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Bata shoe factory shuts down after 30 years, Jokowi reassures economic resilience

Jakarta Globe - May 7, 2024

Elan Suherlan, Alfi Dinilhaq, Antara, Jakarta – Footwear company Sepatu Bata announced last week the closure of its factory in Purwakarta after 30 years of operation due to declining demand and continuous losses over the past four years. As a result, 233 employees lost their jobs.

President Joko "Jokowi" Widodo commented on the closure of the Bata shoe factory, attributing it to the company's inefficiency and competition with new products.

"When a factory closes, it's due to various reasons like efficiency or losing out to new products. Many factors are at play," the former furniture businessman said in Depok, West Java, on Tuesday.

However, he emphasized that the closure of the factory does not reflect Indonesia's overall economic condition.

The Central Statistics Agency (BPS) reported that Indonesia's economy grew by 5.11 percent annually (year-on-year/yoy) in the first quarter of 2024.

In a disclosure to the Indonesia Stock Exchange, the company stated that the decision to halt production activities at the Sepatu Bata factory in Purwakarta was made by the board of directors on April 30, 2024.

Bata's Director and Corporate Secretary, Hatta, said the company could no longer sustain production at the Purwakarta shoe factory due to declining customer demand for the products manufactured there.

"The production capacity of the factory far exceeds the supply from local suppliers in Indonesia," he explained.

Hatta added that the company had tried to maintain operations at all production centers, including its largest shoe factory in Purwakarta.

"Sepatu Bata has made various efforts over the past four years amid losses and industry challenges due to the pandemic and rapidly changing consumer behavior," explained Hatta.

Now, the employees hope to receive severance pay with the maximum value according to applicable regulations.

"I feel saddened by this layoff. There's no other source of income, especially for a mother like me who has to support her children. I've worked for over 20 years, and I'm the main provider for my children who are still in school. I hope to find a new job soon, and I hope to receive the best severance pay," said one of the affected workers to Beritasatu.com, the Jakarta Globe's sister publication, on Tuesday.

According to the company's financial report as of December 31, 2023, Bata recorded a current-year loss of Rp 190.5 billion ($11.84 million), compared to Rp 106.1 billion in the previous year. Meanwhile, Bata's net sales were recorded at Rp 609.61 billion in 2023, down from Rp 643.45 billion in the previous year.

Founded in 1894 by Czech shoe entrepreneur Thomas Bata, Bata's presence in Indonesia began in 1931. Initially, Bata collaborated with the colonial company, Netherlandsch-Indisch, as a shoe importer operating in Tanjung Priok.

Six years later, Thomas Bata established a factory in the middle of a rubber plantation in the Kalibata area, located on Kalibata Raya Street, South Jakarta. Shoe production began in 1940. The Bata factory in Kalibata no longer exists.

In 1982, Sepatu Bata was listed on the Jakarta Stock Exchange with the code BATA. In 1994, the construction of the Sepatu Bata factory in Purwakarta was completed. When it was established, this factory was one of the largest factories in Indonesia.

Currently, Bata operates a retail chain of 435 stores nationwide. Bata is known for producing school shoes and adult men's and women's shoes. The company also oversees several other brands, including Marie Claire, Comfit, Power, Bubblegummers, North Star, B-First, and Weinbrenner.

Kurt Cobain, the lead singer and guitarist of Nirvana, was known to wear Bata shoes, particularly the Bata Hotshots. These shoes became iconic and were widely associated with Cobain's grunge style.

Source: https://jakartaglobe.id/business/bata-shoe-factory-shuts-down-after-30-years-jokowi-reassures-economic-resilienc