Remove the levy cap to increase the performance of SMEs in the leather industry
This levy helps to increase the competitiveness of SMEs in the leather industry.
The industrial sector pays 60% of it with significant contributions from the major groups, with the other 40% coming from imports.
The funds collected are mainly used by SMEs to develop innovation and R&D programmes and improve their competitiveness.
This levy is used to:
- Adapt industrial expertise to ensure better quality skins, increase industrial performance, improve the design of finished products, ensure sustainable development, etc.
- Maintain, develop and transfer knowledge, carry out studies for the federations, and develop initial and vocational training programmes.
- Support the promotion of the leather industry by providing financial assistance to businesses to enable them to take part in national and international trade fairs.
Since 2012, this levy has been capped at 12.5 million euros. Any excess (€828,000 in 2014 and nearly 2 million euros in 2015) is paid to the French government. The cap was lowered to 12.25 million euros in France’s budget bill for 2016 (PLF 2016).
Capping this levy greatly penalises exports, particularly as it limits the ability of SMEs to participate in trade fairs abroad.
This situation limits the resources allocated to collective actions carried out for the benefit of SMEs and based on the four “I’s”: International, Investment, Innovation, Industry.
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The Conseil National du Cuir calls on the authorities to remove the levy cap to improve the performance of SMEs.
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Encourage business creation
The industry is made up of 8,000 businesses. The most innovative of these are growing thanks to breakthroughs made in R&D: improvement in the quality of skins, of production, new industrial processes, etc. Other SMEs are being created based on new, highly creative manufacturing concepts in line with trends.
The Conseil National du Cuir and the Fédération Française de la Chaussure (FFC - French Footwear Federation), with the support of CTC, joined forces to create the ‘ADC Au-Delà du Cuir’ association.
ADC’s aim is to encourage the emergence of new entrepreneurs and promote French creativity and craftsmanship. ADC supports the development of young labels chosen for the innovative nature of their projects in the fields of footwear, leather goods, luggage and leather objects, by providing training programmes, coaching and financial assistance. ADC puts these new companies in contact with footwear and leather goods production sites all over France.
A guarantee fund financed at 50% by the Conseil National du Cuir and at 50% by the Fédération Française de la Chaussure has been created. This fund enables young entrepreneurs to accelerate their creative and economic growth, by facilitating their access to bank loans.
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The Conseil National du Cuir wishes to extend this support to a greater number of entrepreneurs and new business owners in the leather industry by developing the ‘ADC Au-Delà du Cuir’ programme.
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Encourage micro-business and SME succession
The industry is made up of artisans, micro-businesses and SMEs that work as subcontractors for larger companies because of their precious know-how. Gradually, these workshops and small businesses are disappearing with no one to take over their operation. As a result, companies are outsourcing their production abroad.
By being part of the industry’s value chain, these artisans, micro-businesses and SMEs help to promote France abroad.
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The Conseil National du Cuir would like to encourage SME and micro-business succession in order to secure the value chain, and to do so it is considering setting up a guarantee fund.
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Support the fight against the counterfeiting of major brands to protect the Made in France label
Counterfeiting poses a considerable threat to the ‘Made in France’ label, particularly in the leather goods and footwear sectors. The leading luxury labels invest significant amounts to protect their designs and models.
The Conseil National du Cuir encourages and supports effective actions on the part of French customs authorities and the DGCCRF anti-fraud teams. It calls for greater monitoring and control in all European countries.
In France, counterfeiters are very present online but it is very difficult to prosecute them. French companies are faced with highly complex procedures such as having to draw up a notification in the language of the country where the counterfeiter is based, finding a bailiff in that country and serving papers to an address that is difficult to identify.
Canada and the USA have simple and effective procedures for dealing with counterfeiters, particularly over the internet, and they are successful at blocking sales.
French companies that manufacture leather products also face unfair competition due to the non-application of Decree n° 2010-29 of 8 January 2010 relating to products which are made in Europe or transit via a European country. This decree prohibits the use of the word leather for any material other than that obtained from an animal skin using a tanning process or an impregnation procedure that preserves the natural form of the skin fibres. However it is currently only applied to French companies.
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The Conseil National du Cuir calls for greater monitoring and control in all European countries. It would also like legal procedures to be simplified and for action to be taken as quickly as possible to limit the sale of counterfeit products over the internet.
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Secure the leather supply of big companies in the leather industry
Some 60 tanneries, 44 of which are industrial, generate a turnover of 430 million euros and employ 1,731 people.
Thanks to the expertise of these tanneries, French leather is highly sought-after by big companies in France and abroad. France is one of the global leaders for calf leather and exotic skins (crocodile, iguana, ostrich etc.).
Big companies have taken measures to secure their supplies in order to counter the shortage of raw materials and the inflationist tendency of the price of leather. Following the same logic as for the integration of manufacturing, companies and major groups such as Weston, Hermès, Vuitton and Kering have adopted an upstream production integration strategy to secure the availability of materials and know-how by buying up certain suppliers.
Recently, Hermès acquired Tanneries du Puy.
The CNC finds that these takeovers are beneficial for the industry and its activity. Jobs are saved, training programmes are created and skills and expertise are preserved.
The CNC would like to see these tanneries continue to collaborate with all their clients. It would also like for the improvements in production and skin quality to benefit all manufacturers, large and small.
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The Conseil National du Cuir encourages tanneries to preserve their specific production methods and urges them to maintain a diverse range of clients, as proof of their independence and their success.
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Reduce the taxes and costs imposed on shopkeepers and manufacturers of leather products and change retail legislation.
The difficult economic climate has weakened the retail sector, which has registered a 6% decrease in turnover since 2012, while overheads in that same time have continued to increase. Shop rents, indexed on the ICC (Construction Cost Index), have increased by an average of nearly 15% over the last five years to reach almost 14% of turnover (all taxes included), which is the equivalent of the wage bill. The Contribution Economique Territoriale (CET) business tax has increased by 30% on average for retailers and the tax burden is constantly increasing: the tax on commercial premises, TASCOM, has doubled, and local and environmental taxes are on the rise. The Conseil National du Cuir calls for these taxes to be reduced, as they are too heavy a burden on the retail sector.
The CNC is in favour of shops opening on Sundays, particularly in areas popular with tourists. There is a lot to be gained from this, as it would result in additional business growth and the creation of many thousands of jobs (around 20,000 full-time positions). Although progress in this area is still considered to be inadequate, the new bill for growth, activity and equal economic opportunities (known as the “loi Macron”) is a step in the right direction. The Conseil National du Cuir will pay close attention to the results this new bill produces.
As labour costs are too high in France, companies manufacturing labour-intensive leather items in France which are aimed at the lower end of the market are penalised by imports, particularly from Asia.
Lowering labour costs would help to partially offset this imbalance and limit mass imports from Asian countries. The CICE (tax credit to boost competitiveness and employment) is a positive first step in meeting the expectations of our businesses.
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The Conseil National du Cuir calls on the public authorities to take into account the specific characteristics of the leather industry when drawing up new legislative measures for businesses, and to reduce taxes and social contributions in order to allow French businesses to become more competitive.
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