RI may benefit from Nike's global rationalization strategy

Mustaqim Adamrah, The Jakarta Post | Mon, 03/23/2009 1:22 PM

Indonesia's footwear industry may gain more orders placed by United States-based sports apparel company Nike Inc., following plans by the footwear giant to stop orders at four factories globally as part of a major rationalization program, cutting orders to take account of the global economic downturn, as demand has been slashed by falling purchasing power.

Industry Minister Fahmi Idris said last Friday that none of the four factories that are negatively affected are located in Indonesia.

"Nike says it will stop placing (shoe) orders at four factories but none of them are in Indonesia. Its good news," he told reporters at the ministry, while reading a short message service he received from Nike's country manager for Indonesia, John Richard.

"Indonesia will not be affected by Nike's plan. Instead, Indonesia may have Nike place more orders at factories here," he said.

The move made by Nike is prompted by a double-digit decline in shoe orders in the global market amid the economic downturn, which started to impact negatively on world trade, and on shoe production in Indonesia, in the second half of last year.

The ministry's director general for metal, machinery, textiles and miscellaneous, Ansari Bukhari, said Nike usually placed orders in Vietnam, China and Thailand, as well as in Indonesia.

"Our condition is deemed as the most conducive, compared to other countries (where Nike usually places orders)," he said.

The domestic shoe market accounts for 235 million pairs per annum, including 94 million pairs made by local firms and 141 million pairs imported from abroad.

Every year, national shoe production, mostly for export, amounts to 1.2 billion pairs , including 800 million pairs of sports shoes.

Around 60 percent of sports shoes are orders from Nike.