How Portuguese Shoes Are Shining on the Global Stage
WHY YOU SHOULD CARE
Some 82 million pairs of shoes were exported last year.
By Jochen Faget
Fortunato Frederico greets his workers with handshakes as he walks through his factory — one of the most modern in Portugal — near the city of Guimarães. Many of his more than 600 employees know him by name. The 75-year-old entrepreneur is keen that his employees know that not only the shoes produced here are dear to his heart. He also cares about the well-being of his employees. “When I was the chairman of the shoe industry association, I established that men and women deserve the same pay,” Frederico remembers. At the time, about 20 years ago, his recommendation caused a lot of bad blood within the industry. But in hindsight, however, he has been proven right.
The ex–seminary school pupil founded his shoe factory more than 30 years ago, just as the Portuguese shoe industry faced its most severe crisis, which led some pundits to declare the sector dead. Low-cost countries such as China and Bangladesh began marketing their products aggressively overseas, and Portugal could no longer compete. In addition, the industry gained a negative reputation because of child labor, poor working conditions and worker exploitation. Portugal’s shoe industry employs some 45,000 people, most at the minimum monthly wage of 650 euros. Frederico recognized that times were changing and wanted to move away from producing what he described as cheap junk. Instead, he saw the potential for high-quality fashionable shoes with the “Made in Portugal” label, and he followed his instincts.
Portugal sits at 17th place in overall world shoe production. But this footwear is the second most expensive in the world …
… with an average export price of 22 euros ($25). Only Italian shoes cost more, at 41 euros. The world average is just 8 euros.
Last year, some 82 million pairs of shoes were exported, bringing the country some 2 billion euros in revenue. Factories are located almost exclusively in the north of the country. With all economic indicators pointing upward, shoemaking is an important success story for the debt-laden country.
“The first collection I designed was luxurious, precious and expensive, and my father, himself a shoe manufacturer, said that you will not sell any,” Luis Onofre, from the brand Oliveira de Azemeis, told Deutsche Welle. But in fact the opposite happened, and since then the company has established itself as a market leader — with its own stores in the chic shopping districts of Lisbon and Porto. It has an export share of over 90 percent.
Onofre produces luxury shoes that retail at around 400 euros. Modern designs and high quality are the secrets to the firm’s success, as well as its proximity to Europe’s fashion industry, which enables a rapid response to the changing tastes of consumers. Establishing a global brand is expensive, Onofre admits, especially marketing. But profits were made because at the end of the day, the quality and price were right.
“The Portuguese shoe industry has changed a lot in recent years,” said Leandro Melo, director of the Portuguese shoe technology center CTCP. With investments of millions of euros, production has been modernized and has become extremely flexible. The center, which is operated by the shoe industry association, also helps companies to improve quality control.
In contrast to the big cheap producers in Asia, Portuguese suppliers say they can respond to changes during the production process, while simultaneously producing a variety of complex shoe designs. According to Melo, the flexibility of Portugal’s shoe industry is the key to its success. The sector’s reputation has once again made the country attractive to international brands whose footwear is now produced in Portugal. About two-thirds of total production is made under the brand “Private Label,” which are relatively expensive shoes made for foreign retailers, including many German brands. “However, about 10 percent of companies have now launched their own brands,” according to Melo.
Fortunato Frederico, the ambitious shoe manufacturer from Guimarães, was also a trendsetter: In 1994, he founded the world-famous brand “Fly London” and now sells almost all of his shoes under his own labels. But he has no plans to rest on his laurels. His next dream is custom-made shoes, which are ordered in one day and delivered the next. “We must constantly increase the value of our products,” he said.
This could help solve the remaining issue facing the Portuguese shoe industry: low wages. At around 650 euros per month, they barely meet the state-guaranteed minimum wage. This must change, Frederico insists, even though many of his colleagues may not agree with him.
- Jochen Faget, OZY Author Contact Jochen Faget