Argentinean financial crisis and high value of the Peso cripples leather and footwear sectors
Owners and workers of companies in the leather, footwear and leathergoods sectors marched before the Ministry of Foreign Affairs in Buenos Aires on Tuesday December 18 to demand the end of imports of the goods they produce. In marked contrast with the looting seen on December 19-20, the march against imports went off without serious incident.
The main complaint from the footwear sector was that imports from Brazil have put domestic firms out of business. Imports have grown steadily in recent years thanks to the constant devaluation of the Brazilian currency compared with the overvaluation of the Argentinean Peso.
The country’s financial crisis, combined with the austerity measures imposed by the government, have sent the sector into a downward spiral. Thousands of small and medium sized footwear factories have closed down over the last few years as the country has been flooded by imports. Brazil’s shoe exports to Argentina grew by 650% between 1995 and 2000.
Another march in 1999, when some 10,000 people demonstrated before the Ministry of Industry, achieved some success with a subsequent reduction in Asian shoe imports. However, the current situation is far more serious, with the resignation of the Finance Minister Cavallo followed by that of his President, De La Rua, ushering in a period of even greater uncertainty.
The protestors blamed the policies of the De la Rua government for the crisis and demanded urgent measures to avoid the complete elimination of the Argentinean shoe industry. A document was handed over to the relevant authorities demanding the complete ban of shoe imports. It remains to be seen if any future government will be any more sympathetic to the plight of Argentina’s leather, footwear and leathergoods sectors.
The impact of Argentina’s financial and political crisis could be felt across the leather sector as the country is one of the world’s most important suppliers of crust leather. Uncertainty could lead to significant upheavals in the supply chain with producers choosing to stockpile material. However, events could just as easily lead to a rush to sell material in order to gain foreign currency. The general turmoil might also affect the supply of skins through a reduction in the country’s kill.
