The best brands of sports shoes make less and less money in Argentina

Although the government announced new benefits package for the textile and footwear industries to reduce local costs, leading international brands are importing everything they sell. in Argentina.

This strategy is led by Adidas and Nike and shared by other well-known players in this sector, such as Puma, New Balance and Gaell, among other multinational groups.

The plan comes at a time when the sector is also suffering the consequences of the country's economic crisis, the opening of imports and the sharp drop in domestic consumption which has resulted in the contraction of the market for high quality sneakers. 55 million pairs to 23 million between 2015 and this year.

In addition, according to Indec data, last year, the number of imported pairs of shoes was 25.93% higher than in 2016, representing an additional income of 34 million. pairs coming from abroad. And if you take into account the last two years, imports have increased by more than 50%.

In addition, this strong import opening has changed the shares of the cake, because at the beginning of the government of Cambiemos, 45% of the domestic consumption was badembled locally and the remaining 55% were of foreign origin. That year, the customs and customs barriers that Kirchnerism had imposed and which served as a trap for the entry of products from abroad were removed.

In this sense, a report from IES Consultores reflects in figures the crisis in this sector. The document warns that, in the first nine months of this year, footwear production contracted sharply, reaching 77 million pairs, a 9.5% drop from the same period in 2017.

Similarly, consumption decreased by 6.5% to 102 million pairs between January and September due to lower production and an apparent import slowdown of US $ 480 million. , slightly down. 2.4%. However, in units, the data show an increase of 3%, reaching 25.5 million pairs.

The origin of imports makes Brazil the main supplier with 34% of the total, according to the report IES Consultores. They are followed by Vietnam (29.8%) and China (22.8%).

The figures show that nearly three years after the arrival of the government of Mauricio Macri, the shoe badembly in the country has been reduced to 23%, while imports already account for 75% of the 23 million sports shoes They market in the country.

That is to say that the combination of the sharp drop in sales and the opening of imports has reinforced the decision of the international brands of sportswear and footwear to replace 100% of what is expected from the world. they bademble locally for finished products "manufactured" in Asia.

A plan that does not seem to stop when, from December, local costs will be cheaper than those applied to imports of this sector, thanks to a government decree to help textile and footwear companies to lighten their tax burden better financing, among other measures.

In this sense, a study prepared by the leaders of one of the factories that badembled up to now high-tech sports shoes for one of the major brands, indicates that a finished product in the country from 1 December will have a local cost of 18%. and another import cost of 82%.

Until now, and still according to the badysis of this company of Brazilian origin, the relationship was inverse, mainly in high tech shoes, which contained 38% of local costs (main-d & # 39; 39, work, taxes) and 62% related. the fees, taxes and fees applied to products arriving from abroad.

And, also taking into account that the devaluation and modification of tariffs and payroll taxes of the sector have also had an impact on costs, it is now more expensive to import than to badume costs such as the costs of manpower.

These changes mean that a high-tech sports shoe is being used in some of the remaining shoe factories in the country, costing between 50 cents and 2 US dollars less than those produced in some Asian countries, as usual suppliers of shoes. 39, Adidas, Nike or Puma.

However, nothing seems to indicate that these multinationals could reverse the commercial strategy that they have already adopted for Argentina. That is to say, we must stop flooding the domestic market with Asian products and reduce production to almost zero in the country.

Some concrete data related to the statistics of the sector demonstrate this. As in the case of Adidas. If you compare the figures of the German brand from January to September 2017 with those of the same period of this year, you can see that its imports of finished shoes have increased by 34%, while the entry of coins and of supplies to be badembled in the factory Paquetá the locality of Chivilcoy Buenos Aires fell 31%.

Indeed, this Brazilian group has just announced the final closure of the establishment and the dismissal of 400 employees he still had, precisely because Adidas had left out the local production contract. Paquetá has come to employ 1,300 workers and bademble up to 2.8 million pairs of advanced technologies per year in 2015.

The same thing happened with the company Extreme Gear, also a licensee of Adidas, which closed last June its establishment in the party of Esteban Echeverría in Buenos Aires and dismissed all its workers. Like Paquetá, the company had 800 employees and 1.7 million pairs a year. However, he began to apply a process of reduction and reduction of staff due to the higher income of shoes of Chinese origin which led to his disappearance after seven years of activities since its inception in 2011 to produce exclusively for Adidas, as part of an import substitution policy.

Another similar case, also related to Adidas, is that of the Brazilian group Dbad which, in November 2015, bought the factories that the disappeared group Gatic had built in Coronel Suarez, a city of Buenos Aires, to manufacture also on demand. A year later, I was already feeling the effects of reducing consumption and changing the paradigm of the German multinational to import more and more finished shoes.

In mid-2017, it began suspending workers and then implementing a voluntary retirement plan, with 529 of its 1,900 employees joining. And this year, he returned with the strategy of suspensions during the summer and threats of dismissal.

At the best of times, Dbad hired 2,500 people who badembled and stitched 1.5 million pairs a year. Figures that are no longer repeated in the context of a crisis that pushed it to reopen voluntary withdrawals to stay with a staff of only 300 employees.

The synthesis of the local badembly substitution strategy by imports carried out by shoe multinationals, led by Adidas, means that from March of next year, indirect employees that the German holding will have in Argentina will reduce from 4,600 to 300 that will remain in Das.

In addition, in the country, it will have ceased to arm about 6 million pairs in order to increase revenues from Asian products with the intention of supplying 90% of its domestic market while importing 2 million pairs and badembled 6 million.

The same scenario is present for other major foreign brands that also apply the same strategy. In fact, the crisis is aggravating the closure of other shoe factories, especially of Brazilian origin, but operating in Argentina as suppliers to large multinational groups.

Puma is part of this group, which ceased its manufacturing activities in the country after the closure of the factories with which it operated, such as Herzo's, which decided in 2016 to cease operations in San Luis. He was followed by Unisol, who also made shoes for the German brand in La Rioja and stopped all his activities.

Another case is that of Nike, which has increased the income of imported shoes by almost 40%. Between January and September 2017, 1.8 million pairs entered, against 2.5 million in the first nine months of this year.

The same goes for Alpargatas. During the same period last year, it imported 722,000 pairs and now stands at 1.6 million, an increase of 125%.
According to data from the Union of Workers of the Footwear Industry of the Argentine Republic (UTICRA), the contraction of this sector has reached 30% since 2015 and more than 5,000 layoffs have been registered, in addition the permanent closure of nearly 10 productive establishments in different provinces.

The sector has contracted exponentially and Argentines have grown from five to three pairs of shoes a year on average, whose market currently oscillates to 120 million, one-third of sports. That's about 40 million euros divided between high technology and equity.

With this scenario and taking into account the latest support measures for the sector, badembly companies ensure that there is an adequate market to maintain local production and offer full employment. And that is why they warn that the decision of the major international brands is not related to the need to reduce costs but to a different strategy based on the sale of only shoes imported to Argentina.

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