Russia factory produces ‘Italian leather’ for domestic and export markets

Vitaly Mikhailuk
A Russian factory that opened a new production line at the end of January is trying to replace imported leather goods and squeeze foreign suppliers out of the domestic market. The plant already sends goods to the United States, Italy, India and other countries and is planning to ramp up its exports.

The plant&#39;s general director told RBTH that by 2019 the company hopes to capture 11 percent of the Russian market for natural and crust leather, squeezing out foreign suppliers who currently control 22 percent of the market.\nSource: Vitaly Mikhailuk<p>The plant&#39;s general director told RBTH that by 2019 the company hopes to capture 11 percent of the Russian market for natural and crust leather, squeezing out foreign suppliers who currently control 22 percent of the market.</p>\n
According to a company press release, part of the factory&#39;s new output is intended for export, primarily to Italy.\nSource: Vitaly Mikhailuk<p>According to a company press release, part of the factory&#39;s new output is intended for export, primarily to Italy.</p>\n
Although other production lines at the factory, which opened in 1994, also use Italian equipment, this new line will considerably increase opportunities for the plant.\nSource: Vitaly Mikhailuk<p>Although other production lines at the factory, which opened in 1994, also use Italian equipment, this new line will considerably increase opportunities for the plant.</p>\n
The new facility will allow the factory to produce leather in a wider range of colors and increase production volume by 50 percent.\nSource: Vitaly Mikhailuk<p>The new facility will allow the factory to produce leather in a wider range of colors and increase production volume by 50 percent.</p>\n
The factory already successfully supplies raw materials abroad. Exports account for 40 percent of output, according to Vyacheslav Komissarov, general director of Term, a part of the Vyazemskoye Kozhevennoye Manufacturing group.\nSource: Vitaly Mikhailuk<p>The factory already successfully supplies raw materials abroad. Exports account for 40 percent of output, according to Vyacheslav Komissarov, general director of Term, a part of the Vyazemskoye Kozhevennoye Manufacturing group.</p>\n
 
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The Vyazemsky Kozhevenny Factory in the Smolensk Region (210 km west of Moscow) launched a new production facility on Jan. 27. The factory is equipped with industrial machines from Italy and will produce leather used in furniture and footwear.

The plant's general director, Teymuraz Barkalaya, told RBTH that by 2019 the company hopes to capture 11 percent of the Russian market for natural leather and crust leather (leather that is tanned but not finished), squeezing out foreign suppliers who currently control 22 percent of the market.

Investments in the project reached 6 million euros, with two-thirds of the sum granted as a loan by the Industrial Development Fund - the state company that provides financial assistance to enterprises engaged in import substitution.

The new facility will allow the factory to produce leather in a wider range of colors and increase production volume by 50 percent. Although other production lines at the factory, which opened in 1994, also use Italian equipment, this new line will considerably increase opportunities for the plant. According to a company press release, part of the factory's new output is intended for export, primarily to Italy.

Like in Italy but cheaper

The factory already successfully supplies raw materials abroad. Exports account for 40 percent of output, according to Vyacheslav Komissarov, general director of Term, a part of the Vyazemskoye Kozhevennoye Manufacturing group. Clients include businesses in China, India, Italy and the U.S. The Vyazemsky Kozhevenny Factory plans to use the new facility to attract more foreign partners. "Foreign leather today is much more expensive than what we are able to offer," Komissarov says. "At the same time, our output, though cheaper than other countries' leather, is no worse."

Teymuraz Barkalaya says that purchasing managers for international brands are turning to the Russian factory because of its wide assortment of leathers. "In Italy, there are just two or three companies manufacturing as many different types of leather as we do. All the others turn out just one line, while we have 43." In Russia, large footwear brands such as Ralf Ringer, Faradei and Kotofey use materials produced in the factory.

To build the new facility, the Vyazemsky Kozhevenny Factory had to purchase some important equipment abroad. "We sourced the main equipment—drums and machines—from Italy and attracted Italian suppliers, for example, Italprogetti," Anastasiya Kobrova, the company's financial director, told RBTH. "Unfortunately, this kind of equipment is not made in Russia, but we were able to buy auxiliary equipment at home. The mechanical loaders that travel around the plant are Russian made."

"We don't have so many enterprises operating on such a level in this country," said Viktor Yevtukhov, Russian Deputy Minister of Industry and Trade, who attended the opening of the facility. "There is a demand for raw leather today, as well as a demand for finished products."

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