As Diseases Claim Herds, Leather Prices Skyrocket

The outbreaks of foot-and-mouth and mad cow diseases in Europe are inflicting pain on Los Angeles-area manufacturers and wholesalers that deal in leather, and that pain will likely hit consumers soon.

Supplies of cowhide have dwindled just as the demand for leather products is higher than ever.

“It’s horrible,” said Jerry Kohl of Brighton Accessories in the city of Industry. “You worry about the future.”

Kohl has seen the price of the leather that his company uses to fashion belts, handbags and other accessories increase by about 20 percent in the past few weeks, an expense that will probably be passed on to consumers later this year.

Since foot-and-mouth disease appeared in England and other European countries earlier this year, thousands of cows have been destroyed. The highly contagious nature of foot-and-mouth disease requires that stricken animals be destroyed and their hides cannot be saved. With only a handful of tanneries in the United States, most of the cowhides used by American manufacturers come from abroad.

After nearly two decades spent as a buyer for Macpherson Leather Co. in Los Angeles, Elmo Villena said he has never seen leather prices rise as rapidly as they have so far this year.

“The demand is so great,” he said. “Everybody is looking for hides.”

Villena claims he has seen the price of the leather he purchases for the downtown leather supplier and saddle manufacturer jump up about 75 percent since the start of the year, an increase he can’t help but worry about.

“If the price of leather goes up, the garment and every product that we make in here will go up and the consumer will decide not to buy our products,” he said.

Leather is used in everything from car seats to purses to sofas, and leather clothing has regained favor among some of the world’s best-known fashion designers.

As evidence of Americans’ growing appetite for leather goods, the $1.7 billion of leather apparel imported into the United States last year represented a 71 percent increase from the prior year, according to the U.S. Department of Commerce. The $1.2 billion in leather handbag imports marked an 18 percent increase.

And that strong demand, coupled with constrained supply, is driving up prices.

The going price of $38 to $40 per cowhide at the beginning of the year has jumped to $75 to $80 today, according to the Commerce Department.

“There is and has been an unquenchable worldwide demand for leather,” said Charlie Myers, president of Leather Industries of America Inc., a Washington, D.C.-based group that represents leather tanners and suppliers across the United States.

“We’re putting it in everything,” he said. “If the herds are being reduced to some degree by foot-and-mouth disease, and if there is a diminished eating of meat in Western markets, then there is really a shortage.”

The U.S. manufactures about $3 billion worth of leather products a year and imports another $1.4 billion, Myers said.

The retail price of a square foot of leather is going for anywhere from $10 to $20, depending on its quality and treatment, said Jim Muller, manager of Pacific Hide & Leather, a Pacific Design Center showroom that sells hides to manufacturers.

So far, Muller has not seen an increase in the cost of the leather he buys, which he attributes to the fact that Pacific Hide gets most of its hides from U.S. suppliers.

“I could be proven wrong tomorrow,” he said.

Since manufacturers purchase leather far ahead of when their products get shipped to retailers, consumers will probably not see an increase in the cost of leather goods until late summer, said Susan Lapetina, a marketing director for the American Apparel and Footwear Association, an industry group representing about 700 companies.

“You’re going to see a difference,” she said.

Hype about the leather shortage alone could lead retailers to increase prices, said one industry observer who asked not to be named.

But the HideNet Weekly Market Report, a leather industry publication, offered some signs of hope about the leather supply.

“EU slaughter has picked up measurably as the previous disease mania has begun to fade from the headlines and meat consumption increased,” the report said.

Not everyone is worried about the rising cost of leather.

Designer Jonathan Meizler, co-owner of the Melrose Avenue boutique Jon Valdi, is confident that the greater expense will not turn leather-lovers off.

“We just have to adjust our prices,” he said. “(Leather) is more of an investment piece, and they (customers) will pay.”

For Kohl and others, the increasing wholesale cost of leather is not an expense that can be passed on without consequence.

“You either buy cheaper materials or you find ways to make the products cheaper,” Kohl said.

“You’ll just give me a reason to make my things in Mexico or China,” he said. “That way, I’ll make up for the price of the leather.”