regarding the opportunities of Complementarities and ...

A mission for Accomplishment of a Comprehensive sector study regarding the opportunities of Complementarities and Industrial

Integration in the Leather and Shoes Sector in the Member Countries of the Agadir Agreement

( Egypt - Jordan - Morocco & Tunisia)

FINAL REPORT

Prepared by Mahmoud Qattous and Terry McCallin Amman, September 2009

T a b l e

T a b l e o f C o n t e n t s

A mission for Accomplishment of a Comprehensive sector study regarding the opportunities of Complementarities and Industrial Integration in the Leather and Shoes Sector in the Member Countries of the Agadir Agreement (Jordan, Tunisia, Egypt & Morocco)

� LEAThEr And ShoES SECTor

Final RepoRT

Mahmoud Qattous and Terry McCallin

1. GeneRal FRaMeWoRK 8

1.1. oBJECTIVE 8

1.2. oVeRVieW oF WoRlD leaTHeR pRoDUCTS inDUSTRY. 8

1.2.1. ThE InFLUEnCE oF PoPULATIon 8

1.2.2. rEGULATorY FACTorS 9

1.2.3. WorLd MArKET orIEnTATIon 10

1.3. FInAnCIAL CrISIS 11

1.3.1. oVErVIEW 11

1.3.2. STrATEGY For SUrVIVAL 12

1.�. GLoBAL SoUrCInG 1�

1.�.1. EUroPEAn MArKET TrAdE ChArACTErISTICS – FooTWEAr 15

1.�.2. LEAThEr GoodS 19

1.�.3. hIdES And SKInS And LEAThEr 20

2. GloBal TRaDe inDiCaToRS oF leaTHeR inDUSTRY 21

2.1. GLoBAL IMPorTS And EXPorTS: 21

2.1.1. hIdES And SKInS And FInIShEd LEAThEr. 21

2.1.2. PErSonAL LEAThEr GoodS 22

2.1.3. LEAThEr FooTWEAr 23

2.2. EUroPEAn UnIon IMPorTS And EXPorTS 2�

2.2.1. hIdES And SKInS And FInIShEd LEAThEr 2�


2.2.3. LEAThEr FooTWEAr 26

2.3. InTrA AGAdIr TrAdE 26

2.3.1. hIdES And SKInS And LEAThEr 26

2.3.2. LEAThEr GoodS 27

2.3.3. FooTWEAr 27

2.3.�. rAW MATErIALS And InPUTS 27

2.3.5. hIdES And SKInS 29

3. aGaDiR GRoUp analYSiS 31

3.1. JordAn 31

5LEAThEr And ShoES SECTor



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3.1.1. IndUSTrIAL SETTInG And InSTITUTIonAL FrAMEWorK 31

3.1.2. nATUrE oF ThE SECTor 31

3.1.3. TYPE And SIZE oF CoMPAnIES 32

3.1.�. SECTor TYPES oF ProdUCTIon And ChArACTErISTICS 33

3.1.5. InSTITUTIonS And nUMBEr oF WorKErS 3�

3.1.6. ProdUCTIon AddEd VALUE 3�

3.1.7. ForEIGn dIrECT InVESTMEnT (FdI) 35

3.1.8. CoST oF ProdUCTIon 36

3.1.9. FIELd VISITS – CoMPAnY ProFILES 36

3.1.10. STrEnGThS And WEAKnESSES oF ThE SECTor 38

3.2. TUniSia 39

3.2.1. IndUSTrIAL SETTInG And InSTITUTIonAL FrAMEWorK 39

3.2.2. nATUrE oF ThE SECTor �1

3.2.3. TYPE And SIZE oF CoMPAnIES �1

3.2.�. SECTor TYPES oF ProdUCTIon And ChArACTErISTICS �2

3.2.5. InSTITUTIonS And nUMBEr oF WorKErS ��

3.2.6. ProdUCTIon AddEd VALUE ��

3.2.7. ForEIGn dIrECT InVESTMEnT (FdI) ��

3.2.8. CoST oF ProdUCTIon ��

3.2.9. FIELd VISITS – CoMPAnY ProFILES �5

3.2.10. SWoT AnALYSIS �6

3.3. MoRoCCo �7

3.3.1. IndUSTrIAL SETTInG And InSTITUTIonAL FrAMEWorK �7

3.3.2. nATUrE oF ThE SECTor �8

3.3.3. TYPE And SIZE oF CoMPAnIES �9

3.3.�. SECTor TYPES oF ProdUCTIon And ChArACTErISTICS 50

3.3.5. InSTITUTIonS And nUMBEr oF WorKErS 51

3.3.6. ProdUCTIon AddEd VALUE 52

3.3.7. ForEIGn dIrECT InVESTMEnT 52

3.3.8. CoST oF ProdUCTIon 52

3.3.9. FIELd VISITS – CoMPAnY ProFILES 52


6 LEAThEr And ShoES SECTor

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3.3.10. SWoT AnALYSIS 5�

3.�. EGYPT 55

3.�.1. IndUSTrIAL SETTInG And InSTITUTIonAL FrAMEWorK 55

3.�.2. nATUrE oF ThE SECTor 56

3.�.3. TYPE And SIZE oF CoMPAnIES 57

3.�.�. SECTor TYPES oF ProdUCTIon And ChArACTErISTICS 59

3.�.5. InSTITUTIonS And nUMBEr oF WorKErS 61

3.�.6. ProdUCTIon AddEd VALUE 62

3.�.7. ForEIGn dIrECT InVESTMEnT 62

3.�.8. CoST oF ProdUCTIon 62

3.�.9. FIELd VISITS – CoMPAnY ProFILES 63

3.�.10. SWoT AnALYSIS 66

3.5. GroUP IMPACT FACTorS 67

3.5.1. ProdUCTIVITY 67

3.5.2. IndUSTrY orGAnISATIon (ITALIAn METhod) 68

3.5.3. BEnChMArKInG 68

3.5.�. ThE TUrKISh ModEL 72

3.5.5. ThE VIETnAMESE ModEL 7�3.5.6. IdEnTIFICATIon oF oPPorTUnITIES oF dIAGonAL ACCUMULATIon oF orIGIn ProMoTInG CooPErATIon AMonG AGAdIr CoUnTrIES: 76

3.5.7. SUCCESS STorIES 78

4. ConClUSionS 79

�.1. SWoT AnALYSIS SUMMUrY 79

�.2. drAFT FIndInGS (rECoMMEndATIonS): 80

�.3. CooPErATIon PoSSIBILITIES: 81

�.�. AGAdIr STrATEGIC PLAn: 82

5. DeVelopMenT oF STRaTeGY 86

5.1. InTrodUCTIon 86

5.2. ForMULATInG A GEnErIC STrATEGY For ThE GroUP 87

6. ACTIon PLAn 93

6.1. ASPECT 1 - ProdUCTIon 93




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6.1.1. LEAThEr 93

6.1.2. FooTWEAr 97


6.2. ASPECT 2 - MArKETInG 105

6.2.1. LEAThEr 105

6.2.2. FooTWEAr 107


6.3. ASPECT 3 – InVESTMEnT 125

7. SUMMArY oF ACTIon PLAn 132

7.1. ProdUCTIon 132

7.2. MArKETInG 137

7.3. InVESTMEnT 1�07.�. ACTIonS rEQUIrEd For ThE AGAdIr ZonE ArTISAn hAndCrAFT SECTor 1�1

8. PrIorITISATIon oF ACTIon PLAn 1�2

8.1. ShorT And MEdIUM TErMS PLAn 1�2

8.2. LonG TErM 1�5

TaBle oF annexeS

annex i 1�5

1. GLoBAL IMPorTS And EXPorTS ALL LEAThEr ProdUCTS 1�5

annex ii 169

1. EU IMPorTS And EXPorTS ALL LEAThEr ProdUCTS 169

annex iii 177

1. GLoBAL TrAdE oF AGAdIr CoUnTrIES’ LEAThEr ProdUCTS 177

annex iV: 2008 UpDaTe oF aGaDiR TRaDe STaTiSTiCS 195

1.EXPorT & IMPorT oF ThE AGAdIr LEAThEr & FooTWEAr SECTor In 2008 1952.GroWTh oF EXPorT & IMPorT oF ThE AGAdIr LEAThEr & FooTWEAr SECTor FroM 2007 To 2008 In % : 195



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Mahmoud Qattous and Terry McCallin8

1. GeneRal FRaMeWoRK1.1. objective.

This study aims at:

● Diagnosingcooperationfieldsbetweenthe4membercountries(Morocco,Tunisia,EgyptandJordan)ofthe Agadir Agreement through analyzing the possibilities of Complementarities and Industrial Integration in the Leather and Shoes Sector.

● EnhancingregionaltradeexchangesbetweentheAgadirAgreementmembercountries.● BoostingexportstowardstheEuropeanUnionintheLeatherandShoessector.● AttractingEuropeanandotherforeigninvestmentstowardstheAgadirAgreementmembercountries.

1.1. overview of World leather products industry.

Everycountryintheworldhasaleatherproductsindustryinoneformoranotherandeverycountryisamarketforfinishedgoods,thebiggestofwhichisfootwear.Themanufactureofproducts,especiallyfootwear,pullsthroughthedevelopment of the tanning industry. Tanners and leather products manufacturers are mutually interdependent.

Most of theworld population has some sort of foot covering.Even people in the poorest ofAfrican andAsiancountries manage to obtain some sort of shoe. As populations increase and living standards rise so does the demand forshoes.Thismaynotbethecaseforleathergoods,bags,wallets,belts,garmentsetc.astheyaremoreofa“luxury”itemthananecessity.Thegrowthinthissubsectortendstolagbehindfootwear.

Withtherapidurbanisation,particularlyindevelopingcountries,therewillbemoredemandforfootwearandpersonalleathergoods(PLG)ofbetterquality.Thedaysofturningoutcheapproductswillbeoverinthenext5–10years.The biggest manufacturer in the leather industry; China, has brought this about by selling products on a price basis of such inferior quality (mostly out of synthetics) that there has been a reaction against them by consumers. This is alsotrueforotherFarEastsuppliers;namelyVietNam,HongKong,andtosomeextentIndonesia.HoweverinthiscontextChinaisintheprocessofupgradingitsproductsandchangingitsimageofamassproducerofcheapinferiorquality synthetic products to better quality leather items.

1.2.1. TheInfluenceofPopulation

Todaytheworldpopulationisover6.5billionandisexpectedtocrossthe9.0billionthresholdby2050.InglobaltermspopulationgrowthwillbehighestintheIndiansubcontinentandAsiamainlyChina.ThepopulationinEuropeispredictedtodecline.AfricaandLatinAmericawillincrease.NorthAmericawillshowamoderateincrease.

population reference bureau (USA)




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9

Theexpandingmarketsforleatherproductsbypotentialcustomers in terms of size rather than per capita consumption are:-

● Asia● Africa● India● China.

Thoseshowingonlymodestgrowthare:-● Europe● LatinAmerica● NorthAmerica

Theaverageworldannualgrowthrateforthenext6yearsisestimatedat1.125%perannum.Duringthenext15yearsthe population over 55 is predicted to increase by 35.1% in Europe.

Formanufacturersofleatherproductsandshoemakersinparticular,theshiftintheagedemographicsfromarelativelyyoungpopulationtoanageingoneissignificant.Thiswillentailnewmarketingplans,techniquesandproductstoappealtothisparticularmarketsegment,basedaroundcomfort,valueformoneyandconservativestyling.

1.2.2. Regulatory Factors

Thepersonalleathergoodsandfootwearmanufacturingindustriesareregardedasenvironmentallyfriendlyones.Verylittleproblemwasteisgeneratedinthemanufactureofproducts.Manythermoplasticmaterialsarerecycledincludingthenewerdevelopmentsintoepuffandcountermaterials.Solventsareusedinspraysandcementattaching.Howeverthesearebeingreplacedbywaterbasedfinishesandadhesives.Theresultofthiscleantechnologyisthattherearefewextraregulationsimposedontheindustry.

The tanning industry produces large amounts of solid and liquid but as technology improves this becomes less and less.

TheEuropeanUnionhasitsownrules.Azodyes,PCP’sandnickelderivatives(allpotentialchemicalcarcinogens) are forbidden in leather. PETA (people for the ethical treatment of animals) have lobbied hard in the leather goods industrytotheextentthatsomebuyersrefusetoordershoesmadewithIndianleatherparticularlyinGermany.ForsomeyearstheEUhasbeenpushingforanecolabeltobeusedonallfootwearsignifyingitsethicalandnonpollutingorigins.Thisisavoluntarycodeatpresent.ItisalawandrequirementintheEUmarketthateachhalfpairofshoesmusthavea”pictogramme”onthemidentifyingwhatmaterialstheuppers,liningsandsolesaremadefrom.Thisisto stop the practice of passing off some materials as real leather.

AllpackagingthatisimportedtotheEUmustberecyclableandbestrongenoughtomaintainnecessarystandardsofsafety (outside cartons must not disintegrate during transport).

ArecentdevelopmenthasbeentheintroductionoftheREACHprogrammein2007which concerns the Registration, evaluation, authorisation and restriction of CHemicals. It came into force on 1st June 2007 and replaces a number ofEuropeanDirectivesandRegulationswithasinglesystem.Ithasseveralaimsamongthem:-

● Tomake the people who place chemicals on the market manufacturers and importers responsible forunderstandingandmanagingtherisksassociatedwiththeiruse.

● REACHapplies to substancesmanufacturedor imported into theEU inquantities of 1 tonneper yearormore.Generally, it applies to all individual chemical substances on their own, in preparationsor inarticles.

This is a complicated system for the control of potentially hazardous chemicals used in manufacturing. Consulting companieshavesprungupwhowillguideorganisationsthroughthenewregulationsandtherearemanywebsites



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available.Adialogueshouldbeopenedwithsupplierstoseewhatisrequiredofleatherproductmanufacturersintermsofregistration.ThereisanimpliedthreatifnoregistrationisdonewhereneededthenproductswillbebannedfromtheEUmarket.

Howeverthetanningindustryisessentiallybasedonthechemicalsusedinproduction.REACHhasprobablymorerelevanceinthissubsectorcomparedtofootwear,andPLG.

1.2.3. World Market orientation

ThemanufacturingofleatherproductstakesplaceintheEastwiththemajormarketbeingintheWest.ThemainconsumingmarketsintheworldforleatherproductsareEurope(27);thebiggest,andNorthAmerica.Theseareasarethetargetmarketsformanyleatherproductsmanufacturerswhoaspiretobeexporters.

Thefootwearmanufacturingindustry(whichisabarometeroftherestoftheleatherproductsmanufacturingindustry)in theseareashasdeclinedyearafteryearfor thepast20years,as theyloose thebattlewith imports.Percapitaconsumptioninrecentyearshasshownaverymodestincrease.

The effects of imports have been to decimate the local manufacturing industries. only in certain special situations has the local industry still managed to survive. In Europe, the Italian manufacturing industry survives because of innovationintermsofbeingtheworldfashionleader.Productdevelopment,design,andstylingstillhasitsheartinItaly.(AlthoughforsportsfootwearthisalsooccursinUSA).SpainandPortugalonlyjustsurvivebecauseofalowercostbasethanItaly.France,Germany,UKandUSAarestrugglingtosurviveinnichemarkets.Howeveralltheseindustriesareshowingdeclinesinmanufacturingyearafteryearasimportstakealargermarketshare.

ThedifficultiesinEuropeandtoacertainextentthedifficultiesinChina,produceanopportunityforthemanufacturersintheAgadircountriestocapturenewcustomersand/orattractnewForeignDirectInvestments(FDI).Thetrendinmarketsupplyisforsmallerorders;moreoften,ofdifferentstyles.ThecountriesareclosetothebiggestmarketintheworldandhavestrongrelationshipswithItaly,FranceandSpain,andtoalesserextentwithGermany,UK,BeneluxandPortugal.

China has recently been forced by international pressure to re-value its currency, labour shortages are developing in theeastofthecountryandwageratesareincreasing.TheEUcurrentlyhasantidumpinglegislationinplaceagainstChinawhichispredictedtobeextendedforanothertwoyears,itimportsleather,anditcanalsobedifficulttodealwithandisunpopularwithbuyers.CompaniesbuyfromChinabecausetheyhavetonotbecausetheywantto.

HoweverChinaisnotgoingtostandstill.Itisalreadydevelopingnew“ShoeCities”toencouragemoreefficientmanufacturing.IthasopenedawarehouseinSpain.ItisallegedithasplanstoopenretailshopsinEurope.

Otherplayers in the internationalmarketarealsodeveloping their industries,notably IndiaandVietNam. Indiahasnotyetreacheditspotentialontheworldmarket.Itisalsobuildingnewshoecitiesaimedattheexportmarket.LeadingfootwearplayerslikeAdidas,PumaandNikearelikelytoshiftsomeoftheirpurchasingandproductionfromChinatoIndiaoverthenextthreeyears.

InDecember2008TheIndiangovernmenthasapprovedplanstobuildafootwearcomplexandfootwearcomponentsparkinChennai.Thegovernmentwillinvest$3millioninthecomplexand$2.1millioninthecomponents’park.AFootwearDesignandDevelopmentInstituteisalsobeingestablishedinChennaiandisexpectedtobeupandrunningbythe2010-11.ThegovernmenthasalsoapprovedproposalstoestablishaleathergoodsparkinKolkata,WestBengal($1.1million)andaleathercomplexinAndhraPradesh($6.2million).

Indiahaswitnessedpromisingtechnologyinflowandforeigndirectinvestments.Theentireleathersectorisnow“de-licensed”and“de-reserved”,pavingthewayforexpansiononmodernlineswithstate-of-the-artmachineryandequipment.




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TheVietnamesefootwear industry is targetingexportgrowthof12%–13%in2009accordingto theLeatherandFootwearAssociation.VietnamisnowtargetingtheAfricaandtheMiddleEastmarkets.

ThemanufacturersintheAgadircountriescanreplaceFarEastsupplywithproductsproducednearertothemarketbyflexibleproductiontechniques.HowevertodevelopmoreBusinesstoBusiness(B2B)opportunitiesinEurope,timeisoftheessenceforAgadirCountriesbeforetheFarEast/Indiasuppliersre-group.

1.3. Financial Crisis

1.3.1. overview

Strategiceconomistssaythecurrentcrisisisgoingtobemoredifficultthanfirstexpected.Worldeconomicgrowthisexpectedtoslowsharply,withtheUK(-2.9%)amongthehardest

GRoWTH in 2009Country GDp Growth RateWorld 0.5%China 6.7%india 5.1%Brazil 1.8%eU27 -2.0%UK -2.9%USa -1.6%

IMF estimates

developing countries such as China and India should fare better. ReportsfromThailandsaythatthecountry’sfootwearexportstotheUS,oneofitsmostimportantexportdestinations,havefallendramatically.FiguresshowthatshoeexportstotheUSpreviouslyaccountedfor35%ofThailand’stotalshoeproduction,butnowaccountsfor just27%.Asaresult,manyThailandexportershavedecidedtoturntheirattention to countries in theEU.Exports toEU countries now account for 40%of the country’s total footwearproduction.

Manyfootwearmanufacturershavealsoshiftedfromlow-endshoeproductiontomediumandhigh-endproductioninordertoappealtomarketslookingforbetterqualityshoes.ThisconstitutesathreattoAgadirCountries.ChinaandIndiaarealreadytakingstepstoshoreuptheirleatherproductsindustrieswithextraincentivesforexporterssomewhatagainstthespiritoftheWTO/GATTagreements.

The director general of Spain’s labourministry, has told the country’s footwear industry that the first paymentsunderasupportpackagefirstannouncedinOctober2007willbecomeavailableduringthemonthofMarch2008.TheSpanishgovernmentwasfirmlycommittedtotheso-calledFootwearPlan,whichwillmakespecialisttrainingavailabletoworkersinthefootwearindustryandhelpemployerskeepworkers(especiallyolderworkers)onduringeconomically challenging times. In all, the government has promised to makeUS$ 59million available to theindustry.

Portugalistoinvest$1.2millioninthetextileandleatherindustriesinanattempttoboostexportsbyinvestmentsintechnology,trainingandmarketing.Itcanbeseenthereforefromtheaboveexamplesthatthecompetitionintheworldmarketisgoingtogetfiercerthanbeforeasmoreandmorecountriesassisttheirleatherindustries,creatingaverychallengingmarketplacefortheAgadir Countries.



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According to Tunisia’s National Leather and Footwear Federation (FNCC), the value of exports from bothsectors from the country has fallen by 11% since November. Most export-focused producers in Tunisiaconcentrate around 95% of their efforts on the European market, which has been badly hit by the economicdownturn, leading to fewer orders and fewer sales. Some Tunisian companies have seen sales decline by 20-25%andsomehavecloseddown.Tunisia is the strongestcountryof theAgadirgroup.The fact that it isbeingnegatively impacted in this way will mean the other countries will probably be affected more seriously.

Entrepreneursarereluctanttodiscussindetailthestateofbusinessespeciallyiftheyarehavingproblems.HoweverevidencefromvisitsinTunissuggeststhatshoemanufacturersaresufferingadownturnofupto50%inproductionlevels. Manufacturers of personal leather goods also report declines but at a less severe level of 30%. Both industry subsectorsaredevelopingnewproductsinordertogainnewsales.

Onewell developed tannery inTunisiawhich is export oriented is planning for a reductionof20% in sales for2009/10.

Most ofEgypt’s business in tanning is geared to export to semi processed leather.These companies have beenaffectedbythedeclineinworldexportmarkets,reportinga20-40%declineinorders.Thisbringsthemclosetothebreakevenpointandinsomecasesbeyond.

Shoefactoriesarelessaffectedbecausetheyaremostlygearedtothelocalmarket.OnemajorfootwearexporterinEgypthasexperienceda30%dropinordersevenallowingforthefactthatFOBpriceshavebeenloweredby10-15%.Othercompaniesinmorespecializedmarketsegmentsaresurvivingwellinexport(andlocal)localmarketse.g.childrens’footwear.

Thecompaniesinleathergoodssectorwhichexportshowamixedpicturewithsomecompaniesholdingupwellandothersshowingadeclineinactivityof30–50%dependingonwhichmarkettheyserveandwhichproductstheymake.ManufacturersofladiesbagsforexporttoEuropearesurvivingwell.Makersofsmallleathergoods,briefcasesetchaveproblemsespeciallyinthedutyfreemarket.

ThetanneriesinMoroccoarefacinggreatdifficultiesbeingexportersofsemifinishedleather.Productioninthesubsectorisdownbyaround40%forthosecompaniesstilloperating.2largetanneriesremainidle.

Evidencefromvisitstothefootwearmanufacturingsectorsuggeststhatbusinesshereonexportsisalsodownby30-40%.Inleathergoodsthepictureismixed.Thosecompaniesoperatinginnichemarketswithspecialistproductsareholdingtheirplaceinthemarket.Theothersinthemainstreamareshowingdeclinesofupto50%insales.

ThetradingpartofJordan’sindustryseemstobeholdingupwellasevidencedbythetradestatistics,especiallyintheareaoftravelbags,satchelsetc.whicharetradedintheregionratherthanthedepressedmarketsofEurope.Shoemanufacturingisalsoholdingupwellgearedtothelocalandregionalmarkets.Nichemarketsarethekeyherewithindustrialsafetybootsandmedicalshoesdoingwellwithexpansionplansfor2009.

1.3.2. Strategy for Survival

InsomewaystheAgadirCountrieshaveadvantagesthatshouldbeexploited.TheproximitytotheEUmarketwiththeshort/shortproductionscenarioreferredtoaboveshouldbebuiltupon.Europeandistributorsarerunningleaninventoriesofstockintheirwarehouses.Theywillrequiresupplyandmanufactureofsmallandfrequentordersofavarietyofproducts,stylesandcolours.ThisadvantageshouldbeaggressivelymarketedinEurope.

Companiesmustprotecttheirmarketshareasmuchastheycan.TodothistheywillprobablyneedfinancialassistanceandGovernmentandbanksshouldbewillingtomakesoftloanstoallowthistohappen.Governmentsshouldbelobbied to for the need to provide new easier loan guarantee schemes that cover the exporters to the EU. It isexpectedthattheEUdistributorswillbeaskingformorefinancialincentivesandfacilitationinpaymentasthecrisiscontinues.




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Nodoubtbusinessactivityinspiteofallstimuluspackagesonofferisgoingtodecline.(SeeTunisianexperienceabove).Companiesshouldbepreparedforthisandstresstestingtheiroperationssothattheyknowtowhatlevelbusinesscandeclinetowithoutcausingcatastrophe.

Agadircompanies,asamatterofsomeurgency,shouldnowconsiderthePanAgadirmarketof130millionconsumers.Theyshouldclaimthismarketastheirown.Nowisthetimetolookforothermarketstoaugmenttheinevitabledecline in Europe.

Theindividualleatherassociationsinthe4countriesshouldmonitortheleatherproductsmarkettoensurethereisnothreatofdumpingfromFarEastsuppliers.Anycustomsloopholesornonlegitimaterepackagingpracticesthatmayappear for imports from other nearby areas should be addressed.

Newinnovativeproductsnowneedtobedevelopedusingdifferentmanufacturingtechniquestoreducecosts.

The engineering of products should be studied to reduce the amount of materials used, speed up production, increase productivityandfurtherreducecosts.(SeeshoesinparticularmadebyClarks,Ecco,Nike,Addidasetc).

Nichemarketingisanotherpowerfultoolforsurvival.ManycompaniesintheAgadirGrouparealliedmostlytothefashionsideofthemarketbytheircontractors.Thegreymarketisincreasingyearonyear.Therearemanysegmentstothissubmarket.Itshouldbeinvestigatedwithanopenmindtoseekoutopportunitieswhichcouldhelpinfillingthe gaps left by the decline in the fashion business.

Ø SURViVal STRaTeGieS

Developshort/shortmanufacturing

Donotloosecustomers–protectmarketshare

ConsidermorepenetrationofPanAgadirmarket

ConsiderregionalmarketthroughJordan

Monitorlocalmarketsforunfairimportpractices

Nichemarketingoverseasandlocal

Strictfinancialcontrols(stresstest(

Crashprogrammeoncostreductionandincreaseproductivity

MorefinancialfacilitiesandextendedloanguaranteeschemesbyGovernmentsandBanks

Forthefutureindustrialistsshouldtakeonboardthelessonstobelearnedfromthisexperience.Itislessdifficulttosurvivethistypeofmarketcrashifacompanyisdiversified.Relyingon1marketsegmentasastrategyisfineinexpandingeconomies.Companiesshouldnowquestionthebenefitsofsubcontracting.Thishasservedtheindustrywellforanumberofyearsbutnowperhapsitistimeforarethink.

Othermarketsegments,countries,andregionsshouldbeinvestigated.Reliancetotallyon1exportmarkethassomerisks.Manycompaniestaketheviewthatastronglocalmarketpresenceisaprerequisiteforexporting.

Technological levels are also important to give production diversity, cost reduction and increases in productivity. Investinginnewtechnologyinmarketdownturnscanbeadifficultconcepttoimplementbutthefutureisforleanmanufacturing.Companiesneedtogearupforthisandkeepabreastofdevelopmentsastheyarise.Therehastobe


1� LEAThEr And ShoES SECTor

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acontinualinvestmentintechnologyratherthaninvestmentholidaysjustbecausethemarketisbuoyantandprofitsare rising.

Alongwith technology there needs to be a quick reaction, just in time reliable supply chain for rawmaterials.Intimaterelationshipshavetobebuiltwithsuppliers.Thesupplychainmustbemanagedeitherinpartnershiporbyselfsufficiencybyverticallyintegrating.

Newproductsare required.Nichemarketing insulatescompanies toanextent frommarketdownturns.Theyareusuallylesscompetitiveandlargecompaniestendtoignorethem.Making“metoo”productsisnottheanswer.

Ø STRATEGIESFORFUTURE

Market diversification local, region, exportMarket segmentationNew innovative products (CAD1) by segmentNiche marketsUpgrade manufacturing with new technology (CAM2)Managed supply chain for raw materialsIncrease quality levelsReduce pricesReduce costs (see technology above)Increase productivity – set targets

1.4. Global Sourcing

Overtheyears,sourcingcompanieshavebecomemoreexpertatmanagingthesupplychain.However,evennowallowingforadvancesininternationalinventorymanagement,itstilltakesupmonthsormorefrominceptiontogetaleather good into a retail shop. Much is said about the shorter and shorter lead times demanded by retailers. Presently thesystemused,manufacturingintheeastandsellinginthewestmitigatesagainstthis.Leadtimeshavecomedownfrom18monthsto6months.But6monthsisstillariskytimeframewhendealingwithaseasonal,fashiondrivencommodity.

AccordingtotheManagementConsultanciesAssociation,cuttingsupplychaincostsalongwithimprovingefficiencyand productivity is top priority for 9�% of organisations. Long supply chains equals increased costs.

Inthecaseoftheleatherproductsindustry,footwearandotherleathergoodsaretheresultofanintegratedindustrialvaluechain,wherethequalityandcommercialsuccessofbothintermediateandendproductsisdeterminedbymanydifferentfactorsinthestagesofthechain.Forexample:

■ theselectionandpurchaseofrawmaterialsandcomponents■ theproductionprocesses■ marketing,distributionandsales■ byconsumerdemandbothathomeandabroad




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Thefollowingillustratesthevariousfactorsconcernedwithproduct, technologyandmarket thatdrivethetrendsobserved in the global Leather and Leather Products Industry.

Manyofthefactorslistedaretheconsequenceoftheglobalisationofmarketsandofsourcingthroughsubcontracting,jointventuresordirectrelocationofmanufacturingactivitiesfromleatherproducersofindustrialisedcountriestodevelopingcountries.Decisionmakingonthelocalizationofoutsourcinginthedevelopingcountriesdependsontheavailabilityofrawmaterials,lowerwagescalesandtheabundanceoftrained labour.

HowevertheAgadirCountrieshaveanadditionalinbuiltadvantageovertheircompetitorsintheglobalmarket–theirproximitytotheEuropeanandCISmarkets.Asmentionedabove,supplychainsarebeingforcedtoshortenbycurrenteconomicconditions.Thefuturewilldemandshorterandshorterleadtimesinperiodsofweeksratherthanmonthswithshipmentsdirecttoretailshopsofsmallerandsmallerquantities.AgadirCountriesarenexttothemarketsbuttoexploitthistheywillneedtoupgradetheirtechnologyandcommunicationstocopewiththenewdemands.

1.4.1. EuropeanMarketTradeCharacteristics–footwear

TheEU27marketisthebiggestintheworld.Itisdifficulttopenetratebutnotimpossible.Opportunitiesnowarebetterthantheyhavebeenforsometimeevenallowingforthecurrentfinancialcrisis.

TotalEU27footwearconsumptionwasestimatedatUS$67,072millionin2006.TheaverageEUconsumptionpercapitawasUS$135or4.3pairs.PeopleintheNetherlands,Portugal,Austria,Denmark,theUnitedKingdomandFrancewerespendingmostonfootwear,whileBulgarians,RomaniansandHungariansspenttheleast.

EUconsumptiongrewbetween2002and2006byanannualaverageof1.9%, fromUS$62,324 toUS$67,072million.Involumetermstheoverallincreasewas2.2%perannumonaveragereflectingtheseriouspricecompetitioninthemarket.



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Source CBI

Theabovegraphillustratesthegrowthtrendsinthemarketovera5yearperiod.

InsomeoftheEU15countries(UK,France,Benelux,Spain,Portugal,Greece),thefootwearmarketispolarisingintolowerquality/priceandhigherquality/pricesectors,whereasinthenewEUmemberstates(CzechRepublic,Poland,Hungary)amid-rangequality/pricesectorseemstobedeveloping

InthemaintheEUfootwearmarketinthenearfuturewillbeinfluencedbythedemandforhealthyandcomfortablefootwear, especiallyforthegrowingnumberofolderpeople,becauseoftheageingpopulation.

Therewill be a continued shift from formal to casual footwear, especially in the EU15 countries.The demandforformalfootwear in thenewEUmemberstateswitharisingmiddleclassandmorewomenatworkwillalsoincrease.

In2006,theturnoverofthe26,000footwearmanufacturersintheEU27wasvaluedatUS$34,890million,ofwhichanestimated65%wasoutdoorleatherfootwear.Italy,SpainandPortugalaccountedfor67%ofEUproduction.FromthenewEUmemberstates,Romaniaaccountedforalmost10%ofthevalueofproductionand12%ofproductionvolume.PolandandSlovakiawerealsosizeablefootwearproducers.

Byvolume,EUfootwearproductiondecreasedbetween2002and2006from994to727millionpairswithdecreasesinmostcountries,exceptforRomaniaandBulgaria.EventheEasternEUcountriesarenowbeingseriouslychallengedby Asian producers.

In2007theEUaccountedfor5%ofglobalfootwearproduction(bynumberofpairs)andthatfigureisforecasttocontinuetofall,despite“anti-dumping”protectionistmeasuresbytheEUagainstthelargestAsianproducers,ChinaandVietnam.Thedownwardtrendinvalueandproductionovera5yearperiodisshownbythefollowing:

Source CBI




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In2007importswerevaluedatUS$34,905million,2,942millionpairs.Germany,France,ItalyandtheUKwerethelargestimportingcountries.Between2002to2006and2007allEUcountriesincreasedtheirimportsoffootwear.Overall, totalEUfootwear imports rose in thisperiodbyanannualaverageofabout1%invalueandby3%involumeasaresultofmoreimportsofcheapfootwear.

Footwearwithleatheruppers,formednearly60%ofthevalueofEUimports(34%byvolume),whichgrewby5.5%yearonyearbetween2002and2007.Withinthisproductgroup,casualoutdoorfootwearrepresentedover50%.

In2006EUfootwearimportswere501millionpairsfromcountriessuchasChina,Vietnam,India,Indonesia,Brazil,Thailand,MoroccoandTunisiaworthUS$7,194million.ThetopfourimporterswereUK,Germany,ItalyandFrance.

In2007,aroundhalfofEUimportscamefromotherEUcountriesbyvalue,butjust34%byvolume.TheleadingsupplierstotheEUwereItaly,GermanyandRomania,aswellassupplierswithhighre-exportssuchasBelgiumandtheNetherlands.TheworldsuppliersextraEUareshowninthefollowingchart:

Top10ExtraEU-27suppliers(in1000pairs)

200� 2005 2006 2007Share of 2007 imports

%growth2006-2007

%growth 200�-2007

World 1.661.659 1.929.858 2.096.155 2.50�.729 100.0 19,5 50,7China 883.65� 1.310.8�1 1.�87.581 1.8�5.010 73,7 2�,0 108,8

Vietnam 298.089 270.108 256.692 277.12� 11,1 8,0 -7,0India 52.08� 52.789 60.696 65.983 2,6 8,7 26,7

Indonesia 60.259 51.081 5�.725 63.125 2,5 15,3 �,8Brazil 28.251 31.�95 32.717 35.�28 1,� 8,3 25,�Turkey 38.731 30.251 27.5�3 30.13� 1,2 9,� -22,2

Thailand 33.719 28.32� 27.905 28.976 1,2 3,8 -1�,1Tunisia 17.766 19.771 20.�78 22.91� 0,9 11,9 29,0

Morocco 1�.670 1�.712 15.350 16.532 0,7 7,7 12,7Source Eurostat

EUexportstotheworld(i.e.excludingintraEU27trade)increasedbetween2004and2007fromUS$6597milliontoUS$7477million(13.3%)and0.9%involumefrom168.9to170.5millionpairsasthefollowingchartillustrates.

Top10ExtraEU-27exportmarkets(in1000pairs)

200� 2005 2006 2007 Share of 2007exports

%growth2006-2007

%growth200�-2007

World 168.929 160.563 16�.793 170.�72 100.0 3,� 0,9USA 55.069 �2.595 38.681 32.506 19,1 -16,0 -�1,0Switzerland 22.��9 20.�93 22.155 22.250 13,1 0,� -0,9russia 10.108 12.198 1�.�10 18.160 10,7 26,0 79,7Norway 7.667 8.595 7.713 7.990 �,7 3,6 �,2Ukraine �.631 6.�26 6.213 7.775 �,6 25,1 67,9Turkey 5,636 6.363 6.790 7.271 �,3 7,1 29,0Japan 7.163 7.1�5 7.351 6.557 3,8 -10,8 -8,5Croatia 5.050 5.2�9 5.631 6.�55 3,8 1�,6 27,8Canada 6.923 6.776 6.185 5.�85 3,2 -11,3 -20,8U.A.Emirates 2.798 3.010 3.2�0 �.202 2,5 29,7 50,2



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1.4.1.1 Footwear Distribution Channels

MostfootwearissuppliedinmostEUcountriesthroughthetraditionalroute,whichisfrommanufacturertoimporter/wholesalertoretailer.SouthernEUcountries(Italy,Spain,Greece)andthenewEUmemberstates(Poland,Slovakia,Hungary)continuetohavemanysmallfootwearshops.InthemiddleandnorthernEU(Germany,Austria)countriesmanysmallfootwearretailersjoinabuyinggroup,whichnegotiatesdirectlywith(overseas)manufacturers.

InFrance,GermanyandtheUnitedKingdom,therearealsolargefootwearretailersoperatinglocalchainorfranchisedstores,althoughsomeofthesearehavingdifficultiesinrecenttimes.

In2006,therewereanestimated55,000footwearretailoutletsintheEU.Footwearretailinghasbecomemorediversified.Consumerscannowadaysbuyfootwearinmanydifferentways,forexampleataretailoutlet(footwearshop,chainstore,sportsshop,clothingshop,discounter,hypermarketetc.),atamarketstall,afactoryoutletorontheInternet.

Thepastfewyearshasseenthecontinuinggrowthofdiscountfootwearretailers,buttosomeextent,especiallyintheyoungermarketsegmentthegrowingimportanceoffashioninfootwearhasresultedinthewideravailabilityoffootwearinothertypesofoutlets,particularlyclothingretailers.

ThefollowinggivesanindicationofthetypesofoutletsandtheirsignificancetotheAgadirgroup.

oUTleT TYpe CoUnTRY QUaliTY pRoFile aGaDiR

AnWr Buying group Germany Medium high yes

Euroshoe Buying group Benelux Mediumlow possible

deichmann Chain stores Germany and northern Europe MediumLow possible

Salamander Chain stores Germany and northern Europe Medium high yes

C.J.Clark Chain stores Worldwide Medium high yes

Eram Chain stores France Medium yes

Andre Chain stores France Medium yes

Coim department stores Italy Medium high yes

Ecco Manufacturerwithshops Europewide high no

Shoe Zone Chain stores UK Low no

Stead and Simpson Chain stores UK Medium yes

Gardiner Wholesaler UK Medium yes

Carrefour Super/hyper Worldwide Mediumlow possible

Metro Super/hyper Worldwide Mediumlow Possible

Bata Chain stores Worldwide Medium yes

Marks&Spencer department stores Mostly UK Medium yes

● ANWR(AristonNordWestRing)isalargebuyinggrouprepresenting1,700retailerswith4,500shops.● Euroshoehas530shops● Deichmannoperatestheirshopsundertheirownnameandhaveover2,500shops




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● CandJClarkisthelargestretailerofconventionalshoes,(excludingsportsfootwear)intheworld.● BataisanotherinternationalretailerwithabuyingofficeinItaly.● The supermarkets and hypermarkets tend to be in the low tomedium quality levels and buy in large

volumes.

Germany France UK italy Spain netherl. Belgium

Footwear specialists Chain stores* Buying groups Independents Non-specialists department stores Super/HypermarketsSports shops Clothing shops Internet/mailorderothers**

51%22 22 7 49%16� 13 7 5 �

56%2� 13 19 44%3 8 20 � 5 �

43%33 3 7 57%3 5 16 28 � 1

57%8 12 37 43%� 6 12 6 2 13

70%15 9 �6 30%11 3 8 � 1 3

77%38 29 10 23%3 2 11 3 1 3

74%31 23 20 26%2 3 10 5 1 5

* Includes multiples, franchised stores and chains **Includesmarketstallsandfactoryoutlets

Source Euromonitor

Thefollowingchartshowsthemarketshareofvaryingtypesofdistributorsoffootweartotheconsumers.

● SocalledfootwearspecialistshavethelargestmarketsharewithchainstoresbeingthelargestgroupexceptforItalyandSpainwhereindependentshopspredominate.

● BuyinggroupsareimportantinGermany,BeneluxandtosomeextentFrance.● ClothingshopsareimportantintheUKespeciallyfortheyoungerfashionelement.● DepartmentstorearerelativelyimportantinGermanyonly● Sportsshopsareofcoursespecialistoutlets● Footweardistributionisdiversified.Therearemanydifferentoutlets.

Withpersonalleathergoodsthepatternisverysimilartofootwear.Therearespecialistshopsforallleathergarmentsand accessories. department stores have in shop areas dedicated to PLG. Quality levels tend to be high. Some footwearshopssellhandbagswhichcomplementwomensshoes.

14.2. leather Goods

Althoughtheleathergoodsmarketissmallerthanthepredominantfootwearmarketitisstilla50billionUSdollarmarketinworldterms.InEuropethebiggestindividualmarketsarethebiggesteconomies–Germany,France,UKandItaly.Themarketinthesecountriesissegmentedinthemediumtohighqualityend.CheaperproductstendtobemadefromsyntheticsandimportedfromtheFarEastandtosomeextentIndia.



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Ladiesbagsarebecomingamoreimportantaccessorytocomplimentclothingfashion.Someyearsagoabagwasviewedasanecessityratherthanafashionstatement.Bagsnolongerhavetomatchshoesinanensemblebutbecomeanitemintheirownright.Asimilarsceneappliestoladiesbelts.TheleathergoodsmarketinEuropeisdynamicinthatitisgainingmoreimportanceingrowinginabsolutenumbers.Inthisrespectitcurrentlymoreactivethanfootwearevenallowingforthefactthatfootwearisa60%biggermarketinworldterms.

TheactivemarketsforleathergoodsinEuropearethefollowingmajorimporters:

TradeMapITCUnit:thousandofUS$

Theabovechartrepresentsthesizeofthevariousmarketsduring2007.TheComtradeTradeMapanalysisshowsthefollowing

● EUimportsrepresented35%ofGlobalimports● EUimportsofleadingimportersarehighlyincreasingparticularlyItalywithanyearlyimportgrowthof19

% , Spain 16 %, netherlands 15 %, France 1� %, United Kingdom 13 %● EUsmallimporters(Denmark,IrelandandFinland)registeredahighimportgrowthrespectivelyof21%,

23 % and 17 % per year during the period 2003-2007.

1.4.3. Hides and Skins and leatherEuropeisanactivetraderinhides,skinsandleather.Themajorityofproductstradedareforexportmarkets.MuchofthetradeisinsemiprocessedleatherforfinishinginEurope(particularlyItalyandSpain),re–exportingtotheFarEastandfordomesticconsumption.Themarkettrendisupwardswithbusinessincreasingyearonyearupto2007.

The trends are:





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2. GloBal TRaDe inDiCaToRS of leaTHeR inDUSTRYThefollowinggivesanindicationofthetradeflows,bothimportsandexports,ofthevarioussubsectorswithintheindustry. The statistics all come from the ITC Comtrade data Base for 2007.

2.1.Globalimportsandexports:

2.1.1. Hides and Skins and Finished leather.

Therearemanytypesoffinishedleatheravailabletotheindustry.Thehideorskinofanyanimal,reptileorfishcanbetannedintofinishedleather.Manyoftheexoticse.g.reptilessuchassnake,crocodile,Nileperchetcareusedforsmallleatherproductsorasappliquésonlargerproducts.Forthemostpartcowandcalfleatherarecommonlyusedin the leather products industry and represent 23% of global production.

Thetypesofleatherandtheircommonusesareasfollows:

FInIShEd LEAThEr CoMMon USECow shoe uppers, personal leather goods, upholstery, saddles, travel bags Calf Shoe uppers, personal leather goods, garments, gloves, Buffalo Industrialfootwearuppers,someshoeuppersBaby buffalo Shoe uppers, personal leather goodsSheep Shoe linings, garments, gloves, personal leather goodsGoat As abovePig Shoe linings, upholstery, travel bags, shoe uppers Exotics Appliques, gloves, hand bags, etc

Thechartbelowindicatesthetotalactivityforthethreesubsectors.

Global trade indicators in 2007 importsofhides,skins,finishedleather.

FromAnnexIwhichshowsmoredetailsregardingGlobalimportsduringtheyears2003–2007itisclearthat:

● Globalimportsofhidesandskinsandleatherisslowlyincreasingby5%ayearduringtheperiod2003-2007.

● Theworldtopsiximportersaremajorproducersandexportersoffootwearandleathergoods:China,Italy,hong Kong, Germany, Korea, and Viet nam. They represent 56% of the global demand.



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Thechartbelowindicatesthetotalactivityforthethreesubsectors.

Global trade indicators in 2007 exportsofhides,skins,finishedleather.

FromAnnexI,itisclearthat:

● Worldtradeinfinishedleather,hidesandskinsexportsgrewinvalueby5%between2003–2007,similarto imports.

● TheleadingexportingcountryisItalywith16%ofglobalexports.Italyisaworldleaderinfinishedleathernotonlyforitsownneedsbutalsoontheglobalmarket.

● USAissecondwithamarketshareof10%,Brazil4thwith7%,Germany5thwithashareof4%.● China is a large importer of leather rather than exporter, in order tomeet the needs of its expanding

manufacturingindustryoffootwearandleathergoods.

2.1.2. personal leather Goods

Global trade indicators in 2007 importsofleathergoods:

AnnexIshowsthat:● Worldtradeinleathergoodsgrewatanannualrateof12%from2003–2007.● Thesixleadingimportersaredevelopedcountriesthatrepresent59%ofglobalimports.● USAisthebiggestmarketwitha22%share.● France,Germany andUK have amarket share of 18% between them representing approximately 6%

each.




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Global trade indicators in 2007 exportsofleathergoods:

AnnexIshowsthat:● Worldtradeinexportofleathergoodsgrewinvalueatanannualrateof11%between2003-2007● TheleadingexporterisChinawithamarketshareof32%.Italyhasamarketshareof12%followedby

Francewith9%andGermany4%.Indiahasa3%share● Thefiveleadingexportingcountriesofleathergoodsrepresented74%ofglobalexports.

2.1.3. leather Footwear

Global trade indicators in 2007 importsofleatherfootwear:

AnnexIshowsthat:● Worldimporttradeincreasedby10%peryearfrom2003-2007● EU27accountsfor44%ofworldimports● USAaccountsfor23%ofworldimports● EU15 imports represent40%ofworld imports.Their imports increasedyearonyear (from8 to20%

during 2003-2007) despite only a moderate increase in consumption (2%). ● ThebiggestEUimportersareGermany,France,Italy,UK,Belgium,Spain,Netherlands,(seeabove).● ThetargetmarketforAgadircountriesareGermany,France,Italy,UK,Belgium,SpainandNetherlands,

forthefollowingmainreasons:■ AgadirexportstoEUcountriesarefreeoftaxes.■ Germany,France,Italy,UK,Belgium,SpainandNetherlandsrepresent34%oftheGlobaldemand.■ TheirdemandishigherthanthatofUSA(23%)

■ Theirdemandisdynamicwithayearlyincreaseof8to20%from2003to2007.



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Globaltradeindicatorsin2007exportsofleatherfootwear:

AnnexIshowsthat:

● Worldexporttradeincreasedby10%peryearfrom2003-2007,sameasforimports.● Chinaisleadingtheglobalexporterswithamarketshareof30%,whileItalyhas13%,Vietnam7%,and

the others less than 5%● EUcountriesarestillleadingexportersparticularlyItalyrankingsecondexporterfollowedbyBelgium5th,

Germany 6th, Spain 7th, Brazil 8th and France 9th.● TheexportgrowthrateofChinais19%.VietnamandIndiahaveanannualgrowthrateof13%and18%

respectively and are far higher than that of Italy, Spain and Portugal (respectively 5%, 3% and 2%).● ThebigcompetitorsfortheAgadircountriesareChinaandVietnaminthepricesensitivesegment.● Italyinthehighqualitysegmentasitsmarketshareinglobalexportsishighand“madeinItaly”ishighly

appreciated by consumers.

2.2. EuropeanUnionImportsandExports

2.2.1. Hides and Skins and Finished leather

European Union trade indicators in 2007 importsofhides,skinsandfinishedleather

AnnexIIshowsthat:

● ItalyisbyfarthebiggestimporterofsemiprocessedleatherfollowedbyGermany● RomaniaandSpainarealsosignificantimportersofsemifinishedleather.

European Union trade indicators in 2007 exportsofhides,skinsandfinishedleather




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AnnexIIshowsthat:● ThefourmajorEUexportingcountriesexportfinishedleatherratherthanhidesandskins.● Italyisthelargestexporterintheworldwitha16.4%share.Germanyhasa4%worldshare.● FranceandSpainarearound2%.● AllmajorexportingcountriesalsotradeintraEUwithItalybeingthemostactive.

2.2.2. personal leather GoodsEuropean Union trade indicators in 2007 importsofpersonalleathergoods

AnnexIIindicatesthatthe:● EUimportsrepresent35%ofGlobalimports● EUimportsareincreasingparticularlyItalywithayearlyimportgrowthinvalueof19%between2003-

2007,whileSpainachieved16%growth,France14%,UnitedKingdom13%andGermany10%.

European Union trade indicators in 2007 exportsofpersonalleathergoods

AnnexIIshowsthat:● EUexportsrepresent35%ofglobalexportsthesameasimports● TheleadingEUexportersareItaly,FranceandGermany,representing25%ofGlobalexports● TheleadingEUexportershadanannualgrowthrateof18%forItalyandGermany,14%forFranceduring

2003-2007.



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2.2.3. leather Footwear

European Union trade indicators in 2007 importsofleatherfootwear

AnnexIIshowsthat:

● GermanyisthebiggestimporteroffootwearintheEU27● France,ItalyandUKhavesimilarsizedmarketsforimports.● ImportscomemostlyfromChina,12.1%,VietNam,and7.1%,India3.7%● ThereisalsoastrongintraEUtradewiththeimportingcountriesbuyingmostlyfromItaly,Netherlandsand

Belgium

European Union trade indicators in 2007 exportsofleatherfootwear

AnnexIIindicatesthat:

● Italy is the biggest exporter of footwear,with intraEU exports representing 15.3%of theEUmarket.Belgium and the netherlands supply 13.7% of intra EU trade

● Germanyexports1.8%ofhighqualityfootweartootherEUcountries

2.3. intra agadir Trade

2.3.1. Hides and skins and leather

Intra Agadir trade indicators in 2007 of hides,skinsandfinishedleather




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● MoroccoisthebiggesttraderinleatherrawmaterialsintraAgadir● Egyptisactiveinsemiprocessedmaterials● TunisiahasarelativelysamelevelofactivityasEgypt.● Jordanhasonlyasmalltradeinwetblueleather

2.3.2 leather Goods

Agadir trade indicators in 2007 of leather goods

● ThereisonlynegligibletradebetweentheAgadircountriesinthiscategory

2.3.3. Footwear

Agadir trade indicators in 2007 of footwear

● TunisiahassomeactivityinthisareabutinactualitytheintraAgadirtradeinfootwearisverysmallatpresent.

2.3.4. Rawmaterialsandinputs

TheAgadircountriesusemanytypesofrawmaterialsandinputsintheirproductionprocesses.All4countriesusethe same things, some are directly imported, some are available locally and some are manufactured locally. The followingchartsrepresentsthemajorinputsrequiredforthevarioussubsectorsoftheindustryandhighlightsthepossible complementarities and co-operation opportunities available to the group.

MATErIAL AVAILABILITY IMPORT/LOCAL CoMPLIMEnTArITIES

Rawhidesandskins All � countriesExportbannedfromMorocco, Tunisia, Egypt. Traded by Jordan

Jordan has the advantage in this commodity and can trade inter Agadir

Semi processed leather,(wetblue). All � countries Locally made. Export banned

by Tunisia and MoroccoCan be traded intra Agadir by Egypt and Jordan

Finished leather for uppers and leather goods

Egypt has biggest capacityTunisiahasfinishedleather Morocco also but less, Jordan limited types

Locally made and imported from Europe and world

Finished leather can be traded betweenall4countriesoflocalproduction. Is suitable for a number of products



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Finished leather for garments

Available in Egypt Tunisia and Morocco

Locally made. Some importedforre-exportsofgoods

Can be traded intra Agadir

Lining leatherEgypt, Tunisia and Morocco from sheep and goat

Locally made Can be traded intra Agadir

Sole leather (bends) Egypt from buffaloNocowleather Locally made Onlysuitableforlocalmarketsnotfor

exportStitched uppers In all � countries Locally made Can be traded intra Agadir

Threads In all � countries. Mostly imported from Far EastandEurope.Stockedbylocal traders

NotmuchbenefitinterAgadirTradeunlesssuppliedbyapowerfulimporter on behalf of the zone.

needles

In all � countries, needles for simple machines freely available, for sophisticated machines have to be imported from Europe

Mostly imported from Far EastandEurope.Stockedbylocal traders

NotmuchbenefitinterAgadirTradeunlesssuppliedbyapowerfulimporter on behalf of the zone.

Toe puff and counter sheets

From traders in all � countries

Certain imported types locallyavailableinmarket,other directly imported by factories

no real advantage in Agadir trade unlesssuppliedbyapowerfulimporter on behalf of the zone

Ancillary materials:Eyelets,laces,buckles,elastic, velcro, handles, locks,clasps,etc

From traders in all � countries


no real advantage in Agadir trade unlesssuppliedbyapowerfulimporter/traderonbehalfoftheAgadir Group

Steelshanks From traders in all � countries.

Some locally made of indifferent qualitySome standard shapes imported from Europe of goodquality.Bespokeshapeshave to be imported


tacksandnails,

Handtacksavailablelocally. Specialist nails(buttress heel nails, lastingmachinetacks)must be imported



rubber vulcanised sheets for soles Egypt Locally made

Modernplantwithcapacitytotrade intra Agadir to quality levels demanded.

Unit sole moulds Egypt

Locally made in Egypt but of poor quality and limited types suitable only for simple soles. Majorityofmouldsimportedfrom Italy, Spain and Far East

Egyptmouldscanbetradedwheresuitable. Egypt should upgrade its technology. There are companies availablewhocandotheupgradingnecessary

Unitsolesinjectionmoulded

In all � countries. Egypt has large capacity and variations of materials. Jordan much less, Tunisia and Morocco have smaller plants

Locally made. Some up to date fashion items imported fromItaly/Turkey

Possible trade from Egypt to others

Unit soles built up Available in all � countries

Good quality products locally madewithresinrubberinall4countries.Cowleatherbendsolesofexcellentqualityavailable from Tunisia and to someextent,Morocco

All soles can be traded inter Agadir.




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Insole and reinforcing boards for PLG Made in Egypt only Locally in Egypt, imported in

other countriesEgypt could supply the region. Some upgrading necessary

AdhesivesMade in Egypt and some types in Tunisia and Morocco

Local and better quality imported

Manufacture needs to be upgraded before intra Agadir trade

Lasts Made in Egypt, Tunisia and Morocco

Local and better quality imported

NewplantsinEgyptandTunisiaofferbetterqualityproductswhichcanbetraded intra Agadir

Packaging,boxes,cartons, tissue paper Available locally

Local manufacture is possible.Specificationsshould be to EU norms.

Could be traded Inter Agadir depending on commercial environment.

● Thebiggestitemintermsofneedandsalesvolumeisfinishedleather.ThisshouldbedevelopedforintraAgadir trade. Semi processed trade is only a stop gap.

● BendleatherforsolesisofminorimportancebecauseoflowvolumesforintraAgadirtrade● Stitcheduppershaspotentialdependingonwhichcountryisthemostproductiveandcostconscious.All

shoe manufacturers need this item.● Unitsolesdependonmouldsformanufacture.MostoftheseareproducedinItaly.Egyptianmanufacture

need to be upgraded by Joint Venture investment.● TheEgyptianplantsforthemanufactureofsheetmaterials,insolesandsolescouldsupplyallcountries.● Lastsneedtobeproperlyengineeredandgradedandmadefromplasticnotwood.● AnAgadirTradingHouseformaterialsshouldbestudiedasacommercialopportunityforaprivateinvestor,

eitherasanewventureorinadditiontothebusinessofacurrentinvestor.

2.3.5. Hides and Skins

Hidesandskinsarethecommodityatthebeginningofthesupplychaininthemanufactureofleatherproducts.HandSaretradedinthesamewayasanyothercommodityandthetradetendstobeopaqueinnatureandworldwide.Everycountrywithananimalpopulationinevitablyhashidesandskinsasanaturalresource.Ifhideswithinonecountrybutfromdifferentareasdistinguishonefromanother,itisobviousthathidesfromdifferentcontinentsanddifferentclimateshavesignificantdifferences.Itisvirtuallyimpossibletolistallthecharacteristicsofeachoriginandthusatablethathighlightsthedifferencesbetweenoriginsisimpossibletodevelop.HowevertogiveanexamplewecansummarizeandverygenerallycompareawetsaltedcattlehidefromtheUSeastcoastwithawetsalted hide from a bovine of the same age, let us say 2 years old, from Bangladesh.

UniTeD STaTeS BanGlaDeSH

Breed Western no hump Zebu/Brahman hump

Farm/feedlot Yes Thickhide no Thin hide

Insect/parasiteprotection Yes Fewscars no Many scars

Averageweight 20kgs 15kgsGrain Coarse grain Fine grainSplit Good not so goodFlayingmarksandholes no Machineflay Yes HandflayFibre structure Firm Loose

Brandmarks Likely Unlikelyorfew



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Unfortunately there is no such thing as a clearly defined international standard. An international standardor norm is virtually impossible, because each region of origin has its own characteristics in terms of naturaland manmade defects, and in terms of the characteristics of the hide or skin themselves. Therefore you canexpect a certain standard only within a well defined area. Suppliers within a defined area can determine theirown standard aswell, but that personalised standardmore or less reflects the regions standard, and is usually arefinement.TheUSNationalHideAssociationpublishedin1979abooklet“HidesandSkins”preparedbytheirEducationCommittee.Thisbooklet is anexcellentguide layingdown thegeneralbasic rules for theproductionandpreparationofcattlehidesandcalfskinsintheUnitedStates.Thisguidecanformthebasisforallwetsaltedhides and skins all over the world if properly used with common sense and adapted to regional requirements. Thereisageneralconsensusononebasicrule:anydefectpresentingitselfonabovinehidewithin10cmfromtheouter edge of the hide is not considered a defect. Any defect further than 10 cm from the outer edge counts in full as aflaw

Unidohavedeveloped incollaborationwithFAOaveryusefulguideline for the selectionofEastAfricanhidesand skins. This came under the Africa Regional Leather Programme US/RAF88/100 and US/RAF/98/200. Itdealsmainlywithdryhidesandskinswhicharebecoming lesscommon,butnevertheless theguidelines ifusedas such andwith consideration and adapted to each region, are an excellent selection basis forAfrican origins. Thefollowinglinkleadsyoutotheseselectionstandards:Unido h&S_Standards.pdf

Previously the market was predominantly in Europe, currently the market is shifting to the Indiansubcontinent and in particular on the Far East, with the People’s Republic of China as the major market. Europetendtobuyandtransformhighqualityrawmaterials,othermarketsconcentratingonlowandmediumqualityrawmaterial.

Country/Continent Import1988 Export1988 Import2005 Export2005Latin America 68.600 18.700 91.000 �7.600Africa 11.300 38.�00 3.500 55.�00Kenya 200 1.�00 200 �.500near East 29.800 20.300 �3.300 21.100Far East 55�.000 102.500 1.125.900 150.300P.r. of China 197.600 76.700 805.�00 102.800north America �1.000 765.200 88.�00 7��.700Europe 1.019.600 698.800 811.100 829.100Italy 382.700 19.300 3�7.200 61.�00Spain 59.900 1�.600 39.700 59.800Former USSr 1.300 78.700 6�.100 115.200(sourceFAOWorldStatisticalCompendiumforrawhidesandskins2005)

Fromthetableaboveshowsthequantitiesofrawwetsaltedbovinehidesandskins(calf)thathavebeenimportedandexportedinanumberofcountriesandcontinents.Thedifferencebetween1988and2005bothinimportsandexportsindicatesthemarkettrends.

ThetrendwillbethatmassproducedleathersoflowandaveragequalityinsimplebasiccolourswillbeproducedincountrieslikeChina,India,Pakistan,Egypt.SophisticatedhighqualityleathersspecificallyaimedatthehighfashionmarketwillbeproducedinEuropeandparticularlyinItaly.UpholsteryleatherswillprobablybeproducedmainlyinSouth Africa and South America.

Agadir Countries will emerge as competitors to the tanning industry in the Indian subcontinent, whereasthe Sub Saharan tanning industry will probably continue to suffer from the unavailability of raw materialsas these will continue to be exported to the Far East rather than being processed in the countries of origin.




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WiththecontinueddevelopmentoftheAgadirtanningcapacityparticularlyforfinishedleather,especiallyinEgypt,thetanningsubsectorhasagoodopportunitynotonlytosupplythezonebutalsotobeasignificantworldplayer.

3. aGaDiR GRoUp analYSiS3.1. Jordan

3.1.1. IndustrialSettingandInstitutionalFramework

Jordan isclassifiedby theWorldBankasa“lowermiddle incomecountry.”ThepercapitaGDP,as reportedbytheInternationalMonetaryFund(IMF),was$2,533for2006.AccordingtoJordan’sDepartmentofStatistics,theunemploymentratein2006was13%oftheeconomicallyactivepopulation.

Therateofinflationin2006was6.3%;thecurrencyhasbeenstablewithanexchangeratefixedtotheU.S.dollarsince1995atJD0.708-0.710tothedollar.In2006,JordansignificantlyreduceditsdebttoGDPratioto73.2%ofGdP.

Themanufacturingsector inJordan ismainlyoperatedby theprivatesector.Thecommercialbanksoperating inJordanareprivateandtheforeigncurrency,exchangesandtransportationmarketsarefree.TheJordanianmarketisopenandwiththehighsharefortheprivatesector.Withregardtoforeigninvestment,JordanhasabigcompetitiveadvantageincomparisonwithChinaandEasternEuropeancountriesandevenMoroccoandTunisia.

Jordan created an industrial modernization program (Jordan Upgrading and Modernisation Programme – JUMP) whichenabledfourfootwearmanufacturersandthebiggesttannerytojointhequalifyingprogram.However,onlytwoshoemanufacturersdecidedtoimplementtheirupgradingplans.

New investments in international transportation, customs facilitation, and information technologies (internet, e-government)willcontributetoimprovingcommunicationsbetweenbuyersandsellersandshorteningdeliverytimes.Itisexpectedthatconfidencebetweenimportersandexporterswillincrease.ButtheexiguityoftheportofAqabamayprecludethefulfillmentoftheexpectedquickdeliverytime.

Jordan concluded many trade agreements including one in particular of great importance to the Agadir Agreement. This istheTradeAgreementwiththeEUwhichenablesJordantoexportproductsfreeofcustomdutiestoEurope.TheseproductsmustbeproducedinJordanusingdomesticinputmaterialorEUinputwhichisconsideredasJordanian.The second agreement is theFreeTradeAgreementwith theUnitedStateswhich allows the entry of JordanianexportstotheUSmarketfreeofcustomsdutiesalso.

3.1.2. nature of the Sector

TheleatherproductssectorinJordanwhichismainlyfootwear,hassufferedinrecentyearsdueinthemaintothesurge in imports from China, plus Europe and neighbouring countries. In spite of safeguard measures on imports from Chinabeingintroduced;2JDforsyntheticshoesand5JDforleathershoes,themarketforlocalmanufacturershasimproved only marginally. Customs loopholes need to be addressed to ensure the same rules apply to all and ensure fairnessinthemarket.

ThestudydonebytheEuro–JordanianActionfortheDevelopmentofEnterprise(EJADA),in2005onthefootwearindustryinJordanliststhepercapitaconsumptionofshoesbetween1.40and3.11peryeardependingontheeconomicstatusoftheconsumer.Withacurrentpopulationestimatedat6millionplusthiswouldgiveabaselocalmarketof8.4millionto18.7millionpairsofshoesperannum.Recentevidencesuggeststhemarketsizeisatthehighendofthe scale.



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The manufacture of personal leather goods (PLG) sub sector is a very minor player in the leather products industry. Most of the product offered in retail shops is imported and in many cases made from synthetic materials. There are noreliablestatisticsastothenumberofworkshopsinthesubsector.

There is quite a dynamic shoe components industry in Jordan supplying the conventional and Micro, Small and Medium SizedEnterprises (MSME’s).Thissideof the industryhascontractedwith thegeneraldecline inmanufacturing.Howeversurvivorsaredoingagoodjobandmakeaqualityproduct.

Leathersupplytotheindustrycomesfromtheonlytanneryproducingfinishedleatheronanintermittentbasisbutthisisofalimitedproductrange.Otherleathersaresuppliedbytraderswhosourcefromneighbouringcountries.Somecompaniesimporttheirleatherdirectlyfortheirownneeds.

It shouldbementioned that the leather productsmanufacturing sector in Jordan suffers fromapenal cashflow.Manufacturers can supply products to their customers and in return, as a means of payment, receive post dated cheques for up to 9 months in the future. needless to say there is a high incidence of bounced cheques. The result of thissystemismanufacturersarestrappedforcashandworkingcapitalconsequentlyitinhibitstheirabilitytotakeadvantage of commercial opportunities as they arise.

TheAgadiragreementprovidesforacommonmarketforgoodsandrawmaterialsbetweenthe4countrieswhicharetradedwithoutdutyandtaxes.Previously,importsofleatherintoJordanweresubjectto30%duty.ThisisnowzerofromEgypt,TunisiaandMorocco.(HoweverithastobesaiditisalsozerofromothercountriesparticularlyIndia).Thisisabigadvantagetothelocalindustry.Over60%ofthecostofashoeisleather.Majorcomponentsparticularlysoles,secondaryrawmaterialsandcomponentscanalsobesourceddutyfreefromtheAgadirCountries.

TheAgadirAgreementwillopennewsupplyroutes.Jordanhasrelativelysmallmanufacturingunitswhichcanbeturnedtoadvantage.(MostItalianshoecompaniesemploylessthan12workers).Byco-operation,productscanbedevelopedonalowcostoperatingbaseatcompetitiveprices.Someinputsareneededontechnology,designandfactory management. human resources need to be improved by training operators in more modern manufacturing techniques.Nichemarketingisthekey-makingaproductthatdoesnotcompetedirectlywiththeChinese.Thereisevidencethathandstitchedmoccasins,mens‘andladies‘comfortshoeswithadegreeofhandstitchingareshoesindemand.TheChinesedonotliketomakethesetypesastheconstructiondoesnotlenditselftomassproduction.Components, cut parts, stitched uppers, soles, etc can be sourced intra Agadir and the product manufactured in Jordan.Theycanbesoldonthelocalmarketorexported.

Jordanisalsoatransithubformanyproductsre-exportedtotheregion.IthasgoodcloselinkstotheGulfStates.IthasagreatpotentialtobethehubforAgadirmanufacturerswhocanexporttheirleatherproductstoJordanforre-exporttoGulfmarkets.

3.1.3. TypeandSizeofCompanies

AccordingtotheJordanFootwearandLeatherIndustriesAssociationthereareabout13manufacturingcompaniesinthemechanisedsector.Howevertheyareoperatingatlowcapacities(about30–50%).Thenewlyformedassociationis in the process of conducting a survey on the ground of the manufacturing industry to establish the true size of the sector.

AtpresentitisknownthatthesemimechanisedandMSME‘ssectorscompriseabout40registeredcompaniesand100’s of smaller ones.

The Companies Control directorate of the Ministry of Industry and Trade (MIT)lists 11 companies in the tanning sector.Ofthese2companiesarelistedasprocessingleathertothewetbluestage,5arelistedashidesandskinstraders,2listedasleathergarmentsproducers,1manufacturesdyestuffsandthereis1tannerymanufacturingfinishedleather.




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SomeofthepreviousmechanisedcompaniesidentifiedbyEJADAandJUMPin2005arecontinuingtomanufactureconventionalshoesinasimilarmannerasbefore.Howeveronecompanyhasmovedoutofthecountryandonelargecompany temporally interrupted production.

Certaincompaniesbegantorecognisetheextremelycompetitivenatureofthelocalmarketforconventionalshoesanddiversifiedoutofitintogrowthnichemarkets.ThereisnowacompanyinJordansuccessfullyproducingsafetyfootweartoISOapprovedstandardsandhastheCEmarkoftheEuropeanUnion,andonesuccessfullyproducingmedicalcomfortworkingfootwear.Thesecompaniesaresetonagrowthpathandhaveincreasedtheirannualturnoverinthepastthreeyears.Thesafetycompanyisexportingtoregionalmarketsandthemedicalfootwearcompanyhasplanstodolikewise.Thesearethesuccessstoriesoftheindustryandanexampleforotherstofollow.Theyhavealsobeen accepted by the CBI (Centre for the Promotion of Imports from developing countries, The netherlands) in their 3yearexport(fromJordan)promotiontrainingprogramme.

3.1.4. SectorTypesofProductionandCharacteristics

Jordanstartsatthebeginningoftheproductionvaluechaininthatitcollectsandtradesinrawhidesandskinssomeforthelocalmarketandsomeforexport.Theonlyactivetanneryalsoprocessestheseintosemifinishedproducts(wetblue)whicharethenexported.

Furtherproductionisintheformoffootwearforvarioussegmentsnotablydress/casualshoesformenandwomen,safetyfootwear,militaryandindustrialbootsandspecialisedmedicalshoes.Thereislittleproductioninthewayofhandbags,beltswalletsetcandvirtuallynoleathergarmentmanufacturing.

Productionvaluesfromthedepartmentofstatistics,Jordan,forthefollowingcategoriesaregivenas:

ProductioninJordanbysector2007

Source: Department of Statistics Jordan Trade Statistics: AllthefollowingchartsuseComtradeStatistics

ImportstoJordan2007



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ExportsfromJordan2007

Re-exportsfromJordan2007

ImportsfromEUtoJordan2007

ExportsfromJordantoEU2007

3.1.5. InstitutionsandNumberofWorkers

In2007,theJordanianLeatherandShoessectorcounted137enterprisesemployingatotalnumberofworkersof1800.

3.1.6. production added Value

In2006and2007,theproductionvalueaddedforleatherpreparationandtanningwas19.1%&29.3%respectively,whilefortravelandhandbagsandotherleatherproductsitreached43.3%&43.2%respectively.Ontheotherhand,themanufacturingofshoesvalueaddedwas37.2%&38.1%in2006and2007respectively.




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3.1.7. ForeignDirectInvestment(FDI)

JordanisuniquelyplacedintheregionandamongtheAgadirCountriesbeingthehubforcommunicationswiththeGulf States, the surrounding countries of Iraq, Syria, Lebanon and Palestine.

Itshouldbenoted thatJordanhasalsosetupQualifiedIndustrialZones(QIZ’s)for tradewithUSAparticularlyin the textile industrywhichhavebeenverysuccessful. InvestorscomefromChina,Pakistan, IndiaandTurkey.The investment isaroundUS$987million in theQIZ’s.TheQIZ’shelped toestablishanexportcultureamongentrepreneurs in Jordan.

Jordan therefore has an advantage among the Agadir countries to act as a conduit for products made in the region and exported,assembledinJordanandexportedormanufacturedassubcontractorsandexported.TunisiaandMoroccoandtosomeextentEgyptarenotastrongasJordaninservicingthesemarkets.Thereisalsoaperceivedwillingnessforentrepreneursintheother3countriestoworkinco-operationwithJordantodevelopthesemarketshencecreatingsignificantFDIinthecountry.

Despitethedifficultiesinthelocalleatherproductsmarket,Jordanishavingsomesuccessinattractingforeigndirectinvestment in the Leather Products Sector.

Thelargetannerypreviouslyestablishedinthecountryhascontinuedtooperateafteritsmajorcustomersufferedadeclineinbusiness.Thetannerycontinuestoproducefinishedleather,inalimitedrange,forthelocalmarketforconventionalfootwearplustheindustrialsegment.

Inorder toutilise the facilityand investmentmoreeffectively the tanneryhascontractedwithSpanish Investorsto operate themachinery andproduce semiprocessed leather up to thewet blue stage.This is then exported toEurope.Theinvestorspayamonthlyrenttothecompanyinreturnfortheuseofthemachineryandsupplytheirowntechniciansandrawmaterials.

Thesystemworkswellandcouldbethepreludetofurthersignificantforeigninvestmentinthecompany.

TheothermajorinvestmentinthetanningsectoristheestablishmentofalargetanneryinMa’an.ThisinvestmentwashelpedbybenignGovernmentregulationsfortheallocationoflandandthefuturetaxregime.TheprojectisbeingimplementedbyaninvestorfromLebanonwhopreviouslyoperatedatanneryinBeirut.Oneoftheoldesttanneriesintheregion(establishedin1808),iteventuallybecamesurroundedbythecityduetourbansprawlwhichcreatedproblemswiththeenvironment.Thesecurityfactorwasanotherreasonfordecidingtorelocatethebusiness.

Thetanneryisbeingbuiltwithaninitialcapacityof6millionsquarefeetofcowhidesand1.5millionsquarefeetofgoatandsheepskins.Theproductionwillstartwithsemiprocessed,progresstocrustandthentofinished.Thefinishedleatherwillbeaimedatthequalityendratherthancheapermaterialsandwillhaveacapacityof21,000squarefeetperday.MarketsarepredominantlyEurope,inparticularItaly,wherethecompanyhasgoodcontactsfromitspreviousoperations.Thesourcingofrawhidesandskinsisaworldwidebusinessandthecompanyisalsowellversedin thesupplychainmanagementof thiscriticalareaof the tanningindustry.Futureplansarefor theestablishmentofashoefactoryalsoaimedatexport.Thiswouldcreateaverticallyintegratedcompanywhichwillhaveacompetitiveadvantageontheworldmarkets,particularlytoEurope.Intheinitialstartupphasethecompanywill investUS$7millionandemploy100people.It isestimatedthatthetannerywillbeinoperationbythe4th quarter of this year.

Jordan therefore has successfully developed a good reputation in the Agadir countries as a place to operate from. This issignificant.Businesspeopleneedthisconfidencefactortoinducethemtoinvesttheirtime,moneyandexpertise.From this base, a strategy can be devised to encourage more FdI in the leather products sector.



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3.1.8. Cost of production

ThebasiccostsofproductionforshoemanufacturingoperationsinJordanareshowninthefollowingtable.ThesefigureswillalsobetypicalforPLGmanufacture.

UnitU.S.$Year2007

Labour rates per month(factory operators)

210 to 520(unskilledtoskilled)

Labour rates per hour(factory operators) 2.0 to 2.89

Electricity per KWh 0.06natural Gas per m3 0.�1Construction cost per m2 250

Cost of land per m2 20 – 70 (from South to Amman)Transportationperkm $500per20’container&$300pertruck(fromAqabatoAmman)

3.1.9. FieldVisits–CompanyProfiles

Al Manara

● ManufacturerofdoubledensityPUsoleleatheruppersafetyboots.ISOandSATRAapprovedCEmark.● Production70,000pairsperyear● Capacity500pairsperday● Employs35people● Entered intoCentre for Promoting Imports toNetherland (CBI) programme for export opportunities to

Europe● Imports“zuggrain”buffaloleatherfromIndia● StylinganddesignworkdoneinItaly● Usesrobotsinproduction● ExportstoGulfStatesandsupplieslocalmarket.

Target

● Originallysupplierofcomponentstolocalmarket● Nowmanufacturesforanichemarket–medicalfootwear–todoctors,nurses,pharmaciesetc.● Usesandisdevelopingbrandname“Artteko”● Productionfrom120to160pairsperday● ImportsPUcoatedleather.● EnrolledinCBIprogramme● DevelopingScandinavianmarketsforexports

Arab Leather Manufacturing Co

● Bespokemadetoordermens'dressshoesabout10pairspermonth● Dresscasualshoes800pairspermonth● Employees13● Wasactiveinthepastwithmedicalfootwearparticularlydiabeticshoes.Nowsignificantlydeclined.● InterestedincomponentpurchasefromAgadircountriestoassembleinJordanforonwardsales.




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Al Mithaq

● Componentmanufacturerofbuiltupsolesandinsoles.● Supplieslocalmarket● Capacity2,400solesin8hours,2,400insolesin8hours● InterestedinimportingresinrubbersheetsfromEgypt.PresentlyimportingfromEurope.

Jordan Tanning Company

● Largecapacityformanufactureofindustrial,militaryanduniformfootwear.● Isintheprocessofreformingoperations● FullymechanisedfactorywithPUinjectionmouldingandvulcanisingmachinery● Atpresent22workers(were150).● Targeting300pairsuniformshoesand800militarybootspairsperday● RentingouttanneryoperationstoSpanishinvestors● WillimportuppersfromIndiaandEgypt

Leather Industries Association

● Welcomespossibilitiesofco-operationwithAgadircountries● Need“gettoknowyou”meetingswithothercountries’industrialists● Assistancewithtradefairs● Buyersellermeetings● Studyontrainingneeds● AssociationstolobbyGovernments

JUMP

● Conducteddiagnosticstudiesandupgradingplansfor4footwearmanufacturingcompaniesandthelargesttannery.Only2footwearcompaniesstartedimplementingtheirupgradingplans

● Fundsmarketingandpromotionactivitieslikeparticipationinfairsandconductingmarketresearch● Fundedtheestablishmentofexportconsortiumsinothersectors.

Tannery Albert

● NewtannerybeingbuiltinMa'an● Investment7millionUS$● Target6millionsquarefeethidesand1.5millionsquarefeetgoatandsheepskinsperyear.● Shouldbeginoperation4th quarter 2009

Thecompletelistofallregisteredcompaniescanbefoundintheweb–siteoftheCompaniesControlDepartmentaccordingtothefollowinglink:www.ccd.gov.jo

Then choose Companies Data Base, then under Company Inquiry select byAims; where you put tanning, ormanufactureoffootwearortravelbags...etc.

However,theinformationinthissiteisnotupdatedsinceitcontainsonlythedataofcompaniesattheregistrydatewhichusuallychangewhenthecompanystartsworking.

Another more reliable source would be the Leather and ShoesManufacturingAssociation in Jordan where 46companies are registered.The contact person isMr.TalalGhazawi; the head of the association,Mobile: 00962795507955



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3.1.10. Strengths and Weaknesses of the Sector

Thisanalysistakesaccountofthemainfactorsthatimpactontheindustry.Ithighlightsthoseareasthatneedtobeaddressed(positiveandnegative)fortheindustrytomoveforwardwiththeaimofintegrationtotakeadvantageofthe opportunities offered by the Agadir Agreement.

Sometimesitisbelievedbyentrepreneursthatthecurrentcapabilitiesoftheindustryareinadequatewhenfacingthefutureduetoglobalforcesoverwhichtheyhavenocontrol.Thisreflectsacertainlackofexperienceandconfidencewhen dealingwith expansion plans and the internationalmarket.TheSWOT framework highlights the industrystrengths,whichareoftentakenforgranted,whichinrealityareitscompetitiveadvantage.Italsohelpstoidentifythemajorweaknesseswhichcanandshouldbeeliminated Thestrengths(andweaknesses)analysiswasfocusedonthemainareasofactivityinthesectornamelymarketing,manufacturing,humanresourcesandfinance.

Byanalyzingtheseelementsaroadmapcanbedrawnupwhichenablestheindustrytotakeactiontoexploitthestrengthsithasandtocorrecttheweaknesses.Thiswillleadtoaclearerevaluationoftheresourcesthatareavailable(orwhichmustbeacquired)toensurethatactionscanbecarriedouttoenabletheindustrytotakeadvantageoftheAgadir opportunities.

Thereisnodoubtthattheindustryhasanumberofstrengthsavailabletoitinthemarketingandmanufacturingareasoffsetbysomeweaknesseswhichcanberelativelyeasilycorrected.Thehumanresourcesandfinancialareascomeoutasnotbeingquiteasstrong.Lackofgoodfactoryfloorsupervisionandamixedpictureofexperienceandentrepreneurialflairbymanagersshowsignsofweakness.Thefinancialcapitalbaseoftheindustryhasbeenerodedovertimebythedifficultiesinoperatinginthelocalmarket.

However thereareopportunitiesavailable to the industryespecially inco-operationwithotherenterprises in theAgadircountrieswhoarelookingbeyondEuropefornewmarkets.

Asit iswellknown,theindustryreliesongoodqualityleathertobesuccessful.ThedevelopmentofthetanningindustryinJordanwillhelpconsiderablyinthisendeavor.




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DetailsoftheSWOTanalysisthereforeareasfollows:

SWOTANALYSISJORDAN

STRenGTHS

● PartytoAgadiragreement● FreeTradeAgreement(FTA)withEurope● ProximitytoEurope● Abletocommunicateeffectively● Rawmaterialsimporteddutyfree● Excessproductioncapacity● Smallflexiblefactories● Qualitylevelsachieved● Reasonableproductivity● Relativelylowwages● CurrencypeggedtoUS$● Accesstoworkingcapital● TradeAssociation● Availablelabour

oppoRTUniTieS

● Upgradetechnology● HubforGulfRegion● Nichemarketing● TradelinkswithAgadirpartners● Developfinishedleather● Jordanasaresource● Developtransportlinks● DevelopprogrammeforFDI/JV● Trainingschemeindustrywide

WeaKneSSeS

■ Knowledgeofoverseasmarkets■ Productdevelopment■ Competitivepricing■ Alternativeconstructions■ Productionmanagement■ Costcontrol■ Shopfloorsupervision■ Lackofqualifiedtechnicians■ Labourtraining■ Managementvision■ Capitalneeds■ Cashflow

THReaTS

■ Unwillingnesstochange■ Established norms in global markets not

accepted■ Finishedleather■ Salestechniques■ Lackofcapital■ Negativeexchangerates■ ArtificialbarrierstoAgadirtrade

3.2. TUniSia


Since1987,Tunisiawasandstillinvolvedintradeliberalizationthroughthedismantlingofnon-tariffbarriertotrade,investment licenses and price control and the freeing of the economy. Tunisia adheres to GATT and founder member oftheWTO.TunisiaisnowfullyimplementingtheFreeTradeAgreementwiththeEUaccordingtowhichEuropeanmanufacturedproductsare importedfreeofcustomsdutiesandTunisianproductsareexportedtoEuropefreeofduties.TheseproductsmustbeproducedinTunisiausingdomesticinputmaterialsorEUinputwhichisconsideredasTunisian.TheaboveagreementshavebeenthebackboneoftheTunisianExportandForeignDevelopmentPoliciesaswell.TunisiaalsosignedseveralbilateralagreementswithTurkey,Egypt,Morocco,Jordan,IraqandLibya.Tunisiaalsosigned the Arab Free Trade Agreement.


�0 LEAThEr And ShoES SECTor

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SincethefirstimplementationoftheTunisianAdjustmentProgram(TAP)theGovernmenttookseriousstepstowardthe development of a stable and, definitely supportive environment for Small andMedium – Sized Enterprises(SME’s) development. In 2007, Tunisia had 121 industrial zones distributed all over the country covering a surface of 3,807 hectares and offering several facilities.The 11th economic development plan (2007-2011) aimed at the achievement of 31 industrial zones covering 650 hectares to reach a total area of �,500 hectares in 2011.Thegovernmentcreatedequallyseventechnopolesandsevencyberparksinanumberofregions,eachdevotedtoagiven area of specialization.Macroeconomicstability,theopennessoftheeconomy,thekeyroleplayedbytheprivatesectorandmarketforces(degree of competition), and the quality of the infrastructure are the corner stones for a suitable strategy of development of the Leather and Shoes Sector (LSS) in Tunisia.The most important comparative advantage of the Tunisian LSS is the supportive environment and the high quality ofthesupportinginstitutionswhichenablethesectortomovefromthemanufacturingofmassconsumerproductstohigh quality and added value ones.

Thesectorenjoysprofessionalsupportfrom:■ TheTechnicalCenterforLeatherandShoes“CNCC”,whichoffersservicestokeepupwithtechnological

advances and studies, technical assistance, analysis and testing, styles, models and fashion design, training and international cooperation.

■ TheNationalLeatherandShoesFederation“UTECA”.■ TheVocationalTrainingandAppliedTechniquesCenters inLeatherandShoesSector (CSFTAC)which

provide practical training for different specialties in the sector including qualified technicians in theindustry, design,manufacturing techniques, shopfloormanagement, stitching and sewing, andmachinemaintenance.

■ TheCenterforExportPromotion(CEPEX)andForeignMarketsPenetrationProgramme(FAMEX)deliveringassistanceinexportpromotionactivities,marketresearch,andparticipationintradefairsandmissions.UntilMarch2009,twentytwoLeatherandShoescompaniesbenefitedfromFAMEXII.

■ TheForeign InvestmentPromotionAgency (FIPA)developingFDIanddeliveringassistance for foreigninvestors

■ TheIndustryPromotionAgency(IPA)

TheCNCC is the focal point for the implementation of theNationalUpgrading Programmewhich is coveringtechnical assistance, policy support and institutional building:

■ Developingstrategiesandupgradingplansandprovidingactionplanstoboostcompanies’competitiveness■ Expertiseandanalysisofdefectsandresearchprojectsonleatherproductsandprocesses.■ Assistancefortheimplementationandtheorganizationofadesignofficewithinthecompanies.■ Trendsanalysisandassistanceinfashioncollectiondesignandtrends■ Organisationoftrainingcoursesforspecificpurposeseitheroutdoorsorindoorsforcompanies,including

assisting them to set up and carry out training programs.■ Partnershipwithotherforeigntechnicalcentersandotherinternationalorganizations(EU,UNIDOetc.).

YounggraduatesofTunisianengineeringschoolsand trainingcentersareavailable tomeet thegrowingneedofskilledlabortoboostinnovationanddevelopnewproductsandtechnologies.

AccordingtotheGlobalCompetitivenessReport2008-2009,Tunisiawasranked10thontheworldintheavailabilityofscientistsandengineersquality,whileJordan,Italy,Egypt,TurkeyandMoroccocame39th, �5th, �7th, 59th, and 68th respectively.According to theNationalAgency forEmployment and IndependentWork,Tunisia’s vocational training systemincluded135publiccentersthroughoutthecountry,whichprovidedtrainingformorethan100,000traineesinmorethan 336 specialties covering the full range of economic sectors.

�1LEAThEr And ShoES SECTor



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Tunisia has acquired an advanced position (quantitatively and qualitatively) in the area of staff training. In Tunisia, fulltrainingsupport(freeofcharge)isprovidedtoenterpriseswithlessthan100workers.Inadditiontoasubsidyof50%ofthetrainingcostsifisrelatedtotheintroductionofnewtechnology,andthetrainingsystemissupportedby the private sector through co-ordination and partnership. The private sector pays contributions of 1% of the total salariesofitsemployeesandisofferingthepossibilitytoreimbursecostsoftrainingthroughfiscaldeductions.


The leather products sector in Tunisia has enormous potential. of the four Agadir countries it has by far the biggest exportingtotheEUindustry.Thesectorhasawelldevelopedfootwearindustry.Themanufacturingofleatherproductsiswell establishedwith companies ranging from small to intermediate technology factories to fullymechanisedoperations.

Leather products range from personal leather goods, bags and briefcases, leather garments and footwear. Themanufacture of shoes is the largest of the sub sectors by some accounts representing more than 70% of the industry total companies.In 1972, the industry benefited from the Government decision which allowed the foreign direct investments.FootwearfactoriesinparticularworkedinmakinguppersassubcontractorstoFrenchandotherforeigncompanies.Allrawmaterialsandinputswereimportedatthebeginning.In1995,Industryqualifyingprogrammesstartedandthedevelopment of the industry reached a stage to manufacture a complete pair of shoes (starting from year 2000).

Thelargestsubsectorisfootwearproduction.Thisissplitbetweenmechanisedandsemimechanisedbusinesses.Thesectoriscomposedoftotallyforeigninvestments/companies,joint–venturecompaniesandTunisiancompanies.

The mechanised factories have capacities from 800 to 3000 pairs per day but many are operating at anything from �0 – 60% of this.

Mostoftheinputsrequiredtomakeapairofshoesofanyofthemajortypes,dress,casual,ladieshighheels,sandalsandslippersareavailablefromlocalmarket.However,betterqualitymechanisedfactoriesimporttheirownbasicrawmaterials.SometimestheirsubcontractorsaskforoutsourcingtheirmaterialsfromEurope.ThepersonalleathergoodsandgarmentssubsectorhassomeexcellentcompaniesproducingaqualityproductmuchofitforexporttoEurope.The nature of the sector therefore is one of transition from being 100% dependent on EU partners and directed towardsexportintoalessdegreeofdependencyandexportingtoregionalcountriesaswell,supportedbyanenablingindustrial environment.


The Leather and Shoes Industries sector comprises 309 enterprises that employ 10 or more persons. Among these enterprises,212areproducingentirelyforexport.

Breakdownofenterpriseswith10ormoreemployeesbyactivityandregimeActivity TE* oTE* Totaldressing and tanning of leather - 11 11Shoes and shoe uppers 163 60 223Luggage and leather goods 36 1� 50Leather clothing 13 12 25Total 212 97 309TE: Totally exporting; OTE: Other than totally exporting Source: Industry Promotion Agency -2008

note: Some enterprises are engaged in several activities.



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Thecontributionofthesectorinthenumberofcompaniesofthemanufacturingsectorisasfollowing:

2007 *TE *oTE TotalManufacturing sectors 2670 3032 5702Leather & Shoes sector 212 97 309Share % 7.9 % 3.2 % 5.�

Source: Industry Promotion Agency – 2008


TheproductionoftheLeatherandShoesIndustriessectorwasvaluedat905millionUS$in2007,versus779millionUS$in2003.

Theproductiongrowthduringtheperiodisasfollows:

Unit:millionUS$ 2003 200� 2005 2006 2007

production 779 779 783 815 905Figures: at current price. Source: MDICThemoreenlightenedfootwearmanufacturingcompaniestendtofocusmoreonthemarket,exportorlocal,ratherthanproduction.Oneproducerhassuccessfullydevelopedanichemarketforinnovativesafetyfootwearandisverysuccessfulontheexportmarket.Thecompanyexports100%ofitsproductiontoFrance.

Anothershoemanufacturerofmen’sandladiesdressandcasualshoeshassuccessfullymanagedtoproducehisownstylesandheusesrinktechnologyalso.Currently,hehashisownstoresinTunisia(12)andKuwait(3).HeisalsowillingtoexporttoAgadircountriesandwillingtodiscussdifferentscenariosofcooperationwithJordaninspecificasbeingveryclosetotheIraqimarket.

Anotherproducerofhighqualitypersonalleathergoods;handbags,belts,andwallets,issuccessfulinexporting50%of his production to France, Italy, Belgium, netherlands and Germany. he can produce 500 bags and 1000 belts per week.Heisinterestedinhavingleatherandaccessories(Buckles)fromEgypt.HeisalsointerestedtosellhisbrandsexclusivelyinArabCountries,whichpresentsagoodopportunityforhimthroughAgadirAgreement.

Anothershoemanufacturerofladies’shoesbasedoncomfortrelaxationproducts.HeexportstoFranceandproducesingoodqualityandvolume.HeiswillingtoexporttoJordanandtheregion.

Inthecomponentsindustry,agoodexampleisasole,insoleandheelsmanufacturerwhoproducesinhighqualityandvolume(1300–1500pairsperday).HeexportsmainlytohissubcontractorsinItalyandFrance.However,heiscurrentlyinnegotiationswiththeAlgerianArmytoproduce30,000pairsofsoles.HeimportstheleatherforsolesfromItalywhenthequalityisofconcern,andimportsfromMexicoforcheaperprices.Hispreferredminimumorderis 2,000 – 2,500 pairs.

ThereisamoderntanneryoutsideTuniswithacapacitytoproduce1millionsquarefeetpermonthofcowhidesand1millionsquarefeetpermonthofsheepandgoats.Itexports80%ofitsproductiontotheEUmarket(France,Italy,andSpain)andTurkey,HongKong,China.However,itimportsitshidesandskinsfromUSA,Spain,UK,AlgeriaandsometimeswetbluefromEgypt.ItcandelivertoanyAgadirCountrysmallordersizeswithin3-4weeks.




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Tunisiatradeindicators-importsofhidesandskinsandleatherin2007

All Sources of data are ITC calculations based on CoMTrAdE statistics.● ItalyandFranceexportsmostlyfinishedleatherfortheirsubcontractingoperations● SpainandGermanyaresimilarbutsmaller● AlthoughnotonthechartitshouldbenotedthatEgyptexportswetblueandcrust(US$997,000)● MoroccoalsoexportstoTunisia(US$1,374,000)

Tunisiatradeindicators-exportsofhidesandskinsandleatherin2007

● ItalyandTurkeyarethelargestimportersofTunisianleather● Tunisiasellstoitscompetitors;ChinaandIndia● Egyptimportsfinishedleather● Alsonotonchart,Jordanimportsverysmallamountoffinishedleather(US$97,000)

ExportsExportsfromtheLeatherandShoesIndustriessectorwerevaluedat616millionUS$in2007,versus416millionUS$in2002.Averageannualgrowthisaround8%. Theexportsfromtotallyexportingenterprisesrepresent90%ofsectorexports.85%ofexportsarefromtheshoesandshoeuppersproducts,followedbytheleathergoodsandclothingsub-sectors(12%) and leather and hides (3 %).Thecontributionofthesectortotheexportationofmanufacturingsectorisasfollows:

In million USd 2007Manufacturing sectors 11,211Leather and Shoes 616Contribution (share) 5.5 %

Source: National Institute of Statistics (INS)


�� LEAThEr And ShoES SECTor

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3.2.5. InstitutionsandNumberofWorkersTheLeatherandShoesIndustriesenterpriseswith10ormoreemployeesaccountfor30,214sectorjobs,ofwhich26,763personsareemployedbytotallyexportingenterprises. The contribution of the sector in the employment of total active population and that of the manufacturing sector is asfollows:

Employment 2007Active population 3 085 100Manufacturing sector �77 825Leather and Shoes 30 21�Share of LS in active population 1 %Share of LS in manufacturing sector 6 %

Source: Industry Promotion Agency - June 20083.2.6. production added Value

Averageaddedvalue for the sector is368millionUS$ in2007.Thecontribution of added value in that of the manufacturing sector is of 11 % in 2007

ThecontributionofthesectorinGrossDomesticProductionisasfollows:

In Million USd 2007GdP 19529Leather and Shoes 368Contribution (share) 2 %

3.2.7. ForeignDirectInvestment(FDI)InvestmentintheLeatherandShoesIndustriessectorwasvaluedat21.3millionUS$in2007,versus19.1millionUS$in2002.

Theinvestmentgrowthduringtheperiod2002-2007isasfollows:

$Unit:million US 2002 2003 200� 2005 2006 2007

Investment 19.1 19.1 17.7 18.� 18.� 21.3Source: MDICThesectorcounts154companieswithforeignparticipationofwhich109are100%foreignowned.Thebreakdownofthenumberofcompaniespernationalityisasfollows:

Source: Industry Promotion Agency - June 2008

3.2.8. Cost of productionThebasiccostsofproductionforshoemanufacturingoperationsinTunisiaareshowninthefollowingtable.ThesefigureswillalsobetypicalforPLGmanufacture.




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UnitU.S.$Year2007Labour rates per month (factory operators) 250Labour rates per hour (factory operators) 1.39Electricity per KWh 0.1diesel – litre 0.56heavy Fuel oil - tonne 215Water – cubic meter 0.1 – 0.6 depending on consumption volumeConstruction cost per m2 150Cost of land per m2 3–6 (inside Industrial Estates)15–�8 outside.Transportationperkm $525per20’containertonorthernEUports


SoProTIC

● Manufacturerofladies'shoesbasedoncomfortrelaxationproducts● Productioncapacity2,000to2,500pairsperday● ProductionEmploys250people● ExportstoFrance● WillingtoexporttoJordanandtheregion

SoPIC

● Manufacturerofinnovativesafetyfootwear● Productioncapacity1000–2500pairsperday● Employs220people+80subcontractorswhenneeded● Exports100%ofitsproductiontoFrance

Tanneries Megisseries du Maghreb

● ModerntannerylocatedinGrombaliaoutsideTunis● Capacity:1millionsquarefeetpermonthofcowhidesand1millionsquarefeetpermonthofsheepand

goats● Exports80%ofitsproductiontomainlytheEUmarket(France,Italy,andSpain)andTurkey,HongKong,

and China● ImportsitshidesandskinsfromUSA,Spain,UK,AlgeriaandsometimeswetbluefromEgypt● CandelivertoanyAgadirCountrysmallordersizeswithin3-4weeks.

SIMAP

● Manufacturerofhighqualitypersonalleathergoods;handbags,belts,andwallets● Exports50%ofhisproductiontoFrance,Italy,Belgium,NetherlandsandGermany● Capacity:canproduce500bagsand1000beltsperweek● Interestedinhavingleatherandaccessories(Buckles)fromEgypt● InterestedtosellhisbrandsexclusivelyinArabCountries,whichpresentsagoodopportunityforhimthrough

Agadir Agreement

Societe Chaussures - Jancel

● ManufacturerofladiesandChildrenshoes● Startedproducingforthelocalmarket.Currentlyexports80%ofitsproduction



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● Capacity500pairsperday● Employs120people;100inproduction● Minimumorderthatheprefersis500pairs.However,canacceptapilotorderof300pairs● Deliverytime:4-6weeks

STE CoMMErCIALE Ind d’ACCESSoIrE dE ChAUSSUrES (SCIAC)

● Manufactureoffootwearparts(soles,heels,insolesetc.).● Producesinhighqualityandvolume;1300–1500pairsperday● Exports70%ofproduction;mainlytosubcontractorsinItalyandFrance● Atpresent45employees(35inproduction).● ImportstheleatherforsolesfromItalywhenthequalityisofconcern,andimportsfromMexicoforcheaper

prices ● StartednegotiationswiththeAlgerianArmytoproduce30,000pairsofsoles● Preferredminimumorderis2,000–2,500pairs● AshoesmanufacturerfromEgyptcontactedhimforreplacinghisTurkishsourceofsolesandinsoles.

STE SEVIL

Anothershoemanufacturerofmen’sandladiesdressandcasualshoeshassuccessfullymanagedtoproducehisownstylesandheusesrinktechnologyalso.Currently,hehashisownstoresinTunisia(12)andKuwait(3).HeisalsowillingtoexporttoAgadircountriesandwillingtodiscussdifferentscenariosofcooperationwithJordaninspecificasbeingveryclosetotheIraqimarket.

● Manufactureofmen'sandladiesdressandcasualshoes● Usesrinktechnology● Developedasoftwarethatcontrolsthecompletesupplychain(rawmaterialsandinputs,manufacturing,and

warehouse)● Capacity:1500pairsperday.Currentlyproduces700pairsperday● Employs150;130inproduction● Successfullymanagedtoproducehisownstyles● HavehisownstoresinTunisia(12)andKuwait(3)● WillingtoexporttoAgadircountriesandwillingtodiscussdifferentscenariosofcooperationwithJordanin

specificasbeingveryclosetotheIraqimarket

TheNationalLeatherandShoesFederation“UTECA”● Welcomespossibilitiesofco-operationwithAgadircountries● Need“gettoknowyou”meetingswithothercountries’industrialists● Assistancewithtradefairs● Buyersellermeetings● Providedhistoricalbackgroundonthedevelopmentofthesector● Discussedthemethodologyandtheirexpectationsofthestudy● Discussedthescheduleoffieldvisits

Thecompletelistofallsectorcompaniescanbefoundintheweb–siteoftheIndustryPromotionAgencyaccordingtothefollowinglink:www.tunisindustry.net.tn/en/dbi.asp

3.2.10. SWoT analysisThisanalysistakesaccountofthemainfactorsthatimpactontheindustry.Ithighlightsthoseareasthatneedtobeaddressed(positiveandnegative)fortheindustrytomoveforwardwiththeaimofintegrationtotakeadvantageofthe opportunities offered by the Agadir Agreement.The strengths (andweaknesses) analysis focuses on themain areas of activity in the sector namelymarketing,manufacturing,humanresourcesandfinance.Byanalyzingtheseelementsaroadmapcanbedrawnupwhichenablestheindustrytotakeactiontoexploitthe




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strengthsithasandtocorrecttheweaknesses.Thiswillleadtoaclearerevaluationoftheresourcesthatareavailable(orwhichmustbeacquired)toensurethatactionscanbecarriedouttoenabletheindustrytotakeadvantageoftheAgadir opportunities.Thereisnodoubtthattheindustryhaslargenumberofstrengthsavailabletoitinthemarketingandmanufacturingareasoffsetbysomeweaknesseswhichcanberelativelyeasilycorrected.Thehumanresourcesandfinancialareascomeoutasnotbeingquiteasstrong.Lackofgoodfactoryfloorsupervisionandamixedpictureofexperienceandentrepreneurialflairbymanagersshowsignsofweakness.

However thereareopportunitiesavailable to the industryespecially inco-operationwithotherenterprises in theAgadircountrieswhoarelookingbeyondEuropefornewmarkets.

DetailsoftheSWOTanalysisthereforeareasfollows:

SWoT analYSiS TUniSia

STRenGTHS

● PartytoAgadiragreement● FreeTradeAgreement(FTA)withEurope● ProximitytoEurope● Knowledgeofoverseasmarkets● ExpresscargoservicetoEurope● Abletocommunicateeffectively● Rawmaterialsimporteddutyfree● Excessproductioncapacity● Smallflexiblefactories● Qualitylevelsachieved● Reasonableproductivity● Relativelylowwages● Accesstoworkingcapital● TradeAssociations● Availablelabour

oppoRTUniTieS

● Upgradetechnology● Nichemarketing● TradelinkswithAgadirpartners● Developfinishedleather● Tunisiaasaresource● Developtransportlinks

WeaKneSSeS

● Productdevelopment● Competitivepricing● Alternativeconstructions● Productionmanagement● Costcontrol● Shopfloorsupervision● Managementvision● Capitalneeds● Cashflow

THReaTS

● Unwillingnesstochange● Establishednormsinglobalmarketsnot

accepted● Finishedleather● Salestechniques● Lackofcapital● Negativeexchangerates● ArtificialbarrierstoAgadirtrade

3.3. Morocco


Moroccoispreparingtobecomeamajorplayerintheworldleathertradethroughaspecificstrategyofrepositioningandre-launching,hingedondevelopingdiversified,competitive,qualitygoods.



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In fact, thecountry’sgreat tradition in theartof leatherworkand thedeclared intentionof re-launchingwhat isconsidered by the Moroccan Government as a strategic sector, are the strong drivers behind a series of development projectsaimingtogetthemaximumyieldofthissector.

Theemergencyplanof theMoroccaneconomylaunchedin2006tookintoconsiderationthestrongpotentialfordevelopmentoftheleatherandshoessectorlinkedtoexportsandmadeittoppriority,andworthyoflargeinvestmentsaimed at updating of the production processes, personnel training, and promotion on internationalmarkets.Themain actors are the Moroccan Federation of Leather Industries (FEdIC) and the Centre for Moroccan Promotion of Exports(CMPE)whichareimplementingaseriesofinitiativesaimedatimprovingnotonlytheproductioncapacitiesofmanufacturers,butalsohelpdevelopcreativity,upgradequality,response,flexibilityandservice.Theobjectiveistorespondpromptlytothenewdemandsofmarketsandconsumers.

OneoftheprimeobjectivesinthestrategyoftheCMPEandFEDICtopromotemadeinMoroccoinInternationalmarketsisthedevelopmentofcreativeproductswithstrongaddedvalue.

Morocco’sleatherandshoessectorisalsobenefitingfromsubstantialgovernmentsupportondifferentlevelsincludingmodernization, training, and development through providing an adequate investment environment, encouraging the private sector to enrol in the leather and shoes manufacturing and production qualifying process in order to reach an integratedandsustainabledevelopment.Besidesthepresenceofaprofessionalandefficientorganizationsaswellasexecutiveadministrationsthatprovideefficientsupport.

WithsupportoftheMinistryofEducationandtheAgencyoftheProfessionalTrainingandWorkPromotion(OFPPT),theFEDICimplementedawell-organisedactionplanaimedatsatisfyingtheneedsofthecompaniesworkinginthesectorintermsoflabourskills.Theplanincludes,amongotherthings,thereactivationoftheexistingOFPPTcentresand the Institute Superieur de Tannerie et de Transformation du Cuir (ISTTC) in Casablanca, the creation of a training instituteinFAS,thedevelopmentofanexistingcentreinTangier,thetrainingof24teamsofexpertsformanagingthe production in ESITh, the organisation of apprenticeship courses for training production technicians, and opening of a training centre for stylists.

TheISTTChastwobranchesinCasablanca;eachhaving520students/trainees.

Accordingtothenewindustrialpolicy,themajorreformlinesfocusonthethreefollowingareas:

● Change in the overall environment: this included improving the legislation, creating commercial courts,setting a law that governs andorganizes entrepreneurships and companies, facilitates administrative andfinancialprocedures,andcreatesemploymentrecords.

● Industrydevelopmentsystem:upgradingindustrialzones,andcreatingregionalcentresforinvestment.● Upgradingleatherandshoeproduction:encouragingtheuseofcomputersandinnovativetechnologies.

Morocco’s membership in the World Trade organization (WTo) contributed, besides liberalizing the economy in providing an adequate environment to attract foreign investments.

For European investors, Morocco presents many advantages: geographical proximity, good manufacturing andleatherprocessingtradition,skilledlabourandpoliticalstability.Moroccoalsohassimplifiedcommercialandcustomprocedures and freebilateral andmultilateral trade agreementswithEuropeanUnion,UnitedStatesofAmerica,Turkey,Tunisia,EgyptandJordanplusAgadirwhichallowsoriginaccumulationwiththeotherthreecountries.


The leatherproductssector inMoroccohasenormouspotentialwhichhasneverbeen fully realised.Of the fourAgadircountriesithasbyfartheoldesttraditionalindustry.Thesectorhasawelldevelopedhidesandskinscollectionservice,therearemanytanneriesproducingleatheruptowetblue,crustandfinished.Themanufacturingofleatherproducts iswellestablishedwithcompanies ranging fromsimpleworkshops (artisanenterprises) to intermediatetechnology factories to fully mechanised operations.




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Theleatherandshoessectoriscomprisedof358enterprisesproducingdifferentkindsofleatherproductsrangingfrompersonalleathergoods,bagsandbriefcases,leathergarmentsandfootwear.Themanufactureofshoesislargestof the sub sectors.

Subcontracting isstillpredominant inMoroccan industry.However,market researchdonebyFEDICreveals theneedtomovefromsubcontractingtoco-contractinginordertobettermeetthedemandsofafullyevolvingmarket,andhenceMoroccanproducersneedtoadoptthemselvestothenewprovisioningstrategyoftheretailoutletsanddistributorswhoareincreasinglyfavoursupplierscapableofofferingglobalsolutionsthatrangefromthepurchasingof rawmaterials to thedefinitionof the style, and thefine-tuningof theproduct techniques.On theotherhand,there are already someMoroccanproducerswhohavecreated theirownbrands for selling theirproducts in theinternationalmarket.

Thelargestsubsectorisfootwearproduction.Thisissplitbetweenmechanisedandsemiorhandoperatedbusinesses.At present,Morocco exports about 20million pairs of shoes yearly,most of these aremade under contract forinternational brands. In2007,Moroccanfootwearexportsreachedavalueof276millionUS$,showingagrowthrateof20%overthepreviousyear.ThemajorityoforderscamefromFrance,thenSpain,ItalyandGermany.

over the last ten years, local manufacturers have considerably improved and upgraded the quality of their products through training programmes and technical assistance by the Moroccan Centre for Leather Technology (CMTC), andbytechnologicalinvestments.TheseeffortsweredonetodistancethemselvesfromAsiancompetitors.Thesamecanbesaidoftheothertwosubsectors;thoseofleathergarmentsandpersonalleathergoodsthattogetherincludeoverahundredenterpriseswhichexporttheirhighqualityproductsalltotheEUmarket.Inthisareaalso,therearenumerous international brands that have opened production units or moved their manufacture to Morocco, such as PierreCardinandLouisVuitton.In2007,almost400,000articlesbetweenbagsandaccessorieswereexportedforavaluearound32millionUS$.ThebiggestbuyerswereFrance,SpainandSwitzerland.Exportsofleathergarmentsamountedto26millionUS$andwentmainlytoSpain,FranceandtheNetherlands.

Anotherstrategicsubsector,focusofimportantmodernisationprojects,isthetanningindustrywhichcountsto58enterpriseswhoseexportsofleatherreachedavalueof26millionUS$in2007,mostofwhichweretothePortugal,Italy and France.Withanobjectivetointegratetheleatherandshoessector,thefocusnowisoncreatingindustrialparksdedicatedto leather inCasablanca(decidedon thesite),Fez(commencement)andMarrakesh(feasibilitystudy)where themajorityoftannerieswillbegroupedinmodernandfunctionalsites.


Themechanisedfootwearfactorieshavecapacitiesfrom800to3000pairsperdaybutmanyareoperatingatanythingfrom 30 – 60% of this.

Mostoftheinputsrequiredtomakeapairofshoesofanyofthemajortypes,dress,casual,ladieshighheels,sandalsandslippersareavailablefromlocalmarket.However,betterqualitymechanisedfactoriesimporttheirownbasicrawmaterials.SometimestheirsubcontractorsaskforoutsourcingtheirmaterialsfromEurope.

ThepersonalleathergoodsandgarmentssubsectorhassomeexcellentcompaniesproducingaqualityproductmuchofitforexporttoEurope.Someoftheleatherusedissourcedlocallywhichisofexcellentquality.ThestructureofthePLGsubsectorissimilartofootwearinthattherearemanysmallworkshopsproducinggoodsbyhandwithahandful of professionally managed operations.

Thenatureofthesectorthereforeisoneoftransitionfrombeinghamperedbytheindustrialenvironmentwhichmadeitdifficulttoprogresstoasituationinthenearfuturewheretheindustrywillhavetheopportunitytomodernise,atleast as a manufacturing base.



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Themoreenlightenedfootwearmanufacturingcompaniestendtofocusmoreonthemarket,exportorlocal,ratherthanproduction.Oneproducerhas successfullydevelopedanichemarketanda successfulbrandname forhigh– end men’s shoes made by the Good-Year Welted method (80% classic and 20% sport). This brand is very active indistribution, indeedhehave two franchisesoperating inBrussels, one inNetherlands, two inCasablanca andMarrakeshandtwointheIvoryCoast.Thecompanyexports70%ofitsproductiontoGermany,Belgium,Switzerland,ItalyandSweden.

Anothershoemanufacturerofladies’andbaby’sshoesbasedoncomfortrelaxationproducts.HeexportstotheEUandUSmarketsandproducesingoodqualityandlargevolume(2000pairsdaily).

Awellestablishedmen’s,women’sandchildren’sshoefactory,producesmiddletohighqualityshoesandexportstoFrance,SpainandUSA.Hisproductioncouldreachupto3000pairsdaily.Hisproductscouldbeeasilymarketedin Jordan.

Anotherenlightenedmanufacturerwhoproducesleathergoodsandnaturalleathergarmentsformenandwomenhasstartedproducinghighqualityfurgarmentsin2008.Heproducesunderhisowntwobrands;oneforbagsandanotherfor leather garments. his production capacity is around 8,000 pieces of leather goods and 11,000 of leather garments peryear.Heexports75%ofhisproductiontoSpain,Italy,France,USAandtheMiddleEast.

Another producer of high quality personal leather goods; ladies’ hand bags, belts, and travel bags, is successful inexporting98%ofhisproduction toFrance.Heisalsosuccessful inusing local leather(50%)inhisproducts.Heproduces3,000piecespermonth.However,hishighproductioncostscouldbeloweredifheshiftstobemoremechanised.


Thesupplychainfortheleatherindustrystartsfromthecollectionofrawhidesandskins.Thetanningofleathercurrentlyhassomeproblemsinthefinishedproductinthattheindustryuntilrecentlyhasconcentratedonprocessinguptothecruststage.Thereisalackoftechnicalknowledgeandexperienceincontinuingtheprocessuptofinishedleathersuitableforleatherproductmanufacturingforexportmarkets.

ThemanufactureoffinishedproductsisdominatedbyfootwearalthoughMoroccohasareputationforpersonalleathergoodsmanufacture.Thevarioussub-sectorscontinuetoshowhealthygrowthinmanufacturingandexporting.

Export:

Before2001/2002, the exportsweremainly toEurope (70%) andLibyan (25-30%)markets.However, after thereleaseofUNembargoonLibya,theMoroccanexportsstartedfacingsomeproblems. In itsefforts to improvethecooperationbetweenindigenousmanufacturers, theMoroccanExportersAssociation(ASMEX)withassistanceofUNIDOlaunchedanExportConsortiumProjectaimingatsupportingtheenterprisestoexportasagroupunderoneConsortia.Thefundingstartedin2006andthefundingforeachConsortiacanreachUS$82,715dividedover3years;inthefirstyearUS$11,816areallocatedfortheestablishmentoftheConsortiaandtheremainingUS$70,899aredividedequallyoverthethreeyearsonpromotionalactivitieswithasubsidyshareupto70%, 60%, and 50% for each respective year.

Exportedproducts Shoes leathers and skins leather goods leather clothes

ValueofexportedproductsUS$ 216,703,635 17,79�,196 35,519,652 21,618,111

%oftotalsectorexports 7�.29% 6.1% 12.17% 7.�1%

Maincustomers France - Spain -Germany Spain - Portugal - China France - Portugal

- SpainSpain - France – netherlands




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Importsofleatherproductsaremostlyintheformoffinishedleatherbecauseofthelackofgoodqualitymaterialavailable from local tanneries.The secondhighest sub sector is footwearmostly fromChina andhigher qualityproductsfromItaly.Theimportsituationisrepresentedbythefollowing:

ImportedProduct Shoes leathers and skins Crust leatherValueinUS$ 30,288,102 107,127,203 6,191,818%oftotalsectorimports 21.1% 7�.59% �.31%Exportingcountries China - Italy Spain – France - Italy Spain - FranceHere-belowarethemaincustomersoftheMoroccanleatherindustryclassedpersectorbranchfortheyear2006.Forthecrustleatherandleather,exportedvaluesaresolowtobetakenintoconsideration.

ShoesCountry Value(US$)FRanCe 79,0�1,22�Spain 75,172,063GeRManY 33,127,598iTalY 16,690,150UniTeD STaTeS 3,090,801oTHeRS 10,507,578

LeathergarmentsCountry Value(US$)Spain 10,059,109FRanCe �,027,�86neTHeRlanDS 3,639,�63iTalY 1,�83,�32GReaT BRiTain 953,271UniTeD STaTeS 936,905oTHeRS 610,801

Smallleathergoods,bagsandtravelgoods CoUnTRY $Value (US)FRanCe 12,589,611poRTUGal 9,263,516 Spain 6,6�0,5�9 SWiTZeRlanD 2,�96,736(U.E.B.L(ECONOMICUNIONOFBELGIUMANDLEXUMBOURG 1,566,858iTalY 1,001,700 GReaT BRiTain ��0,7�1 neTHeRlanDS 307,925oTHeRS 1,363,761

3.3.5. InstitutionsandNumberofWorkersThe companies operating in the leather products manufacturing sector are estimated by FEdIC (Moroccan Federation ofLeatherIndustries)asfollows

Shoes Tanneries leather goods leather clothes TotalNumberoffirms 23� 58 �5 21 358personnel 153 1� 1662 1569 823 207 18of turnover of the leather sector % 71,02% 15,63% 7,3�% 6,01% 100%

There are 358 production units in Morocco employing 18,200 people.



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AccordingtoFEDICtheaddedvalueinthevarioussectorsinUS$isasfollows:

Shoes Tanneries leather goods Leathergarments TotalAddedvalue(US$) 82,903,750 13,124,617 8,114,744 4,392,436 108,535,428

3.3.7. ForeignDirectInvestment

FromtheMinistryofIndustryinvestmentintheleathermanufacturingsectorin2005was11.8millionUS$andin2006itdeclinedto10.2millionUS$.


ThebasiccostsofproductionforshoemanufacturingoperationsinMoroccoareshowninthefollowingtable.ThesefigureswillalsobetypicalforPLGmanufacture.

UnitU.S.$Year2007

Labour rates per month(factory operators) 300

Labour rates per hour(factory operators) 1.67

Electricity per KWh 0.13

Water – cubic meter 0.23 to 0.99depending on consumption

Construction cost per m2 200

Cost of land per m2 �2

Transportation -Costof90cubicmeterloadedtruckforexportfromCasablancatoValencia(Spain)-Cost90cubicmeterloadedtruckforimportfromValenciatoCasablanca

3220

2100


BEnSon ShoES

● Manufacturerofhigh–endmen'sshoescharacterisedbyGood-Yearconstruction● Produces80%classicshoesand20%sport● Startedproducingawomens'linewithamasculinestyle.ItcollaborateswithaSpanishdesigner● Production160/170pairsperday● Employs70people● Veryactiveindistribution;havetwofranchisesoperatinginBrussels,oneinNetherlands,twoinCasablanca

andMarrakeshandtwointheIvoryCoast● ExportstoFrance70%ofitsproductiontoGermany,Belgium,Switzerland,ItalyandSweden.● ImportsleatherfromFranceandleathersolesfromBelgium● SucceededtomakeshoesinItalyunderhisbrandname




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● Sells15%lessthanSpanishandPortuguesecompanies● AnEgyptianshoemanufacturershowedinteresttocontacthimtodiscusspossiblecooperation

UnIVErS CUIr

● ManufacturerofPLG;mainlyforstationaryandgifts● Newlyestablishedfactory;only2years● Smallproductionvolume● Promotesitsproductsthroughtheinternet

MAChA

Anothershoemanufacturerofladies’andbaby’sshoesbasedoncomfortrelaxationproducts.HeexportstotheEUandUSmarketsandproducesingoodqualityandlargevolume(2000pairsdaily).

● Manufacturerofladies'andbaby'sshoesbasedoncomfortrelaxationproducts● ExportstheEUandUSmarkets● Capacity:canproduce2400pairsperday,actualis2000pairsdaily● Employs150people● NothappywithpreviousexperienceswithJordanandTunisia

CoroC and FrEEWAY

● Manufacturerofleathergoodsandnaturalleathergarmentsformenandwomen.Leathergoodsincludehandandtravelbags,travelboxes,stationarygiftsandsmallitemsofPLG

● Startedproducinghighqualityfurgarmentsin2008● producesunderownbrands;COROCforbagsandFREEWAYforleathergarments● Capacity:around8,000piecesofleathergoodsand11,000piecesofleathergarmentsperyear● Employs90people● Exports to Spain, Italy, France,USA and theMiddleEast (90% fromFREEWAYproducts and 70%of

CoroC products)

SELECT dIFUSSIon

● Manufactureofmen's,women'sandchildren'sshoes● Producesmiddletohighqualityshoes● ExportstoFrance,SpainandUSA● Capacity:3000pairsperday.Currentlyproduces2000includingmakinguppersinexternalfactories● Atpresent170employees(150inproduction)● Producesunderownbrands;ATTICOforchildrenandLOLITAREPUBLIKfoewomen

TAnnErIES MohAMMEdIA

● Large,ModerntannerylocatedoutsideCasablanca● Exportscrustandfinishedleatheronly● ImporteditshidesandskinsfromKSAandAlgeria(nownotpossible),Libya,andIraq● Itsex-factorypricesrangefromUS$2.1–2.8persquarefoot● Thecompanycurrentlyoperatingat1/3ofitscapacity● Someproblemsintheproductqualitywerenoticed

MArTAL

● Manufactureofhighqualitypersonalleathergoods;ladies'handbags,belts,andtravelbags



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● Exports98%oftotalproductiontoFranceonly● Useslocalleatherin50%oftheproductionandimportstherestfromFrance,Italy,andHongKong(2%

only)dependingonclient'srequest● Capacity:3000piecespermonth● Employs136people;130inproduction● Thehighproductioncostscouldbeloweredifcanshifttobemoremechanised

The Moroccan Federation of Leather Industries (FEdIC)

● Providedhistoricalbackgroundonthedevelopmentofthesector● Welcomedpossibilitiesofco-operationwithAgadircountries● Need“gettoknowyou”meetingswithothercountries’industrialists● Assistancewithtradefairs

The complete list of the sector companies can be found in the portal of the Ministry of Industry and Trade and Modern Technologiesbyfollowingthelinkshownbelow:http://www.mcinet.gov.ma/mciweb/mciweb/qpq.jsp

Then choose Secteur d’activité « industrie du cuir et de la chaussure »

Wherelistsof343companiesappear,andbyclickingonacompanynameyougetmoredetails.Theinformationisavailable in French only.

3.3.10. SWoT analysis


Thestrengths(andweaknesses),opportunitiesandthreatsanalysisfocusesonthemainareasofactivityinthesectornamelymarketing,manufacturing,humanresourcesandfinance.Byanalyzingtheseelementsaroadmapcanbedrawnupwhichenablestheindustrytotakeactiontoexploitthestrengthsithasandtocorrecttheweaknesses.Thiswillleadtoaclearerevaluationoftheresourcesthatareavailable(orwhichmustbeacquired)toensurethatactionscanbecarriedouttoenabletheindustrytotakeadvantageoftheAgadiropportunities.




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SWOTANALYSIS–MOROCCO

STRenGTHS

● PartytoAgadiragreement● ProximitytoEurope● Localavailabilityofleather● ExpresscargoservicestoEurope● GovernmentAgenciessupport● Excessproductioncapacity● Smallflexiblefactories● Availabilityoflabour● TradeAssociation

oppoRTUniTieS

● Newleathercities● Upgradetechnology(CAD/CAM)● MarketingplanwithGovernmentAgencies● Nichemarketing● TradelinkswithAgadirpartners● Developfinishedleather● AdvertiseMoroccoasaresource● DeveloptransportlinkswithEU● Trainingschemeindustrywide

WeaKneSSeS

■ Productdevelopment■ Competitivepricing■ Nichemarketing■ Alternativeconstructions■ Productionmanagement■ Costcontrol■ CADsystems■ Shopfloorsupervision

THReaTS

■ Leathercitiestakelongertodevelop■ Unwillingnesstochange■ Established norms in global markets not

accepted■ Finishedleathernotuptostandard■ Salestechniqueslacking■ Lackofcapital■ Negativeexchangerates■ ArtificialbarrierstoAgadirtrade

3.4. Egypt


The Government of Egypt has focussed on the leather products industry in all its sub sectors as a priority in the economicdevelopmentoftheCountry.Manyoftheworld’sdevelopedleatherindustrieseitherhavehadorcontinuetohaveGovernmentsupportintheirdevelopmente.g.China,India,Vietnam,Brazil,ItalyandtosomeextentEUwithitsantidumpinglegislationwithChina.

TheEgyptianindustrythereforehasagoodopportunitytoemergeintoaworldplayer.Thetimingisappositeinthatthecurrentlowerlevelofcommerceinthesectorgivestimeforplanstobeimplemented.

Theplan tore-locate the tanneries to thenew“leathercity”atRubeiky inBadrCity isanexcellentplan. Itwillprovideforanewenvironmentallyfriendlysituationcoveringthewholesupplychain.Itwillalsoincludeamoderntechnologycentre,designcentre,vocational trainingschooland testingfacilities.Thewholeoperationshouldbeimplementedwithin5years.

Thefootwearandpersonalleathergoodsmanufacturingsubsectorsarereplicatingthesameplanfortheirsideoftheindustry.Thenewfacilitywillbein10th of ramadan City not far from the tannery cluster.

Thesetwodevelopmentsalonewillprovideanintegratedindustrywithashort,flexiblesupplychainwhichwillbenecessaryfortheyearstocome.Theindustrialsettingfortheindustryisbetternowthanithaseverbeen.



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Theindustryisalsosupportedbymanyinstitutionalagenciesallwithhelpfulprogrammes.TheLeatherChamberisnowveryactiveinitssupportfortheindustryanditinturncancallonthehelpofGovernmentMinistriesandsubsidiariesofthemforhelpintrainingtoexportpromotion.


TheleatherproductssectorinEgypthasenormouspotentialwhichhasneverbeenfullyrealised.OfthefourAgadircountriesithasbyfarthebiggestindustry.Thesectorhasawelldevelopedhidesandskinscollectionservice,therearemanytanneriesproducingleatheruptowetblue,crustandfinished.Themanufacturingofleatherproductsiswellestablishedwithcompaniesrangingfromsimpleworkshops(artisanenterprises)tointermediatetechnologyfactoriesto fully mechanised operations.

Leather products range from personal leather goods, bags and briefcases, leather garments and footwear. Themanufacture of shoes is the largest of the sub sectors by some accounts representing 85% of the industry total activity.

Todaytheindustryhasanumberofrestraintsinthevarioussubsectors.Thereisamplesupplyofcow,buffalo,sheepandgoathidesandskinsinthecountry.Howevertheprimaryrawmaterialrequirednamelyfinishedleatherseemsnot to be freely available in the country. There are many tanneries particularly in old Cairo but they operate in very difficultconditions,70%of theirproductionbeingwetblue,aneasilyexportedproduct.Littlefinished leather ismanufactured.Itisdifficultforthetanneriestoimprovetheirsituationbecauseoftheenvironmenttheyarein.Theyarenotallowedtomovetheiroperationstogreenfieldsitesbecauseofenvironmentalconcerns.TheonetannerythathasbeenabletosetupoutsideCairoisanexampleofwhatispossibleiftheconditionsareright.Thistanneryisrunonultramodernlines,isclean,environmentallyfriendlyandverysuccessful.Howeveratpresentthistypeofmoveis not available to the other enterprises.

Howeverthereareadvancedplanstobuildanew“LeatherCity”outsideCairo,custombuiltforthetanningindustrywhichwillincorporateacentraleffluentcontrolfacility.TheinvestmentwillbeintheorderofU.S.$8million.Thenewfacilitywhencompletedwillbeabletohouseupto550tanneriesemployingaround25,000workersfinishingabout300millionsquarefeetofleatherperannum.Manyofthesewillobviouslybequitesmallbutwillserveassubcontractorsforthelargercompanies.Thisprojectwillprovidethemuchneededstimulusforthetannersandenablethemtooperatetheirfacilitiesinamodernandefficientmanner.Theconsequenceofthiswillbemoreandbetterfinishedleatherwhichwillpullthroughtherestoftheleatherproductsindustryandprovideamuchneededstimulustoexports.Thefirsttanneriestomovetothenewfacilityareexpectedinthe4th quarter of 2009.

Thelargestsubsectorisfootwearproduction.Thisissplitbetweenmechanisedandsemiorhandoperatedbusinesses.Themajorityof footwearproduced inEgypt isbyMSME’s.Thissectorproduces(up to95%)of totaloutputofaround75millionpairsperyear.Thisisdoneinrelativelysmallworkshopsproducinganythingfrom5to50pairsper day. Quality levels are indifferent and manufacturing techniques are not far above that of a shoe repairer. having saidthis,thefinishedproductlooksquiteacceptablebuthaspoorwearingproperties.

The mechanised factories have capacities from 800 to 3000 pairs per day but many are operating at anything from 30–50%ofthis.Theyhavebeenoperatingatlowlevelsofcapacityfromsomeyearswhichhasmadeitdifficulttoinvest in the latest technological improvements.

Mostoftheinputsrequiredtomakeapairofshoesofanyofthemajortypes,dress,casual,ladieshighheels,sandalsandslippersareavailablefrommerchantsinCairo.Thequalityoftheinputsisrelativelylowinordertokeepcostsdownwhich,reflectsthelackofpurchasingpowerofthemassmarket.Betterqualitymechanisedfactoriesimporttheirownbasicrawmaterials.

ThepersonalleathergoodsandgarmentssubsectorhassomeexcellentcompaniesproducingaqualityproductmuchofitforexporttoEuropeorthroughdutyfreeshops.Muchoftheleatherusedissourcedlocallyandisofexcellentquality. It proves the point that good leather can be obtained from local tanneries if the tanner and manufacturer




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worktogetherindevelopingtherequiredspecificationsandpayafairpriceforsodoing.ThestructureofthePLGsubsectorissimilartofootwearinthattherearemanysmallworkshopsproducinggoodsbyhandwithahandfulofprofessionally managed operations.

Thenatureofthesectorthereforeisoneoftransitionfrombeinghamperedbytheindustrialenvironmentwhichmadeitdifficulttoprogresstoasituationinthenearfuturewheretheindustrywillhavetheopportunitytomodernise,atleast as a manufacturing base.


ThefootwearsubsectoroftheleatherindustryinEgyptcomprisesover3300unitswithaproductionofaround75million pairs and a capacity base of 120 million pairs per annum.

Current Manufacturing Capacity Million Pairs per year 120 Annual Production Million Pairs 75 ExportCapacity Million Pairs 50

ExportMarkets Ex-EastBlockCountriesandRussia,Euro Countries , Arab and African Countries

NoofExportOrientedFactories Factories 60

no of Medium to Small Factories Factories 200 ProductionUnitsemployinglessthan10workers production units 3000

Source: Chamber of Leather IndustryTheexportorientedfactoriestendtobefullymechanised.Themediumtosmallfactoriesaresemimechaniseduptothepointoflastingwithsomefinishingmachines.Thesmallproductionunitsbyandlargearehandoperationswithsomesimplesewingmachinesandsolepresses.

Themoreenlightenedfootwearmanufacturingcompaniestendtofocusmoreonthemarket,exportorlocal,ratherthanproduction.Oneproducerhassuccessfullydevelopedanichemarketandasuccessfulbrandnameforinnovativechildrens’footwearandisverysuccessfulonthelocalmarket.Thecompanyexports50%ofitsproductiontoNorthernEurope(alesscrowdedmarketthanmiddleEurope).ItalsohasopenedopportunitiesinJordanforexportthereandre–exporttootherregionalmarkets.

Anothershoemanufacturerofmens’dressandcasualshoeshasexploitedthefactthatthelocalmarkettendstolagbehindthatofEurope.ItcontractswithanItalianmanufacturertopurchaseallitsmanufacturingequipment(lasts,patterns,andcuttingdies) from thepreviousseason.Thismeans theyare thefirston the localmarketwithnewdesignsandhaveaproductthatismadetoItalianspecifications.TheyarealsoaimingtoexploitthisstrategyintraAgadir.

Anothercompany,anexBallylicensee,isproducingtopqualityallleathermens’dressshoes(leatheruppers,liningandinsole)withlocalqualityleather.TheyarenowincontactwithasolesupplierinTunisiatosourcetheirsolesthereratherthanfromthepresentsupplierformTurkey.

Awellestablishedmens’shoefactory,traditionallyproducingmiddleoftheroaddressshoeshasimplementedanewconstructionwithahighdegreeofhandworkwhichdoesnotcompetedirectlywiththeChinese.ThisshoeisindemandinEuropeforthegreymarket.ThisisasuccessfulstrategyforenteringintothelargerEU27markets.



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Thereareapproximately300tannerieslocatedinOldCaironearthecitycentreproducingmostlywetbluecowandbuffalohidesandsimilarlysheepandgoatskinsforexportandsomefinishedleatherforthelocalmarket.ThereisonemoderntanneryoutsideCairowithacapacitytoproduce6,000piecesperdayofcowandcalfleather,approximately120,000ft2.Thetanningsectorisasfollows:Total Production: 1�9 Million square feet – Finished Leather for Uppers per annum

Type Square Feet PercentageCowHides 75�997�0 50.53%Buffalo 39652000 26.5�%Camel 9810800 6.57%Calf 1020710� 6.83%Sheep 139�1�00 9.33%Goat 310776 0.21%Total 1�9�21820 100%

Source: Chamber of Leather Industry

number of Tanneries: 300 Total Labour Force: 15000 ExportMarkets:Spain,Italy,Cyprus,Greece,Libya,China,SaudiArabia,UAE

Inleathergoodsthereareover1500productionenterprises.About50companiessupplythequalitymarketlocallyandforexportmostlytoEuropeandtheGulfStates.

ItisworthnotingthatasuccessfulleathergarmentmanufacturerhasupgradeditsproductionfacilitybydevelopinginhousecostingsoftwareandhasinvestedinastateoftheartCADsystem.Thissuccessfullycontrolsthecosts,stylesandfitofthefinishedproductmakingthemcompetitiveontheworldmarket.

Averygoodexampleofasuccessfullymanagedcompanyisonemakingsmallleatherproductsofthehighestqualityfromlocalleatherandsellingtheminthedutyfreeshopmarket,oneofthemostdemandingintheworldbutoneofthemostprofitable.BecauseofitsqualityandfanaticalattentiontodetailthecompanyexportstothehighendGulfmarketandintotheEU15markets.

NoofExportOrientedFactories 25 FactoriesSmall factories or production units 1500

ExportProducts Wallets–Purses–Attaché and Business Bags Gifts, Souvenirs and Advertising items of genuine leather

Leather Goods Ladies Bags ,Casual and Classic Belts, Men ,Ladies and Children Leather Garments according to latest fashion trends. home and Car Upholstery

ExportMarkets Germany and other EU Countries, Arab and African Countries, USA and Canada, russia

Source: Chamber of Leather Industry

Theotherenterprisesaresmallunitsmakinglowerqualityproductsonoffertothelocalmarket.




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Thesupplychainfortheleatherindustrystartsfromthecollectionofrawhidesandskins.Muchofthisisdonebyprivateslaughterratherthanmechanisedabattoirs.Manualflayingofthehidesandskinsbesidesusingtraditionalinventorytechniquesandtransportationmeanscreatedefectsonthefleshsideproducinglowerqualitymaterials.Someestimatesputthisproblemat30%ofthetotalcollections,representingaseriouslosstotheindustry.Howevertheremaining70%ofhidesandskinsareofgoodquality.

The hides and skins business is a commodity trading business and tends to be global in its naturewith pricesfluctuatinginasimilarmannertosaycoffeeortea.Occasionallyitisbettertoimportandviceversadependingonmarketconditions.Egyptisnoexceptiontothismethodologyconsequentlysometimes,whenexpedient,itimportsrawhidesandskins.

From the ITC Comtrade data base 2007; trade map analysis Spain and Bosnia represent over 90% of Egypt’s imports of this commodity.

Exports are relativelyminor as they arediscouragedbyGovernmentpolicy.However small amountshavebeenexportedtoItalywhichrepresenting70%+ofthetotal,andtoamajorcompetitor;Indiawhichrepresentsalmost20% of the total.

Egypttradeindicators-importsofhidesandskinsandleatherin2007

● SpainmostlyexportsrawhidesandskinstoEgypt● Italyexportsmostlyfinishedleather● Bosniatradesinrawhidesandskins● Lebanon,TunisiaandSyriaareallexportingfinishedleathertoEgypt.

Egypttradeindicators-exportsofhidesandskinsandleatherin2007

● Spainimportssemiprocessedandsomefinishedleathermostlyfrom1tanneryinEgypt● Italyimportssemiprocessedleather● PortugalissimilartoItaly● ChinaandIndiaimportsemiprocessedleatheralso● Turkeyisasmallermarketforsemiprocessedleather



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Egypttradeindicators-importsofleathergoodsin2007

Imports of leather goods are dominated by China at over 70% of the total. Imports from other countries are minor.

Egypttradeindicators-exportsofleathergoodsin2007

ExportsofleathergoodsmostlytakeplacetoItalyandBelgium;21%and26%oftotalexportsrespectively.

Egypttradeindicators-importsoffootwear2007

ImportsofshoesintoEgypt,notsurprisingly,aredominatedbyChinaatover76%ofthetotal.ThisisfollowedbyItalywithabout12%andBrazilwith1.8%.Othertradingpartnersare1%orless.

Egypttradeindicators-exportsoffootwearin2007




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Theexportofshoesisdominatedbyonemarket–Italy.ThismarketismostlysuppliedbyoneexportingfootwearcompanyinEgypt.Italyrepresentsover60%ofshoeexports.Franceisthenextbiggestmarketwitha9%share,followedbySaudiArabiawith4.5%.

AgadirCountriesareexportedtoinaminorway.Jordantakes2.4%ofthetotal,followedbyTunisiawith0.1%.Morocco is negligible.

3.4.5. InstitutionsandNumberofWorkers

FromtheChamberofLeatherpublishedinformationthereareapproximately300tanneriesofonesortoranotherin“OldCairo”employing15,000workers.(Thereis1largetanneryoutsidethisenvironmentemployingapproximately600workers).

ThefootwearsubsectorislocatedmostlyinCairoandthesurroundingcitiesof6th of october and 10th of ramadan. ThereisarelativelystrongpresenceinAlexandria.Intheselocationsthereare60mechanisedorlargelymechanisedfactories.Employmentlevelsinthissectorarefrom4,800to7,200workers.

AgainfromChamberinformation,thereareabout200smallerworkshopsintheCountryeachemploying5–30workers.Thereare3,000MSME’swhichemploy5–15workers.

TheIMCstudy(IMC/PS-38)doneonthefootwearandleather industryinEgypt in2006agreeswith theformalsectoroutlineabovebutliststhesmallandmicroworkshopsasbeingintheorderof19,000–27,000unitsprovidingjobsfor42,000to60,000people.(Thiswouldincludethevariousworkshopsproducingcomponentsandancillaryparts).

TheChamberliststheleathergoodssectorascomprising50factoriesand1500smallproductionunitswhereastheIMCstudysuggests23factoriesandbetween500–1,900workshopsemploying5workersorless.Totalworkersinthesubsectorcouldbeintheorderof6,000workers.

Theleathergarmentssubsectorisrepresentedby9companiesemployingfrom20–60workersonaverage,foranestimatedtotalof420workers.Smallunitsnumberaround100andemployabout5peopleeachforatotalof500workers.ThisisderivedfromtheChamberandtheIMCstudy.

ReCapiTUlaTion

SECTor ProdUCTIon UnITS ToTAL EMPLoYEdWorKErS

TAnnErIESold Cairo 300 15,000Modern Tanneries 1 600FooTWEArMechanised 60 �,800 – 7,200Semi mechanised 200 1,000 – 6,000Small units 3,000 – 27,000 30,000 – 60,000LEAThEr GoodSMechanised 23 – 50 1,265 – 6,000Small Units 500 – 1900 1,750 – 6,650LEAThEr GArMEnTSMechanised 9 180 – 5�0Small units 100 500 ToTal 4,139–29,620 55,095–102,490



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According to the IMC study done in 2006, the production value added for footwearwas 30%,while for travelandhandbagsitwas35%.Insmallleathergoodsitreached65%.Ontheotherhand,themanufacturingofleathergarmentsvalueaddedwas20%.

3.4.7. ForeignDirectInvestment

Stemming from broad based institutional and structural reforms implemented by the Government, the Egyptian economyiscontinuingonitsstronggrowthpathforthethirdconsecutiveyear;bringingintheconfidenceoflocalandinternationalinvestors.TheEgyptianeconomyachievedrealgrowthof7.2%(marketprices)duringthecourseofthefirstsemesterof2007/08(7.5%atcostlevel),andisexpectedtowitnessasimilargrowthpatternfortheentireyear,slightlyhigherthanthe7.1%achievedinFY2006/07,butupfrom4.1%justhalfadecadeagoin2003/04.(Source Ministry of Finance).

Recentindicatorsassurethatsuchgrowthisgainingmomentumaswellassustainability.Assourcesofeconomicgrowtharebecomingmorediversified-withthemanufacturingsectorleadingthecurrentgrowthwave,productivityandpercapitaincomeareincreasing.WiththeincreasedconfidenceinEgypt’seconomicsustainability,annualnetFDIinflowsreachedUS$11.1billioninFY2006/07(8.5%ofGDP)upfromUS$6.1billionayearbefore.Greenfieldinvestmentrepresentsmorethan46percentofnetFDIinflowswitnessedinFY2006/07.ItisnoteworthythatnetFDIinflowsduringtheperiodJuly-March2007/2008increasedtorecordUS$11.3billionupfromUS$9billionduringthesameperiodlastyear,withnetGreenfieldinvestments(oilexclusive)increasingbysome40%duringthesameperiod.

Asfarastheleatherindustryisconcernedtherehavebeeninrecentyearssomeinvestmentandsomecurrentprojects.ThelargefootwearcompanyinIsmailiainthefreetradezonehasbeenasuccessstoryforEgyptexporting100%ofitsproduction.Currentplansaretoincreasecapacityforexportandstartanewoperationforthedomesticmarket.

ThereisanindependentinvestorfromTurkeywhoiscurrentlyassessingthepossibilityofstartinganewmodernlastmakingfacilityinEgypt.

There are other opportunities in the leather sector, particularly components to upgrade the current product line either by Joint Venture (JV) or by FdI.


ThebasiccostsofproductionforshoemanufacturingoperationsinEgyptaregiveninthefollowingtable.ThesefigureswillalsobetypicalforPLGmanufacture.

UnitU.S.$Year2007

Labour rates per month(factory operators) 100 to �00

Labour rates per hour(factory operators) 0.55 to 2.2

Electricity per KWh 0.0�8natural Gas per cubic meter 0.0�diesel per litre 0.15Water per cubic meter 0.09Construction cost per square meter 150Cost of land per square meter 18Transportation $450per20’container(fromAlexandriatoEurope)




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ElSharkTannery

● Manufacturescow,buffaloandbabybuffaloleather● Wetblue,crustandfinished● Exportoriented;exportsabout90%ofproduction● Producesapproximately7-8,000squarefeetpermonth● ExportswetblueandcrusttoItaly,SpainandPortugal● HasexportedtoAgadircountries(Tunisia)● Has60-65workersinproduction

BaramkiGroup

● Largecompanyproducingvulcanisedrubberproducts.● Produces20-25tonnesrubbersheetsperweekforsoling● Largeproductrangeofmanydifferenteffects● ExportstoAfrica,ItalyandTunisia● IsintalksforpossibleJVwithcompanyinTunisia

Bruno Shoe Factory

● Manufacturerofmens'dressshoesforlocalmarket● Largelymechanisedinstallation● Capacity300–400pairsperday● Actualproduction150–200pairsperday

Ell Gonih Tannery

● Manufacturerofsemiprocessedleather● Exportoriented;exports80%toEurope● Exportsconsistof80%wetblueand20%crust● Remainingproductiongoestolocalmarket● Capacityis600,000squarefeetpermonth50%crust,50%wetblue● Currentcapacityutilisationis40–45%ofnominalcapacity● HasexportedtoTunisia● Planningoninstallingfinishingplantasnextphaseofexpansion

ChamberoftheLeatherIndustryandtheLeatherExportCouncil

● NewleathercitycanbeopentoFDIespeciallyTunisia● InterestedtohaveinformationaboutTunisianFootwearandMoroccanLeatherandFootwear● NewvocationaltrainingcentresetupinCairo● Discussedmethodologyofprojectandgaveviews● PromotingAgadirLeatherProductsviaInternationalMarketingCompany● InterestedinintraAgadirchambermeetings● EstablishmentofadatabasefortheindustryintraAgadir

Egyptian - Italian Company

● Manufacturerofmens'dress/casualshoesand“Gulf”sandals● Capacity1,200pairsperday.Actual50%ofthis● Employs130workers



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● MakeshandstitchedClarkstypeshoes● AlsoMcKaystitch● Bothconstructionsagoodnichemarket

Farag Leather Products

● Manufacturerofhighqualityladiesbags● 100%forexport;Belgium,Italy,andFrance● Outputisvariablefrom100to500piecesperday● Employsonaverage120workers● Hasplantostartcomplimentaryshoemanufacturingcompanyproducing500pairsperdayofTimberland

typeboots100%forexporttoItaly–NassrFreeZoneCity.

Armando Shoe Factory

● Manufacturerofhighqualitymens'dressshoes.● ExBallylicensee● Produces100pairsperday● Semimechanisedplant● Employs20people● WantstocontactBensonShoeinCasablancatodiscusspossiblecooperation● HascontactedSCIACCompanyinTunisiaforbuiltupleatherunitsoles.

Piel Color Tannery

● LargeultramoderntanneryoutsideCairo(allegedlynumber6intheworldforsize)● OperatesinFreeTradeZone● Produces6,000piecesperdaycowandcalfleatherfromwetblue,crustandfinished● 100%exportoriented;mostlytoSpain

Leather International

● LargeshoefactoryoperatinginFreeTradeZoneatIsmailia● 100%exportmostlytoItaly,alsoGermanyandFrance● Manufactures3,000pairsperdayofmens'andladiescasualcementlastedshoes● Employs980people● Hehashisowninternaltrainingsection/workshop● ImportsmostleatherandsolesfromItaly● Expansionplansfornewcompanyoutsideoffreetradezoneproducing50%forlocalmarketand50%for

exportat1,500pairsperdayofsportfootwear,employing550people

Shoepedic

● Specialistmanufacturerofhighqualitychildrens'shoesandsandals● Production800–1000pairsperdayofshoes● Employs110workers● 50%productionforexportand50%forlocalmarket● ExportstoGermany,Scandinavia,Benelux● HasownretailshopsinCairo● ExportedshoestoJordan,3000pairsyearlyandiswillingtoexportmorethroughotheragents● Styling,designandpatternworkdonebytwoassociatedItalianStudios.




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Alfa Leather Company

● Manufacturerofhighqualitymens'personalleathergoods,briefcases,andpromotionalitems● ExportorientedtoBenelux,Italy,GermanyandUK● Useslocalleatherwherepossible● Components/accessoriesfromItalyandChina● Productionvariablebutheachieved120,000piecesper3monthsunderspecialorder.● Employsfrom60to120workersasneeded.

Match for Leather Products

● Manufacturerofladiesuniquebagsandwatchstraps● ExportorientedtoUKandCanada● AlsomakesfortouristmarketsinEgypt● Capacityabout2,000bagspermonth● Employs17–35womeninavillageoutsideCairo● Buyslocalleather

Egypt Shoes

● Semimechanisedfactoryformens'sandalsanddressshoes● Capacity400pairsofsandalsor120pairsofshoesperday.Currently,operatingatabout50%ofthis● Employs13people● ExportorientedtoSaudiArabia,Kenya,andYemen● Exportsrepresent30%ofproduction● Has alternative largermechanisedproduction facilityoutsideCairoonAlexandria roadnot at present in

operation.

Three Angels Genuine Leather

● Manufacturerofveryhighqualitypersonalleathergoods● Wallets,briefcases,ladiesbagsandpromotionalitems● ExportsthroughdutyfreesalesinCairoandKuwait● ExportsalsotoEUdirect● Capacity7,000–8,000piecespermonth● Employs50–60people

Industrial Modernisation Centre (IMC)

● Discussedbroadprincipalsofreport● Newleathercitiesprogress● Recruitmentofforeignexpertstoassistindustry● Interested tohaveIntraAgadirdatabaseofconsultantsandexperts,also twinning initiativeswithsimilar

centres in Agadir Countries● Benchmarking● Developmentoffinishedleather

Elegant Fashion

● Manufacturerofmens'andladies'leathergarments● Modernmechanisedfactory● UtilisesCAD● Sophisticatedcostingsystembycomputer–inhousedeveloped



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● Sellsmostlyinlocalmarket● Wasbetweenseasonsattimeofvisit● VeryinterestedininternationalmarketingcompanyasIPO(initialpublicoffering)

Top Group

● Producesmens'andwomen'sclassicandcasualshoes● Capacity6,000pairspermonth,actualproduction4,000● Employs65workers● Has6shopswherehesellshisproductsandimportedonesalso● Exportsonly10%mainlytoSaudiArabiaandYemen● Usesonlylocalleather● BuyspreviousEuropeanseasonstylesandtoolingfromanassociateinItaly● Isoneofthefirstonthelocalmarketwithnewfashions● HastroublefreetechnicalproblemsinmanufacturebecauseofItalianshoeengineering● Ismarketleaderinfashiononlocalmarket

Geem

● Manufacturerofmens'casualshoesandsandals● Employs45workers● Useslocalleather● ExportstoSyria,Jordan,Iraq,SouthAfrica,Kuwait,KSA,Zambia,andKenya● Hispricesareacceptedbythelocalmarket(120–250E£).25%lessforWholesaler'sprice● MostproblemsareinMarketing,lackofskilledlabour,employeetrainingcentres/schools,andinconsistency

of leather quality and inputs

riviera Group

● Largemanufacturerofshoecomponents● Manufacturerofcelluloseinsoleboardsandinjectionmouldedunitsoles● SoleinPolyurethane,ThermoplasticRubberandPolyVinylChloride● Alsoproducesshankboardsandadhesives● Produces4,700tonnesperannumcelluloseboards(3.6millionsheets),1,900tonnesshankboards(635,000

sheets) ● Soleproductioncapacity3,000to5,000pairsperday● Employs200workers● Iscurrentlyinstallingnewplantforleatherboardproducing3,000tonnesperyear.● Nowhasexcesscapacityandisplanningtoexport,particularlytoAgadircountries.

ThecompletelistofallregisteredcompaniescanbefoundbycontactingtheHeadoftheLeatherExportCouncilofEgyptonthefollowingaddress:

3.4.10. SWoT analysis


Thestrengths(andweaknesses),opportunitiesandthreatsanalysisfocusesonthemainareasofactivityinthesectornamelymarketing,manufacturing,humanresourcesandfinance.Byanalyzingtheseelementsaroadmapcanbe




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drawnupwhichenablestheindustrytotakeactiontoexploitthestrengthsithasandtocorrecttheweaknesses.Thiswillleadtoaclearerevaluationoftheresourcesthatareavailable(orwhichmustbeacquired)toensurethatactionscanbecarriedouttoenabletheindustrytotakeadvantageoftheAgadiropportunities.

SWOTANALYSIS–EGYPT

STRenGTHS

● PartytoAgadiragreement● ProximitytoEurope● Localavailabilityofleather● ExpresscargoservicestoEurope● GovernmentAgenciessupport● Excessproductioncapacity● Smallflexiblefactories● Availabilityoflabour● CurrencypeggedtoUS$● TradeAssociation● Costreductionprogrammes

oppoRTUniTieS

● Newleathercities● Upgradetechnology(CAD/CAM)● MarketingplanwithGovernmentAgencies● Nichemarketing● Internationalmarketingcompany● TradelinkswithAgadirpartners● Developfinishedleather● AdvertiseEgyptasaresource● DeveloptransportlinkswithEU● Develop programme for FDI/JV in component

supply● Trainingschemeindustrywide

WeaKneSSeS

■ Knowledgeofoverseasmarkets■ Productdevelopment■ Competitivepricing■ Nichemarketing■ Alternativeconstructions■ Productionmanagement■ Costcontrol■ CADsystems■ Shopfloorsupervision

THReaTS

■ Leathercitiestakelongertodevelop■ Unwillingnesstochange■ Establishednormsinglobalmarketsnotaccepted■ Finishedleathernotuptostandard■ Salestechniqueslacking■ Lackofcapital■ Negativeexchangerates■ ArtificialbarrierstoAgadirtrade

3.5. GroupImpactFactors

3.5.1. productivity

InordertomakeacomparisonandtoindicatethecompetitivenessoftheAgadircountriesthefollowingproductivitychartwascompiled.Thefiguresrefertothefootwearmanufacturingindustriesinthevariouscountries.Thesefiguresweretakenfromvarioussourcesandinsomecasesextrapolatedtogiveafairestimateofthesituationinthedifferentcountries.Allthefigurescomefromindustrysources.



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Country

pRoDUCTiViTYNumberofPairsperWorkerperDay

(8hours)France 18.1Spain 17.7European Average 13.8Italy 13.0Tunisia 10.6India 7.8Morocco 5.9Egypt 5.0Viet nam �.1Jordan n/aBestpracticehighlyautomatedplant 26–28

● Europeancountriesarethemostproductivebecauseoftheirbetterorganisationanduseoftechnology● TunisiarankswellduetothedevelopmentofitsindustrywithEuropeantechnicalinputsovertime● VietNamshowsalowproductivitylevelbutremainscompetitivebecauseofitslowlabourrates.

3.5.2. IndustryOrganisation(ItalianMethod)

MuchhasbeensaidoftheItalianmodelfortheproductionofleatherproducts,particularlyfootwear.TheItaliansystemrevolvesroundtheco-operationofsmallcompaniesworkingtogetherinpartnership.ThemajorityofItalianshoecompany’semploylessthan12people.Therearebetween6,000and9,000companiesinthesector.

ThesuccessoftheItalianindustryisduetothisclusteringprocesswherecompaniesshareoutthevariousstagesofproductiontodifferentsmallworkshops.Namelyonecompanywouldproduceuppers,anotherdothelastingandanotherdothefinishing.Theshoeswouldthenbemarketedbyacooperativerepresentingthesmallproducers.ThemajormarketinItalyisstillindependentretailerswhotakesmallquantitiesratherthanmassmarketers.

TheindustryinItalyalsobenefitsfromaveryvibrant,innovativecomponentsmanufacturingandtanningindustrywhichservestheproducersandisincloseproximitytotheirplants.MostoftheshoemachinesaredevelopedinItalytogetherwithnewtechnicaldevelopmentsyearonyear.TherealsoistheinbuiltItalianflairforfashionandstylingwhichisaculturalphenomenon.

The Italian industry is successful therefore because its structure is built around three things:

● Clustering● Componentsupplyandtanneries● Design

Italyisthedriveroffashion,stylingandinnovation.Itleadstheworldinthisaspectofproductionandhasdoneformany years. It gives the industry a competitive advantage and provides value to its customers. This co-operative methodofmanufacturingandmarketingworkswellinItaly.Howeveritreliesonthetotaltrustandsupportofeachmember of the cluster. It has been tried in other countries but has not been successfully replicated outside of Italy.

3.5.3. BenchmarkingTherearemanybenefitsofbenchmarking.Commonlybenchmarkingisdonebyindividualcompaniesagainsttheirpeers.InthiscasewearetakingamoregeneralapproachandarebenchmarkingcertaincountrieswiththeAgadirGroup.ThiswillgiveaguidetoperformancelevelsastheypertaintodaycountrybycountrycomparedwiththeGroup.




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FortheAgadirgroupitwasdecidedtobenchmarktheirperformancewiththefollowingcountries● Turkey● Vietnam● India● Italy

In order to get a better understanding of present performance and to get a picture as to the performance levels of the AgadirCountriesversusthebenchmarkedcountries,thefollowingchartwasproduced.Theinformationisempiricalinnatureandreflectstheopinionsoftheconsultants.Threebroadareasofcomparisonwereusedwithsubheadingsfor each:

● Marketing● TechnicalaspectsofLeatherProductsManufacturing● HumanResources

Foreachcategorybeingbenchmarkedascorewasgiventoeachcountry(from1–10):1representedverypoorand10representedexcellent,anythinginbetweenrepresentedanimprovementfrom1.

IndICATor CoUnTrY

MeasurementCategory Best Practice Indicators Agadir Turkey Viet

nam India Italy

MarketingProduct development

Continuousaccesstofashionforwardinformation in real time 6 6 5 5 9

Price Vs. qualityAllowsorexceedsnormalretailmargins,highspecificationthroughwholeproduct 6 6 8 7 7

ExhibitionsEuropean International, regular attendance over many years 5 5 5 6 9

Image as a resource Comfort factor, reliability, implicit trust 6 � 6 � 7

Logistics(proximitytomarket,efficiency)

3 – 5 days door to door delivery. drop shipments 8 6 2 2 9

TechnicalProduction facilities Allmechanisedwherepossible.CAD 4 5 5 5 8

Technical innovationContinuouslyinvestinginnewtechniquesCAM, robots, automation 4 5 5 � 8

Leather availabilityLocal,allvarieties,highqualityfinishing,laboratory tested 7 7 � 5 9

Ancillaryrawmaterialsavailability

Unit soles, insole and sole sheets, reinforcing, adhesives 3 7 7 6 9

HumanResourcesTraining facilities Availablefromshopfloortodegreelevel 8 5 5 7 6

Availability of labour Abundant and disciplined 6 6 8 8 5

Productivity output per operator to international norms 4 6 7 6 8

Labour rates Lowestpossible 7 5 8 8 �

Shopfloormanagement Trained,workshoporganisation,costcontrol 4 5 7 6 8

Governmentsupport Exportpromotionagencies Available, active, generous terms 7 6 8 8 6



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Industry chamber Managed by professionals committed to industry betterment 7 6 5 8 7

research and development agencies

Exist,hyperactive,linkstointernationalpeers and academia 7 5 5 7 8

Foreign Investment Promotion Agencies Exist,supportlocalindustrybyFDI 7 5 5 6 5

LackofBureaucracy Regulationkepttoaminimum,openmarketphilosophy 6 5 6 � 7

ToTal SCoRe 112 105 111 112 139

RanK 2 5 � 2 1

Theabovetableinchartformisasfollows:

ThetablesummarisesallthebencsummarisesalltheBenchmarkswhmarkswherethefollowingerethefollowingobservations are made:

● ItishardlysurprisingthatItalycomesoutthetopcountryinthiscomparison.Itistheworldleaderinmanyaspectsoftheleatherproductsindustryandisinfactthebenchmarkthatothercountriesshouldstrivefor.

● TheAgadirGroupcomesoutwell in thecomparison in that it isbetter thanTurkeyand isequal toVietNamandIndia.HoweverthiscanbeabitmisleadinginthattheobjectfortheAgadirGroupshouldbetooutperformthesetwocountrieswhoaremajorcompetitors.

● Fromthisbenchmarkstudy,MarketingshouldbeimprovedbytheGrouptoexploititscomparativeadvantageofclosenesstotheEUmarkets.ThismeansthattheGroupneedstoincreaseitseffortsinproductdevelopmentandexhibitionsparticipation,inadditiontoimprovingitsqualityandcompetitiveprices.

● Itstechnicalcapabilitiesareindangeroflaggingbehindrecentdevelopments.Herethereshouldbeemphasisandresearchdoneonhowtoimprovethecapabilitiesoftheproductionprocesses.Asmentionedthefutureneedwillbeforflexibleproductiondonequickly.Thishastoincludetheoptionofautomation.

● TheAgadircountriesshouldcontinueitseffortsinfinishingitsleatherwithhighquality.However,theGroupshoulddoextensiveeffortstoensuretheavailabilityofAncillaryrawmaterials.

● TheAgadir Countries come out neutral in Human Resources. However weaknesses show up in labourproductivitylevelsandshopfloormanagement.ThismakesmoreburdensoneachcountryofAgadirGroupto pay more attention to its labour discipline and productivity. Fortunately, all countries started vocational training reform programs.

● GovernmentsupportfortheAgadirGroupisgoodwhichshouldencourageenlightenedentrepreneurswith




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visiontoinvestintheircompaniesandsobenefittheregionasawhole.However,theGovernmentsinthe4countriesarerequestedtokeepthismomentumoftheirsupportespeciallyduringthecurrentglobalfinancialcrises.

Therankingofthecountriesbenchmarkedagainsteachotherisasfollows:

Agadircountriesshouldconsiderthefollowing:-

● Italy is theworld leader in theleatherproducts industryparticularlyfootwear.Themainreasons it is theworldleaderis:

■ Originalideasandstyling■ Innovativecomponentssupplyindustry■ Anytypeoffinishedleatheravailable■ Manufacturingexpertise■ Marketingexpertise

● Italyisthenumberoneexporterofmediumtohighandhighqualityproducts.Itsdisadvantageisthehighlabour costs in spite of high productivity plus the general cost of manufacturing in Europe. Viet nam is a smaller version of 1Chinabut isbeginningtochangeitsstrategyto tryandbecomeaflexibleproducer.However itsdistance from themajormarkets for leatherproducts (EU27andUSA)gives it an inherentdisadvantage.

● Indiaisbeginningtoemergeasaworldplayer.ItisdevelopingitssupplylinestobecomemoreefficientandattractingFDIincomponentsupply.AtpresentitdoesnothavethedesignexpertiserequiredforEuropeandUSA.Ithasagoodsupplyofleatherofcertaintypesupto1.4mmthickness.

● In the case ofTurkeyTunisiaMorocco andEgypt performquitewellwith the exception of componentsupply.HereTurkeyhastheadvantage.

● TunisiaandMorocco,beingthetwomoredevelopedindustriesintheAgadirGroupbecauseoftheirestablishedsubcontractingrolestoEuropeanmarketers,haveamarketingadvantagewhichshouldbeexploitedinthefutureforproductdevelopment.Theygain thefashionknowledgefromtheirpartners.ThiscoupledwithflexibleproductionunitsandtheirproximitytoEuropegivesthemanadvantageoverVietNam,India(andChina).

● HoweverbothMoroccoandTunisiaareindangerofsurrenderingtheircompetitiveadvantagesbecauseofthegreaterdemandinthefutureforfinishedleathertobeavailablelocallytocopewiththenewflexibleproductionenvironment.Theyalsoneedtodeveloptheircomponentsupplyindustryandimplementnewshoe engineering techniques in production and constructions, to reduce costs.

● TunisiaandMoroccohaveinvestedintrainingandresearchinstitutesfortheirindustry.Inthistheyareahead

� China does not have great expertise in styling or design. It imports leather. Its marketing is based mainly on low selling prices. The manufacturing philosophy is to employ cheap labour to solve production problems or increase output. It does how--ever have an efficient component supply industry. Exporting high volumes cheaply is an unsustainable strategy for the future where quick manufacturing times are required for smaller orders with short delivery times. China is far away from the major markets.



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ofVietNamandIndia.Howevertheynowneedre-evaluatetheschemesavailableinthetwocountriesinthelightoftheforthcomingtrendsinthemanufacturingenvironment.Thereisaspecialneedforshopfloorsupervisors in Tunisia and Morocco. This problem needs to be addressed because India could easily catch up in training and research.

● Egypthastheperceivedadvantageofanamplesupplyofleathertosupportthemanufacturingindustryinthecountryandpotentiallytheregion.IthadtheadvantageoverVietNamandtoanextentTurkey.(AlsoChina).HoweverIndiacontinuestoupgradeitstanningindustry.Egypthasthenewtannerycityunderdevelopment(ashasIndia).Itwillbearaceastowhoachievessignificantcommercialadvantagefirst.

● Egypthasthepotentialtodevelopintoalowcostproducerifitconcentratesondevelopingitsmanufacturingexpertise.Amplesupplyoflabourisavailable.NewmanufacturingtechniqueshavetobedevisedtokeepupwithdevelopmentsinVietNamandIndiawhoaremoreproductionoriented.IndiaandVietNamhavehigherproductivitymakingthemcompetitiveintheworldmarket.EgyptalsohastoexploititsclosenesstoEuropemore.

● TheleatherproductsindustryinJordanistheweakestofthe4AgadirCountries.Theylagbehindallofthebenchmarkedcountriesinnearlyallaspects.Theydohoweverhaveamarketingadvantageinthatitcanbea hub for distribution of products to the region.

3.5.4. The Turkish ModelSector overview and performance

TheTurkishleathersector,whichhasahistorygoingback500years,isanimportantplayerinthegloballeatherindustry.TheTurkishleatherindustrywhichoccupiesaprominentplaceintheTurkisheconomyhasbeendevelopingbycombiningnewtechnologyanditshistoricalbackground.Theindustryhasashareof1%ofthe country’s GdP, 2.3% of total industrial production and 1.5% of registered manufacturing employment.

Atpresent,therearefiveorganisedleatherindustryzonesinTurkey.Inaddition,eightorganisedleatherindustryzonesare under construction. The sector produces according to international standards and is becoming more sensitive to health and the environment; about 90 % of the production is based on health and environmental standards. Until the 1970’sand1980’stheindustrywascomprisedmostlyofsmallworkshopslocatedinapartmentbuildingsintheoldpartofIstanbul,Ankaraetc.Thesehavenowbeenmovedtotheleatherindustryzones.

TheleatherproductsindustryisoneofTurkey’sleadingexportsectors.Theexportfigureoftheleathersectorfor2008wasaboutUS$1.3billion.Thisfigureisactuallyhigherifthetouristictradeandsocalled2“bagtrade“aretakenintoconsideration.ExporttoEUcountriesaccountsfor40%ofthetotalleather,PLGandfootwearexport.Themainmarketsare:

● Russia32%● Germany11%● France6%● USA5%

Themajorexportproductgroupsfortheleatherproductsindustryare:

● Saddleryandgarments38%● Furandfurcoats33%● Footwear21%● Hidesandskinsandleather8%

� Traders from neighbouring ex Soviet countries travel across the border in busses and purchase goods which are taken back in travel bags for reselling in their own countries.




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TheTurkish leather industryhas takenan importantposition in theglobal leather and leatherproducts industry.Turkeyclaimsitisthirdintheworld’sexportofleatherandleatherproductsintermsofquantity.Itisalsorankedamongthetop10furexportingcountries.Itisalsoranked3rd in Europe after Italy and Spain in terms of production capacity.

Ofthe13plannedLeatherIndustrialOrganizedZonestooperateinTurkey,theyarelocatedmostlyintheMarmaraandAegeanregions.Therearemorethan3,000producercompaniesdealingwithexportsthroughoutTurkey.

Turkeyhastendedtospecialiseinleathergarments.Itproducesabout1.2%oftheworldsleatherclothing.Itisamongtheworldsmajorproducersoffurcoats.

Amajority of the industry’s rawmaterials are imported.These are converted into high value productsmany ofwhichareexported.InordertoconsolidateitspresentpositionGovernmentisprioritizingmarketing,researchanddevelopment,designandeducatingtheworkforce.Turkey is nowmarketing itself as amajor resource for leather products. In addition to domestic fairs, nationalparticipation has been organized to international fairs in an effort to promote an image of ingenuity and reliability as a producing nation.

TheprimaryadvantagesthattheTurkishindustryhasareverysimilartotheAgadirGroup:

● Closetothemainmarkets–EUandRussia● ShortShortmanufacturing● Shortdeliverytimes(proximitytoEurope)● Qualifiedlabourresources● ComplieswithEUregulations● Innovation● Modernworkingconditionsandpractices.

Theexport/importperformanceofTurkeyintheimportantsubsectorsisasfollows:

U.S$CATEGorY 2006 2007 2008

41 leather H & SExport 102,611,612 120,162,021 121,070,629Import 566,317,622 609,6�1,6�9 518,293,16942 p. l. G.Export 360,531,353 �09,�86,069 �51,60�,093Import 365,13�,818 �70,8�1,505 537,�22,85964 FootwearExport 237,069,�00 316,739,6�1 3��,889,810Import 569,928,759 672,917,�87 51�,969,515

Comtrade

in 2008 Turkey traded with the agadir zone as follows:

U.S$CATEGorY 2008

Egypt Morocco Tunisia Jordan41 leather H & SExport 110,27� 71,513 12,853 151,662



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Import 5,212,81� 1,667,8�6 3,285,878 042 p. l. G.Export 2,389,022 292,8�1 229,370 211,600Import 127,583 1�6,899 218,683 80�64 FootwearExport 1,118,2�7 �1�,�87 282,836 1,061,568Import 92,976 3,021,287 7�9,675 1,352

Comtrade

3.5.5. TheVietnameseModelSector overview and performance

Vietnamhas450leatherandfootwearenterprisesemploying600,000workers.Oftheseabout180aremechanisedmodernplantstherestaresmallworkshoporientedenterprises.

AccordingtotheGeneralStatisticsOfficeofVietnam,thecountryexpectedtoachieveUS$2billioninexportrevenuefromleatherandfootwearproductsinthefirsthalfof2009,orsome8.7%lowerthanthatinthesameperiodlastyear.ThereisatargetforexportrevenueofUS$5billionfor2009,10%morethanlastyear.AccordingtothestatisticsfromVietnamLeatherandFootwearAssociation(LEFASO),shoeexportvalueslowed10%to1.3billionU.S.dollarsinthefirstfourmonthsoverthesameperiodoflastyear,particularlyexportstoBritain,JapanandEUcountries.Consideringtheweakdemandininternationalmarketsandtheshrinkageinshoeexports,Vietnameseshoemakersarerevisingtheproductionandexportprogramaccordingtotheactualsituation.Thetopprioritywillbegiventotechnicalinnovation,newproductdesigns,andpersonneltraining,soastoimprovethequalityoffootwearoffered.Manydomesticleatherandfootwearcompaniesfacefiercecompetitionfromimportedfootwear,particularlyfromChina.Thedomesticleatherandfootwearenterpriseshaveamarketshareof30%ofthedomesticmarketcomparedto 70% in previous years.

Thestructureoftheindustryisasfollows:

Exports 4.767billionUS$CapacityFootwear 750 million pairsLeather 130 million square feetBags 88 million piecesLabour force 610,000 peopleEstimated turnover 2010 6.2billionUS$TypeofCompaniesStateowned 3Limited company 103Joint venture 9100%foreignowned 21Stockcompanies �7others 3Sub SectorsShoes 153Tanning 1�Components 10Bags, PLG, luggage 6repairs 3LEFASo




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However, the country has to import 60% ofmaterials fromChina,Taiwan,Thailand andKorea.The country’sfootwear enterprises were weak in establishing stable supply chains, building connections between leather andfootwearcompaniesandmaintainingrelationshipswithdomesticmaterialsuppliers.

Thecountry’sbiggestcentre tosupply rawmaterialsandaccessories to the footwear, leathergoodsandgarmentsectorswasbuiltinMay2009whichwillhelpeasetheover-relianceoflocalmanufacturersonimportedmaterials.

Thefirstphaseof thecentrewillbecomeaworld-classhubfor localand internationalsuppliers.Thecentrewillincludeawholesalemarketcovering11,000squaremetersandlikelyaccommodating650stalls,asectionofofficesandshowroomscovering4,500squaremeters,andabondedwarehouseof18,000squaremetersabletostoreupto20,000tonsofgoods.Thecentrewillalsoprovidesupportingservicesincludingbankingandcustoms,andtradepromotionactivities.Itisexpectedtohousehundredsoflocalandforeignsuppliersofleatherproducts,footwearandtextile-garmentmaterials.Inspiteofthedifficultiesbroughtonbytheeconomiccrisis,Vietnamisstillactiveinattractingco-operationwithforeigncompanies.NineleatherandfootwearenterprisesfromSwitzerland,theU.K.andChilehaveexpressedwishtojoinhandswithVietnamesepartnersinthefieldaccordingtoHoChiMinhCity’sLeatherandFootwearAssociation.Also two retail companies from theU.K.are seekingVietnamese suppliersof leatherbagsand suitcases.SixChileanimportersseekingsuppliersofchildrensfootwear,leatherglovesandslippersandonefromSwitzerlandisseekinga supplier of ladies leather shoes.

The primary advantages that the Viet nam industry has are:● Lowcostbase● ChineseandTaiwanInvestors● Qualifiedlabourresources● Exportoriented● Innovation● Modernworkingconditionsandpractices.

Theexport/importperformanceofVietNamintheimportantsubsectorsisasfollows:53

U.S$CATEGorY 2005 2006 2007

41 leather H & SExport 51,539,811 73,�00,979 173,28�,128Import 73�,331,890 776,711,90� 933,705,50742 p. l. G.Export 366,566,660 376,69�,19� �83,003,816Import 15,813,806 17,951,110 29,096,25864 FootwearExport 3,078,615,6�5 3,65�,7�9,526 �,076,198,601Import 278,298,5�1 230,793,63 203,976,568

In2007VietNamtradedwiththeAgadirzoneasfollows:

CATEGorY 2007Egypt Morocco Tunisia Jordan

leather H & S 41Export 0 0 0 0Import �31,276 0 3,570 0.p. l. G 42Export 80,220 33,79� 3,017 2,825Import 0 0 0 3,798

5 Figures for �008 are not yet available from Comtrade



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Footwear 64Export 6�6,727 390,318 110,166 16,956Import 0 0 0 0

3.5.6. Identificationofopportunitiesofdiagonalaccumulationoforiginpromotingcooperationamongagadir countries:

TheAgadirAgreement,whichcameintoforceinMarch2007,isafreetradeagreementbetweenfourArabcountries;Tunisia,Jordan,MoroccoandEgypt.TheAgreementallowsexemptionofimportcustomsdutiesamongstitsmembersand theEUcomplyingwith thePan-EUROMEDRulesofOrigin thatallowfordiagonalaccumulationoforiginamongstitsmembercountriesandEUcountriesforsufficientlyworkedorprocessedproductsThe newly introduced concept of the Pan-Euro-Med accumulation system provided an untapped potential fordiagonalaccumulationbetweentheEuropeanandtheMediterraneanpartners.However,thissystemprerequisitesharmonizationof rulesoforiginasper theEuro-Medrules,aswellas signingaFreeTradeAgreementbetweenconcerned countries. The recent Agadir initiative falls under this umbrella thus enlarging the sourcing possibilities betweenthefourAgadircountries(Jordan,Egypt,TunisiaandMorocco)foraccumulationoforiginforexportstothe EU

DiagonalaccumulationoperatesbetweenmorethantwocountriesprovidedthattheyhavesignedFreeTradeAgreementscontainingidenticalrulesoforiginandaprovisionforaccumulationbetweenthem.Diagonalaccumulationisthesystem operation in the Pan-European Zone. Similar to bilateral accumulation, only originating products or materials canbenefitfromdiagonalaccumulation.

For the purposes ofArticle2 of thePan –Euro-MedAccumulation regulations, “productswhich are notwhollyobtainedshallbeconsideredtobesufficientlyworkedorprocessedwhentheconditionssetoutinthelistinAnnexIIarefulfilled”.

“Non-originatingmaterialswhichaccordingtotheconditionssetoutinthelistinAnnexII,shallnotbeusedinthemanufacture of a product may nevertheless be used, provided that:

(a) theirtotalvaluedosenotexceed10%oftheex-workspriceoftheproduct;

(b) anyofthepercentagesgiveninthelistforthemaximumvalueofnon-originatingmaterialsarenotexceededby virtue of this paragraph.

TheAnnexIIlistsstipulateforfootwear,leatherandleathergoodsthefollowing:

hS heading description of Product Workingorprocessing,carriedoutonnon-originatingmaterials,whichconfersoriginatingstatus

(1) (2) (3) (�)

ExChapter6�

Footwear,gaitersandthelike;parts of such articles; for

Manufacture from materials ofanyheading,exceptfromassemblies of uppers sole components of heading 6�06




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6�06

Partsoffootwear(includingupperswhetherornotattachedto soles others than outer soles): removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles and parts thereof

Manufacture from materials ofanyheading,exceptthatof the product

Accordingtotheabovetableanyfootwearproductgetstheoriginatingstatusinusinganynon-originatingmaterialsin themanufacture of the product except assemblies of uppers and sole components.Accordingly any footwearproductoruppersmanufacturedinTunisia,Morocco,JordanorEgyptwillgettheoriginstatuswhatevertheoriginoftheleatherorpartsoffootwearusedforthemanufacturingoftheproductexceptassembliesofuppersandsolecomponents.AstherearenosignificantexportersofassembliesofuppersandsolecomponentsinAgadircountries,thediagonalaccumulationoforiginwillrarely?applyforfootwearproductsandpartsoffootwear.

hS heading description of Product Workingorprocessing,carriedoutonnon-originatingmaterials,whichconfersoriginatingstatus

(1) (2) (3) (�)

ExChapter�1

Rawhidesandskins(otherthanfurskins)andleather,exceptfor

Manufacture from materials of any heading,exceptthatoftheproduct

Ex4102 Rawskinsofsheeplambs,withoutwoolon

Removalofwoolfromsheeporlambskins,withwoolon

�10� to �106

Tannedorcrusthidesandskinswithoutwoolorhairon,whetheror not split, but not further prepared

re tanning of tanned leather or Manufacture from materials of any heading,exceptthatoftheproduct

�107,�112 and �113

Leather further prepared after tanning or crusting, including parchment-dressed leather, withoutwoolorhairon,whetheror not split, other than leather of heading �11�

Manufacture from materials of any heading,exceptheadings4104to�113

Ex4114Patent leather and patent laminated leather, metallised leather

Manufacture from materials of headings �10� to �106, �107, �112 or �113, provided that their total valuedoesnotexceed50%oftheex-workspriceoftheproduct



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According to the above table leather further prepared after tanning or crusting of headings �107, �112 and �113 should not bemanufactured from non-originating semi-finished leather to get the originating status. In reverse,leather further prepared of headings �107, �112 and �113 manufactured in Tunisia or Morocco from semi-Egyptian finishedleatherwillgettheoriginatingstatusthroughdiagonalaccumulationoforigin.Accordingly,thepromotionoftheAgadiragreementamongtanningfactoriesinAgadircountrieswillincreasetheirsourcingfromEgyptofwetblueleathertobefurtherprocessedandexportedfreeofcustomsdutiestotheEUthroughdiagonalaccumulationoforigin

3.5.7. Success Stories

Currently,therearerelativelyfewcompletedsuccessstories.Thereare,however,afairnumberofprojectsintheirearlystageswhichhopefullywillbeatotalsuccessbytheendofthisstudy.Besides,thereareaseriesofotherimportanteventswhichcanbeconsideredsuccessstoriesinthattheycontributetostrengtheningtheenablingenvironmentforintra-Agadirintegration.Accordingly,successstoriesaredividedintothesetwogroups:

3.5.7.1Successstoriesthathelpcreateaninvestment-friendlyenablingenvironmentforintra-agadir integration

● SourcingrawleatherfromJordantoEgyptunderAgadirAgreement.● EstablishinganewtanneryinJordanwithArabinvestment($7million).● ThenewtrendbysomeproducersinAgadircountriestodevelopnewcompetitiveproductsindemandinthe

Europeanmarket(safetyfootwear,medicalcomfortfootwear,children'sfootwear),whichisanexampleoftheabilityofAgadirproducerstopracticenichemarketing.

● Exportingstylishcomfortchildren'sfootwearfromEgypttoJordan,withthepossibilityofexpandingthisproductintheJordanianmarket-nichemarketing.

● AstrongtendencytobuildindustrialcitiesspecializedinleatherindustriesinbothEgyptandMorocco.ThefirstofwhichisexpectedtobeupandrunningsooninEgypt.

● Thesuccessofamen's shoe factory indeveloping innovativehigh-qualityproductsunder itsownbrandname,marketingtheminitsstoresinCasablancaandMarrakech,aswellasmarketingtheminfranchisesoperating in Brussels, netherlands and the Ivory Coast.

● ThepossibilityofestablishingashoelastsfactoryinEgyptwithforeigninvestment,notingthattherearecurrently factories in Egypt, Tunisia andMorocco, but are insufficient in terms of type and volume ofproduction.

● ATunisianleatherproductsfactoryisinterestedinsourcinghidesandskinsfromEgypt.● StartingTunisian-Jordaniantalkstomarketmen'sandwomen'sfootwearinJordan.● Thesuccessofafootwearmanufacturerindevelopingproductsofitsowndesignsandopeningstoresunder

itsnameinTunisiaandKuwait.

3.5.7.2Successstoriesandongoing(preliminary)projects

● Submitting a formal request to the National Center for Leather and Shoes (CNCC) in Tunisia to helpJordanFootwearandLeatherIndustriesAssociationinestablishingasimilarcenterinJordanandprovidingcounseling to promote the leather and footwear sector in Jordan, especially in the areas of training anddesign.

● StartingtalkstoestablishashoefactoryinEgyptwiththeparticipationofTunisia,JordanandEgypt.ItisplannedthatthefactorystartssellingitsproductsinEgyptianandJordanianmarkets,thenexpandslatertoexportoutsideAgadircountries.

● ThepossibilitytosupplyTunisiaandJordanwithsoleandinsoleboards,whicharecurrentlymanufacturedinEgypt-sampleswereexchangedduringthefieldsurvey.




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● AsampleofEgyptianleatherusedtomanufacturesafetyshoeswasdeliveredtoaJordanianfactory.● AnEgyptianmen'sshoefactoryisinterestedinacquiringheels,solesandinsolesfromTunisia-Negociation

hasstartedbetweenthemanufacturers.● AnEgyptianmen'sshoefactoryisinterestedincooperatingwithaMoroccanfactorywhichproduceshigh-

qualityGoodYearweltedmen'sdressshoes.

4. Conclusions4.1. SWoT analYSiS SUMMURY

Egypt Jordan Morocco TunisiaNumberofenterprises(1) 4139 137 1500 450

Leatherexport 92826 8692 25509 282�7Leatherimport 10531 62� 10620� 2855�5LProdexport 5297 3220 61685 9�,3�6LProdimport 65176 17861 �0167 27,222Footwearexport 21069 �225 3�86�1 608039Footwearimport 126968 �1876 95312 1�1,62�Trade balance -83�83 -��22� 253328.5 2762�1labor 55095 1800 15000 40000productivity 5 na 5.9 10.6Wage/hour 1.1 2.7 1.67 1.39KW/Hour 0.048 0.06 0.13 0.1

Main advantagesproduction costs ProximitytoGulf

countriesFlexibilityandshorttermdelivery

Flexibilityandshorttermdelivery

Competitivetowards China

Importanceofnichemarketorientedproduction

24thfootwearsupplierof the World

30thfootwearsupplierofthe World

Importanceofthelocalmarket

Exportofhighqualityfootwearproducedinlowquantitiesadaptingto the fast changing of fashion

Exportofhighqualityfootwearproducedinlowquantitiesadaptingto the fast changing of fashion

availability of raw skin and leather

availability of raw skin and leather

PossiblebenefitsfromEgyptianwetblueleather to achieve accumulationoforiginsatexporttotheEU

PossiblebenefitsfromEgyptianwetblueleather to achieve accumulationoforiginsatexporttotheEU

Challenges

Toshiftfromalocalmarketorientedproductiontoanexportorientedone

Tofacedumpingpracticescomingfromimports

Availabilityofqualityleather and accessories

Availabilityofqualityleather and accessories

Subcontracting Subcontracting Subcontracting Subcontracting

Design and marketing Designandmarketing Designandmarketing Designandmarketing

Vocational training Vocational training Achievinghighquality Achievinghighquality



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productivity Productivitysimilarthanthat of italy

achieving high Productivitysimilarthan that of italy

achieving high Productivitysimilarthanthat of italy

Specializations Wet blue leather Raw hides leather footwear leather footwear

Footwear for agadir localmarket Safetyandmedicalshoes leather bags leather bags

(1) Companiesemployingmorethan10workersinMoroccoandTunisia

(2) ImportsandExportsandTradeBalanceareinthousandsofUSD,year2008

(3) StatisticsSourceareITCtradeMapforEgypt,Tunisia,andJordanandMoroccanOfficedeschangesforMorocco

4.2. DraftFindings(Recommendations):

v TheEU27marketisthebiggestintheworld.Itisdifficulttopenetratebutnotimpossible.AsmentionedaboveopportunitiesnowarebetterthantheyhavebeenforsometimenotwithstandingthecurrentfinancialcrisiswhichmayplayreasonablywellforAgadircountries.one of the fall outs of the crisis is to manage thesupplychainmoreefficiently.Thecurrentclimateofshortleadtimesandsmallordersmeansthattheclosertheresourcetothemarketwhichhasaflexibleproductionunitisarecipeforsuccess.China,Vietnam,Indonesia,Indiaarealongwayaway.AgadirCountrieshaveaninbuiltadvantageinthisrespect.

v According,totheinternationalmarketanalysis,thetargets for Agadir countries are Germany, France, Italy, UK,Belgium,SpainandNetherlands,forthefollowingmainreasons:▪ AgadirexportstoEUcountriesarefreeofcustomsduties▪ Germany,France,Italy,UK,Belgium,SpainandNetherlandsareresponsibleof34%oftheGlobal

demand. ▪ TheirdemandishigherthanthatofUSA(23%)▪ Theirdemandisveryactivewithayearlyincreasefrom8to20%

v In someof theEU15 countries (UK,France,Benelux, Spain, Portugal,Greece), the footwearmarket ispolarisingintolowerquality/priceandhigherquality/pricesectors,whereasinthenewEUmemberstates(CzechRepublic,Poland,Hungary)amid-rangequality/pricesectorseemstobedeveloping

v At same time theEUfootwearmarketinthenearfuturewillbeinfluencedbythedemandforhealthyandcomfortablefootwear,especiallyforthegrowingnumberofolderpeople,becauseoftheageingpopulation.

v Therewillbeacontinuedshiftfromformaltocasualfootwear,especiallyintheEU15countries.Thedemandforformalfootwear inthenewEUmemberstateswitharisingmiddleclassandmorewomenatworkwillalso increase.

v Thepastfewyearshasseenthecontinuinggrowthofdiscountfootwearretailers,buttosomeextent,especiallyin the younger more fashionable marketsegmentthishasresultedinthewideravailabilityoffootwearinother types of outlets, particularly clothing retailers.

v OpportunitiesforexportersfromAgadircountries:▪ Opportunitiesexistinthepremiumpartofthemarket,particularlyinthesupplyofgoodqualityleather

footwearinsmallseriestodifferentiateAgadirsupplyfromthatofVietnamandChinawhoareverycompetitive in the mass consumer segment. here it is important to demonstrate design capabilities and sensitivitytothefashiondemandsoftheEUmarketplace.




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▪ Thereisstillademandforfashionfootwearcontinuestogrow,butdesigncapabilitiesandsensitivitytothechangingfashionneedsofthemarketisrequiredtobeabletoshowapointofdifferenceespecially intherapidlygrowinggreymarket.

▪ TheenlargedEUmarketwillnotprovideintheshortmoreopportunitiestoAgadircountries.EasternEUmarketsarelessdrivenbyfashion.ItisdifficulttoexporttoEasternEUcountriesastheirimportsarelimitedandstillbigfootwearproducersandnotyetinterestedindelocalisation

▪ As theEU footwear industry looks forways to cut its costs, therewill be opportunities created byformingworkingpartnerships.ThebestformofpartnershipislikelytobewithanEUcompanywithasimilaroutlooktoAgadir'sentrepreneurs'andonethatoperatesinanichemarket,e.g.children’footwear,sandals,healthfootwear,outsizedshoesandorthopaedicfootwear.

4.3. CooperationPossibilities:

v Tunisia andMorocco could benefit from theAgadirAgreement and theArab Free tradeAgreement toeffectively source their leather from Egypt. Saudi Arabia and Syria.

v BytheaccumulationoftherulesoforigininordertoincreaseexportstowardsEurope(bilateralaccumulationof the rules of origin) -TunisiaandMoroccoimportsofthesemi-finishedleatherareveryhigh.ThepromotionoftheAgadiragreementamongtanningfactoriesinAgadircountrieswillincreasetheirsourcingfromEgyptofwetblueleathertobefurtherprocessedandexportedfreeoftaxestotheEUthroughdiagonalcumulationof origin.

v Tunisia, Morocco and Jordan can outsource the sheets for Soles and Insoles from Egypt.

v Egypt can outsource leather unit soles Shoes and Insoles from TunisiaandfinishedshoesfromMorocco.

v JordanandEgyptcouldattractmorePanAgadirDirectInvestments(PADI)duetoproximitytoIraqandother Gulf states.

v TheAgadir4countrieshavearound130millionpeoplewhichmeanapowerfulmarketofabout300millionpairs of shoes annually from different quality and price levels. Currently, none of the � countries is self dependentonmeetingitsmarketneeds.Thecooperationcouldtakedifferentformsfromtradetoindustrialcooperation(subcontracting,assembling,joint–ventures,trainingonmanufacturinganddesigns...).

v ImprovingthecomponentsindustryinEgyptwillbenefitbothEgyptandAgadircountriestolowercostofimported components such as sheets, soles, insoles, adhesives, lasts, zippers…etc.

v Jordan and Egypt arealreadyworkingonnichemarketsfor footwearproductssuchassafetyshoes,healthandcomfortshoes,andstylishandhealthychildren’sshoes.Thisisanotherareaofcooperationbetweenbothcountries.

v Establish a shareholding company to distribute all Agadir leather and shoes products in the region, and initially the EU.Thiscompanywillbeempoweredtoopenfranchises,setandoutsourceitsdesignsandfashions, give subcontracts to different suppliers from Agadir countries based on price and quality not quotas. Itisassumedtohaveachiefexecutiveofficer(CEO)outsidefromtheownerswhoknowshowtomarketand promote its products effectively. The manufacturers may beshareholdersbutthemanagementwouldbeindependent.



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4.4. agadir Strategic plan:

Beforesettingthestrategicobjectivesandrecommendationswhichwillbepresentedinthesecondreport(StrategyandWorkPlan),itispossibletodrawbroadlinesofthepossiblecooperationdevelopmentpoliciesbetweenthe4countriesinsidetheAgadirzone.Itis common to build decisions based on past analysis and conclusionsdealingrespectivelywiththefollowing:

-Thesituationandstrengthsandweaknessesofthefourcountries.

-Demandstructureandmarketforecast.

- International competition.

Therewillbefourlevelsofcooperationfortheproposedstrategydealingwiththefollowing:

-Tradeexchangesbetween<Agadircountries>–Intratrade

- Industrial and commercial investments

- «Competitive» cooperation

-Goinginternational–TowardsGlobalization

1. TradeexchangesbetweenAgadircountries–IntraTradeDevelopmentProgramme

Thiswilltakeintoconsiderationallapprovedrecommendationsregardingthecooperationpossibilitiesandaccumulation of rules of origin discussed earlier in this report.

2.Industrialandtradepartnership:

Thismay take different forms in trade or industrial partnerships as discussed above in the findings andrecommendations.Howeverthemostpredictedscenarioswouldbeasfollows:

IdentificationofopportunitiestocreatenewindustrialprojectsintheAgadirmemberstatesindividuallyorcollectively based on the analysis of the regional imports from the E.U of Leather and Shoes.

IdentificationofnewindustrialprojectswhereintegrationandcomplementaritiesintheLeatherandShoessector intheAgadircountriesispossible,andhenceforth,promotingexportsof theseprojects intheE.Umarket.

Thispartofthestrategywillprovidesomeideasregardingattractingmoreforeigndirectinvestments(FDI)and/orpanAgadirdirectinvestments(PADI).

3.TechnicalAssistanceDevelopmentProgram-TechnicalCooperation:professional, technological,andinformational,trains...;

ThethirdsubjectoftheStrategyis to develop the competitiveness of the Leather and Shoes sector in Agadir zone This is aimed at focusing on comparative advantages and remedying weaknesses throughcommonactions withfixedobjectivessetbythegroup. This willoffer the sector the best possible environment to face the double challenge of international competition and the changing demand on local and globalmarkets.

For thepurposeofachieving this, theactionplanmustaddress the followingpriorities, asmuchas it ispoliticallypossible,toaddskillstogenerateaddedvalue:.

I-Humanresourcesdevelopment

TheHumanResourcesDevelopmentplantobeproposedaims,especiallyintheindustrialfield,atenabling




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the transition from sub contracting operations to co - contracting and the final producer. This requires addressingthefollowingissues:

-EnsuringtheupgradingofskillsofoperatorstoalevelwheretheycanbeproductiveenoughtoentertheEUmarkets

- Training or improving thefactoryfloor technicians and supervisors capacities

- Training or improving the designers capabilities

- Training in achieving higherlevelsoffinancialmanagement

Thecompanies’marketingcapabilitiesinthefourcountriesturnedouttobe very weakingeneralandtheneed for modern skillsis urgently required. This willrequiregreateffortstoemployandtrain,marketingandexportmanagers.

Inordertoencouragetrainingefforts,theactionplanwillproposethefollowing;

-Linkthehightraininginstitutionsinthefourcountriessoastoopenthedoorofpermanentdialogueabouteducational programs or curriculum

- organize events and study tours among the Agadir countries on training of trainers

-Giverecommendations tocurrent reformprogramsof thevocational trainingprojects insomeof the4countries based on successful results in the other countries.

- EstablishAgadirFootwearInstituteforMiddleandSeniormanagementtraining

ii- DeSiGn ReSeaRCH & DeVelopMenT

MasteringofnewinformationandcommunicationtechnologiesisastrategicissuefortheLeatherandShoessector in the four countries. These techniques are very necessary for improving international competition of the sector. Innovation, having a visionary management, industrial organization, logistics, communications CAD/CAM managing product life cycle, enterprise resource planning, computer assisted productionmanagement systems, agent relations management, aresubjectsthatneedtobemastered.

PLEASE Add SoME InPUTS rEGArdInG dESIGn

dESIGn

The leather products industry tends to be driven by design and innovation. The centre for this is undoubtedly in Italy. It is necessary therefore for the Agadir countries to have access to this information in real time. LinkageshavetobeestablishedwithfashionanddesigncentersinItalyonapanAgadirbasisthroughthevariouschambers.Thiswillgivethemanufacturingcompaniesacompetitiveadvantageandpresenttotheirclientsakeycustomervalue.

Inaddition,recommendationswillbesubmittedtoimprovethequalityandinnovationoftheproductionintheAgadirzone.ThisincludesimprovingR&Dactivitieswhilerelyingonthetechnicalcentersintheregiontoestablishcooperationandcollaborationandcreateeconomiesofscaleaswellassensitizing to initiatestrongerpartnershipwithEuropeanlabs,technicalcenters,engineeringschoolsanduniversities.

iii CReaTion oF a DaTa BaSe on expoRT anD SoURCinG oppoRTUniTieS:

4.ExportDevelopmentProgram-Encouraginga commonexportplan



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TheobjectivesoftheProgramare:

■ Toconsolidatethepositionsintraditionalmarketsandtoreachouttonewmarkets,inordertostabilizefirstthecurrentmarketshareofthefourcountriesandthentoincreaseitsignificantly.Thisexportplanentailsmarketresearch,communication,exportpromotionpolicyandorganisation.

■ TosearchforopportunitiestoestablishindustrialandcommercialassociationswithintheAgadiragreementintheLeatherandShoesindustryinordertopromoteexportandcompetition.

■ ToreachnewmarketsinsideproposedEUtargets(UK,Portugal,BelgiumandHolland)andoutsideEurope,such as Gulf states, and other MEnA countries.

ForeachcountryofAgadir,exportisconsideredthemaindriverforgrowth.This is for many reasons Among them, preferentialagreements,theexistenceofrawmaterials,geographicproximity,theimplementationofacomplementary development environment and the cost factors.Theproposedprogramwilltakeconsiderationofspecificneedsanddifferencesofthefourcountries;examplesare:

-TheprivilegefrontpositionofMoroccoandTunisiaintheEUmarket

-TheexclusivefrontpositionofJordanintheIraqiandGulfStatesmarkets

-ThequasifrontpositionofEgyptintheMENAmarkets.

Accordinglytheexportdevelopmentactionplanwill:● ConductafeasibilitystudyforpossibleFDIorJVfortheestablishmentofanewbusinessproducingsoles/

moulds/lasts/adhesives.Allitemsthatareweakpointsinthesupplychainoftheleatherproductsindustryinall four countries.

● Establishadatabaseofexperts,resourcesandcommoncontactsforallcompaniesintheregion.

● Conductafittingsurvey:InordertogiveAgadircountriesacompetitiveadvantageintheregionalmarketsofover300millionpeopleconductalastsurveytodesignaproperlyfittinglastforthefootwearconsumers.ThisseriesoflastswouldthenbesuperiortoanythingfromChinaorfromEuropeleadingtoamoreacceptableandmarketableproduct.

● Improve international transportation amongAgadir countries: In order for intraAgadir trade to developseamlesslytransportationlinkshavetobeimproved.

● ParticipationinInternational Fairs

AsanecessaryextensiontoglobalmarketingeffortsAgadircompaniesmustattendEuropeaninternationalfairstogainexposure,experienceandeventuallysecureorders.Inordertobeeffectiveattendanceatselectedfairshastobeoveraminimumof3years(twiceperyear).Amoreeffectiveapproachisover5years.

Bytheirverynatureattendanceatoverseasfairs isanexpensiveoperationforanycompanyletaloneonethat isjuststartingontheinternationalmarket.Infacttheonlywayforthisform(ofeffective)marketingtoproceedisbysupportfromGovernmentandTradeagencies.TheAgadirCountrieshavethissupportfromtheirownindividualcountries.HoweveramoreintegratedapproachwouldbemoreeffectiveincombiningresourcestohaveanAgadirGrouppresenceatselectedshows.




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Attendanceatashowshouldnotbea“turnupandshow”basis.Marketresearchshouldbedonebeforeparticipatingintheselectedshow.Ifnotalreadydone,theshowshouldbevisitedbeforeshowingtogetafeelforit.Thereshouldbeaplanwithclearimplementableobjectivesforattendanceandaclearplanforfollowupaftertheshow.Obviouslya budget should be allocated.

OftheinternationalshowsthatareavailabletotheAgadirCountriesthefollowinghavemerit.

ExpoRivaSchuh,RivadelGarda,Italy,JanuaryandJuneeachyear.

Shoes and some complementary bags

MeetinAfricaCairo,Egypt,February

All leather products

LineaPelle+SimacTanningTech,BolognaItaly,April,OctoberInternationalExhibitionOfleathers,accessories,componentsandsynthetic productsandmodelsforfootwear,leathergoods,leatherwearandfurnishing.

InOctobertheshowisjoinedwithSimacaninternationalexhibitionofmachinesandtechnologiesforfootwear,leather goods and tanning industry.

GDSDusseldorf,GermanySeptember

Biggestinternationalshoeshowintheworld

MIPELMilanItalyMayandSeptember

InternationalShowcaseforleathergoods.Twiceayear,inaprestigioussetting-thecityofMilan,oneofthefashioncapitalsintheworld-thebestcreationsinleather,fabricandalternativematerials,forallseasonsoftheyear,arepresented.Theaimistohighlightandpromotetheimageofleathergoodsproducedallaroundtheworldand,inparticular,Italian-madegoods.Theexhibitorsmeettheirmostimportantcounterparts,dealersandthemedia,andcanalsotakepartinspecialevents,conferencesandroundtablesinapleasant,elegantenvironment.

MICAMMilan,ItalyMaySeptember

Internationalfootwearfair

MIDECParis,France,AprilSeptember

Internationalfootwearfair

Salondelamaroquinerie.ParisFranceFebruary,September

International leather goods fair

Thefollowingshowshouldbevisitedifpossibleformarketresearchpurposes(notforexhibiting)APLFHongKongApril

FashionAccess-Handbags,Travelware,Footwear,LeatherGarmentsandFashionAccessoriesisacomprehensiveeventthatcoversawiderangeoflifestylefashion.



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aGaDiR TRaDe FaiRS

Morocco,TunisiaandEgyptallhavetheirownleatherfairswithaninternationalfocus.UnderthespiritoftheAgadirAgreementinorderforthefairstobemoreeffectiveintheinternationalmarket,particularlyEurope,theyshouldbesubsumed into one larger unit under the Agadir umbrella.ThisnewAgadirFairshouldthenalternateyearonyearinthefourcountries.

5. DeVelopMenT oF STRaTeGY5.1. introduction

The study has highlighted the challenges facing the sector in the quest to uplift the performance of the industry in the4countriessothatitwillbepreparedforthebusinessenvironmentthatwillexistgoingforward.Thestrategythereforehas toaddress theneed toachieve thestatedgoalsof thestudyso that the industrywillbe inastrongpositiontoreacttoworldcompetition.Thesegoalsare:

● IncreaseexportstoEurope● Enhanceregionaltrade● Industryco-operationandintegrationinthe4countries● AttractForeignDirectInvestment

Strategy and its subsequent action plan therefore need to be articulated for the above goals. The strategic plan suggests away forward that theAgadirgroupshouldbe taking. Itgives thedirectionbutcannot foretellexactlyhow thecurrentbusinessenvironmentwillevolveinthefuture.Thecommercialenvironmentatthemomentisunprecedentedin modern times.

Theanalysespresentedinthefirstphasereportreviewed:● The EU demand structure, the global competitive situation and the position ofAgadir countries in this

regard.● Thesituation,performances,strengthsandweaknessesandchallengesoftheleatherandshoessectorineach

of the four countries signatories of the Agadir Agreement;

ThisanalysisshowedthattradeexchangesforLeatherandShoesandcross-investmentsbetweenthefourcountriesare veryweak andbelow the aspirations of theGovernments of the four countries.Although complementaritiesaccumulating strengths, competencies, and resources of the four countries are very promising of improved global competitiveness of the zone vis-à-vis international competition. Sector’s entrepreneurs are not fully informed on Leather and Shoesmarket andmanufacturing capacities in the zone neither aware on cooperation opportunitiesoffered by the implementation of the Agadir Agreement.

Thisanalysisshowedalso,competitiveadvantagesofAgadirzonesaswellaschallenges.Thesearesummarizedbelow:

TunisiaandMoroccohavethefollowingcompetitiveadvantages:

● Areawellestablishedexportersoffootwear,leathergoodsandsomesemifinishedleathertotheEU● Haveamarketingadvantagewhichshouldbeexploitedinthefutureforproductdevelopment.




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● TheygainthefashionknowledgefromtheirEUpartners.ThiscoupledwithflexibleproductionunitsandtheirproximitytoEuropegivesthemanadvantageoverVietNam,India,andChina

● Endowedwithabusinessenvironmentconducivetoexportdevelopment● Haveinvestedintrainingandresearchinstitutesfortheirindustry● Amplesupplyofqualifiedlabor

Egypthasthefollowingcompetitiveadvantages:

● Anamplesupplyofleathertosupportthemanufacturingindustryinthecountryandpotentiallytheregionenablingflexibleproductionenvironment

● EgyptsurplusofwetblueandcrustleathercouldbeimportedbyTunisianandMoroccantannerieswithinthepreferentialoriginaccumulationinordertoincreasetheircompetitivenessandgainnewmarketsharesforexport.

● The potential to develop into a low cost producer if it concentrates on developing its manufacturingexpertise

● Amplesupplyoflabor

Jordanhasthefollowingcompetitiveadvantages

● Smallerflexibleshoemanufacturingunitswhichhavespecialisedinnicheproducts.● HasgoodtradelinkswithcountriesoftheregionmoresothantheothermembersoftheAgadirzone.● Hasamarketingadvantageinthatitcanbeahubfordistributionofproductsandsourcingofleathertoand

from the region.

agadir countries are facing the following challenges:

● Morocco andTunisia are in danger of surrendering their competitive advantages because of the greaterdemandinthefutureforfinishedleathertobeavailablelocallytocopewiththenewflexibleproductionenvironment.

● Theyneedtodeveloptheircomponentsupplyindustryandimplementnewshoeengineeringtechniquesinproduction and constructions, to reduce costs.

● Thereisaspecialneedforshopfloorsupervisorsinallfourcountries.Thisproblemneedstobeaddressedbecause India could easily catch up in training and research.

● Thereisaneedtoupgradetheirtanningindustrytocontinuetheireffortsinfinishingtheirleatherwithhighquality.

● Thereisaneedtoupgradeexportcapabilitiesofdomesticmarketorientedcompanies● Thereisaneedtowidentheirvaluechaininexportingfinishedproductsandenhancingtheirmarketingand

design capabilities● Theneedtoimprovethecapabilitiesoftheproductionprocesstoincludetheoptionofautomation.

5.2. FormulatingaGenericStrategyfortheGroup

FromtheSWOTanalysisandthefindingsandconclusions,ananalysisofthebusinessenvironmentcanbedonewhichwillpointthewaytodecidingthecriticalelementsofthestrategicplan.TheplanmustbeSMARTi.e.:-

● Specifictotheindustry● Measurableinthesensethattangibleresultscanbequantified● Achievable in the sense that the planned results are possible● Relevant in the sense that they are recognised as meaningful by the

entrepreneurs of the industry● Timespecific-projectingaheadupto3–5years.



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Becauseofthecurrentbusinessclimatetheplanneedstobevieweddynamicallyandstrategicinnovationhastobepracticedtomodifytheplan,itsobjectivesandactionsasandwhennewissuesoccurintheoperationalareaoftheAgadir Group.Using the business analysis tool of STEEP, thisanalysiswillrevolvearound:-

● Social – cultural factors – human resources available in the � countries● Technology–theextenttowhichthisisused,underusedandupdated● Economicenvironment–thestateofthetargetAgadirmarkets● Ecological factors especially pertaining to the tannery sector.● Political/LegalorRegulatoryassistanceavailabletotheindustryinthe

� countries.ThiswillrevealthecorecompetencesoftheAgadirindustryshowingthecompetitiveadvantagesandthekeyindustrysuccessfactorsasfollows:




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FromtheBusinessEnvironmentandIndustrialSettingwhichwaspresentedinphase1ofthereportforeachcountry,theresultsoftheSTEEPAnalysisisshownbelow:

Social Environment

ThefollowingfactorswereidentifiedthatwerelikelytohaveaneffectoncompaniesofAgadircountries:• Culturalvaluestowardsemploymentimpactonthebusiness,i.e.,frequentabsenceresultinginhighemployeeturnoverand

absenceofworkers• lowappreciationofleatherproductsbycitizensofAgadircountries-poorleatherculture• Goodmaleworkersarehardtomotivateforthistypeofwork,whereaswomentendtoquitworkaftermarriage• Poorattitudestowardswork.Workersappeartobelessproductive• Inadequate specialized labour training• GovernmentsofAgadircountrieshavevocationaltrainingreformprogramswhichwillbenefitallmanufacturingsectors

Governments of Agadir countries should improve the current vocational training schemes and programs to develop a stronger business culturetofacilitateeconomicgrowth.

Technological Environment

Thefollowingfactorsweveidentifiedaslikelytohaveaneffectonthebusiness:• Newequipmentisavailableontheinternationalmarketfortheproductionofmediumhighqualityleatherproductsand

components.• Someincentiveschemesareavailableforthepurchaseofnewcapitalequipment.Mostoftheseschemesfocusoncapital

extensiveinvestmentsandlocallyproducedmachinery.• Trend to establish specialised Leather Cities.• Short – short manufacturing is a necessity by all EU sub or co-contractors• Excessproductioncapacity• Smallflexiblefactories• Quality levels achieved• reasonable productivity• Needtoimprovefinishedleather• Sufficientsupplyofleatherandcomponents.However,qualityoflocallyproducedcomponentsneedstobeimproved.

Businessownersinthe4countriesshouldrecognizetheimportanceoftechnologicalimprovementstotheirproductionprocess,andinparticular in relation to modern technology and manufacturing techniques. Also, improvement of artisan production techniques is needed. They should gear themselves to technological challenges of their businesses.

Economic Environment

Thefollowingfactorswereidentifiedaslikelytohaveaneffectonthebusiness:• EconomicslowdownandGlobalfinancialcrises• Thefreetradeagreementbetweenthe4countriesandtheEUprovidesgoodpotentialtoimprovetheindustryinthe4countries• high investment costs• Withthecurrentfinancialcrises,accesstofinancewillbeharder• nearly Stable local currency in the � countries• Levelsofdisposableincomewereshrinkingasmorepeoplewerelosingjobs.Businessownersneedcontinuouslytoreviewtheeconomicenvironmenttostrategizeonanynewpurchasestobemadeattherighttime.Theircurrenttargetmarket(EU)isadverselyaffectedbythecurrentfinancialcrisiswhichprovidesopportunitytoAgadircountriesoverothercompetitorsifcanmeetnewtrendsintechnologyandmanufacturingtechniques.

Ecological Environment

Thefollowingfactorswereidentifiedaslikelytohaveaneffectonthebusinesses:• TheREACHprogrammewillbeimplementedsoonorlaterwhichmightaffectthetanningindustry• Employee safety and occupational health is priority to EU• RecyclablepackagingisalsoapriorityfortheEU• Voluntary“ecolabel”forleatherproductssoldinEU• Governments of Agadir countries are imposing more environment control measures specially on tanning industry. BusinessownersneedtofollowchangesinEUandGovernmentregulationstopreservetheenvironmentforlong–termsustainabilityoftheindustry.ThiswillenhancetheimageoftheirproductsintheEUmarket.

Political/LegalEnvironment

Thefollowingfactorswereidentifiedaslikelytohaveaneffectonthebusiness:• relative political stability • respect and protection of individuals’ property rights under the constitution.

• Changesintaxlaws,whichmakesubmissionoftaxreturnsacumbersomeexercise.• rival producers need to instigate legal action over content labelling details• Anti-dumping measures against Chinese products should be considered by the � countries as a unity• Strong enabling environment via Governments’ and associations’ supportBusinessOwnersneedtobenefitfromthecurrentenablingenvironmentandGovernmentalsupporttocapitalizeontheircurrentmarketsharesandexpandit.



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Adistillationof the foregoinganalysisproduces the followingbusinessenvironmentandstructureof theAgadirGroup:

However,whatisstillmissingnowistheoverallstrategicdirectionofthebusinessesinAgadirZonetoachievethestudystatedgrowthgoals.Theoverallstrategicdirectionisthebroadoverarchingapproachthebusinessadoptsinordertobuildonitsdistinctivecompetencies/strategicadvantages,soastomakethoseintosustainablecompetitiveadvantages. hence, there is a need for an overall strategy that gives the strategic thrust for successful competition, increaseinmarketshareandbusinessgrowth.

Essentially,CompaniesworkinginAgadirZonehavetwobasicchoices.Thefirstrelatestotheproduct.Inrelationtotheproduct,acompanycandecidetoofferastandardproductoraproductthatisdifferenttowhatcompetitorsoffer,thatis,adifferentiatedproduct.Thesecondchoicerelatestothemarket.Acompanycandecidetoofferaproducttotheentiremarketortoasegmentofthemarket,i.e.,aparticularcustomergroup.Ifonecombinesthesetwooptionsthatgivesthefollowingfourgenericstrategies:



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A low cost strategyanenterpriseadoptstoachievethelow(est)costinproductionbystrivingtobeanoveralllow-costproviderofaproduct/servicethatappealstoabroadrangeofcustomers.

Businessesshouldrealizethatthestrategictargetislowcostrelativetocompetitors,notabsolute low cost.

A differentiation strategy: an enterprise offers a product that is different or perceived to be different by the customer fromastandardproductavailableonthemarket.Itimpliesaddingvaluetotheproduct.Itseekstodifferentiatethecompany’sproductofferingfromrivalsinwaysthatwillappealtoabroadrangeofbuyers.Thesebecomeattractivewhenbuyers’needsandpreferencesaretoodiversetobefullysatisfiedbyastandardproduct.

Focusedormarketnichestrategybasedonlowercost:anenterpriseadoptstoofferproductstoanarrowbuyersegmentandout-competingrivalsonthebasisoflowercost.

Focusedormarketnichestrategybasedondifferentiation: an entrepreneur adapts to offering niche members a product customized to their tastes and requirements.

Stuckinthemiddle!

The above four strategies indicate that onewould have to choose one of them.Many companies have tried tocombinesomeof theabovestrategies.Portercalled thisbeing‘stuck in themiddle’.The logicbehindfollowingone generic strategy is that a strategy aimed at achieving cost leadership precludes the capital investment required foradifferentiationstrategy.Porterarguesthatthemiddleoftheroadisnotpossibleandleadstobelow-averageperformance.Thereis,however,evidencetosuggestthatfirmscombiningalowcostanddifferentiationstrategycanbesuccessful.Honda,forexample,operatedonalowcost(andlowprice)strategyforsubstantialtime,butgraduallydifferentiated its products successfully. Volvo operated for a long time on the basis of a differentiation strategy (high qualityspecificfeaturesatapremiumprice),butgraduallyintroducedalowcoststrategywithmorestraightforwardcarsproducedatlowcost.




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Nevertheless,beingclearaboutone’sgenericstrategyisimportantasitprovidesthebasisforthewayabusinesspositionsitselfinthemarket.

The Strategy

TheAgadircooperationstrategyfortheleatherandfootwearsectoristopromoteregionalintegrationthatsumthecompetitive advantages of each of the four countries signatories of the Agadir Agreement to meet sector’s challenges ofcompetitivenesstowardslowcostAsiancountriesandresponsivenesstothenewglobalizationrequirements.

ThecooperationstrategyisalsotomarkettheAgadirzoneasazoneofexcellenceforEUfootwearsourcingandFDIlocation.

Therefore, it is highly recommended that Agadir countries need to follow a Differentiation Strategy and encourage their companies to develop niche products.

Theactionplanthereforerevolvesaroundthreemajoraspectsofstrategy:-● Production● Marketing● Investment

6. aCTion plan6.1.Aspect1-Production

InpracticaltermstheAgadirGroupcompaniesshouldtaketheopportunityunderthisprojecttoorganisethemselvesso that they are in a position to be able to manufacture the various products required for interAgadir Trade to a level of efficiency, quality and competitiveness that satisfies theB2Band consumermarkets in thevarious countries.EstablishingthemselvesinthepanAgadirmarketwillalsostrengthentheofferthecompaniescanmaketotheEUmarkets.

6.1.1. leather

i. Integration and Supply opportunities

EgyptisthepowerhouseintheAgadirregionfortheproductionofleather.Ithasthelargestproductioncapacityofthe4countries.HowevermostoftheleatherproducedbytheEgyptiantanningsubsectorissemifinished(eitherwetblueorcrustwithsomepickledskins).Recentlyhowevertherehasbeenamarkedswingtogoingtothenextstageandproducingfinishedleather.

TunisiaandMoroccohavetraditionallyreliedonimportsoffinishedleatherfromEuropeansubcontractingpartnersto convert into leather products. Presently tanneries in Tunisia and Morocco are being encouraged by Government toproducegoodqualityfinishedleatherforexportorlocalproductionratherthanconcentratingonsemifinishedproducts.Thisisagoodstrategyandwillhelptheleathergoodsmanufacturingsubsectorstoimprovetheirefficiencyof supply by having a local supplier of finished leather rather than relying on imports.Taking into account theavailability of quality semi-finished leather in Egypt the intra-trade development should focus on developing aprocess of vertical integration whichstrengthensthesupplychainwhichcanthenreactefficientlytothenewshortshort supply requirements.

Jordanisasmallplayerinleathermanufacturewith1tanneryinoperationwhichcanproduceleatherthroughtofinished.

Theopportunity for intraAgadir trade therefore lieswith theproductionoffinished leather.Thedevelopmentoffinishedleatherneedstobeacceleratedasmuchaspossibleandtradewillhelpsatisfythisobjective.The ability to manufacturefinishedleathertosatisfymarketneedsisakeyperformanceindicatorforthedevelopmentoftheAgadir



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tanningindustry.Itwillalsogoalongwayinimportsubstitutioninthesuborcocontractingspheregivingincreasesinvolumetotheindustrywhichiscurrentlyoperatingbelowcapacity.

Thefirstphaseanalysisestablishedthatfinishedleathermade in Tunisia or Morocco from Egyptian semi processed leatherwillgettheoriginatingstatusthroughdiagonalaccumulationoforigin.Thus,thepromotionoftheAgadiragreementamongtanningfactoriesinAgadircountrieswillincreasetheirsourcingfromEgyptofwetblueleatherto be further processed intofinished.(ThiscouldalsobeexportedfreeofcustomsdutiestotheEUthroughdiagonalaccumulation of origin.)TakingintoaccountthehighavailabilityofleatherinEgypt, thisdiagonalaccumulationwouldimpactsubstantially in the development of the intra-trade among Agadir countries.

Inordertoachieveintegrationandfindsupplyopportunitiesthefollowingactionsshouldbecarriedout:

action Responsibility Resources

Meeting of Tanners Associations to decide areas of co-operation, integration and supply requirements

Tanners Associations ExportPromotionAgenciesin4countries

Marketresearchtodeterminetypesoffinishedleatherrequiredineachcountryespecially for import substitution.

Factfindingtourbypotentialexporters

Tanners associations

ExportPromotionAgencies

The Tanners

Countryassociations,inco-operationwithExportPromotionAgenciestoplan,co-financewithindividualcompanies,andorganize a study tour for each of the four countries to the others.

Companies to be pre-selected as to suitability and commitment

Decidewhattypesthatcanbeproducedwithcurrenttechnologyby evaluation of current manufacturing plants

The TannersContact machinery manufacturers

Contact chemical suppliers

Decidewhichtypesindemandthatcannotbeproducedbutcouldbewithnewtechnologyby evaluation of current manufacturing plant

The TannersContact machinery manufacturers

Contact chemical suppliers

Decideonmostappropriatemarketsegments(whichtypeofleathertobeusedin each subsector of the leather and shoes sector) :

CowShoesSheep PLGGoat Garment

The Tanners Company management in house strategic thinking

ii. Cost Competitiveness

ThetrendinthetanningindustryintheAgadirCountriestodevelopthecapabilitytoproducefinishedleatherneedsto be managed carefully to maintain its position as a competitive manufacturer. The industry has achieved this in the fieldofsemiprocessedleather.Egyptparticularlystartsfromalowoverheadbasewhichwillhelpincompetitivenessinfinishedleather.Italsohasgoodaccesstowater,whichisamajorprobleminJordan.The competitiveness of the industry revolves around the normal management concerns of overheads and labour rates andinthecaseofleather,thebasicrawmaterial(rawhidesandskins).Thereisalsoasignificantcostinchemicals,




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mostofwhichareimported.

Purchasingrawhidesandskinslocallyisobviouslypreferabletoimportation.Ithasbeeninferredbytheindustrythatthecollectionofrawhidesandskinsisnotasefficientasitmightbeandthatthereisawastagefactorinallcountries.

Thephysicalstructureoftanneriesinthezonevariesfromcountrytocountry.Egypthasdifficultoperatingconditionsin old Cairo, Tunisia has modern structures, Morocco has a combination of both and Jordan’s one operating tannery isrelativelymodern.Theproposedmovesto“TanningCities”bytheGovernmentsofEgyptandMoroccowillhelpinthisproblembyreducingcosts.Itwillalsoencouragethetannerstoinvestinuptodatemachinerywhichwillalsohave an impact in reducing costs.

Inordertomaintaincostcompetitiveness,thefollowingactionsshouldbecarriedout:

action Responsibility ResourcesEach Country to commission a study on hides andskinscollectionwithanemphasisonreducingwaste

Tanners AssociationsCentral Government support

ATU support

Create an international data base on sourcing, suppliers,andpricesofthemajorchemicalsrequired in tanning


ATU support

Takeadvantageofthenewleathercitiesasan opportunity to re-organise production processes to reduce costs

The Tanning CompaniesBusiness development agencies offering preferential inducements for capital investment

hold an Agadir Group seminar on the latest tanningtechniqueswithaviewtoreducingcosts

Tanners Associations

The Tanning CompaniesInvitations to international chemical and machinery companies to attend the seminar

iii. Quality Improvement

Thequalityofleatherdependstoalargeextentonthequalityofthehidesandskinscollected.Atthisprimarysourcethereneedstobecontrolledslaughteringandflayingtechniquestoavoiddefectswhichcouldthenbetransferredintofinishedleather.Alsorawhidesandskinshavetobestabilizedassoonaspossibleafterslaughterpreferablybywetsalting.Thecontrolandimprovementinthissubsectorwillhaveamajorpositiveimpactondownstreamoperations.

ThequalityoffinishedleatheriscommonlyclassifiedbygradesfromI(thetop)toV(thelowest)andpricesreflectthis.Akeyperformance indicator herewouldbe tohave this system implemented in theAgadir zone. Itwouldproducetransparenceintradewhichintheshorttomediumtermwouldbenefitallplayers.

Inordertoimprovequality,thefollowingactionsshouldbecarriedout:


Inconjunctionwiththestudyabovefurtherworkshould study slaughtering and preservation techniques withtheobjectofupgradingtherawmaterial.


IntroduceanAgadirwideclassificationsystemforfinishedleather Tanners Associations

Central Government support

ATU support



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InconjunctionwiththeAgadirgroupseminarabovefurtherworkshouldstudythelatestfinishingtechniques


The Tanning CompaniesGovernment support agencies and Tanners

iv. Productivity Improvement

The tanning industry is relatively labour intensive. one important measure of productivity is the number of pieces processedpermonthwithagivennumberdirectlabour;piecespermanpermonth.Intheglobalmarketplacetannersneedtokeepthisratioashighaspossible.ItisdifficulttogetaccuratefiguresastowhatistheactualperformanceintheAgadirtanningindustryduetothepresentdifficultoperatingconditions.Empiricalevidenceobtainedfromvisitstotanneriessuggeststhatproductivityisnearthefollowing Tannery Pieces per Man per Month A �0 B 99 C 119 d 229 E 280 F 800 *Robiki 1000

*ThisisthenewleathercitybeingestablishedoutsideCairo.Theexecutiveplaniscallingfortheaboveproductivitylevel.Thekeyperformanceindicatorfortanningproductivitywouldbetogetwithin90%ofthisfigure.Theimpactofincreasingproductivitytothislevelwouldbehugebyreducingcostsandpossiblypricesenormously.

Agadirtannersneedtodevelopaproductivityimprovementschemetoensuretheyareperformingaswellasifnotbetterthantherestoftheworld.

Inordertoimproveproductivity,thefollowingactionsshouldbecarriedout:


Feasibility studies on man versus machine for productivity gains The Tanning Companies In house management

BenchmarkingproductivitybestpracticesinSpain,Italy,IndiaandTurkey The Tanning Companies Government support agencies and

Tanning companies

Implement a productivity improvement drive The Tanning Companies Government support agencies and Tanning companies

v. Training

Tanningisessentiallyachemicalprocess.Thereforethereisacontinuousneedfortechnicalpersonneltobekeptabreast of the latest developments in the chemistry.

Shopfloorsupervisorsneedtobeawareofthelatesttechniquesdevelopedinmanufacturing.Laboratorypersonnelalsohave tobeawareofnewchemicalsandhowtheyshouldbeused.Researchanddevelopmentpersonnelarecritical in using their knowledge to develop newmanufacturing techniques, new products and improvements toexistingproducts,inordertogivethecompanyacompetitiveadvantage.

Enhancementoftheknowledgeofthesepeopleisnotaluxurybutisessentialforthewellbeingandsuccessofthecompanies.




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However,the4countriesareencouragedfirsttobenefitfromanyexperiencesfoundinanycountry.MoroccoandTunisiawerethebeginnerstoestablishspecializedtrainingcentersforTanningandFootwearmanufacturing.Inordertoimplementtraining,thefollowingactionsshouldbecarriedout:


AssistanycountryfromAgadirZonewhoisinterestedto establish specialized training center in the Leather and shoes industry.

Individual Leather and shoes associations

Government support agenciesAny country form the � countries whohaveadvancedexperienceinthisfield

Shopfloorsupervisors,laboratorytechniciansandresearch and development personnel should attend the proposed seminar above

The Tanning Companies Government support agenciesATU

Selected and appropriate personnel to attend the LineaPelleleathershowinItalytostudythelatestdevelopments on display.

The Tanning CompaniesIndividual country development agenciesATU

develop up to date specialized training program in the tanningindustrybenefitingfromwhatwillbepresentedby the international chemical and machinery companies duringtheseminarandtheleathershowabove

Tanning associations and Tanning companies of the � countries

Government support agenciesATU

6.1.2. Footwear


Ashasbeenshownin the body of the report theleveloftradeinfootwearleather products and leather sub sectors is relatively minor. An intra-trade development plan is needed targeting to reach an intra-Agadir minimum trade value of 50 million euros in 2011. This target is reachable due especially to the leather availability in Egypt and the interestingexportpotentialitiesoffootwearineachofthefourcountries.

Taking intoaccount theavailabilityofquality semi-finished leather inEgypt the intra-tradedevelopment shouldfocusondevelopingaprocessofverticalintegrationallowingreinforcingtheperformancesofthesupplychainforan optimized response to the short circuit short requirements.Thefirstphasereport identifiedthepotentialitiesoffootwear ineachof thefourcountries thatcouldbuildonaindustrial and trade partnership.

These potentialities are:

● EstablishedAgadirexportersmostlyfromTunisiaandMoroccohavedemonstratedanincreasingcapability to respond to the short circuit short requirements in shifting the production process from massproductiontosmallseriesandexportinghighqualityproductsthatcansatisfytherequirementsof the high revenue consumers’ segment of the Agadir zone.

● Egypt,thankstolowproductioncosts,hasdemonstrateditscompetitivenessinAgadirlocalmarketto replace increased Agadirfootwear imports from China.

● Tunisia,MoroccoandJordancanoutsourcethesheetsforSolesandInsolesfromEgypt.● EgyptcanoutsourceleatherunitsolesfromTunisiaandfinishedshoesfromMorocco.● Jordancouldbenefitfromtheir itsproximitytoandexistingdistributionchannelinGulfcountries

andIraqtore-exportfootwearandleatherproductstothesecountries.



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Therearemanyconstructionsandtypesoffootwearinallthemajorsegmentsavailablesomewhereinthe4countries.Thisisoneoftheirstrengths.Nichemarketsoffergoodopportunitiesforthosecompaniespreparedtoinvestinthemintermsofproductdevelopment.Amongthemostmarketableproductsfornichemarketsare:

● Industrial/safetyfootwear● Medical/orthopaedicshoes● St.Crispinconstruction● McKaystitchedmoccasins● Ladiesballerinas● Goodyearwelted● Mecvalsidewallstitch

Amarketresearchforeachoftheabovementionedprojectneedstobecarriedoutbyinterestedcompanies.Thisresearchshouldconcentrateonthemarketingmix:

● Thetypeoffootweartobesold● Pricepointsatfactory,wholesaleandretaillevel● Distributionmethods● Promotiontechniques

ThemarketresearchiscrucialforsuccessinestablishinginterAgadircountrytrade.Companiesmustworkwiththeirexportpromotionagencies,theirassociationstoplanameaningfulstudytour.Fromtheresultsofthemarketresearchcompaniescanplanastrategywithobjectives,actionsandanimplementingbudget.

AkeyperformanceindicatorforthisexercisewillbetheextenttowhichinterAgadirintegrationandsupplywillreplace imports especially from theFarEast.Thiswill have amajorpositive impacton the economiesof the4countries. Targets should be set say by reducing imports by 15% in three years.

Inordertoachieveintegrationandfindsupplyopportunitiesthefollowingactionsshouldbecarriedout:


Researchthemarketinallfourcountries,Factfindingtourbypotentialexporters

Exportpromotionagencies

Country associations

Individual manufacturing companies

Country associations, in co-operation withexportpromotionagencytoplanandco-financewithindividualcompanies to organize a study tour for each of the four countries to the others.


Decidetargetmarketbycountryandanalyse results of tour

CompanieswithinputsfromAssociations

BrainstormingsessionswithAssociations

Reasoneddecisionfromexperiencesfromfactfindingtour,decidetypeofproducttobe manufactured

Companies Using information obtained from study tour

Set targets for import substitutionAssociations CompaniesGovernment Ministries


ii. Cost Competitiveness

Themarket’scurrenttrendtowardsthedevelopmentandrapidevolutionoffashionproductsandthemanufacturingofsmallseries,requiresmorecapitaltofinancerawmaterials,theinvestmentintechnologicalequipmentCAD/CAM




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and automatic cutting etc. Theinvestmentincomputeraidedmanufacturinganddesignwillreducecostsaslesslaborwillbeneededtodoanygiventask. SourcingofbasicrawmaterialsfromEgyptintheformofinsolesandunitsolesshouldalsoreducecostsbyreplacingInternational imports.

Shoeproductioninthezoneisquitecompetitiveincost.Howeverthisisnocauseforcomplacency.Costscanbereduced further by newproduction techniqueswhichwill impact positively on the industry.A key performanceindicatorwouldbetogetascloseaspossible,say75–85%,ofFarEastcostsinlikeforlikeproducts.

There is also a need to develop a trade facilitation program to improve port logistics and transport. This is an important factortoencouragecooperationbetweenmembercountriesintheareaoflogisticstoreduceshippingcosts.

hold an Agadir conference grouping Agadir supporting institutions to initiate and agree on a cooperation program withrelatedco-financingsystem



Studycurrentproductiontechniqueswithaviewtore-engineeringthem Companies

In house management

Associationexperts

Consider alternative labour and material saving constructions Companies

In house management

Associationexperts

VisitSIMACshowinItalyforresearchonlatest machinery and equipment available

AssociationsCompanies

ExportpromotionagenciesBusiness development agenciesAssociations

ResearchsuppliersofrawmaterialsandcomponentsinAgadircountrieswithaviewtoreduceimportsubstitutionandlowercosts


AssociationexpertsCompaniesownmanagement

Agadir Group meeting to formulate policy onlogisticsandexportfinanceforcostcompetitiveness


ATUExportDevelopmentBanksExportpromotionagenciesBusiness development agencies


ThemanufacturersintheAgadirzoneproducefootwearaccordingtotheirchosenmarketsegments.Theresultistheymakeshoestoaqualitystandardthatisdemandedbythatparticularsegment.Generallytheworkmanshipofthefinishedproductisatacceptablelevels.

Quality levels are determined largely by the components used – types of leather, different soling materials (from PVC to PU to built up leather) and ancillaries (insoles, counter, toepuff, lining etc).

In spite of the best efforts of the manufacturers there is a quality image problem that needs to be addressed.

It is strongly recommended tobuildandpromoteastrong image for theAgadirFootwearSector focusedon the



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idea that the sector has a positive competitiveness, an attractive resource of complementarities and a manufacturer of quality products.Thisimagewillbebuiltfromthesuccessstoriesanddevelopedwithinamediaplanintegratingespecially a press information campaign inside and outside Agadir.

To support the above mentioned campaign and in order to give Agadir countries a competitive advantage in the regionalmarketsofover300millionpeople it isneeded toconducta“lastsurvey”.Theobjective is todesignaproperlyfittinglastforthefootwearconsumers.ThisseriesoflastswouldthenbesuperiortoanythingfromChinaorfrom Europe leading to a higher quality andmoremarketableproduct.

InsideAgadirwecouldusethemediainthefourcountries,thewebsitesofAgadirsupportinginstitutions,andthesuggestedAgadirnewsletterandAgadirPortal.(Seeundermarketing).

OutsidewecouldusetheservicesofShoeIntelligencethatisa(subscriptionbased)regularlyinformationbulletinonthe shoe industry in the EU (http://www.shoeintelligence.com)

Although an awareness campaign targeting theAgadir consumers, highlighting the quality of Agadir products compared to Chinese products,and the virtue of leather and its availability in quantity and quality in the Agadir zone, theawarenesscampaignshouldtargetequallytheintroductionof the culture of consuming leather among Agadir consumers.

There should be a certificationprocessaswellastheenforcementananti-counterfeitingregulations preventing any breach of the country of originqualitycertification.

Intermsofqualityenhancementsuccesswillbejudgedbythedegreeconsumersbuylocalratherthantheequivalentimportedproduct.Thiswillbethekeyperformanceindicator.Localmanufacturersshouldalsoeliminatethepracticeof plagiarising international brands.



Media campaign AssociationsCompanies

ATUExportpromotionagencies

Introducing the leather culture AssociationsCompanies



Aswasmentionedinthebodyofthereport,productivityasmeasuredbythenumberofpairsproducedperoperatorin8hoursvariesbetweenthe4countries.Tunisiahasthehighestproductivitywith10.6pairs,Moroccowith5.9pairsandEgyptwith5pairs.Jordanfigureswerenotavailable.

Industrybestpracticeinahighlyautomatedplantisbetween26and28pairs.TheEuropeanaverageis13.8pairs.AkeyperformanceindicatorfortheindustrywouldbeatleasttogettotheEuropeanaverageandthenplantogobeyond this.Apartfromtheskillanddiligenceofoperators,shopfloororganisationinashoefactoryhasanimportantparttoplayinproductivityenhancement.Thefollowingfactorsimpactonproductivity:

● Factorylayout(rinksystemsetc)● Attachmentstomachines(threadcutting,needlepositioningetc)




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● Automaticmachines● Robots● Timeandmotionstudy● CAD● Constructionsused.

TheAgadirGroupcompanieshaveagoodopportunitytoincreaseproductivityastheystartfromarelativelylowbase.Productivitygainsareverymuchdowntomanagementtoprovideanenvironmentwhereoperatorscanimprovetheir performance.

Itshouldberecognisedthatevensmallproducers(500pairsperday)canbenefitfromtheinvestmentinautomatedmachinery. The aim should be to embrace lean manufacturing practices.Inordertoimproveproductivity,thefollowingactionsshouldbecarriedout:


Critically assess current manufacturing practices Company Management

ExpertsfromAssociationsInhouseexpertsATUinternationalexperts

re-design and re-engineer operational areas Company ManagementExpertsfromAssociationsInhouseexpertsATUinternationalexperts

Conduct feasibility study into automated and semi automated machinery and equipment Company Management


AttendtheSIMACinternationalfootwearandleathergoodsmachineryshow

AssociationsManagement

ATUBusiness development agenciesAssociations

Analyseandconsidernew,lesslabourintensive constructions Company Management In house

Set productivity targets Company Management In house

v. Training

Tunisia and Morocco have invested in training and research institutes and Egypt and Jordan are developing theirs. Trainingschemesneedtobebroughtintolinewiththeneedsofamodernindustrywhichhaschangedinrecentyears.(Short – short, lean manufacturing).

Training should be aimed primarily at closing room operators (stitchers) and shop floor supervisors. In a shoemanufacturing environment these are the critical people.

Sewingmachineoperatorscanhaveabigimpact,iftrainedandorganisedwell,onproductivityandcostreduction.Theyshouldbeabletooperatethemachinesatoptimumspeeds–upto2,000stitchesperminute.This isakeyperformance indicator.

Anotherkeyperformanceindicatorintrainingistheretentionoflabouri.e.lowturnover,especiallyattheoperatorlevel.

Shopfloorsupervisorsneedprofessionaltraining(notjustpromotingthebestoperators).Tobeeffectivetheymustunderstand:



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● Loadingofoperators● Costcontrol● Timeandmotionstudy● Shoeengineeringandtechnology

Pattern cutters need to be trained on pantograph and CAd systems.

Thereisalsoaneedformanagementtobetrainedintheaspectsofmarketingandsellingtechniques.

Inordertoimplementtraining,thefollowingactionsshouldbecarriedout:

action Responsibility ResourcesReviewtrainingcoursesavailablefrominstitutionsfor relevance and quality needs of the modern industry

MinistriesAssociations

The institutionsCorresponding training institutes in Europe

Adjustwherenecessary MinistriesAssociations The institutions

Assess the quality of instructors MinistriesAssociations The institutions

BenchmarktheattainmentlevelsoftraineestoEuropean levels



Holdseminarsonmarketingandsellingformanagement Associations ATU

International consultancies



PersonalleathergoodsareabitmoredifficulttotradeinbetweentheAgadircountries.Theseproductstendtobeviewedmoreofa“luxury”itemratherthananecessity(likeapairofshoes).Itemsmadeinthe4countriestendtobeofmedium-hightohighquality.Thetargetmarketsfortheproductsmanufacturedthereforewillreflectthoseconsumersinthehigherincomebrackets.There are limited opportunities for integration and supply opportunities in theintraAgadirmarket.Thereislittlethatcanbeaddedinvaluetothecurrentproductlineswhichgivethemakeycustomervalueinthemarketsofthefourcountrieswhicharenotalreadysatisfiedbylocalmanufacturers.

Inordertoverifytheaboveassumptionsmarketresearchneedstobecarriedoutinasimilarwaytofootwearaswellastheactivitiestobecarriedoutfortheachievementofthemarketresearchanditsimplementationbycompanies.Inordertoachieveintegrationandfindsupplyopportunitiesthefollowingactionsshouldbecarriedout:


Research the market in all four countries,Factfindingtourbypotentialexporters




Countryassociations,inco-operationwithexportpromotionagencytoplanandco-financewithindividualcompaniestoorganizea study tour for each of the four countries to the others.





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ii. Cost CompetitivenessThetwomainfactorsthatimpactcompetitivenessinmanufacturingpersonalleathergoodsaredirectlabourcostsand price and utilisation of leather.

MinimumlabourratesaresetbyGovernmentandvaryfromcountrytocountryinthezone.Companiespaywhattheyneedtoattractandretainskilledstaff.Labourratespaidbyzonecompaniesareasfollows(2007):

Country U.S.$perHour U.S.$perMonth Egypt 0.55 - 2.20 100 - �00 Jordan 2.00 - 2.89 210 - 520 Tunisia 1.39 250 Morocco 1.67 300

Theseratesarecompetitiveontheirownandprovidesagoodbaseformanufacturingcompaniestocontrolcosts

The quality of leather required forPLG tends to be relatively high due to themarket segments served and cansometimes impact on the competitiveness of the industry due to its higher cost. It is essential therefore that proper, accurate and keen costing allowances are adopted to keep the costs down.Allowances aremost accuratewhenderived from CAd systems.



Studycurrentproductiontechniqueswithaviewtore-engineeringthemwithtimeandmotionstudies Companies In house management

Associationexperts

VisitlineapelleshowinItalyforresearchonlatestmachinery and equipment available



Investigate the use of CAd especially for ladies bagsproduction


Business development agenciesAssociations


ThequalitylevelsofPLGproducedintheAgadirzoneareexcellent.Goodqualityleatherisusedandworkmanship,which is craft based rather than operatingmachinery, is also of a high standard.The need is tomaintain thesestandards.



Maintain standards and strive for furtherimprovement Management In house


Manyoftheoperationsdoneinthemakingofleathergoodsaredonebyhand.Theexceptionsbeingstitchingandsome machine cutting operations. As technology improves there are more small machines developed to replace hand operations–doingthemquickerandmoreaccurately.



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Productionmethodsneedtobecontinuallyassessedcomparingtheresultsofbatchworkingversusproductionlineworking.

Theapplicationoffairincentiveschemescanalsoleadtoproductivitygains.Asakeyperformanceindicatortargetsshouldbesetforproductivitygainstoachieveacompetitiveadvantageinanindustrywherecostaresimilarinallfour countries.Inordertoimproveproductivity,thefollowingactionsshouldbecarriedout:


Critically assess current manufacturing practices by time and motion study Company Management








v. Training

Trainingshouldbeaimedatstitchersandpatternmakers.ThesearetwocriticalareasinPLGmanufacturing.Goodperformance here has a large impact on reducing costs by increasing productivity.

Sewingmachineoperatorscanhaveabigimpact,iftrainedandorganisedwell,onproductivityandcostreduction.Theyshouldbeable tooperate themachinesatoptimumspeeds–upto2,000stitchesperminute.This isakeyperformance indicator.

Pattern cutters operating CAd systems can produce patters that use the minimum amount of leather and also engineer themsothattheyfittogetherwithoutproblemsinmanufacturingoperations.

Shopfloorsupervisorsneedagoodknowledgeoftimeandmotionstudyinordertoorganiseworkflowforthebestpossible outcome.

Inordertoimplementtraining,thefollowingactionsshouldbecarriedout:


Reviewtrainingcoursesavailablefrominstitutions for relevance and quality needs of the modern industry in stitching operations



Train pattern cutters in CAd operation Company management AssociationsMachinery suppliers

Invest in and train up supervisors in time and motion study Company management Associations

Independent consultants




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6.2. Aspect2-Marketing

Behindeverygoodmarketingplanthereisanequallygoodorbetterproductionfacility.Byimplementingtheactionplandescribedaboveunderproduction,theAgadirGroupcompanieswillbeinapositiontoimplementtheactionsforasuccessfulstrategicmarketingplanwhichwillhaveapositiveimpactontheeconomiesofthe4countries.TheemphasisfortheplanisontheAgadirMarkettoenhanceregionaltradefollowedbyopportunitiestoincreaseexportsto Europe.

6.2.1. leather i. Product development

PresentlymostoftheexportofleathertotheEUiswetblueprimarilyfromEgypt.Thereisinsignificanttradeinrawhidesandskins.TunisiaandMoroccoarebeingencouragedbytheirGovernmentstoexportfinishedleatherratherthansemiprocessedasinthepast.Egypthasadesirealsotoenterintothefinishedleathermarket.

The future strategy therefore would be to gradually move into leather finishing. However the leather productsmanufacturingbusinessinEUcontinuestodeclineyearonyearwithmoreandmoremanufacturersturningthemselvesintoimportersorclosingdowncompletely.ThismeansineffectthemarketforfinishedleatherintheEUisindecline.Howevertherestillaretradersandtannerswhotradeinternationallyasre-exportersandstillprovideamarketforexports.

Thebiggestpotentialforfinishedleatheristhroughprovidingfinishedleathertolocalleatherproductsmanufacturerswhointurnexporttheirproducts.ThiswouldprovidethebiggestbenefittotheAgadirGroup.

Thefinishingofleatherismoreofanartthanscience.Thereforetoproducegoodqualityfinishedleatherrequiressomeexperienceandtechnicianscanlearnthetechniqueseitherbytrialanderrororfromexperiencedleatherfinishingtechnicians.InthecaseoftheAgadirzonetheprocessofacquiringknowledgeneedstobespeededup.

Typesofproductsthatshouldbedevelopedbythetechniciansarethefollowing:

ProdUCT BUFFALo BUFFCALF CoW CALF

Full Grain ü ü üCorrected Grain ü ü ü üAniline ü ü üdry Milled üNubuk ü üIndustrial/military ü ü ü

Inordertoimplementproductdevelopmentthefollowingactionsshouldbecarriedout:


Analyse the machinery and equipment availableforfinishing Companies

Company managementMachinery suppliersChemical suppliers

Assessthetechnicalknowledgeoftechnicians Companies Company management



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Train technicians to the required standardFieldinternationalconsultantsonfinishingfor 12 months over a 3 year period.

CompaniesTraining institutionsAssociations

ATUBusiness development agencies

Seminar – see under quality improvement

Visit European chemical suppliers for informationonfinishingtechniques.CombinewithvisittoLineaPelle

Companies ATUBusiness development agencies

SponsorstudytourstoEUfinishingtanneries and chemical suppliers for technicians

CompaniesATUBusiness development agenciesInternational agencies

ii. Promotion

Havingmadethestrategicdecisiontodevelopfinishedleatherandthatthisleatherbecomesareality,thisinformationneeds to be disseminated in the Agadir zone to the leather product manufacturers. The main message for promotion is thatfinishedleatherisnowavailablefromtannersinthezoneandthattheyare“openforbusiness”withtheemphasisonimportsubstitution,betterserviceandkeenerpricesthanthatwhichcanbefoundoutsidethezone.

The static tools for promotion are:

● Aleathermanufacturedatabaseforthezone● The production of a Company DVD complimented by a company

brochure● AttendanceatinterAgadirfootwearandleathershows● RepresentationontheproposedAgadirportal(seeunderfootwear).

The active tools for promotion are● AppointmentofAgentsinall4countries● Managementtraveltopotentialclientsinall4countries

Thekeyperformanceindicatorsforfinishedleathershouldbethemeasurementofincreasedtrade.Atpresentthisisatalowbase.Atargetshouldbesettoincreasethetradebyacertainpercentagesayby30%overthreeyears.

AsfarasEuropeisconcernedthisshouldbeonlyasteppingstonetopromotefinishedleathertothelargershoeproducingareasintheworldnamelytheFarEast.PromotionshouldbeaimedatEuropeantannersandexportagentsparticularlyinItalyandSpainwhoareactiveinFarEastmarketsaswellasdomestically.TheLineaPelleshowinItaly is a good forum for this.Actionsrequiredforpromotionareasfollows:


Setupof“Agadir”LeatherDatabase The AssociationsThe Companies

ExportPromotionAgenciesATU

design of a Brochure and dVd on the Agadir zoneLeather(&Footwear)sector

The AssociationsThe Companies


Agadirleatherpavilioninlocalleathershowsin4countries



CreationofAgadirLeather(andFootwear)Portal The AssociationsThe Companies


Seekoutsalesagentsinthe4countries The Companies In house




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Management sales missions to all � countries The CompaniesIn house ATUExportpromotionagencies

Agadir selling pavilion aimed at EU and beyond attheLineaPelleshow.

The CompaniesThe Associations


iii. distribution

The advent of short short manufacturing in the client companies of the tanners puts more emphasis on the tanners’ abilitytodeliverfinishedleatherquickly.Bufferstocksofthemostpopulartypesofcrustshouldbekeptreadyforimmediatefinishingondemand.Evenbufferstocksofcertainfinishedleathercanbekeptforimmediatesupply.Theacceptanceofsmallerordersofcoloursbytypeofleathershouldbewelcomedsay1,500ft2.HoweverTannersshouldmaintaintheprincipalofmadetoorderratherthanholdingstocks.

Distributionthereforeforfinishedleathershouldconcentrateondevelopingtheabilityforquickdeliveryfortheshortshort era.

TheabovealsoappliestotheEuropeanmarketsofItalyandSpain.

Actionsrequiredfordistributionareasfollows:


Arrangefinishingsectionintannerytoreacttorapiddeliveries The Companies In house

6.2.2. Footwear

i. Product development

Initiallytherearecertainthingsanexportershouldbeawareofwhenconsideringsellingintoboth the Agadirmarketand EUmarkets.AlthoughtheseregulationsrefermostlytotheEUcompanieswouldbewelladvisedtoapplythemalsototheregionalmarket.These are:

● Labelling.Therehas tobe a label attached to the shoe showing thecomposition of its component parts

● Environmentalissues,REACH,Azodyesetcreferredtoearlierinthisreport

● Regulationsonmaterialsusedfromendangeredspecies(CITES)● Recyclablepackagingmaterials● Antidumpingregulations

ThemarketingeffortsoftheAgdirCountrieswillbeaimedprimarilytotheregionandafteraperiodofassimilationand a better economic climate, to Europe.

Toavoidduplicationof effort, product developmentwork for shoes should combinewhat is needed in regionalmarketsfortheshorttermandwhatisneededinEuropeinthemediumterm.ItisfairtosaythatmostideasforproductdevelopmentareinitiatedinEurope.Themarketsinallfourcountriesreflectthestyles,trendsanddesignscomingfromEurope.ProductdevelopmentthereforeshouldbeinternationalinapproachandnotjustpanAgadir.Theinternationalaspectofproductdevelopmentshouldconcentrateonthe2largermarketsoftheEUnamelyUKandGermanyfollowedbyBeneluxasasecondarytarget.Anunderstandingofthevariousmarketsneedsandwants



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hastobeacquiredbeforesensibleproductdevelopmentisstarted.Torecapthemarketsare:

● Egypt● Morocco● Tunisia● Jordan● ArabRegion● UK● Germany● Benelux

Thecombinedproductdevelopmenteffortthereforeshouldprogressbylogicalstepsbyimplementingthefollowingactions.STEP 1action Responsibility Resources

ResearchthemarketinallfourAgadir countries.Factfindingtourbypotentialexporters.Special attention in Jordan for re-exportingopportunities






StudytourandmarketsurveytoUK,Germany and Belgium

Country associations, in co-operationwithexportpromotion agency to planandco-financewithindividual companies to organize a tour


ATU


Country associations Individual manufacturing companies

Therawmaterials,machineryandequipmentnecessarytodevelopproductshavetobeeasilyavailableinordertoaccommodateshort–shortmanufacturing.OnesourceofthisinformationistheLineaPelle+SIMACshowheldinItaly. This is an InternationalExhibitionofleathers,accessories,componentsandsyntheticproductsandmodelsforfootwearandleathergoods.InOctobertheshowisjoinedwithSimacaninternationalexhibitionofmachinesandtechnologiesforfootwear,leathergoodsandtanningindustry.Weakpoints in thesupplychainof the leatherproducts industry inall fourcountriesaresoles /moulds / lasts /adhesives.Conductafeasibilitystudyfortheestablishmentofanewbusinessproducing. STEP 2action Responsibility Resources

VisitLineaPelleshow AssociationsCompanies

ExportpromotionagenciesATU

Studyfortheestablishmentofanewbusinessproducingsoles/moulds/lasts/adhesivesinanAgadir country

Trade associations ATU

Apartfromexistingshoe typeswhichcompaniesshouldbecontinuouslyupdatingconsiderationshouldbegiven




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to developingnewer offerings for the variousmarkets. Supply opportunitieswere found inAgadirmarkets (seeabove)whicharecomplimentarytoEUmarkets.Nichemarketingwhichisakeystrategyrevealscertainmarketcharacteristics.

TheBritishmarketrepresentsagoodpotentialmarketfortheAgadirzonefootwearexportersduetotheimportanceoftheirimports,theirculturalinteractionsparticularlywithEgyptandJordan,andthehighpotentialexportsfromTunisiaandMorocconotexploitedyet.TheUKfootwearimportshaveoneofthehighestshareoutofthetotalEUimports;aswellandduetothehighproductioncosts,themarkethasundergonelargechangesthatledtooutsourcing,and forced many importers to source from close suppliers such as Morocco, Tunisia and Eastern Europe. The UK market isalsobenign in that it iswellused to importsand isnotfighting tosavea local,dieing,manufacturingindustryinthewayItaly,SpainandtosomeextentFranceare.Themarketiswide–ithasmanysegments–fromlowquality to the highest quality brand names.

TheGermanmarketismorerestrictedinitspurchasingmethodscomparedtoUK.Ittendstobemore“upmarket”inqualityfrommediumquality+.HowevertherecentinfluxofimmigrantsfromEasternEuropehascreatedamarketforcheaperlowerqualityshoesandleatherproducts.

TunisiaandMoroccohavegoodcontactswithItaly,FranceandSpainmostlythroughsubcontracting.Thisbusinessshouldbecontinuedinthenormalway.Atthistimeinordernottodilutetheeffortrequiredtosetupnewexportmarkets,concentrationshouldbeontheAgadirmarketandafterconsolidationhere,thetwolargeEUmarkets-UKas the primary target and Germany as the secondary should be addressed.

SegmentationoftheUKmarketisexceptionallywide.Reasonable,simple,leatherfootwearcanbeboughtatretaillevelforaslittleas$16.Atthetopendofthemarketweltedfootwearsellsforover$400perpair.

Themarketintermsofvolumeandeaseofpenetrationisthesocalled“greymarket”–peopleintheagegroup45+yearswiththecoretargetbeingthe55–75yearssegment.Thereisalsoanactivemarketinchildrensfootwearofmediumtomedium-highquality.Industrialandsafetyfootwearatthemediumqualityandlesstechnicalspecificationsellingtoselfemployedconstructionworkersisanotheractivemarket.Atthehighendofthemarketgoodyearweltedmensfootwearisalsoindemandandhasbeenformanyyears.Thereisalsoamarketfororthopaedictypeshoesparticularlyforwomenwhohavetobeontheirfeetalldayforworkegnurses,retailassistants,cleanersetc.

GermanyhasthelargestpopulationinEuropewithapproximately85millionpeople.ItfluctuateswiththeUKintermsofmarketvolumeforshoessoldfor thenumberoneslot.Thisreflects theeconomicconditionsinthetwocountries.

SegmentationintheGermanmarkettendstobenarrowerthanUK.Germanconsumersdemandatleastmediumuptohighqualityfootwear.Menbuyabout50%ofshoessoldandwomen31%,19%,ischildrensfootwear.Ofthetotalconventional (i.e. non sport) shoes sold �1% have leather uppers and non leather soles.

Therealsoisasignificant“greymarket”inGermanysimilartotheUKwhichrequiressensible,comfortcasualshoes,formenandwomen.BrandslikeSeibel,Reiker,Gabor,AraandSiouxarepopular.

ThereisalsoasignificantmarketforsocalledhealthfootwearwithbrandnameslikeBirkenstok,Bama,DrScholland Ganter.

Thesafety,industrialfootwearmarkettendstobedeterminedbytechnicalproductswhichstrictlyconformtheEUstandards(andparticularlytheGermanDINstandards).Thereisnotamarket(asthereisintheUK)forindustrialfootwearoflesstechnicalspecifications.

ChildrensfootweartendtobeofagoodqualitystandardwithbrandnameslikeElefanten,RicostaandSalamanderpopular.



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TheproductsthereforefortheGermanmarketareverysimilartotheUKwiththedifferenceofhigherqualitylevelsandlessstyling.Themarkettendstobemoreconservativeinitsoutlook.

ThemarketforfootwearintheNetherlands,BelgiumandLuxemburgtendtobelinkedtogetherbecauseindividuallytheyarerelativelysmallmarkets.

Theimportmarket(i.e.themarketforAgadirexporters)isdominatedbytraderswhosupplylocallyandre-exporttotherestofEuropeandbeyond.ThemarkettendstobeatthelowtomediumendwhichAgadirmanufacturerscaneasilycopewith.ThetradersalsobuyfromItalyforre–exportandlocalsupplysothereisadistinctpossibilitythatAgadirproducersmayalreadyservicingtheBeneluxmarketthroughthirdparties.Theylookforkeenpricesforvolume business.

AnagentbasedinGermanycouldeasilyservicetheBeneluxmarketaswellasGermanyonbehalfofAgadircompanies.FortheAgadirGroup,atpresentthisisaperipheralmarketandmostmarketingeffortsshouldbeconcentratedonUK and Germany.

Typesofproductsthatshouldbedevelopedarethefollowing:

ProdUCT AGAdIr UK GErMAnY BEnELUXHandstitched,flexible,comfortfittingmoccasins,McKaystitched soles

üü ü ü

Mens casual shoes , comfort, padded leather uppers, soft soles,comfortfittinglasts ü ü ü üSt Crispin construction hand stitched soles ü ü ü üWomenswithsamespecsasmens ü ü ü üLadies comfort ballerinas ü ü ü üSoft,flexible,comfort,strobelconstructions ü ü ü üChildrens medium quality leather shoes and sandals ü ü (ü) üIndustrial boots and shoes ü (ü)MensGoodyearweltedshoes ü üWorkoriented,stressrelieving,comfortfootwearforladies

ü(ü)

ü

Stitch out construction ü ü ü üMecValsidewallstitched ü ü ü ü

(ü)=Canbemarketedbutwithdifficulty

STEP3


research and design a shoeline for Agadir, UK and Germanmarkets.Productdevelopmentfunction

Fashionforwardinformation from Associations, Possibleco-financingforservices of international design studio

Utiliselocaland/orinternationaldesigners CompaniesAssociationsExportpromotionagencies

Thekeyperformanceindicatorofmarketpenetrationshouldbetracked.Withnewshoelinesdevelopedbyenlightened,uniqueproductdevelopment,increasesininterAgadirexportswillbeachieved.PresentlyinterAgadirexportsareatalowlevel.Anaggressivetargetshouldbesetcountrybycountryforincreasedtradeovera3yearperiodupbysay 30%.




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ii. Promotion

Aswithproduct development promotion shouldbedirected towards theAgadir zone as theprioritymarket andfollowedbytheEUmarketsofUK,GermanyandBenelux.Ithasbeenmentionedthatthereshouldbeanawarenesscampaign particularly to Agadir consumers on the availability of quality leather products from Agadir leather product manufacturing companies. This is also part of promotion and compliments this aspect.

OnereasonforthesmallvolumeofinterAgadirtradeisthelackofcirculationofpertinentinformationbetweentheentrepreneurs of the four countries. The creation of an Agadir database available on line on an Agadir portal and accessibletothebusinesscommunitywillalleviatethisweaknessandwillcontributetoboosttradeamongAgadircountries.

Asearchenginewillgiveaccesstoinformationstartingfromcriteriasuchas:

● Country:Egypt,Jordan,Morocco,Tunisia● Companynamesandtradenames● Brand● Activities/products: tanning, leather footwear, component, leather goods

manufacturer,importer-wholesaler,footweardistributor● Functions:subcontracting,co-contracting,ownlabeletc● Turnover● Specialequipment● Designcapabilities● Leadtimes

To compliment the above the design of a brochure and dVd on the Agadir zone footwear(andothertheothersubsectors) is necessary. This should be done in Arabic and English

ThisbrochureandtheDVDwillbesystematicallyusedduring thesector’s tradeevents (conferences,seminars,shows.)andATUpromotionactivities .ItwillalsobewidelydisseminatedbyAgadirsupportinginstitutionsandtradeandinvestmentrepresentativeswhichcantakepartinthepromotionoftheAgadirzoneabroadaswellastothezone’scompanieswhowilluseitfortheirindividualpromotion.

As a spin off from the brochure and dVd the creationofavirtualAgadirexhibitionwouldbeahelpfulmarketingtool.

ThiswouldbeaB2Belectronicallymatching”system“throughthecreationofanAgadirvirtualexhibitionwebsitewhereAgadirmanufacturersandtraderscouldpresenttheirproductcollectionwithrelateddatatechnicalsheetforeachexhibitaswellascommercialconditions.

Asanumbrellaelectronicpromotionalaid,anewAgadir Footwear(andLeather) Portal shouldbesetup.ThiswillnotonlypromotetheAgdircompaniestothelocalAgadirmarketsbutalsohelpinpromotiontoEurope.

ThisPortalwhichwouldbedesignedbytheassociationswithguidancefromtheATUThisportalwillaimto:

● Disseminate valuable information on the leather and footwear sector in the fourcountries.

● Market the zone internationally and among the Agadir zone in presenting theopportunities offered by the Agadir Agreement and the success stories.

● Develop export and FDI with European Union and amongAgadir countries bypublicisingAgadircompaniesandencouragingtheexchangeofinformation.



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Consequently,thesitewill:

● Providecurrentandpertinentinformationonthesectorinthefourcountries(factors’costs and the sector’s features in the four countries)

● FacilitatetheonlineaccesstootherprofessionalandpublicsitespublishedintheAgadirzoneandinternationally,throughhypertextslinks

● Providehyperlinkswithweb-siteandportalsofATU,EUcommissionandsectortechnical centres, business associations and supporting institutions

● TopresentinformationontheAgadiragreement,EU-Agadircountriesagreementstrade and quality regulation (origin, customs, standards, labeling, etc) of the four countriesaswellastheirexportandinvestmentpolicies(incentives,tradeshows,training, laboratory and design capabilities, etc.)

● Providehyperlinkswithspecializedinternationalwebsitesprovidingtechnologywatchandsectornews

● Hostthesector’snewsletterthatwillbepublishedmonthlyandwillrelatetofourcountriesLeather&Footwearnews.Itwillprovidepertinentinformationonchangeinregulations,onorganizedandplannedsectorexhibitions,companyinformation,markets and distribution, international news, FDI, consultant and professionalviews,etc…Thenewsletterwouldholdadiscussionforumandwouldbeavailablein English and Arabic.

● Integrateadetaileddirectoryofthefourcountries’Leather&Footwearsectorwitha multi-criteria search engine

● Establishhyperlinksandorhostweb-sitesofindividualcompaniesofferingintra-trade and supporting services among Agadir countries

● Allow toAgadir companies andEU clients the access toAgadir data base afterenteringpasswordandcompleteinformationabouttheonlinevisitor’sidentity.Thisinformationwillbeintegratedinthedatabasesof“clients”and“suppliers”.

● Allow to Agadir companies and EU clients the access on-line to trade andsubcontracting opportunities.

● The site will bemanage one of the � country associations by appointing an IT manager whomust have good knowledge of the sector but also of web designtechniques.Themarketingofportalworldwideandtheestablishmentoflinkswithinternational leather and footwearportals is aprerequisite for theoutreachingofsubstantial outcomes.

Apart from these published and electronic methods of promotion there need to be human interaction to establish businessandtradingagreements.Oneofthebetterwaysofdoingthisisbyshowswherecompaniescanshowtheirproducts and meet potential clients.

The development of supporting services in the Agadir zone

ToachievethiscoordinatetheparticipationofAgadirLeatherandfootwearcompaniesintheTunisia,EgyptandMorocconationalLeatherandFootwearShows.Morocco,TunisiaandEgyptallhavetheirownleatherfairswithan international focus. Under the spirit of the Agadir Agreement in order for the fairs to be more effective in the internationalmarket,particularlyEurope, theyshouldbesubsumedinthelongrunintoonelargerunitundertheAgadirumbrella.However,intheshortrunitisneededtobuildonexistingfairs.

It will consist of the organizingAgadir stands gathering companies from countries others than those from theorganizingcountry.Inthisrespect,ATUincooperationwithAgadirLeather&FootwearOrganisationandAgadirexportpromotioncentres,maycontributeincarryingoutthefollowing:

● OrganiseAgadir stand including companies from Jordan, Egypt and Tunisia in




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MoroccoLeatherShow“MarocCuir-SalonInternationalDuCuir”Date:Oct.8-10,09, Web site: http://www.marocuir.ma/

● OrganiseAgadirpavilionincludingcompaniesfromJordan,EgyptandMoroccoinaTunisianLeatherShow“PROMOCuir”organizedinTunisiaonMay2010.

● AlsoorganizeanAgadirLeatherstandin“MeetinAfrica”Cairo,Egypt,February2010

For Jordan, currently there are no international fairs. However, the Jordanian Leather IndustriesAssociation isplanningtoorganizeincooperationwithJUMPonJuly2-4,09thefirstJordanianspecializedfair in leatherandFootwearproducts.ItwillbelocalandinvitationsweresenttorepresentativesfromalltheArabcountriestoattend.ItaimsatraisingtheawarenessofthecustomersaboutJordanianleatherindustries.Withintheorganizationofthisevent,aseminarcouldbedevotedtoAgadircooperation.Nextyear,theAssociationwillestablishtheJordanianLeatherIndustriesFair.ThiswillbedirectedtowardsArabicparticipationwithanAgadirleatherstand.

To facilitate the participation of Agadir companies, preferential conditions should be granted to them and promotional activities should be carried out by the individual country associations.

Toensuresuccessfulresults,ATUincooperationwithsupportinginstitutionsshouldconductthefollowing:● Aproperawarenesscampaigntargetingsectorrepresentativesandleaderstoattract

AgadirzonecompaniestoparticipateintheShow.● PriorexchangebetweenAgadirparticipantsofcompanyprofiles● Organizeabuyersellermeetingtosupportcommercialcontact● AseminaronAgadircooperationtodiscussthefacilitationofAgadirintra-trade.

Promotion,whichisaformofadvertising,needstobejudgedastohoweffectiveitisinproducingthedesiredresultsfrommakingwhatcanbesubstantialfinancialinvestments.Keyperformanceindicatorsshouldbeestablishedforthepromotionplanandtheimpacttheywillhaveontheeconomiesofthezone.Onesimplewayistosetexpected(achievable)targetsbyexpectinganincreaseinexportsoffootwearbyagivenpercentsay5%inyear1,10%inyear2,andsoon.Theseachievedtargetsinmarketpenetrationwillhaveahugelypositiveimpactonlocaleconomies.

ActionsrequiredforinterAgadirpromotionareasfollows:


Setupof“Agadir”Leather&FootwearDatabase The AssociationsThe Companies


design of a Brochure and dVd on the Agadir zone Footwear(&Leather)sector



CreationofavirtualAgadirexhibition The AssociationsThe Companies


CreationofAgadirLeatherandFootwearPortal The AssociationsThe Companies


SetupamonthlyAgadirNewsletter The AssociationsThe Companies


Agadirpavilioninlocalleathershowsin4countries The AssociationsThe Companies


Set performance targets The AssociationsThe Companies


InthemediumtermpromotionshouldalsobecarriedouttoaidpenetrationofthetargetedEUmarkets.

ThefirstphasereportrecommendedtheneedforAgadircountriestofocusonUK,France,Italy,Spain,Germany



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andBenelux(Belgium,Holland).MostofAgadirexportsarenowfocusingonItaly,FranceandSpain.ThestudyemphasizedtheneedtodiversifytheexportmarketstoincludeotherEuropeanmarketssuchasUK,GermanyandBelgiumToachievethesegoals,thestrategyandactionplanhighlightedtheneedforapromotionalandawarenesscampaignintheEuropeanmarketstopromotetheAgadirzoneexports.Inthisrespect,itissuggestedtoorganizearoadsomeEUtargetedcountriesaswellastoco-participateinEuropeanInternationalexhibitions.

TherearetwoshoeshowsintheUKwhicharenotparticularlyusefulforexporters.Britishbuyerstendtotraveltooverseasshoeshowsparticularly,theGDS(Germany)andRivadelGarda(Italy).HowevertheprovenpromotiontoolofalocalroadshowhasbeensuccessfulintheUKparticularlyinthetextilessector.Ithastheadvantageofhavingfacetofacemeetingswithinterestedbuyersratherthanbeingoneofthousandsofexhibitorsinaninternationalshow.Attendanceatinternationalshowsisexpensiveandtobeeffectiveexportersneedtoshowtheirproductstwiceperyearforatleastthreeyears.Aroadshowismorecosteffective.TheroadshowisconsideredaninnovativewayinexportpromotionandhasprovedtobeverysuccessfulformanyexportingcountriessuchasTurkey,China,andVietNam.

Theroadshowinvolvestakinganumberofcompaniestothetargetedmarket,toexhibittheirproductsandpotentials.One-to-onemeetingswithmajorimportersandbuyersarealsoconducted.Itdiffersfromthespecializedtradeshowsbythefollowing:

● Itattractsbettermediaattention● ItreflectsapositiveimageabouttheAgadirzonefootwearindustryforthemajor

buyersandimportersintheUKmarket.● It offers an opportunity for the participation of many enterprises with different

products.

FortheroadshowtoachieveitsmaximumeffecttheroadshowtimingshouldcoincidewiththesourcingscheduleoftheimportersandthebuyersaswellasthetimingofFootwearexhibitionsinEurope.

Theroadshowdesignshouldfocusprimarilyonselectingtheright typeandnumberofparticipatingcompanies,selectioncriteriaforchoosingcompaniesshouldbeinplacepriortotheshow.However,thenumberofcompaniesexhibiting each product category should be (3-5) to allow a choice variety and increase professional visitors’interests.

Theplacefor the roadshowshouldbeselectedwithgreatcare inorder tomakesure toattract the rightbuyers.Usually,itshouldtakeplaceinalargehallinoneofthelargehotelsorspecializedshowrooms.

Priortothecommencementoftheroadshow,anumberofpreparatorystepsshouldtakeplaceasfollows:

● AdetailedstudyontheUKmarketregardingitspotential,consumertastes,inadditiontotargetedimportersandinvestorsshouldtakeplace.PracticalrecommendationsonhowtomaketheshowasuccessandhowtodobusinesswiththeimportersintheUKmarketshouldalsobegiven.Theoutcomeofthestudyshouldbedisseminatedtotherelevantstakeholdersinthesector.

● AproperawarenesscampaignshouldbeconductedtoattractAgadirzonecompaniestoparticipateintheroadshow.Theapplicationsshouldbescreenedandthecompaniesselectedaccordingtoapre-definedcriteriatoguaranteethegoodpresentationoftheAgadirzonefootwearsector.

● Fortheroadshowtobesuccessful,greatattentionshouldbegiventothedesignsoftheexhibitedproducts,AgadirzonecompaniesshouldbesupportedwithtechnicalexpertisefromtheUKmarkettodeveloptheirproductsaccordingtothedesignsandfashiontrendsrequiredinthethismarket.

● FieldvisitsshouldbeconductedtothemainstoresintheUKmarkettoinvestigateprices and quality of competing products.




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● A very thorough promotional campaign should be prepared and implemented toguaranteetheproperattendanceoftheroadshowandthequalityofattendees,thecampaignisintendedtoincludethefollowingactivities:

● Invite specialized reporters from theUKmarket threemonths prior to the showtovisitsomeenterpriseswithinthesectortowritearticlesaboutitsstrengthsandachievements.However, this activity aims at preparing the buyers and sellers toencouragethemtovisittheshowanddobusinesswiththeAgadirzoneenterprises

● Conductarigorousmediacampaigninthespecializedmagazinesinthesectorusingadvertisements and promotional articles.

● Sendinvitationsonthreestagestargetingthelargestnumberofdistributors,importersanddistributorswithintheUKmarket. Followupthroughdirectcontactorbyphonewithdistributorsand importerstoencouragethemtovisittheShow.

● Apressconferenceshouldbearrangedwithpresentationsbysectorrepresentatives,testimonialsfrominvestorsandmajorforeignbuyersthroughwhichtheAgadirzoneeconomic achievements and Investment Climate are presented.

It isanticipatedthataseniorinternationalexpert isneededfor2monthsperiodinsixmonthsdurationandfourAgadir consultants for one month each to assist ATU and the sector representatives of each Agadir member country topreparetheroadshowandtofollowuponitsresults.

TheinternationalexpertandtheAgadirexpertswillaccomplishthefollowingactivities:

● ConductamarketstudyfortheUKmarkettoidentifytheexportpotential,consumertastes, in addition to targeted importers and investors.

● Conductseminarstopresentthefindingsofthestudyandtheirimpactontheroadshowpreparationstothedifferentstakeholdersinthefootwearsector.

● ConductanawarenesscampaignforthefootwearsectoronthebenefitsoftheroadshowtoattractAgadirzonecompaniestoparticipateintheroadshow.

● Define selection criteria to be utilized to screen companies’ applications andguaranteethegoodpresentationoftheAgadirzonefootwearsector.

● ConductfieldvisitstostoresintheUKmarkettoinvestigatepricesandqualityofcompeting products.

● Advisetheparticipatingcompaniesonthebestpricerangesanddesignsandfashions.However,theconsultantshouldbeabletoidentifyadesignerfromtheUKmarketthat can help the Agadir zone companies to develop the designs of their products according to the tastes of the UK consumers.

● WorkwiththeAgadirzonecompaniestopreparetheirproductsandsamplesfortheroadshow.

● Workcloselywith sector representativesandATU to implement thepromotionalcampaignassociatedwiththeroadshowandadviceonthepromotionalactivitieswiththehighestimpact.

Moreover, the associated promotional campaign is suggested to be the responsibility of sector representatives that can coordinateallthepromotionaleffortsinordertoattracttherightaudiencesfortheroadshowactivities.

Germanyhoststhelargestandmostsignificantshoeshowintheworld–theGDSinDüsseldorf.(gds-online.com).ItisheldtwiceperyearinMarchandSeptember.BuddingexporterstotheGermanmarketneedtoexhibitatthisshow2timesyearlyforatleastthreeyearstobeeffective.Attheshowpriorityshouldbegiventofindingasuitablesalesagent in Germany.

ThestudytourtoUK,aspartofthebuilduptotheroadshow,shouldalsoincludeGermanyonitsitinerary.ThefootwearmanufacturersinterestedinexporttoGermanyshouldjointhestudytourasobserversformarketresearch



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purposes.

Companiesneedtodeveloptheirownbrochuresandflyersandadvertisetheirintentionsinoneormoreofthetradepress in Germany.

● Schukurier● Shoez● Schumarkt

Itisanticipatedthataseniorinternationalexpertisneededfor1monthperiodinsixmonthsdurationandfourAgadirconsultants for 15 days each to assist ATU and the sector representatives of each Agadir member country to prepare the Agadir participation in GdS

TheinternationalexpertandtheAgadirexpertswillaccomplishthefollowingactivities:

● ConductanawarenesscampaignforthefootwearsectoronthebenefitsoftheGDSshowtoattractAgadirzonecompaniestoparticipateinthetradefair.

● Define selection criteria to be utilized to screen companies’ applications andguaranteethegoodpresentationoftheAgadirzonefootwearsector.

● Advise the participating companies on the best price ranges and designs andfashions.

● WorkwiththeAgadirzonecompaniestopreparetheirproductsandsamplesforthisshow.

● Workcloselywith sector representativesandATU to implement thepromotionalcampaignassociatedwiththetradeshowandadviceonthepromotionalactivitieswiththehighestimpact.

● DuringtheeventtheConsultantshouldassistATUandAgadirsupportinginstitutionsto organize promotional operations :An open door eventwhere invited,AgadirMinisters of Trade, representatives of German Government in charge of international cooperation,Germanleatherandfootwearassociations,representativesofretailers,German footwear importers, representatives of German footwear supportingservices (designers, …) and representatives of media. A press conference should also be held during this promotional event.

● Organisation during the event of B2B meetings between potential partners“International Trading companies” as well as with chambers of commerce,representatives of professional organizations, technical centers and training and fashion institutes.

● These meetings should lead to the signing of trade agreements, partnershipagreementsandcooperationagreementsrelatingtoforexamplevocationaltraining,thetransferoflaboratoriesorproductionactivitiestowardstheAgadirzone

Belgium represents a special case as it is also the seat of the European Union. The strategy and action plan highlighted theneedforapromotionalandawarenesscampaignintheEuropeanmarketstoattractinvestmentsandjointventuresaswellaspromotetheAgadirzoneexports.Inthisrespect,itissuggestedtoorganizearoadshowandFDImissionin Brussels, Belgium

ThisroadshowandFDImissionwill target theexportdevelopmentto theBelgiummarketaswellEUfootwearassociationandfinancinginstitutions.TheBelgiummarketrepresentsagoodpotentialmarketfortheAgadirzonefootwearexportersduetotheimportanceoftheirimports,thepositionofBelgiumasanimportantre-exportertotheEUandthesimilaritiesoftheBelgiumconsumerbehaviortotheFrenchandGermanmarketwithwhichTunisiaandMoroccohaveanexportexperience.ThepresenceofEUsupportinginstitutionsinBrusselswillofferalsoanimportantopportunitytopromoteFDIandraiseEUfinancingsupporttotheAgadirfootwearsector.




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TodevelopexportstoEuropeAgadircompanieswouldbewelladvisedtoattend selected European international fairstwiceayearoveraminimumof3years.

BytheirverynatureattendanceatoverseasfairsisanexpensiveoperationforanycompanyletaloneaswellasforNationalGovernmentsupport.HoweveramoreintegratedapproachwouldbemoreeffectiveincombiningresourcestohaveanAgadirGrouppresenceatselectedshows.

Attendanceatashowshouldbeanticipatedbyaplanwithclearimplementalobjectivesandanallocatedbudgetwhichwillbefinancedaccordingtheco-financingsystemoftheAgadircooperationactionplan.

OftheinternationalshowsthatareavailabletotheAgadirCountriesthefollowinghavemerit.● ExpoRivaSchuh,RivadelGarda,Italy,JanuaryandJuneeachyear:

ThisshowisdedicatedtoShoesandsomecomplementarybags● Linea Pelle + Simac Tanning Tech, Bologna Italy, April, October International

Exhibitionofleathers,accessories,componentsandsyntheticproductsandmodelsforfootwear,leathergoods,leatherwearandfurnishing.InOctobertheshowisjoinedwithSimacaninternationalexhibitionofmachinesandtechnologiesforfootwear,leather goods and tanning industry.

● MIPEL,MilanItaly,MayandSeptember.InternationalShowcase for leather goods. Twice a year, in a prestigious setting - the city ofMilan,oneofthefashioncapitalsintheworld-thebestcreationsinleather,fabricand alternative materials, for all seasons of the year, are presented. The aim is to highlight andpromote the imageof leathergoodsproducedall around theworldand, in particular, Italian-made goods. The exhibitorsmeet theirmost importantcounterparts, dealers and the media, and can also take part in special events,conferences and round tables in a pleasant, elegant environment.

Duringtheseeventsitisrecommendedtoperformthefollowing:

● An “Agadir partnership” event should be systematically organized during theseshows.Itwillconsistofconnectingcommercial/industrialpartnerswhowouldhavebeenidentified

● Apromotionalcampaignshouldbeperformeddevelopingtheimageofthe“Agadir”LeatherandshoessectorwithintheEuropeanBusinessCommunityandinforminginternational clients and potential partners on the sector, and particularly on the participating companies.

● Eachoperationshouldhavetobeprecededbyabriefingconcerningshowparticipantsfeatures and relevant recommendations for potential participants

ActionsrequiredforAgadirpromotioninEUareasfollows:

action Responsibility ResourcesOrganizearoadshowto the UK



AttendtheGDSshoeshow AssociationsCompanies


OrganizeaFootwearRoadShow&FDIandFinanceraisingmission in Brussels Belgium



OrganizetheparticipationofAgadirLeatherandfootwearcompaniesinInternationalExhibitions





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iii. distribution

TheprojectisconcernedwithdistributionmethodsintraAgadiranddistributionmethodsinEurope.

IntraAgadirdistributionhasvariousmethodsopentothecompanies.Itisuptoindividualcompaniestodecidewhichmethodormethodstheyfeelcomfortablewithforimplementation.

PartnershipDeveloping a relationshipwith a complimentarymanufacturer in another country and using their existing basefor distribution. The reciprocal relationship can mean manufacturing and distributing each others products in their respectivelocalmarketordirectlyimportingfinishedproductsfordistribution.

Vertical MarketingSeekingoutawholesalerintherespectiveexportmarketandusingthewholesalertodistributetheproduct.

agency SalesSeekingoutasalesagentwhosolicitsordersforimportationanddistributionfromavarietyofcustomersfromretailchains,wholesalers,largeretailers,GovernmentAgencies,industrialcompanies,serviceindustry(hotels,hospitalsetc).Worksonasoleagencybasiswiththemanufacturer.

FranchisingIfacompanyhasabrand.Setupfranchiseretailshopsorshopswithinashop.

Catalogue StoresSetupsmallwarehouseswithasalescounterinfront.Printcataloguesorflyerswiththefootwearonoffer.Keepstockofshoesinthewarehouseandondisplayatthecounter.Sellshoestomembersofthepublicinminimumquantitiesonly–say1cartonatwholesaleprices.Thesecustomersthenbecomedefactominiwholesalers.

DistributionCompanyCarry out a feasibility study for establishing a shareholding company to distribute all Agadir leather and shoes products in the region,This companywill be empowered to open franchises, set and outsource its designs andfashions, give subcontracts to different suppliers from Agadir countries based on price and quality not quotas. It is assumedtohaveachiefexecutiveofficer(CEO)outsidefromtheownerswhoknowshowtomarketandpromoteitsproductseffectively.Themanufacturersmaybeshareholdersbutthemanagementwouldbeindependent. ActionsrequiredforinterAgadirdistributionareasfollows: action Responsibility ResourcesEvaluate method of distribution that company feels comfortablewith Company Management In house

Underthefactfindingtourevaluatetheoptionsfordistributioninthefield Company Management

ExportpromotionAgenciesCountry AssociationsATU

Feasibility study for establishing a distribution chain CompaniesAssociations


For distribution in Europe there aremultiple choices available to exporters to theUK. It has awide variety ofimportersandfewbuyinggroupswhichmeanstherearemanymorecustomersavailable.




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Thebiggestsellersoffootweararethechainstoreswhichrepresent43%ofallsales.Exampleofimportersare: ChAIn STorES dEPArTMEnT STorES WhoLESALErS dISTrIBUTorSCandJClarks MarksandSpencer BrevitReiker Pentland IndustriesStead and Simpson debenhams Magnus and Warren PeterBlackrussel and Bromley British home Stores h. r. Marrum Kidderminster ShoeJonesBootmaker JohnLewis NewmansFootwearFaith Shoes house of Frazer Gardiner BrothersBenson Shoe Coop PatrickShoes

Independent retailerscanbefoundfromtheIndependentFootwearRetailersAssociationandfurther informationfromtheBritishFootwearAssociation.(Bothhavewebsites).

PhoenixandBoltonBrosaretwocompanieswhichspecialiseinorthopaedicfootwear.

Thereareonlyabout20footwearmanufacturersleftintheUKmostlyinvolvedwithGoodyearweltedconstructionsolittleopportunityforsubcontractingexceptforspecialistGoodyearweltedcompaniesintheAgadirregion.

Sellingpricesattheretaillevelarewhatguidesthesellingpricefromtheexportingfactories.Generallytheretailerrequiresamarginofprofiton the sellingpriceofaminimumof45%.Thiswouldbe fora recognised brandedproduct.Unbrandedproductsorminorbrandswouldrequireamarginof50%.Thehigherthemargintheretailercanmakethehigherthechancesofanexportorder.

In thismix there isawholesalerordistributorwhoprovides thefootwear to theshops.Thiscompanyrequiresaminimumof30%marginontheCIFpriceoftheshoes.(Thewholesalerandordistributorcansometimesbethesamecompany as the retailer, none the less the margin is still required).

Startingwiththeresearchdoneatretaillevelforsellingpricesforsimilarshoesthatareplannedtobeexported,usingtheabovemargins,exporterscancalculatewhatacompetitiveandacceptableFOBsellingpriceshouldbe.

ThemostpopularpricepointsatretailintheUKarebetween£35and£60(approximatelyeuros40–70).Thiswouldgive a factory FoB price of around euros 11 to 19.

There isnomagic formulaonhowtoapproach thesecompanies.Advertisingforanagent isagoodfirststep inentering themarket.Agoodagentwilleaseentry intopotentialcustomersandmake theexportprocessquicker.Howevergoodagentsonlydealwithequallygoodfactories.

Direct introductory letter to the import company principle or potential agent,with a short profile of theAgadircompanyandanoverviewof theproduct rangewithprice indicators ishelpful. In the letter informationofwhyitwouldbebeneficial todealwithAgadirwithuniquesellingpropostionsandkeycustomervalues isnecessary.Mentioningawebsite,includingaprofessionallyproducedcatalogueorbrochure,evenasampleshoe(s)willseparateonecompanyfromanother.Invitationtovisitstandatatradefair.Whateverhappenstherehastobeaplantofollowprogressive steps until a face to face meeting is achieved.

Intermsofcustomerpreferencethewholesalersareprobablytheeasiesttargets.TheyhavetheircustomerlistandbuyinsmallerquantitieswhichmatchesupwiththeabilitiesoftheAgadirmanufacturers.

Therearenotasmanysalesopenings inGermanyas thereare in theUK.Thebuyingof footwear isdominatedbybuyinggroupswith thousandsof shopsand largechains in turnwith thousandswhich ineffectmeans fewercustomerstosellto.Therearesmallerretailchainsandmanufacturers(orexmanufacturerswhoimportundertheirbrands).ThesmallerchainsareeasiertosellintoalthoughDeichmann,withover2,000shopshasanaffinitytodo



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businesswithdevelopingcountries.Departmentstorestendtobeatthelowendvolumesegmentofthemarketanddifficulttosupplyagainstlowcostproducingcountries.Examplesofthemajorbuyersare:

BUYInG GroUPS rETAIL ChAInS M A n U F A C T U r I n G IMPorTErS dEPArTMEnT STorES

*Ariston nord West ring diechmann Salamander Karstadt*GarantSchue+Mode Salamander Gabor Kauthof

Breuninger Reiker LidlSchuhhof Seibel MetroCeka Sioux Aldiroland-Schuhe Arahamm- reno

*Thesecompanieshavebeenhavingadifficulttimerecentlyduetothefinancialcrisis.

Birkenstok,BamaandGauterspecialiseinhealthfootwear.

Informationcanbefoundattheassociationoftraders,manufacturersandexportersathds-schuh.de.

Asmentionedabove,thereisnoparticularlyrecommendedwaytoapproachthesecustomers.Companiesneedtodeveloptheirowntechniquesforthis.Anapproachsimilar tothatoutlinedfortheUKwouldbeagoodpointofreference.

TheprinciplesofpricingfortheGermanmarketarethesameastheUK.PossiblythepriceslikeforlikeareslightlyhigherinGermany.Thismeansthatallplayersinthevaluechaincangetalittlemoreprofit.HowevertheGermanmarketismoredemandingandthehigherpricessometimesreflecthigherlevelsofserviceandquality.

Retailsellingpricesthereforerequirethe50%+marginofprofitonthesellingpriceandthewholesalerrequiresthe30% margin.

ForgettingdetailedinformationonEUimportersthefollowingsourcesare available:

● AnIndiancompanycalledEximInfotekpublishesadirectoryofEuropeanimportersofalltypes(http://www.eximinfo.com).

● AgoodlinktowholesalersandwholesalepricesintheUKistheFootwearandShoeUKWholesaleSuppliersDirectory(http://www.the-wholesaler.co.uk)

ActionsrequiredforEUdistributionareasfollows:


Defineprofile,jobdescriptionandTORforanagency agreement Company management

In houseLegal representationExportpromotionagencies

SeekoutagentsinpotentialmarketsUKattheroadshowandGDSGermany at the GdSBeneluxattheGDS

Company ManagementExportpromotionagenciesATUCompanies




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i. Product development

Leather goods manufacturing can be broadly categorised into 5 groups.

Group percentage of Market Item

Ladies bags 30 - �0

Medium/higher,elegantfashionClassic fashionYounglookFunctional

Small leather goods 25 – 30

Wallets, purses, bill folds, stationery items, keyholders,cameracases,phonecasesetc2 levels Highquality–uppermarketsegmentMediumquality–corporategiveaways

Mens items 10 Brief cases, attaché cases, shoulder bags, folios, overnight bags, toilet bags

Luggage 10 Bags,trunks,suitcases

Belts 7 – 10 Mens and ladies, sometimes become a fashion itemWatch straps

Apart from the above there is a plethora of other items that can be made from leather if there is a demand.

Ladiesbagsisadynamicmarketandunlikefootwear,hasshownconsiderablegrowthinrecentyears.Ofnecessityladies bags made from leather, because of cost structures, need to be in the medium to high quality fashion segments. LadiesbagsareinhighdemandintheEUmarketsbecomingafashionstatementthisalsotranslatestoanextenttotheAgadirmarkets,atthesamelevels.

Theleathergoodsindustryhasdevelopedfromacraftbasetowhereitistoday.Howevermuchofthemanufacturinghasremainedatacraftlevelwithfewmechanizedfactories.Mostfactoriesareatbestsemimechanizedandrelytoalargeextentontheskillsofthehandworkers.Thesuccessfulmanufacturersarethosewhichhavemechanizedasmuch as possible.

Fromaproductdevelopmentpointofviewfactoriesshouldassesstheirproductionprocessesandtransformfromabatchhandworkedsystemtoamachineoperatedproductionlinesystem.TheSIMACmachineryshowinItalyhason display the latest developments in manufacturing techniques.

Successful operations also specialize in a particular type of product – ladies bags – mens briefcases – corporate givaways,etc.Thisbringsineconomiesofscaleandincreasesinproductivity.Asmallerproductlineusuallymeansbetter product development through specialization.

Ladiesbags,thebiggestmarket,issubjecttofashionasarebeltsinrecenttimesandproductdevelopmentheremustkeepupwiththetrends.Fashionforwardinformationisneeded.ThisinformationisavailableatinternationalshowssuchasMipelinItalyandtosomeextentfromtheinternet.

Leatherproducts consistof a largeproduct range,nonetheless there are certaincategoriesworthconsidering foractionwhichhaveademand.AlltheseitemslendthemselvestointernationalmarketsbetheyinterAgadirorEU.



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● Ladiesbags● Ladiesbelts● Mensshoulderbags● Laptopbags

Akeyperformanceindicatorinproductdevelopmentwouldbethedegreetowhichafactorycanchangeitsproductionfromcraftbased tomachinebasedwith theconsequentsavings incosts the impactofwhichwouldgive themaconsiderable competitive advantage.Actionsrequiredforproductdevelopmentareasfollows:


Assessproductionmethodswithaviewtomechanize.VisitSimacshowinItalyforlatestmachinerydevelopments

Company Management Business upgrading programmesATU

Consider specialization by product line Company Management In house

Getfashionforwardinformationforladiesbagsandbelts.VisitMipelshowinItaly. Company Management

ExportpromotionagenciesATUCompanies

ii. Promotion

Thepromotionofpersonal leathergoodsshouldfollowthesamemechanismsasfootwear.Infactcertain leathergoodsarealsosoldinfootwearshops,namelyladiesbagsandtosomeextentbelts.

ThevolumeofinterAgadirtradewillbelessinleathergoodsthanfootwearasleathergoodsreallyareaimedatthetopendoftheAgadirmarkets.TherearemoreopportunitiesinEuropewherethebuyingpowerisgreater.

ForAgadirPLG,promotionshouldruninconjunctionwiththefootwearactionplanasoutlinedabove.TheCompanydVd and brochures should be designed and produced. The companies should be an integral part of the electronic advertisingplan.TheyshouldattendtheAgadircountryleathershows.

ActionsrequiredforinterAgadirpromotionareasfollows:


Be part of the “Agadir”Leather&FootwearDatabase The AssociationsThe Companies


design of a Brochure and dVd on the Agadir zone PLG sector



Be part of the creationofavirtualAgadirexhibition The AssociationsThe Companies





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Be part of the creationofAgadirLeatherandFootwearPortal



Be part of the setupamonthlyAgadirNewsletter The AssociationsThe Companies




PromotiontotheEUshouldfollowconventionallines.Twothingsarerequiredvistheattendanceatinternationalshowsandtheappointmentofsalesagents.Attendanceattheshowsshouldbeusedtosellproductsandalsoattractestablishedsalesagents.Showattendanceshouldbeoveraminimumofthreeyearstwiceperyeartobeeffectiveandproduceresults.Thekeyperformanceindicatorherewouldbetheincreaseinexportordersfromthepointoffirstshowattendance.

ActionsrequiredforEUpromotionareasfollows:


Attendinternationalshow.ChoosebetweenMipelandoffenbach Company Management ExportPromotionAgencies

ATU

Seekoutsalesagents Company Management AdvertiseatshowAdvertise in Trade Press

iii. distribution

AswithfootweartheprojectisconcernedwithdistributionoptionsintraAgadirandEurope.

IntraAgadirdistributionhasvariousmethodsopentothecompanies.Itisuptoindividualcompaniestodecidewhichmethodormethodstheyfeelcomfortablewithforimplementation.

It is probably not sensible for PLG companies to utilise the catalogue stores option. To recap the options are:● Partnership● Verticalmarketing● Agencysales● Franchising● Distributioncompany

ActionsrequiredforinterAgadirdistributionareasfollows: action Responsibility ResourcesEvaluate method of distribution that company feels comfortablewith Company Management In house







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As far as the EU is concerned the route from manufacturers to consumers in the EU trade for leather goods is varied.Thereisacleardistinctionbetweenspecialist distribution, wheretheproductishandledbyintermediaries(agents,buyinggroups)andretailerswhoprimarilydealwithdifferenttypesofleathergoods,andnon-specialist distribution. Innon-specialistdistribution,leathergoodsarejustoneofa(wide)rangeofproductshandledbythe companies in question.However, there are differences between the segments. For luggage (suitcases andbriefcases), specialist channels remain important, as specialists tend to provide more display space. This is not easy for a non-specialist. For bags and small leather accessories there is awide distribution network,whichincludessalesbyallsortsofothershops.Forallsegments,departmentstorestakeupalargeproportionofretailsales.

TYpiCal DiSTRiBUTion STRUCTURe FoR leaTHeR GooDS in eU

FromtheaboveforAgadircompaniesimportersand/orwholesalersprobablyofferthebestopportunityfordistribution.

Bybuyingontheirownaccountimporterstakestitletothegoodsandarresponsiblefortheironwardsaleanddistribution.Importersusuallybuyandsellthegoods,takecareofimport/exportproceduresandholditemsinstock.Manyimportersselldirectlytospecialistretailers,departmentstores,sportsorclothingshopsthroughpermanentexhibitioncentres.Othershavetheirownsalesstaffthatvisitretailersonaregularbasisandtakeorders.

Theimporterhascontactsinthelocalmarket,knowsthetrendsandcansupplyconsiderableinformationandguidance




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to the overseasmanufacturer.The development of a successfulworking relationship betweenmanufacturer andimportercanleadtoahighlevelofco-operationwithregardtoappropriatedesignsforthemarket,newtrends,useofmaterialsandqualityrequirements.Someimportersalsoactaswholesalers.

Wholesalersoftensupplyindependentorspecialistluggageandleatheraccessoriesshopsandplayamajorroleinthesupply of a particular type or style. They usually specialise e.g. ladies’ bags or laptop cases, or in travel goods, but theyoftencarryawidevarietyofproducts.Wholesalemarginshavetraditionallybeenquitehigh,buttheirinfluenceis diminishing due to the increasing dominance of large retailers and the increasing acceptance of online trade.

AsecondaryformofdistributionwouldbethroughsellingagentsTheyusuallyworkonacontractandcommissionbasisforoneormoremanufacturers.Somesellfromstocksuppliedonconsignmentbytheexporterinordertomeettheirclients’short-termdemand.Ifanagentbuildsuphisownstock,heisinfactfunctioningasawholesalerordistributor.

Informationonwholesalersandsellingagentscanbefoundatwww.eximfo.comacompanywhichpublisheslistsofoperators in various countries on a subscription basis.

ExamplesofdistributorsintheEUofvarioustypesareasfollows:

ChAIn STorES dEPT. STorES IMPorTErS BUYInG GroUPS

Accessorize, UK Karstadt, Germany Samsonite, Belgium Goldkrone,Germany

Claires Accessories, UK Kaufhof, Germany Bags etc, UK Assima, Germany

Zara, Spain El Corte Ingles, Spain Rimowa,Germany Lecombi, Germany

Next,UK Galleries Lafayette, Fr

Top Shop, UK JohnLewis,UKMango, Spain Coim, ItalyC and A, Belgium


action Responsibility ResourcesEvaluate method of distribution that companyfeelscomfortablewith Company Management In house

Under the fact finding tours evaluate theoptionsfordistributioninthefield Company Management


6.3. Aspect3–Investment

BeforetalkingaboutpotentialinvestmentsorpresentingtheactionsneededtoattractmoreinvestmentseitherintraAgadirorForeignDirectInvestments(FDI),thefollowingannualproductionquantitiesarepresentedineachofthe4countriessoinvestorscouldestimatetheAgadirmarketsizeandpotentialinvestmentopportunitiesaccordingtophase 1 report:



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annual production Quantities

Leatherproduction Egypt Jordan Morocco Tunisia*

Type Squarefeet

Beef 7�.�3�.680 3.000.000 27.272.725 -Buffalo �7.352.600 - - -Camel 9.307.250 - - -Veal/smallcalf 10.801.200 - - -

Sheep 15.0�2.�00 �.500.000 76.5�6.757 -

Goat 3.167.160 2.250.000 11.789.�72 -

Imported leather 22.500.000 - - -

Merino (imported Australiansheepskin)** - 9.000.000 - -

Total 182.605.290 18.750.00 *** 115.608.95� -Footwearproduction(pairper year) 70 million half million - -

Source: Chambers of Industry and professional associations in the four countries *****

*: All data obtained from Tunisia are in Tunisian dinar, and can not be converted in this table because they reflectonlythequantitiesproduced.

**:TheyareallexportedasrawhidesfromJordan.***:Jordanexports80%oflocalrawhidesandtansonly20%intheonlytannerycurrentlyexisting,orabout2

million square feet annually. ****: none of the four countries provided any data on production quantities of clothing and personal leather

goods.*****:Theabovementioneddatawereobtained from leather associations and leather industries in the four

countries,whichcontactedtherelevantministriesintheircountries.

The following table shows someof thepotentials in the four countries in termsofpotential investments,whichdependontheavailabilityoftheindustry’sbasicmaterials,theexistenceofindustrialzonesspecializedinleatherandotherleatherindustries,theavailabilityofwater,energyandlaborataffordablepricesandsufficientquantities,theavailabilityoftherequiredtechnicalexpertiseandtheadequatesupplyofcomponents.

Country Raw hides

Specializedcities

Industry'sbasicmaterials(1) Water energy labor Technical

expertise

Jordan *** not available ** * * * **

Egypt ***** **** **** ***** ***** **** ***

Morocco ***** *** **** **** *** **** ****

Tunisia **** not available **** **** **** **** ****




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(1)Likerawhidesorhalf-processedleather,salt,lime,pigments,chromium,oils,fillersinthecaseoftanning,tannedleatherandcomponentsinthecaseoffootwearandotherleatherindustries.

(2)Inthisclassification,*meansweakand*****meansthestrongestcountryofthegroup.(3)Inregardsofbasicresources,likewater,energyandlabor,twofactorsweretakenintoaccount:theavailabilityand the competition in terms of cost and quality.(4)Technical expertise includes knowledge ofmanufacturing and designmethods, keeping up to datewithfashiontrends,providinghigh-levelspecializedvocationaltrainingandknowledgeofexportmarkets.

Theinformationcontainedintheabovetablewasconcludedbasedontheresultsofthefirstphaseofthestudy,butitisonlyapreliminaryanalysisthatcanbemoreusefulwhenfeasibilitystudiesandotherinvestmentstudies,whichwillberecommendedherelater,areconducted.

A-Developmentofinvestmentintra-agadircountries1. Encouragingthecreationofplatformsfortradehousesandbigintegratingprojectsfocused

on leather and footwear in agadir countries:

The international market’s current trend towards the demand for finished products, the development and rapidevolutionoffashionproductsandthemanufacturingofsmallseries,requiresmorecapitaltofinancerawmaterials,the investment in technologicalequipment(CAD/CAMandautomaticcuttingandquilting),creationanddesign,marketingandtrainingworkforce.

ThischaracteristiccontradictswiththedimensionofsubcontractorSMEsandtheexistingbusinesses,whichdon’thaveenoughequitycapitaltobuysophisticatedequipmentandsufferfromlackofworkingcapital,whichinturnforcesthemtoworkassubcontractorsfortheorderingparties,providingthemwithrawmaterials.

To repair this, it is important to create big platforms in Agadir area or international trade companies (Trade house) andstreamlinetherelationshipbetweensubcontractorsandorderingparties.

The platforms should have substantial financial resources to finance the acquisition of new technologies, theprocurementofqualityrawmaterials,highlyqualifiedtechnicalstaff,thecreationofnewcollectionsandpromotionabroad.

Giventhehighrisksassociatedwiththeseplatforms,thegovernmentsofAgadirAgreementMemberCountriescangranttheseplatformsthesameadvantagesasthosegiventopriorityindustrialprojects.

Theestablishmentofpartnershiprelationsbetweensubcontractorsandorderingpartiesandimprovingthemanagementofsubcontractorsarenecessaryconditionsforthesuccessofplatformdevelopmentproject.

To that end, it is necessary to encourage the creation of a new generation of subcontractors by supporting theinvestment platforms in subsidiary subcontractors in the form of consortia and by increasing the funding granted to subcontractors’ contracts.

It is also necessary to:

Promotethecertificationofsubcontractors,supervisorsandauditors.

Developanaccreditationsystemfor internationallyrecognizedcertificationbodies inAgadircountries.

Establishapromotion,extranetandvideoconferenceprogramwithsubcontractors toenablethemtoworkinnetworkswithorderingparties.



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2. Creatingintegratedprojectsfortanningandfinishingqualityleather

AlthoughEgyptisabigexporterofsemi-finishedleather,Agadirareaispoorlyintegratedverticallycomparedtothecompetition.

Tolimittheimpactofthiscompetitionadvantage,itisnecessarytoimprovetheconditionsandqualityoffinishedleathersupplybyencouragingthecreationofleatherfinishingprojects.

Withtheexceptionoftheexistenceofsomehigh-endleatherfinishers,especiallyinTunisia,theleatherfinishingsectorisweakinAgadirarea.

Giventhehighrisksassociatedwiththeseinvestments,thegovernmentscangrantAgadirareainvestorsandforeigninvestorsadditionaladvantages,suchasaidsfortheconstructionofindustrialspaceandotherbenefitstobenegotiatedcase by case according to the technological contribution of the developer. Toattractthesedevelopers,itisalsonecessarytoemphasizetheimportanceoftheneedsofexportingcompaniesinAgadir area of quality leather. IdentificationofnewindustrialprojectswhereintegrationandcomplementaritiesintheLeatherandShoessectorintheAgadircountriesispossible,andhenceforth,promotingexportsoftheseprojectsintheE.Umarket.

3. Carry out a feasibility studiesofidentifiedopportunitiesofinvestmentinAgadircountriesandparticularlyforthecreationoffootwearindustrialparksofferingallneededfacilitiesforFootwearMicro and SMEs: tanning facilities and supporting services.

4. DevelopinginAgadirSupportingservicesprojects:Creating in Agadir supporting services that cover:

● Themarketing● Thequalityanddesign● TheInformationTechnology

5. Creatingadatabaseofprojectsandmakeitavailabletotheinvestorsinthearea:CreatingthisdatabasewillbeaccomplishedthroughconductingopportunitystudiesoftheinvestmentprojectsinAgadir area.

TheseopportunitystudieswillstudydemandandsupplyinAgadirarea,determinetheavailableexportpossibilitiesandthebestlocationsfortheprojects,aswellastheprofitabilityofthecurrentinvestments.

Theyfocusonhighpotentialsectorssuchasfinishedleather,high-endleatherfootwear,specializedfootwearfornichemarkets(orthopaedicandsafetyfootwear)andthemanufactureoffootwearcomponents.

6. DevelopinganinvestmentpromotionplaninAgadirarea

Organizingpublicitycampaigns topromote theproduction inAgadirarea in foreignmedia(specialized journals,televisionprogramspresentingcompaniesthatsuccessfullyproducedandexportedqualityproductsforthetopthreecompaniesinthebestdesignerandbestexportercontests).

Developingcooperationagreementswithallprofessionalassociationsandorganizationswhichencourageinvestmentand foreign trade, and the targeted countries in the European Union.

Organizingmissionstoexploreforeigninvestmentopportunities inAgadircountries,highlightingtheadvantagesoffered by Agadir area.

OrganizinganopendoordaybetweenEuropeanplatforms,supportorganizations,investor,EuropeandistributorsandindustrialdistributorsandfinanciersinAgadirareaandtheGulfcountries.B-DevelopmentofFDI:




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Besides the national FdI development program, developing of an FdI development program that include:● NegotiatingwithEUcountriestoestablishcreditlinestofinanceshort-termoperations(purchase

ofrawmaterials,fundingsubcontractingoperationsandotherservices)performedinAgadirarea.● DevelopaninvestmentfundingprograminAgadirarea:

1. Asking the European Investment Bank’s help in setting up a guarantee fund to finance regionalinvestmentprojectsandanintra-Agadirinvestmentdevelopmentfundtoencouragejointprojectsinthearea.

2. Developcreditinsurancemechanismsforexportsattheregionallevel:

Promotea regionalexportcredit insurancesystemtostrengthen thepartnershipbetween thenationalexportcreditinsuranceorganizationsontheonehandandbetweentheseorganizationsand their European insurers and reinsurers counterparties on the other.

Considertheadvisabilityofestablishingaregionalexportcreditinsurancecompany.

Expandtheexportcreditinsurancesystemtoincludethepurchasescompletedforthepurposeofexport.

InvestmentDevelopmentActionPlanactions Responsibility Funding

Provide incentives for the creation of platforms Business Associations Agadir countries

Provideincentivesforinvestmentintanning&finishing Business Associations Agadir countries

CreationofIdeasofprojects’Database ATU EU

ConductfeasibilitystudiesforidentifiedopportunitiesandparticularlyforthecreationoffootwearindustrialparksdedicatedtoFootwearMicroandSMEs and including tanning facilities and supporting services

Business Associations Agadir countries

Creationofsupportingservicesprojects Business Associations Agadir countries

FdI promotion mission in the EU & Gulf countries Business Associations Agadir countries

EstablishfeasibilitystudyoftheinvestmentfinancingsupportingsystemandAction Plan Business Associations Agadir

countries

C- agadir artisan leather Crafts Subsector:

HandcraftproductionisamajorformofemploymentandintheAgadircountriesandconstitutesasignificantpartoftheirexporteconomies.Theescalatingnumberofsmallbusinessesturningtohandcraftproductionisunlikelytodeclinesignificantlyinthefuture.Artisanshavebeenidentifiedasthesecondlargestsectorofruralemploymentafteragriculture in the region.

Artisan production has thrived because handcrafted products offer distinct advantages:

● minimalstart-upcapital● flexibleworkhours● theabilitytoworkathome● freedomtomanageone’sownbusiness.

Unlikemanyotherformsoflabour,artisanproductioncanalsoenableadegreeoflabourautonomyforthosewhohave limited access to the cash economy. As a means of livelihood, handcrafts provide an ideal avenue for creative, independent entrepreneurs.

According to the Creative Economy Report 2008,artsandcraftsaretheonlycreativeindustrywheredeveloping



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countrieshavealeadingpositionintheglobalmarket.�Forthiscreativesector,developing-countryexportsnearlydoubledintenyears,increasingfrom$7.7billionin1996to$13.8billionin2005,accountingfor60%oftotalworldexportsofcreativegoods.Tourismandtheexpansionofleisureandartmarketswillcontinuetocontributetothedynamismofartsandcraftsintheworldmarket.

Thereportalsoquantifiedinternationaltradeinartsandcraftsastotaling$23.2billionin2005.Thereportfurtherstates:“The global market for arts and crafts is expanding and clearly is not negligible; world exports increased 31% during the period 2000-2005, from $17.7 billion in 2000 to $23.2 billion in 2005. Arts and crafts are the most important creative industry for export earnings in developing countries”.

The Moroccan Ministry in charge of handcrafts evaluates the number of persons considered as craftspeople in the countrytobe20%oftheactivepopulation.Thereare2millionfull-timecraftspeople,approximately1million

familieslivingatleastpartiallyfromhandcrafts,and4,390exporters.

Tunisiaintermsofcraftsproductioncounts300,000craftspeople(11%oftheactivepopulation)ofwhich2/3workonapart-timebasis(4workinghoursaday).Theirproductionaccountsforanaverageof3.8%oftheGrossDomesticIncomeandensuresanannualincomeofUS$2,400perhousehold(anaverageof5members).

OneofthemajorproblemstheAgadirartisanshaveisindistributing,marketingandsellingtheirwork.Inordertoreachanexportmarket,mostartisansworkthroughatraditionaldistributionchannel.Thetraditionaldistributionchannelconsistsofartisans,exporters,wholesaleimporters,retailersandconsumers.

5In this distribution channel structure, artisans are responsible for producing products and transporting them to an exporter.

� UNCTAD, UNDP Special Unit for South-South Cooperation, �008, Creative Economy Report.

5 Adapted from USAID “Building a profitable craft business”




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Inadditiontoqualitycontrol,packingtheproductandtransportinggoodstotheportofexit,theexporterhastheresponsibilitytomarkettheproductstowholesalersorretailers:

● producingacatalog● establishingandsellingatFOBprices● salesmeetingswithwholesalersandretailers● maintaininganin-countryshowroom

Thewholesalerthenexhibitsininternationaltradeshows,sellingtheproductstoretailersatwholesaleprices.Inordertobeasuccessfulwholesaler,thesebusinessesshouldhaveawebsite,fullproductcatalog,andincurallthecostassociatedwithtradeshowexhibition,whichincludeinventoryprocurement,transportationtotheshow,boothdisplay,marketingcollateralsuchashangtags,brochuresandproductcatalogues.

Because of increased technology, ease of communication, and more shipping options globally, this traditional distributionchannelisflattening.Artisansarebecomingmoresophisticatedandtakingontheresponsibilityofnotonlyproducingproducts,butalsoexportingthem.Additionally,moreretailers,evenindependentretailersandsmallshops,arebuyingdirectlyfromartisansandtakingonimportingresponsibilities.Thisflatteningdistributionchanneldoesputasmall incrementalamountofprofitintothehandsofartisanexportersandretailer importers,howeverit is important to note that even though a player is removed from the distribution channel, the responsibilities and associated costs are not removed.

FortheleatherproductartisansworkingintheAgadirzonetheyshouldconcentrateoncertainaspectsofthebusinessin order to remain competitive, survive and prosper in the global economy. These are:

● ProductDevelopment● StreamlinedProductiontoprovideeconomiesofscaleandtospeedupdeliverytimes.● QualityControl● Marketing/Distributioninworkingtowardsdevelopingadirectdistributionchannelasabove.

ActionsrequiredfortheAgadirZoneArtisanHandcraftsector:



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Protect Agadir handicraft products through their registration in the international intellectual property record as done for Tunisian and Moroccan sandals (balgha and countra)

Agadir Intellectual property Institutions


Movetoaflatteneddistributionchannel Associations, entrepreneurs

Central Government supportATU support

Product development improvement Associations, entrepreneurs

Central Government supportInternational consultantsATU support

Improve production techniques and quality Associations, entrepreneurs


Developmarketingplanbasedonabovechart Associations, entrepreneurs


7. SUMMaRY oF aCTion plan7.1. pRoDUCTion

a. leather

Cost Competitiveness


Each Country to commission a study on hides and skinscollectionwithanemphasisonreducingwaste Tanners Associations


ATU support

Create an international data base on sourcing, suppliers,andpricesofthemajorchemicalsrequiredin tanning


ATU support

Takeadvantageofthenewleathercitiesasanopportunity to re-organise production processes to reduce costs

The Tanning CompaniesBusiness development agencies offering preferential inducements for capital investment

hold an Agadir Group seminar on the latest tanning techniqueswithaviewtoreducingcosts


The Tanning Companies

Invitations to international chemical and machinery companies to attend the seminar

Meeting of Tanners Associations to decide areas of co-operation, integration and supply requirements Tanners Associations ExportPromotionAgenciesin4

countries

Integration and Supply opportunities




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Marketresearchtodeterminetypesoffinishedleather required in each country especially for import substitution.

Factfindingtourbypotentialexporters

Tanners associations

ExportPromotionAgencies

The Tanners

Country associations, in co-operationwithExportPromotionAgenciestoplan,co-financewithindividual companies, and organize a study tour for each of the four countries to the others. Companies to be pre-selected as to suitability and commitment

Decidewhattypesthatcanbeproducedwithcurrenttechnology by evaluation of current manufacturing plants

The Tanners Contact machinery manufacturersContact chemical suppliers

Decidewhichtypesindemandthatcannotbeproducedbutcouldbewithnewtechnologyby evaluation of current manufacturing plant

The Tanners Contact machinery manufacturersContact chemical suppliers

Decideonmostappropriatemarketsegments(whichtype of leather to be used in each subsector of the leather and shoes sector) :

CowShoesSheep PLGGoat Garment

The Tanners Company management in house strategicthinking

Quality Improvement

action Responsibility ResourcesInconjunctionwiththestudyabovefurtherworkshould study slaughtering and preservation techniques withtheobjectofupgradingtherawmaterial.

Tanners Associations Central Government support

IntroduceanAgadirwideclassificationsystemforfinishedleather Tanners Associations Central Government support

ATU support

InconjunctionwiththeAgadirgroupseminarabovefurtherworkshouldstudythelatestfinishingtechniques

Tanners AssociationsThe Tanning Companies

Government support agencies and Tanners

Productivity Improvement


Feasibility studies on man versus machine for productivity gains The Tanning Companies In house management

BenchmarkingproductivitybestpracticesinSpain,Italy,IndiaandTurkey The Tanning Companies Government support agencies and

Tanning companies

Implement a productivity improvement drive The Tanning Companies Government support agencies and Tanning companies



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Training


AssistanycountryfromAgadirZonewhoisinterestedto establish specialized training center in the Leather and shoes industry.

Individual Leather and shoes associations

Government support agencies

Any country form the � countries whohaveadvancedexperienceinthisfield

Shopfloorsupervisors,laboratorytechniciansandresearch and development personnel should attend the proposed seminar above

The Tanning CompaniesGovernment support agencies

ATU

Selected and appropriate personnel to attend the LineaPelleleathershowinItalytostudythelatestdevelopments on display.

The Tanning Companies

Individual country development agencies

ATUdevelop up to date specialized training program in the tanningindustrybenefitingfromwhatwillbepresentedby the international chemical and machinery companies duringtheseminarandtheleathershowabove

Tanning associations and Tanning companies of the � countries

Government support agencies

ATU

B. Footwear







Countryassociations,inco-operationwithexportpromotionagencytoplanandco-financewithindividualcompaniestoorganizea study tour for each of the four countries to the others.Companies to be pre-selected as to suitability and commitment

Decidetargetmarketbycountryandanalyse results of tour

Companieswithinputsfrom Associations BrainstormingsessionswithAssociations

Reasoneddecisionfromexperiencesfromfactfindingtour,decidetypeofproducttobe manufactured

Companies Using information obtained from study tour

Set targets for import substitutionAssociations CompaniesGovernment Ministries





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Studycurrentproductiontechniqueswithaviewtore- engineering them Companies In house management

Associationexperts

Consider alternative labour and material saving constructions Companies In house management

Associationexperts

VisitSIMACshowinItalyforresearchonlatestmachinery and equipment available



ResearchsuppliersofrawmaterialsandcomponentsinAgadircountrieswithaviewtoreduceimportsubstitutionandlowercosts


AssociationexpertsCompaniesownmanagement

Agadir Group meeting to formulate policy onlogisticsandexportfinanceforcostcompetitiveness


ATUExportDevelopmentBanksExportpromotionagenciesBusiness development agencies

Media campaign introducing the leather culture AssociationsCompanies




Critically assess current manufacturing practices Company ManagementExpertsfromAssociationsInhouseexpertsATUinternationalexperts

re-design and re-engineer operational areas Company ManagementExpertsfromAssociationsInhouseexpertsATUinternationalexperts



Analyseandconsidernew,lesslabourintensiveconstructions Company Management In house


Trainingaction Responsibility Resources

Reviewtrainingcoursesavailablefrominstitutionsforrelevance and quality needs of the modern industry



Adjustwherenecessary MinistriesAssociations The institutions

Assess the quality of instructors MinistriesAssociations The institutions

BenchmarktheattainmentlevelsoftraineestoEuropeanlevels



Holdseminarsonmarketingandsellingformanagement Associations ATUInternational consultancies



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C. personal leather Goods









CreationofCenterofexcellenceindesignand creation for leather goods industry in each Agadir country and initiate cooperationbetweentheseinstitutionsthrough the creation of a coordination committee

Industrial development agenciesCountry associations

Industrial development agencies



Studycurrentproductiontechniqueswithaviewtore-engineeringthemwithtimeandmotionstudies Companies In house management

Associationexperts

VisitlineapelleshowinItalyforresearchonlatestmachinery and equipment available



Investigate the use of CAd especially for ladies bags production


Business development agenciesAssociations



Critically assess current manufacturing practices by time and motion study Company Management











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Training

action Responsibility ResourcesReviewtrainingcoursesavailablefrominstitutionsforrelevance and quality needs of the modern industry in stitching operations



Train pattern cutters in CAd operation Company management AssociationsMachinery suppliers

Invest in and train up supervisors in time and motion study Company management Associations

Independent consultants

7.2. MaRKeTinG

a. leather & Footwear

Product development


VisitLineaPelleshow AssociationsCompanies

ExportpromotionagenciesATU

Studyfortheestablishmentofanewbusinessproducingsoles/moulds/lasts/adhesivesinanAgadir country

Trade associations ATU

research and design a shoeline for Agadir, UK and Germanmarkets.Productdevelopmentfunction

Fashionforwardinformation from Associations, Possibleco-financingforservices of international design studio

Utiliselocaland/orinternationaldesigners CompaniesAssociationsExportpromotionagencies

Analyse the machinery and equipment available forfinishing Companies

Company managementMachinery suppliersChemical suppliers

Assessthetechnicalknowledgeoftechnicians Companies Company management

Train technicians to the required standardFieldinternationalconsultantsonfinishingfor12months over a 3 year period.

CompaniesTraining institutionsAssociations

ATUBusiness development agencies

Visit European chemical suppliers for information onfinishingtechniques.CombinewithvisittoLinea Pelle

Companies ATUBusiness development agencies

SponsorstudytourstoEUfinishingtanneriesandchemical suppliers for technicians Companies

ATUBusiness development agenciesInternational agencies

ResearchthemarketinallfourAgadir countries. Factfindingtourbypotentialexporters.Special attentioninJordanforre-exportingopportunities

ExportpromotionagenciesCountry associationsIndividual manufacturing companies

Country associations, in co-operation withexportpromotionagencytoplanandco-financewithindividualcompanies to organize a study tour for each of the four countries to the others.Companies to be pre-selected as to suitability and commitment



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StudytourandmarketsurveytoUK,GermanyandBelgium

Country associations, in co-operationwithexportpromotion agency to planandco-financewithindividual companies to organize a tour Companies to be pre-selected as to suitability and commitment

ATUExportpromotionagenciesCountry associations Individual manufacturing companies

ActionsrequiredforinterAgadirpromotion:


Setupof“Agadir”Leather&FootwearDatabase The AssociationsThe Companies


design of a Brochure and dVd on the Agadir zone Footwear(&Leather)sector The Associations

The CompaniesExportPromotionAgenciesATU

CreationofavirtualAgadirexhibition The AssociationsThe Companies


CreationofAgadirLeatherandFootwearPortal The AssociationsThe Companies


SetupaquaterlyAgadirNewsletter The AssociationsThe Companies




Set performance targets The AssociationsThe Companies


ActionsrequiredforAgadirpromotioninEU:


Organizearoadshowto the UK



AttendtheGDSshoeshow AssociationsCompanies


OrganizeaFootwearRoadShow&FDIandFinance raising mission in Brussels Belgium



organize the participation of Agadir Leather and footwearcompaniesinInternationalExhibitions






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ActionsrequiredforinterAgadirdistribution:

action Responsibility ResourcesEvaluate method of distribution that company feels comfortablewith Company Management In house



ActionsrequiredforEUdistribution:


Defineprofile,jobdescriptionandTORforanagencyagreement Company management

In houseLegal representationExportpromotionagencies

SeekoutagentsinpotentialmarketsUK,GermanyandBenelux Company Management


B. Personal Leather Goods

Actionsrequiredforproductdevelopment:

action Responsibility ResourcesAssessproductionmethodswithaviewtomechanize.VisitSimacshowinItalyforlatestmachinerydevelopments

Company Management Business upgrading programmesATU

Consider specialization by product line Company Management In house

Getfashionforwardinformationforladiesbagsandbelts.VisitMipelshowinItaly. Company Management


ActionsrequiredforEUpromotionareasfollows:

action Responsibility ResourcesAttendinternationalshow.ChoosebetweenMipeland offenbach Company Management ExportPromotionAgencies

ATU

Seekoutsalesagents Company Management AdvertiseatshowAdvertise in Trade Press

ActionsrequiredforinterAgadirdistributionareasfollows:

action Responsibility ResourcesEvaluate method of distribution that company feels comfortablewith Company Management In house




1�0 LEAThEr And ShoES SECTor

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Evaluate method of distribution that company feels comfortablewith Company Management In house

Under the fact finding tours evaluate the options fordistributioninthefield Company Management


7.3. inVeSTMenT

InvestmentDevelopmentActionPlanInvestmentDevelopmentActionPlan

Actions responsibility Funding

develop an Investment development Program targeting Agadir investors

Concerned Agadir Government Agencies Agadir countries

Promotethecreationofcomplementingprojectsdedicatedtotanningandfinishingofhighqualityleather

Business Associations & Industrial development Institutions

Agadir countries

CreationofIdeasofprojects’Database ATU EU

ConductfeasibilitystudiesforidentifiedopportunitiesandparticularlyforthecreationoffootwearindustrialparksdedicatedtoFootwearMicroandSMEsandincludingtanningfacilities and supporting services

Business Associations Agadir countries

Performafeasibilitystudyforthesettingupofindustrialparkdedicated to Micro, Small and Medium Enterprises Business Associations Agadir countries (Business

development Centres)

Provide incentives for the creation of platforms Business Associations Agadir countries

Provideincentivesforinvestmentintanning&finishing Business Associations Agadir countries

Creationofsupportingservicesprojects Business Associations Agadir countries

1�1LEAThEr And ShoES SECTor



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FdI promotion mission in the EU & Gulf countries Business Associations Agadir countries

Establishfeasibilitystudyoftheinvestmentfinancingsupporting system and Action Plan Business Associations Agadir countries

7.4.ActionsrequiredfortheAgadirZoneArtisanHandcraftsector


Protect Agadir handicraft products through their registration in the international intellectual property record as done for Tunisian and Moroccan sandals (balgha and countra)

Agadir Intellectual property Institutions


Movetoaflatteneddistributionchannel Associations, entrepreneurs

Central Government supportATU support

Product development improvement Associations, entrepreneurs


Improve production techniques and quality Associations, entrepreneurs


Developmarketingplanbasedonabovechart Associations, entrepreneurs




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8. pRioRiTiSaTion oF aCTion plan8.1. ShortandMediumtermsplan

Before discussing the plan, it should be noted that the private sector stresses the need to develop a program to facilitate tradeand improve logistic services, transport andports, aswell as facilitating thegrantingofvisas forbusinessmen in Agadir countries. This is an important factor in encouraging cooperation among member states in the fieldsoftransportandprovisioninordertoreduceshippingcostandpromoteprofessionalcooperationinthesectorin Agadir area.

Tothisend,it issuggestedtousethefindingsandrecommendationsofthetransportstudyundertakenbyAgadirTechnical Unit (ATU).

The representatives of the private sector stressed the importance of specialization for the successful implementation of the plan. Therefore, the companies in Agadir area should focus and specialize in certain types and industries in theirsub-sectorstobecomemorecompetitiveandthusincreaseexportopportunities.

ProposedRecommendation TheResponsibleBody ExpectedBudget

First: Tanning and leather

01- The study recommends the adoption of a three-dimensional plan on the national level for thetanningsectorthattakesthefollowingintoconsideration:

• Switchingfromhandslaughtertomachineslaughter in the slaughterhouses

• BuildingleatherwarehousesintheArabcountries

• Providingreliableandwellequippedtransport to ensure proper leather preservation

Professional associations in Agadircountriesfinancedbytheirgovernments. These associations should hold coordination meetings, conduct the necessary studies and identify the expectedcostsofthisplan

25 thousand(for the study)

02-Organizingandholdingjointcoordinationmeetings and developing a cooperation frameworkamongprofessionalassociationswhichrepresentthetanningindustryinorderto identify potential areas of cooperation and integration and supply needs and establish committee for permanent consultation

Professional associations 25 thousand

03-Creatingadigitaldatabankonthesuppliersand the main chemical materials needed in tanningindustryandmakeitaccessibleonline(Agadir Technical Unit gate)

Agadir Technical Unit 30 thousand




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04-Consideringthenewleathercitiesasanopportunity to reorganize production processes to reduce costs and promote cross-investments in this area

Agencies for supporting the industry and promoting investment in Agadir countries

20 thousand

05-Increasingprofessionalmeetingsbetweenprivate sector companies in the leather sector to furtheridentifythemarketneedsineachcountry


06- harmonizing standards by agreeing on abroadclassificationsysteminAgadirforfinalleatherwithintheframeworkoftechnicalcooperation

Professional associations and Agadir Technical Unit 35 thousand

07-Exchangingexperiencesbetweenthefourcountries in the area of training and the possible developmentofjointtrainingprograms

Professionalassociationswithsupportfrom the agencies and programs for supporting the industry in Agadir countries

100 thousand

Second: footwear and personal leather Goods

08-Organizingandholdingjointcoordinationmeetings and developing a cooperation frameworkamongprofessionalassociations,whichrepresentthesectorsoffootwearandpersonal leather goods in order to identify potential areas of cooperation and integration and supply needs and establish committee for permanent consultation


09-Increasingprofessionalmeetingsbetweenprivate sector companies in the sectors of footwearandpersonalleathergoodstofurtheridentifythemarketneedsineachcountry


10-Creatingadigitaldatabankonthesuppliersand the main materials needed in manufacturing footwearandpersonalleathergoodsandmakeitaccessible online (Agadir Technical Unit gate)

Agadir Technical Unit

Around the same cost mentioned earlier in the tanning and leather plan of 30 thousand Euro

11- developing an action plan to train companiesoperatinginthesectorsoffootwearand personal leather goods in Agadir area similar totheTunisian-Moroccanexperience,withintheframeworkoftechnicalcooperation

Professionalassociationswithsupportfromexistingrehabilitationprogramsintheir countries

5 thousand for each company eligible for support from rehabilitation programs in the four countries

12-Promotingpartnershipprojects Professional associations 25 thousand

13-Encouraginginternationaltradebetweenmerchants in the four countries

Professionalassociationswithsupportfrom relevant government agencies 25 thousand

14-Cross-participationinexhibitionsorganizedin Agadir countries

Professional associations and Agadir Technical Unit

30 thousand for each exhibition


1�� LEAThEr And ShoES SECTor

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15-Participatinginspecializedexhibitionsin Europe, to be chosen by the professional associationsincoordinationwithAgadirTechnical Unit

Professional associationsAgadir Technical UnitThe relevant government agencies in the four countries

200 thousand for eachexhibition

Third: Handicraft products

16- developing a technical cooperation programbetweenthebodiesresponsiblefortraditional and heritage crafts to further promote theseproductsinthemarketsofAgadirmemberstatesaswellasintheEuropeanUnion

The bodies responsible for craft industries in the four countries 100 thousand

17- Protecting the traditional and heritage crafts by registering brands at the international level liketheTunisian«cuntra»andtheMoroccan«belgha»

The bodies responsible for craft industries in the four countries 50 thousand

Fourth:Investment

18- Creating an investment digital map on the promisingprojectsinthesectors,andmakeitavailable to investors in the region

Professional associationsAgadir Technical Unit 25 thousand

19- Analyzing investment opportunities in regionalprojectsintheleather,footwearandother leather products

Institutionschargedwithsupportingtheindustryandencouraging/promotinginvestment in the four countries in coordinationwiththeprofessionalassociations

100 thousand




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8.2. Longterm

Thevariousproposalsandrecommendationsofthisstudycanbecategorizedaccordingtoaschedulethattakesintoaccounttheavailableresourcesandthewillingnessofvariousparties.Itissuggestedtoauthorizetheratificationofthe proposed plan for implementation over the coming years.

annex i1. GlobalImportsandExportsAllLeatherProducts

Designation GlobalexportinmillionofUS$ Share

4101 Rawskinsofcattle �,66�,79� 15

4102 Rawskinsofsheep 99�,�99 3

4103 Rawskinsofgoat 53�,295 2

4104 Prepared leather of cattle 7,063,069 23

4105 Prepared leather of sheep 530,869 2

4106 Prepared leather of goat �5,8587 1.5

4107 Prepared leather of reptile, porcine and others 12,666,010 �1

4112 Finished leather of sheep after tanning 1,003,938 3

4113 Finished leather of goat after tanning 1,817,903 6

4114 Finished chamois leather 770,386 2.5

4115 Finished reproduced leather 351,�07 1

Total 30,855,757 100


Theabovetableshowsthefollowing:● 20%of exports are raw skins, 67%are semi-finished leather and10%are constitutedof

finishedleather● Theleadingrawskinexportedproductisrawskinofcattle● Theleadingsemi-finishedexportedproductareleatherofcattleandleatherofporcine,reptile

and others● Theleadingexportedfinishedleatherproductsaregoat,chamoisleatherandfinishedreproduced

leather



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1.1 HIDES,SKINSandLEATHER

1.1.1 Globalimportshides,skinsandleather:

TheGlobalimportsofhides,skinsandleatherduringtheperiod2003-2007isasfollows:

Importers

Trade indicators

Value importedin2007,in USD

thousand

Trade balance in 2007 in USD

thousand

annual growth in value between 2003-

2007,%


2007,%

Share in world

imports,%

World 29,�92,510 1,�97,26� 5 6 100

China 5,96�,67� -�,787,713 12 7 20.22

Italy �,219,962 8�5,500 7 10 1�.31

hong Kong 3,568,065 -621,176 3 -8 12.1

Germany 1,0�6,123 175,938 8 6 3.55

Korea 903,355 -�7,713 -2 5 3.06

Viet nam 851,306 -689,233 13 22 2.89

romania 850,55� -736,22� 5 3 2.88

USA 8�8,715 2,216,066 0 -� 2.88

Spain 782,626 -59,579 -1 18 2.65

Mexico 7��,111 -�6,6�26 -� -12 2.52

Tunisia 256,706 -231,160 11 33 0.87

Morocco 115,0�5 -91,19� 12 6 0.39

Egypt 1,52�5 13,0�71 68 59 0.05

Jordan 610 7,1�9 -15 -12 0


Theabovetableshowsthefollowing:

● Globalimportsofskinandleatherisslowlyincreasingby5%ayearduringtheperiod2003-2007.Mostproducingcountriesofleatherareproducersoffootwearandleathergoods

● Theworldtoptenimportersaregloballeadingproducersandexportersoffootwear:China,Italy,hong Kong, Germany, Korea, Viet nam, romania, EU countries, USA and Japan. They represented 67 % of the global demand

● ThebiggestAgadircountriesimportersareTunisiaandMoroccothataretheleadingexportersoffootwearofAgadirmemberstates




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1.1.2 Globalexportshides,skinsandleather:

TheGlobalexportsofskinandleatherduringtheperiod2003-2007isasfollows:

Exporters

Trade indicators

Value exportedin2007,inUSD

thousand


thousand

annual growth in value between2003-2007,%

annual growth in value between 2006-2007,

%

Share in world

exports,%

World 30,989,770 1,�97,26� 5 6 100

Italy 5,065,�62 8�5,500 5 � 16.35

USA 3,06�,781 2,,216,066 � 7 9.89

hong Kong 2,9�6,889 -621,176 3 -8 9.51

Brazil 2,193,931 2,035,8�� 20 17 7.08

Germany 1,222,061 175,938 � 8 3.9�

China 1,176,961 -�,787,713 3 -33 3.8

Argentina 969,�81 923,759 7 9 3.13

Australia 91�,383 820,03� � 1� 2.95

Korea 855,6�2 -�7,713 -5 3 2.76

Chinese Taipei 833,38� 283,738 1 5 2.69

India 805,16� 391,157 10 9 2.6

France 775,369 205,319 3 13 2.5

Spain 723,0�7 -59,579 5 8 2.33



● With a significantpositiveTradeBalance,EUdevelopedcountries andUSAare the leadingexportingcountriesparticularlyItalyrankingbyfarthefirstexporterwith16%ofGlobalexportsfollowedbyUSAsecondwithamarketshareof10%,Germany5th withashareof4%.Thisisduetothespecialisationofdevelopedcountriesinhighqualityfinishedleatherwhiledelocalisingtheproductionofuppers,footwearandleathergoodsindevelopingcountries.

● ChinaislagginginthesixthpositionwithahugenegativeTradeBalance.Chinaismassivelyimportingleathertomeettheneedsofitsexpandingindustryoffootwearandleathergoods.

● Brazilranking4th, Argentina 7th and Australia 8tharealsoingoodpositionwithaveryimportantpositivetradebalanceduetotheimportanceoftheirproductionoflivestockandrelatedproductionofrawskin



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1.1.3 Globalexportsofrawcowhides:

TheGlobalexportsofrawhidesofcattleduringtheperiod2003-2007areasfollows:

Exporters Value exportedin2007,in USD thousand

Trade balance in 2007 in USD thousand

annual growth in value between 2003-2007,%

annual growth in quantitybetween2003-2007,%


Share in world exports,%

World �,66�,79� -76,927 2 1 8 100

USA 1,77�,511 1,72�,�17 3 1� 38.0�

France 350,160 31�,955 5 10 6 7.51

Australia 29�,882 293,881 8 31 6.32

Canada 282,233 277,733 9 12 6 6.05

Germany 2�5,�35 80,891 6 1 -10 5.26

netherlands 195,008 87,608 � 1 �.18

hong Kong 153,518 -51,19� -13 -15 -� 3.29

UK 119,872 58,785 7 -� 5 2.57

Ireland 116,378 116,163 13 11 11 2.�9

Italy 108,996 -786,939 2 7 -11 2.3�

Spain 107,5�3 �2,270 9 -2 -� 2.31

Egypt 6,715 -1,590 10 3 -28 0.1�

Jordan 686 686 -3 -15 6 0.01

Tunisia 55 -1,885 0



● Globalexportofrawhidesofcattleisverylowasmostdevelopingcountriesareestablishingtheirowntransformationcapacitiesofrawhides

● USAistheleadingglobalexporterofrawhidesofcattlefollowedbyFrance,Australia,Canada,Germany, netherlands, hong Kong, United Kingdom, Ireland, Italy and Spain.

● Theleadingglobalexportersarethosewhoarebigproducerofmeatandexportingrawhidesasabyproductandthemostlyexperiencingthedelocalisationoftheirleathertodevelopingcountries.




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1.1.4 Globalexportsoffinishedcowleather

TheGlobalexportsoffinishedcowleatherduringtheperiod2003-2007isasfollows:

Exporters Value exportedin2007,in USD

thousand

Trade balance in

2007 in USD thousand


%



Share in world exports,

%

World 7,063,069 711,921 6 0 3 100

Brazil 1,081,930 1,002,502 18 10 20 15.32

Argentina 697,628 667,210 11 3 15 9.88

USA 677,1�7 581,786 11 3 9.59

Italy 531,0�� -917,218 -3 9 -10 7.52

hong Kong ��,�07 -99,133 -6 -17 -3� 6.29

Taipei 396,528 17�,378 0 7 � 5.61

Kazakhstan 338,069 337,950 59 5 5� �.79

Australia 211,299 175,0�0 -9 -6 2.99

Thailand 188,197 -6,83�1 36 17 20 2.66

Ukraine 182,099 166,721 23 10 9 2.58

Egypt 99,0�0 98,331 12 � 22 1.�

Morocco 7�0 -878 16 351 0.01

Jordan �50 �30 103 26 0.01



● Theleadingglobalexportersofpreparedcowleatherarebigproducersofmeatwhohasahightransformationcapacitiesofrawskinasaby-product.

● SomedevelopingcountriesarealsohighexportersofpreparedcowleathersuchasKazakhstan,Thailand,UkraineandEgypt

● ExportsofMorocco,JordanandTunisiaarenotsignificant



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1.1.5 Globalexportsoffinishedleatherofporcine,reptileandothers

TheGlobalexportsofpreparedleatherofporcine,reptileandothersduringtheperiod2003-2007isasfollows:

Exporters Value exportedin2007,inUSD

thousand



2007,%


Share in world

exports,%

World 12,666,010 �85,712 8 � 100

Italy 3,238,515 2,527,388 7 2 25.57

hong Kong 1,88�,057 -275,862 7 -5 1�.87

Brazil 1,069,608 1,0�8,119 23 1� 8.��

China 8�0,295 -1,788,198 9 -35 6.63

Germany 695,123 2,2951 6 13 5.�9

Korea 601,�05 �10,�33 -3 � �.75

Austria �8�,810 �18,037 13 63 3.83

India �0�,773 363,287 31 25 3.2

USA 338,993 -2�2,910 9 17 2.68

Argentina 257,186 251,511 0 -5 2.03

Thailand 230,7�9 153,3�3 -5 36 1.82

Egypt 28,363 26,022 �6 19 0.22

Tunisia 7,992 -10�,250 1� 0 0.06

Morocco 3,07� -80,6�9 31 3 0.02

Jordan 20 -99 11 0



● TheexportleaderisItalywithamarketshareof26%● Theleadingglobalexportersaredevelopedcountrieswhoarebigproducersofmeatandhavea

hightransformationcapacitiesofrawskinasameatby-product.● SomedevelopingcountriesarealsohighexportersofpreparedleatherofporcinesuchasBrazil,

China, India, Thailand, and Egypt




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1.1.6 Globalexportoffinishedleatherofsheep

TheGlobalexportsoffinishedovineleatherduringtheperiod2003-2007areasfollows

ExportersValueexportedin2007,in

USD thousand



annual growth in

value between 2006-2007,%

Share in world

exports,%

World 1,003,938 151,�91 0 -2 100

Italy 268,2�2 129,521 -� -6 26.72

hong Kong 109,86� -56,555 0 2 10.9�

nigeria 92,072 92,072 18 9 9.17

Korea 69,93� 20,155 -20 -19 6.97

Spain 68,786 36,203 2 � 6.85

India 66,917 65,6�2 �5 29 6.67

Free Zones 58,569 57,022 20 � 5.83

France 5�,9�1 33,638 7 6 5.�7

China 36,577 -106,998 -8 -8 3.6�

UK 33,088 27,009 -5 -16 3.3

Pakistan 31,037 30,083 19 3.09

Tunisia 7,622 3,0�3 -7 -1 0.76

Egypt 2,�91 891 109 65 0.25

Morocco 2,266 635 -8 -11 0.23


● The above table shows that the leading exporters of finished sheep leather are EU developed countriesparticularlytheItalywhoisleadingtheglobalexportswithamarketshareof27%.

● HoweversomedevelopingcountriessuchasIndiaandPakistanareknowingahighincreaseoftheirexports



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1.1.7 Globalexportoffinishedleatherofgoat:

TheGlobalexportsoffinishedleatherofgoatduringtheperiod2003-2007isasfollows:

Exporters

Trade indicators 4113

Value exportedin2007,inUSD

thousand


thousand

annual growth in value between

2003-2007,%

annual growth in quantity

between 2003-2007,%


%

Share in world

exports,%

World 1,817,903 170,255 13 � 10 100

Italy 2,85,712 -26,601 19 15 39 15.72

China 2,2�,758 �3,617 16 6 -10 12.36

hong Kong 18�,977 -59,806 11 13 1 10.18

Pakistan 18�,116 183,�07 29 31 10.13

India 169,377 165,217 21 20 8 9.32

Taiwan 115,�17 109,107 8 -8 -1 6.35

nigeria 87,619 87,180 25 9 22 �.82

South Africa 65,062 59,275 18 21 8 3.58

France 61,75� 11,657 9 3 36 3.�

Singapore 56,37� 51,682 27 18 33 3.1

Germany �5,950 -11,568 0 -3 19 2.53

USA �3,630 -13,97� -8 -20 2.�

Spain 39,108 -70,573 17 17 8 2.15

Morocco 9,178 -7,020 165 126 132 0.5

Egypt 81� 670 �9 -28 0.0�

Tunisia 181 -6,799 -29 -62 -83 0.01





Final RepoRT

● The above table shows that the leading exporters of finished leather of goat are EU developedcountries.

● HoweversomedevelopingcountriessuchasChina,Pakistan,India,NigeriaandSouthAfricaareexperiencingahighincreaseoftheirexportswithanyearlyrateofgrowthrespectivelyof16,29,21,25 and 18 %

1.1.8 Globalexportsoffinishedchamoisleather:

TheGlobalexportsoffinishedchamoisleatherduringtheperiod2003-2007isasfollows:

Exporters

Trade indicators4114

Valueexportedin2007,inUSD

thousand


thousand




World 770,386 37,365 1 28 100

Italy 389,802 370,�72 11 29 50.6

Korea 7�,121 71,6�7 -10 -3 9.62

USA 55,283 �2,527 -39 68� 7.18

dom republic 50,959 50,887 977 18 6.61

hong Kong 3�,382 5,800 7 72 �.�6

Mexico 18,�61 -183,150 22 -9 2.�

Spain 16,615 -10,736 -13 7 2.16

China 15,160 -99,73� -5 -33 1.97

Brazil 13,587 10,286 20 28 1.76

Slovenia 11,228 -6,096 280 79 1.�6

romania 9,18� -29,727 -6 -26 1.19

France 7,931 -1�,997 12 �1 1.03

Tunisia 6,296 -33,307 10 52 0.82

Morocco 2,319 -�,170 -2� 50 0.3

Egypt 350 -5�8 171 29 0.05

Jordan 1 -270 0




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1.1.9 Globalexportsoffinishedreproducedleather:

TheGlobalexportsoffinishedreproducedleatherduringtheperiod2003-2007isasfollows:

Exporters

Trade indicators 4115


thousand


thousand



2007,%


World 351,�07 -26,633 -1 -21 100

hong Kong 80,389 -81,681 9 18 22.88

Germany �7,�22 �2,817 -1 3 13.�9

Italy �1,70� 28,976 -7 7 11.87

Mexico 39,283 37,�08 -1 -73 11.18

Taiwan 23,810 21,838 -�3 6 6.78

USA 18,528 6,99� -9 -28 5.27

Spain 15,�17 11,085 30 1� �.39

rep Korea 11,079 5,77� -2 -6 3.15

Brazil 9,088 7,9�3 39 62 2.59

UK 8,527 7,162 22 7 2.�3

Poland 7,081 5,�16 �2 9 2.02

France 5,7�1 2,098 -17 -20 1.63

Tunisia 658 -�3,809 -9 -�5 0.19

Egypt 89 -�6 1171 0.03

Jordan 22 -�3 5 0.01TradeMapITCUnit:thousandofUS$


● Theleadingexportersoffinishedreproducedleatheraredevelopedcountriesthatrepresented75%ofglobalexports:HongKong,Germany,France,Italy,Mexico,Taipei,USA,andSpain

● GlobalExportgrowthrateisnegative● Global Export growth of Brazil, France, UK, Rep of Korea and Spain are highly increasing

respectivelywithanyearlyrateof26,23,20,13and11%● Agadirexportsarenotsignificant




Final RepoRT

1.2 leaTHeR GooDS

1.2.1 Globalexportspersonalleathergoods

TheGlobalexportsofleathergoodsduringtheperiod2003-2007areasfollows:

Exporters

Trade indicators42


thousand


thousand




World ��,098,580 -5329356 11 1� 100

China 1�,229,3�0 1,372,0730 10 15 32

hong Kong 6,210,732 138,89�2 7 7 1�

Italy 5,226,103 2,565,853 18 2� 12

France �,05�,379 1,078,839 1� 12 9

Germany 1,579,21� -1,306,077 18 20 �

India 1,328,002 1,263,538 8 9 3

Belgium 1,22�,�23 117,927 12 15 3

USA 1,131,856 -9,579,75� 15 -2 2.6

Viet nam 772,991 725,823 13 22 2

UK 733,30� -2,061,77� 13 22 1.7



● Thetenleadingexportersofleathergoodsrepresented84%ofglobalexports● Thefiveleadingexportingcountriesofleathergoodsrepresented72%ofglobalexports.● ThefirstleadingexporterisChinawithamarketshareof32%,followedbyHongKongwith14%,

thenItalywith13%followedbyFrancewith9%andGermany4%.● ThegloballeadingexportersareAsiandevelopingcountrieswith51%ofglobalexports,followed

bydevelopedcountrieswithamarketshareof33%● Leadingdevelopedcountriesregisteredanannualexportgrowthduringtheperiod2003-2007higher

thanthatofglobalexportswhereasleadingdevelopingcountriesregisteredalowerincrease.



Final RepoRT


1.2.2 Global imports personal Leather Goods

TheGlobalimportsofleathergoodsduringtheperiod2003-2007areasfollows:

Importers

Trade indicators

Valueimportedin2007,inUSD

thousand


thousand


%


Share in world imports,%

World �9,�27,930 -5,329,356 12 15 100USA 10,711,610 -9,579,75� 7 6 21.67Japan �,9�1,�68 -�,880,867 8 6 10hong Kong �,821,790 1,388,9�2 6 10 9.76France 2,975,5�0 1,078,839 1� 25 6.02Germany 2,885,291 -1,306,077 10 16 5.8�UK 2,795,078 -2,061,77� 13 22 5.65Italy 2,660,250 2,565,853 19 22 5.38Spain 1,5�6,686 -873,�80 16 20 3.13Canada 1,107,008 -930,133 1� 15 2.2�Belgium 1,106,�96 117,927 10 18 2.2�



● Thetenleadingimportersaredevelopedcountriesthatrepresented72%ofglobalimports

1.2.3 Globalexportsofleathergoodscarriedinpocketorhandbag

TheGlobalexportsofleatherarticlescarriedinpocketduringtheperiod2003-2007areasfollows:

Exporters

420231Articlescarriedinpocketorhandbag,withoutersurfaceofleather

Value exportedin2007,in USD

thousand


thousand

annual growth in


annual growth in quantity

between 2003-2007,%


%


World 3,1�9,370 688,511 18 -7 27 100France 1,132,827 968,932 27 19 35 35.97China ��7,89� �2�,02� 22 13 21 1�.22hong Kong 36�,559 �2,19� 8 13 11.58Italy 356,977 209,822 21 10 �2 11.33India 258,000 256,095 7 -26 12 8.19Germany 121,513 -61,207 22 19 31 3.86Switzerland 9�,080 1�,319 19 15 8 2.99Spain 93,�0� �1,593 -8 -7 20 2.97UK 51,�88 -80,186 37 35 36 1.63Thailand 32,238 26,562 15 7 38 1.02





Final RepoRT

Theabovetableshowsthefollowing:● Franceistheleadingexporterwithamarketshareof36%ofglobalexportsfollowedby

Chinawithamarketshareof14%,HongKong12%,Italy11%andIndia8%● The ten leading global exporters are EU developed countries and Asian developing

countries● Globalexportsarehighlyincreasingwithanyearlyrateofgrowthof18%● UK,France,Germany,China,ItalyandSwitzerlandregisteredrespectivelyanyearlyexport

growthof37%,27%,22%,22%,21%and19%higherthanthatoftheglobalexports.India.

● HongKongandThailandregisteredalowerincrease

1.2.4 Globalexportsleatherhandbags

TheGlobalexportsofleatherhandbagsduringtheperiod2003-2007isasfollows

Exporters

Value exportedin2007,in

USDthousand

Trade balance in 2007 in

USD thousand

annual growth in value between

2003-2007,%

annual growth in value between 2006-2007%


World 5,580,�30 -8,�23 22 22 100Italy 2,081,77� 1,631,051 23 29 37.3France 86�,33� 277,1�� 17 8 15.�9hong Kong 8�8,560 56,903 20 20 15.21China 633,183 567,098 �1 22 11.35India 209,599 20�,6�� 10 6 3.76Switzerland 101,657 -61,265 32 75 1.82Germany 99,113 -106,61� 22 15 1.78UK 89,007 -308,757 53 �� 1.59Spain 83,�0� -��,981 9 32 1.�9USA 7�,072 -1,126,381 12 -22 1.33romania 55,803 �6,063 16 32 1Morocco 13,730 10,178 15 15 0.25Tunisia 13,�56 11,575 -2 21 0.2�Egypt 1,7�0 -271 26 70 0.03Jordan 98 -8� 22 216 0



● Italyistheleadingexporter,withamarketshareof37%ofglobalexportsfollowedbyFrancewithamarketshareof16%

● ItalyandFrancecovered53%oftheGlobaldemand



Final RepoRT


1.2.5 Globalexportersofleatherexecutivecasesandbriefcases

TheGlobalexportsofleatherexecutivecasesandbrief-casesduringtheperiod2003-2007isasfollows

ExportersValueexportedin2007,inUSD

thousand


thousand

annual growth in value

between 2003-2007,%


2007,%


World 957,606 206,582 10 11 100

China 369,921 355,061 7 15 38.63

Italy 1�1,357 92,292 25 33 1�.76

France 89,0�9 5�,353 6 -26 9.3

hong Kong 67,217 -2,798 8 5 7.02

India �2,060 39,798 38 9 �.39

Germany 38,125 58� 17 38 3.98

UK 28,610 -60,965 � 3 2.99

Mexico 18,36� 13,588 0 -2 1.92

USA 18,271 -83,52� -1 -18 1.91

Spain 1�,1�9 -10,029 � 55 1.�8

Morocco 3,3�3 2,938 2 9 0.35

Tunisia 1,�21 1,338 -10 -11 0.15

Egypt 239 -521 7 -33 0.02

Jordan 2� -330 -28 -8 0



● Chinaistheleadingexporterofexecutiveandbrief-cases,withamarketshareof39%ofglobalexportsfollowedbyItalywithamarketshareof15%thenbyFrance9%

● China,ItalyandFrancecovered63%oftheGlobaldemand● Italy and France are specialised in the fancy high quality segment with an unit value

respectivelyofUS$126andUS$190whereasChinaandIndiaarespecialisedinthemassconsumersegmentwithanunitvalueofUS$48.




Final RepoRT

1.2.6 GlobalexportersofleatheraccessoriesTheGlobalexportsofleatheraccessoriesduringtheperiod2003-2007isasfollows:

Exporters Valueexportedin2007,in

USD thousand


thousand


2007,%

annual growth in value

between 2006-2007,%


World 2,563,598 962,��2 10 3 100China 613,3�8 521,382 18 3 23.93France 255,893 205,089 11 -12 9.98Mexico 1�9,�07 316 30 17 5.83hungary 1�8,286 76,303 22 30 5.78USA 1�2,583 -13,111 16 -�0 5.56Poland 136,906 68,800 -3 52 5.3�Austria 90,307 71,878 -19 1 3.52Italy 90,179 �8,330 5 -8 3.52Brazil 86,803 82,955 -1 -12 3.39Argentina 8�,922 8�,193 2� 35 3.31TradeMapITCUnit:thousandofUS$


● Chinaistheleadingexporter,withamarketshareof24%ofglobalexportsfollowedbyFrancewithamarketshareof10%.

● ChinaandFrancecovered39%oftheGlobaldemand● Franceisspecialisedinthefancyhighqualitysegmentwithanunitvaluerespectivelyof

US$214whereasChinaisspecialisedinthemassconsumersegmentwithanunitvalueofUS$11.

1.2.7 Globalexportersofleatherapparel

TheGlobalexportsofleatherapparelduringtheperiod2003-2007isasfollows:

Exporters Valueexportedin2007,inUSD

thousand


annual growth in



2007,%

Share in worldexports,

%

orld 8,�79,0�� 171,�11 1 � 100China 2,567,7�8 2,505,517 -10 -11 30.28Italy 1,150,3�1 723,797 1� 2� 13.57hong Kong 703,05� 197,838 3 2 8.29Pakistan 666,691 663,730 13 8 7.86India 529,2�7 523,736 � 5 6.2�Germany �30,283 -3�2,891 12 22 5.07France 305,�72 -199,911 12 10 3.6USA 279,096 -1,729,535 22 31 3.29Turkey 238,307 192,080 -� 13 2.81netherlands 169,958 -57,6�1 15 29 2TradeMapITCUnit:thousandofUS$Theabovetableshowsthefollowing:



Final RepoRT


● China is the leading exporter of leather apparel,with amarket share of 31%of globalexportsfollowedbyItalywithamarketshareof14%

● ChinaandItalycovered45%oftheGlobaldemand● ItalyisspecialisedinthefancyhighqualitysegmentwithanunitvalueofUS$143whereas

ChinaisspecialisedinthemassconsumersegmentwithanunitvalueofUS$40.

1.3 FooTWeaR

Thetableshowsthatfootwearwithleatheruppersrepresentedthebiggestshareofglobalexportsatnearly60%.

designation GlobalexportinmillionofUS$ Share 6�01 Waterprooffootwear 1 1 %6�02 Footwearwithrubber/plasticuppers 17 20 %6�03 Footwearwithleatherupper �6 56 %6�0� Footwearwithtextileupper 9 11 %6�05 Specialfootwear 3 � %6�06 Partsoffootwear 7 8 %Total 83 100 %

1.3.1 Globalexportsoffootwear

Exporters

Trade indicators 64

Value exportedin2007,inUSD thousand




2007,%


World 83,620,�20 -�,5�2,288 10 12 100China 25,305,590 2�,579,090 19 16 30.26Italy 10,711,020 5,333,101 5 9 12.81Viet nam 6,1��,136 5,891,693 13 13 7.35hong Kong 5,962,��7 826,38� 1 -1 7.13Belgium 3,396,171 826,120 18 1� �.06Germany 3,271,395 -3,105,882 15 15 3.91Spain 2,626,815 106,�7� 3 1� 3.1�Brazil 2,038,057 1,815,789 5 � 2.��France 1,98�,03� -3,735,725 11 18 2.37netherlands 1,8�2,887 -507,985 12 15 2.2Portugal 180,122� 1,102,923 2 13 2.15romania 1,782,507 1,1�0,083 6 5 2.13Indonesia 1,637,959 1,556,050 9 2 1.96India 1,�12,039 1,272,�71 18 1� 1.69





Final RepoRT


● Ahighincreaseofexportscomingfromdevelopingcountriesthroughthedevelopmentofthedelocalisation of the productionprocess fromhigh cost labour countries to lowcost labourcountries:ChinaisleadingtheGlobalexporterswithamarketshareof30%;Vietnam,IndonesiaandIndiaarerankingrespectivelythird,13th and 1�thexporter

● EUdevelopedcountriesarestill leadingexportersparticularlyItalyrankingsecondexporterfollowedbyBelgium5th , Germany 6th , Spain 7th , and France 8th

● Romaniastillequallyinagoodposition(12th )despitethefactthatRomanianexportsareshowingaslowincreasesinceitsaccessiontotheEU

● ExportgrowthofChina,VietnamandIndiawithanannualgrowthraterespectivelyof19%,13 % and 18 % are by far higher than that of Italy, Spain and Portugal(respectively 5%, 3% and 2%)

Accordingly, the Agadir countries’ competitors are mostly: ● ChinaandVietnaminthepricesensitivesegmentastheyhaveahighmarketshare,30&7%,

andtheirexportgrowtharealsoveryhigh,19%and13%peryear.● ItalyinthehighqualitysegmentasitsmarketshareintheGlobalexportisstillhighandthe

“labelproducedinItaly”ishighlyappreciatedeverywhere.

1.3.2 Globalimportsoffootwear

Importers

Trade indicators 64Value

importedin2007,inUSD

thousand



2007,%

annual growth in


Share in world

imports,%

World 88,162,710 -�,5�2,288 10 10 100USA 20,�0�,�70 -19,517,050 6 1 23.1�Germany 6,377,277 -3,105,882 8 7 7.23France 5,719,759 -3,735,725 8 1� 6.�9Italy 5,377,919 5,333,101 9 5 6.1UK 5,338,129 -�,272,993 7 6 6.05hong Kong 5,136,063 826,38� 1 -2 5.83Japan �,096,788 -�,031,023 8 7 �.65Belgium 2,570,051 826,120 11 2� 2.92Spain 2,520,3�1 106,�7� 20 16 2.86netherlands 2,350,872 -507,985 17 16 2.67TradeMapITCUnit:thousandofUS$

Theabovetableshowsthefollowing:● Worldimportsarehighlyincreasingby10%ayearduringtheperiod2003-2007● Theworld top ten importers are developed countries:TheEU countries,USA and Japanwhich

represent 68 % of the global demand● TheEU27countriesimportsrepresent44%ofworldimports● TheEU15countriesimportsrepresent40%ofworldimports.Theirimportsarehighlyincreasing(from

8 to 20%) despite only a moderate increase in consumption(2%) this is due to an increase of their imports from developing countries

● MostEUimportsaretoEU15andrepresent40%ofGlobalimportswhereasimportstonewEUmembers are very limited, �% of Global imports

● ThebiggestEUimportersare Germany,France, Italy,UK,Belgium,Spain,Netherlands whichrepresents34%ofGlobalimportsshowsahighincreaseoftheirimports:from8%to20%ayearduring the period 2003-2007



Final RepoRT


1.3.3 Exportsoffootwearwithleatherupper(6405)

TheGlobalexportsoffootwearwithleatherupperduringtheperiod2003-2007areasfollows:

xporters Valueexported2003

Valueexported2004

Value Exported 2005

Valueexported

2006

Valueexported

2007World 29 759 �2� 32 �9� 852 36 �02 936 39 9�9 260 �6 233 028China 5 279 301 6 2�8 522 7 990 087 8 697 711 9 �33 576Italy 5 998 8�6 6 373 195 6 387 06� 6 895 967 7 922 096hong Kong 3 ��9 �18 3 351 5�8 3 737 798 3 753 259 3 731 803Viet nam 663 0�5 761 358 898 0�2 1 266 839 3 179 710Germany 1 281 678 1 �82 5�7 1 679 8�6 1 873 �15 2 068 301Belgium 712 657 679 572 967 �72 1 �28 927 1 826 797Spain 1 678 672 1 726 770 1 571 039 1 63� 869 1 817 85�Portugal 1 39� 529 1 �07 032 1 269 818 1 29� 981 1 �9� 180Brazil 1 283 666 1 �56 11� 1 507 7�7 1 �50 9�2 1 397 517netherlands 685 822 815 791 1 0�2 302 1 117 058 1 21� 213France 7�8 �09 863 �97 927 512 1 037 021 1 187 797Indonesia 721 621 817 777 909 876 1 1�� 826 1 150 �92India 501 900 565 320 751 793 908 778 1 0�� 9�6roumania 691 �57 769 �15 858 293 929 30� 1 023 263UK �79 198 5�1 087 596 998 665 ��3 729 962Thailand ��0 900 �50 775 562 7�� 622 752 596 26�Denmark 331 9�7 376 038 �08 788 �80 596 586 872Slovakia 251 1�1 30� �66 327 365 3�9 792 518 �87Austria �16 936 ��9 653 �89 803 �90 238 50� 06�Tunisia 1�6 81� 228 051 258 3�5 275 937 357 837Morocco 129 969 132 803 157 098 152 576 193 915Turkey 7� 697 92 808 106 919 �7 626 71 799Egypt 16 983 18 181 19 329 2� �03 19 658Jordan 156 123 133 233 872


Theabovetableshowsthefollowing:● Chinaisleadingtheglobalexportsoffootwearwithleatheruppers● Italystillingoodpositioninthissegment;thesecond.ThegapwithChinastilllimitedcompared

to other segments . Italy has been the global leader up to 200�.● Tunisiaisrankingthe17th exporter intheGlobalmarketfollowedbyMoroccoranking26th

● Tunisiahasthehighestmarketshare0.7%oftheGlobalexportsfollowedbyMorocco0.4%whereasthemarketshareofEgyptandJordanareinsignificant,0.03and0.01%

● TheTunisian,MoroccanandJordanianexportgrowth,respectively12,11and15%,arehigherthanthatoftheglobalmarket,10%

● TheEgyptianexportgrowth,7%islowerthanthatoftheGlobalexport.




Final RepoRT

1.3.4Exportsoffootwearwithrubber/plasticupper(6402)

TheGlobalexportsoffootwearwithrubber/plasticupperduringtheperiod2003-2007areasfollows:

Exporters Valueexported2003

Valueexported200�

Value Exported 2005

Valueexported2006

Valueexported2007

World 10,361,865 11,6�� ,7�8 13,028, 632 1�,601,389 17,�11,592China �,653, 986 5,55�,�58 6,667,186 7,860,3�5 9,166,902Viet nam 3�9,083 316,158 321,168 510, �72 1,679,27�hong Kong 1,633,137 1,652,861 1,668,825 1,5�0,0�2 1,�36,698Belgium 537,6�1 600,808 835,867 859 ,662 887, 272Italy 666,53� 7�3,20� 6�0,76� 653,0�� 707,822Germany 199,820 28�,7�6 357,763 39�,978 522,825Morocco 762 1,696 1,309 3,581 7,868Tunisia 1,655 1,191 5,713 7,680 5,755Jordan 229 �16 273 379 373Egypt �17 639 33� 281 222TradeMapITCUnit:thousandofUS$

1.3.5 ExportofWaterprooffootwear(6401)

TheGlobalexportsofwaterprooffootwearduringtheperiod2003-2007areasfollows:

Exporters Valueexported2003

Valueexported2004 Valueexported2005

Valueexported2006

Valueexported2007

World 561 000 663 0�� 756 7�2 750 709 838 171China 136 703 153 91� 196 273 219 �75 273 268Italy 76 306 77 7�3 77 65� 87 276 92 123France 28 713 29 71� 30 877 35 333 �� 11netherlands 18 686 20 7�2 31 �88 29 6�8 33 115Portugal 17 615 20 722 19 089 19 370 2� 96�romania 3 266 6 973 8 021 10 301 2� 888Equador 8 302 10 7�5 12 173 1� 77� 19 168Canada 16 215 21 353 25 910 1� 656 19 026UK 11 016 1� 038 15 63� 13 558 18 980Belgium 8 031 9 966 9 72� 11 365 18 091Morocco 3 710 3 298 5 0�8 8 7�0 � 6��Tunisia � � 3 176 981Jordan 168 9� 1�5 127 203Egypt 29 �2 36 9 19


Theabovetableshowsthatglobalexportsarelimitedinthissegment.ThirdofglobalexportsarecomingfromChinaand11%fromItalywhereasexportsfromothercountriesareverylimitedparticularlythosecomingfromAgadircountries



Final RepoRT


1.3.6. ExportofFootwearwithtextileupper

ExportersValue exported2003

Valueexported2004 Valueexported2005Valueexported2006

Valueexported2007

World 5 308 787 6 �70 069 7 327 592 8 157 397 9 021 552China 1 612 08� 1 87� 33� 2 380 �80 2 876 681 3 �7� 317Viet nam 659 �79 1 15� 765 1 �11 017 1 �8� 107 1 117 365Belgium 585 655 62� 355 682 570 6�5 837 62� 153Italy 331 39� �2� 502 �27 767 �73 85� 566 185hong-Kong 316 263 310 902 350 126 321 89� 399 158Germany 167 276 226 378 2�8 223 301 1�0 36� 695Spain 23� 269 218 053 2�2 666 265 5�2 311 606France 137 539 16� 898 167 098 198 060 268 31�netherlands 1�0 935 196 �58 1�6 101 166 32� 26� 607Tunisia 13 655 20 301 17 839 � 999 7 6��Morocco 5 691 8 083 8 207 5 962 5 �0�Egypt 97 320 351 366 3�5


TheabovetableshowsthatExportsfromChinaandVietnamarepredominantintheglobalexports.Theyrepresented50%ofGlobalexportswhereasexportsfromothercountriesareverylimitedparticularlythosecomingfromAgadircountries

1.3.7 Exportof Specialfootwear:TheGlobalexportsofspecialfootwearduringtheperiod2003-2007areasfollows:

Exporters Valueexportedin2007,inUSDthousand





World 3,238,5�6 -91,757 1� 19 100China 1,789,707 1,78,7555 2� 32 55.26Italy 152,070 78,789 -6 12 �.7romania 123,553 115,131 -2 -25 3.82Spain 88,793 30,786 3 1� 2.7�Portugal 83,1�6 6�,�66 8 20 2.57Poland 75,677 66,�91 � 7 2.3�Viet nam 71,�33 69,508 29 7 2.21hong Kong 67,98� 20,796 10 -5 2.1USA 67,221 -1,�66,201 18 �9 2.08Morocco 32,537 29,3�2 32 15 1Tunisia 22,738 22,320 21 9 0.7Jordan 2,827 -15,18� 13 �2 0.09Egypt 675 -1,192 23 192 0.02





Final RepoRT

TheabovetableshowsthatExportsfromChinaandVietnamarepredominantintheglobalexports.Theyrepresent55%ofGlobalexportswhereasexportsfromothercountriesareverylimitedparticularlythosecomingfromAgadircountries.HoweveritistonotethatAgadircountriesexportsofthissegmentarehighlyrisingparticularlythatofMorocco32%,Tunisia21%andEgypt23%.Globalexportsarealsoincreasing(14%)higherthanthatofthewholefootwearsector,10%.

1.3.8 ExportofPartsoffootwear(6406)

TheGlobalexportsoffootwearpartsduringtheperiod2003-2007areasfollows:

Exporters

Value exportedin2007 in USD thousand

Trade balance 2007 in USD thousand




World 650816� 609956 � � 100

China 1167816 868753 2� �6 17.9�

Italy 106908� 165791 -2 -23 16.�3

romania 388180 50�95 -� -10 5.96

Korea 370806 259151 3 -1 5.7

hong Kong 322801 68�10 2 -3 �.96

India 289836 231258 10 19 �.�5

Germany 27220� -138078 9 10 �.18

Taiwan 2�0609 209170 -� -6 3.7

USA 205980 -15935� 5 -13 3.16

Spain 1863�3 5�7�7 8 16 2.86

Tunisia 180862 667�2 2 13 2.78

France 1�3507 -103132 -1 1 2.21

Brazil 126307 1135�5 13 22 1.9�

Albania 12312� 81578 0 � 1.89

Bulgaria 10368� �6626 1 11 1.59

Morocco 9�36� 39160 7 23 1.�5

Egypt 1��2 -27098 51 �6 0.02

Jordan 166 -22�0 -37 1283 0TradeMapITCUnit:thousandofUS$

Theabovetableshowsthefollowing:● TheleadingexportingcountriesoffootwearpartsareChinawithamarketshareof18%,followed

byItalywith16.5%andRomaniawith6%● AmongAgadircountries,Tunisiaistheleadingexporteroffootwearparts,ranking11thfollowedby

Moroccoranking14th

● Jordanexportsoffootwearpartsareverylimited



Final RepoRT


1.3.9 ExportofFootwearuppers

TheGlobalexportsoffootwearuppersduringtheperiod2003-2007areasfollows

ExportersValueexportedin 2007

Trade Balance in 2007

Growthin % 2003-07

Growthin%2006-07 Share in %

World 2,9�0,599 267,708 � 13 100

China 621,202 583,�77 21 �0 21.13romania 31�,728 231,191 -6 -15 10.7India 268,60� 262,05� 10 22 9.13Tunisia 175,930 1�5,�23 1 12 5.98Italy 159,588 -573,886 � 19 5.�3Albania 113,086 87,678 -2 3 3.85Bulgaria 92,766 73,663 3 15 3.15Germany 91,703 -122,769 13 7 3.12Brazil 85,709 81,718 13 32 2.91Serbia 83,915 7�,528 3� 2.85Bosnia 70,008 62,,081 77 22 2.38Morocco 69,�16 �8,775 0 11 2.36Egypt 1,105 -1�,359 �9 63 0.0�Jordan 61 -869 1�25 0

$Trade Map ITC Unit: thousand of US

Theabovetableshowsthefollowings:● Theleadingexportersofuppersaremostlyfromdevelopingcountries● Chinawithamarketshareof21%,Romaniawith11%,India9%andTunisia6%covered47%

ofGlobalexportsofuppers● Thelaborintensiveuppersaremoreandmoresubcontractedindevelopingcountries● TheexportgrowthofTunisiaandRomaniaisslowlyincreasingordroppingastheyaremoreand

moreproducingfinishedproducts.

1.3.10 ExportofFootwearUnitsoles

TheGlobalexportsoffootwearunitsolesduringtheperiod2003-2007areasfollows:

Exporters

Value exportedin2007,in USD thousand





World 1,292,31� 10,079 6 16 100China 378,176 302,538 31 62 29.26Italy 312,�86 268,118 2 � 2�.18hong Kong 120,5�3 2�,093 2 -3 9.33Taiwan 63,331 55,1�6 � -7 �.9Spain �2,169 18,875 -2 18 3.26Germany 36,�63 -11,85� -6 -8 2.82France 36,000 629 -2 -6 2.79




Final RepoRT

romania 26,267 -111,889 6 1� 2.03Portugal 26,209 -1,826 0 2 2.03Austria 19,353 -7,55� -2 � 1.5Morocco 10,993 -9,0�5 71 131 0.85Tunisia 1,899 -18,332 16 -30 0.15Egypt 210 -10,930 50 -21 0.02Jordan 55 -9�6 0 1733 0


Theabovetableshowsthefollowing:● TheleadingexportingcountriesoffootwearpartsareChinawithamarketshareof

29%,followedbyItalywith24%.● AmongAgadircountries,Moroccoistheleadingexporterofunitsoles,withahighgrowthof71%

a year during the period 2003-2007● JordanandEgyptiansexportsofunitsolesareverylimited

1.3.11 ExportofOtherFootwearparts(heelsandinsoles)

TheGlobalexportsofotherfootwearpartsduringtheperiod2003-2007areasfollowings:

Exporters Valueexportedin2007,inUSD

thousand


thousand


annual growth in



World 2,257,253 325,951 3 -11 100

Italy 595,196 �70,576 -5 -38 26.37

Korea 288,986 280,783 5 1 12.8

China 16�,372 -20,289 2� 37 7.28

USA 153,095 18,368 � -20 6.78

Germany 1�3,�71 -3,816 13 17 6.36

Taiwan 137,�6� 128,681 -5 -� 6.09

hong Kong 135,239 26,�35 8 -2 5.99

Spain 123,737 83,256 12 20 5.�8

France 85,625 5,686 -2 0 3.79

romania �6,912 -68,689 6 23 2.08

Morocco 13,953 -320 87 �6 0.62

Tunisia 3,033 -60,332 21 91 0.13

Egypt 126 -1,687 58 193 0.01

Jordan 22 -375 -55 3�0 0TradeMapITCUnit:thousandofUS$



Final RepoRT


Theabovetableshowsthefollowings:● TheleadingexportingcountriesofotherfootwearpartsisItalywithamarketshareof26%,● AmongAgadir countries,Morocco is the leading exporter of other footwear parts, with a high

exportgrowth,87%ayear● JordanandEgyptianexportsofotherfootwearpartsareverylimited

1.3.12 Importsofuppers

TheGlobalimportsoffootwearuppersduringtheperiod2003-2007areasfollows:

Importers Valueimportedin2007,inUSDthousand




Share in world imports,%

World 2,672,891 267,708 1 � 100

Italy 733,�7� -573,886 -� -13 27.��

Japan 223,078 -210,216 11 1� 8.35

Germany 21�,�72 -122,769 � 2 8.02

USA 155,�01 -121,232 -� -6 5.81

France 131,093 -109,305 -7 9 �.9

Slovakia 129,312 -6,1783 25 �1 �.8�

Korea 95,617 -31,780 3 1 3.58

Portugal 85,703 -69,051 -2 21 3.21

romania 83,537 231,191 11 33 3.13

Spain 67,665 -�9,015 2� � 2.53


Theabovetableshowsthefollows:● Theleadingimportersoffootwearpartsaredevelopedcountries(Italy,Germany,France,Portugal,

Spain,USAandJapan)thatarestillahighproducersoffootwearwhilesubcontractingtheuppersindeveloping countries

● SlovakiaandRomaniaarealsoimportantimportersofuppers




Final RepoRT

annex ii1. EUImportsandExportsAllLeatherProducts

1.1 hIdES, SKInS and LEAThEr

1.1.1 Europeanimportsofhides,skinsandleather.

Fortheimportsofhides,skinsandleatherduringtheperiod2003-2007seethestatisticspresentedinAnnexIunder“global”section1.1.1.ThisalsogivesinformationforEurope.

1.1.2 Europeanexportsofhides,skinsandleather.

Fortheexportsofhides,skinsandleatherduringtheperiod2003-2007seethestatisticspresentedinAnnexIunder“global”section1.1.2.ThisalsogivesinformationforEurope.

1.2 leaTHeR GooDS

1.2.1 Europe imports personal leather goods

TheEuropeimportsofleathergoodsduringtheperiod2003-2007areasfollows:

Importers

Trade Indicators

Value imported in

2007, in USd thousand

Trade balance in 2007 in USd thousand

Annualgrowthinvaluebetween2003-2007,%

Annual growthin value between

2006-2007, %

Shareinworldimports, %

World �9,�27,930 -5,329,356 12 15 100France 2,975,5�0 1,078,839 1� 25 6.02Germany 2,885,291 -1,306,077 10 16 5.8�UK 2,795,078 -2,061,77� 13 22 5.65Italy 2,660,250 2,565,853 19 22 5.38Spain 1,5�6,686 -873,�80 16 20 3.13Belgium 1,106,�96 117,927 10 18 2.2�netherlands 882,171 -205,�70 15 21 1.78Austria 500,306 -276,28� 9 2� 1.01Sweden 398,077 -233,528 1� 1� 0.81Denmark 391,200 -155,551 21 � 0.79Greece 353,613 -325,560 12 25 0.72Portugal 286,269 -227,826 11 3� 0.58Ireland 231,175 -160,200 23 53 0.�7Finland 198,371 -153,087 17 1� 0.�TradeMapITCUnit:thousandofUS$

Theabovetableshowsthefollowing:● EUimportsrepresented35%ofGlobalimports● EUimportsofleadingimportersarehighlyincreasingparticularlyItalywithanyearlyimportgrowth

of 19 % , Spain 16 %, netherlands 15 %, France 1� %, United Kingdom 13 %● EUsmallimporters(Denmark,IrelandandFinland)registeredahighimportgrowthrespectivelyof

21 %, 23 % and 17 % per year during the period 2003-2007.



Final RepoRT


1.2.2 Europeexportspersonalleathergoods

TheEUexportsofleathergoodsduringtheperiod2003-2007isasfollows:

Exporters

Trade Indicators�2

Valueexportedin 2007, in

USd thousand

Trade balance in 2007 in

USd thousand

Annualgrowthinvaluebetween2003-

2007, %


Share in world

exports,%

World ��,098,580 -5,329,356 11 1� 100Italy 5,226,103 2,565,853 18 2� 12France �,05�,379 1,078,839 1� 12 9Germany 1,579,21� -1,306,077 18 20 �Belgium 1,22�,�23 117,927 12 15 3UK 733,30� -206,177� 13 22 2netherlands 676,701 -205,�70 20 3� 2Spain 673,206 -873,�80 11 25 2Denmark 235,6�9 -155,551 30 29 0.5Austria 22�,022 -276,28� -� 12 0.5TradeMapITCUnit:thousandofUS$


● EUexportsrepresented35%ofglobalexports● TheleadingEUexportersareItaly,FranceandGermany,representing25%ofGlobalexports● ExportgrowthofEUleadingexporters(18%forItalyandGermany,14%forFrance)arehigher

thanthatoftheglobalexports(11%)

1.3 FooTWeaR

1.3.1 Europeanexportsoffootwear

Fortheexportsoffootwearduringtheperiod2003-2007seethestatisticspresentedinAnnexIunder“global”section1.3.1. and 1.3.3 . This also gives information for Europe.

1.3.2 Europeanimportsoffootwear

Fortheimportsoffootwearduringtheperiod2003-2007seethestatisticspresentedinAnnexIunder“global”section1.3.2. and 1.3.12 . This also gives information for Europe.

1.3.3 AnalysisofEuropeandemandforFootwear

From the internationalmarket analysis, themarket target forAgadir countries areGermany, France, Italy, UK,Belgium,SpainandNetherlands,forthefollowingmainreasons:

● AgadirexportstoEUcountriesarefreeoftaxestheycouldexportfree● Germany,France,Italy,UK,Belgium,SpainandNetherlandsareresponsibleof34%oftheGlobal

demand. ● TheirdemandishigherthanthatofUSA(23%)● Theirdemandisveryactivewithanyearlyincreasefrom8to20%




Final RepoRT

1.3.3.1 italy

ThebreakdownofItalianimportsbyoriginisasfollows:

Exporters Imported value in 2003

Imported value in 200�

Imported value in 2005



World 1,75�,960 2,030,�03 2,395,795 2,722,779 2,911,705romania 596,299 616,�2� 662,225 725,2�� 556,2�2China 70,151 85,581 287,060 307,560 300,551Belgium 50,873 60,�90 83,538 1�6,�38 255,�33Tunisia 117,7�0 95,�32 119,761 125,011 176,786India �8,185 75,918 86,382 129,589 157,983netherlands 52,385 1�9,371 1�9,7�1 132,�00 137,500France 58,871 66,230 80,198 106,608 131,000Indonesia 30,83� 32,593 �7,151 7�,9�6 10�,968Viet nam 128,323 115,550 1�3,669 107,298 103,207Bosnia and herzegovina 55,760 57,130 58,005 78,69� 96,892Morocco 1�,926 1�,869 16,0�9 16,805 19,168

TradeMapITCUnit:thousandofUS$Theabovetableshowsthefollowing:

● Thefive leading exporters to Italy areRomania, followed byChina,Belgium,Tunisian andIndia.

● RomanianExportGrowthtoItalyisdecreasingsinceRomania’saccesstotheEU● Chinese,Tunisian,Belgium,Indian,FrenchandIndonesianexportgrowthisincreasing● Moroccowithalimitedmarketshareisranking25th in the Italian Imports

1.3.3.2. France

ThebreakdownofFrenchimportsbyoriginisasfollows:






World 2,315,038 2,5�5,�6� 2,875,�79 3,09�,087 3,�35,999Italy 67�,563 75�,02� 799,891 852,8�5 969,929Portugal 290,651 326,860 3�2,716 378,553 �5�,362China 173,656 165,063 339,�51 351,352 37�,699Spain 295,633 30�,538 296,202 277,726 29�,667Viet nam 205,�10 210,090 229,209 258,059 261,017Indonesia 56,0�9 �6,08� 79,137 130,�33 151,903Tunisia 59,96� 79,8�6 85,68� 115,986 126,93�Germany �3,816 60,878 79,80� 101,008 118,530India 3�,690 50,�67 62,70� 83,3�8 110,09�Morocco 55,781 55,185 �7,1�8 51,602 70,770TradeMapITCUnit:thousandofUS$

Theabovetableshowsthefollowing:● ThetenleadingexporterstoFranceareItaly,1st,followedbyPortugal,second,China3rd, Spain

�th, Viet nam 5th, Indonesia 6th, Tunisia 7th, Germany 8th, India 9th and Morocco 10th

● ExceptforSpain,exportgrowthoftheexportingcountriesisincreasing



Final RepoRT


1.3.3.3 Germany

ThebreakdownofGermanimportsbyoriginisasfollows:






World 2,979,166 3,156,665 3,567,6�2 3,773,725 3,852,121Italy 666,�55 6��,739 65�,6�1 70�,�29 75�,9�5China 168,366 211,218 529,029 5�5,096 �69,560Viet nam 29�,33� 376,880 395,666 385,�08 379,522Portugal 286,612 238,08� 239,026 276,�73 292,777India 107,787 1�9,000 166,913 189,381 229,88�Slovakia 139,�39 116,611 188,09� 178,500 196,176romania 138,929 165,116 181,183 190,712 191,501Indonesia 79,069 75,600 78,605 108,258 155,7�6Austria 197,381 193,118 195,509 175,287 133,666Spain 156,329 137,181 117,57� 93,569 90,150Morocco �9,156 55,599 6�,803 83,885 82,719Tunisia 3�,509 38,993 �9,331 �3,573 5�,893


Theabovetableshowsthefollowing:● TheelevenleadingexporterstoGermanyareItalyfirst,Chinasecond,VietNamthird,Portugal4th,

India 5th,Slovakia6th, romania 7th, Indonesia 8th , Austria 9th , Spain 10th , and Morocco 11th .● RomanianandSlovakianExportGrowthtoGermanyareslowingordecreasingsinceRomaniaand

SlovakiaaccesstotheEU● Italian,Indian,PortugueseandIndonesianexportgrowthisincreasingwhereasChinese,Vietnamese

andAustrianexportsaredecreasing● Tunisiaranks18th in the German Imports

1.3.3.4. UK

ThebreakdownofUKimportsbyoriginisasfollows:

Exporters Imported value in 2003 Imported value in 200�




World 2,658,687 3,123,�71 3,261,7�� 3,292,863 3,�03,1�8Italy �80,196 52�,163 �63,�9� �1�,01� 518,220China 196,592 2��,015 581,291 5�7,363 �96,185Viet nam 395,708 531,631 �93,323 �61,119 �19,900India 152,009 191,371 193,902 205,591 253,697netherlands 201,003 2�8,569 28�,360 261,673 233,0�0Brazil 109,619 1�6,537 183,�07 210,1�8 229,735Spain 210,510 235,019 180,851 151,991 170,650Belgium 79,862 7�,726 95,752 218,205 169,861Portugal 282,137 275,921 199,863 172,577 169,100Germany 89,882 115,977 127,736 1�3,553 1�6,802Indonesia 78,838 82,�69 8�,�62 117,003 125,615Tunisia 9,666 22,�15 2�,268 17,3�� 22,622





Final RepoRT


● ThetenleadingexporterstoUKareItalyfirst,Chinasecond,VietNamthird,India4th, netherlands 5th, Brazil 6th, Belgium 7th, Portugal 8th , Germany 9th , and Indonesia 10th .

● RomanianandSlovakianExportGrowthtoUKareslowingordecreasingsinceRomanianandSlovakianaccesstotheEU

● Italian, Indian, German and Indonesian Export growth are increasing whereas Chinese,VietnameseandSpanishexportsaredecreasing

● Tunisiaisranking19th in the UK Imports ● MoroccanexportsarenotsignificantatUS$132,000

1.3.3.5Spain

ThebreakdownofSpanishimportsbyoriginisasfollows:






World 6�8,960 778,�92 1,010,313 1,188,079 1,320,�25China 75,568 87,708 230,1�2 271,797 26�,281Italy 85,699 109,73� 132,89� 161,867 198,386Viet nam 101,3�8 131,�27 1�2,3�1 132,130 139,280netherlands 72,�59 90,073 106,667 123,399 112,778Portugal 55,128 70,356 78,608 79,361 98,8�7Indonesia �1,892 36,990 38,327 57,126 83,760India 1�,238 22,576 30,822 53,3�9 62,372France 29,869 33,325 ��,�00 �5,8�7 56,823Brazil 15,9�6 28,655 �5,086 �9,955 51,989Morocco 18,0�1 16,732 25,786 29,999 36,365Thailand 27,206 23,189 2�,773 28,87� 32,955Belgium 7,228 3,655 3,826 1�,916 26,6�8United Kingdom 15,966 13,233 17,69� 17,7�0 23,379Germany 17,78� 17,369 16,580 19,601 23,082hong Kong 1,326 1,086 2,099 8,992 20,932Macau 2,685 10,096 1,771 10,098 1�,7�2Tunisia 10,985 10,966 13,658 1�,92� 1�,5�7



● ThetenleadingexporterstoSpainareChinafirst,Italysecond,VietNamthird,Netherlands4th, Portugal 5th, Indonesia 6th, India 7th, France 8th , Brazil 9th , and Morocco 10th .

● Moroccan,Italian,Indian,GermanandIndonesianexportgrowthisincreasingwhereasChinese,andVietnameseexportgrowthissluggish.

● Tunisiaranks17th in imports to Spain



Final RepoRT


1.3.3.6 Belgium

ThebreakdownofBelgiumimportsbyoriginisasfollows:






World 863,86� 951,836 1,125,350 1,226,713 1,525,57�China 90,210 79,667 169,92� 21�,162 27�,502Italy 183,289 20�,�31 220,�99 229,753 267,925netherlands 107,321 139,160 172,113 182,28� 232,996Viet nam 11�,�9� 121,2�1 126,016 130,269 153,329Indonesia �5,006 �9,562 62,561 76,338 129,0�1France 81,518 90,711 88,921 89,368 101,272Germany 6�,�30 72,012 76,059 72,563 82,619Thailand 32,9�0 36,�38 51,181 68,932 77,652Spain ��,767 ��,137 �2,568 37,88� �3,525India 9,�21 12,1�8 15,990 2�,��2 39,260Tunisia 1,757 2,206 3,711 �,�29 3,369TradeMapITCUnit:thousandofUS$


● ThetenleadingexporterstoBelgiumareChinafirst,Italysecond,Netherlandsthird,VietNam�th, Indonesia 5th, France 6th, Germany 7th, Thailand 8th , Spain9th and India 10th .

● ExceptSpain,exportgrowthofexportingcountriesisincreasing● Tunisiaranks22th in imports to Belgium

1.3.3.7 netherlands

ThebreakdownofDutchimportsbyoriginisasfollows:






World 833,�87 97�,113 1,139,751 1,280,596 1,�56,225China 105,�02 161,051 222,800 188,152 239,561Italy 167,666 182,1�5 178,105 17�,073 199,216Belgium 27,701 �1,803 159,986 2��,005 193,7�0Germany 77,776 85,532 87,161 1�9,987 16�,��7Portugal 105,858 110,65� 115,331 128,59� 1�2,9�6Viet nam 61,650 95,0�5 88,699 ��,290 86,�79United Kingdom 16,775 13,033 19,293 �2,990 69,785Indonesia 22,95� 28,366 33,056 �6,610 67,�13India 1�,21� 20,027 21,105 30,�62 �6,�75Brazil 20,385 22,135 3�,395 �0,673 �2,653TradeMapITCUnit:thousandofUS$


● ThetenleadingexporterstoNetherlandsareChinafirst,Italysecond,Belgiumthird,Germany�th, Portugal 5th, Viet nam 6th, UK 7th, Indonesia 8th , India 9th , and Brazil10th .

● ExceptBelgiumandBrazil,exportgrowthofexportingcountriesisincreasing

1.3.4 AnalysisofEuropeanDemandforUppers

Italy, Germany and France are the most important importers of uppers due to the delocalisation of their production to developing countries of labour intensive items such as uppers.




Final RepoRT

1.3.4.1 italy

ThebreakdownofItalianimportsbyoriginisasfollows:






World 911,066 823,672 752,082 839,237 733,�7�romania 377,850 33�,32� 285,003 298,332 151,935Tunisia 89,001 79,0�5 69,520 88,338 102,16�Albania 100,707 106,117 97,999 100,�98 98,161Serbia 0 0 0 55,187 75,��3India 5�,9�9 �6,16� �2,761 63,513 67,8�6Bulgaria 82,971 73,003 75,830 83,610 55,203Bosnia 21,328 27,132 22,920 28,331 33,�65Macedonia 15,781 19,077 2�,578 21,956 33,118Croatia 15,680 12,178 9,628 13,327 21,255Ukraine 5,63� 5,192 6,018 11,018 17,�83China 10,939 10,997 11,398 16,985 17,057Poland 15,328 17,701 15,8�7 8,106 15,122hungary 1,356 11,375 6,293 6,703 7,32�Morocco 3,092 2,351 1,702 �,66� 7,005TradeMapITCUnit:thousandofUS$Theabovetableshowsthefollowing:

● Italianimportsaredecreasing● ExportsofRomaniaandBulgariaaredecreasing● Tunisian,Ukrainian,HungarianandMoroccanexportsareincreasing● Exportsfromotherexportersaresluggish● TunisiaisrankingsecondandMorocco14th

1.3.4.2 Germany

ThebreakdownofGermanimportsbyoriginisasfollowings:






World 186,92� 181,259 180,936 209,933 21�,�72India 33,501 36,�29 35,226 �1,�67 �5,651Viet nam 89 655 12,683 35,�05 3�,710Brazil 13,185 15,121 12,998 20,1�5 21,535Indonesia 13,993 10,21� 13,010 20,159 20,706Bosnia and herzegovina 7,308 8,506 10,092 12,507 18,718romania 9,616 10,339 16,120 20,86� 16,5�7hungary 2�,977 17,113 1�,939 1�,1�2 13,927Portugal 28,661 35,89� 30,093 16,690 13,631Croatia 8,656 10,309 9,018 9,375 12,733China 1,909 �,086 8,295 11,011 5,826Morocco �09 853 373 297 2,178Slovakia 9,355 �,863 5�7 157 1,352Ukraine 219 88 �62 1,1�7 1,311Colombia 1,675 1,688 1,27� 981 1,288Poland 1,357 1,7�1 �7� 1,�25 993Czech republic 3,613 1,613 660 �82 777Tunisia 1,569 1,209 1,118 1,156 635TradeMapITCUnit:thousandofUS$




Final RepoRT


● Germanimportsareincreasing● ExportsofRomania,Bulgariaaredecreasing● MostofGermanimportsarefromEastEuropeanandAsiancountries● Exportsfromotherexportersaresluggish● Moroccoisranking11th and Tunisia 17th

1.3.4.3 France

ThebreakdownofFrenchimportsbyoriginisasfollows:






World 161,988 155,385 133,309 119,808 131,093Tunisia 63,736 58,7�8 �5,�92 �0,18� �3,�27India 18,870 26,832 27,108 30,665 3�,839Morocco �5,021 38,�27 26,685 20,21� 21,105Slovakia 6,838 9,083 12,�10 7,381 9,321Portugal 13,�03 9,106 7,933 7,002 6,252Czech republic �56 1,718 2,836 3,303 3,�55China 1,�8� 1,��2 2,261 3,113 2,819Bosnia and herzegovina 137 2�5 829 1,730 2,215Bulgaria 0 1 0 0 1,533TradeMapITCUnit:thousandofUS$

Theabovetableshowsthefollowing:● Frenchimportsaredecreasing● ExportsofIndiaandCzechrepublicareincreasing● Portuguese,TunisianandMoroccanexportsaredecreasing● TunisiaisrankingfirstandMorocco3th

1.3.4.4Spain ThebreakdownofSpanishimportsbyoriginisasfollows:






World 26,659 �8,�29 60,199 6�,851 67,665India 16,97� 26,6�5 29,317 26,770 26,71�romania 2,766 5,308 9,033 8,267 9,716Morocco 632 �,7�� 5,293 8,680 7,662Tunisia 15� 2,38� 5,081 5,753 7,�8�Colombia 605 1,569 2,930 3,91� �,�07SriLanka 0 0 138 2,131 2,890Brazil 518 1,953 3,236 559 2,580TradeMapITCUnit:thousandofUS$Theabovetableshowsthefollowing:

● MoroccoandTunisiasupplyequalamountstoSpainbutaresmallcomparedwiththepurchaseby Spain from India.

● Indiasupplies40%oftheSpanishmarket● MoroccoandTunisiahavea11%shareeach.




Final RepoRT

annex iii1. Global Trade of agadir Countries’ leather products

1.1 hIdES, SKInS and LEAThEr

1.1.1 TheAgadircountriesexportsofleather,hidesandskinsduringtheperiod2003-2007areasfollows:

Exporters

Trade Indicators

Valueexportedin 2007, in USd

thousand

Trade balance in 2007 in USd

thousand

Annual growthin

valuebetween2003-2007, %


2006-2007, %

Share in world

exports,%

Egypt 1�5,716 130,�71 15 10 0.�7Tunisia 25,5�6 -231,160 � �9 0.08Morocco 23,851 -91,19� 19 30 0.08Saudi Arabia 111,683 109,�05 16 �9 0.36

Syria 63,�86 60,897 3 36 0.2Source: Trade Map ITC Unit: thousand of US$

Theabovetableshowsthefollowing:● Egypt,SaudiArabiaandSyrianArabRepublicareimportantnetexportersofleatherdueequally

to the importance of their production of meat.● Tunisia andMorocco are exporters of leather butwith an important negative trade balance.

There aremassively importing leather to support their emerging footwear and leathergoodsindustry

● Accordingly,TunisiaandMoroccocouldbenefitfromtheAgadirAgreementandtheArabFreetrade Agreement to effectively source their leather from Egypt, Saudi Arabia and Syria.

1.1.2 ExportsofAgadircountriesfromhides,skinsandleathertotheEU

Country Year 2005 2006 2007

Jordan 652 �35 8Egypt 7�,�87 92,192 110,807Morocco 8,708 13,253 17,820Tunisia 11,503 6,851 10,756

Unit: thousand of US$ Source: Trade Map ITC

● EgyptisbyfarthebiggestexporterofsemiprocessedleathertotheEU● MoroccoandTunisiahaverelativelylowexportstoEU● Jordan’stradeisnegligible.

1.1.3 ImportsofAgadircountriesfromhides,skinsandleatherfromtheEU:

Country Year 2005 2006 2007

Jordan �6 168 11�Egypt 5,610 7,785 11,350Morocco 8�,710 10�,�99 108,17�Tunisia 158,006 177,�00 233,099

Unit: thousand of US$ Source: Trade Map ITC



Final RepoRT


● Tunisiaisalargeimporteroffinishedleathertoserviceitssub-contractingsystem.Muchofthisleatherisre–exportedintheformoffinishedgoods

● MoroccohasaverysimilarsystemtoTunisia,onlysmaller● Egyptimportsleatherusuallyforitsexportorientedcompanies● Jordan’stradeisverysmall.

Thefollowingchartsshowtheimportandexportofhidesandskinsbythe4countriesintheAgadirGroup.Egypt. These statistics come from the Un statistics division data base and are published under http://data.un.org. These statisticsaredifferentfromtheITCComtradeTradeMapstatisticswhichhavebeenusedaboveandelsewhereinthereport.

These statistics have the advantage that they show the detailed breakdown by industrial code for the variouscommodities in the sub sector. They provide a useful guide as to the trends in the trade during the last three years. The information comes from information passed to the Un by member countries. Information, if required, for other countries(Morocco,TunisiaandJordan),canbeaccessedattheabovewebsight.

JORDAN-IMPORTOFHIDESANDSKINS

Comm. Code Commodity TradeUS$(000’) Trade Kgs. (000’)

2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw 13,�70 729

�10121 Bovinehides,whole,freshorwet-salted

�10122 Buttsandbends,bovine,freshorwetsalted

�10129 Hidesections,bovine,nes,freshorwetsalted 5,501 2�,000

�10130 Bovinehides,raw,nes

�101�0 Equinehidesandskinsraw

�10210 Sheeporlambskins,rawwoolon,exceptPersian �9,365 3,909 �8,000 10,000

�10221 Sheeporlambskinspickled,withoutwool �8,181 ��,000

�10229 Sheeporlambskins,raw,exceptpickled,nowool 60,01� 182,751 62,860 137,�78

�10310 Goatorkidhidesandskins,raw,nes

�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 6,075 200

�10�10 Bovineskinleatherwhole

�10�21 Bovineleather,vegetablepretannedexceptwholeskins




Final RepoRT

�10�22 Bovineleather,otherwisepretannedexceptwholeskin 99,271 6,088

�10�29 Bovine and equine leather, tanned or retanned ,nes 51,615 20,�18 29,928 37,270 811 1,6�9

�10�31 Bovine or equine leather full or split grain, nes 33,752 23,615 2,693 3,07�

�10�39 Bovine and equine leather, nes 1�,595 8�,928 88,152 1,020 9,830 9,993

�10511 Sheeporlambskinleather,vegetablepre-tanned

�10519 Sheeporlambskinleather,tannedorretanned, nes

�10520 Sheeporlambskinleather,nes �,�63 38,111 3,878 329 2�,108 151

�10612 Goatorkidskinleatherotherwisepretanned �,227 230

�10619 Goatorkidskinleather,tannedorretanned,nes

�10620 Goatorkidskinleather,nes 17,631 19,780 858

�10710 Swineleather

�10721 reptile leather, vegetable, pretanned

�10790 Leather of animals, nes 192,089 17,25� 28,88� 1�,782 587 1,058

�10800 Chamois (including combination chamois) leather 35,763 1,661

�10900 Patent leather, metallised leather 1�2,923 270,709 58,217 3�,637 28,261 1,813

�11000 Paringsandotherwasteofleather

�11100 Composition leather in slabs, sheets or strip 9,385 65,03� 20�,281 1,296 1�,998 37,698

JORDAN-EXPORTOFHIDESANDSKINS


2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw 5�2,690 6�2,981 7�6,221 628,000 731,000 797,6�0

�10121 Bovinehides,whole,freshorwet-salted 87,0�1 �3,�09 83,000 �6,500

�10122 Butts and bends, bovine, fresh orwetsalted



Final RepoRT


�10129 hide sections, bovine, nes, fresh orwetsalted 18,025 �0,000



�10210 Sheeporlambskins,rawwoolon,exceptPersian 26�,980 1,251,250 �,083,�93 335,000 1,522,710 �,69�,500

�10221 Sheeporlambskinspickled,withoutwool 1,922,15� 2,010,1�3 58�,697 2,�2�,�10 2,378,500 737,500

�10229 Sheeporlambskins,raw,exceptpickled,nowool 137,721 92,523 12�,000 10�,000

�10310 Goatorkidhidesandskins,raw,nes 2,633,738 3,�11,720

�10320 Reptileskinsraw

�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 2�1,666 383,350 226,�52 2�2,000 518,063 285,630


�10�21 Bovine leather, vegetable pretannedexceptwholeskins

�10�22 Bovineleatherotherwisepretannedexceptwholeskin 358,29� 390,935

�10�29 Bovine and equine leather, tanned or retanned ,nes �50,066 5�2,619 532,000 582,500

�10�31 Bovine or equine leather full or split grain, nes 1,735 20

�10�39 Bovine and equine leather, nes 17,631 20,169 1�,385 25,000 9,180 22,000

�10511 Sheeporlambskinleather,vegetable pre-tanned

�10512 Sheeporlambskinleather,otherwisepretanned 282,395 88,1�1

�10519 Sheeporlambskinleather,tanned or retanned, nes 25,515 10�,610 27,000 110,000

�10520 Sheeporlambskinleather,nes 1,102,897 1,788,661 1,033,387 755,260 2,2��,�00 1,236,000

�10611 Goatorkidskinleathervegetable pretanned

�10612 Goatorkidskinleatherotherwisepretanned

�10619 Goatorkidskinleather,tannedor retanned, nes 625,887 736,938 761,000 785,500

�10620 Goatorkidskinleather,nes 236,031 329,261 331,28� 18�,350 �06,500 355,500




Final RepoRT

�10710 Swineleather 17,60� 17,000


�10729 reptile leather other than vegetable pretanned

�10790 Leather of animals, nes �7,775 9,596 26,000 2,710

�10800 Chamois (including combination chamois) leather 153,852 �,660

�10900 Patent leather, metallised leather 11,707 1,073 39,816 6,000 1,022 �6,9�0

�11000 Paringsandotherwasteofleather 21,017 12,6�5

�11100 Composition leather in slabs, sheets or strip 22,399 28,000

TUniSia - iMpoRT oF HiDeS anD SKinS


2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw 922,088 1,�79,955 617,959 �2,662 203,001 �0,0�5

�10121 Bovinehides,whole,freshorwet-salted 696,777 338,662 662,391 �33,163 220,991 163,�73


�10129 hide sections, bovine, nes, fresh orwetsalted 105,001 121,113 93,225 23,�69

�10130 Bovinehides,raw,nes 6�,971 �2,915


�10210 Sheeporlambskins,rawwoolon,exceptPersian 2,856,993 32,71� 631,789 1,728,38� 20,39� 268,652

�10221 Sheeporlambskinspickled,withoutwool 137,12� 56,763 183,37� 7,222 32,100 17,916

�10229 Sheeporlambskins,raw,exceptpickled,nowool 21,987 397 20� 228

�10310 Goatorkidhidesandskins,raw,nes 101,338 172,908 220,789 76,390



Final RepoRT


�10320 Reptileskinsraw 95,903 ��,673 77,125 909 20,856 11,�36

�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 71�,608 275,295 �99,22� 38,016 57,333 83,900



�10�22 Bovineleather,otherwisepretannedexceptwholeskin 75�,9�� 1,126,935 125,857 3�,253

�10�29 Bovine and equine leather, tanned or retanned ,nes 1,6�0,851 2,268,70� 3,515,176 �83,318 661,911 622,517

�10�31 Bovine or equine leather full or split grain, nes 77,876,703 95,2�0,271 113,510,203 3,�31,95� 3,710,99� �,071,516

�10�39 Bovine and equine leather, nes 25,961,976 30,�98,615 33,6�7,621 1,188,1�9 1,398,570 1,67�,3�6


�10512 Sheeporlambskinleather,otherwisepretanned 355,122 339,806 ��,65� 100,85�

�10519 Sheeporlambskinleather,tanned or retanned, nes 1,619,68� 188,990

�10520 Sheeporlambskinleather,nes 7,235,695 30,868,��3 �7,830,559 313,822 1,08�,636 1,367,5��

�10612 Goatorkidskinleatherotherwisepretanned 56,267 59,280 2,000 2,695

�10619 Goatorkidskinleather,tannedor retanned, nes �1,222 9,020

�10620 Goatorkidskinleather,nes 3,�98,282 6,732,602 3,157,236 129,723 311,057 150,006

�10710 Swineleather 1,�69,709 2,010,009 876,988 118,70� 135,853 10�,1�2


�10729 reptile leather, other than vegetable pretanned 21,555 120,287 19,6�0 �0� 5,583 55�

�10790 Leather of animals, nes �51,�68 38,958 265,326 19,579 38,958 9,701

�10800 Chamois (including combination chamois) leather 1,550,�02 2,579,607 3,68�,915 59,658 96,��6 128,608




Final RepoRT

�10900 Patent leather, metallised leather 35,690,981 37,023,063 35,962,080 3,255,606 3,008,9�8 2,6�6,51�

�11000 Paringsandotherwasteofleather 62,107 123,218 95,313 ��,188 66,1�8 2�,878

�11100 Composition leather in slabs, sheets or strip 31,3�6,396 ��,3�3,569 1,288,�76 1,220,323 1,�10,690 1,288,�76

TUniSia - expoRT oF HiDeS anD SKinS


2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw �2,229 700

�10121 Bovinehides,whole,freshorwet-salted 12,�66 1�,000


�10129 hide sections, bovine, nes, fresh orwetsalted



�10210 Sheeporlambskins,rawwoolon,exceptPersian 129,981 �3,1�0

�10221 Sheeporlambskinspickled,withoutwool 100,�99 19,�23 22,300 5,635

�10229 Sheeporlambskins,raw,exceptpickled,nowool

�10310 Goatorkidhidesandskins,raw,nes 1,299 60


�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile



�10�22 Bovineleather,otherwisepretannedexceptwholeskin 397 30

�10�29 Bovine and equine leather, tanned or retanned ,nes 95,327 2�2,1�1 11,000 99,�10



Final RepoRT


�10�31 Bovine or equine leather full or split grain, nes 1,010,765 1,272,360 886,835 �0,�59 56,723 10�,120

�10�39 Bovine and equine leather, nes 6,998,�53 6,719,52� 8,0�5,250 289,228 306,961 �10,770


�10512 Sheeporlambskinleather,otherwisepretanned 50,977 2,7�0,705 11,550 766,125

�10519 Sheeporlambskinleather,tanned or retanned, nes 3,9�3,696 980,650

�10520 Sheeporlambskinleather,nes 2,267,330 7,62�,081 6,8�3,90� 19�,935 227,625 25�,869

�10612 Goatorkidskinleatherotherwisepretanned 99,883 57,300

�10619 Goatorkidskinleather,tannedor retanned, nes 157,066 �0,000

�10620 Goatorkidskinleather,nes 1,067,981 180,7�8 1,9�0,9�3 28,328 �,�13 �05,953

�10710 Swineleather 29� 35


�10729 reptile leather, other than vegetable pretanned

�10790 Leather of animals, nes

�10800 Chamois (including combination chamois) leather 1,1�0,251 2,�79,�61 1,917,513 95,393 397,151 259,621

�10900 Patent leather, metallised leather 2,999,890 3,816,317 3,99�,929 1,760,760 1,805,5�8 551,607

�11000 Paringsandotherwasteofleather 63,150 135,035 25,383 226,632 �67,601 261,776

�11100 Composition leather in slabs, sheets or strip 1,13�,191 522,869 230,151 107,819 10,101 5,732

MoRoCCo - iMpoRT oF HiDeS anD SKinS


2006 2007 2008* 2006 2007 2008*

�10110 Bovineskins,whole,raw 5,�32,850 1,251,3�2 2,75�,97� 29,688

�10121 Bovinehides,whole,freshorwet-salted �,012 90


�10129 hide sections, bovine, nes, fresh orwetsalted 9,605 3,375




Final RepoRT



�10210 Sheeporlambskins,rawwoolon,exceptPersian 16,399 118,532 66,785 11�,016

�10221 Sheeporlambskinspickled,withoutwool 2,60� 5,050

�10229 Sheeporlambskins,raw,exceptpickled,nowool 8�0 1,736 10 21

�10310 Goatorkidhidesandskins,raw,nes 13,13� 983 �,056 1,772


�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile �68,892 1,739,�23 191,195 �23,17�



�10�22 Bovineleather,otherwisepretannedexceptwholeskin 3,530 �5,196 66 2,978

�10�29 Bovine and equine leather, tanned or retanned ,nes 92,507 8�,757 9,016 5,777

�10�31 Bovine or equine leather full or split grain, nes 60,0�9,6�7 6�,239,28� 2,�7�,370 2,512,956

�10�39 Bovine and equine leather, nes 18,301,7�8 20,971,888 857,9�7 9�3,�68


�10512 Sheeporlambskinleather,otherwisepretanned 328,862 108,617 8,009 �,108

�10519 Sheeporlambskinleather,tanned or retanned, nes

�10520 Sheeporlambskinleather,nes 1,728,952 2,322,139 72,�78 70,8�9

�10612 Goatorkidskinleatherotherwisepretanned 123,6�7 11,291 1,867 325

�10619 Goatorkidskinleather,tannedor retanned, nes

�10620 Goatorkidskinleather,nes 3,�83,322 5,3�5,�21 7�,98� 109,755

�10710 Swineleather 8,0��,139 8,�56,989 �29,026 �11,817


�10729 reptile leather, other than vegetable pretanned 85,785 27,�70 3�0 362

�10790 Leather of animals, nes �,05�,297 3,222,706 1,019,651 371,6�3



Final RepoRT


�10800 Chamois (including combination chamois) leather 537,2�8 98,86� 22,271 3,03�

�10900 Patent leather, metallised leather �,865,171 6,390,625 203,602 2�9,892

�11000 Paringsandotherwasteofleather 21,939 2,950 1,853 858

�11100 Composition leather in slabs, sheets or strip 1,101,283 598,1�0 211,�62 219,258

* 2008 statistics not available

MoRoCCo - expoRT oF HiDeS anD SKinS


2006 2007 2008* 2006 2007 2008*

�10110 Bovineskins,whole,raw

�10121 Bovinehides,whole,freshorwet-salted 16,608 16,88�

�10122 Butts and bends, bovine, fresh or wetsalted

�10129 hide sections, bovine, nes, fresh orwetsalted



�10210 Sheeporlambskins,rawwoolon,exceptPersian

�10221 Sheeporlambskinspickled,withoutwool

�10229 Sheeporlambskins,raw,exceptpickled,nowool

�10310 Goatorkidhidesandskins,raw,nes


�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 22,075 298,168 6,9�0 31,563





Final RepoRT


�10�22 Bovineleather,otherwisepretannedexceptwholeskin

�10�29 Bovine and equine leather, tanned or retanned ,nes 5,7�8 2,335 1,310 9�

�10�31 Bovine or equine leather full or split grain, nes 1,797,520 1,825,611 �5,833 50,007

�10�39 Bovine and equine leather, nes 1,336,087 1,986,656 67,311 92,767


�10512 Sheeporlambskinleather,otherwisepretanned 1,026 15,162 8 632

�10519 Sheeporlambskinleather,tanned or retanned, nes

�10520 Sheeporlambskinleather,nes 2,7�5,823 7,552,17� 83,611 220,�30

�10612 Goatorkidskinleatherotherwisepretanned 22,276 3,765 192 8�

�10619 Goatorkidskinleather,tannedor retanned, nes

�10620 Goatorkidskinleather,nes 60,783 565,032 1,817 15,17�

�10710 Swineleather 117,�67 131,708 3,79� �,03�


�10729 reptile leather, other than vegetable pretanned

�10790 Leather of animals, nes 9,511,235 9,1�3,317 �29,62� 208,589

�10800 Chamois (including combination chamois) leather 6,828 113,785 61 1,618

�10900 Patent leather, metallised leather 1,533,696 2,205,5�7 52,275 73,771

�11000 Paringsandotherwasteofleather 26,801 7,739 28,558 7,��2

�11100 Composition leather in slabs, sheets or strip 1,193,099 �9 16,119 1�

* 2008 statistics not available



Final RepoRT


eGYpT - iMpoRT oF HiDeS anD SKinS


2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw 56 28 2,22� 28 13 600

�10121 Bovinehides,whole,freshorwet-salted 121 �36 5,079 71 236 1,�08

�10122 Butts and bends, bovine, fresh orwetsalted 22 67 - -

�10130 Bovinehides,raw,nes 63 2,563 - 1,289

�101�0 Equinehidesandskinsraw 55 509 - -

�10210 Sheeporlambskins,rawwoolon,exceptPersian 1,091 1,�83 615 633

�10221 Sheeporlambskinspickled,withoutwool 33 5� 23� 6 1� 51

�10229 Sheeporlambskins,raw,exceptpickled,nowool 58� 323 - 113

�10310 Goatorkidhidesandskins,raw,nes 96 6�

�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 72 23� - 115

�10�10 Bovineskinleatherwhole 7 10 0.5 0.6

�10�21 Bovine leather, vegetable pretannedexceptwholeskins 18 1

�10�29 Bovine and equine leather, tanned or retanned ,nes �3� 62

�10�31 Bovine or equine leather full or split grain, nes 330 17

�10�39 Bovine and equine leather, nes �53 16

�10511 Sheeporlambskinleather,vegetable pre-tanned 6 162 - -

�10519 Sheeporlambskinleather,tanned or retanned, nes 271 10�




Final RepoRT

�10520 Sheeporlambskinleather,nes 20 38� - 9

�10619 Goatorkidskinleather,tannedor retanned, nes 0.1 0.1

�10620 Goatorkidskinleather,nes 2 0.3

�10710 Swineleather 8 21 0.6 1

�10721 reptile leather, vegetable, pretanned 5 -

�10790 Leather of animals, nes 11 105 �65 0.8 - 66

�10800 Chamois (including combination chamois) leather 5� �1

�10900 Patent leather, metallised leather 2� 2

�11000 Paringsandotherwasteofleather 6 1� 12 � 10 6

�11100 Composition leather in slabs, sheets or strip 337 122 32� 55 26 �0

eGYpT - expoRT oF HiDeS anD SKinS


2006 2007 2008 2006 2007 2008

�10110 Bovineskins,whole,raw 90 �� 553 50 26 12�

�10121 Bovinehides,whole,freshorwet-salted 35 105 21 �9


�10130 Bovinehides,raw,nes 37 1�

�101�0 Equinehidesandskinsraw 21� -

�10210 Sheeporlambskins,rawwoolon,exceptPersian 62 220 3� 3�



Final RepoRT


�10221 Sheeporlambskinspickled,withoutwool 653 179

�10229 Sheeporlambskins,raw,exceptpickled,nowool 9 315 � 76

�10310 Goatorkidhidesandskins,raw,nes 33 7 1� 3

�10320 Reptileskinsraw 51 26 0.8 2

�10390 Rawhide/skinsexceptbovine/equine/sheep/goat/reptile 610 60� - 23�

�10�10 Bovineskinleatherwhole 7 9,550 2 -

�10�21 Bovine leather, vegetable pretannedexceptwholeskins �,510 7,301 - -

�10�22 Bovineleatherotherwisepretannedexceptwholeskin 3,830 �,502 1,171 1,3�6

�10�29 Bovine and equine leather, tanned or retanned ,nes 72 8,009 23 2,107

�10�31 Bovine or equine leather full or split grain, nes 859 81

�10�39 Bovine and equine leather, nes 10,�05 13,156 5,506 - 866 1,�2�

�10511 Sheeporlambskinleather,vegetable pre-tanned 1,060 �38 - -

�10512 Sheeporlambskinleather,otherwisepretanned 33 5

�10519 Sheeporlambskinleather,tanned or retanned, nes 255 989 - 269

�10520 Sheeporlambskinleather,nes 0.7 3 2,323 - - 587

�10611 Goatorkidskinleathervegetable pretanned 81 �33 - -

�10612 Goatorkidskinleatherotherwisepretanned 11 23 0.5 -

�10619 Goatorkidskinleather,tannedor retanned, nes ��1 15� 3�1 - - 186

�10620 Goatorkidskinleather,nes 763 192




Final RepoRT

�10710 Swineleather 36 17


�10729 reptile leather other than vegetable pretanned 211 -

�10790 Leather of animals, nes 88 78 79 - - 31

�10800 Chamois (including combination chamois) leather 0.5 1

�10900 Patent leather, metallised leather �27 152

�11000 Paringsandotherwasteofleather

�11100 Composition leather in slabs, sheets or strip 177 60 115 �1 20 5

1.2 leaTHeR GooDS

1.2.1 AgadircountriesexportsofLeatherGoods

Exporters

Trade Indicators�2

Value exportedin




Annualgrowthinvaluebetween

2006-2007, %

Share in world

exports,%

World ��,098,580 -5,329,356 11 1� 100

Tunisia 78,538 5�,772 9 31 0.18

Morocco 59,�61 18,589 5 -7 0.13

Egypt 5,165 -��,615 28 1 0.01

Jordan 2,16� -11,137 36 63 0 Source: Trade Map ITC Unit: thousand of US$

ThemostexportedleathergoodsbyAgadircountriesare:● Leather articles carried in pocket or handbag, leather handbags, leather executive cases,

leather accessories and leather apparel articles.



Final RepoRT


1.2.2 Leatherarticlescarriedinpocketorhandbag

ThefollowingtableshowsAgadirexportsofleatherarticlescarriedinpocket

ExportersValue

exportedin2007, in USd

thousand


thousand



2007, %

Shareinworldexports,%

World 3,1�9,370 688,511 18 27 100

Morocco 3,1�6 2,798 21 118 0.1

Tunisia 1,998 1,898 -23 �5 0.06

Egypt 338 -61� 23 -2 0.01

Jordan 3 -67 0Source: Trade Map ITC Unit: thousand of US$

Theabovetableshowsthefollowing:● Globaldemandgrowthofleatherarticlescarriedinpocketisveryhigh;18%peryear● MoroccanexportsarelimitedbutwiththehighestmarketshareintheAgadirArea(0.1%)

withahigherannualgrowththanthatoftheglobalgrowthwhichis21%● EgyptandJordanexportsarenotsignificant

1.2.3 Agadirexportsofleatherhandbags

Agadirexportsofleatherhandbagsareasfollows:

Exporters Valueexportedin 2007, in USd

thousand


thousand


2007, %


2007, %


World 5,580,�30 -8,�23 22 22 100

Morocco 13,730 10,178 15 15 0.25

Tunisia 13,�56 11,575 -2 21 0.2�

Egypt 1,7�0 -271 26 70 0.03

Jordan 98 -8� 22 216 0Source: Trade Map ITC Unit: thousand of US$

Theabovetableshowsthefollowing:● Globaldemandgrowthofleatherhandbagsisveryhigh;22%peryear● MoroccanandTunisianexportsarelimitedbutwiththehighestmarketshareintheAgadir

Area(0.25%)andalowergrowthratethanthatoftheglobal.● EgyptandJordanexportsarenotsignificantbutthehighestingrowthrate.




Final RepoRT

1.2.4 Agadirexportsofleatherexecutiveandbrief-cases

Agadirexportsofleatherexecutiveandbrief-casesareasfollows:

ExportersValueexported

in 2007, in USd thousand


thousand

Unit value (USD/unit)


2003-2007, %


2006-2007, %

Share in world

exports,%

World 957,606 206,582 3�,722 10 11 100Morocco 3,3�3 2,938 23,055 2 9 0.35Tunisia 1,�21 1,338 36,�36 -10 -11 0.15Egypt 239 -521 3,�1� 7 -33 0.02Jordan 2� -330 -28 -8 0

Source: Trade Map ITC Unit: thousand of US$


● Globaldemandgrowthofleatherexecutiveandbrief-casesisimportant;10%peryear● MoroccanandTunisianexportsarelimitedbutwiththehighestmarketshareintheAgadir

Area(0.35%and0.15%respectively)andalowergrowthratethanthatoftheglobal● EgyptandJordanexportsarenotsignificant

1.2.5 Agadirexportsofleatheraccessories

Agadirexportsofleatheraccessoriesareasfollows:

Exporters Value exportedin2007,in USd thousand


Unit value (USD/unit)


2003-2007, %

Annual growthin value between2006-

2007, %

Share in world

exports,%

'World 2,563,598 962,��2 10 3 100

'Tunisia 1�,716 3,002 26,185 31 �3 0.57

'Morocco 3,200 -5,936 21,918 20 -2� 0.12

'Egypt 733 -32� 23,6�5 52 -52 0.03

'Jordan 19 -�68 -15 -78 0Source: Trade Map ITC Unit: thousand of US$


● Globaldemandgrowthofleatheraccessoriesisappreciable;10%peryear● TunisianexportsarelimitedbutwiththehighestmarketshareintheAgadirArea(0.6%)and

ahighergrowth;31%thanthatoftheglobalgrowthrate● EgyptandJordanexportsarenotsignificant



Final RepoRT


1.2.6 Agadirexportsofleatherapparel

Agadirexportsofleatherapparelareasfollows:

Exporters Value

exportedin 2007, in USd

thousand


thousand

Unit value((USD/unit

Annualgrowth invaluebetween

% ,2003-2007

Annual growth in value between

2006-% ,2007

Shareinworld% ,exports

World 8,�79,0�� 171,�11 32,951 1 � 100 Morocco 28,557 17,292 39,066 -1 16 0.3�

Tunisia 2�,352 19,720 �8,998 7 11 0.29 Egypt 2�8 -�,519 11,273 -9 -33 0

Jordan 129 -2,075 8,063 17 -36 0Source: Trade Map ITC Unit: thousand of US$

Theabovetableshowsthefollowing:● Globaldemandgrowthofleatherapparelisverylimited;1%peryear● MoroccanandTunisianexportsarelimitedbutwiththehighestmarketshareintheAgadirArea

(0.3%)withahighergrowthratethanthatoftheglobe● EgyptandJordanexportsarenotsignificant

1.3 FooTWeaR

1.3.1 Agadircountriesexportsoffootwear

Thefollowingtableshowsfootwearexportsfootwearduringtheperiod2003-2007:

Exporters

Trade Indicators 6�

Value exportedin



thousand


2003-2007, %


2006-2007, %


World 83,620,�20 -�,5�2,288 10 12 100Tunisia 575,817 ��9,597 12 22 0.69Morocco 338,732 2�0,892 11 23 0.�1 Egypt 22,369 -77,�19 7 -11 0.03Jordan �,820 -28,�7� 15 58 0.01

Source: Trade Map ITC Unit: thousand of US$


● Tunisiaranksthe24th exporter intheGlobalmarketfollowedbyMorocco30th, Egypt 78th

and Jordan 97th

● AmongAgadircountries,Tunisiahas thehighestmarketshare (0.7%)of theGlobalexportsfollowedbyMorocco(0.4%)whereasthemarketshareofEgyptandJordanareinsignificant,0.03 and 0.01% respectively

● TheTunisian,MoroccanandJordanianexportgrowthratesare,respectively12%,11%and15%.Thesearehigherthanthatoftheglobalmarket;10%

● TheEgyptianexportgrowth;7%islowerthanthatoftheGlobalexport.




Final RepoRT

ANNEXIV:2008UpdateofAgadirTradeStatisticsForthisannexandalongallthisreportalluseddataareinthousandsofUS$andthesourceisITCtradeMap,exceptwhenitisexpresslymentionedadifferentunitorsource.

1. Export&ImportoftheAgadirLeather&FootwearSectorin2008Unit:ThousandofUS$

Egypt Jordan Morocco Tunisia

Leather&hidesExport 92826 8692 25509 282�7

Leather & hides Import 10531 62� 10620� 2855�5

Leathergoodsexport 5297 3220 61685 9�,3�6

Leather goods import 65176 17861 �0167 27,222

Footwearexport 21069 �225 3�86�1 608039FootwearImport 126968 �1876 95312 1�1,62�

Alongthisreport,alldataareinthousandsofUS$andtheSourceisITCTradeMap

2.GrowthofExport&ImportoftheAgadirLeather&FootwearSectorfrom2007to2008in%:

Theexportandimportin2008comparedtothatof2007registeredthefollowinggrowth:

Egypt Jordan Morocco TunisiaLeather&hidesExport -36 12 7 11Leather & hides Import -38 2 -8 11Leathergoodsexport -2 �9 � 17Leather goods import 30 3� -2 15Footwearexport -10 -12 3 6FootwearImport 2� 26 -3 12

TheabovetableshowsthatJordanandEgyptregisteredadecreaseoftheirfootwearexportduetotheimpactoftheglobalcrisiswhereasTunisia&Moroccoachievedanincreaseoftheirexport.ThisisduetothatsomeTunisianandMoroccan manufacturers succeeded to shift to the production of fancy shoes in small series enabling Tunisia and Morocco to resist more to the Global crisis.

3.1.ListofimportingmarketsforleathergoodsexportedbyTunisiaImporters Exportedvaluein2007 Exportedvaluein2008

'World 78,538 9�,3�6‘Italy 26,�� 36,225‘France 2�,��5 32,512‘Germany 20,882 17,999‘Belgium 2,710 3,373‘United Kingdom 603 �21‘Spain 33� 172‘Morocco 67 132



Final RepoRT


3.2.ListofsupplyingmarketsforleathergoodsimportedbyTunisia:

Exporters Importedvaluein2007 Importedvaluein2008‘World 23,766 27,222‘Italy 9,779 10,006‘France 3,716 �,813‘China 2,790 3,103‘Spain 1,531 1,775‘Germany 993 1,583‘Portugal 2,312 1,217‘Morocco 38� �2

3.3.ListofsupplyingmarketsforRawhidesandleatherimportedbyTunisia:

Exporters Importedvaluein2007 Importedvaluein2008‘World 256706 2855�5‘Italy 1�18�8 15580�‘France 71027 75551‘Germany 7355 18113‘India 11551 10�10‘Spain 7830 63�5‘Morocco 137� 1210‘Egypt 997 3�2‘Greece 1� 333‘China 183 2�9

3.4.ListofimportingmarketsforRawhidesandleatherexportedbyTunisia

Importers Exportedvaluein2007 Exportedvaluein2008‘World 255�6 282�7‘Italy 8956 9075‘Turkey �927 �069‘China 1598 2383‘India 783 1572‘France 691 1538‘Spain 852 1120‘Morocco 0 169‘Egypt 867 79

3.5.Tunisianfootwearimportoriginduring2007&2008:

Exporters Importedvaluein2007 Importedvaluein2008‘World 126,220 1�1,62�‘Italy 71,853 77,6�9‘France 30,601 29,691‘Germany 1,09� 12,612‘India 8,330 6,207‘China �,�71 �,885‘Spain 3,539 3,7�6‘Viet nam 1,6�7 2,509‘Morocco 101 56‘Egypt 1� 0




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3.6.Tunisianfootwearexportdestinationduring2007&2008:

Importers Exportedvaluein2007 Exportedvaluein2008‘World 575817 608039‘Italy 271630 30�022‘France 186�5� 185778‘Germany 551�0 66933‘United Kingdom 20797 17623‘Spain 2�350 16783‘Morocco 2079 2981‘netherlands 2189 2�19‘Egypt 70 153‘Jordan 15 7

4.1.ListofsupplyingmarketsforRawhidesandleatherimportedbyEgypt

Exporters Importedvaluein2007 Importedvaluein2008

‘Total 16995 10531‘Italy �256 6�72‘Greece �5 13�7‘Germany 550 395‘Jordan 111 290‘Tunisia 867 79

4.2.ListofimportingmarketsforRawhidesandleatherexportedbyEgypt

Importers Exportedvaluein2007 Exportedvaluein2008‘Total 1�6023 92826‘Italy �0�92 �0157‘India 12276 15585‘hong Kong (SArC) 8363 11860‘China 5755 8372‘Turkey 2�60 5213‘Brazil 1126 5010‘Pakistan 1�7 1859‘Greece 1001 1203‘Tunisia 997 3�2‘Jordan 1 9

4.3.ListofsupplyingmarketsforleathergoodsimportedbyEgypt

Exporters Importedvaluein2004

Importedvaluein2005

Importedvaluein 2006

Importedvalue in 2007

Importedvaluein2008

‘Total 19250 27501 39030 501�3 65176‘China 1�868 20592 29138 360�6 �7027‘Italy 913 1�10 196� 3352 �670‘Turkey 132 253 ��7 932 2389‘Germany 63� 611 1166 2312 212�‘France �91 937 1029 1795 2067‘India 137 2�7 220 31� 1727‘Jordan 0 2 0 0 187



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4.4.ListofimportingmarketsforleathergoodsexportedbyEgyptImporters Exportedvaluein2007 Exportedvaluein2008

‘Total 5396 5297

‘Belgium 13�9 1592

‘Italy 1090 1�69

‘Jordan 322 508

‘France 128 311

‘United Kingdom 152 281

4.5.ListofimportingmarketsforFootwearexportedbyEgyptImporters Exportedvaluein2007 Exportedvaluein2008

‘Total 23�23 21069

‘Italy 13558 1�908

‘Greece 799 1916

‘Norway 576 1361

‘France 1985 788

‘Jordan 5�3 36�

4.6.ListofsupplyingmarketsforFootwearimportedbyEgyptExporters Importedvaluein2007 Importedvaluein2008

‘Total 102�05 126968‘China 75890 99728‘Italy 117�0 13689‘United Kingdom 1317 1872‘Jordan 0 189‘Tunisia 70 153

5.1.ListofsupplyingmarketsforRawhidesandleatherimportedbyJordanExporters Importedvaluein2007 Importedvaluein2008

‘World 610 62�‘Australia 60 176‘India 286 159‘Italy 96 73‘Egypt 1 9

5.2.ListofmainimportingmarketsforRawhidesandleatherexportedbyJordanImporters Exportedvaluein2007 Exportedvaluein2008

‘World 7759 8692‘Turkey 3783 3�78‘Syrian Arab republic 1137 2862‘China 1925 988‘Egypt 111 290‘Italy 0 188




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5.3.ListofsupplyingmarketsforleathergoodsimportedbyJordanExporters Importedvaluein2007 Importedvaluein2008

‘World 13301 17861‘China 9551 12203‘Italy 519 872‘Syrian Arab republic 2�6 618‘Germany 208 539‘Egypt 322 508‘Tunisia 12 38‘Morocco 1 9

5.4.ListofimportingmarketsforleathergoodsexportedbyJordanImporters Exportedvaluein2007 Exportedvaluein2008

‘World 216� 3220‘Free Zones 1905 2017‘Lebanon �2 596‘Egypt 0 187‘Germany 0 2

5.5.ListofimportingmarketsforFootwearexportedbyJordanImporters Exportedvaluein2007 Exportedvaluein2008

‘World �820 �225

‘Free Zones 2�98 15�8

‘Iraq 777 953

‘Bahrain 6 601

‘Egypt 0 189

‘Saudi Arabia 19� 118

5.6.ListofsupplyingmarketsforFootwearimportedbyJordanExporters Importedvaluein2007 Importedvaluein2008

‘World 3329� �1876

‘China 200�0 11193

‘hong Kong (SArC) 233 903�

‘Syrian Arab republic 1781 3679

‘Italy 1230 1135

‘Spain 927 995

‘India 621 860

‘Egypt 5�3 36�

‘Tunisia �7 38

‘Morocco 3 12

6.MoroccanExport&Importoftheleather&footwearsectorin2008

Importin000’DH Exportin000’DH Importin000’US$ Exportin000’US$

Leather & hides 8�9633 20�071 10620�.125 25508.875

Leather goods 321332 �93�79 �0166.5 6168�.875

Footwear 762�99 2789127 95312.375 3�86�0.875

Source:OfficedesChanges,Morocco

7. Thedetailedimportandexportchartsofhidesandskins:ThedetailedimportandexportchartsofhidesandskinsinAnnex4,showthatJordanexportsofsheepandlambskin,rawwoolonareimportantUS$4,083,493whereasTunisian&EgyptianimportsarerespectivelyUS$631786and1,483,000thatcouldbeanimportunitytoimproveintra-tradeamongagadircountries.Tunisia,whichisabigimporterofsheepandlambskinleatherUS$47,830,559couldimportapartfromJordanwhichisexportingin2008,US$1,033,387fromthisitem.Although,thistableidentifiesimportantopportunitiesofAgadirintra-trade:

nSh code Commodity EgyptExport

2008Tunisian imports

2008

MoroccanImports

2007

�10�29 Bovine and equine leather, tanned or retanned ,nes 8,009,000 3,515,176

�10�31 Bovine or equine leather full or split grain, nes 859,000 113,510,203 6�,239,28�

�10�39 Bovine and equine leather, nes 5,506,000 33,6�7,621 20,971,888

�10519 Sheeporlambskinleather,tannedorretanned,nes 989,000 1,619,68� 108,617

�10520 Sheeporlambskinleather,nes 2,323,000 �7,830,559 2,322,139

�10620 Goatorkidskinleather,nes 763,000 3,157,236 5,3�5,�21

�10900 Patent leather, metallised leather �27,000 35,962,080 6,390,625

�11100 Composition leather in slabs, sheets or strip 115,000 1,288,�76 598,1�0

Unit : USd

AgadirIntra-TradeinAnnex3enablesustoformulatethefollowings:● JordanshouldconcentrateonnichemarketsandhighqualityproductstoexporttoAgadircountries

andEU.The industryhasbeenhamperedby imports fromlowcostAsiancountriesand it isnomore possible for Jordan to compete in the mass consumer segment. Target products may include safetyandmedicalshoes,highdesignleathershoesfortheEUmarketandthefinishingofleatherto increase thevaluechainof the tanningprocessand theprocessingof rawskins available inimportant quantities.

● MoroccoandTunisiacouldincreasetheirintra-tradeinfootwearandleatherbagsknowingahighincrease of imports from the EU.

● Tunisia,MoroccoandJordancouldreplacetheirincreasedimportsoffootwearfromChina,VietnamandIndiabytheirimportsfromEgyptendowedwithlowerproductioncost.



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