Shoes for the Russians stay here – Angelo Mastrandrea

This article was published on March 19, 2022 on page 4 of number 19 of the Essential. You can subscribe here.

Loriblu is one of the main companies of the Porto Sant’Elpidio footwear pole, the most important in Italy for turnover and number of employees. It has a hundred employees, has a turnover of 25 million euros a year and is a symbol of how the economy of this town of 26 thousand inhabitants, overlooking the Adriatic Sea, has been based on exports for thirty years, especially to Russia. but also Ukraine.

Until a month ago, trucks were leaving from here headed for Eastern Europe, filled with crystal-set women’s shoes and leather wedge boots. In the outlet attached to the factory, in the industrial area of ​​the country, Russian customers were the most numerous. “We were making very important collections”, they say in the shop, “thanks to individual buyers and influencers active on social networks, who bought the shoes at a warehouse price and then resold them on the internet”. The minimum orders did not go below 10 thousand euros. Now no one is seen.

Since February 24, everything has changed. That day the last day of the Italian Fashion exhibition was underway in the 11 thousand square meters of the Krasnaya Presnya Expocenter in Moscow. 128 brands of Italian clothing and footwear were present at the fair, defined by the organizers as a “fundamental meeting point for Russian buyers and specialized operators” interested in the novelties of Italian fashion. Nine of these came from the Marche region, invited by the Italian fashion body and the Fermo Chamber of Commerce to try to revive the sector after an unfortunate year.

According to data provided by the Confindustria moda study center, 114 shoe factories closed and 1,269 jobs were lost in 2021 due to the pandemic along the Adriatic coast between Fermo and Macerata. The latest crisis exploded in early February, when L’Autre Chose, a women’s clothing and shoes company founded in 1959 in Porto Sant’Elpidio and 95 per cent owned by the Sator fund of the financier Matteo Arpe, submitted a request for an arrangement with creditors because revenues fell from 15 million in the pre-covid-19 era to 3 million in the first nine months of 2021.

That morning, while Russian President Vladimir Putin announced on television the start of a “special military operation” in Ukraine, Loriblu representatives concluded their last business on the FOG64 stand before returning to Italy. “We had invited Russian customers who had not been able to come to us in Italy because the Russian vaccine, Sputnik, is not recognized in the European Union”, says Claudia Cuccù, who with her brother, two sisters and mother Annarita Pilotti manages the shoe factory.

They showed them the collection for next autumn-winter and made arrangements for supplies, with price increases between 20 and 30 percent due to the increase in energy and transport costs. Once back in Italy, on Saturday 26 February with one of the last flights before the airspace was closed, the owners of the Loriblu however realized that the agreements stipulated in Russia would soon become impossible to respect.

In the following days the couriers suspended shipments. Some Russian buyers have sent their own trucks to collect the goods before the borders closed, but it is not known if it arrived at its destination and when it will be paid, due to the blockade of the Swift international banking system and the devaluation of the ruble which increases to the cost for the Russians is enormous. Only one customer was able to pay 500 thousand euros before the sanctions came into force, while another, says Cuccù, “came in person from Russia to collect an order for 500 shoes, for a value of about 100 thousand euros”.

On the other hand, shipments to Ukraine have stopped due to the closure of shops due to the bombing. Purchases in the shops of Piazza di Spagna in Rome and via Manzoni in Milan have also slowed down, while the shopping shuttles from Milan to the outlet of Serravalle Scrivia, in the province of Alessandria – 20 euros round trip including the fashion passport for discounts by 10 percent, and another 20 to get the VIP card – they suddenly lost the Russian tourists who thronged them. Within a few hours, the fairs scheduled in Almaty in Kazakhstan in March, in Moscow in early April and in Kiev in the middle of the same month were canceled.

The “end of the Russian dream”, as more than one defines it in these parts, risks plunging the Marche into a heavy recession. Paolo Silenzi, president of the National Confederation of Artisans (Cna) of the Marche region, even fears a “default of the entire supply chain due to lack of liquidity”. Until the day of the invasion, one in three shoes imported into Ukraine came from these areas and the province of Fermo was the main exporter of shoes to Russia.

In 2021 exports to that country of the Marche footwear sector exceeded 80 million euros, those to Ukraine reached 11.4 million. The average price of a pair of shoes was 68 euros, but many shoe factories aimed at a higher range of customers. Loriblu shoes, in Moscow stores, sell for up to a thousand euros per pair. Numbers that make the Marche the main Italian exporter to Russia and Ukraine, and which this year will be zero.

The secretary of the CGIL of Fermo Alessandro De Grazia defines it as “an explosive situation”. “The economy of this area”, he explains, “revolves around footwear: there are companies that export 80 percent to Russia. There is a risk that everything will stop ”. The footwear sector employs more than 22,000 people within a radius of a few tens of kilometers, and the chamber of labor fears a wave of crisis and layoffs. To avert it, they ask the government to grant an extraordinary layoff, as had happened during the pandemic. The industrialists, on the other hand, are asking for a reduction in taxes and economic relief for the losses suffered as a result of the war.

On March 15, a new list of goods that cannot be exported to Russia was published in the Official Journal, for a market that Sace – the public company owned by the Cassa Depositi e Prestiti which guarantees credits in exports – quantifies at 7.1 billion euros. Along with sparkling wine, cigars and perfumes, there are “footwear of various types and shapes”. Thus, thousands of shoes destined for a medium-high clientele are left in stock and are likely to remain unsold because they do not fit the tastes of Western fashion.

The damage for Loriblu is limited because production for the next winter season had not yet started. “We had only made some preliminary purchases of materials in December”, explains Cuccù, “because we feared an increase in prices, and now we will have to try to absorb them”. The fears mainly concern the future.

“At the moment the effects for companies are that it is not known whether the shoes shipped will be paid for, there are stocks in the footwear warehouses that could be shipped but no one knows where they would end up, and orders already made that could become waste paper” , said the president of Assocalzaturifici Siro Badon on the sidelines of a meeting at the international footwear fair Micam, which took place in Milan in mid-March.

“With the blocking of current accounts, who will pay for the ordered shoes?” Asks Valentino Fenni, president of the Confindustria Centro-Adriatico footwear manufacturers. “The Russian and Ukrainian markets for our district represent 80 percent of turnover, despite the sanctions of 2014 causing a reduction of more than 60 percent in the value of Marche’s exports to Russia”, explains Alessandro Migliore, manager of the fashion sector of the Cna of Fermo and Macerata.

Even then, no Italian bank was more willing to advance Russian bills, despite Sace’s credit insurance. Loriblu is one of them. “Until 2014 our turnover depended almost entirely on sales to the Russians,” says Cuccù. After the first blockades following the annexation of Crimea and the war in the Donbass, they decided to downsize and look for new markets to stay on their feet, starting with Africa. Today, turnover has halved and dependence on the Russian market has dropped to 60 percent, just enough not to collapse but too little to not have to look for new sales channels.

Other companies, on the other hand, continued to focus almost exclusively on Eastern countries. Until February 24, Marino Fabiani exported 85 percent of the women’s shoes produced in his factory in Fermo to Russia and Ukraine. “In stock”, says Fabiani, “we have 4,900 pairs of shoes, worth around 600 thousand euros, which were ready to be shipped and which we now risk having to throw away”.

Also in this case, these are shoes that cannot be resold elsewhere and that, he explains, “in three months will no longer have any value”. “At the end of February I was able to pay everything, including the salaries of my 25 employees, despite the order not being shipped, but now I am no longer able to pay. If the war continues, we just have to close and say goodbye to our companies ”, says Fabiani.

Many other shoe factories in the area would be found in the same conditions. After thirty years that everyone considers gold, it is widely believed that the hundreds of “shoemakers” – as they are defined in these parts with affectionate irony – who have turned into small footwear entrepreneurs must now have the ability to reinvent themselves.

Even at Loriblu they know they will have to look for new paths, but they say it will take a long time and it won’t be easy. “We are trying to explore new markets”, says Cuccù, “and we will have to invest in research and development, as well as in marketing”. For the moment, the plant’s four production lines are contracting out for other luxury brands. Meanwhile, the owners welcomed the owner of a shop in Kharkiv to whom they supplied the shoes in franchising.

When the Ukrainian city fell under Russian bombs, he pulled down the shutter and fled to Italy with the whole family. They arrived in Porto Sant’Elpidio after a week-long car trip and asked for help from shoe suppliers, who found them temporary accommodation in a house they owned. “They don’t even know if the shop is still standing, for now they will stay here, we are looking for a school for the two children and a job for them”, says Claudia Cuccù. The young footwear entrepreneur suddenly found herself in the war at home.

This article was published on March 19, 2022 on page 4 of number 19 of the Essential. You can subscribe here.