As Peso Weakens, Mexican Firms Boost Exports

LEON, Mexico — Mexico’s leather goods industry hopes to grow 10 percent to $1.8 billion this year as booming exports offset sluggish domestic sales, industry observers said. However, they noted profits will fall as Mexico’s peso continues to tumble against the U.S. dollar, making key raw-material imports more costly. As falling oil prices and growing political scandals take the shine off Mexico’s economy, its volatile currency has slid to 15 per dollar compared to about 12 per dollar about a year ago. “The peso is out of control,” Jose Franco, owner of cowboy boots label Joe Boots, said during the Sapica footwear and leather goods fair ended here last week. Franco added that the price of feedstocks including livestock are up 10 to 12 percent on average. “For the past four to five years, the peso has been stable but now it’s really fallen out of the government’s hands. It could close the year at 16 [per dollar],” he said. Mexican leather goods producers import roughly 60 percent of raw materials and processing chemicals from Italy, Brazil or South Africa. And as local shoppers pare consumption, they are having a hard time passing on the cost hikes. “We are going to miss our profit targets,” Franco said,

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