Leather and technology supply chain: analysis and perspectives for 2025 between global challenges and innovation

2024 is shaping up to be a year of considerable complexity for the Italian fashion industry and its entire value chain, including instrumental mechanics. An uncertain global macroeconomic framework, characterised by a slowdown in demand and geopolitical tensions, has imposed a significant slowdown on a sector that represents one of the excellences of Made in Italy. The analysis conducted by Assomac in its latest report offers a detailed overview of this conjuncture, outlining the critical issues but also the strategic opportunities that await companies in the coming months, with a special focus on the tannery, footwear and leather goods technology sector.

THE GENERAL CONTEXT: A WIDESPREAD CONTRACTION IN THE FASHION SUPPLY CHAIN

The entire fashion ecosystem has been affected by the weak economic environment. According to data from Federmacchine, the Italian mechano-instrumental goods sector recorded a drop in turnover of 7.4% in 2024 compared to the previous year, to EUR 52.5 billion. This drop was caused by both a decrease in exports (-4.2% to EUR 36 billion) and a collapse in deliveries on the domestic market (-13.7%), a symptom of a drastic reduction in investments in machinery by companies (-14.3%).

The user sectors, in turn, suffered a contraction. The fashion industry as a whole ended 2024 with a turnover of 96 billion euro, down 5.3%. The ‘core’ sectors of the supply chain suffered the most:

– Tannery: The sector saw its turnover fall by 4.3% and production volumes drop by 7.6%. This is the second consecutive year of decline, influenced by the weakness of the main customer sectors (fashion, furniture, automotive). Exports, although slightly down (-3%), showed uneven trends, with growth in markets such as Spain, Germany and Vietnam and declines in the USA, Portugal and the UK.

– Footwear: 2024 was a particularly difficult year for the Italian footwear industry. Assocalzaturifici reports a 9.4% drop in turnover and a 16.1% drop in production. These figures also had a severe impact on employment, with a loss of almost 2,800 employees and the closure of 195 companies (5.5% of the total).

– Leather goods: This sector also recorded a significant drop in turnover (-8.9%) and an even more marked drop in production (-22.9%), with a loss of around 2,000 jobs and the closure of 3.9% of companies. Exports are also down in this sector (-9.3%).

The widespread suffering is fuelled by the slowdown in consumption, particularly in key markets such as China, and by a change in the spending priorities of consumers, who are seeking a better balance between quality and price, even in the luxury segment.

FOCUS TECHNOLOGIES: ITALIAN MECHANICS UNDER PRESSURE

The heart of Assomac’s analysis focuses on the footwear, leather goods and tannery machinery sector, which represents the technological engine of the supply chain. In 2024, the sector generated a total turnover of around €575 million, marking a 12% drop compared to 2023.

The dynamics of exports, which are the main vocation of these companies, were mixed:

– Tannery Machinery: bucking the trend, they recorded a slight positive sign (+2.18%), driven however by specific orders and not by a structural recovery.

– Footwear and leather goods machines: They suffered a significant drop in exports of 19.76%. In particular, machines for leather goods showed a drastic -37.84%.

– Spare parts: They showed a smaller decrease (-3.98%), indicating that maintenance and service activities continue to represent a solid base.

Geographically, while strong European manufacturing markets such as France (-29.8%), Spain and Portugal slowed down, there were surprisingly positive performances in China (+35.4%), Vietnam (+142.9%), Brazil (+47.7%) and India (+33.8%). These figures, however, reflect specific dynamics of investment in local tanneries or production clusters and not a global trend reversal.

THE COMPETITIVE SCENARIO: THE UNSTOPPABLE ADVANCE OF CHINA

Despite the difficulties, Italy maintains a technological leadership position, holding 30% of global exports of machinery for the sector. However, international competition has become more aggressive. China has made an impressive leap, increasing its share of global trade from 34% to 44% in just one year.

China’s strategy is not only based on direct sales, but on an industrial policy of expansion and relocation to South East Asian countries (Vietnam, India, Indonesia), where Beijing consolidates its presence with agreements that feed local demand for machinery. As the world’s leading footwear producer, China is strengthening its role as Asia’s industrial hub, putting pressure on the competitiveness of European companies specialising in higher value-added segments.

2025 OUTLOOK: UNCERTAINTY AND THE NEED FOR A CHANGE OF GEAR

The outlook for 2025 remains cautious and uncertain. The start of the year was weak, with declining orders in both domestic and international markets. There is a lack of concrete signs of an upturn in consumption, a factor that directly affects investments in new machinery by customer supply chains.

Added to this is the lack of impact of the Transition 5.0 Plan, a measure designed to support the dual digital and ecological transition but which, due to excessive bureaucracy and high initial costs, has failed to intercept the needs of SMEs, the backbone of the Italian production fabric.

Faced with this scenario, the Assomac report highlights a number of strategic guidelines that are essential for recovery:

1. Driven Technological Innovation: The real competitive leverage lies in the adoption of advanced technologies. Artificial Intelligence for quality control and predictive analysis, collaborative robotics to automate critical phases, digital twin to simulate production processes, and traceability technologies (blockchain, RFID) are no longer options, but necessities to respond to regulations and consumers’ growing demand for transparency and sustainability.

2. Aggregation and Collaboration: The fragmentation of the production fabric, largely composed of micro and small enterprises, represents a structural weakness. It is essential to promote collaboration models such as business networks, consortia and joint ventures to share resources, access economies of scale, participate in European calls for tenders and improve international visibility.

3. Human Capital and Training: Technological transformation must be accompanied by an investment in skills. It is essential to create training paths to develop new professional figures with digital, technical and sustainability-oriented skills, encouraging generational change.

4. Targeted Industrial Policies: Companies are asking for concrete support through an Extraordinary Industrial Plan, both at national and European level. They need targeted tax incentives, export support tools and a regulatory framework that simplifies bureaucracy and promotes competitiveness, countering the advantage of countries with more favourable regulations and tax systems.

The Italian fashion technology supply chain is at a crossroads. The current crisis is not only conjunctural, but structural. Recovery will depend not only on a restart of global markets, but on the ability of the country-system and individual companies to implement a profound strategic change. The excellence of Made in Italy, based on know-how and technological leadership, is a heritage to be defended and enhanced, but to compete in the new global scenario we will need a decisive step towards collaborative innovation, digitalisation and sustainability.