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With 260,000 Jobs at Stake, Brazil Has a Detailed Plan to Transform Its Powerful Footwear Industry, Facing Asian Competition and Targeting the Global Market.
The new industrial policies of Brazil focus on high-tech sectors, such as clean energy and rare earths. While important, these segments often reduce the number of jobs. Conversely, the footwear industry stands out as a strategic and labor-intensive sector, crucial for the economic and social development of the country.
The Footwear Industry Scenario
The importance of the footwear sector for Brazil is evident in the numbers. With an annual production of 830 million pairs, the country generates 260,000 direct jobs. The sector consists of 5,500 companies, mostly small, and has an estimated annual revenue of R$ 40 billion.
Globally, Brazil ranks as the 4th largest footwear producer in the world, behind only China, India, and Vietnam. Despite this, most of the production is absorbed by the domestic market, which consumes about 80% of the footwear manufactured. There is high demand for popular footwear, especially those made from synthetic material and sandals.
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The Challenges of Brazilian Footwear
Despite its productive strength, Brazil exports little. The country is only the 11th largest exporter globally. Exports total 130 million pairs per year, focusing on lower-added-value products like PVC flip-flops. The main destinations are the United States, Argentina, and France.
The national footwear industry faces clear vulnerabilities. Among them are the high Brazil Cost, driven by poor infrastructure, and strong international competition, which results in a loss of competitiveness against countries like Vietnam, China, and Indonesia. Additionally, the unstable exchange policy directly affects import costs and profit margins on exports. The sector also suffers from informality, with part of the production operating outside the norms, and a significant technological lag, especially among small producers.
Sustainability, Nearshoring, and Innovation
Experts point to trends that could benefit the sector. One of them is nearshoring, a movement where international brands seek suppliers closer to their consumer markets, such as the U.S. and Europe. This could favor Brazil in relation to Asia.
In addition, other relevant opportunities are emerging. The rise of sustainable fashion, focusing on recyclable materials and clean production, opens new markets. At the same time, there is a growing number of companies investing in design and own brands, adding value to the product. Industry 4.0 is also a reality, with major groups like Grendene, Calçados Bibi, and Arezzo already utilizing automation and advanced technologies.
A National Policy to Strengthen the Footwear Industry (PNDIC)
To tackle challenges and seize opportunities, a strategic plan has been consolidated: the National Policy for the Development of the Footwear Industry (PNDIC). Its objectives are to reposition Brazil as a relevant exporter, add value to the national product, defend production against unfair competition, and promote sustainability.
The policy is based on fundamental pillars. In the productive-industrial axis, the goal is to offer credit through BNDES for machinery modernization and create a “Made in Brazil Premium” seal. For the export and exchange pillar, the plan foresees strengthening the Brazilian Footwear program, creating subsidized exchange insurance and hedging, and seeking bilateral agreements. In trade defense, the central action is to increase monitoring against undervaluation and dumping of Asian products. The plan also includes training and design, with the redesign of technical courses, and sustainability and ESG, through green credit lines and the “Sustainable Footwear Brazil” seal.
Monitoring for Sector Growth
To ensure the execution of the plan, the proposal includes the creation of the National Footwear Industry Council (CONICAL). This council would have members from the government, the private sector, and workers. Additionally, an online public dashboard would be implemented to monitor monthly indicators of production, employment, exports, and sustainability, with goals revised every three years.
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