Effects of the pandemic: Local production up, imports down, pressure on prices

More than any other footwear category in South Africa, safety footwear has so far survived the pandemic relatively unscathed - no life support from government, and apparently no casualties.

It helped that its status as part of PPE, and therefore an essential service, allowed it to operate, albeit on a reduced scale, during the strictest part of the lockdown. So too has the fact that demand has also remained high. That's despite many end user industries - the rest of the footwear industry, for example (not that it's a big PPE user), and most other consumer goods industries, too - being on prolonged short time.

But safety footwear suppliers, both local manufacturers and importers, insist demand has been consistently high, and sources say that locally there is pressure on component suppliers - especially CMT upper producers - to increase production.

This is in stark contrast to the rest of the local footwear manufacturing industry, where 3 or 4 day weeks are common.

 

The size of the safety footwear industry, by number of pairs and value, and by number of participants, can be estimated, but only with a fair degree of margin for error.

According to figures from the Southern African Footwear & Leather Industries Association (SAFLIA), imports of gumboots with metal toe-caps (tariff code 64.01.10.00), in 2020 totalled 29 797 pairs, worth R3 657 013, with an average unit price of R122.73. These were down from 2019 figures - 91 369 pairs (-67.39%), worth R7 015 842 (-47.87%), with an average price of R76.79 (+59.84%).

Almost all were from China. 

One fascinating set of figures is for imports from the UAE: 2020 - 1 pair worth R1 428, compared to 2019 - 2 pairs worth R1 466. For gumboots! It would be interesting to track down the story behind them.

Imports of leather safety footwear (tariff code 64.03.40.00), in 2020 totalled 1 667 188 pairs, worth R244 811 485, with an average price of R146.84. These were also down from 2019 figures - 2 210 601 pairs (-24.58%), worth R296 177 685 (-17.34%), with an average price of R133.98 (+9.6%).

Again, almost all were from China, with India in a distant second place.

And also again, there were fascinating imports from the UAE: 2020 - 3 pairs worth R1 230, compared to 2019 - 4 pairs worth R3 620.

Total safety footwear imports - gumboots, leather and specialised footwear - in 2020 totalled 1 816 392 pairs, worth R259 201 843, down from 2019 - 2 471 192 pairs (-26.5%), worth R317 543 999 (-15.09%).

By comparison, locally-made safety footwear - gumboots and leather - grew from 5.2 million pairs in 2019 to 5.7 million pairs in 2020. SAFLIA didn't provide a breakdown between gumboot and leather figures, nor their values, but it did say most of the growth had been gumboots.

10 years ago or more, the major local safety footwear manufacturers were warning that imports of leather safety footwear were reaching parity with local production by pairage, which they regarded as a tipping point.

Gumboots, by contrast, have remained almost entirely the property of local manufacturers; 1 explanation by a local gumboot manufacturer is that not enough pairs of relatively low-priced gumboots can be put into a container to make it worthwhile, another that the labour cost to make gumboots - with just a handful of people performing a few operations, is much lower than for labour intensive leather footwear, with its dozens of operations.

 

The number of businesses is easier to establish than it was, thanks to the National Regulator for Compulsory Standards' (NRCS) list of approved styles. To legally sell footwear as safety footwear in South Africa, suppliers are obliged to submit all their styles, along with proof from accredited testing houses, that they comply with the requirements of EN ISO 20345 (or its local equivalent, SA National Standard (SANS) 20345). Once approved, they are issued with a letter of authority (L.O.A.) and numbers (a different number for each style) which have to be displayed on the footwear.

As of April 13 this year, the NRCS list includes 337 styles. When brands with multiple styles are counted once,  and house brands belonging to PPE distributors are taken out, there appear to be around 30 business entities supplying safety footwear to distributors, resellers and directly to end users in SA.

Of those, 7 - Africa Soul Footwear Manufacturers, Bata SA, BBF Safety Group, Jim Green Footwear, Neptun Boot, Palm Footwear, and Phoenix Industrial & Safety Supplies, make all or almost all of their footwear locally, and another, DOT Safety Footwear, makes its gumboots locally but imports its (much bigger) leather boot range.

Villa Footwear is a local manufacturer which has been affected by the slow processing of applications.

Villa makes around 450 pairs/day of DIM PU leather upper safety and work boots, and has had several styles awaiting NRCS approval numbers since early 2020, member Mohamed Hussain said. It is currently restricted to making work footwear (no protective toe caps) under its own brand, though he said it does make safety footwear for other safety footwear suppliers who have NRCS numbers.

Looking through the list, a safety footwear supplier identified 20 to 25 which import entirely or mostly to wholesale rather than retail. These include Barron, Claw, DOT, Dromex, Hi-Tec/Magnum, Javlin, Kaliber, Pioneer, ProFit, Rebel and Wolverine.

Most of the house brands are imported, but workwear manufacturer Jonsson sources all or most of its branded footwear range locally.

House brands offer distributors and resellers better margins, but it can be assumed that they're more out of importing than in, especially in a period like this.

Since the importers spoken to say their figures have either grown or remained much the same, it suggests that house brands have borne the brunt of the drop in imports.

 

The NRCS approval numbers came into being when the bigger local manufacturers of leather safety footwear, alarmed at the rapid growth of imports, approached government, via the DTIC and the SABS, to argue that the local, SABS-developed safety footwear standards they had to adhere to, penalised them in terms of costs, and that to compete with imports, they needed to be allowed to make to the same standard as the importers - ISO 20345.

Government agreed, then gave the task of implementing and policing it to the NRCS.

From the beginning, the industry has criticised the slow rollout of numbers. It has also questioned the efficiency of the NRCS is policing non-compliant safety footwear.

On behalf of local manufacturers, but no doubt with the support of importers, SAFLIA is now trying to resolve their concerns with the NRCS.

"This isn't a finger pointing exercise," said SAFLIA director Jirka Vymĕtal. "The manufacturers believe that if they continue complaining, the NRCS will penalise them in some way."

The NRCS falls under the Department of Trade, Industry & Competition (DTIC), and he said SAFLIA has asked the Director of the Leather & Footwear Industrial Competitiveness & Growth Branch at the DTIC, Dr Jaywant Irkhede, to intercede "but with little success so far".

"I've given him a list of 7 issues from the safety footwear manufacturers," Vymĕtal said. "We need his assistance because the NRCS doesn't respond to our enquiries, and has stopped attending meetings with the safety footwear industry."

He said some manufacturers believed the NRCS was "deliberately delaying granting approval numbers to them".

 

Items on the SAFLIA list are:

1. Communication from the NRCS to the industry is very poor and needs to be improved.

 

2. The approvals issued by the NRCS are valid for 3 years, yet the validity of ISO certificates is 5 years. "Our suspicion is that the NRCS is treating the safety footwear industry as a cash cow," he said. "For the industry, it just pushes up costs, and this is needs to be rectified as soon as possible."

 

3. The NRCS allows footwear suppliers 30 days to remedy any non-conformance. "We request at least 90 days," Vymĕtal said. "Samples first have to be remade and if necessary submitted to an International test house for testing and reporting. That can take a lot longer than 30 days."

 

4. In the issuing of approval numbers, local manufactures "should be given priority, to keep industry going and to sustain jobs and create further employment of people. This fits in with the main objective of the MasterPlans 2030."

5. The NRCS's very slow turnaround times need to be speeded up. 

 

6. Until the NRCS can improve its service, styles awaiting approval numbers should instead be subject to a 'Supplier of Declaration Compliance (SDoC) system'. "One of our suggestions is that while the NRCS is incompetent, it should allow local manufacturers to self-regulate. In other words, if one of their shoes fails, they are fully liable for any costs caused by the failure of their footwear to perform to specification." 

 

7. Meetings with the NRCS inspectorate to be held "at least" 6 monthly. "This would assist with communication to discuss issues, updates, technical files and submissions."

 

"As an observation," Vymĕtal said, "after the approval numbers have been granted, who enforces that the bulk is made to the standard?"

He said the safety footwear manufacturing industry was disproportionately important to job creation in the footwear industry. Between them, they employ 1 246 weekly paid workers, which is 14.1% of the footwear industry's diminished workforce at present.

"Every job in South Africa is important," he said. "Normally, because they use capital intensive direct injection moulding, safety footwear manufacturers employ fewer people relative to pairage than most other types of footwear in a factory with a conventional bottomstock and lasting department.

"But where most factories are on short time, they're working at almost full capacity.