Paycueros broke the silence: “finishing leather in Uruguay is no longer a possibility”.

The company assured that the Paysandú plant does not have the conditions today to sustain the level of activity it used to have.

After more than two months of union conflict and public denunciations of dismissals and alleged non-compliance with agreements, the representatives of Paycueros appeared for the first time before Parliament to explain their version and share the projections they have for the company from here on out.

During the session of the Senate Committee on Labor Affairs and Social Security, the director of the tannery, Diego Stein, and the legal advisor Rodrigo De León assured that the Paysandú plant does not have the conditions to operate with the same capacity as in previous years, given the transformations of the global market.

De León recalled that Paycueros – founded in 1948 and with uninterrupted activity since then – is the only tannery of its size located north of the Río Negro, which implies higher logistical costs, since the hides must be transported from meatpacking plants throughout the country to Paysandú and then to the port of Montevideo. Added to this is a transformation in consumption patterns at a global level, with a sustained drop in the demand for leather.

The company – part of the international Sadesa group, with operations in South America and Asia – is mainly dedicated to the tanning and retanning of bovine leathers, with a focus on the production of leathers for sports footwear.

According to the advisor, the drop in demand is due to multiple factors such as a reduction in the use of leather in clothing and footwear, the advance of synthetic materials – cheaper, easier to produce and perceived as more sustainable – and the geographical proximity of these materials to manufacturing centers. “Customers are getting closer and closer to manufacturers and manufacturers are almost all in Asia,” he said.

Stein, for his part, explained that the transfer of the business model to Southeast Asia, where the footwear and automotive upholstery industries are concentrated today, made Uruguayan production unsustainable for certain markets.

The delivery times demanded by customers, between 15 and 20 days, cannot be met from South America and according to its director, the company is forced to produce closer and closer to the end customer. This supply logic, Stein said, is incompatible with maintaining previous levels of activity at the Paysandú plant.

“We see it as practically irreversible that today, in the global context, the Paysandú Paycueros plant can finish the same amount of hides as before. I want to be very clear about that,” the director emphasized.

The hierarch acknowledged that for years the strategy was to produce in Uruguay and send inventories to their plants in Asia, which allowed them to maintain certain businesses. However, that dynamic is no longer viable. “We were sustaining production until the end of last year thinking that the situation was going to be reversed, but today we are not being able to sell that inventory we have there,” he said.

The lack of global demand, coupled with an excess of supply, led them to reduce the volume produced and to maintain an installed overcapacity in all the group’s plants. In this context, Stein said that the finishing plant “will continue to operate, but to supply businesses in the region, not for businesses that have to be served from Asia. There should be too much of a change to go back to the way it was before.” Currently, the completion plant continues to operate, although with a very low level of activity.

As he detailed, this situation had already been communicated to both the union and the Ministry of Labor in different instances since the beginning of the year, each time the renewal of unemployment insurance was requested. On those occasions, the company warned that it saw no prospects for a recovery in demand for the remainder of 2025.

For his part, union leader Antonio Ferreira assured the newspaper El Telégrafo de Paysandú that the union maintains the expectation of agreeing on a “single insurance exchange” that will allow unifying the expiration dates of unemployment benefit for all workers, given the fragmented schedule that currently governs. “The next expiration dates will be July 9, August 2, August 10, August 16, August 24 and September 2. It is complicated if a solution is not found,” he warned.

The leader expressed concern about the level of activity in the different sectors of the plant. He indicated that currently work is only being done on the riverbank and the wet blue sector – which concentrate the first section of the process – while the semi-finished sector has little production and the finishing sector, almost none. “We always denounce that the last process is not done here. Today we are concerned that not even the second one is done, and that is why there are so many workers on unemployment insurance,” he said.

According to Stein, competition for the few businesses available and customer demands in terms of location make it unfeasible to resume production at previous levels. “Today our clients ask us to be in India, in Indonesia. They tell us that the businesses are going to go to those who are in the places where they produce,” he said.

The company has a factory that has three sub-plants: the riverside, where fresh leather is received and transformed into wet blue; a second, where it is transformed into semi-finished and a third, which is the finishing plant.

In this last subplant, according to Stein, less than 50 people currently work since others have already been sent to unemployment insurance. In total, the tannery maintains about 500 employees in all its areas, and although some subplants – such as the wet blue or semi-finished – could continue with oscillations, the production of finished leather for export to Asia is no longer part of the scenario projected by the company.

“Finishing leather in Uruguay, in the medium term, is not a possibility. And even less so in the short term,” concluded the director.