Financing a Leather and Garment Manufacturing Plant

Financing a Leather and Garment Manufacturing Plant

Financing a Leather and Garment Manufacturing Plant

Published Jul 21 


99 Articles

Leather has become a growing segment in the global economy development. In connection with garment, wood leather formed the basis of much ancient technology.

The most successful and promising industry glowing in economic development is the Leather Industry .

Skin and hides which are sourced from animals are used to generate leather. It is a valuable industry. As of today, leather-making needs a lot of studies and experience, but the old-worldly taste and mystery containing this craft still prevail. Animal skin is filtered within an inch of its life and comes out to be more adaptable, strong and water-resistant. All the efforts included in this method together comprise the process called the leather tanning.

Tanning is the last phase of the entire process. Many different types of mechanical and chemical things are implicated in this complicated procedure.

Financial Development Leather and Garment Manufacturing plant

The conglomerate of leather and garment goods market size was rated at USD 414.0 billion in 2017 and is predicted to progress at a CAGR of 5.4% in the future years. The demand for leather is mainly pushed by growing disposable revenue, enhanced living standards, shifting fashion trends, and rising domestic and worldwide tourism. Rising demand for safe, trendy, and fancy footwear along with evolving brand awareness is expected to have an optimistic impact on the leather market.

A growing number of working people and the results to rise in the extra income levels will also improve the market expansion in the years to come. In the footwear sector, sneakers sales have been growing the most due to the rising demand for the safe and trendy footwear market. So, if you are looking for starting a leather manufacturing business and need proper guidance to monitor every step in the business and if you have any kind of doubt then you should check our official book written on the topic “Leather Processing & Tanning Technology“. Which is only available on our official website. Our book includes various topics such as Tanning, Dressing and Finishing, Coloring etc.

Leather and Garment Export Volume and Export Earnings

Leather and Garment processing industry has been a significant source of export and import revenue revenue on the global economy for many decades. The export performance of the leather industry is consistent with the production performance of the industry described above. Although export earnings increased on average, they have experienced significant fluctuations over the years. Leather and leather products exports from 1999 to 2012 totaled more than $1 billion. Although this figure seems large, it becomes less striking given the century-long existence of the sector and the country’s acknowledged potential in this sector. Ethiopia’s share of the global market and of the African market is almost nonexistent.

Workforce and productivity for Financing a Leather and Garment Process industry.

Workforce and productivity for leather and garment industry is measured as production per person per day, where production is in terms of square feet in tanneries, and pairs per day in footwear. For leather garments, reliable data were unavailable. Many existing leather products manufacturers do not specialize in leather garments, and only produce them in small quantities. Data on footwear had to be disaggregated into leather and non-leather footwear (canvas, rubber, plastic). Labour productivity trends in leather footwear show that the sub-sector has remained stagnant for a very long time. As illustrates, it declined following liberalization in the early and mid-1990s and has never recovered.

Financing Structure for Leather and Garment Processing Plant

The global market for leather and leather products was $60 billion in 2011 (FAO 2011). Growth of the leather products sub-sector is determined by the global economic situation and consumer demand. On the other hand, the leather sub-sector’s growth is determined by demand from the leather.

The main source of hides and skins for China, Europe, and the Far East has been the US. The US exports some 750,000 tons of bovine hides and skins per year, while China is the biggest importer of bovine hides and skins Brazil’s annual domestic consumption of hides and skins stood at 12 million in 2011. Brazil has 213 million head of cattle (14 per cent share of the world’s cattle population), an increase of 23 per cent in ten years. This remarkable growth is attributed to Brazilian policy and the Brazilian leather promotion agency’s initiatives to improve sustainability, quality, innovation, and creativity.

Investment Promotion Instruments for Financing a Leather and Garment Processing Plant

An investment incentives for a leather and garment industry were designed to attract any type of new financing, a practice that continued until 2012. The incentives were neither designed to monitor reciprocity, nor to attract the best industrial performers, who would advance Ethiopia’s technological and marketing base.

The total number of investment certificates issued between 1992 and 2012 was 220. However, of those registered between 2003 and 2007, only 12 per cent became operational, 7 per cent were at the implementation phase, while 81 per cent were still in the pre-implementation phase. Investment increased gradually after 2002, peaking after 2007. Between 1992 and 2001, more than 86 per cent of investors were domestic, and they were primarily interested in tanneries. The primary reason for investing in this sub-sector was its familiarity in the global market.

Access to Financing for Financing a Leather and Garment Processing Plant.

The states with the highest percentage of economic units that received financing were Baja California Sur (33.3%), Tabasco (21.9%), Zacatecas (21.4%), Nuevo León (17.6%), and Guanajuato (16.8%).

Types of Financing for a Leather and Garment Processing Plant

As regards to funding leather and garment industry, there are several mean to access financing for the leather and garment plant. These come in the shapes of asset financing, secured loans, working capital loans and more.

Asset Financing: Asset finance relates to valuable items in your company. Ultimately, there are two types of asset finance: With asset finance your business can gain access to assets such as machinery or equipment, or it enables you to release cash from the assets you already have.

Equipment Leasing: With equipment leasing, a lender will purchase an asset for you and subsequently lease the asset out to you. You’ll have access to the asset immediately, with only a small percentage of its cost paid down. At the end of the lease, depending on the agreement, you can pay to buy it outright, upgrade to something else or simply return it.

Asset Refinancing: Refinance is when a company sells an asset to an asset finance provider — for a lump sum payment in the business is then able to lease back the asset, just sold, in exchange for regular repayments.

Benefits of Asset Finance:

  • Access to high-tech equipment you may not be able to afford outright
  • With some leasing agreements — the finance provider is responsible for maintenance
  • Widely available financing option
  • In the case of asset refinance — allows you to get funds against valuable assets you own

Havelet Finance Limited is a reliable name in the financial world for offering integrated technical consultancy services. We are planners, specialists, financial experts, economic analysts and design specialists with extensive experience in the related industries.

Contact us for funding a modernization of leather and garment processing plant.

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