MEXICO. Footwear and clothing fell more than 30%

In his recent report published in the Mexican press, entitled "Winners and losers in manufacturing in 2020," Alejandro Gómez Tamez, Executive President of CICEG, the Guanajuato Chamber of the Footwear Industry and General Director of GAEAP, Economy and Finance Consultancy, described an outlook of this productive sector, with dissimilar behaviors according to the items, projecting for some in particular its evolution according to the new consumption habits imposed by the pandemic.

“We are a few days away from the end of 2020, a year that will be remembered as one of the worst in the modern history of Mexico and the world. Although the pessimism in the predictions has moderated, the fact that this year the Gross Domestic Product (GDP) of Mexico is expected to contract -8.99% and that it will rebound just 3.54% in 2021 and 2.59% in 2022 is still terrible. If these expectations of the analysts surveyed by Banxico are met, it means that at the end of 2022 we will still be 3.34% below the GDP level that we recorded in 2019”.

Specifically, the executive described that the two most affected activities were FOOTWEAR (-32.25%) and CLOTHING (-36.12%). This is due to several factors, among which the following stand out:

1. With the economic crisis, many people have seen their income affected and therefore their spending on semi-durable goods;
2. Many people stay at home, which causes clothes and shoes to wear out less;
3. The absence of social events means that people do not have to buy shoes and clothes as before;
4. The lack of face-to-face classes in schools hit many shoe and clothing manufacturers severely.

“Regarding the aforementioned, the severe damage that has been caused to various manufacturing activities, and the strategies for their reactivation, it is essential that the fight against illegal imports be taken up with great seriousness. And it is that despite the fact that imports have fallen, due to the contraction of the national economy, there are still problems of smuggling and undervaluation in the country's customs.

“To mention an example, in the footwear sector, the percentage of imported pairs in conditions of presumed undervaluation (prices below the cost of raw materials used) rose from 41% in 2019 to 45% in 2020. There is no doubt that the economic recovery is underway and that the aggregate of the manufacturing sector is part of it, but it cannot be ignored that there are productive activities with severe problems caused by the drop in the population's income, the closure of some marketing channels, as well as the change in the consumption habits of the population”.

“Many entrepreneurs have started long processes of transformation and adjustment, some others have not held out any longer and made the painful decision to close their company. The most regrettable thing is that regardless of the fact that Mexico is one of the countries in which there was less support from the federal government for companies and their workers, the difficult times are far from over, so we will have to see new restrictions on economic activity, such as those that have just been established for Mexico City, in which shopping centers and department stores have to close again in the best sales season of the year”.

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