BUSINESS/ECONOMY

A welcome mat for shoes

LINDA CAHILL December 9 1985
BUSINESS/ECONOMY

A welcome mat for shoes

LINDA CAHILL December 9 1985

A welcome mat for shoes

BUSINESS/ECONOMY

With sewing machines clattering in the background and the smells of glue and polish rising in her family’s Toronto shoemaking factory, Louise Valantic, 28, hurried to fill winter boot orders. But as the cutters turned out black leather uppers and the sewers zipped through fleecy white linings, Valantic, vice-president of Star Valenti Co. Ltd., surveyed her busy staff of 400 last week and declared that she is increasingly worried that many of them may lose their jobs. Indeed, she added that the federal government’s late November decision to lift import quotas on mens’ shoes on Dec. 1 and to phase out quotas on women’s shoes over the next three years will lead to a flood of lowpriced imports. And that, she said, would force shoemakers to lay off employees. Said Valantic: “I think they’re scared. I’m young. I have education, I’ll find something to do. But what will they do?” Announcing the phase-out of quotas, first imposed in 1977, International Trade Minister James Kelleher said that Canada’s 135 shoe manufacturing companies had been protected long enough. He added that the firms should now have improved their productivity and be able to compete with foreign

imports. As well, Canadians had paid a high price to help the industry: since they were imposed eight years ago, quotas have cost consumers $450 million to $500 million in higher imported shoe prices. Said Kelleher: “Canadians across the country will benefit as consumers from this decision.”

Indeed, consumer groups and retailers were delighted with the government’s action. But opposition members criticized the government for not fulfilling an undertaking to help the country’s $2-billion shoe industry, claiming that jobs would be lost in Quebec and Ontario, where shoemakers are concentrated.

Still, the government was under pressure to drop the quotas. Canada had already extended the system several times—an action to which many European exporters objected. Under the General Agreement on Tariffs and Trade, quotas can only be imposed temporarily to give domestic industries enough time to adjust to competition. After last year’s extension the European Community threatened to impose punitive duties on $150 million worth of Canadian exports if Canada did not end the shoe quotas.

As well, financial analysts said that to renew a protectionist measure would create a credibility problem for the Tories, who are committed to negotiating a free trade deal with the United States. Said Martin Kaufman, a consumer goods analyst with investment dealer Nesbitt Thomson Bongard Inc. in Montreal: “They can’t be seen to be anti-free trade. Certainly it is an aspect of the decision.”

But shoe manufacturers claimed that the government’s decision would result in the loss of half the industry’s 20,000 jobs within two years. Terence Howe, president of Sunbeam Shoes Ltd., a Port Colborne, Ont.-based maker of safety and combat boots and bowling shoes, said that domestic manufacturers, who have only 40 per cent of the Canadian market—down from 48 per cent in 1979—will continue to lose market share. He pointed to the problems of the American shoe industry, which lost protective quotas in 1981. Declared Howe: “Imports now have 77 per cent of the U.S. market. Over 100 shoe factories have shut down, and 100,000 workers have been laid off.”

Many industry analysts and retailers said that manufacturers’ fears of largescale job losses were exaggerated. But as she discussed potential layoffs of her staff last week, Louise Valantic said that she is not convinced the government’s action will benefit anyone. Said Valantic: “The Conservatives cam-

paigned on jobs, jobs, jobs. And now they are exporting jobs.”

— LINDA CAHILL in Toronto