adidas Group to end business relationship with PT Prima Inreksa Industries in six months time
Herzogenaurach, 25 June 2008 – After a difficult 12 months, the adidas Group has reached a decision to end its business relationship with PT Prima Inreksa Industries – a large footwear supplier located in Tangerang, Indonesia.
In May 2007, PT Prima’s former management team resigned. They left behind a factory that was heavily in debt to creditor banks and to material suppliers. The factory temporarily closed and the investors in PT Prima were faced with a simple choice: either to declare the business immediately bankrupt, or to work with the adidas Group on a rescue package.
The adidas Group agreed to support PT Prima by continuing to place orders and putting in place measures to stabilise the business.
For more than a year adidas supported the factory through direct financing of materials, on-site operational support and by offering favourable payment terms. These efforts were conditional upon PT Prima meeting its delivery schedules, restructure its debts, strengthening its management team and providing the necessary level of investment to make the factory a going concern. They failed to do so. Consequently, on June 9th 2008, the adidas Group gave PT Prima 6 months notice that it would end the business relationship.
The adidas Group has informed the Indonesian Government of its decision and its concerns over the workers’ situation at PT Prima. The Indonesian Footwear Manufacturer’s Association (APRISINDO) and the Indonesian Employers Association (APINDO) have offered their support to help PT Prima develop a second rescue package. The details of that package are still being negotiated.
Indonesia continues to be a key sourcing country for the adidas Group. In 2007, 19% of the adidas Group's total volume of approximately 201 million pairs was produced in Indonesia. By 2012, the Group expects to double in size the current volume of business in Indonesia.