NATIONAL: A lack of targeted funding support for Australia's footwear manufacturing sector could soon spell the end of locally made shoes, a peak industry group has alleged.
The Footwear Manufacturers Association of Australia (FMAA) claimed local businesses were struggling to come to terms with measures announced in the 2009 Federal Budget, which contained no "meaningful" support for the continued production of shoes here.
FMAA director Peter Eames said the $410 million package promised to the textile, clothing and footwear (TCF) sector would neither increase local activity nor employment opportunities for key players. In conjunction with the decision to cut footwear tariffs to five per cent in 2010, this meant there would be no reason for companies to choose locally made shoes over imported, finished products.
"There is now no framework for continuing manufacturing operations here in Australia," Eames argued. "At the same time, [the Federal Government] allowed the Department of Defence to specify an imported boot in a request for tender, making it absolutely impossible for any local manufacture to supply."
While clothing and textile manufacturers had been allocated targeted funding in the Federal Budget - including $22.5 million per year under the Clothing and Household Textile Building Innovative Capability Program - there was no such allocation for footwear providers, Eames claimed.
Instead, businesses could seek support through the broader Enterprise Connect initiative or apply for one-off grants under the TCF Strategic Capability Program.
"Enterprise Connect is useful to new small businesses looking to hire consultants to write a business plan," Eames said. "Australia's footwear manufacturers are sophisticated major [producers] that know how to run their businesses."
He said the Strategic Capability Program, aimed at building "innovation capability" at an enterprise and workplace level, was also unsuitable as it opened funding for major projects priced at over $1 million.
"The footwear industry has just spent 10 years re-equipping itself with the most up-to-date equipment available and there is no way that anybody will have a call for spending more than $1 million in one go in the next five years."
After a period of subsidised equipment purchases, most manufacturers were now focused on increasing local activity and lowering employment costs. The latest figures from the Australian Industry Group and PricewaterhouseCoopers indicated manufacturing activity had fallen in May, the 12th contraction in a row.
Sydney-headquartered J Robins & Sons, which produced footwear for Sandler, Easy Step and Widestep, confirmed it had been forced to lay off staff in recent months. Managing director Phil Butt said it was difficult to remain optimistic under current conditions.
"Without government assistance, the industry will die and never be replaced - the global financial crisis will only speed up the rate at which footwear manufacturing shuts down locally and moves offshore. And now we're excluded from a scheme that clothing [manufacturers] have a shot at for the next five years."
However, Australian footwear brands approached by Ragtrader indicated their decision to manufacture offshore was not necessarily based on price considerations. High-end designer labels such as Terry Biviano, Leona Edmiston and Mary Kyri all produced their collections in Europe.
Kyri, who counts Princess Mary, Nicole Kidman and Cate Blanchett among her client base, said while local prices were on par with those of Italian manufacturers, the variety and worksmanship was of a higher level offshore.
Edmiston said she had never attempted to have her footwear range manufactured locally.
"I would [say] to a certain extent that with the hundreds of years of experience behind the Europeans they might have a slight head start on some techniques. We were lucky enough to have a contact line already established to make our shoes in Spain."
Shoe designers Gabrielle Thompson and Shannon Gunn, who spent five years working for a multi-branded Australian footwear company before launching their Tom Gunn label in 2007, said they had initially toyed with producing some styles locally.
Gunn and Thompson studied footwear design and patternmaking in Milan, making the sourcing process easier than usual.
"The prices from Italy were similar [to those here] for noticeably better quality product with a clean Italian finish and unlimited choices for leathers including specialised true python, lizard, stingray and eel, which we found difficult to source in Australia."
Originally we thought we'd also make some of our collection in Australia using Australian leathers but found the prices were very high for medium quality and limited materials."
However iconic footwear brand Gary Castles, which operated seven retail sites across Australia, said it mitigated the costs of local production by sourcing 50 per cent of its collections locally and 50 per cent from Europe. Castles said he would not venture into cheaper offshore markets and would continue to work with local "artisans" to ensure quality, value and exclusivity.
"We have had a contact in Australia dating back over 40 years and we also have a very well known and respected name. It's sad to witness the demise of what was once a formidable industry give way to the classic syndrome of cheaper and inferior offshore products."