By Steve Lee, Steve Lee associates, 8 Ash Lane Wells, Somerset, BA5 2LU, UK
Whilst a lot has been written about the dominance of labour costs as a key factor in the production footwear, very little has been done to quantify this, or to assess how increased automation in countries with high labour costs might help those regions compete more effectively.
There is little data to make comparisons, so the approach here has been largely qualitative.
Footwear production and demand
As the footwear market grows or decreases, demand for sole materials reflects that, and the main factor driving rising demand for footwear is population, which is steadily increasing. Another influence is the amount of disposable income, the footwear competes with other consumer items.
World Bank data shows that the GDP drop as a result of the recession has not been as high as first thought. Global GDP grew 9.3% in 2006, 12.4% in 2007, 9.8% in 2008 and fell 1.2% in 2009.
GDP is set to grow by only 1.7% in 2010 and then grow more slowly for the next few years – at around 3 to 4% a year.
This shift in global GDP is reflected by a drop in footwear, as shown in Table 1.