Get to know the basic ideas of Milton Cardoso:

The new president of ABICALÇADOS  

 

Milton Cardoso, the new president of ABICALÇADOS – Associação Brasileira da Indústria do Calçado (Brazilian Footwear Industry Association) was born in São Paulo and is 51 years old. Graduated in Economy, he worked as a university professor and has been actuating in the footwear segment for more than 20 years, and this is reason why he says that he is a shoemaker. He is the Superintendent Director of the Vulcabrás Group for the last 10 years where he also actuated as Financial Director. In August 2007, he took over the Superintendence of Azaléia, one of the major footwear industries in the country.

 

In this short interview, Milton Cardoso presents, in a concise and objective manner, what could be called the structure of his line of actuation at front of the destination of a local entity that congregates the country's footwear industries. No doubt, a difficult task, but Milton Cardoso, in a few words, indicates that he knows the path to follow, the result, for sure, of his experience in the segment.

 

COUROBUSINESS: What is the focus (or focuses) that you intend to follow in your administration as head of Abicalçados?

 

Milton Cardoso: As I am in the position for quite a short time, I took over last July, I am still in the process of knowing the entity's operation. But it is sure that we will give continuity to the effort of convincing the Brazilian authorities of the harmful effects of the exchange devaluation for a segment that is so fundamental for the Country's economy.

 

COUROBUSINESS: Export of footwear has experienced a growth well below the one forecasted a few years ago. In addition to the exchange issue, what other factors are delaying a larger growth?

 

Milton Cardoso: The exchange devaluation was the reason for the drop in the footwear exports. Had we maintained the trajectory of 2004, when we were resuming the export rhythm, nowadays we would be exporting much more than the two billion dollars. The exchange devaluation has shown even more the misdirection of the industrial policy, which is the maintenance of these exorbitant interest rates and the heavy structure of the companies' costs, where the labor fringes and the tax system are a real worry. For the companies, it is becoming extremely expensive to produce for export. And the local market is unable to absorb the excess of this production that nowadays is not exported, as the consumption per capita has not increased.

 

COUROBUSINESS: The import of Chinese footwear has been growing significantly in relative terms, although the quantity imported when compared to the quantity exported, still reveals the export trend of the Brazilian footwear industry. For ABICALÇADOS China frightens more by what we import from them or by what it takes from us as market share especially in the USA ?

 

Milton Cardoso: It frightens us due to these two reasons. The footwear imports totaled 15 million pairs from January through July of this year. A growth of 46% when compared to the same period of last year, whereas 68% of this volume was imported from China . These figures are not official as yet, and we have no way to account the shoes that enter the country illegally. In the foreign market the problem is even more significant. Today, China produces approximately nine billion pairs of shoes, assaulting our buyers through an abusive price due to the subsidies of the government and doubtful quality. Our exports to the United States dropped 13% in 2006 and 23% from January through July of this year. We would have been in a different position if we had adequate prices, as no buyer likes to get supplies from only one market and Brazil is an excellent commercial partner.

 

COUROBUSINESS: The footwear export profile has changed significantly, with the drop in export of leather shoes. Is an even higher drop in this type of footwear expected, with the growth of those of other material?

 

Milton Cardoso: The footwear in alternative material has been replacing the leather, which product is more and more a noble product. As the world population grows more than the offer of this raw-material, it is a good issue for the footwear industries to have production alternatives. But who defines really the growth of this consumption is the market and the leather will continue having its space as a high level material.

 

 

COUROBUSINESS: The Brazilian entrepreneurs are installing their business in China – in an isolated manner or in strategic partnerships – to produce footwear. For sure, many of these shoes will be sent to Brazil . How does Abicalçados faces this situation of having Brazilians producing in China and exporting to Brazil ?

 

Milton Cardoso: When competing prices, it is natural that this occurs in an open and capitalist economy. The businessman will chose what will revert in profits. However, it is a bad condition for the segment as a whole, resulting in unemployment and in reduction of foreign currencies, refraining internal investment. This is a situation caused by the lack of an industrial policy that favors the manufacturers of higher added value products and which generates thousands of employments. If we had competitive conditions, nobody would need to produce in any other location.

 

 

COUROBUSINESS: The valorization of the Real has been the main arguments of several exporting segments to justify the loss of market share. Based on the opinion of Abicalçados, which exchange rate would provide competitive conditions to the Brazilian footwear industry?

 

Milton Cardoso: Abicalçados would like a realistic exchange rate, followed by a cost reduction. I have highlighted in my speech when I was seated that if the government gives us a realistic exchange rate, the segment would be committed to generate 14 employment per hour, this means 120 thousand positions per year. Which would be this realistic exchange rate? Based on the very high cost that the companies face nowadays, it would be above R$ 2,50, but it could be less if the tax burden was not so high, a labor system that only burdens the worker and the employer as well as the extremely high interest rates.

 

 

COUROBUSINESS: Under your administration, is there an expectation to implement new projects, such as for example, an incentive for creation of Brands, conquest of new markets where the Asiatic competition would less aggressive, etc?

 

Milton Cardoso: These projects have been under implementation for the last six years. Abicalçados is insistently promoting the presence of Brazilian brands in several markets, to confirm this, just have a look at the Brazilian Footwear reports, a program that the entity develops together with Apex-Brasil. Today, the results would be much more significant if we could have more realistic prices. But the conquest of new markets and the aggregation of national brands are on-going.

 

COUROBUSINESS: The Federal Government, with resources from FAT, has recently created an additional credit line in favor of the footwear manufacturers, with low, subsidized interests, as it had done approximately two years ago. Does Abicalçados have an analysis of the effective results of the use of these resources and if, in fact, they have contributed in helping the footwear industry?

 

Milton Cardoso: We do not have this data as yet. But as the requirements to obtain these resources are extremely complex, I can say that several companies do not use these resources as they do not comply with the loan specifications.

 

Revista Courobusiness – Ed. Nº 53 – julho/agosto de 2007