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Fast paced growing imports threatening the Argentinian industry

Feb 28, 2017 Argentina
Fast paced growing imports threatening the Argentinian industry
The growth of 62% in footwear imports so far this year combined with the fall in domestic consumption and the rise in production costs had a strong impact on the sector
According to the local media, the President of the Chamber of the Footwear Industry (CIC), Alberto Sellaro described the current situation as "critical", saying that a total of 4 000 jobs were lost in 2016 and current issues such as "factory closures, layoffs, staff suspensions, shift cuts and early vacations" could lead to further job losses. The situation is particularly serious in the interior of the country and in the segment of sports shoes, which is the one that is being imported the most (70%). "The three major sports brands stopped buying, one directly imports kits that come with all the components and are assembled here," Mr. Sellaro added.

The local associations also added that consumption fell by 6.2%, which also directly affects the industry functioning at a 63% capacity utilization. Last year production was around 111 million pairs when in 2015 it had reached 125 million – a 11.2% decrease. In 2016 the growth of imports was 22%.

Higher labor costs than the neighboring countries could be pointed as one of the reasons behind the situation. The local associations also point high tax levels and the exchange rate lag, affecting the international competitiveness as other issues.

To try and improve the situation, last December a project from the Argentinean Chamber of the Footwear Industry was presented to the National Government with a request for tax incentives. No response is known to this request yet. The plan also included measures aiming to strengthen the value chain in the industry and the incorporation of more value add to products.

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