“Governments come and governments go, and we still don’t have any industrial policy,” complains Haroldo Ferreira, executive president of the Brazilian Association of Footwear Industries (Abicalcados). He says the current government is giving signals that it wants to provide re-industrialisation – or neo-industrialisation – and took some steps with the announcement of credit lines at “more convenient” interest rates on the 25th, as he points to the basic interest rate as one of the major current problems affecting the international competitiveness of all sectors .
Ferreira believes that shoe manufacturers do not have a competitiveness problem when evaluating the output of pairs produced per employee. “Our problem is that we are based in Brazil, because the costs in Brazil are what take away our competitiveness for export purposes.”
According to the executive, the average output per employee in the region in 2022 was 2,863 pairs, higher than the average of 2,510 pairs for the four largest global manufacturers – China, India, Vietnam and Indonesia. In 2019, before the pandemic, the Brazilian average was 3,374 pairs, but after the pandemic the average price of production increased by 38% and manufacturers began to focus more on products with high added value, which require more labor . “In relative numbers it is small, but the larger production mix became leather products with greater added value, while plastic and rubber shoe production fell”, he says.
Ferreira says there are footwear industries in more than 600 municipalities in 25 states of the country, most of which have international certificates of sustainable origin and a competitive industrial park. “If there was any support for modernization, the sector would definitely be more productive and export more, because our problem is not competitiveness, it is cost.”
For Raphael Cagnin, an economist at the Institute of Studies for Industrial Development (IED), it is essential to accelerate productivity gains in industry. “All the social intentions of the government, for example with the revaluation of wages, find their limits in the rate of productivity growth.” He believes that, because it is important and urgent, this agenda needs to be built in phases, starting with improvements in education, professional qualification programs and expanding investment in innovation, the impact of which will be felt more in the long term. . “A technological update program with adequate investment financing conditions and greater access to international technologies is also needed, but with more medium-term impacts, as investments reach their maturity point,” he says.
A more immediate agenda would be to disseminate already known management techniques that rationalize the production process. He cites the Brazil Mice Productivo program created in 2016. It had significant results in pilot projects, increasing productivity in small and medium-sized companies by between 40% and 60%, but today it is practically at a standstill due to financing difficulties.
Cagnin highlights that industry is characterized by increase in scale, that is, it is always more efficient when it produces a lot more. “When industry grows faster, when it serves larger markets, when it exports, productivity improves; therefore, this systematic scenario of reducing production or moving to the sidelines allows the sector to achieve economies of scale.” And does not help in increasing its productivity. Apart from structural changes, growing more helps”, he says. (state institution)
Five Paths to Productivity:
- Education: Investing in education with vocational qualification programs
- Innovation: Increase investment in innovation
- Technology: Technological update programs with adequate financing conditions and greater access to international technologies
- Management: Diffusion of management techniques that rationalize the production process
- Scale: Benefits of scale with expansion of exports