With strong demand, footwear industry prepares expansion
Valor Econômico
Internal market on the rise, low imports thanks to the anti-dumping tax rate imposed on the Chinese products and exports in recovery after last year's fall are causing the Brazilian footwear industries to take their expansion plans off the drawer. Midsize companies like Piccadilly, Bottero and West Coast have already announced new plants or the enlargement of the current lines, whereas large companies such as Grendene and Vulcabrás also begin scheduling new investments.
According to the Executive Director of the Brazilian Association of the Footwear Industry (Abicalçados), Heitor Klein, the sector operates with an idleness of 15% to 20% compared to an installed capacity of nearly 950 million pairs a year. But with the current pace of increase in the demand, he believes the annualized production will already be at such level at the end of 2010. According to estimates of the entity, in the accumulated in 2009 the country produced 813.6 million pairs, 0.3% less than in 2008.
According to Milton Cardoso, CEO of Vulcabrás and also a person who chairs the Abicalçados, the new momentum in the sector is due to the increase of the domestic demand and to the Government's decision of applying, for five years, the antidumping rate of US$ 13.85 per pair of Chinese imported footwear (in September a temporary surcharge of US$ 12.47 was imposed). In order to avoid predatory competition in the internal market, the measure stimulates the increase of the production in the country and it assures the gain of scale and competitiveness for the national industry abroad, said the Executive.
Compared to the same period of 2009, the footwear imports in Brazil in the first two months retreated little more than 43% in value and volume, to US$ 42.8 million and 4.8 million pairs. Only the Chinese products fell nearly 73% to US$ 13.5 million and 1.9 million pairs respectively. As for exports, they increased by US$ 280.2 million to US$ 295.2 million and from 28.8 million pairs to 34.2 million, according to the Abicalçados. In 2009 the shipments had retreated 23.7% in volume, to 126.6 million pairs, and 27.7% in value to US$ 1.36 billion and preliminary projections for 2010 are of growth of 3%.