The fate of Rohde’s Portuguese factory, which remains uncertain, highlights a trend in the country’s shoe sector toward reduced reliance on foreign capital in the last years. It has actually grown bigger if we exclude the earlier shutdown of the Portuguese shoe manufacturing facilities previously operated by big foreign companies like Clarks and the capacity cutbacks implemented by ECCO and other foreign players.

As reported in the last issue of Shoe Intelligence, Ara Shoes has decided to close one of its three factories in Portugal and to move some of its production to Ethiopia, where labor costs are lower. Meanwhile, another German company, Rohde, has confirmed its decision that it would no longer use its former big factory in Portugal. The factory was not part of Rohde’s takeover last year by Square Four Investments. Rhode had an option to take it over again by last June, but decided against it for various reasons.

Officials at the Portuguese manufacturing company said they were in negotiations with potential new clients. Its plant is not in operation for the moment. The unions representing its 982 employees, who are currently the company’s only creditors, rejected a few days ago a proposal to dismiss half of the workforce. They were thus told by the management that their fate will be sealed in January.

As of last year, Rohde was one of the six remaining foreign contractors that were still operating their own shoe factories in Portugal, down from 22 companies back in the year 2000. The others were and still are Ara, ECCO, Gabor, Mephisto and Sioux. Like Rohde, Sioux is set to come under the ownership of Square Four Investments (see next article), but well-placed sources indicate that it wants to keep its factory in Portugal in any case.

Research conducted recently by Apiccaps, the Portuguese shoe industry association, shows that the share taken by these “multinationals” in the country’s shoe exports declined from 39 percent to 11 percent between 2000 and 2008, falling down to only €160 million in 2008. At the same time, the export sales of fully Portuguese companies increased by 22 percent to €1,131 million, making a major contribution to the country’s overall trade balance.

In spite of the disinvestments implemented by foreign contractors, the Portuguese shoe industry’s export ratio increased from 87.2 percent to 95.5 percent over the same period, and the range of their destinations has diversified considerably, growing to encompass a total of 118 countries. As the most important investors were from Germany and the U.K., these two countries were previously the main outlets of the country’s production. Other countries such as France, Spain or the Netherlands have become more relevant.