Indonesia’s footwear industry is under pressure as two major factories in Tangerang – Victory Chingluh and Adis Dimension Footwear – have cut a combined 3500 jobs due to declining international orders from global brands, including Nike and Adidas.

Victory Chingluh, a subsidiary of Taiwan’s Ching Luh Group, has been downsizing since January, laying off 2000 workers at its facility in Cikupa District.

The company, which manufactures for brands such as Adidas, FootJoy, Mizuno, Nike, and Reebok, also operates factories in China and Vietnam.

According to Tangerang Regency Manpower Department official Desyanti, the company attributed the decision to “soaring operational costs and plummeting market demand”.

Nike’s evolving retail strategy may be a contributing factor. In 2023, the company announced plans to cut up to US$2 billion in costs over three years to “fuel future growth, accelerate innovation at scale, and drive long-term profitability”. Part of this strategy includes streamlining product assortment, increasing automation, and restructuring its organisation.

Meanwhile, Adis Dimension Footwear, Nike’s long-time manufacturing partner in Indonesia, laid off 1500 employees last year in cost-cutting efforts at its factory in Balaraja District.

Desyanti said that while operational expenses and weak demand drove last year’s layoffs, the company has no plans for additional cuts.

Septo Kalnadi, head of the Banten Manpower and Transmigration Agency, explained that these layoffs reflect a broader industry slowdown rather than wage concerns.

“There will be more layoffs next year,” said Kalnadi. “Every day, there was always some company asking for permission for layoffs.”

Last year, Tangerang businesses collectively laid off 12,000 workers.

The Indonesian government has responded with a $1.3 billion credit program to support struggling industries such as footwear, textiles, furniture, and food manufacturing. Companies employing at least 50 workers will be eligible for financial assistance.