By Andrea Guolo, Europe Correspondent.
SLOW. As 2025 is coming to an end, things are slower than usual in Europe. The automotive industry particularly so, as car manufacturers have significantly cut production, slowing down business for the tanneries. Take Porsche, a company known to use a lot of leather. They lost nearly €1billion in the third quarter of 2025. Mid- and mid-to-high-end furniture is in sharp decline, while low-end furniture manufacturing is largely absent. Consequently, things are slow in major Italian tanning districts such as Arzignano and Santa Croce sull'Arno. There, some tanneries are running on four-day week schedules and others are resorting to temporary layoffs and other extraordinary measures to avoid complete shutdowns. There is still hope that work will resume in February/March, but the sector now seems resigned to a partial downsizing, starting with tanneries that work for third parties. Several of them are reportedly closing permanently by the end of the year. Production is approximately 60-65% of the capacity available to European tanneries.
THE LATEST M&A SCENARIO Many Italian tanneries are up for sale. And they have been for a while. What has changed recently, is the expectations. Hopes of quick deals are about to be squashed as those looking to sell have no intention of remaining in a market in decline. They simply want to exit the business and do something different. The buyers – specifically those with groups that are part of, or majority-controlled by investment funds – want to be ‘creative’ with their payments. Cash is not what’s on the table. Such sales are becoming increasingly rare. Buyers want to make deals by offering shares. At the same time, those who have established relationships with luxury’s top manufacturers, or the few that are still doing well, are in a pinch, facing the challenging task of selecting the right raw materials to meet their customer's quality standards. Unfortunately, at these prices, the quality of the processing carried out at the slaughterhouse doesn't live up to expectations. So what happens now? In October, I would have said that perhaps some quick negotiations were possible. A month later, I’m convinced that no one wants to rush things. We’ll probably revisit this discussion at the end of winter, when the macroeconomic conditions will be clearer. For right now, there are simply too many unknowns to close deals.