Making the world’s car seats: Czechia, leather, and deforestation risk

The next insight in our series on deforestation risk in automotive leather supply chains

By Christina MacFarquhar

Research Analyst, Supply Chains Programme

In a factory on the outskirts of Pilsen, Czechia, workers apply strength, dexterity, and often a great deal of delicacy as they join dozens of diverse components together to form a car seat. The speed, focus, and endurance are phenomenal. For anyone curious about the ingenuity and hard work that go into creating comfort for car users, a few minutes observing the shop floor of one of these factories is a masterclass.

Although the Covid-19 pandemic has hit the car industry and its employees hard, scenes like this are common in the small country, which is the world’s biggest exporter of car seats. In 2019, just before the Covid-19 pandemic, Czechia exported two and a half million seats, about a fifth of global exports. Most of them will have been installed in cars in nearby European countries, but Czechia’s factories serve every continent. Destinations include nearly all of the world’s major car exporting nations, so even after shipping and installation in car bodies, many of the seats will cross borders again before meeting their end users.

Some of their components are produced locally, others come from abroad: bearings from Mexico; cables from India. And then there are the upholstery materials, such as leather.

Automotive interior leather, including that used in car seats, has been increasingly in the spotlight due to heated exchanges between non-governmental organisations (NGOs) and leather industry representatives. The issue: whether, and in what way, tanning companies are linked to deforestation in Latin America, where cattle ranching is the leading direct driver of forest and land conversion.

Route to Czechia

So where do the hides come from that flow into Czechia’s busy car seat factories?

Leather travels to Czechia from over 30 countries, mostly in a ‘finished’ state, ready to make into products such as car parts and furniture. Less than 1% of this comes directly from Latin American countries: Argentina, Brazil, Colombia, Mexico and Paraguay. The main direct sources are other European countries, whose tanneries and traders supply more than 90% of Czechia’s finished leather imports. They include Austria, Germany, Hungary, Italy, the United Kingdom, and many others.

Much of the leather passing through Europe, however, will have originated elsewhere. For example, these five European countries alone collectively take in a third of all Brazilian and Paraguayan leather exports, often processing it further before shipping it onwards to be cut, sewn, and shaped into products. And those origins will not always be obvious: trade policy in the EU allows leather originating elsewhere to ‘become’ EU leather after having undergone further processing.

So there are plenty of routes by which Latin American leather enters Czechia’s automotive parts factories. This is no surprise, given the large proportion of Brazilian and other Latin American leather known to end up in cars, and the global importance of Czechia’s car seat industry.

But is the leather coming from cattle raised on deforested land? And what does that tell us about forest risk exposure among car seat makers operating in Czechia, and their car brand clients around the world?

Understanding risk exposure

There are currently two main ways by which leather industry outsiders can search for answers to these questions. One is by reading reports from non-governmental organisations investigating car leather supply chains, sometimes going undercover with tanneries and meatpackers in Latin America, and joining the dots (recent examples include Earthsight’s Grand Theft Chaco report and Global Canopy’s 2019 supply chain study).

The second way is by reading deforestation policies, reports and procurement information published on company websites or disclosed to NGO platforms such as CDP’s forests program. However, examples of these are extremely scarce, including among tanners and car component makers, local and foreign, operating in Czechia.

Four of the world’s biggest car interior parts makers – Lear, Adient, Faurecia and Magna – dominate the car seat industry in Czechia. Between them, these ‘original equipment manufacturers’ (OEMs) supply most global car brands. Their leather suppliers include major automotive leather suppliers such as Austria’s Boxmark and Wollsdorf, Germany’s Bader, Lear’s own US-based subsidiary Eagle Ottawa, and Italy’s Gruppo Mastrotto, Mario Levi and Pasubio, among others. These companies are sometimes represented by Czechia-based intermediaries or subsidiaries such as Consuled and Beryl Budos. Other local companies play vital roles in the automotive leather supply chain, serving the large OEMs; Stival Automotive, for example, makes leather car seat covers for Adient’s Czech operations.

No matter where they sit in the supply chain, however, none of these companies states publicly where the leather originates from or whether and how they assess or address deforestation risk.

In fact, in an assessment of websites carried out for this article, it was found that none of the major car leather tanneries worldwide publishes this information. This suggests that companies downstream – the car manufacturers of the world – could be exposed to deforestation risk via most, if not all, of their suppliers. Although NGO reports often highlight specific car brands linked to leather coming from high risk areas, this is not an issue for one or two manufacturers: it encompasses the entire automotive industry.

Finding common ground

But what does this silence in the middle of the automotive leather supply chain represent? A distancing from the deforestation issue? Is it that tanners and seat manufacturers supply car brands and not consumers, so they keep a lower profile and don’t feel the need to explain themselves publicly? Does it come down to the argument, often cited by tanners and industry associations, that leather is an otherwise useless by-product of meat production, so those using it don’t influence cattle prices or land use in Latin America and have nothing helpful to disclose? Or is it the unhappy silence of a leather industry that feels battered by stern NGO scoldings, confounding market forces, and impossible demands as car brands look for ever larger quantities of ever more ‘sustainable’ materials at ever lower prices?

In fact, the answer is a complex combination of all the above. And yet it is clear that, privately, some in the industry are taking forest risk seriously. Bader has recently engaged in frank, in-depth discussions with Global Canopy and WWF about its concerns related to forest risk and the measures it takes to avoid sourcing raw materials from particular high risk areas. At least two other companies – major car brands – are in private talks with NGOs. And high reactivity and an overall willingness to engage among others in the automotive leather tanning world indicate that the deforestation issue is firmly on the industry’s radar.

Concern for the environment and the desire to do the right thing are undoubtedly there. As Stephen Tierney, the editor of industry magazine World Leather, puts it, “sustainability is the number-one subject of discussion in every boardroom, on every factory floor and at every meeting and conference. It’s the only game in town.” It’s certainly a salient theme in leather industry magazines and websites.

Indeed, beyond the polarised debate about culpability lies fertile common ground. Understanding how to find it and what ambitions to grow there, however, requires having the willingness to take a step back and a fresh look at the fundamental questions in the debate.

In the next article in this series, focused on automotive leather in Germany, we’ll be starting to do that. Click here to receive the next article in your inbox.

Missed the first insight in this series? Read ‘Exploring deforestation risk in automotive leather‘.