We have been analyzing the pandemic and the post-pandemic process in many of our writings together.
The things that happened during this process;
- Changes in cash flow
- Interest rate hikes
- Increase in regional wars
- Supply chain crises
- Rapid fluctuations in supply-demand balance
- Trump’s new tariffs,
We can say that these and similar issues are the challenges faced by leather producers in the last 5 years.
During all these changes, many leather producers around the world had to change their position with the decisions they made.
Some leather producers lost their market and reduced production, while others increased their capacity and expanded their market.
This article could be a roadmap for leather suppliers who are about to be too late in making decisions.
Let’s illustrate this topic with a current event example;
The USA-India decision on August 6th (a tense 21 days)
We can say that the USA is one of the most profitable markets in the world, especially in Europe.
Both the consumption rate linked to the population and the level of economic standards make America one of the best markets for leather and leather products.
Over the years, production for America has been shifting from China to countries with lower labor costs, such as India, Vietnam, Pakistan, and island nations.
Due to low labor costs, India became one of the best producers after China by a wide margin. With the tariff changes Trump imposed on all countries, India moved a few steps ahead.
Both the knowledge and experience from the past, low labor costs, and this new 25% tariff rate, which is much lower compared to countries that could rival India, made India shine like a rising star.
During this process, producers in Europe first, and later all leather producers, realized that they needed to invest more in India, which seemed like a rising star, and made decisions in that direction.
But something unexpected happened, and with Trump’s new announcement on August 6th, it was reported that an additional 25% tariff would be applied to India’s customs duties. The reason given was the large oil import between India and Russia. A 21-day period was given for this additional tariff to take effect.
During this process, leather producers who were hesitant to make delayed decisions gave up on the shining dream of India and decided to wait again.
So where was the mistake? If we were to examine this in 3 stages;
Before the decision;
Leather producers are unable to make timely decisions despite following market demands in the long term. They have difficulty in determining the direction of their companies.
The decision-making process;
Not properly substantiating the decision they want to make, not conducting long-term market research, not developing products suitable for the target market, and being quickly affected by negative feedback are causing them to abandon their decisions.
After the decision;
Because they cannot foresee the next stages of the changing events, they are unable to stand behind the decisions they’ve implemented, taking a step back and halting their company’s medium and long-term projects.
As an example of this entire process, leather producers, upon hearing that India—expected to benefit the most from the revised global tariffs by Trump—would face a huge 25% + 25% tariff after the announcement on August 6th, chose to put their plans on hold and lost their focus.
What they missed is that many countries managed to revise their customs tariffs through agreements with President Trump. It is highly likely that the situation India will face will be the same. Either a new agreement will be reached before August 27th, or an agreement will be made after August 27th.
Let’s all observe the August 27th process together…
