“In previous articles, we analyzed costs that either add value or do not. When the findings from such evaluations are managed by a skilled team, they can lead to safe and effective actions.”
One of the most frequently discussed topics in the leather industry is whether to keep expanding or to downsize when necessary. For many companies, 2024 has turned into a period of struggle with downsizing and uncertainty about how to proceed.
With rising production costs on one side and disruptions in workflow on the other, it has become challenging for producers to remain positive. This situation is currently being experienced not only in Turkey but in many parts of the world. Let there be no misconception that these crises are unique to Turkey; this has become a new “challenge” for leather producers worldwide to overcome.
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Both leather apparel and leather producers must maintain a dynamic structure that can adapt to the rapidly changing global conditions while safeguarding their core standards. Only in this way will they be able to reach a period of favorable conditions with ease.
As we approach the end of 2024, we want to examine three main topics along the axis of growth or downsizing:
- U.S. Presidential Election
- Preserving Our Standards
- Staying Dynamic
THE U.S. PRESIDENTIAL ELECTION
For Turkish leather producers and leather apparel companies, 2024 became the year when some of the optimism for continuing the growth surge seen between 2019 and 2022 faded. The hope that the regional and global crises we mentioned in our previous article could be resolved to some extent is among the developments that all exporters are waiting for. Even a 3-5% improvement in these issues could provide a lifeline to companies in the end.
In this context, the perception that Trump might reduce or even end certain conflicts has created expectations in many sectors, including the leather industry. Although this won’t happen overnight, rumors have already started circulating, and exporters are, at least mentally, encouraging themselves with a positive outlook.
Among the expectations are a reduction in tensions between Russia and Ukraine, a possible easing of tariffs in the U.S.-China trade war, and a resolution to the unrest in the Middle East and Africa. These are the immediate thoughts, but it is also known that Trump’s roadmap includes a focus on financial relief, which gives hope to producers who have long been burdened by tight monetary policies.
At least in the first week, the impression has been positive for producers.
PRESERVING OUR STANDARDS
As markets slow down, companies may plan sharp downsizing measures, but hastily made decisions can damage the brand reputation built over time. Customer relationships may be neglected, choices based on rising costs may affect customer retention, and activities such as customer visits, trade shows, R&D, and investments in staff and machinery may be disrupted.
While some of these actions can be taken without compromising core values, certain decisions should be made through consensus and with guidance from industry experts. In previous articles, we analyzed costs that either add value or do not. When the findings from such evaluations are managed by a skilled team, they can lead to safe and effective actions.
Otherwise, the loss of brand reputation among customers may reach a level that cannot be replaced later, which is a much more difficult process for companies than regional or global crises.
STAYING DYNAMIC
When we think of staying dynamic, the first thing that comes to mind is staying motivated. It’s crucial to keep the board, management team, and all production staff engaged and motivated. Staying positive and motivating a team under challenging conditions isn’t always easy, but maintaining discipline will naturally lead to a motivated team in such times.
Here are some examples:
- Adhering to Customer Quality Requirements:
During times of uncertainty, the production team may be inclined to relax standards, view certain tasks as unnecessary or use reduced workforce as an excuse. At this point, if senior management is firm in upholding customer quality requirements, it sets the tone for the rest of the team, encouraging them to stay engaged and motivated to perform their roles fully. - Standing Behind Your Product in Case of Quality Issues:
When business flows smoothly, companies may respond quickly to quality issues, but in slower markets, they may ignore them. A quick, dismissive response to a customer’s complaint can result in losing a long-term client. A measured response, even in challenging markets, helps retain clients, which is an invaluable advantage. - Maintaining Product Quality Standards:
Under intense cost pressure, some companies may consider reducing product quality. Making such changes without informing or gaining approval from customers will ultimately lead to losses rather than gains and turn the process into a one-off transaction. - Maintaining Communication with Partners:
A company in downsizing mode may be tempted to cut ties with certain customers or partners without prior evaluation, which can lead to poor decisions and the loss of valuable partners. Before making such moves, consult with your partners about your new roadmap.