Due to the Ethiopia Tannery Share Company outsourcing its management to Pittards, a British leather company, and the launch of finished and crust leather products being produced at its factory, the company has lost its European market and is now looking and moving towards the Far East.

In August 2005, Ethiopia Tannery management was handed over to Pittards, a company based in Yeovil, UK where it was founded in 1826. The Company produces high-end technical leathers for sale to manufacturers and distributors of shoes, gloves, luxury leather goods and sports equipment and is centre for research and development for the production of leathers globally.

Ethiopia Tannery is contracted to pay Pittards 250,000 dollars a year for its management responsibilities as well as two percent of its profit from royalties. The British leather company on its end offers the Ethiopia Tannery its brand name. Pittards is also negotiating with two other private companies, Dire and Wallia, to sign a project development agreement.

Approximately 80pc of Ethiopia Tannery production was exported in the form of semi-processed leather, includind pickled sheepskins, wet blue goatskins, cow crust, sheep garments, sheep gloves, and goat linings, with the remaining 20pc being sold as finished leather for shoe and garment factories.

According Alem Asfaw, general manager of Ethiopia Tannery, the current plan is to shift to providing finished leather and crust leather to both its local and international market.

But because the Tannery’s principal export buyers and distributors in Europe are competitors to Pittards, they are neither pleased with Ethiopia Tannery’s signing with the British company, nor are they happy with the finished products offered. These clients want semi-processed leather.

General Manager of Wallia Tannery Plc, Alemayehu Simegn, told Fortune that countries that want semi processed leather products often look towards countries with cheap labour for this type of leather product manufacturing.

Since Ethiopia is considered such a country, it is not looked to internationally for manufacturing finished products.

According to Alemayehu, Pittards coming into the country will have a positive impact, as it is going to encourage other international companies to come in as well.

Wallia Tannery was established 15 years ago and is a company that exports its semi processed leather products to countries in Europe and the Far East.

Alem told Fortune that the Tannery took part in the Shanghai International Trade Fair from September 5 to 7,2006 where it was able to make new contacts with companies that it hopes to supply in the future.

In 2004-2005, before signing the five-year management agreement with Pittards, Ethiopia Tannery processed two million cattle hide, three million sheepskins and 800,000 goatskins, making a profit of 183 million Br.

In 2005-2006, the Tannery processed 582,000 cattle hides, 2.66 million sheepskins, and 650 goatskins, making a profit of 174.1 million Br. There has been a 10pc decline in sales since Pittards came in.

The Ethiopia Tannery took a 16.5 million Br loan from the Industrial Development Fund (IDF) one and a half months ago, which it intends to pay back within four years; the money will go into the procurement of new machines.

The Ethiopia Tannery was established in 1976 by the Ethiopian Government under a technical cooperation agreement with the then Czechoslovak Government. It is located at Lake Koka, near Modjo,  90Km south east of Addis Ababa.

The Tannery has a facility with a capacity to process 17 million square feet of sheep and goatskins annually, and nine million square feet of cow hide.

The principal products of the tannery are cow crust, shoe uppers, bag leather, hide garments, upholstery, pickle sheep, crust sheep, sheep garment, sheep glove, wet blue goat and crust goat.

There are over 20 tanneries in Ethiopia. Ethiopia Tannery is still the biggest, resting on an area of over 220,000sqm; the Tannery’s capital is 135 million Br.

Ethiopia Tannery holds 25pc of the 75.3 million dollars made in exports received from leather products during the budget year of 2005-2006.

Ethiopia Tannery and ELICO are the largest  tanneries in the country that export finished leather goods. In the budget year of 2005-2006, ELICO made six million Birr in sales.

ELICO, whose factory is located in Awash, was established in 1997 and exports most of its products to Europe, Japan, China, Korea, South East Asia and North America.

Dire Industrial Tannery and Hafeda Tannery have each made 10 million Br in sales. Ethio-Leather Industry made sales of six million Birr during 2005-2006.