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| Sunday, 21 July 2002 |
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Footwear industry in a crisis, warns of possible retrenchment : One foot in the grave by Surekha Galagoda The footwear industry has warned the Government that unless immediate action is taken to implement the proposals it has forwarded, the industry would be compelled to retrench employees to cut costs in order to face the competition from imported shoes.
Director Samson Sportswear and Deputy Chairman Ceylon National Chamber of Industries (CNCI) Ranjith Hettiarachchi, who is also the CNCI's Sectoral Chairman for Footwear and Leather, said the demands put forward include the introduction of a minimum invoice value on imported shoes, removal of duty on components and limiting the personnel baggage to six pairs. It will give a boost to the ailing local footwear industry which is in crisis at present. Chairman GiGi Group of Companies and Vice President of the Footwear Association Sarath Pathmalal said unlike other countries, Sri Lanka does not have a policy to protect the local industry. Though most other countries follow an open economic policy, they do not spell catastrophes to their domestic industries. "Therefore, if immediate action is not taken to correct the situation, we have no other alternative but stage a protest or retrench our staff which in turn will be detrimental to the economy," he said.
The industry has assured that if the requested changes are implemented on a priority basis, they can fulfil the increasing demand while saving foreign exchange. The footwear industry, which was a foreign exchange earner and prospering local industry catering to the demand of local customers, has gradually become a sick industry. A few major producers and several small timers have closed down while some are struggling to retain their work force. Growth The footwear market has grown tremendously in the recent past, but the market has already been captured by the traders. "As manufacturers, we do not have any dissatisfaction about this, but unfortunately, the contribution to the economy from the traders is very negligible compared to the contribution of the producers," said Mr Hettiarachchi. Employment He said the industry employs 15,000 directly at present while more than 100,000 are employed indirectly. According to industry sources, Bata is planning to retrench and discussions are under way to offer a Voluntary Retirement Scheme to its staff and most are expected to follow suit. History The footwear industry in Sri Lanka progressed at a remarkable pace up to the 1990s. It achieved great heights Customers were given a very good choice in fashion, quality and price. Unfortunately, with the reduction of duty on imported shoes, the expansion of the local industry came to a grinding halt. One by one, major manufacturers and medium scale producers curtailed production and limited expansion. During the last two years alone, three major manufacturers have disappeared from the footwear scene. The rapid progress made by China, Thailand and Indonesia worsened this situation. He said that improvement in the living standards saw footwear become a fashion item. Therefore, consumers required frequent changes in designs and styles, but due to financial constraints, local industrialists were not in a position to introduce design changes. For example, a mould costs US$ 2,000 while a machine costs US$50,000. Due to the tariff structure, the imported footwear found Sri Lanka a good dumping ground to dispose their over-runs and leftovers at very low prices. Though footwear industrialists drew the attention of the authorities to this situation, nobody was serious about finding a solution to safeguard employees and industrialists. |
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Mr Hettiarachchi said the Ministry of Industries has accepted the
proposal in principle and forwarded it to the Tariff Commission for
further action.
