BRAZIL AND MEXICO MAINTAIN TOEHOLD IN THE US MARKET

BRAZIL AND MEXICO MAINTAIN TOEHOLD IN THE US MARKET

Like other footwear-producing nations, Brazil is facing a tough challenge from China, which now produces about two-thirds of all shoes sold in the United States.

Last year's devaluation of currencies in many Asian countries has led to even stronger competition in the U.S. and global footwear markets.Brazil's U.S. exports are dominated by medium-priced women's leather dress and casual footwear, said Peter Mangione, president of the Footwear Distributors and Retailers of America. Brazil has about a 7 percent share of the overall U.S. market.

Mexico, whose peso is relatively weak, gained nearly a third on its year-earlier position, John Byron, the U.S. Commerce Department's footwear analyst, said. The two countries are the only Latin American suppliers among the top five U.S. sources of footwear; they have a combined volume share of just over 9 percent and a value share of under 11 percent.

STRATEGIES REWORKED

So times are tough in boot, shoe and sneaker factories in Mexico City and Sao Paulo, and strategies are being reworked frenetically to attempt to maintain a foothold in the more than $13 billion U.S. footwear market, which imports nearly 90 percent of its supplies.

In Latin America, the good news is that some Mexican operations are managing to boost their competitiveness with China and increase footwear trade with the United States.

Apart from foreign exchange rate considerations, Mexico's advantage is based in part on its geographic proximity to the United States and its lower transportation costs.

MAQUILADORA 'ALIVE AND WELL'

''Reynosa is alive and well, and we are increasing production there,'' said a Converse Inc. import manager in North Reading, Mass., referring to the company's maquiladora operation in Reynosa, Tamaulipas state. A maquiladora is an export-oriented assembly factory, frequently operating with in-bond status, that uses components sourced in the final market country, like the United States. The Converse-owned factory, Calzado Deportivo de Reynosa SA, already employs more than 500 workers, according to Solunet, an El Paso company that analyzes maquiladora operations in Mexico.

Mexican exports of rubber and leather footwear to the United States during the first 11 months of '97 totaled 40.9 million pairs, worth $264 million.

Those numbers are up from the 37 million pairs, worth $226 million, that were exported to the United States in all of '96, Mr. Byron said. That enabled Mexico to retain its rank as fifth-largest footwear supplier to the United States.

BIG STEPS BY BRAZIL

In contrast, Brazil's global competitiveness is slipping somewhat. In response, the Brazilian government has slashed import taxes on capital goods for footwear makers.

It is also helping manufacturers acquire new technology and is funding international trade show initiatives, according to the Associacao Brasileira da Industria do Calcados (Abicalcados), the national footwear trade group, in Sao Paulo. But hopes are not high that the industry will increase exports to the United States, despite a reorientation to higher-quality shoes that has helped exports somewhat.

''The measures that have been taken (by the government and the industry) to enhance exports are good, but are far from what is necessary to return our competitiveness overseas,'' said Ricardo Wirth, a former president of Abicalcados.

Brazilian footwear exports dropped 3.2 percent to $1.52 billion in 1997, with the United States accounting for 80 percent of that total, compared with $1.57 billion in 1996, Abicalcados reported.

Nonetheless, with nearly 85 million pairs of shoes shipped to the United States in the first 11 months of 1997, Brazil held on to its rank as the second-largest footwear supplier to the United States.

Brazil is holding on to its U.S. market share by focusing on higher-quality and higher-priced shoes. ''Brazil has been very successful at moving to higher-end footwear products,'' said Cyro Marcondes, commercial manager in Sao Paulo for Hamburg-Sud/Columbus Line Inc., a major carrier in the U.S.-Brazil trade.

FOCUS ON EUROPE

The pressure in the U.S. market also is driving Brazilian exporters to focus more intensely on the European market, Abicalcados indicates.

Apart from Brazil and Mexico, other Latin American countries that export footwear to the United States include the Dominican Republic, ranked as the ninth-largest U.S. supplier; Costa Rica, the 24th largest; and Colombia, in 26th place.