Archive for the ‘Footwear’ Category

Review of assistance to Australian textiles, clothing & footwear industry

September 22, 2008

The review by the Taskforceinto the textiles, footwear and clothing industry was handed to the Minister by Professor Roy Green in late August.

 

The AFR ran a front page article on the likely thrust of the report. Judging from the word around the Canberra traps, the AFR article is pretty close to what the feds will finally decide. In brief:

 

§          The tariff reduction to 5% will happen (no big deal – tariff assistance can be swamped by currency fluctuations)

§          Programs to be introduced for workforce and management capabilities, R&D support, adoption of new business models, links to global supply chains (aligns with new Enterprise Connect Program)

§          Building competitive advantage through uniqueness, design, innovation, speed to market etc.

§          Emphasis on fashion and design, which was largely missing from the Button TCF Plan (no-brainer – opportunity to leverage off Melbourne’s longstanding capability, and to link with Milan etc.)

§          Prof. Green said ‘we should be giving as much attention to where value is created as to where assembly is situated’ (totally agree – owners of Quiksilver, Rip Curl and Billabong are sipping wine at Jan Juc and the Gold Coast as you read this)

§          Renewed emphasis on value-adding the wool industry (yes – bring the farmers in from the cold).

 

Some very interesting agendas are about to unfold in TCF. However the Government is not well-equipped to put together international joint ventures due to the demise of Invest Australia.  

Kim Carr’s innovation agenda

April 13, 2008

Federal Industry Minister, Kim Carr addressed the Annual Industry Leaders’ Dinner in Geelong in late March. It was significant at three levels. Excerpts below.

Commitment to manufacturing “Do I support manufacturing? You bet. – Do I think it’s vital to the Australian economy and Australia society? Absolutely – Do I think governments should create an environment in which manufacturing can flourish? No question. When Kevin Rudd said he wanted Australia to remain “a country that actually makes things”, I cheered.

“…We remain firmly and unapologetically committed to securing the future of manufacturing…the slightly more challenging news is that the government can’t support manufacturing at any cost, or on any terms…the quid pro quo for our support is that manufacturers must be ready to innovate and export…and prepared to invest in local know-how to create their own competitive advantage.”

Status of reviews underway The 4 reviews are National Innovation System (chaired – Dr Terry Cutler); Cooperative Research Centres program (chair – Professor Mary O’Kane (part of the innovation review); Automotive Industry (Steve Bracks); Textiles, Clothing & Footwear Industries (Professor Roy Green).

The Cutler review will help us understand the connections between the different elements of our national innovation system. The automotive and TCF reviews will show what innovation can do for industry. The NIS and CRC reviews will show what industry can do for innovation. We need to connect sectors, institutions and individuals to promote collaboration and knowledge transfer.’ (Cockatoo is about connectivity – we will be making submissions. See innovation.gov.au)

Enterprise Connect program $200 million initiative to give SMEs better access to new ideas, know-how and technologies. To create a network of knowledge-creation and knowledge-transfer sites. Main elements:

§ 5 new manufacturing centres – Sydney, Melbourne, Adelaide, Perth, Burnie, plus existing QMI Solutions base.

§ 5 dedicated innovation centres – Creative Industries; Clean Energy; Remote Enterprise (Alice Springs); Mining Technology (Mackay) Innovative Regions (Geelong). First two have not been decided.

§ $10 million Researchers in Business scheme – for placement of university and public researchers in businesses.

Brazil’s footwear cluster – Sinos Valley

April 10, 2008

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Alfredo Lopes Neto, A Brazilan expert on economic development, published a very instructive book titled “Notes on Clusters” a couple of years back. It has  chapters with practical examples of clustering in Brazil (in English & Portuguese). We have lost contact with Alfredo recently, but he may be contactable via presidencia@sfiec.org.br. or Tele/Fax: (085) 224-67-46. He has some particularly useful insights. Excerpts below. 
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The footwear cluster of Sinos Valley (Rio Grande Do Sol) enjoyed a growth period in the 1970s & 1980s, promoted by North American importers. But little by little, the importers became dominant, taking over the distribution system and product development – and the increase in production and imports was not matched by the development of entrepreneurial market-oriented consciousness.
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The behavioural standards of Brazilian footwear companies were characterised by their submission to North American importers and by their inertia with regards to technology, product development and distribution..
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The fragile situation was shaken in the early 1990s by tariff reductions in the local market, and the entry of Chinese footwear. Sales of the entire supply chain were affected and until 1996, the ghosts of lack of investment and of insolvency hunted Sinos Valley, with a dramatic decrease in the number of tanneries, component producers, machinery and equipment manufacturers – and while the Brazilian firms were going bankrupt, the exporting agents left the Valley.

 

Once the initial impact of the crisis had passed, Sinos Valley showed its capacity to rebound. The cluster underwent market diversification and a radical change in business culture. Businesses turned to the Latin American and domestic market, and invested in product development, constructed their own identity (brand) and made logistical improvements.

 

Other initiatives included managerial training and trade promotion, including participation at selected international trade fairs, and the establishment of a permanent footwear showroom in Miami in April 2001. The machinery, equipment and component manufacturers have also invested in marketing and promotion and recently launched the brand By Brazil.

 

The tanneries are thinking about introducing a quality seal. A supply chain program for the leather and footwear industry has been in operation since 1999, and now has participation by 167 firms.

 

Veneto’s competitive advantages

April 7, 2008

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Karen MacRae is a marketing consultant who practices in Bassano del Grappa in the Veneto heartland. A couple of years back she provided us with some material on the dynamics of the Veneto region of Italy. It provides interesting insights: 

 

Veneto (Venetia) is one of Italy’s larger regions (population 4.5 million – Venice, Verona, Padua, Vicenza).

 

Like most of the Italian northeast, it is now flourishing – highly mechanised agriculture, a tradition of heavy industry (oil, chemicals etc), and an explosion of smaller companies in specialised manufacturing districts. The region is No. 1 in Italy in tourism revenues and is the most export-oriented. It is characterised by 11 strong industry sectors, generally in major geographic clusters. They include:

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Metal and Mechanical – 24,000 companies. Exports = US$14 billion.

Hide Tanning – World centre of hide tanning in Vicenza – 760 tanneries, with turnover = US$3.2 billion.

Marble and graniteThe marble area is a proper district, 25 km by 25 km running along the Adige River – 1,431 SMEs and 4,000 workers. Exports have doubled to US$760 million in last six years.

Clothing – Major brands such as Benetton, Diesel, Marzotto and Stefanel – but also many SMEs.

Eyewear – 80% of Italian eyewear manufacturers – 1,000 companies. Turnover of  US$1.5 billion.

Footwear – 115-120 million pairs of shoes are manufactured yearly – 86% exported – concentrated in provinces of Verona, Rovigo – Montebelluna produces 65% of the world’s ski-boots.

Furniture – 13,000 companies in the wood/furnishings sector employing 69,000 workers.

Goldsmith’s Art – between Vicenza and Bassano is the industrial jewellery sector – 2,000+ enterprises.

Creative Craftsmanship – Veneto has 132,500 artisan companies.

Agriculture and Food – Traditional strong point of the Veneto economy.

 

The fundamentals that characterise the Veneto model are SMEs, co-existence of traditional products with technologically advanced activities, internationalisation of markets, and organisational flexibility.

 

However there are concerns regarding the lack of network technologies in small firms, the negligible contribution by the service sector to exports, and the need for training, certification, and research, particularly into Internet based technologies.  Veneto does not seem to lack the financial resources, so much as the imagination and determination to make them work better.

 

The establishment of a Veneto Internet portal to market the region’s 11 industry cluster-sectors could stimulate the rapid growth of a webservices industry sector. The starting point is seed capital to prepare a strategic plan for the Veneto Internet portal. (Karen’s company is profiled at www.pro-plan.com).

 

Shoe cluster – Sinos Valley, Brazil

October 16, 2007

Brazil raised its share of world leather shoe exports from a 0.5% in 1970 to 12.3% in 1990, and became the world’s 3rd biggest exporter of leather shoes in 1992.

Although Brazilian shoe manufacturers are spread over 25 states, the fastest state has been Rio Grande de Sul, where the industry is concentrated in Sinos Valley. It accounts for 30% of national production, but 80% of its shoe exports. This has been possible because an initial cluster of local firms was set up.

The Sinos Valley shoe industry concentration of 400 shoe firms, soon grew to around 1,820 firms. One characteristic of this cluster is that the proportion of small firms declined from 85% in 1971 to 48% 1991. The Sinos Valley’s rapid shift to export was due to the geographical concentration of firms, government incentives and increasing demand from US importers.

With government incentives, local manufacturers took a collective action and organised a national fair, which was promoted overseas, and foreign buyers and journalists were invited with paid airfares. Aggressive marketing also took place where a consortium of producers took their products to Europe and the US. The Sinos Valley manufacturers launched their first contracts because importers recognized the advantages of buying from an established cluster, with specialised local input suppliers.

Once the connection between the Brazilian producers and the US market was established, US manufacturers became importers. But the US retail chains immediately set up offices in the Valley to carry out the intermediary role between the US market and local producers.

Other foreign agents set up business to carry out similar roles, provide technical assistance organise transport etc. This is why Brazilian shoe exports to the US increased remarkably. 

Source: Etienne B. Yehoue, IMF

Tasmania – Adventure Island?

October 16, 2007

In mid 2006, Rod Brown (manager of this blog) spoke at the LGAT conference in Hobart.

His message was that regions MUST think about a ‘positioning strategy’ – just as businesses do – and the creation of a strategic architecture that helps firms capture or create business opportunities.

This architecture is a unique combination of infrastructure, technologies, core competencies and human capital that can take advantage of a business or trade opportunity.  

Tasmania is nice compact region, with an excellent brand and credentials in environmental management, a track record in manufacturing, and the need for value-adding niche industries. I posed the question – could Tasmania develop a strong adventure and leisure industries agenda?

I explained that there are three major adventure chains in Australia – Paddy Palin, Kathmandu and Mountain Designs. Three years ago, I browsed around the latter’s Launceston outlet and asked the manager if there were any Tasmanian products in stock – he could only point to packets of beef jerky. But the shelves were full of high value, foreign and interstate product lines:
§          Hiking boots and thermal clothing – Europe, USA.
§          Hiking and camping cooking utensils – France, Switzerland
§          Specialist measuring and optical equipment  – Switzerland, Germany, Japan.
§          Energy food and drink – New Zealand, Queensland, NSW and Victoria.
§          Kayaks and small, specialist boats – New Zealand.
§          Fishing equipment – Japan, RO Korea, Taiwan, China. 

There were no Blundstone boots (iconic Tassie firm since 1870), or kayaks, or maritime gear where Tasmania has capability. People say that we can’t compete in this industry. Rubbish. It hasn’t stopped NZ developing a strong presence in this field, or Rivers making quality footwear in Ballarat, or RipCurl and Quiksilver making Torquay a world centre for surfwear.

The answer is a global network of facilities, with the high-value manufacture and management activities located on-shore.

If this has resonance with you, email me on apd@orac.net.au because there are a couple of government programs that might fit your needs. 

Michael Porter struts his stuff in Sydney

October 16, 2007

The Harvard professor and popular author drew an audience of 1,000 at $1,000/head in Sydney a couple of years ago, where he talked about competitive advantage and clusters. He recently gave an interview with Business Week. Main points: 

§          There are no barriers to investment. But the paradox is that location still matters. The U.S. is still the most important space in the world, and regions have tremendous specialization. Anything that can be easily accessed from a distance no longer is a competitive advantage. But the more there are no barriers, the more things are mobile, the more decisive location becomes. This point has tripped up a lot of really smart people.

§   As a result, the bottom half of U.S. locations are facing more stress. Many cities used to have a natural advantage just become they were in the U.S. But that is not such an advantage any more. We are finding a tendency for the rich regions to get richer.

§  Now that globalization continues to power forward, clusters must become more specialized in individual locations. The global economy is speeding up the process by which clusters get more focused. There is a footwear cluster in Italy where they still produce very advanced products, but much of the production has shifted to Romania, where the Italians have developed another cluster. All of the production companies actually are Italian-owned. Taiwan has done the same by shifting production to China. The innovation is in Taiwan, but its companies are moving aspects of their cluster that don’t need to be in Taiwan.

§          The notion of industry clusters is now pretty much ubiquitous. Many regions now look at development in these terms, and have identified many different clusters.

§          It’s very important to understand that the bar has risen substantially. Everything matters now. The schools matter. The roads matter. You have to understand this is a marathon. Also, you can’t try to built clusters across the board and be into everything. You have to build on your strengths.

§          Interaction between one region and its neighbors is important. The overlap between clusters is very important in stimulating growth. Isolated clusters are less powerful than integrated clusters. That’s because new clusters often grow out of old clusters. You need a lot of cross-company collaboration in a region. Meanwhile, universities used to be seen as stand-alone institutions. Now, more regional economies see universities as players and are integrating them into industrial clusters.

§          National policies and circumstances explain 20% to 25% of why a regional economy is doing well. What really matters is where the skills and highly competitive institutions are based. Some of these assets take a very long time to build. But competitiveness essentially is in the hands of regions. 

Blundstone – the Tassie icon

October 15, 2007

The Australian Greens say the closure of Tasmania’s Blundstone boots factory highlights the need to scrap efforts to sign a free trade agreement with China.

Greens Senator for Tasmania, Christine Milne, says the loss of 300 jobs in Hobart is a case of the company being let down by the inherent contradiction in federal government policy – which lowers tariffs and gives industry restructuring assistance knowing that such assistance will never be enough to compete with low-wage economies. She adds that Blundstone has been forced to leave because it can’t compete with low wages.  

This is an incredibly difficult issue, but one thing’s for sure – tariff assistance is not the answer. The use of tariffs on imported goods to improve the competitive position of local firms is yesterday’s approach. Apart from running into huge problems with WTO rules, it is transient support that can be quickly eroded by exchange rate changes. The emphasis has shifted to support for local capacity enhancement, infrastructure support, international supply chain development and R&D grants – and the EC and Japan show the way.  

 This is cold comfort for Blundstone. But one can only hope that Blundstone can be a viable operation by blending overseas manufacturing operations with local design and management functions. Some of you might remember that Pacific Brands began the off-shore production push twenty years ago as a matter of survival, and a host of other Australian manufacturers have taken the same route. 

Arkansas – creativity in the natural state

October 15, 2007

Stu Rosenfeld writes in an evocative style. His latest work ’Creativity in the natural state – growing Arkansas’ creative economy’ has close parallels to many other local economies. Perhaps yours? Extracts follow: 

The Arkansas economy in 2007 is very different than it was in the 1980s and ‘90s. Between 2000 and 2004, the state lost 10,000 manufacturing jobs in wood products, furniture, apparel etc.

The assets that once meant competitive advantage now represent nothing more than the opportunity to compete. Many of the products that were the bread and butter of the South’s economy are now made off-shore…unable to withstand the price competition from China and other emerging nations.  Today, talented workers are more mobile and selective. They look at location first and particular jobs second, causing states and nations to reorder their priorities. Chasing talent is the new game. 

NEW MARKET OPPORTUNITIES – CREATIVE GOODS & SERVICES

Consumer markets have created a plethora of new opportunities in non-traditional sectors. Arkansas has been the location for 200+ commercial movies, videos, and television shows…Buyers are paying premium prices for products that evoke an emotional response, create an image, or provide a sensory experience based on authenticity, appearance, or style embedded in content, packaging, or brand. Alessi kitchenware, Bang & Olufsen media products, Kohler’s artist-edition sinks, Viking ranges, and, in Arkansas, Munro’s Icon shoes. 

The state’s creative economy consists of large numbers of very small enterprises…many are in distinguishable categories e.g. new media, design, and publishing. But many are in classifications that combine companies producing artistic goods with those making purely utilitarian products. 

A NEW COMPETITIVE ADVANTAGE

Talented people are moving to Arkansas, as immigrants or urban artists and designers escaping the high costs and congestion of big cities. Others come out of a technology background in digital arts, computer and video games, and design.

The state’s EAST lab program attracts high school students into digital media, where some remain on a creative career track. Arkansas also has an advantage in amenities, which could bring new wealth and opportunities. Arkansas must differentiate itself from the pack, rethink its special advantages, and look for creative sources of growth and inventive niches that can resist competition and imitation – in short, develop its creative economy.

Unfortunately, the state considers them amenities rather than sources of growth, as tourist attractions rather than export or consumption industries.  

Contact the editor for a copy of the full report.

Mauritius – footwear

October 27, 2005

In 2003, having developed their Strategy and Action Plan, the Footwear Cluster in Mauritius sought the technical expertise and collaboration of the African Management Services Company.

While we are awaiting an update on progess, it is instructive to note that Hal Bosher, AMSCO Project Officer, told Footwear Cluster members then that AMSCO would delegate a foreign expert to the project. This was on cost-sharing basis for two years to assist enterprise technological improvement and also assist emerging clusters in training needs via their matching funds program. 

Mr. Bosher said that AMSCO would be more interested in asssiting clustered enterprises than individual ones because clusters provide the opportunity to involve more enterprises in improvement programs, hence speeding up industry restructuring.

 

Cluster involvement enables firms to jointly address common factors that affect both industry and firm competitiveness, namely material inputs and labour, and improvements in technology.  

The Productivity Implementation Committee on Clustering has identified printing, IT, language and environment as sectors for future projects.

There is scope for footwear associations, clusters or networks in other countries to form an alliance with the Mauritius folk. In this regard, Yorkshire (UK) was reportedly doing leading-edge work with the Mauritians  on digital printing.

Contact us for futher details.