The leathergoods industry produces a variety of products using primarily two major types of materials, leather and local fibers. The more familiar leathergoods product lines include bags, belts, wallets and gloves. Most firms in the sector are small to medium in size, although there are a few large companies with foreign investments who usually operate in the export processing zones.

There about a thousand registered firms in the leathergoods sector at present as per estimates of the Department of Trade and Industry (DTI). Included in this number are the major manufacturers and exporters as well as enterprises who operate as subcontractors. The industry employs an estimated 40,000 workers.

Leathergoods products cater to different market segments based on quality and price. These are sold locally and to foreign markets. The world market for leathergoods was estimated at US$ 25.22 billion in 2001. The United States is the largest buyer with Hongkong and Japan also having significant market shares. China is world’s predominant producer of leathergoods, supplying a little more than half of the world demand in 2001.

Philippine exports of leathergoods amounted to US$ 168.73 million in 2002. Sales are concentrated to the United States where slightly more than three fourths of local exports are directed. Most items exported consist of travel goods and gloves. The performance of the industry in the world market has not been good during the past years, averaging a negative growth of 8.41% annually from 1998 to 2002.

The leathergoods industry faces considerable issues in the supply of their major raw materials. Local leather supply is limited, primarily due to a lack of sufficient volume of good quality hides which can be processed into leather. Indigenous fibers used by the industry also suffer from supply problems. There are variations in the quality of the available fibers due to lack of proper gathering and post harvest handling. Climate and weather conditions can also affect the quality of materials processed.

Compared to other countries, local leathergoods producers usually have not mechanized a signficant part of their manufacturing process. There is a lack of modern technology and facilities in the industry. Workers’ skills also need upgrading especially in some key stages of operations such as skiving.

There are relatively few issues in the sector concerning the later part of the leathergoods value chain. These pertain mainly to the development of an appropriate marketing program and the related support activities. There are a variety of measures that can be implemented to strenghten the sector. Some of these are directed at finding both short and long term solutions to their raw materials problems. Access to suitable technologies and equipment is also needed as well as sustained worker training. There should also be efforts at further developing the local market. Alliances with both government and other groups who are in a position to help the industry should also be maintained.


Download the Document in PDF Format