Raw hides shortage hits Bata Shoe Company
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The shortage comes after suppliers increased the price of the hides by 20 percent from $1 per kg to $1,20 per kg which threatened the viability of the shoe manufacturing giant especially with the influx of cheap imports especially from the Far East.
The rise in the price of the hides comes barely eight months after suppliers under their umbrella organisation, the Hides Collectors Association (HCA), hiked the price of raw hides by 25 percent from $0,75 per kg to $1 per kg in May.
Bata managing director Mr Luis Pinto blamed the current shortage to illegal exports of the commodity and added the new price would hurt the company which was still recovering from a decade of sanctions-induced economic meltdown.
"Today, there are shortages of raw hides for our local industry. The available suppliers demand $1,20 or more per kg of raw hides making it impossible for the local industry to be competitive at this price level. The ripple effect is that at the end of the day, it is better to import footwear than to produce locally.
"We have made rigorous efforts to try and get raw hides to operate our tannery and shoe factory but we continue to face challenges to meet our daily capacity hence publishing in media as another way of trying to reach out to many people. The local leather industry has been hit hard left, right and centre through illegal exports of raw hides. This has adversely crippled the industry especially where the so much needed raw hides are smuggled thus depriving the local industry of the opportunity to recover and grow with each passing day," he said.
Mr Pinto said his company was in negotiations with the Hides Collectors Association to try and find a solution to the impasse but warned that if an agreement was not reached soon the company might be forced to retrench part of its 1 440 workforce and scale down operations.
"It is hoped that the local authority and all the relevant stakeholders will take a proactive step in assisting to curb the illegal exports of raw hides because raw hides remain the flesh, blood and bones of the footwear industry.
"Without raw hides, which after all, constitute the basic ingredient of leather products, losses and diminishing production will ensue, We have not sat idly hoping and wishing for a meaningful change in the leather sector. We have invited Hides Collectors Association for a meeting to try and reach some form of agreement to help us acquire raw hides from their partners.
"The result of this engagement has not yielded any positive result yet with each passing day we are confronted with painful options which are to import finished leather, to close local tannery, to scale down operations within every sector of leather and shoe products, to retrench employees so as to meet our reduced operational needs and to completely abandon production of footwear and specialise in exclusive imports for the local market."
The problems bedevilling the sector may affect the company's refurbishment exercise which was meant to increase production from 60 percent capacity utilisation to optimum levels by July this year.
At its peak Bata produced two million pair of shoes per year and employed over 5 000 workers.
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