Nicaragua fosters footwear fetish

Country hopes shoe industry will kick exports into overdrive

MANAGUA—The flirtation started innocently enough when the U.S. footwear industry complimented Nicaragua on her shoes. Nicaragua winked back.

Then the $22.7 billion shoe industry started to show a little more interest in the Central American darling. How much do you cost? What’s your turnaround time? Are you into leather?

The flirtation turned to footsie last week when the head of the Footwear Distributors and Retailers of America (FDRA), an organization representing 75% of all shoe sales in the United States, visited Managua to help ProNicaragua organize its first footwear-investment forum called, “Nicaragua: The Right Step.” The forum shoehorned 55 foreign companies and 30 local producers into the same room for two days of presentations on Nicaragua’s potential to become a major footwear manufacturer to supply markets in the U.S. and Europe.

As the Chinese shoe-manufacturing industry begins to cool from white hot to red hot, Nicaragua has found an opportunity to stick its foot in the door. Since Nicaragua started exporting shoes to the U.S. and Europe in 2010, this Central American country has become a global leader in emerging-market growth for the footwear industry.

“There has been a lot of progress in the footwear industry here; we’ve seen some astronomical growth out of Nicaragua,” says FDRA president Matt Priest.

Cobbling a winner (photo/ ProNicaragua)

“From 2010 to 2011 alone, Nicaragua exports grew an amazing 1,336% in value and an even more impressive 1,402% in volume,” Priest added.

Though Nicaragua’s monstrous growth numbers can be explained partially by the fact that the country’s industry was starting from close to zero, so any growth at all would appear exponential, it’s also true that Nicaragua is now outpacing emerging-market competitors such as Bangladesh and Cambodia. And last year’s growth trends are continuing into 2012, according to FDRA. Nicaragua is already exporting 96% more shoes to the U.S. than it was last year at this time, and the value of its footwear exports is up 110%, according to the U.S. footwear federation.

If the numbers hold, Nicaragua is expected to export some 1.3 million pairs of shoes this year, up from 735,000 pairs last year, according to Priest.

Nicaragua footwear gets leg up with CAFTA

Nicaragua still has a ways to go to catch up to the 1.8 billion pairs of shoes produced by China each year, but the country is expected to make up significant ground within the context of the U.S.-Dominican Republic-Central American Free-Trade Agreement (DR-CAFTA).

Though the Dominican Republic has dominated the regional shoe industry for the past decade, representing 93% of the entire footwear industry in 2002, Nicaragua has come on strong thanks to CAFTA. According to the FDRA’s numbers, Nicaragua has quickly and quietly become the region’s No. 2 cobbler, representing 12% of the DR-CAFTA market and bumping the Dominican Republic’s market share down to 74%.

Overall, the CAFTA countries represent only 1% of shoe imports into the U.S. market, while China still controls around 85% and Vietnam controls 7%. Still, for small markets such as Nicaragua, Priest says, “It doesn’t take much to see dramatic growth in exports.”

If the shoe fits…

Though Nicaragua has a long tradition of talented artisan shoemakers, the country only began producing export-quality shoes less than three years ago.

The first footwear company to invest here was Brazilian company Schmidt Irmãos Calçados, which invested $15 million in Nicaragua in 2010 and started exporting women’s fine leather shoes to the U.S. and Europe. The company currently employs 3,000 Nicaraguan factory workers.

A year later, Brazilian competitor Aniger sambaed its way into Nicaragua and became the second footwear manufacturing company to operate here, investing $6 million and providing an additional 800 jobs.

“This new investment confirms Nicaragua as an attractive and competitive export platform in the global footwear industry,” Javier Chamorro, executive director of ProNicaragua, told The Nicaragua Dispatch in an email. “Both companies, which operate under the free zones fiscal incentives regime, have left an important mark as pioneers in this growing manufacturing subsector. This is why in 2012 the Footwear Distributors and Retailers of America highlighted Nicaragua as a ‘rising star’ in terms of footwear production worldwide.”

Two short years after breaking into the global export market, Nicaragua is now attracting investment interest from major U.S. footwear companies such as Adidas, Nike, Wolverine Worldwide Footwear and Brown Shoe Company.

As Nicaragua’s footwear industry grows—$35.3 million in exports last year, which is projected to double this year—the sector continues to provide new jobs for Nicaraguans. And as long as U.S. citizens continue to buy shoes at the compulsive and Imeldanian clip of 7.3 pairs per person per annum, Nicaragua could become an increasingly important near-shore supply platform in the years to come.

“The statistics give credibility to the industry in this country,” said Gen. Alvaro Baltodano, presidential delegate for investments. “All the numbers show that the tendency in Nicaragua is towards growth.”

  • Harry Pantalones

    You could say that Nicaragua is a shoo-in for this one. Yoinkss!

    • jungle bob

      Did some guy named Pantalones just make a shoe joke? awesome!

  • jungle bob

    does anyone have any contacts in the handbag/tote/bolsa industry in nicaragua?would appreciate it!

    • PRONicaragua

      Jungle bob,

      Hadn’t seen your comment. Why don’t you send your questions to info@pronicaragua.org and someone at PRONicaragua will assist you.

      Public Relations
      PRONicaragua

      • GringoLoco

        You can also contact the commercial section at the US Embassy in Managua for assistance: ManaguaEcon@state.gov