Nike Cs Leaves Tangerang, Ministry Of Industry: Moves To Cheap-Wage Areas

Shoe industry (Photo: Antara)

The Ministry of Industry (Kemenperin) said that the reasons for a number of shoe factories in Tangerang to leave the area were that the shoe factories that were relocated were global brand manufacturers such as Nike and Adidas.

Director of Textile, Skin and Footwear Industry of the Directorate General of Metal, Machinery, Transportation Equipment and Electronics (ILMATE) of the Ministry of Industry Rizky Aditya Wijaya stated that his party had coordinated with related associations.

The decision to move the factory was said to be due to lower labor wages considerations in the central area of Java Island.

"And the occurrence of layoffs at production facilities, especially in the western region of Java, right, footwear, labor intensive, the largest component is labor. So, that doesn't mean they continue to lay off and stop production, no. They move to the middle area where the wages are much cheaper," said Rizky at the Ministry of Industry's office, Jakarta, Thursday, October 30.

"Well, for the context in Tangerang yesterday, the information is that they moved to Cirebon. The new (communication) is from the association, the company has not yet. We will try to control it later," he continued.

Even so, Rizky said, in general, the performance of the national footwear industry is actually on a positive track. This year the industry managed to experience growth of 8 percent.

"This means that for footwear, it is still good, we are still the production base of famous brands. And the phenomenon of layoffs in Banten occurs because of shifting locations to places where wages are lower," he added.

Previously, the Nike shoe factory, PT Victory Chingluh in Tangerang Regency, Banten, was reported to have laid off 2,804 employees.

The news was confirmed by the General Chairperson of the Confederation of the Indonesian Trade Union Alliance (KASBI), Unang Sunarno. He explained that layoffs were carried out because there were export products returned by buyers due to the decline in production quality.

"The company argued that shoe products were re-exported because their quality decreased during the production process," said Unang, quoted from the Instagram account @infotng_id.