Reebok to dismiss 3,000 RI workers

JAKARTA (JP): American sports clothing line Reebok, in anticipation of shrinking production this year, plans to slash employment of some 3,000 workers in its subcontracting footwear factories in Indonesia, a report says.

A deputy of the Investment Coordinating Board (BKPM), Sugihono Kadarisman, said over the weekend that Reebok Boston told a team of BKPM officials last November it would cut down production in Indonesian shoe manufacturing factories.

"The production cut is caused by a shift in market segment, not because of the country's political condition," Sugihono was quoted by Bisnis Indonesia daily as saying on Monday.

One of the five manufacturing factories, which are located in Jakarta and Bandung, West Java, has stopped producing, he said.

"The supply of Reebok shoes from Indonesia will remain at 25 percent of the world's, but the closing of one of the factories will leave 3,000 people jobless," Sugihono said.

Three of Reebok's manufacturing factories here are locally invested subcontracting companies, while the other two subcontractors were foreign direct investors, the daily reported.

Meanwhile, the secretary-general of the Indonesian Footwear Association, Djimanto, said on Monday there had been no indications that other local producers for brand-name sporting shoes would reduce staff numbers as their productions remained stable.

"As far as I know, only Reebok plans on doing it, and it's decline in orders is caused mainly by tighter competition among other sporting shoe producers," Djimanto told The Jakarta Post.

He said market trends had shifted from sport shoes to casual and "brown shoes", the half casual half sport shoes.

In addition, international sport shoe producers saw their sales pie diminishing, as they also had to compete with local footwear producers, whose products were normally much cheaper, he said.

Djimanto said 60 percent of shoe producers in Indonesia supplied international brands, while the remaining 40 percent were producers of local brands like Carville and Neckerman and suppliers of foreign but smaller brands like Lotto and L.A. Gear.

Aprisindo earlier forecasted a drop in export orders of locally made footwear to US$1.5 billion this year from $1.8 billion in 1998, as foreign buyers anticipated economic and political instabilities in Indonesia.

The association's 170 member companies had shrunk to 107 this year, Djimanto said. (das)