The 1970s, Switzerland. The Swiss watch industry churns out tens of millions of timepieces a year. Then came quartz; production plummeted, and entire brands disappeared. Yet today, Switzerland sells far fewer watches than it did back then and earns far more: it has swapped volume for value. It is the same gamble that Italian shoes, handbags and leather goods have taken over the last thirty years. With one caveat: someone further up the supply chain is footing the bill.
THE FIGURES BEHIND THE SACRIFICE
Let’s start with footwear. In 1996, Italy produced 482.7 million pairs; in 2024, it produced 125.1 million. The number of companies has fallen from 8,467 to 3,369, and the workforce from 122,000 to 71,000. Volumes have been cut, the sector has shrunk. Yet, in terms of value, exports over the same period have risen from 6.3 to 11.6 billion euros. Fewer pairs, but much higher revenue per pair. The leather goods sector tells a contrasting yet complementary story: turnover has risen from 2.5 to almost 12 billion, whilst the workforce has grown from 33,000 to 49,000. It is the only segment of the supply chain to expand, driven by the major luxury brands.
WHERE HAS THE VOLUME GONE?
The pairs of shoes that Italy has stopped producing have not vanished. In 1996, we imported 133 million pairs worth 946 million euros; in 2024, we are importing 344 million pairs worth 6.6 billion. At the top end, Italian footwear is moving upmarket; at the bottom end, domestic consumption is being met by foreign production. The sector has become polarised, and the mid-range segment — the one that used to fill the assembly lines — is the first to have dried up.
TWO SIDES, ONE AND THE SAME CHOICE
What holds together a sector that has shrunk to a quarter of its former volume and one that has almost quintupled its turnover? Luxury. Both have stopped competing on price to compete on added value. It works, as long as the high end is driving growth. But the leather goods sector today reveals the flip side of the coin: its strength — its dependence on luxury brands — is also its weakness. When the luxury sector slows down, the impact is amplified and felt throughout the entire supply chain. And that supply chain includes not just those who sew the bags, but also those who build the machines to sew them.
THE MIRROR OF MACHINES
This is where the technology sector comes in, acting as the most accurate barometer of that transformation. In 2025, Italian production of machinery for tanning, footwear and leather goods fell to 512 million euros: down 11 per cent, following a 12 per cent decline in 2024. But it is the breakdown of the figures that tells the story. Machinery for leather goods recorded a 9.80 per cent decline: the first tremor of the cooling luxury market, foreshadowed by capital goods. Tanning machinery plummeted by 24.49 per cent. Footwear machinery held up better, down 4.08 per cent, whilst spare parts remained virtually unchanged, down 0.64 per cent. Translation: if you’re not buying a new machine, at least keep the old one running. A sector that repairs more than it renews is a sector that is biding its time.
THE UPSTREAM PICTURE
Raw materials bring the picture full circle. The Italian tanning industry has seen physical production of hides fall from 247 to 120 million square metres, and sole leather from 23,805 to 6,346 tonnes: a drop of almost three-quarters. Yet it still accounts for 27 per cent of global production by value and 31 per cent of global exports of finished leather. Once again: less quantity, more quality. The figures for 2025, however, add an uncomfortable caveat: moving upmarket reduces volumes, and lower volumes mean less investment in technology. The result is evident in Vigevano, where the ratio of machinery manufacturers to shoe manufacturers is now close to eight to one.
WHO HOLDS THE LINKS TOGETHER
Each link in the chain has learnt to be worth more by producing less. But technology is not bought by value: it is bought by capacity. And if installed capacity dwindles, first orders move elsewhere, then expertise, and finally the machines themselves. The number of engineering firms has already fallen from 225 to 220 in a year, and the workforce from 3,800 to 3,700. Small figures, but the trend is clear.
Switzerland has been able to do without high volumes because it was enough for it to sell time. Italy’s leather industry sells shoes, bags and the machinery to make them: if it allows the latter to disappear, it risks that sooner or later it will no longer be able to sell the former either.
