Was the country long time a symbol for just fish and cork, nowadays Portugal boasts other innovations as well. Its craftsmanship and relatively low labour costs make it the place to be for upcoming industries. As the country expands its reach on a global stage, IT-start-ups, clothes and shoes are just three of the products that currently proudly carry the label ‘made in Portugal’.
See the original article in Enjoy the Algarve – magazine April 2016
Traditionally, Portugal has always been a seafaring nation. The sailors of the 15th century were pioneers of the European exploration of the world; discovering faraway coasts and setting up maritime trade. Nowadays, in the 21st century, the country reaches out globally again, but in a different way.
Since formally joining the European Union back in 1986, state-controlled firms have been privatised in the former dictatorship. As the country was among the first to adopt the euro in 1999, trade flourished even more. Naturally, the financial crisis also hit Portugal hard. But in 2014 the country recuperated: nowadays things are going well for the Portuguese, with a falling unemployment rate and a rising economy.
Most people know Portugal as a country of fish and cork. To a certain extent this is correct: the fish consumption per capita is one of the highest in the world and one would have to look hard to find a better place to buy fresh sardines. A sunny climate and the fact that 34% of the country is covered by natural resources such as cork forests, account for agricultural success, with cork being one of the main export products. Currently, Portugal still produces about half of the world’s cork. However, on the other hand the country has developed away from its traditional roots in the last decades. Nowadays, fisheries and agriculture only account for about 2.4% of the GDP (gross domestic product, a monetary measure of all final goods and services produced in a period).
So what has taken its place? As with most developed countries, the tertiary sector of the economy has grown massively; it now accounts for 74.4% of the GDP. Instead of agriculture, fishing and mining (the primary sector) and manufacturing (the secondary sector), the tertiary sector represents the service industry. It’s the part of the economy where people use their knowledge and time to improve things like productivity, potential, performance and sustainability. In Portugal, where there’s government support for entrepreneurship, this mainly includes IT-start-ups. In an article from 2015, American business magazine Forbes speaks about the ‘rapid emergence of the Portuguese entrepreneur’ and mentions software companies like Talkdesk, a cloud-based call centre solution.
This scene is especially booming in Lisbon, where 2016’s Web Summit, a technology conference with over 42,000 attendees from 134 countries, will be held. Lisbon is also where the Portuguese IT start-up Attentive.us has recently won the Caixa Capital award, which comes with an investment of € 100.000. Other young IT-based companies include Veniam, Unbabel and Tuizzi. The decision for many young Portuguese entrepreneurs to start up their own company is a logical one, according to a 2015 article in the Financial Times, is a logical one: ‘For those who were part of a young and highly qualified generation with no immediate employment prospects there were two options: leave the country or start a business’. Since the current generation is brought up with internet, information technology seems an obvious choice.
Still, perhaps surprising, two other booming Portuguese industries can be found in the secondary sector of the economy. The country’s craftsmanship traditions are honoured as both clothes and footwear are more and more made in Portugal.
According to the Portuguese Footwear, Components and Leather Goods Manufacturers’ Association (APICCAPS), after an increase of 21% in the last four years, the annual production of the Portuguese footwear industry is currently in excess of 75 million pairs. Some more figures: almost 38,000 people are employed in this industry, an increase of 18% since 2010. Most shoes that are made are of leather: the material accounts for a whopping 91% of total sales value.
These numbers don’t mean that Portuguese people suddenly buy a lot of leather pumps, flipflops and moccasins, but mainly indicate a growing trade with foreign countries – about 98% of the shoes made in Portugal are exported. Was first Italy seen as the one and only mecca of stylish upmarket footwear, nowadays Portugal is fast becoming its rival and the go to production place for many foreign companies.
“We decided to produce our boots in Portugal because we want them made according to the highest standards. We’re always working with the best method and materials, and Portugal is one of the few countries that can make the high quality Goodyear Welted construction (a traditional labour-intensive method of shoe construction which provides greater comfort and durability) we’re using for our boots,” explains Wouter Munnich from the Dutch Butts and Shoulders, one of the many companies who has outsourced their footwear production in Portugal.
Although the bags of Butts and Shoulders are made in Holland, their virgin leather boots are produced in a factory in Benedita, north of Lisbon. Wouter explains: “We prefer European production and this factory fits perfectly with our Butts and Shoulders mind-set. It shares our vision and is specialized in the Goodyear Welted construction. Goodyear Welted isn’t a mass production technique, so you’ll have to find the right partner who has the same idea about authentic craftsmanship. Our goal is to make a boot that stands a lifetime and Portugal is just the right place for us to make this happen.” The country’s leather workmanship heritage and the talented Portuguese hand workers are also appreciated by the Dutch company. Wouter: “We are very happy and honoured to work with these extremely skilled craftsmen.”
Skills and craftsmanship are also the reason why the Portuguese fashion sector is doing well, with 24 designers and 14 labels making an appearance on the catwalks of the 37 fashion shows that were held during Portugal Fashion in 2015. Was Portugal first seen as the China of Europe with cheap, low-quality mass-produced clothing, nowadays established brands like Zara, Calvin Klein, Ralph Lauren and Burberry produce items of clothing here. On the other hand, upcoming independent Portuguese designers are eager to showcase their creative talent as well – mainly Porto and Lisbon are seen as fashionable hubs.
Its many small-scale factories allow for limited-quantity orders and a minimum monthly wage of 530 euros means that, although Portugal can’t compete on price with countries like China and India, labour costs are still relatively low compared to the rest of Europe. Combine this with the strategic location, -still in Europe, but close to the US, with frequent flights to both continents-, and it isn’t hard to see why the textile industry is rising. According to the Textile and Clothing Association of Portugal (ATP) there are currently over 120,000 people working in this sector. Its yearly exports? Over 4.8 billion euros annually, to more than 180 countries in the world. Like Portuguese footwear, clothing made in Portugal is also in high demand, whether it’s a traditional crocheted wraps, a cork tie or the ready-to-wear from Miguel Vieira (pictured below) or the designer duo Alves-Gonçalves.
Just like a proximity to the sea and cork forest made the fish and cork industry booming, now it’s a combination of artisan quality, cheap workforce and the latest technology which facilitates the rise of the country’s IT, footwear and clothing industry. It seems that Portugal’s future is looking as bright as the sun that’s shining here most of the days.
The sailors of the 15th century can be proud of their 21st century descendants as the Portuguese empire is set to show its potential to the world once again. This time not trading spices and colonizing countries, but instead making sure that we’re all able to communicate smart, while walking comfortably and looking nice. Vamos!
See the original article in Enjoy the Algarve – magazine April 2016