Benel D. Lagua l September 20, 2023 l Manila Bulletin
My AIM classmate Roger S. Py, Jr., Director General of the Philippine Footwear Federation, Inc., shared a talk he gave to the Marikina Polytechnic College.
The global footwear market size was valued at $409.5B in 2022 and is projected to reach $725.1B in 2032 based on alliedmarketresearch.com. Roger estimates a humongous demand for 23 billion pairs a year.
The Philippine footwear manufacturing industry started as early as 1887. In the 1960’s, we were the largest exporter to the USA. Nike started a plant in the country. Both Under Armour and Adidas also had factories in Cebu. Unfortunately, these are all now closed.
Today, the Philippines is the 2 nd largest export market of China, next to US. The Philippine market was estimated to be around 170 million pairs, yet China imports were 360 million pairs in 2022, 2 pairs per person. China, India, Vietnam and Indonesia accounted for over 75% of footwear production worldwide in 2022.
Austria in the early 80s was where Roger first observed the use of special stamp pads which a consumer steps on to measure the pressure points of his or her footprint. This has been replaced by a special software that scientifically designs the best shoe fit for the customer. Today, some semblance of this in
malls for selected brands. We need to adapt to technological advances. Software developers in shoe design can be trained to make the local industry competitive. Several athletic companies including Nike, New Balance and Under Armour are utilizing 3D printing technology which shortcuts many of the processes involved.
The biggest branded maker of athletic and casual footwear is Taiwan. Taiwan is now the world’s largest investor in footwear manufacturing thanks in part to government support both in funding and incentives.
The footwear sector worldwide currently faces a shortage of skilled laborers. While leather is the prominent shoe material, other materials are plastic, rubber and fabric. In fact, 70% of shoes worldwide is now textile based. Taiwan is developing fruit-based leather through the Taiwan Footwear Research
Institute.
In 2022, Indonesia exported US$7.75B to the US. Indonesia is in the top five producers according to the World Footwear Yearbook. We used to be that exporter 50 years ago. Vietnam has now surpassed China in textile shoe manufacturing.
Cambodia is a new entry, yet 60 new factories have been set up in recent years mostly from Taiwan investments. Many Taiwan manufacturers are setting up production bases elsewhere like in India as they forge a supply chain less focused on China. Philippines is nearby but we are being overlooked.
Thailand tycoons opened a mall in Vietnam which predominantly sells goods produced and manufactured in Thailand. Indonesia encourages their domestic malls to allocate 30% of mall space for local brands.
We must keep pace with the other countries’ best practices and then add the distinct Filipino flavor to our strategy. There will be niche markets for Philippine brand of footwear. We must adapt the latest in technology and combine it with latent Filipino ingenuity and creativity. Filipino designers have always been winners in international footwear design competitions.
The demand worldwide for formal and casual shoes is increasing. Some studies show that elsewhere, men buy shoes every 4 months. The industry worldwide is expected to grow at compounded annual rate of 5.9%. How we can be future ready?
One, government should put their act together and move as a team to execute the footwear industry road map. There are many agencies involved but they need to improve coordination to achieve coherence in execution. The Federation is working with key policy makers to set aside a budget of at least
P1.0B a year for the footwear industry but this will not be enough. Incentives for industry players, both the SMEs as well as the large players, must match or even exceed our country competitors.
Two, the academe must review its curriculum to fill in the gaps needed by industry. We should train the generals, the soldiers, the technicians, the software developer, and the digital enhancers who will level up Philippine competitiveness in the industry. The country must invest in digitalization, software development, training on CNC or computer numerical control machines, robotics, and program design.
Three, we must develop local raw materials through research and development, international collaboration, and studies on new demands. International linkages to explore the processing of fabrics from abundant local materials like pineapple and banana can be pursued. Buyers are now expecting that producers adapt practices that meet the demand of ESG (environment, social and governance) parameters.
Finally, the generation of young Filipinos must be part of the journey in modernizing the Philippine footwear industry as responsible workers in whatever field. They need to see that this is an arena where they can make a difference and where the Philippines can assume a position of leadership which it once occupied.
*** (Benel Dela Paz Lagua was previously EVP and Chief Development Officer at the Development Bank of the Philippines. He is an active FINEX member and an advocate of risk-based lending for SMEs. Today, he is independent director in progressive banks and in some NGOs. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.)