NAICS 316110 Quarterly Industry Report
Leather and Hide Tanning and Finishing
Comprehensive industry research for valuation professionals, business owners, buyers, and lenders
NAICS Code: 316110Sector: 31Updated: Q1 2026
About This Report
This Fair Market Value industry report for NAICS 316110 provides business owners, acquirers, and financial advisors with data-driven valuation insights for the leather and hide tanning sector, drawing on data from the U.S. Census Bureau[5] and EPA[7] compliance records. Additional data is drawn from Bureau of Labor Statistics[9].. The report aggregates transaction multiples, financial benchmarks, and market trends specific to NAICS 316110 establishments, supporting buy-sell agreements, succession planning, SBA-financed acquisitions, and litigation support engagements.
Industry Snapshot
Key metrics for the leather and hide tanning and finishing industry.
Industry Definition & Overview
Leather and Hide Tanning and Finishing (NAICS 316110) encompasses establishments primarily engaged in tanning, currying, and finishing hides and skins, having others process hides and skins on a contract basis, and dyeing or dressing furs. The industry converts raw animal hides from the meatpacking sector into finished leather used by downstream manufacturers of footwear, handbags, upholstery, automotive interiors, and other leather products. According to the U.S. Census Bureau[5], approximately 180 active domestic establishments operate in this sector, concentrated in regions with historical tanning operations and proximity to cattle processing facilities, generating over $1.5 billion in annual shipment value.
Domestic tanners face competitive pressure from overseas operations in countries including Italy, Brazil, and India, though U.S. producers maintain advantages in cattle hide quality and proximity to the world's largest beef cattle herd. The industry has shifted toward higher-value specialty leather production including automotive upholstery leather, premium full-grain leather for luxury goods, and performance leather for footwear and sporting goods. Per Bureau of Labor Statistics[6] data, employment has declined alongside industry consolidation, with remaining operations typically investing in automated processing equipment and environmental compliance infrastructure.
The EPA[7] regulates tannery wastewater discharge, air emissions from finishing operations, and chromium-containing waste disposal, creating substantial environmental compliance costs that affect operating margins and represent material considerations in business valuations. Water treatment systems, chrome recovery equipment, and waste management infrastructure represent both operational necessities and material capital assets. The SBA Office of Advocacy[8] notes that smaller tanneries increasingly focus on vegetable-tanned and chrome-free leather processes that command premium pricing in markets demanding sustainable and environmentally responsible materials.
What's Included in This Industry
- Valuation multiples benchmarked to leather tanners and hide finishing operations
- Revenue and EBITDA trends for domestic tanning and finishing establishments
- SBA lending data and financing terms for NAICS 316110
- Comparable transaction data from recent leather tanning industry mergers and acquisitions
- Industry risk factors including environmental compliance costs and raw hide price volatility
- Workforce composition and labor cost benchmarks for tanning operations
- Regional market analysis covering domestic tanning center locations
- Environmental compliance cost analysis and remediation liability assessment
- Growth projections tied to automotive leather, luxury goods, and sustainable tanning methods
- Owner compensation and discretionary earnings benchmarks
NAICS Classification Hierarchy
| Level | Description | Code |
|---|---|---|
| Subsector | Leather and Allied Product Manufacturing | 316 |
| Industry Group | Leather and Hide Tanning and Finishing | 3161 |
| NAICS Industry | Leather and Hide Tanning and Finishing | 31611 |
| National Industry | Leather and Hide Tanning and Finishing | 316110 |
Related NAICS Codes
| Code | Description | Relationship |
|---|---|---|
| 311611 | Animal (except Poultry) Slaughtering | Animal slaughtering establishments producing raw cattle hides as a byproduct of beef processing that serve as the primary raw material input for leather tanneries |
| 316210 | Footwear Manufacturing | Footwear manufacturers consuming finished leather as a primary material input, representing one of the largest downstream markets for tanned hides |
| 316990 | Other Leather and Allied Product Manufacturing | Other leather product manufacturers producing handbags, luggage, wallets, and accessories from finished leather supplied by tanning operations |
| 325199 | All Other Basic Organic Chemical Manufacturing | Other basic organic chemical manufacturers producing tanning agents, dyes, and finishing chemicals consumed in leather processing operations |
| 424590 | Other Farm Product Raw Material Merchant Wholesalers | Other farm product raw material wholesalers handling raw hide trading, brokerage, and distribution between meatpackers and tannery operations |
| 423130 | Tire and Tube Merchant Wholesalers | Tire and tube merchant wholesalers and industrial supply distributors handling leather and hide products for commercial and industrial end users |
Geographic Concentration
Top states by share of national establishments.
| # | State | % Est. | Total Est. |
|---|---|---|---|
| 1 | New York | 15.7% | 22 |
| 2 | California | 13.6% | 19 |
| 3 | Texas | 10.0% | 14 |
| 4 | Wisconsin | 6.4% | 9 |
| 5 | Florida | 5.7% | 8 |
| 6 | North Carolina | 4.3% | 6 |
| 7 | Michigan | 4.3% | 6 |
| 8 | Georgia | 4.3% | 6 |
| 9 | Minnesota | 3.6% | 5 |
| 10 | Ohio | 3.6% | 5 |
% Of Establishments
0%
16%
Source: County Business Patterns, U.S. Census Bureau[3]
SBA Lending Summary
16
Total SBA Loans
$5.0M
Total Loan Volume
$314K
Average Loan Size
10 yrs
Average Loan Term
10.60%
Average Interest Rate
176
Jobs Supported
Source: SBA 7(a) Program Data, U.S. Small Business Administration — FY 2025[4]
Key Insight: Leather and hide tanning operations seeking SBA financing typically qualify under the SBA size standards[10] for NAICS 316110, which set the threshold at 500 employees for small business classification. The SBA 7(a) loan program[11] provides up to $5 million for business acquisitions, tanning equipment upgrades, and working capital for raw hide inventory. Industry CDC/504 loan program[12] offers long-term fixed-rate financing for facility improvements, wastewater treatment system installations, and production line modernization. Lenders evaluate environmental compliance records, EPA permit status, and raw hide sourcing agreements when underwriting transactions in this sector.
Top SBA Lenders
| # | Lender | Loans | Volume | Avg Loan |
|---|---|---|---|---|
| 1 | Idaho Central CU | 8 | $4.6M | $573K |
| 2 | Fifth Third Bank | 8 | $432K | $54K |
Frequently Asked Questions
Common questions about this industry.
What is the typical valuation multiple for a leather tanning business?
Leather tanning operations typically trade at 3x to 6x EBITDA, with environmental compliance status, customer diversification, and specialty leather capabilities driving premium valuations. Operations with clean environmental records and established automotive or luxury goods supply relationships command higher multiples. Per U.S. Census Bureau[5] data, industry consolidation has reduced the number of domestic tanneries, increasing the strategic value of well-positioned operations.
What SBA loan options are available for acquiring a leather tannery?
The SBA 7(a) loan program[11] provides up to $5 million for business acquisitions and equipment purchases, while the CDC/504 program[12] finances facility improvements and wastewater treatment infrastructure. Lenders conduct thorough environmental due diligence including Phase I and Phase II assessments to evaluate potential remediation liabilities before approving tannery financing.
How do environmental regulations affect leather tanning valuations?
The EPA[7] regulates tannery operations under the Clean Water Act, Clean Air Act, and Resource Conservation and Recovery Act, requiring discharge permits, air emission controls, and proper handling of chromium-containing waste. Environmental compliance costs including wastewater treatment, chrome recovery, and waste disposal can represent 8-15% of operating costs, while potential remediation liabilities can materially affect transaction values.
What are the main cost drivers for leather tanning operations?
Raw hide costs typically represent 50-65% of total production costs, with prices fluctuating based on cattle slaughter volumes, international demand, and seasonal factors. Chemical costs for tanning agents, dyes, and finishing materials represent the second largest variable cost category. Per Bureau of Labor Statistics[6] data, energy costs for heating tanning drums and operating finishing equipment contribute meaningfully to operating expenses.
What equipment is needed for leather tanning and finishing?
Core equipment includes tanning drums, fleshing and splitting machines, shaving equipment, drying systems, finishing spray lines, and quality testing instruments. Per SBA[13] lending data, wastewater treatment systems represent a major capital requirement alongside production equipment, with chrome recovery systems and biological treatment plants adding to fixed asset requirements.
What growth opportunities exist for domestic leather tanners?
Growth opportunities include automotive leather demand driven by vehicle interior upgrades, premium and luxury leather goods markets, vegetable-tanned leather commanding premium pricing from sustainability-conscious consumers, and technical leather applications for military and industrial products. Per U.S. Census Bureau[5] data, specialty leather production supports higher margins than commodity hide processing.
How do raw hide prices affect tanning business profitability?
Raw hide prices are driven by cattle slaughter volumes tracked by the USDA[14], international demand from competing tanneries, and finished leather market conditions. Price volatility creates margin compression risk when tanners cannot immediately pass increased hide costs through to finished leather pricing, making inventory management and forward contracting practices material factors in profitability.
What workforce challenges do leather tanneries face?
Key challenges include recruiting workers willing to perform physical labor in wet-processing environments, training operators on chemical handling and safety protocols, and retaining skilled finishing technicians who control the color, texture, and quality characteristics that differentiate premium leather products. Industry employment has declined alongside consolidation, narrowing the experienced labor pool.
Sources & References
Government datasets and editorial sources used in this report.
- [1]U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages bls.gov
- [2]U.S. Census Bureau, Economic Census census.gov
- [3]U.S. Census Bureau, County Business Patterns census.gov
- [4]U.S. Small Business Administration, SBA 7(a) Loan Program Data data.sba.gov
- [5]U.S. Census Bureau census.gov
- [6]Bureau of Labor Statistics bls.gov
- [7]EPA epa.gov
- [8]SBA Office of Advocacy advocacy.sba.gov
- [9]Bureau of Labor Statistics bls.gov
- [10]SBA size standards sba.gov
- [11]SBA 7(a) loan program sba.gov
- [12]CDC/504 loan program sba.gov
- [13]SBA sba.gov
- [14]USDA usda.gov
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