Bata Under Threat
Bata Shoe Company, the country's largest shoe manufacturer, is under threat from escalating leather costs, which went up by 25 percent over the past nine months.
Managing director, Luis Pinto, said abattoirs around Gweru, from which Bata sources most of its hides, had "unilaterally" hiked prices to US$1 per kg by June, an increase which he said is unjustified.
"The abattoirs unilaterally increased price of leather from US 75 cents per kg to a dollar per kg in the last eight months, a price which we feel is not justified considering that the inflation rate is hovering around four percent and unless the government intervenes the shoe manufacturing industry will not be viable, "Mind you, we only increased the price of our products by just four percent yet all the production costs increased by up to 40 percent and if nothing is done, we will soon be out of business," Pinto said.
Despite the myriad of problems bedeviling the company, Pinto said the firm would continue to invest in the country. The company, which is operating at 60 percent capacity, is seeking at least US$5 million in the short term to import shoe manufacturing equipment which will see production capacity improving. Pinto could not be drawn into commenting on the company's indigenisation plans.
However, The Financial Gazette's Companies & Markets can report that the company's indigenisation process involves local procurement and outsourcing arrangements favouring indigenous Zimbabweans as described by the country's indigenisation laws.
Gweru Urban legislator, Roderick Rutsvara's company, Rutsvara Shoe Company, was the first company to benefit from the scheme after being awarded a contract to make the Tommy tennis shoes. Bata, which has been rattled by high production costs, has also been affected by the influx of cheap Chinese products on the market despite the government imposing a 40 percent duty on imported footwear.