Leather industry and its future in Bangladesh

TABLE OF CONTENT

1. Introduction
1.1 Leather industry in Bangladesh
1.2 History of leather and tannery industry in bangladesh
1.3 Livestock in Bangladesh
1.4 Methodology

2. Growth and current performance
2.1 labor and management
2.2 technology
2.3 Export Potential

3 Leather Goods Manufacturing of Bangladesh
3.1. Small leather goods/Fancy leather goods
3.2. Medium leather goods
3.3 Heavy leather goods

4. Objectives

5. Overview and analysis of leather industry
5.1 PESTEL Analysis
5.2 Environment pollution and negative effect on workers health
5.3 Toxic Effects on Health
5.4 Health Problems of Tannery Workers
5.5 SWOT analysis
5.6 Limitations Faced by the Industry

6. SUMMARY OF THE FINDINGS

7. Conclusion and Recommendations
7.1 Conclusion
7.2 Recommendations References

Executive summary

The leather goods market in Bangladesh has huge potential with the increasing disposable income of the middle and upper-middle-class families. The GDP growth at over 5% over the last decade shows the strength of the economy and its resilience. The leather industry is the 2nd largest export sector in Bangladesh and leather sector’s exports cross $1billion in 2015. This report has been prepared by collecting information through websites; annual report of several tanneries, various book articles regarding the leather industry.

The entire report is the combination of four portions. Chapter one is the introduction part of the report.it describes the introduction, methodology, export performance and limitation of the report. The purpose of this report is to provide a thorough idea about the leather and leather goods industry in context to the global and Bangladesh scenario. The problem and limitation that I faced during the preparation of this report is the lack of experience for the analyzing data and maximum data collected from secondary data. Chapter two describe the Growth and current performance, labor, and management technology, and Export Potential summary of the leather oriented articles.

Chapter three mainly describe Leather Goods Manufacturing of Bangladesh. It includes worldwide leather export and import, globally available leather product, recent development in global leather industries. Chapter four includes all the objectives and Chapter five includes SWOT and PESTEL analysis and Toxic Effects on Health Health Problems of Tannery Workers Limitations Faced by the Industry problems of Bangladesh export-oriented industries. Bangladesh Exports of leather goods increased from USD 765.03 million in 2011-2012 to USD 1130.51million in 2014-2015 amid high political turmoil, natural disasters, and global recession in the recent past.

The leather goods market in Bangladesh has huge potential with the increasing disposable income of the middle and upper-middle-class families. The GDP growth at over 5% over the last decade shows the strength of the economy and its resilience. Strong export growth despite the global recession shows the competitive advantage of the entire industry, thanks to mostly the availability of the superior quality raw materials and cheap labor.

1. INTRODUCTION

The leather manufacturing procedure is mainly divided into three stages: preliminary stages, tanning, and crusting. A wide range of leather items experience these procedures, and further sub-processes are required for surface coating, which might be added to the successions. It is, for the most part, confined to group preparing, but in terms of surface coating, the tanning procedure can be continuous. The operation flow needs to take after the [preliminary ^ tanning ^ crusting ^ surface coating sub-process] arrange without deviation, however, a portion of the sub-procedures can be precluded relying upon the variety of the product. (Sharphouse, H. John). Animals hides and skins are preserved by drying, salting, or chilling so that raw hides and skins will achieve leather tanneries in an acceptable condition. The utilization of naturally persistent toxics for the preservation of raw hide up and skins is to be avoided. In the tanning procedure, animal hides and skins are dealt with to remove hair and unstructured proteins and fats, leaving an essentially pure collagen network. The hides are then preserved by impregnation with tanning operators. Leather production generally includes three particular stages: preparation (in the beam house); tanning (in the tanning yard); and finally finishing with, including dying and surface treatment. A wide range of procedures and chemicals, including chrome salts, is used as a part of the tanning and finishing procedures.

The leather and its related downstream businesses can claim to be the world's biggest modern business sector by looking at its products. in leather business, the raw material is a result of the meat business. Hides and skins and their downstream items are one of the major resource of foreign remittance and compare well enough with other rural wares ( agricultural products) and, also with any internationally exported products. In Bangladesh, tanneries and leather, leather products, and footwear producers are putting on war paint to fight for more supplies in the international markets (Sarker, 2000). The hides, skins and leather industry is one of the key agricultural sub sectors with a high potential towards product advancement that tends to pertinent issues of financial importance in society and positively impacts on local development,creation of wealth and business.

1.1 Leather Industry in Bangladesh

There is extraordinary potential for the leather business in Bangladesh to become one of the nation's major foreign earners, After readymade garments (RMG). This leather industry is playing an imperative part in our national economy, gaining us the tremendous amount of foreign remittance. Most of the leather goods and footwear produced here are mainly export-oriented.

According to the Export Promotion Bureau (EPB), “leather exports totaled USD 116.73 million in the last fiscal year (July 1, 2016-June 30, 2017); the amount was USD 92.50 million the previous year”.

To modernize this leather industry and also to make it a good alternative to the RMG segment, the authorities adopted the model to move the oldest leather plants from the capital's Hazaribagh area to Savar in 2003 and began distributing plots to factory owners in 2009. Another good news is that 'green factory' idea in the footwear business has also been started in Bangladesh.

As indicated by Bangladesh Tanners Association, “the nation produces 220 million square feet (around 20 million square meters) of each year, 64.82 percent of which is leather, 2.25 percent buffalo hide and 1.2 percent sheepskin. More than half of it is procured from animals sacrificed during the Eid-ul-Azha festival. Another study says in regards to 16.5 million pieces of hides are collected every year in this country.

About the historical background of our leather industry, Mohiuddin Ahmed, Chairman, Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association, said that: “The leather industry was started in Narayanganj by famous entrepreneur Ranada Prasad Shaha before the Second World War. After 20 years, it was moved to Hazaribagh from Narayanganj in 1960. By the order of the High Court, and with help of Bangladesh Small and Cottage Industries Corporation (BSCIC), it was relocated from Hazaribagh to Hemayetpur in Savar on about 200 acres of land. Our local investors invested about Tk 250 crore (Tk 2.5 billion) to shift their tanneries. It caused a short-term gap. In that time, our foreign buyers went away from our country to our neighboring countries. Now, it is our main duty to get them back as soon as possible.”

Mohiuddin Ahmed Ahmed shared his plan about leather exports in this sector and said that "Our present target is to ensure USD 5 billion exports by 2021 for our 50th year of independence. If we are successful, about 2 million people will be employed in this sector. For this, the government has to attract new entrepreneurs and investors in this sector. Of course, there are some limitations as people are choosing plastic or artificial leather products now. But the demand for leather goods in our country is increasing day by day. One survey says that about 20 percent of our population is buying shoes worth Tk 4,000 every year. So, there is also a great possibility in the local market. The biggest markets for Bangladeshi leather and leather goods are

Italy, England, Spain, France, Germany, Poland, China, Japan, USA, and Canada. We export mainly men’s shoe to these countries," about exports in this division.

Skill development and good use of technology are important to increase productivity and growth in this sector.. To ensure that, some training and academic institutions have been set up to set up talented working power for this area. Among those, the Center of Excellence for Leather Skill Bangladesh Limited (COEL) is a creatively active Industry of Skills Council (ISC) of leather, leather merchandise, and footwear sector.

About its activities and training courses, Imran Nazmul, manage (operation) of COEL, stated that: "COEL was set up on December 22, 2009 to meet the skill needs and the specialized help of the leather sector. Since then, COEL has strived to become a center of excellence to provide a one-stop solution for the leather industry, in terms of training, operational excellence, productivity improvement, and ancillary services. At present, COEL, in collaboration with the industry, imparts technical and soft skills training to create skilled manpower. It operates in a manner which reflects the needs of its industry partners, meets development goals, and at the same time, contributes towards national agenda. By providing skill solutions and training, COEL assists the leather sector to achieve sustainability. It also promotes decent working environment through social compliance and occupational health and safety (OHS) in the workplace. In the past few years of its operation, COEL trained approximately 15,000 machine operators in sewing, cutting and lasting operations, and placed almost 98 percent of them in jobs with various factories. COEL also provides training to almost 4,500 mid-level managers in several sectors. "

About the training modules of COEL, Imran Nazmul said that: "COEL has its own training center at Gazipur with a space equivalent to 12,000 square feet (1,115 sq m). It has a training floor which contains flatbed sewing machines, post-bed sewing machines, and skiving machines. It has six well-equipped training rooms, which have the capacity of accommodating 150 persons at a time. "It has machine support office, framework for planning manual and CAD-CAM (PC helped outline and PC supported manufacturing) for footwear measurement and also for training" "COEL has an aptitude pool of mentors, BTEB (Bangladesh Technical Education Board) ensured assessors, affirmed lead inspectors, and six completely outfitted preparing rooms with full set-up of classroom preparing, sewing machine operation preparing, design making and CAD (PC helped to outline) preparing, machine support preparing and programmable rationale control (PLC) machine for preparing. COEL likewise has prepared in-house firefighting, save and catastrophe administration group with firefighting hardware," Imran Nazmul concluded.

Institute of Leather Engineering and Technology (ILET) of University of Dhaka is the main specialized instructive institution in Bangladesh solely devoted to the leather industry. It offers four-year undergraduate courses in leather engineering, footwear engineering, and leather products engineering.

Aftab Ali Shaikh, director of ILET, told this reporter: “ILET admits 150 students every year who are equally divided into three streams. The future status of the students of this institute is classified into three categories _ 10 percent of the students will go abroad for higher degrees, 60 percent will be employed at different local and multinational leather, footwear and leather product factories, like Youngone, Picard, Timberland, Pauma, Decathlon, Nike, ABC Mart, Bata, Apex and others, as quality control officer, technical officer, research officer, product development officer, production manager, merchandiser, factory manager and so on, while the rest (30 percent) may go for government and other jobs, like working at leather research institutes, international testing laboratories (SGS, Bureau Varitus, ITS), and local and international NGOs.” “The government has declared the leather industry as a thrust sector, with considerable growth, investment and export-earning potential. Prime Minister Sheikh Hasina announced leather and leather products as ‘products of the year’ in January 2017. Currently, Bangladesh produces and exports quality bovine (buffalo and cow), ovine (sheep) and caprine (goat) leathers, which have an international reputation as fine-textured hides and skins. The seventh five-year plan (2016-20) of the Government of Bangladesh is especially focused on leather, leather goods, and footwear as a highly potential export sector after readymade garments. It is now growing at a healthy pace and the growth rate is expected to accelerate with new factories coming into operation, and growing interest of foreign investors in the footwear sector. "On the contrary, Bangladesh Bureau of Statistics figures (2016) demonstrate that the local footwear market is around USD 2 billion."There are more than 3,500 local and more than 110 export market oriented shoemaking units supported by more than 250 tanneries, according to Bangladesh Investment Development

Authority_ the apex national body facilitating investments,” Aftab Ali Shaikh said regarding the contribution on our national economy.

About employment opportunities in this sector, the ILET director stated: "The leather business involves a position of noticeable quality in the economy in perspective of its fantastic potential for work and development of exports. The sufficient number of properly gifted individuals is essential to tap the capability of the whole leather esteem chain, notwithstanding expanded interest in innovation and showcasing. As a matter of fact, the leather part is one of only a handful couple of areas that assumes an imperative part of the export enhancement activity of Bangladesh and offers high business opportunity."

"Up to this point, there was the non appearance of present-day innovation in tanneries, since they were set up a prolonged stretch of time prior. Be that as it may, the recently settled footwear and leather merchandise industrial facilities utilize some most recent advancements, similar to CAD (PC helped plan) and CAM (PC supported make), CIM (PC incorporated produce). Subsequently, quick intercession is required to present current tannery handling innovation, especially in regard to cleaner and asset proficient creation, concoction and strong waste administration, ETP (emanating treatment plants) operation, and general operational administration to take care of the worldwide demand. Propelled leather preparing procedures like CIM, lean assembling, social and ecological directions, both nearby and worldwide, word related wellbeing and security, change of profitability and eco--friendly leather processing must be ensured,” the director added.

1.2 History of leather And Tannery industry in bangladesh

Leather processing is an old assembling sub-segment in Bangladesh with a long legacy of more than six decades. Accessibility of indigenous raw material (hides up and skins) encouraged the setting up of the business in the mid-1940s in the then East Bengal. During Pakistan period (1947-1971), the industry was commanded by non-Bengali vagrants from India, who had the learning and the know-how of leather preparing industry. Around then, leather processing was limited to the production of wet blue leather (semi-processed tanned leather) and the non-Bengali dealers exported a large part of the produce to West Pakistan for additionally preparing and generation of leather merchandise. A couple of little tanning units was owned by Bengali businessman who processed leather predominantly for the local market.

After the independence of Bangladesh, the administration assumed control over the tannery industry relinquished by the withdrawing non-Bengali business entrepreneurs but had limited success in working them in the public sector. Export of processed leather composed completely of wet blue leather till 1980-81. After 1981, of policy support measures aimed for raising the level of value addition in the industry provided the incentive for new private interest in the leather industry. The prohibition on the export of wet blue leather in June 1990 prompted the setting up of modern leather tanning units for the production of outside leather (tanned leather after further processing of wet blue leather) and finish leather and this was followed by new investment in leather products industry, especially leather footwear.

However, till 2004 the leather industry involves just a humble position in Bangladesh economy was below its actual potential. Along these lines, in 2001-02, esteem expansion in leather endeavors with at least 10 specialists added up to Tk. 8,737 million ($152 million), which was around 3 percent of assembling esteem included that size gathering of businesses. Leather footwear represented 28% of the fair profit from leather and leather items in 2007-08, while the offer of leather and other leather items were 68% and 4% separately. Hence, despite its little size, leather industry in Bangladesh appears to have experienced the huge change amid the previous two decades from a low-esteem option tanning action to a maker of leather footwear and leather merchandise alongside high esteem included outside layer and completed leather.

By 2011-2012, the contribution of the leather industry to the Bangladesh economy was More thamUS$500 million, representing 3% to 4% of nation's export. Recent export trends demonstrate that the footwear sector(value added stock), is becoming the fastest. The figure demonstrates that performance with regard to footwear is increasing considerably. Additionally, progress in such manner is required in the years to come. As of now, there are more than 30 automated footwear organizations in the country, most produce leather footwear for the worldwide export. A large number of semi-mechanized and, non-automated footwear units are also operating in the domestic market. Somewhere near about 15 or 20 companies produce high- quality leather products which are consistently exported in good demand. Export performance can be foreseen to increment in the following five years with no less than 12-15% growth in turnover for each annulus. In the following years, the current footwear factories are probably going to exports shoes. The new capacity [expanded and new factories] that will go ahead stream from late 2017 will give increased growth. The export processing Zones (all through Bangladesh) at present have the more than 20 shoe and leather products industrial facilities and there are at least several large factories under construction.

1.3 Livestock In Bangladesh

In Bangladesh livestock has a fairly huge population to support a solid and developing tanning industry. The segment proportion is dairy animals (Cow) hides account for 56% of all the production, goat skins for 30% and buffalo and others make up the rest. At present yield of leather in Bangladesh is roughly 200 million square ft yearly. Aside from bovine hides, buffalo, goat, and sheep; a great amount of kangaroo hides is imported from Australia and completed in Bangladesh for making high-quality shoes to export overseas. Most of the shoes are made from that kangaroo leather for generally trade to Japan. Some ostrich leather is also imported from overseas (Australia, China) for production of high class and high-quality bags and wallets for re­traded to those countries. According to The Global Segment of leather Business “The global markets for Bangladesh regarding leather and tanning industry is up roaring, since the freedom of the nation in 1971. Later then, during 2003, BELA (Bangladesh Environmental Lawyers Association) has asked for a lawsuit from the Supreme Court with respect to relocating of leather tannery industry at Hazaribagh, and situating at the environmental friendly zone. The lawsuit additionally says about reusing the huge amounts of tannery disposals, (Writ Petition no. 891 of 1994) from now on, making a tannery reusing industry at the area of the new leather and tannery zone, which was, later on, moved to Savar region. This has assumed a positive role, for the overseas investors to invest more into this leather industry, particularly Japan and Italy, to observe the new zones, and work close by the current leather and tannery industry. While Bangladesh is expanding its leather market in Italy, it holds a strong possibility of entering the EU (European Union), generally moving the countries trade coalitions, giving it a positive start to the role and to dominate the leather market near in future years. Technological advancement: Chrome-tanned leather has a tendency to be softer and more flexible than vegetable-tanned leather, has higher warm stability, is exceptionally steady in water and takes less time to make than vegetable-tanned leather. All leather produced using lighter-weight dairy cattle hides and from the skin of sheep, goats, and pigs are chrome tanned. The initial steps of the procedure (dousing, fleshing, liming/dehairing, deliming, bating, and pickling)

1.4 Methodology

The report has been prepared based on data collected from secondary sources and tertiary sources and have been cited where appropriate. It was not possible to rely on primary sources as obtaining data from this source requires a lot of trouble and selected authority permission. The secondary information came mainly from websites; Bangladesh Bureau of Statistics, Bangladesh Bank, Ministry of Finance and the Ministry of Industries of the Government of Bangladesh, the annual report of several tanneries, various book articles regarding the leather industry, various brochures published by the company.

2. Growth and Current Performance

The cheap labor and domestic raw materials promoting the 2nd largest export trade division of Bangladesh with the total amount of $1.29 billion USD. After RMG sector, Currently, Leather Goods & Footwear industry is one of the largest developing sector of Bangladesh. Bangladesh is set to rise as the next manufacturing hub for the worldwide leather industry. The cheap labor and domestic raw materials are elevating top makers to relocate their factories in the country. Fortunately the various number of foreign investors, as well as foreign addition purchasers, buyers have already shown interest in Bangladesh's leather and footwear sector.

Recently, a new opportunity has opened up to additionally broaden the range of Bangladesh's export base by including footwear and other leather products in the list of exports, especially to the European Union (EU) market.

Additionally, the country already has been trading finished leather and various types of leather items to the abroad markets. These products also enjoyed considerable demand due to their high- quality service. The fundamental purpose behind this was the natural advantage of leather that Bangladesh produces. In spite of the high quality of local animal hides both in raw and finished form, Bangladesh was still trailing behind Vietnam and China in the export of footwear and other leather products in the European and other overseas markets.

At present, Japan and Germany are the biggest markets for Bangladeshi leather goods. On the other hand, US buyers are progressively showing interest in sourcing from Bangladesh. Bangladesh could have a billion-dollar leather goods export sector by 2013, claim local shoemakers based on both the current development in shipments and the increased production capacity in factories under development. If their assessment is correct, within three-year of time the level of exports can expand five-fold from the $205 million worth of shoes that were exported in the last fiscal year that ended in June 2010.

As EU information at the function, the leather sector earned $110.07 US million from the leather products during the first half (July-December) of the last fiscal year 2014-15. The export earnings from this area were increased by 60.68% to $176.86 million during the first half of the fiscal year 2015-16.

BANGLADESH’S EXPOT OF LEATHER AND LEATHER PRODUCTION

(Value in Million US $)

Abbildung in dieser Leseprobe nicht enthalten

Source Export promotion Bureau

Ashraf Leather goods & Footwear owner Md. Ashraf Uddin said that "Bangladesh has great opportunity to prosper in leather industry area inside in Bangladesh" He further added that Bangladesh is the Muslim nation so that in raw materials dairy animals ( Cow, Buffalo) skin is extremely common in the domestic market and cheap labor also accessible in Bangladesh. So production and manufacture of finished leather products very cheap of cost.

Pioneers of the Leather Goods and Footwear Manufacturer and Exporters Association of Bangladesh (LFMEAB)said the Bangladesh leather goods export would be multiplied if the government gives support and necessary cooperation and the present political circumstance stays sound.

Bangladesh Paduka Prostutkarok Somiti (BPPS) representing members of all the bunch in Bangladesh in the leather demonstrate sector. This is the biggest and oldest footwear bunch consisting of progressively the 450 MSMEs with close around 3,00,000 workers serving the local market and substituting imports through best practices to procedure high-quality leather goods.

The BPPS Common Facility Center, subsidized by the European Union under its Bangladesh INSPIRED project, will give essential training to all the unskilled labor of this sector. Also, the newly established center mainly will be a one-stop service point for the exporters of leather products.

2.1 Labor and Management

In a survey data shows that a total number of 18059 workers are directly working with the leather sector firms/units having more than 15 working force. Of them, around 60% are highly skilled (having work experience of over 3 years), around 21% are semi-skilled (having work experience of 1-3 years), around 15% are on beginner level (having a background of under 1 year) and under 4% are experts. The greater part of the leather sector labor/workers (around 80%) are full-time workers, and the majority of them have a place with highly skilled workers' classification. A huge number of worker around 18% of all the labor are occasional workers. Of the total workers, around 59% is employed in the leather processing units, 37% in the footwear producing units, and remaining 4% are in leather products manufacturing firms. Among all the workers around 73% is male. Around 97% of the total female workers are full-time workers; however, around 28% of the male workers are either occasional or part-time workers.

Center for Excellence in Leather Skill Bangladesh Ltd. (COEL) is supporting nonprofit training association. their main focus is to develop lobar skills with various training. Md. Imran Nazmul Assistant manager of Business Development said that "We have the shortness of 80000 qualified labor in Bangladesh leather industry, however last year we supply near about 13000 talented labor. According to COEL last year Bangladesh export leather and leather goods almost $1.29 billion. If everything goes well with our planning the export of leather goods will reach $5 billion within next 5 years. Currently, leather industry is holding the 2nd position exporting after articles of clothing. He additionally included that there are 2500 running factories in Bangladesh and 152 are 100% export oriented factory.

2.2 Technology

One observes wide inter-firm variations of technology levels in the leather processing and finishing sub sectors, ranging from primitive to highly sophisticated processing. The cottage sector producing wet-blue and also, the leather plants producing finished leather for the local market (local finish leather) are found to use hand-operated techniques extensively, e.g. sun­drying. hand-coating and hand-spraying. On the other hand, the medium- and large-scale plants which number around 30 are found to use sophisticated machinery and equipment in many operations such as shaving, splitting, spraying and measuring, the machinery having been imported from some famous European manufacturers. Both mechanical and hydraulic machinery and equipment are found in operations such as fleshing, saying. and shaving. The use of the hydraulic press is a common feature in the finishing plants; some have even installed roto-press, a sophisticated piece of machinery. In staking. the modern vibratory operation is now replacing the old jaw-type system. Italy, West Germany Czechoslovakia, and England are leading European sources of machinery and equipment, while France is trailing behind. India and local sources are found dominant in operations demanding less sophisticated machinery and equipment. Locally made wooden drums are almost invariably used as this item is obtained at one-third the imported cost. In recent years, two or three local leather machinery firms have been producing toggle driers of the ordinary type, which the leather manufacturers have found satisfactory. The leather manufacturers at the medium- and large scale level are found to be reasonably well-acquainted with the technology. This is due to a Number of factors.Firstly, they are frequently in touch with foreign customers and many travels abroad and visit international leather fairs including Semaine du Cuir in Paris and the Hong Kong Leather Fair. Secondly, the' leather manufacturers in Bangladesh are frequently visited by the representatives of some leading leather machinery manufacturers. Thirdly, about a dozen of the entrepreneurs have been in business for over 20 years. Fourthly, the size of the industry is reasonably big with over 200 establishments, including three dozen or so large or medium-scale plants. Fifthly, the College of Leather Technology, being centrally located, has turned out to be very handy for obtaining information as well as for providing expertise through the regular supply of trained leather technologists. Finally, a number of simple types of machinery like paddles, wooden drums, and drying equipment have been locally made for forty years, often by the leather manufacturers themselves, and some form of technological capability, though at a low level, has already been achieved.

2.3 Export Potential

As much as 85 percent of the output from the leather manufacturing sector is presently exported. Moreover, export comprises the top grades of output, the local market being supplied with fifth and sixth grades, or even lower quality of finished upper leather. There is high international demand particularly for Bangladesh glace-kid produced from goatskins, which is famous for its grain quality. Wet-blue and crust from goatskins and cowhides are also in high international demand.Indeed, most of the leather exporters from Bangladesh are found to have established a good relationship with importers from Italy, West Germany, the USA and a number of other developed countries.all the data below has been prepared to give an idea of net export earnings over production cost in wet-blue, crust and finished leather. No account has been taken, of export duty on wet-blue, nor of the various export, incentives offered. It is, however, apparent that large marginal benefit exists in processing raw -hides and skins into crust, the initial wet-blue stage showing negative net benefit. It is, of course, the ' manufacture of finished leather from raw hides and skins, which is offering the highest single benefit per sq. ft. in the sub-sector. It is affirmed that the cost of neighborhood crude stows away and skins and furthermore of wet-blue has been kept misleadingly high, well over the global value, as a result of coordinated endeavors by some deceitful western merchants who might want to execute the developing crus and completed calfskin part of Bangladesh by ceasing the proposed restriction on wet-blue fare.

3. Leather Goods Manufacturing of Bangladesh

There is a wide variety of leather goods produced in Bangladesh. The main groups are below:

The leather products of Bangladesh (non-footwear) include the following:

3.1: Small Leather products

Small leather merchandise or local leather products which are normally conveyed in pocket and purses, incorporates totes, wallets, key case, international ID case, note case, card case, cigarette case what's more stogie case, matchbox case along these lines others. A large portion of those items is made without any inside solidifying of fortification. These leather products oblige leather having the thickness of around 0.5 mm to 1.0014 mm. distinctive sorts of conceals and skins which are typically utilized as a part of making small cowhide products are, bovine softy, goat coat, sheep napa, calfskin and so forth.

3.2: Medium Leather Goods

It incorporates purses, shopping packs, shoulder sacks, report cases, joins cases et cetera. These packs are produced using calf, goat, sheep and colorful skins and stow away completed with the scope of colors which produces a decent appearance and look complexity and innovation. Leather, which has a thickness of 0.8 mm to 1.2 mm, is utilized as a part of the making of medium cowhide merchandise. Bovine softy, dry processed, cow napa, sheep napa, goat and buff softy cowhide are broadly utilized as a part of the making of medium leather merchandise.

3.3: Heavy Leather Goods

These are made by and large from cow and bison shrouds, which are solid and strong. The shrouds always have different surface grain examples and size reaches from 20 to 30 sq. ft. is a full stowaway. Cow and buff cover-up of thickness 1 to 1.5 mm is utilized for making substantial cowhide products. The sort of cowhide products for making substantial cowhide products is box sides, Katti Leather, Split Leather, Cow Upper, Upholstery, Buff Softy, and so forth.

MAJOR IMPORTING COUNTERIES OF BANGLADESHI LEATHER AND LEATHER PRODUCTS & FOOTWEAR

The European Union (EU) is the biggest destination for footwear export accounting 60% share followed by Japan with 30%

(Value in million US$)

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Source: Export promotion Bureau

BANGLADESH IMPORT OF BOVINE & OVINE LEATHER

Category Quantity in 2011

Imports of leather from bovine animals 5.0 million square feet Imports of leather from sheep and goats 10.0 million square feet Total 15.00 million square feet

Source: world statistical Compendium for raw hides and skins, leather and leather footwear 1993-2012,FAQ

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Flow Chart of leather processing operations

4.Objectives:

1. Critical analysis about the impact of leather and tannery industry in Bangladesh
2. The development, effects and modernization of this industry in Bangladesh.
3. The trending analysis and technological advancement of the industry within the border of Bangladesh.
4. Government support and foreign investment

5. Overview and analysis of leather industry

5.1 PESTEL Analysis

Stakeholders need in-depth insight into the industry they delve into. A PESTEL analysis is a framework or tool used by businesses to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis. PESTEL stands for: P - Political, E - Economical, S - Social, T - Technological, E - Environmental, L - Legal.

Political

1. The political environment is highly volatile with frequent strikes and clashes between the major political crises.
2. The government policies are highly favorable with the sector being declared a “Thrust” sector, whereby enjoying 7% interest rate for loans, bonded warehouse facility, 15% cash incentives, Generalized System of Preference (GSP) facilities etc.
3. Trade policies fixed by the government has always been favorable to businesses though bureaucratic red tape has always hindered the smooth operations of business.
4. EPZs provide excellent environment throughout for smooth operations of the business.
5. The government has set highly attractive incentives for the foreign investors to lure in FDI, including 100% foreign ownership, 100% profit transfer to country of origin and that too without prior permission from the central bank.

Economical

1. The economy has been growing at over 5 percent over the last decade and is set to continue this trend for years. This has increased the number of middle to high-income group in the economy who can afford leather goods with higher than average disposable
2. Interest rates have been set at the minimum possible level by the government whereby ensuring the cheap source of capital for the business.
3. Exchange rates are heavily monitored by the central bank and are always favorable to the exporters. However, the relatively devalued local currency makes imports of chemicals used in the processing of rawhide and machinery used in the production process expensive.
4. While the economy sees the high level of food inflation, the overall inflation level has been quite consistent over the last few years at less than 8 percent 26 showing a downward trend.

Social

1. Social factors like the acceptability of leather goods by the vast majority of the population helps the sector gain popularity.
2. The trend of the present generation to lean towards fashionable and expensive products like leather belts, side bags, jackets etc. increased the prospect of the sector.

Technological

1. The local companies are lacking behind major international brands in terms of innovation and quality.
2. The small firms in the local market are overshadowed by the bigwigs producing in large scale allowing for them to be able to afford expensive technologies.

Environmental

1. The long awaiting shift of the tanneries to Savar from Hazaribagh is yet to see any light of day. When done, it will mean expensive relocation for the tanneries, and even more burdensome costs to the small businesses who will not be allocated any land in the selected area.
2. The ETPs in Savar will allow increasing the value and acceptability of the local leather whereby allowing for premium pricing and entry into the previously untapped market due to restrictions.

Legal

1. Health and safety rules in Bangladesh are barely monitored and controlled.

2. Labor rate is the lowest in the world and there seems to be no interest in the government to push the bar higher in the foreseeable future. There are no major restrictive laws in place that hamper the smooth operations of the companies.

5.2 Environment pollution and negative effect on workers health

Industrial pollution is a growing concern of the present days. Effluents, mostly untreated, are primarily discharged into rivers and streams. Since the water bodies are used for drinking, washing, domestic purposes as well as irrigation and fisheries, pollution of the natural water bodies from industrial discharges, is having the most damaging effect on the environment. From the previous decades, Bangladesh has been confronting the issue of extreme environmental pollution of Buriganga and other connected rivers, around the capital city Dhaka. However, over the years, the water of Buriganga has encountered extreme deterioration cause of Hazaribagh tannery industry development.

The Buriganga river in Bangladesh is subject to severe pollution and considered as one of the worst polluted rivers in the world. Especially, the development of tannery industry at Hazaribagh that has pulled the Bangladesh economy is causing pollution and the disruption of ecosystem to the watershed environment. As a result, the environmental problems are getting worse. According to the Export Promotion Bureau (EPB) of Bangladesh, export earning from leather sector was US$ 401.64 million in 2009-2010, which was a major foreign exchange earner in Bangladesh economy. But Hazaribagh tannery city is discharging its hazardous effluents everyday directly to the Buriganga without any treatment. Ministry of Environment (MoE) reports that the tanneries collectively dump 22,000 liters of toxic waste including cancer-causing chromium into the Buriganga every day.

The development of tannery industries at Hazaribagh is having the most damaging effect on the Buriganga watershed environment, which indirectly causes the serious health problems and the socio-economic consequences. It is speculating that a vast number of people will die in this area in near future. But the economy is being given priority to environment, which is very common in any developing country, like Bangladesh. Failure to improve the wastewater treatment and management systems, lack of development and effective implementation design of policies for the maintenance and regeneration of the environment and inadequate sewerage and infrastructure facilities are leading to worsening of the situation. In this situation, the Government of Bangladesh (GOB) is coming up with a variety of environmental regeneration and conservation measures. There are public groups working for the environmental conservation and technology is being developed for the water quality improvement. However, neither the activity and measure for environmental conservation and regeneration are propagating easily nor the improvement of the watershed environment is moving forward at all. Especially, the delay in the development of pollution control measures by the tannery industry is remarkable. As the apparel industry and the leather product industry is being shifted from China to Bangladesh for its cheap labor cost, further pollution of the watershed environment is assumed. Hence, the improvement of the water quality of Buriganga and the design and development of policy and measures for the regeneration and conservation of the watershed environment are the nation’s urgent need.

5.3 Toxic Effects on Health

The most contamination creating businesses of Bangladesh are tanning ventures. It is considered as ‘dirty industry' everywhere throughout the world because of its condition polluting capacity. Among all of the polluters are many tanneries on the bank of the Buriganga. An environment and water management expert of World Bank, Khawaja Minnatullah said that “the toxins have eaten up all oxygen in the Buriganga and we call it biologically dead and it resembles a septic tank. There is no fish or aquatic life in this river separated from zero oxygen survival sort of life forms. Human, living close to the rivers, utilize the water since they are unaware of the wellbeing dangers and furthermore having no other option”.

Hazaribagh tanneries release 21,600 m2 of liquid wastes each day. These dangerous wastes including chromium, lead, sulfur, ammonium, salt and different materials, are extremely polluting the capital city and the Buriganga river. Among several natural and inorganic wastes released from tanneries, substantial metals are the most concerning factor and among the dangerous overwhelming metals, chromium is the most noteworthy. Poisonous with overwhelming metal like chromium, utilized as a part of Hazaribagh tanneries are released directly in the Buriganga, may cause genetic disorder, birth deformities, and cancer if it gets in the nourishment cycle. Chromium can act specifically at the site of contact or be retained into or through human tissue. Unfavorably susceptible contact dermatitis is the most noticeable response to the interaction of chromium with skin.

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