more modern tanning processes forthe benefit of UNIC’s member (www.unic.it).

AIP: is the Italian Fur Trade Federation. Member of the Italian General Confederation of

Enterprises, Professional Occupations and Self-employment (CONFCOMMERCIO), represents ata national level the interests of breeders , importers and wholesalers of leather, tanneries, retailersand manufacturers, craftsmen, stylists, designers and workers, agents and representatives,companies specialized in the clearing and storage of furs and in machinery, equipment andaccessories for the fur industry (www.aip.it/AIP_-_Associazione_Italiana_Pellicceria.html).

In addition, at national level in the major employer associations there are specific professiongroups for the fashion sector in general, that involved textile, leather, and other connected sectors.Some examples:• in the General Confederation of Italian Crafts (Confartigianato), there is “Federazione

Nazionale della Moda” (http://195.103.237.153/minisiti/categorie/moda/se_moda.jsp);• in the National Confederation for the Craft Sector and Small and Medium-Sized Enterprises

(CNA), there is “Federmoda” (www.cna.it/UNIONI/Federmoda/Chi-siamo);• in Casartigiani there is “Federazione Nazionale Abbigliamento”;• in the Italian General Confederation of Enterprises, Professional Occupations and Self-

employment (CONFCOMMERCIO), there is both a general group for the fashion industry“Federazione Moda Italia” (www.federazionemodaitalia.com ) and a more specific sectorgroup that represents interests of footwear traders, “Federcalzature” - National Shoe TradersFederation (www.federcalzature.it/ ), part of CEDDEC – European Shoe trade Confederation.

Cluster/ Industrial Districts

CAMPANIA

Leather:1) Tanning Industrial District of Solofra (Province of Avellino and Salerno);2) Neapolitan Footwear Industrial District (Province of Naples)

APULIA

Leather:1) Footwear District of Barletta / Nord Barese Ofantino (Province of Barletta – Andria – Trani);2) Footwear District of Casarano (Province of Lecce)

Scientific institutions

As a general rule, in Italy there are two relevant research institutions with a general scientificcompetence and distributed all over Italy through a network of institutes aiming at promoting a wide


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diffusion of their competences throughout the national territory and at facilitating contacts andcooperation with local firms and organizations. They are:

CNR - The National Research Council (CNR)CNR is a public organization with a duty to carry out, promote, spread, transfer and improveresearch activities in the main sectors of knowledge growth and of its applications for the scientific,technological, economic and social development of the country. To this end, the activities of theorganization are divided into macro areas of interdisciplinary scientific and technological research,concerning several sectors: biotechnology, medicine, materials, environment and land, informationand communications, advanced systems of production, judicial and socio-economic sciences,classical studies and arts.

ENEA-Italian National Agency for New Technologies, Energy and Sustainable EconomicDevelopment.The Agency’s main research issues are identified as follows: Energy Efficiency, Renewable EnergySources, Nuclear Energy, Climate and the Environment , Safety and Health, New Technologies,Electric System Research. Specifically, the Agency’s activities are devoted to basic, mission-

oriented , and industrial research exploiting wide-ranging expertise as well as experimentalfacilities, specialized laboratories, advanced equipment; new technologies and advancedapplications; dissemination and transfer of research results, thus promoting their exploitation forproduction purposes; provide public and private bodies with high-tech services, studies,measurements, tests and assessments; training and information activities aimed at broadeningsector expertise and public knowledge and awareness. The Agency’s multidisciplinarycompetences and great expertise in managing complex research projects are put at the disposal ofthe Country system.

Furthermore, in particular reference to the involved sectors, there are the Experimental Stations,public institutes located in specific territories but competent all over Italy.The Experimental Stations, in close collaboration with the productive sectors of reference, carry out

activities for supporting the competitiveness of enterprises. In particular these activities includeanalysis and laboratory tests, the R & D, certifications, consulting and training.Currently there are 8 Experimental Stations; 3 of them are active in the sector of leather, textile(silk), and paper:

1. Experimental Station for the leather industry and tanning substances(www.ssip.it/intera.htm);

2. Experimental Station of paper, paperboard and pulp for paper(www.sperimentalecarta.it/it_pagine/ssccp/attivita.asp);

3. Experimental Station for silk (www.ssiseta.it/ ).

Specific action in involved countries

1. Worthy of note are the “Operational Programme (POR) FESR 2007-2013 of the Regionscovered by Consortium . They have among priorities the objective to improve environmentalservice standards and to protect the health and safety of citizens and enterprises.

ABRUZZO – Operational Programme Abruzzohttp://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=549&gv_PGM=1159&gv_PER=2&gv_defL=10

MOLISE – Operational Programme Molisehttp://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=658&gv_PGM=1057&gv_PER=2&gv_defL=10

CAMPANIA – Operational Programme Campania


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http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=1218&gv_PGM=1162&gv_PER=2&gv_defL=10

PUGLIA – Operational Programme Pugliahttp://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=690&gv_PGM=1157&gv_PER=2&gv_defL=10

BASILICATA – Operational Programme Basilicatahttp://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=562&gv_PGM=1050&gv_PER=2&gv_defL=10

CALABRIA – Operational Programme Calabriahttp://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=572&gv_PGM=1165&gv_PER=2&gv_defL=10

SICILY - Operational Programme Sicily - Co-funded by the European Regional Development Fund(ERDF) under the Convergence Objective

http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=IT&gv_reg=1224&gv_PGM=1044&gv_PER=2&gv_defL=7

2. With reference to REACH (European Community Regulation on chemicals and their safeuse - EC 1907/2006) and its role in the three involved sectors, in Italy, in addition to nationalHelpdesk, created and managed by Ministry of Economic Development, there are also 8territorial Reach helpdesk settled in 8 Enterprise Europe Network points as first contact point ofinformation and orientation for Small and Medium enterprises. Three of them have competencein South of Italy.

3. Environmental rules (Source: European Commission) http://europa.eu/youreurope/business/doing-business-responsibly/keeping-to-environmental-rules/italy/index_en.htm

LEGAL REQUIREMENTSNational policies on environmental legislation aim to reduce pollution and promote sustainableenergy. In Italy, businesses are held responsible for the environmental impact of their activities.Environmental legislation Legislation - Ministry of the Environment, Land and Sea

Italy has adopted the EU's environment legislation by introducing the National inventory ofemissions and their sources (INES) which groups together and publishes data on industrial

emissions polluting air and water.'National inventory of emissions and their sources' and the 'European Pollutant Emission Register'

Two decrees implemented the Community legislation concerning industrial waste products andthe treatment of polluting substances such as arsenic, cadmium, mercury, nickel and polycyclicaromatic hydrocarbons.Decree on industrial waste disposal Decree on arsenic, cadmium, mercury, nickel and polycyclic aromatic hydrocarbons in ambient air Other decrees implemented EU legislation on the prevention of pollution and the control andreduction of dangerous substances in electrical and electronic equipment and waste disposal.Decree on integrated pollution prevention and control Decree restricting the use of certain hazardous substances in electrical and electronic equipment

Environmental control


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The national strategy for sustainable development determines the main objectives and actionsfor the four priority areas in terms of the environment: climate; nature and biodiversity; quality of lifeand the urban environment; sustainable use and management of natural resources and waste.Environmental plan of action for sustainable development in Italy Water Air and noise pollution EnergyLand

Waste management The national waste observatory is the body responsible for supervision and control of waste,packaging and packaging waste management.Legal measures - National waste observatories Waste and land reclamations - Ministry of the Environment

Chemicals The National Centre for Chemical Substances deals with the application of the new REACH

(Registration, Evaluation, Authorisation of Chemicals) Regulation which substantially modifies theCommunity legislative framework on controlling chemical risk. The first phase of the application ofthe legislation consists of gathering information, by the industry, on all substances of which over 1ton is produced or imported per year.The activities of the National Centre for Chemical Substances include:

− evaluating the danger from hazardous products/articles present in the Italian market;− coordinating the execution of analytical assessments and tests on chemical products

retailed and the problems linked with overdoses of chemical substances;− giving opinions on the degree of danger of preparations bound for commerce.

Legislation - National Centre for Chemical Substances Chemical safety - M

Leather+Global+UCV

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