footwear

STATE OF THE SECTOR REPORT

PHILIPPINE

FOOTWEAR

October 1, 2003Pearl2 Project

The State of the Sector Report — Philippine Footwear isone of a series of State of the Sector Reports published bythe Pearl2 Project.

Pearl2 is a Canadian International Development Agencyfunded Project jointly managed by the Innovation ScienceCouncil of British Columbia and the British ColumbiaInstitute of Technology.

Pearl2 is a five year initiative (2002 – 2007) with the statedpurpose of supporting the development of small and mediumenterprises (through out the Philippines) that createmeaningful jobs for both men and women through thestrengthening of Business Support Organizations (BSO) andInvestment Promotion Groups (IPG).

The Field Office of the Pearl 2 Project is located at:

Suite 2103, Antel 2000 Corporate Center121 Valero St., Salcedo VillageMakati City, Metro ManilaPhilippines

Phone + 63 2 715 5912Fax + 63 2 884 1544E-mail [email protected] www.pearl2.net

Pearl2 ProjectTechnical Paper #2 “State of the Sector Report – Philippine Footwear”October 2003

All rights reserved. No part of this document may be reproduced, stored in a retrieval system,transmitted in any form or by any means, or otherwise circulated in any form, binding or cover,other than the form, binding and cover in which it was published, without prior written permissionof the Innovation and Science Council of British Columbia, on behalf of its Pearl2 partners theBritish Columbia Institute of Technology and the Canadian International Development Agency.

Innovation and Science Council of BC4720 KingswaySuite 1048 Metro Tower IIBurnaby, B.C.CanadaV5H 4N2Telephone + 1 604 438 2752www.iscbc.org

Disclaimer

This report has been prepared by contracted advisors to the Pearl2 Project. The judgmentsexpressed do not necessarily reflect the views of the Pearl2 Canadian Executing Agency(Innovation and Science Council of British Columbia and the British Columbia Institute ofTechnology), the funding agency, the Canadian International Development Agency or the Project’sPhilippine partner the Department of Trade and Industry.

While every effort has been made to ensure accuracy of the information contained in thistechnical paper, this is not guaranteed. Accordingly, neither the Canadian Executing Agency, theCanadian International Development Agency nor the Department of Trade and Industry acceptsany liability for actions taken based on this material

Project TeamMr. Arun Abraham, Project DirectorMr. John Manzanas, Senior Programme Officer and EditorDr. Rizalito Gregorio, Advisor, Value Chain AnalysisMs. Ana Jover, Advisor, Costume JewleryMs. Ma. Teresita Agoncillo, Advisor, Costume JewelryMs. Cherie Carlos, Technical Editor

Front Cover Design – pITstop, Legaspi Village, Makati City, Philippines

The Pearl2 Project gratefully acknowledges the assistance from the Philippine FootwearFederation, Inc. (PFFI) and Sikap Mo, Inc. and its members in the preparation of this report.

TABLE OF CONTENTS

1. Introduction 1MethodologyLimitationsAcknowledgements

2. Executive Summary 5

3. Overview of the Industry 9Product ScopeIndustry CoverageFirms in the IndustryMarket SegmentsWorld MarketExports of FootwearLocal Footwear Market

4. Profile of the Sector 27Key Findings, By Section

5. Value Chain Analysis 39Structure of the Philippine Footwear SectorProcess Flow in the IndustryThe Footwear Value Chain DiagramKey Findings from the Value Chain AnalysisFootwear Value Chain Table

6. Needs Assessment of the Sector 53Key Findings, By Section

7. Proposed Areas for Intervention 59

Annexes 67

11111 INTRODUCTION

The Pearl2 Project, working with the Department of Trade

and Industry, has identified the footwear industry as one of

the areas for program assistance under the Project’s Sectoral

Enhancement component. Footwear manufacture has good

export potential and has been established in the country

for quite some time. To help determine how the Pearl2

Project can effectively assist the industry, this study was

undertaken to determine the needs of the sector and the

possible areas for assistance. In addition, the study also

generated information on the firms in the industry that can

serve later as baseline data for use in assessing the impact

of assistance.

Methodology

Two consultants were engaged by the Pearl2 Project to

undertake this report. Data was gathered from existing

studies and reports provided by both government and private

entities, including the Department of Trade and Industry

(DTI), the National Statistics Office (NSO) and the Cottage

Industry Technology Center (CITC). In addition, the

INTRODUCTION 1

consultants also designed and conducted a short survey of

footwear firms who were members of the Philippine

Footwear Federation, Inc. (PFFI) and the Sikap Mo, Inc.

Both groups are based in Marikina, Metro Manila, which is

the center of the footwear industry in the country.

Interviews were also conducted with key industry

personalities, who provided valuable insights into the

workings of the sector

Data obtained from the survey, field research and literature

review were tabulated and encoded. The Pearl2 Project

also adopted the value chain model devised by Dr. Michael

Porter of the Harvard Business School to analyze industry

activities. The value chain analysis yielded information on

specific issues, problem areas and other concerns of the

industry — a fairly wide ranging list from the sourcing of

raw materials through processing and after sales service.

These findings were then organized according to the

industry’s value chain components. Finally, the needs of

the sector were assessed and specific areas of intervention

to assist producers were identified. (Please see Annex 1 for

a short background on the use of the value chain analysis.)

Limitations

The study is limited to the members of PFFI and Sikap Mo,

Inc., who are concentrated in Marikina, Metro Manila. A

total of forty six companies responded to the questionnaire,

STATE OF THE SECTOR REPORT - PHILIPPINE FOOTWEAR2

which represents about 44% of the combined members of

the two groups, which number 105. Not included in the

sampling are the small shoe enterprises that are not

members of PFFI or Sikap Mo and operate informally. The

study also has limited information on support industries such

as suppliers of leather and other shoe parts or materials.

The value chain analysis used in this study consolidates

findings from different firms. It does not cover any financial

or cost information from the firms, since these are quite

difficult to obtain and would prove hard to reconcile when

doing an evaluation on an industry level. There was also

not enough time or resources for this effort. The value chain

analysis used here is limited to the primary and support

activities of the producers and does not consider the value

chain of external entities such as suppliers or buyers.

Acknowledgements

The Pearl2 Project acknowledges with thanks the assistance

and support for this report of the following persons: Ms.

Ma. Teresita Jocson-Agoncillo and Ms. Ana Jover for

undertaking the research and drafting the State of the Sector

Report on Footwear; Dr. Rizalito Gregorio for helping

develop the value chain for the sector; Mr.Joel Rodriguez,

Philippine International Trading Corporation brand manager

for wearables; Ms. Merlin Diaz of the Bureau of Export Trade

INTRODUCTION 3

Promotions, product manager for footwear, for their support

in the research of this study; Mr. Roger Py, Director General

of PFFI, Mr. Mahar Jardiolin, President of Sikap Mo, Inc.,

and Mr. Frank Bonoan, Executive Director of CITC for their

assistance in gathering data for this study. The project

also acknowledges the cooperation provided by the other

officers and members of PFFI and Sikap Mo, Inc. in providing

data useful to the report.


22222EXECUTIVE SUMMARY

The local footwear sector covers a range of products that

includes dress and casual shoes, sports shoes, sandals and

slippers. This report focuses on footwear made of leather

and non-leather materials manufactured by small- to

medium-sized producers and sold in both the local and

export markets.

There about 2,148 footwear firms nationwide directly

employing 26,396 workers. Production of footwear in the

country is concentrated in the National Capital Region

(NCR), where about 43% of all shoe manufacturers are

situated, employing some 46% of the industry’s total work

force. Within this area, the city of Marikina is the center of

the footwear business. As of 2001, the city accounted for

almost three fourths of all shoe producers in the NCR.

Most of manufacturers in the industry are micro to small in

size. Firms usually have their own shop facilities, although

a small number rely on subcontractors for production work.

For marketing and distribution, some companies have their

EXECUTIVE SUMMARY 5

own boutique stores while others rent space in large

department stores and malls. The specific market segments

for the sector are defined according to the price and quality

of the product. These range from cheap, low-end footwear

made from synthetic materials to high-end and well-crafted

leather shoes based on European or American designs or

brands.

The majority of shoe producers utilize manual and semi-

automated processes in their manufacturing operations.

Most workers are in production, and there is almost an equal

proportion of men and women employed in the industry.

The world market for footwear totaled almost US$ 49 billion

in 2001. Most of the products represented by this figure

were non-leather footwear. The United States is the largest

market for footwear products, while China is the world’s

largest supplier. Exports of Philippine footwear amounted

to about US$ 48 million in 2002. Sports shoes comprised

almost half of the exports. The Netherlands is the biggest

market for the industry, followed by Japan and Great Britain.

Local footwear exports have generally not performed well

during the last few years, and a declining trend has been

noted.


Local shoe producers face stiff competition in the market

mainly from low-priced products coming from China and

other Asian countries. The industry also has difficulties

regarding raw material supply. Local leather, as well as other

shoe components, are not of the desired quality and price.

Producers generally have to rely on imports for their

materials and supplies. Problems on the production side

include lack of skilled workers, use of outdated technology,

and low worker productivity and efficiency. Also, the sector

has no standards for shoe sizes, resulting in variations in

product sizes.

A favorable development for the industry is the recent

establishment of a Philippine Footwear Academy in Marikina.

This school aims to train workers in the various skills needed

in shoe production. The Sikap Mo, Inc., supported by the

PFFI, has also launched a branding concept for the footwear

sector. This should help promote an appropriate image for

the industry.

EXECUTIVE SUMMARY 7

33333OVERVIEW

Product Scope

Footwear manufacturing in the country covers a range of

products that includes sports shoes, dress or casual shoes,

slippers and sandals. Materials range from leather, rubber

and plastic to textile and other components. The sector

targets buyers of all ages and offers products for men,

women and children.

Leather footwear is normally used as dress shoes. Non-

leather footwear with outer soles of rubber or other

materials such as plastic, wood, textile is commonly used

as casual footwear. Sandals and slippers are mostly made

of textile or plastic material and are used both indoors and

outdoors.

Sports footwear entails high standards of production and

most sport shoes facilities in the country involve some direct

foreign investments. Annex 2 provides a brief description

of the general classification of footwear products. For the

purposes of this study, the focus will be on leather and

OVERVIEW 9

non-leather footwear.

Industry Coverage

As of 2001, there were about 2,148 registered footwear

manufacturers nationwide. Total direct employment for the

same year was estimated at around 26,396. Another 30,000

workers are estimated to be indirectly employed in the

sector.

The industry has a large presence in the National Capital

Region (NCR), where 924 firms or 43% of the total

manufacturers are located. Other regions with significant

footwear producers include Central Luzon, Southern Tagalog

and Central Visayas. Table 1 on the next page shows the

distribution of footwear firms and employment in the

country.


Within the National Capital Region, Marikina has the largest

number of producers, with some 682 footwear firms

employing about 7,480 workers. Employment of footwear

workers in the city represents about 61% of the total for

the region. Table 2 on the next page presents the industry

presence within the National Capital Region.

OVERVIEW 11

Firms in the Industry

Most firms in the industry have their own production

facilities. A smaller number, however, rely on a network of

subcontractors who manufacture all or part of their


products. These companies have very minimal in-house

production facilities, and in certain cases, have none at

all. In this setup, the company maintains a number of sub-

contractors with qualified production operations and

manufacturing standards. These firms focus their resources

on the marketing and distribution of finished goods. They

are referred to either as ‘brand distributors’ or ‘traders’.

The former refers to a company that develops its own market

under a specific brand and has its products manufactured

by a network of local sub-contractors or, in the case of

some companies, supplements production with importation.

Traders are companies with established distribution

networks, with manufacturing done mainly by

subcontractors.

There are two major groups identified under the Sectoral

Enhancement component of Pearl2 as the lead associations

for footwear. Both are located in Marikina. These are the

Philippine Footwear Federation, Inc. and Sikap Mo, Inc.

Please see Annexes 3 and 4 for a brief background on these

two groups. Another group of footwear producers, the Carcar

United Footwear Manufacturers Association, Inc. (CUFMAI),

is based in Carcar, Cebu province. The group has about 15

members to date, comprised mainly of micro entrepreneurs.

The CUFMAI is not covered in this study but a brief

background on their association is provided in Annex 5.

OVERVIEW 13

Market Segments

While footwear product lines vary according to fashion and

cater to a specific market segment, the market

segmentation for this sub-sector follows the same pattern

as that of garments in that it is based on the income levels

and the lifestyle of the end consumer. There are basically

three distinct market segments for footwear based on

quality and price.

The high end market represents the upper echelon of the

market segment. Buyers in this category can afford luxury

items and indulge in extravagant lifestyles. This group

normally buys imported shoes ranging from US$ 75.00 a

pair to US$ 350.00 a pair in the local retail market.

Preference leans towards Italian, French and American

branded shoes. While customers from this sector purchase

mostly imported branded shoes, they occasionally also

purchase the locally made, branded footwear of select local

boutiques. Normally, local boutique brands are made from

imported materials. The average price point of the locally

manufactured high-end footwear ranges from US$50 to

US$75 a pair.

Price and comfort are the major concerns for the middle-

end market consumers. This group belongs to the low-

middle to middle-high end in the economic scale and is


normally composed of the working and professional groups,

for whom value for money is a primary consideration. Shoes

produced for this market are normally of good quality, and

prices range from US$12 to US$ 30 a pair for ladies’ and

men’s leather shoes. This group normally purchase from

locally famous boutique shops that have carved themselves

a niche in the market.

At the low end of the footwear market, products basically

cater to the mass market made up of a relatively large low

to middle income groups, who may opt to forego quality

for price.

Taking price into account, this group usually invests in a

few pairs of dress, formal shoes. The price points of these

products would be around US$ 6 to US$ 8 a pair. The majority

of the shoes would be of the casual, simple kind, with prices

in the neighborhood of US$ 2.50 a pair.

World Market

The global market for footwear of all types was estimated

at US$ 48.8 billion in 2001. Much of this figure is composed

of non-leather products, which accounted for almost half

of the market in 2001. The chart on the next page shows

the distribution of footwear products in the world market.

OVERVIEW 15

The world market for footwear has remained stagnant during

the last few years. From 1997 to 2001, there was no

significant growth in the global imports of footwear. Among

the various products, only non-leather footwear and sandals

and slippers indicated any positive growth during the period.

Leather shoes declined by an average of 5.32% yearly, while

sports shoes decreased at an average rate of 4.08% annually.

Table 3 on the next page provides some details.


The United States is the world’s largest importer of footwear.

In the year 2000, the U.S. market bought some US$ 15.58

billion worth of footwear products, representing about a

third of the global market for the year. Other major buyers

include Hongkong, Germany, the United Kingdom and Japan.

(Please refer to Table 4 for the footwear imports of these

countries.)

OVERVIEW 17

Among the major importers of footwear, only the United

States and the United Kingdom have shown a positive growth

trend during the last few years. From 1996 to 2000, imports

by the U.S. averaged an annual increase of 4.25%. The U.K.

market grew yearly by an average of 3.04%. (Table 5 shows

the growth trends in the world’s major markets for

footwear.)


China is the dominant supplier of footwear in the global

market. In 2000, it sold about US$ 20.78 billion worth,

accounting for some 44% of the world market. Italy was the

second largest supplier for the year, but its exports are

relatively small compared to China. Other major footwear

suppliers include Vietnam, Indonesia and Brazil. (Table 6

provides more details.) The presence of two other Asian

countries among the five leading footwear exporters may

indicate a trend towards the migration of orders to

developing countries in the Asia-Pacific Region due to

perceived cheaper production costs.

OVERVIEW 19

Exports of Footwear

Exports of local footwear products totaled US$ 47.79 million

in 2002. Sports shoes comprised almost half (49.76%) of

this amount. Consigned footwear accounted for about a

fourth of the total while non-leather footwear constituted

around 23% of exports. (Please see the chart on the next

page for details.)


The Netherlands is the largest market for Philippine

footwear exports. In 2002, about US$ 12.93 million worth

of footwear products were sold to the Netherlands. Other

major markets include Japan, Great Britain, Germany,

Mexico and the United States. (Table 7 on the next page

shows the exports to these countries in 2002.)

OVERVIEW 21

Exports of Philippine made footwear have declined

significantly during the last few years. From US$ 146.61

million in 1998, the exports shrank to only US$ 47.79 million

in 2002. On the average, it declined by about 22.83% yearly

during this period. Stiff competition has driven down exports

of the sector. (See Table 8 for details.)


Local Footwear Market

The local consumption of footwear is currently estimated

to be around 46 million to 51 million pairs per year. Most

firms in the industry are engaged in the manufacture of

ladies shoes, either as their sole product line or the bulk of

their general product lines. The inclination of the local

footwear sector to cater to ladies footwear is dictated by

fashion. Women have a penchant for purchasing more than

three or four pairs of footwear per year, depending upon

their income level.

Stiff competition in the domestic footwear market come

from imports, such as those from China, which can be priced

more cheaply. In 2002, footwear imports totaled US$ 54.62

OVERVIEW 23

million. The bulk of footwear imports is comprised of non-

leather shoes— basically made of synthetic, textile and

similar materials— which accounted for about 50% of

footwear imports in 2002. The table below shows the type

of footwear imported by the country.

About three fourths of footwear imports in 2002 came from

China and Hongkong. China supplies around 47% of Philippine

footwear imports while Hongkong, the second major

supplier, has a 27 share%. (Table 10 shows the imports of

footwear products in the country for 2002.)


The growth in imports from both China and Hong Kong has

been significant. From US$ 16.09 million in 1998, footwear

from China reached US$ 25.66 million by 2002. This

represents an average growth of 16.86% yearly. Imports of

footwear from Hong Kong grew yearly by an average of

12.68%. (See the chart on the next page for details.)

OVERVIEW 25

44444PROFILE OF THE FOOTWEAR

MANUFACTURING SECTOR

The Pearl2 project conducted a survey of members of the

Philippine Footwear Federation Inc. and Sikap Mo, Inc. to

gauge the situation within the sector. A response rate of

about 44% was obtained during the survey, with 46 out of a

combined membership of around 105, responding to the

survey. The following section contains the significant

findings from the survey. Please note that some questions

in the survey elicited multiple answers from the respondents

which affect the figures indicated when the responses were

tabulated.

Key Findings from the Survey

Date of establishment

The majority of the companies or 48% were established

during the years 1970-1989. As the shoe-making business

attracting more interest, 15 more companies or 32% of the

respondents joined as industry players in the period 1990-

1999. Around 20% are relatively new, having been

PROFILE OF THE FOOTWEAR MANUFACTURING SECTOR 27

established only since 2000.

Company size

In terms of assets, a large proportion or 86% of respondents

are either micro or small in size. Micro and small enterprises

had identical proportions of 43% each of the total firms

surveyed. Companies referred to as medium-sized

represented 12% of total respondents while large-sized firms

comprised 2% of the total.

Company setup

Only a minority of survey respondents or 23% are established

as corporations. Most (77%) of the companies surveyed are

set up as single proprietorships.

Product lines

A large number of firms or 40% of those surveyed produce

leather footwear. Companies manufacturing non-leather

footwear accounted for 30% of respondents while 26%

produced sandals and slippers. The remaining 4% of

respondents are into other product lines such as sportswear,

bags and belts and parts of footwear. Most firms produce a

variety of products, meaning a mix of leather and other

types of footwear. Only a few firms concentrate on a single

product line. Among the respondents, only about 17%


focused exclusively on leather footwear only. Some 2%

produced only sandals and slippers. Another 2% only

manufactured unit soles.

Ownership of facilities

Traditionally started as family businesses, the majority or

80% of the manufacturing facilities are set-up on owned

properties. The remaining twenty per cent (20%) of the

companies work in rented facilities. These producers consist

mainly of micro and small-sized companies.

Employment

The survey respondents reported 2,950 employees, of which

67% are involved in production, 26% in marketing, and 7%

in administration.

A large proportion or 90% of firms surveyed have their own

in-house production system. The number of production

workers range from 10 to 155. Of these firms, more than

half have 30 or fewer workers in production. About 17%

have from 31 to 60 production personnel while 31% have

more than 60.

The number of marketing personnel range from a minimum

staff of 2 to an extensive sales network involving 80 to 600


employees. The majority of the firms surveyed or 85% have

only 5 or fewer marketing workers. Some 4% have from 6 to

10, while 11% have more than 10 marketing staff. Those

with a large marketing network have their own retail

outlets, either independent stores or selling areas within

malls, located within and outside of Metro Manila.

A large majority of respondents or 80% have a minimum

administrative staff of from 1 to 5 employees. About 17%

have from 6 to 10 in administrative positions, while only 3%

have more than 10 administrative staff. There was one

producer who had around 50 in its administration and

support departments.

By gender, there is almost an equal number of male (49%)

and female (51%) employees among the survey respondents.

In both production and marketing, male and female workers

are almost equally represented. In production, 51% are

male and 49% are female. In marketing, the reverse ratio is

noted, with 51% women and 49% men. It is in administrative

positions where females (71%) vastly outnumber the men

(29%).

Subcontractors

The majority or 78% of the total survey respondents do not

use any subcontractors. Only 22% of respondents employ


subcontracting work. Of those that use subcontractors, 67%

are small size producers, 22% are considered medium or

large, while 11% are micro in size. Among firms not using

subcontracted work, most or 58% are micro level companies,

29% are small and 13% are medium sized enterprises.

Sources of raw materials

Nearly half or 43% of the firms surveyed use mainly local

materials complemented with imported materials. About

29% of the companies use more imported materials than

local ones. The remaining fourteen per cent (14%) use, on

the average, equal parts of imported and local materials.

Another 14% use only local materials in their products.

Local materials include leather, pig skin, insole, heels,

lining, shoe lasts, adhesive, buckles and other accessories.

Imported materials and components cover a similar range

of natural/synthetic leather, insole/outsole, leather lining,

uppers, shank, plastic heels, eyelets, buckles, glue, thread

and other accessories. These are mainly sourced from

neighboring Asian countries and partly from Europe.

A large majority or 82% of surveyed firms source their

materials from the open market. Some 6% produce their

own materials, while 12% source both internally and from

the open market.


Mode of Production

Almost two thirds or 65% of respondents stated that they

use semi-automated means of production. Some 31% use

manual production, while 4% have a fully automated setup.

Automation is defined as the presence of mechanized

process for cutting, skiving, installing shoe lasts, sealing,

drying, testing and others. A manual-based production

produces an average of 1,000 pairs per week. This can

accelerate to 3,000 – 5,000 pairs per week with a semi-

automated process.

Capacity Utilization

Twenty-eight per cent (28%) of respondent companies stated

that they had a 100% utilization of their production capacity.

These companies represent a cross-range of small (46%),

micro (31%) and medium/large-sized companies (23%). The

remaining 72% of surveyed firms had underutilized

production capacities. Three main reasons were cited for

unutilized capacity. Some 58% of firms said that inadequate

supply of raw materials was the primary cause for low

production capacity. This includes poor raw material quality

and shortage of materials. In addition, 55% of respondents

also indicated machine limitations as the cause for

unutilized capacity. About 28% cited lack of space as another

reason. Other reasons include manpower problems and


financial limitations. Some companies reported more than

one reason for low-capacity use, resulting in multiple

responses.

The majority or 71% of respondents plan to expand company

production space, while 63% stated they had plans to

increase machinery investment.

Research and Development

More than half or 63% of companies surveyed had R&D

facilities. Among these firms, 46% said they had in-house

R&D, and 20% used outside product and design development

services provided by government or private agencies.

Lacking R&D activities were 37% of the companies, the

majority or 76% of which are micro-sized, and about 24%

are small-sized firms.

Of the total companies surveyed, with or without R & D

setup, 65% develop products based on buyers’ specifications.

Quality control

The majority of the survey respondents or 60% stated that

they conduct quality control measures. Some 56% of the

companies have in-house quality control and testing setup,

STATE OF THE SECTOR REPORT - COSTUME JEWELRYPROFILE OF THE FOOTWEAR MANUFACTURING SECTOR 33

while 4% utilize outside test facilities such as those provided

by TESDA and the Philippine Army.

Market coverage

The majority or 93% of the respondents cater solely to the

local market, while the remaining 7% sell both in the local

and export markets. The majority or 55% of surveyed

companies manufacture and sell products aimed at the

middle market segment. About 29% of firms target the high-

end market while 16% cater to the low segment of the

market.

Companies defined market segments based on a price range

relative to the type of products manufactured. Each firm

stated general price ranges for all its product groupings,

with one given price range covering both leather and non-

leather footwear.

No medium-sized company sells in the low end of the

market, a segment dominated by small (67%) and micro-

size (33%) companies. The majority (52%) of the companies

producing for the middle-end market are small-sized. About

29% of those who target this segment are micro enterprises

and 19% are medium-sized. High-end suppliers are also

mainly small-size companies (38%) with micro firms


STATE OF THE SECTOR REPORT - COSTUME JEWELRY

comprising 31% and medium-size companies making up

another 31%.

Most companies cater to consumers within the age segments

of teenage to adult level. Young adults or those aged from

19 to 39 are the leading clientele for 37% of respondents.

Adults or those aged from 40 to 60 years old were targeted

by 25%. Some 22% of respondents primarily catered to

teenagers while 8% targeted children from 12 years and

below. Mature adults beyond 61 years of age were the

primary clients of 8% of companies. Most of the companies

deal with more than one target segment.

Market access and distribution

A majority or 83% of the companies market their products

through their own direct contacts or established buyers.

Twenty-four per cent of respondents participate in trade

fairs such as the bi-annual Department of Trade Industry-

CITEM F.A.M.E, and in U.S. trade fairs (Hawaii & New

Jersey). Around 19% use referrals to get orders. A company

usually uses one or two of these methods to get buyers.

Specialty stores such as boutiques are the leading channels

of distribution for respondents. About a third of the firms

surveyed said they use these stores for product distribution.

Other marketing channels include department stores (25%),


trading companies (18%), retail stores (12%) and direct

selling (11%). The latter is a common setup for exclusive

manufacturers of a specific brand.

Competitors

Among the respondents, nearly all of the companies or 90%

identified China as their major competitor. Citing China’s

fully-mechanized operations, they pointed out that Chinese

shoe factories now have the capacity to produce large

volumes of fashionable and even branded shoes which are

sold at relatively low prices. Other minor competitors

mentioned include Thailand with its access to local materials

and components.

Concerns

Regarding their concerns, 59% of the companies cited

uncompetitive pricing as the foremost problem in marketing

their products. This was followed by unsuitable packaging,

reported by 16%, unsuitable design by 13% and unacceptable

quality by 6% of the respondents. Some 3% of them reported

difficulties with both insufficient technology and marketing.

Sales

For the year 2002, respondent firms indicated a wide range

of sales figures, from below Php 1 million to more than Php


100 million. Most firms or 39% of the companies generated

sales within the range of Php 1 million to Php 10 million.

About 22% had sales within the range of Php 20 million to

Php 50 million; 19% indicated sales below Php 1 million;

14% had more than Php 10 million to Php 20 million sales;

and 6% generated sales of more than Php 50 million.

Financing

About 61% of surveyed companies are dependent on internal

sources to support expansion plans. Forty two per cent of

firms said they depend on bank credit lines for funding.

Around 50% of the respondents are still sourcing their funds

as of the time of the survey.

Operating Expenses

More companies are spending on R&D, with about 41% of

surveyed firms saying this was their major operating

expenditure. Administrative and marketing expenditures

were reported as the biggest cost item by 32% and 27% said

marketing was their leading cost category. Most firms or

60% of respondents say they use their own funds for

operating expenses. About 33% borrow from banks and 7%

use funds from cooperatives.


Needs Indicated

Almost all of the respondents or 97% have never availed of

direct assistance from any foreign-funding agency.

Companies who participated in the survey rated their needs

as follows: supply chain sources (30%), financial (28%),

technology (22%), training (13%), marketing (11%),

production/quality (9%), product development (9%) and

government policies (7%).


55555VALUE CHAIN ANALYSIS

Structure of the Philippine Footwear Sector

The local footwear industry is a labor-intensive operation,

with most of the firms small and micro in size. Production

is seasonal work, with peak periods before Christmas season

and school opening. Workers are hired on a piece-rate basis,

as most manufacturers cannot afford to employ workers

the whole year.

A major area of concern for the sector is the sourcing of

raw materials. The country does not have a competitive

tanning infrastructure that processes semi-finished or

finished leather hides. Therefore, procurement of leather

and shoe-related components such as shoe lasts, heels,

counters and top lift are sourced abroad. Almost 80% of

these items are not locally available and are generally

imported by the manufacturer.

Major firms in the industry normally produce their own

brands and may manufacture a name brand. Some firms

VALUE CHAIN ANALYSIS 39

use sub contractors for various stages of the production

process. These companies undertake direct or in-house

production but may also use subcontractors to manufacture

footwear that are labeled with their own brand. Another

type of manufacturer engages in contract manufacturing

of a foreign brand for export.

Some producers are known as manufacturer/suppliers,

whose production facilities are contracted by another

manufacturer. Other players in the industry are traders with

their own brand names. The latter group does not engage

in any direct production but contracts with either a

manufacturer/exporter or a manufacturer/subcontractor

to produce the goods.

The distribution network of the sector is multi-faceted. It

may include stand-alone boutiques in shopping malls or

concessionaire setups inside major department stores. A

recent trend initiated by an independent cooperative

organization, Sikap Mo, Inc., is the “networking-clustering”

system. The system entails subcontracting the

manufacturing process to a select group of qualified

manufacturers (mostly small or micro small firms) within a

framework of strict standards. The organization then

undertakes the marketing of designs to target buyers.


Process Flow in the Industry

Production of footwear starts with the sourcing of leather,

accessories and components from accessible suppliers. In

the footwear industry, the suppliers include leather tanners,

shoe-last manufacturers, shoe-component manufacturers

and accessories manufacturers/suppliers (they are also

referred to as shoe-supplies stores/ importer-traders).

Leather footwear use either genuine or synthetic leather.

The type of hide and finishing or tanning determines the

value of the leather. Surface skin has a higher value than

the section taken from the middle of the hide. Other shoe

components procured include insoles and outsoles made of

different materials such as rubber, pvc-plastic and

polyurethane. Soles can be purchased in molded sole form

(most commonly used), pre-trim sole (which comes in

standard sizes of small, medium and large), and sheet sole

(uncut).

Shoe lasts are obtained from both local suppliers and

importers. About 70% of the shoe manufacturers use wooden

lasts. Only 30% use plastic shoe lasts due to its higher cost.

Materials such as chemicals, buckles, threads, foam, etc.,

are sourced from various shoe supply stores.

Samples of materials for product development are initially

obtained by the shoe manufacturer. Development of samples


does not usually involve creating an entirely different design

concept, but is merely a revision of existing designs sourced

from magazines, retail stores and other sources. After an

order is confirmed, procurement of materials begins.

Production is either in-house or through subcontractors.

Patterns and lasts are made before the materials arrive to

save time. The initial steps include pattern-making for the

uppers, covering all required sizes; then, materials are cut

according to the pattern. All of the work is done manually

by most manufacturers, except in cases where orders are

large. The process is labor-intensive, involving local

craftsmanship aided by machines at certain stages such as

skiving and sewing. The next step is the assembly process,

which puts all the parts together. Then the shoe is taken

for roughing and finishing. At the end of the production,

another person conducts quality control and remedies any

perceived defects.

Complete production of one pair of shoes normally takes

two days. A typical footwear firm using manual production

produces an average of 1,000 pairs per week. This volume

can increase to 3,000-5,000 pairs per week with semi-

automated processes.


The Footwear Value Chain Diagram

Given on the next page is the value chain diagram for the

footwear industry. This diagram applies to the sector as a

whole and was based on research materials on the industry,

as well as interviews with several companies.


Key Findings from theValue Chain Analysis

The value chain analysis of the footwear sector gave rise

to certain significant concerns in the sourcing of raw

materials, particularly the sourcing of leather hides, and

in the nature of the production process. Local leather is

still not of the desired quality and price for the sector, so

the sector relies on imported hides. There are also some

issues in the manufacturing process that affect the quality

of the finished product. These include the widespread use

of wooden rather than plastic lasts, the lack of worker skills

and inadequately updated facilities. The industry also has

difficulty developing a standard sizing system for their

products. Shoe sizes vary, depending on the specifications

followed by manufacturers.

The industry has tried to address some of their technical

concerns by establishing a Footwear Academy. This

institution focuses on skills training to upgrade the level of

workers’ capabilities. The Marikina footwear sector has also

established a marketing group to promote one common

brand or image for the entire industry. Both are relatively

recent undertakings by the sector and would need sustained

support.

More details on the value chain of the sector are presented


in the following table. This table provides the findings

together with the concerns about these issues and some

recommended measures to address them.


66666NEEDS ASSESSMENT OF THE SECTOR

The value chain analysis of the local footwear sector has

identified some issues and needs of the industry. They are

as follows:

Inbound Logistics

The industry needs a reliable source of good quality

leather hides. At present, local hides are not up to the

standards required by the footwear sector in terms of

quality and price, so producers have to rely heavily on

imported leather.

The cost of chemicals and other supplies for treating

local hides is quite high. Prices for these materials must

be lowered.

Importation procedures for raw materials and other

components take too much time and effort because of

bureaucratic procedures. Representations must be made

with government in order to streamline the importation

process.

There is a need to develop the shoe component industry,

which provides the needed accessories for footwear

NEEDS ASSESSMENT OF THE SECTOR 53

manufacturers. At present, component parts of the right

quality and price are sometimes difficult to source

locally.

Tariffs and duties on imported shoe components are

relatively high. Again, representations must be made

with the government to settle this issue.

Operations

The technology used in the industry is outdated and

technology adoption rate of new technologies by

producers is low. Efforts should be made to accelerate

the pace of technology adoption among shoe

manufacturers.

Lack of production specialization among workers leads

to inefficiencies at some stages of the manufacturing

process. Continuous training in key areas of production

is needed to upgrade specific worker skills.

Research and development activities on products must

be expanded. Currently, research work is limited and

not sustained on the industry level.

Production planning procedures are inadequate.

Companies should develop skills in planning

manufacturing operations and adopt a systematic

approach for managing production activities.

The industry suffers from low worker productivity and


efficiency. Aggravating this situation is the strong

resistance by labor to changes proposed by management

to correct this problem. This situation needs a well

planned program of value formation, change

management and productivity improvement to overcome

worker resistance and institute needed reforms on the

shop floor.

The industry suffers from high operating expenses,

particularly for electricity and other power costs.

Producers must find ways to manage their operating

costs more effectively.

Product standardization is lacking. The fit of shoes for

a given size can vary among the different manufacturers,

since there is no common standard. Most producers

usually conform to the specifications set by their buyers,

but the industry needs an appropriate set of standards

for all producers to adopt and use.

The shoe industry as a whole needs a comprehensive

training program, especially on the standardization of

procedures for shoe manufacturing. This will facilitate

the use of modern technology and accelerate the

learning curve for workers.

The sector has to increase the available pool of skilled

manpower. At present, there are few labor entrants with

the right kind of skills.

The working environment for production, especially


among the smaller producers, need to be improved.

Facilities and operating conditions should be upgraded.

Such an effort will also contribute to workers’ well being

and productivity.

Producers should upgrade their management knowledge

and skills to be able to put in place a more systematic

work process and improve workflow.

Marketing and Sales

Marketing should be focused through product

specialization. Not only will this conserve marketing

resources and efforts, but also allow more sustained

development efforts in specific areas.

A brand identity will facilitate product promotions to

target buyers. It will create a common image for local

footwear, especially in the export market.

The current distribution system for the local market

needs improvement, especially among small producers

who cannot afford to open their own boutique stores or

rent spaces in malls.

There is lack of any sound pricing policy for the industry.

A suitable pricing structure should be developed, based

on product lines and target markets.

Exporters in the industry do not have a comprehensive

marketing plan to boost sales abroad, as well as deal


with competitors. A strategic marketing plan is needed

to guide promotional efforts and direct resources at

specific targets.

The industry needs to find a way to quickly deal with

the problem of cheap footwear imports, mainly from

China, which are eating into their share of the local

market. The sector has to adopt measures to prevent

any further loss of market share and increase their

competitiveness over the long term.

Services

The inconsistent sizing system in the industry requires

good after-sales service to deal with customer

complaints on shoe size problems. This is needed

particularly for high-end products promoted and priced

on the basis of their quality.


77777PROPOSED AREAS FOR INTERVENTION

Based on the analysis of the needs of the industry, the

following measures and activities are recommended:

1. Simplify importation proceduresfor raw materials

To address the need for competitively priced raw materials,

the industry should adopt an integrated approach on

simplifying the importation procedures for leather and

footwear components. This will facilitate the entry of

rawhides, skins, finished leather and accessories with the

desired quality. To achieve this, there is a need to maintain

continuous dialogue and advocacy with the government.

2. Encourage consolidation ofraw material imports

Given the volume of materials and components bought by

footwear producers from abroad, it may be practical to

consider a consolidation of their orders. Bulk importation

can reduce per unit cost and limit the amount of time and

resources spent on this process. The industry should

consolidate import requirements and coordinate delivery

PROPOSED AREAS FOR INTERVENTION 59

schedules with the inventory and production of

manufacturers.

3. Provide support toshoe-component suppliers

To augment the local supply of hides and components, there

should be institutional support for producers of these items.

This would include increasing their access to affordable

credit and containing technical smuggling of shoe

components from abroad. Collaboration and trading with

transnational companies supplying footwear components

should also be encouraged with the objective of establishing

joint ventures or investments in the country.

4. Develop reliable sources for raw materials

Over the long term, there must be serious efforts to develop

the raw material base for leather while exploring alternative

indigenous raw materials that can complement, supplement

or substitute for leather. This would require research and

development work, as well as forging linkages with groups

working on alternative or substitute materials. Specific

agencies such as the Department of Science and Technology

and the Fiber Development Authority are some possible

sources of information and research work. The leather

tanning industry would also require sustained support in

terms of new technologies and production systems to bring


their products up to the standards desired by the footwear

manufacturers. The leather tanners should coordinate

closely with the shoe industry for their specific quality

requirements and should anticipate changes in specifications

of leather materials.

5. Implementation of proper standardizationamong shoe-last producers

Standards should be set for manufacturers of shoe lasts, in

order to develop a consistent level of quality for their

products. Specifications for shoe lasts should meet the needs

of footwear producers. Shoe-last producers would have to

upgrade their facilities and technology to conform to the

changing needs of the industry. Other components (heels,

insoles and outsoles) would also benefit from the

standardization of shoe lasts.

6. Encourage the use of more plastic shoe lasts

Since a plastic last is more reliable than a wooden one for

setting footwear sizes, the use of plastic lasts needs to be

more widely adopted in the industry. To offset the high

cost of plastic lasts, efforts should be made to attract more

firms to invest in this business. The footwear sector should

coordinate with government to make shoe-last investment

a priority area.


7. Make technology transfer andfacilities acquisition easier for small firms

A program should be established to allow micro and small

enterprises in the footwear industry to obtain modern tools

and equipment at affordable financing terms. Guarantees

by either the local or national government can be worked

out to support this program. In addition, technology transfer

from larger firms in the industry to smaller subcontractors

should be sustained. The sector needs to expand present

levels of cooperation and linkages among producers to

accelerate the technical capabilities of smaller companies.

8. Improve and upgrade skills of workforce

The recent establishment of the Philippine Footwear

Academy (PFA) is a favorable development for the local

footwear industry. The PFA, together with the Cottage

Industry Technology Center (CITC), an agency under the

DTI, should take the lead in rehabilitating the skills and

values of the present labor force in the industry. A consistent

flow of training programs in modern skills and techniques,

business values, work ethics and related concerns should

be maintained for the workers. The programs must also

take into consideration the multi-faceted training schemes

of workers, as the industry practice requires workers to be

aptly skilled in one or two processes, while supervisors must

be able to shift from one production process to another.


Training programs must cover the whole spectrum of

shoemaking operations including shoe-last technology, raw

materials preparation, sizing, grading, cutting,

uppermaking, skiving, stitching and assembly.

9. Undertake entrepreneurial andmanagement training for producers

The industry should provide adequate training programs

for their supervisors, middle and top level managers. The

objective of such programs should be to professionalize

the management of shoe firms. Given the work load of these

personnel, training can be modular in structure and provided

during off-hours. Among the topics which can be covered

are: operations planning, marketing, labor management,

inventory control and financial management. For owners

of micro and small firms, who usually operate as

subcontractors, courses in entrepreneurship can be offered

to provide them with the knowledge and skills to expand

their businesses.

10.Develop specific market niches

Given the influx of cheap imported footwear from China

and nearby Asian countries, the industry should reassess its

market and focus on certain segments in which it can

compete successfully. There may be opportunities in the

market between the extremely low-priced goods of low


quality and the high-end imported American and European

branded shoes. The niche in the local market is within a

price range of quality leather footwear between US$ 18.00

– US$ 80.00, perfectly crafted, using primary leather hides

and imported shoe components. For the global market, the

industry can focus on their design and craftsmanship and

avoid competing based on price alone.

11. Sustain the branding conceptfor the industry

The present branding for local footwear, initiated by Sikap

Mo, Inc. and supported by the PFFI, should be maintained.

A local brand provides a competitive advantage to producers

and can eventually be used to launch a distinctly Filipino

image in the export market. Adequate promotional efforts

and programs to project a quality image should be

implemented consistently.

12.Develop an industry price structure

The development of an industry-accepted pricing structure

for different footwear products is also recommended. This

could be implemented through an actual cost study analysis

of the production setup of the industry in order to establish

the range of pricing, given the setup of the producers. A

systematic pricing policy can help maintain profitability and

allow more effective responses to changing market conditions.



13.Continue support for exporters

A small group of manufacturers who are already in the

export business, the Marikina Council of Fashion, should be

assisted and supported by both the local and national

governments in their quest to promote Filipino-made shoes

in the global market. Specific areas of assistance include

support for the participation of the group to foreign

footwear exhibits or the conduct of a focused selling mission

abroad. A well planned promotions program should also be

developed for the group.

14.Strengthen institutional supportfor the industry

A cohesive network among the footwear industry and

national government offices should be supported to

facilitate the industry’s access to information and programs

relevant to their needs. In particular, footwear producers

could benefit from closer linkages with such offices as the

Fiber Industry Development Authority (FIDA) of the

Department of Agriculture to develop locally available

materials that could be used as alternatives to leather.

ANNEXES

ANNEXES 67

Annex 1Value Chain Analysis as Used in the Sectoral

Enhancement Component of Pearl2

The Value Chain Concept

Value chain analysis is a method for identifying and

understanding the various activities of an organization that

provide value to its products or services and the linkages among

such activities. It is used to determine which aspects of a

firm’s operation can be enhanced, where to reduce costs,

optimize resource use, or even reconfigure the entire chain

of operations for better performance. The end result of this

effort is increased product or service value, lower costs of

operation or both.

A value chain covers of two sets of activities. The first refers

to the primary activities of a firm and consists of inbound

logistics, operations, outbound logistics, marketing & sales

and service. These are the activities that organizations engage

in to produce a product or service. The second set covers

support activities that indirectly contribute to the firm’s

operations. These include organization infrastructure, human

resource management, technology development and

procurement.

All these activities are linked together and work in a process

ANNEXES 69


which can be structured into a value chain diagram. A firm’s

value chain can also be linked with external chains such as

those of its suppliers or buyers.

Value Chain Analysisin Sectoral Enhancement

An adaptation of the generic value chain described in Michael

Porter’s book, “Competitive Advantage”, was used to analyze

the structure and performance of industries or sectors covered

in Sectoral Enhancement. Originally, the value chain was

designed for company-level evaluation. In the Pearl2 project,

however, it was used to develop a framework for understanding

how a particular industry operates with the objective of

determining the needs of that sector. On the basis of such

needs assessments, it is possible to identify areas where

appropriate assistance can be provided.

Basically, work on the sectors included designing the value

chain diagram, developing a table describing the main

components of the value chain and analyzing the flow of the

chain to identify issues, problems and recommended courses

of action. Such an assessment brought out the needs of the

sector and allowed closer evaluation of them. The value chain

analysis focused primarily on producers who are members of

the Business Support Organization (BSO) identified for the

sector. The analyses are not by any means comprehensive and

do not involve any cost estimates for the chain or a comparison

of the industry value chain with similar structures in other

countries or regions. No references were made to external

value chains. Time and resource constraints did not permit

such additional work.

ANNEXES 71

ANNEXES 73

Annex 3Brief Background on the

Philippine Footwear Federation, Inc. (PFFI)

The Philippine Footwear Federation, Inc. (PFFI) was

established on December 20, 1992. Formerly known as the

Marikina Footwear Federation, Inc. or MFFI, the federation

was founded through the joint efforts of Architect Tereso

V. Pasco, Sr., the late Mr. Rogelio G. Villareal and Mr. Renato

A. Florencio after a meeting attended by various NGO’s,

civic organizations, cooperatives, trade associations and

various footwear manufacturers in Marikina.

The PFFI is composed of footwear manufacturers, retailers,

cooperatives and allied industries. At present, the

organization has about 63 members. The majority of the

members are from Marikina, Laguna, Bulacan, San Mateo

and Cebu. Most of the members are classified as small and

medium enterprises (SMEs) and are often family-owned.

The PFFI is currently manned by a Director General with

two staff members, an Assistant Director General and a

clerk/messenger.

From 1993 to 1998, it was the MFFI that provided the

footwear industry with training, seminars and workshops

on the various aspects of footwear making. The federation


also helped to establish the Footwear Productivity Center

(FPC) and the Footwear Industry Promotions Building (FIPB).

FPC is now named the Philippine Footwear Academy (PFA),

the first and only footwear school in the ASEAN Region.

The PFA is located within the premises of the Cottage

Industry Technology Center of the Department of Trade and

Industry (CITC-DTI) in Marikina. The idea behind establishing

the PFA was to provide the industry with technology

transfer, skills training, technical consultancy services, as

well as a common facility for services. The Leather Footwear

Industry Master Plan. which was prepared in cooperation

with CITC-DTI, provided the basis for the PFA. The CITC

also provided the Computerized Shoe Pattern Engineering

(CAD/CAM) System, now housed at the PFA, which provides

fast and cost-saving shoe patterns for the use of the shoe

industry. In addition, the FIPB was established as a “one-

stop shop” for all information relating to footwear, which

included a display center, as well as the head office of the

federation.

In 1999 the MFFI, as a new member, participated in the

18th Asian Footwear Conference held in Vietnam. That same

year, in its effort to revitalize itself in order to provide

more services to the majority of footwear manufacturers

and its allied industries, the federation called an assembly

of shoe manufacturers to discuss current issues concerning

ANNEXES 75

the industry. During the meeting it was agreed that in order

to attract membership from other parts of the country, the

word “Marikina” of the MFFI should be changed to the

Philippine Footwear Federation, Inc. (PFFI). Thereafter, an

agreement was signed by all participants to signify their

commitment to support all the endeavors of the PFFI.

The PFFI hosted the 20th Asian Footwear Conference on

July 26-27, 2001 at the EDSA Shangri-La Plaza Hotel, Manila.

Footwear manufacturing associations from China, Hongkong,

India, Japan, Korea, Malaysia, Taiwan, Thailand , Vietnam

and the Philippines came to discuss the policies, issues and

concerns of the footwear industry in the region. Now the

PFFI is internationally recognized as a footwear industry

association and is a trading partner of the Footwear

Distributors & Retailers Association of America and the

Apparels and Footwear Association of America.


Annex 4Brief Background on Sikap Mo., Inc.

Sikap Mo, Inc. is a joint venture of companies comprising

the Marikina shoe industry. The group aims to make the

footwear sector become more competitive and win back

the local market share it has lost to imported shoes. Sikap

Mo pools together the resources of its members in an

association in order to achieve the following objectives:

Re-engineer the Marikina shoe industry by introducing

more efficient manufacturing and updated marketing

methods. It is determined to retrain the whole shoe

industry, from the factory workers to the owners.

Create an exciting collection of comfortable, durable,

fashionable and affordable genuine leather shoes.

Build a unified brand name “Marquina” through

advertising and promotions.

Launch a collective selling effort to retail and wholesale

companies nationwide.

Sikap Mo has 62 members. The organization has undertaken

an aggressive project to improve the quality and promote

the products of the Marikina shoe industry by focusing on

the following aspects:

1. Selling the project idea and forming the corporation

2. Designing the products and improving marketing

3. Advertising and starting to sell

4. Manufacturing of products according to manuals

5. Delivery on time without quality problems

To date, Sikap Mo has reached the second stage, which

involves training in shoe production (including advanced

shoe production) and marketing. Recently, the group also

launched the Marquina brand, which aims to create a

prestigious image in the shoe sector’s market. The activities

of Sikap Mo have received wide support in the media, as

well as from celebrity endorsers.

ANNEXES 77


Annex 5Carcar United Footwear Manufacturers

Association, Inc. (CUFMAI)

Fifteen shoemakers from Carcar, Cebu decided to come

together in August, 2001 and organize themselves into a

non-profit, non-stock association. On October 4, 2001, the

Carcar United Footwear manufacturers Association, Inc.

(CUFMAI) came into existence legally under SEC registration

no. C200100989.

The association seeks to deal with the fast-paced changes

affecting the footwear industry, which include technological

innovations, market competition, flooding in the local

market of low-priced shoe products from China and Vietnam,

as well as the pirating and migration of laborers.

The vision of CUFMAI is stated as follows:

To become a dynamic association recognized as a major

change agent in making the footwear industry in Carcar,

Cebu, globally competitive by effecting structural changes

and making strategic alliances

To achieve these aims, the group plans to undertake the

following:

Enhance the entrepreneurial/managerial capability of

the members thru the conduct of training, seminars and

workshops

Facilitate technology transfer programs in order to

upgrade the technical skills of the members

Network with financial institutions for resource

generation

Establish a production center to house a common service

facility for the benefit of other members of the

association

Establish a marketing/display center to showcase major

product lines of the members

Secure accreditation with the appropriate GA/LGU/

Federation necessary in establishing local and global

linkages

In partnership with government, the association will look

into and interpret the changes facing the industry, and

provide direction to the industry on how to position

themselves in the global arena. About two years ago, the

association held a workshop to create their development

plan, the CUFMAI Development Plan, which would serve as

its guide for the next three years.

The Association has been chosen as one of the beneficiaries

of “Isang Bayan, isang Produkto, Isang Milyung Piso”

ANNEXES 79

program of the Department of Trade and Industry in

coordination with the Cebu Provincial Government. The DTI

has provided numerous interventions to the organization,

including technical training, organizational strengthening,

financing and market matching, and business linkages to

affiliate associations.


footwear

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