The effects of the minimum wage can only be seen in the long term. The effect that jobs are cut, not filled or even relocated becomes apparent in difficult economic times or in sectors that are particularly affected by the minimum wage. It is undisputed that many jobs in the minimum wage sector were cut during Corona. Wages are generally rising in Germany and all products that we export from Germany to the world – cars, for example, are also relatively badly affected – are becoming more expensive and less attractive. Because of the minimum wage, we tend to have more people without work and they then have to be paid by those who receive the higher wage. In addition, exports are stalled and the very thing that actually brought prosperity to Germany is at risk.
What concrete consequences does the situation have for Berkemann?
The issue of minimum wage is of course not a purely German issue, but rather a European issue. In Hungary, wages have increased by 20%, in Croatia by 30%. This has led us to think about relocating our locations again. In Germany, the topic of reduction is at the top of the agenda for me. We will stay in Europe, but we have to look for other countries or set other priorities. We have production facilities in Hungary, Croatia and the Czech Republic. And we’re making adjustments and shifts there now. Our strategy has always been to automate heavily in order to be able to stay at our European production sites. But we don’t even get compensation for a 30% minimum wage increase. And it doesn’t just affect wage costs. Our material costs are also increasing. We will continue to automate and digitize. The motto is: qualified employees, but significantly fewer employees. In addition, since the entire labor market is affected by the minimum wage, the gaps between wage groups are becoming ever smaller and it is becoming increasingly difficult to provide appropriate salary incentives for qualified work without allowing the cost situation to spiral out of control. It’s almost like a planned economy, what we’re doing here.
Looking ahead to the coming months, what issues do you see as the biggest challenges for your company?
The political and economic conditions are undoubtedly challenging. I’m not yet afraid of the new European laws that are coming our way. But it drives me crazy when I see that we are cutting jobs in Germany that are being transferred somewhere else. And when we finally realize that it doesn’t work that way, we can’t get them back.
And the people who might lose their jobs won’t be found shopping in the pedestrian zones in the future…
I haven’t even started consuming yet. I am also concerned with transfer payments. Citizens’ money has been poorly implemented. There is now much more money and support for those who do not want to work. I think that in the long term we won’t get anywhere by not going to work.
How has the year been for Berkemann so far?
I can say that we had good years during the Corona pandemic. Now it has become more difficult. 2024 is not a good year. I’m currently looking out the window, the sun is shining and the temperatures are around 20 degrees at the end of October. The felt slippers won’t work for now.
Which companies in the Berkemann Group are doing better and which are doing worse?
Berkemann and Solidus are the stable backbone of the group; sometimes one company performs a little better, sometimes the other. The two companies balance each other out quite well. The topic of comfortable and health shoes simply works much better. We will reposition Marc at the appropriate time. Now is not the right time for this, but a better consumer mood will emerge again. We are undergoing a massive restructuring with the children’s shoe brand Däumling. But I see that we are on the right track.
What does this massive renovation entail?
We have reduced production in Germany and relocated production from Portugal to Hungary and Moldova. We have restarted the partnership with Sympatex, developed new models and used innovative materials. The logistics were moved away from the Palatinate and integrated with us in Zeulenroda. The transition to the SAP system took place on November 1st, so that we can also serve the brand from our central warehouse.
You have done something very interesting with the Heinrich Berkemann brand: a new collection was launched that reissues traditional styles from the wooden shoe sector. The topic fits the current situation both in terms of fashion and zeitgeist…
Yes, from the perspective of sustainability, this collection is a contribution. Wooden shoes generally last 20 years longer than other shoes. Wood is a renewable raw material and can be recycled. In recent years, we and Berkemann have developed more strongly in the orthopedic technology and medical supplies sales channel. Now there is also a fashionable collection. It has its own name, Heinrich Berkemann, and also has its own distribution. We show traditional products with a new interpretation. The project will really get started in spring 2025. The models are currently only available in the online shop, new versions will gradually come onto the market and also in stores. In terms of sales, the topic is a shop-in-shop. You become a partner because you have a special positioning in your market area and you bear little risk in the collaboration.
Is it possible to attract new dealers in the current difficult times or is growth currently working better for existing customers?
It is currently easier to expand your shares with retailers you already work with. But of course that won’t be enough in the long run. It won’t work without new and different retailers. And I also believe that there will be free spaces in the market because one or the other manufacturer will reduce their production. These are not easy times; not everyone will be able to stay in the market. What I work on are our own themes and concepts. At Berkemann this is the single pair order. With Solidus it’s the fit and the orthopedic footbed. At Däumling it is WMS. We want to score points with this. I focus on both the shoe and the service surrounding the shoe.
How is the Berkemann Group positioned in the EDI area?
We can serve almost all types of electronic data exchange, and we have been using Berkemann for three years, and I don’t have the impression that the market has just broken down. The rethinking has not yet begun among retailers. The first attempts are now being made tentatively and cautiously. We have an advantage with our comfortable and standard shoes, because it is difficult to put fashionable shoes in the warehouse on suspicion. A collection that focuses on longevity and continuity is easier to trade. On the other hand, we see that recurring shoes are purchased frequently. In fact, business could be done with this. To do this, you have to have employees on site who are trained and able to sell a high-quality shoe.
What makes you confident?
The direction we took with Däumling. And we have new shoe concepts as well as some developments in the area of insoles and footbeds in the works, which we will bring to the market over the next year. And I hope that in the future there will be greater emphasis on diversity and not everyone will offer the same thing. The Internet prevents you from being successful. An example from the beer industry: Until five or ten years ago there was only consolidation in the market; Bigger and bigger breweries emerged and everyone drank the same thing. And suddenly craft beers came onto the market and people now buy interesting, handcrafted beers, sometimes with unconventional blends, but also for the right price. I think we need more diversity.
