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PALMA SHOE manufacturers on Majorca could have to close down their operations on a large scale in the first quarter of 2009 if banks don't start to allow them credit.

Manuel Pelarda, Action Secretary for the General Workers Union in the Balearics said yesterday that footwear businesses need upfront financing to prepare goods for the next tourist season which in their case will begin in March. Additionally, cash is needed to maintain staffing levels, for the purchase of materials and other costs - all this, said Pelarda needs to be in place before clients start buying shoes to see them through the coming spring and summer seasons.

Pelarda said it was only those shoe companies which were diversifying their businesses which are able to survive. An example are those manufacturers who produce goods for the Fluxa Group, owner of Camper, but who also count Iberostar and Iberojet and other tourist industry organisations amongst their patrons. He added that as a result of the credit squeeze, there are few companies who will not have to make redundancies. Pelarda described the situation as “grave”. He said that even with moderate financing, times are going to be difficult for the shoe industry, but if the “door is shut completely” he anticipated that only one or two operators will survive. The problem he said, that manufacturers have to operate within fixed supply dates for their clients but are not able to expect immediate payment. They “collect” some months after the signing of a contract.