Rising imports, pandemic force 250 Ctg shoemakers out of business

Highlights

• Number of factories declined to 250 from 600 over 9 years
• Annual turnover now Tk200cr, down from Tk500cr in 2012
• Sales drop by 40%, compared to pre-pandemic times

Thirty-seven years ago, Kabir Hossain went into the shoemaking business in the port city of Chattogram with five labourers and Tk2 lakh in primary investment. Gradually, his business grew, reaching a sales figure of Tk3-4 lakh per month. 

However, the small-scale entrepreneur has been facing a recession in his business since 2012, in the face of growing finished product imports from India and China. The declining business finally drew to an end in the recent Covid-induced lockdown.  

Kabir is one of the hundred shoemakers who were forced to shut down their businesses- simply for failing to cope with foreign competitors in the local market and unable to keep themselves going when the pandemic hit. 

"We handmade-shoe producers were already under pressure because of the rapid surge in Chinese and Indian shoe sales in the country. And we finally lost the business to the pandemic owing to lockdowns and other restrictions," Kabir told The Business Standard.

A failure to pay rent, workers' wages, an increase in dues and shrinking buying orders were some reasons, among others, behind the worsening situation, he added.

"There was a time when some 70 labourers worked in my factory, resulting in a minimum of a Tk50 lakh annual turnover," said another losing shoemaker Anwar Hossain, who closed his factory in 2014 as a result of a sharp fall in sales turnover. 

According to the ChattogramKhudroPaduka Malik Samity, a trade body for the small-scale shoe industry there, the port city had around 600 micro and small shoemaking factories, employing around 10,000 workers before 2012, while the annual turnover of the industries amounted to Tk500 crore. The city has witnessed the closure of some 150 factories due to a rapid surge in finished products import followed by the outbreak of the deadly coronavirus. 

In the pandemic, the port city lost about 100 factories and incurred losses of Tk200 crore in sales.

Currently, some 350 factories are in operation, with a yearly Tk200 crore turnover, the association said. Besides, more than half the labourers have switched to other professions. 

It said the industry has had a drop of 40% in sales amid the pandemic, to one crore pairs of shoes from the earlier 1.8 crore.

The small-scale shoemaking industry in Chattogram witnessed its highest growth in the 1990s, mostly in East and West Madarbari, OvayMitraGhat, Jalsha Market and Nalapara in an unplanned way. Interestingly, the majority of the entrepreneurs came from outside Chattogram, mostly from Bhairab and Manikganj, to tap business potential in the port city. Since the beginning, the factories have used mostly 90% rexine and a little leather, about 10%.

Among the 350 factories in operation, many are fighting for survival. Malik Azhar of Dilip Shoes is one of them. 

"Once I used to make some 150 dozen shoes per week, which has now come down to 50 dozen only. Hence, I have had to cut down on the number of workers – from 50 to 15," he told The Business Standard.

"Earlier we could not have lunch until the evening owing to the high pressure of work, but now we have plenty of free time," said shoe factory workerBelayet Hossain.

MdMosleh Uddin, general secretary of the association, said entrepreneurs in the sector had not received any stimulus package from the government in the pandemic. "Now all are facing hurdles due to a capital crisis. Some have failed to come back. Even new entrepreneurs are in difficulties," he added.

He urged the government to impose higher duties on finished leather-goods import and to reduce the value-added tax to 10% from the existing 15% on raw material imports. Besides, the use of machinery and technology is now mandatory in the matter of coping with foreign competitors. 

Monjur Khan, the president of the association, urged the government agencies, particularly the SME Foundation, to come forward and take up a massive plan to save the sector. He also emphasised branding locally made products at home and abroad and long-term loan facilities with easy conditions for the entrepreneurs.

While contacted, MdMofizur Rahman, managing director at the SME Foundation, told The Business Standard that the foundation had requested the banks to provide e loans on easy terms to the industry. 

"But the banks did not show interest as they were fearful of a failure in the repayment of loans," he added. 

"We have also taken an initiative to import heavy machinery for the industry to help small entrepreneurs grow with technology. The machines are expected to be set up in Kaluhati, Bhairab and Chattogram."