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The China Syndrome

Global trade and sourcing in the safety footwear game

Donald Trump’s presidential victory shocked much of the world and we are all waiting to see the direction of the USA as an economy and how its role as the major policing superpower will now affect world stability.

How the US now approaches its new ideologies when it comes to trading will have repercussions across continental divides. Trump is promising a rethink of global trade and has vowed to put American interests above any other nations when it comes to benefits from international trade.

My fear of the future led me to buying a new copy of George Orwell’s prophetic book, 1984, and reading each chapter complete with side column markings of points that I tried to relate to what could actually happen now in this new world order.

In the world ‘BT’ (Before Trump) greed was king and globalisation rushed ahead. Survival of the fittest was the manifesto, making the 1% of society even wealthier and China the giant supplier of consumerism to the rest of the world.

As the rich get richer and the poor get poorer we are now seeing a domino effect of western nations beginning to fall to the wishes of a democratic one person one vote and an ignoring of the pleas from their traditional national leaders to “stay the course” when it comes to globalisation and free trade.

This magazine is dedicated to the role of health and safety in industry for the Middle East and Africa and so I succumbed to the idea of reviewing what could possibly change now in this part of the world when it comes to the sourcing of industrial and safety footwear needs.

I can’t promise my projections will be correct or forthcoming in these early stages of this realignment of political thinking, but at the least I can be provocative enough to get sound minds thinking of what can be the alternatives to the status quo, should the USA decide to hunker down and look after only itself.

Geographical focus

From my perspective, these two global areas of Africa and the Middle East could not be more different in their needs should drastic changes appear, yet both, like the rest of the world, have in the past decades of globalisation joined the Silk Route to China for their mass market products.

For the Arab states, the demand for raw materials and industrial products was immense as giant building after building was thrown up, making Dubai’s architecture the envy of the rest of the world. Qatar, The United Arab Emirates and Kuwait unlike much of Africa are not poor countries; their oil prices may have fallen on global markets but the rest of the world is still hurriedly trekking to these regions to sell their wares.

Among those wares are industrial and safety branded lines, albeit for most of them carrying a “styled in” sourcing label or predominantly just the “made in China” identification.

In Africa, on the other hand, as the old Colonial production units closed down, the buying acumen passed to the African elites of commerce, as it should, but again the sourcing in the main was passed to China for the manufacturing of products as that was the global trend.

Outsourcing to the East

As I see it, China became the key supplier because for branded workwear it was easier to handle the marketing in the West and let the East handle the technical problems and labour training challenges.

To be fair to China, the GYW workboot and the class vulcanised rubber shoe were first outsourced to South Korea before them, then moving on to Taiwan and later mainland China.

Industrial footwear in its early outsourcing days was strictly possible because of the rise of Western major discounting retailers and their new found huge volumes of what were then basic, non-seasonal, ‘classic’ products.

The domestic western footwear manufacturing base quickly declined as retailers and consumers alike flocked to the idea of cheaper resources and gave no thought as to the long term effect this trend would have on the lower stratas of society who actually paid their taxes and kept governmental services going.

To be fair to some domestic footwear manufacturers, they did try to compete via new technology against the wave of companies moving to Asia, but price seemed to win out over the recognition of the need for local basic jobs.

Ironically while much of the traditional way of making shoes was outsourced, the concept of domestic replacements for vulcanised and moulded rubber bottoming in the form of direct injected polyurethane was tried as a domestic production answer, but it failed dismally in North America and only now is beginning to be considered again for domestic production. In Europe, however, it has been a different story and ironically the remaining manufacturers and purveyors of branded shoes are in the main at the higher end of the global brand story.

In industrial footwear the PU process, through perseverance of established domestic makers, has survived the outsourcing drive and eventually – even with rampant globalisation and late competition – has taken hold of EEU markets and in the area of moulded bottoms and boot shells Europe is now a world leader in both industrial and wellness footwear categories using the PU bottoming process, albeit using rubber sole skins for safer traction.

I must note also, from a personal observation and being a fifth generation British work boot family, that I have seen the impact that closed rural factories can have on local societies. Those families of workers survive, but few were able to reinvent or re-educate themselves and many did not find new jobs to suit their artisan skills.

Today China also offers PU bottoming and more sophisticated industrial and safety products. Fortunately for the West this Chinese success is also opening up greater demands for their own domestic consumer needs, as more and more massive infrastructure ventures take place in that country.

Domestic demand

As a result of this ever growing domestic demand in China many western importers are becoming increasingly concerned as to their supply channels possibly drying up.

This is not an idle fear, as history and the role of exports by a nation has long had cyclical trends where in times of local demand, their export customers were neglected.

In the past, however, those in need of merchandise like the giant retailers’ customers could fall back on their own domestic resources, simply expressing a ‘mea culpa’ for going overseas in the first place and promising huge orders to struggling factories, yet still demanding low prices as the all-important retailing need.

Sadly, however, today much of the fall back scenario of open armed domestic vendors has dissipated. Now those stately Victorian three or four floor solid brick buildings that previously housed heavy shoe machinery are more likely to be state of the art lofts, condos or cultural centres.

The panic for domestic western production is not for a love of rebuilding lost manufacturing facilities and jobs in the West, it is simply a desire to find a replacement for where all these cheap goods will come from now that we have made ourselves so reliant on China as the exclusive source and they appear to now not want to produce goods for export.

“if China turns inward and the USA tries to bring back domestic industry, where will Africa and the Arab States turn to for their growing industrial needs?”

Future trends

So, if China turns inward and the USA tries to bring back domestic industry, where will Africa and the Arab States turn to for their growing industrial needs? American exports will not be the answer. Even though in the late 19th century the US was the single largest exporter of both GYW and rubber vulcanised footwear in the world, they are now the largest importer of such products, showing you what can happen in a century of international trade.

Here are my prognostications of what could possibly be the trends to come.

Stockpile resources

The mainland Chinese government is pragmatic. They have recognised the importance of basic raw materials as have some of the Indian billionaires. Both of these two groups, in Africa at least, have been buying up hide resources, natural rubber sources and creating offshore mass production units outside of the China mainland should the Trump dynasty try to dismantle free trade. The hidden theory is that should China find itself kept out of the US market or the TPP, if this treaty is viable without the USA as a partner then China backed resources will still have access to the US market through these offshore manufacturing communities.

Evidence already exists to show the plan at work as places like Ethiopia and Bangladesh revamp their artisan shoemaking and tanning skills for export demand.

Much of this development is Chinese financed, but with US mass retailing commitment.

Asian export moving to non-Chinese locations

The South Koreans, initially directed by the Japanese trading giants and US aid, pioneered the Asian export market but quickly found out the hard way that the US import/export business is built on price not quality. After just a couple of decades the shoe business in Korea became but a shell of its previous glory and the export production moved to Taiwan, leaving many good Korean technicians to find jobs in the new high tech industries that then evolved in their country such as cars, electronics and solar energy, or they moved to non-Chinese locations to start shoe manufacturing again to supply local Korean needs. Like the Taiwanese, South Koreans are good at setting up manufacturing units for basic consumer goods. They are at heart great technicians, but are often not expert at marketing their own global footwear brands.

Today there are many Korean owned factories in places like Indonesia, Vietnam, Cambodia and Myanmar trying to offer the basic industry mass market products, including safety footwear. Some are already supplying safety uppers to European suppliers for bottoming in Italy and I see this as the future of joint global production strategies.

One of the major limitations with these countries is their lack of industrial infrastructure, which is so vital for a good export business and one enables imaginative samples to be easily made. Without a solid shoe industry infrastructure, it is very difficult to find dedicated customers.

At the moment, much of the component base of these new export wannabees has to be developed and imported from China. Just as China now wants to concentrate on domestic needs, so possibly will be their attention to domestic trade infrastructures at the expense of export sales. This makes exporting finished shoes hard to plan for.

Sourcing in the Middle East and Africa

As a result of what I have listed above, I predict the future lies not in Asia for sourcing to the Middle East and Africa, but at your own doorstep.

The problems of globalism and ‘Trump-ism’ are the same. Brexit started the bloodless revolution of those who did not benefit from globalisation, there was the problem of many of the middle class who found their jobs replaced by computers or lost jobs as a result of the consolidation of consumer driven branded companies through giant investment group deals.

AMEXIT, as I call the US version of social unrest, is an enigma still to be explained. Trump won the election by promising ‘his’ world to the “deplorables” but has built his cabinet with billionaires. The seriousness of this strategy being that those who know ‘how to beat the system’ had better darned well make it work for the average American redneck, or capitalism as we know it may be in for a drastic change or even rejection for more socialistic principles.

One cannot simply close down globalisation, it’s too far evolved to stop, but what I do see with my Nostradamus glasses is a new joint venture global approach.

Today’s bottoming of shoes is no longer restricted by construction.

Uppers made of leathers, canvas or synthetics with a simple Strobel sock lining can be moulded on PU Injection moulding machines no matter the category or type. Robots today can change moulds and moulding stations, turntables can be both heat setters and refrigerating stations, and management of machines is conducted by product engineers and no longer by shoemakers.

“the future lies not in Asia for sourcing to the Middle East and Africa, but at your own doorstep”

Modernising manufacturing

So, what’s the difference from the past way of doing things? Firstly, I don’t see a revitalisation of manufacturing based on traditional concepts.

Already Nike, Adidas et al are making us think of knitting uppers rather than multi component leather assembly. They are also using variations on the 1970s flow moulding processes for stitchless uppers using all synthetic materials.

When it comes to leather quality shoes, this is where the joint venture concept plays its part in the rejigging of globalisation strategies.

Leather tanning, the cutting of leather and the sewing of those components are better suited to locales where there is an abundance of hides and natural artisans to operate the sewing machines.

Such seamstresses in the West have long locked up their sewing machines and offshore cheap production of fashion clothing has created new generations in the West that wouldn’t know where to start to make their own clothes.

The Strobel sock lining system is like a moccasin in construction. It uses sewing machines. Completed uppers with Strobel sock linings can be compression packed tightly and air freighted and arrive ‘just in time’ (JIT) from any part of the world where people have sewing skills.

Since the EEU is the major developer and supplier of moulds, machinery and soling materials for high tech processes, it makes sense to me that bottoming be the joint venture source of a Middle east / African venture. Today, with current new technology, the possibility exists for these areas of the world to expand their own quality of domestic production using EEU technologies. Today’s manufacturing is not high labour content.

In this regard, I am fully aware that some excellent resources to produce traditional footwear do exist in Turkey, Pakistan and even Afghanistan, but my message is more about the new technologies and questions why we need to keep being so totally dependent upon China for these market areas, especially when even China is showing a disregard for exporting everything the world needs cheaply.

Making quality footwear is now undertaken using more than low cost labour and has moved away from machinery and processes invented over a century ago.

The labour employment for robotically operated injection moulded machines is not huge and the Gulf States have the educational facilities and relationships with eastern educational structures to produce good product engineers.

We no longer have to think that only cheap footwear has to be produced here in these climates.

Today’s builders use expensive and technically advanced equipment and technology. The people who operate those machines and processes are valued for their skills so they also need functional footwear which can be expensive, with most of those costs being tied up in the transportation of the products across the world to their point of consumption.

Domestic resources

In Africa we also have the opportunity to export readymade uppers from good locally tanned leathers and even consider the practicality of rubber unit soles moulded in Africa from local processed rubber as an export product.

Now even the developing countries are looking at ways to increase the value added content of their basic domestic resources. In Africa, an abundance of hides is a logical platform for advanced tanning and finishing methods leading to ready supplies of finished uppers for export.

In many countries of Africa there are still some good technicians and certainly South Africa, Ethiopia or Kenya could become the central training facilitators for future African owned enterprises.

In Africa in particular I also see a great need for some ingenious product development that caters to the climatic working conditions of Africa.

For too long I believe we have tried to put western footwear ideas on African feet when in fact Africans need their own products that are designed to be healthy, comfortable and functional for their climate.

In this regard I am a great fan of expanded PU or foam EVA direct moulded one piece designs even for safety footwear products. Yes I know we already have numerous such wellington boots being used in Africa, but I am talking of a whole host of well thought out occupational moulded footwear, not just wellingtons. I do say this with much sincerity as when I was Marketing Manager for Bata South Africa in the early 70s as a very young man we introduced an expanded PVC foam sandal to the African market. That required us to convince them that this was a better shoe for their rural needs than an ill-fitting cheap pair of leather shoes. We showed them a product that was seamless, spongy to the touch, comfortable and flexible, that wouldn’t break, could be washed and even disinfected, would float if it came off their foot in the river, and cost half the price of their leather shoe. I believe we sold nearly a million pairs of that one shoe.

It hurts me to see some international brands offering incentives such as “for every pair of shoes bought we will supply a pair to Africa.” All African workers need are production units that make shoes tailored to their needs.

Summary

In closing let me say I have always been influenced by a Confucius saying that was drilled into me by Thomas Bata: “Give a man a fish and he is not hungry for a day, but teach a man to fish and he will never go hungry.”

I have long held this belief that we in the West need to help developing nations to make some of their own much needed products. To my way of thinking it is asinine to use cheap labour in China to make basic traditional foot coverings for the mass African market. What is needed is a product designed for the functional needs of that market climate and for far too long we, as an established centuries old craft industry, have been too fixated on just leather uppers as being the only correct material to use for a functional activity in an environment that is damp, humid, hot and subject to many foot ailments.

My message is that modern day technology exists to create the possibilities for more and more of a return to domestic production.

When outsourcing first started in Asia it was because labour costs were too high domestically for the needed footwear prices of the day and our politicians thought our old style industrial labour would be gainfully deployed with new high tech manufacture, but that never happened in the rust belt – they were simply forgotten. Now is the time to rethink that strategy.

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Phillip Nutt’s family background in work boots, along with Northampton’s reputation for Goodyear Welts and Doc Martens, exposed him to many of the in depth basics of industrial footwear.