Bulletin - Footwear in the USA

Christopher Columbus is credited with discovering the ‘New World’ of America in 1492. Settlers from Europe soon arrived and, from 1607, the 13 British colonies that would become the original States were founded along the East Coast. In 1774, many of the colonists rejected the legitimacy of the British Parliament to govern them without representation, and the Revolutionary War broke out the following year. On 2nd July 1776, the Congress in Philadelphia voted to declare independence from Great Britain. Two days later, the Declaration of Independence was signed and the United States of America was born. To this day, the nation still celebrates its day of independence every 4th July. However, the USA was not officially recognised as a new nation until the Treaty of Paris in 1783.

During the 19th and 20th centuries, 37 new states were added to the original 13 as the nation expanded across the North American continent and acquired a number of overseas possessions. The two most traumatic experiences in the nation’s history were the Civil War (1861-1865), in which the Northern Union states defeated a Confederacy of 11 southern states, and the Great Depression of the 1930s – an economic downturn during which about a quarter of the labour force lost their jobs. Today, the USA is the world’s most powerful nation state and the economy has been marked by steady growth, low unemployment and inflation, and rapid advances in technology.

Geography of the land

The United States of America is located between the North Atlantic Ocean on its east coast and the North Pacific Ocean on the west. It borders Canada to the north and Mexico to the south. Including the states of Alaska and Hawaii, the USA is the 3rd largest country in the world, covering a total area of 9.8 million sq km (3.8 million sq miles). The landscape is very diverse, with a vast central plain, mountains in the west, hills and low mountains in the east along with rugged mountains and broad river valleys in Alaska and a volcanic landscape in Hawaii. Because of this, the climate varies considerably across the 50 states, from tropical in Hawaii and Florida to arctic in Alaska, with many variants in between. From semiarid in the Great Plains to arid in the basin of the south-west, many states also see huge variants in temperatures from summer to winter. Inevitably, these conditions can lead to tornados and hurricanes (mainly along the Atlantic coast and in the Gulf of Mexico), as well as frequent fires in the south-western states and the occasional earthquake around the Pacific basin.

Industry in the USA

The USA has the largest and most technologically-powerful economy in the world, with a per capita GDP of $46,900, although only 21.9 per cent of this is in the industrial sector. The remaining 78.1 per cent is split between 1.2 per cent agriculture and 76.9 per cent in the services industry. US firms are at the forefront in technological advances, especially in computers, medicine, aerospace and military equipment. With a potential work force of 154.5 million (including those currently unemployed), the USA is placed 4th in world comparison.

In more recent years, unemployment has risen from 5.8 per cent in 2008 to 9.4 per cent in 2010, due largely to the global economic downturn from the sub-prime mortgage crisis and investment bank failures. Falling home prices and tight credit pushed the US into a recession by mid-2008. GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilise financial markets, the US Congress established a $700 billion ‘Troubled Asset Relief Programme’ (TARP) in October 2008. The government used some of these funds to purchase equity in US banks and other industrial corporations, and in January 2009 President Barack Obama signed a congressional bill providing an additional $787 billion fiscal stimulus to be used over ten years. Two-thirds of this will be on additional spending and one-third on tax cuts, to create jobs and to help the economy recover.
Approximately two-thirds of these funds will have been injected into the economy by the end of 2010

The history of US footwear

The US footwear industry has undergone major changes in recent years. The average US consumer has certainly developed a serious love affair with footwear. In 1977, shoppers purchased on average three pairs of shoes per year, but 30 years later this figure had grown to almost eight pairs per year.
However, as the sales of footwear in the USA have grown (by over 148 per cent – from 1,629 million pairs in 1997 to 2,424 million pairs in 2007), the manufacturing sector has all but moved away from the US mainland. The USA produced 525 million pairs in 1977 and only 31 million pairs in 2007.

Many US companies began to source large volumes of footwear globally – initially from Mexico and the Caribbean, and then from South America and south-east Asia. China is now the largest supplier of footwear to the USA, sending in 2,041 million pairs in 2007 (85 per cent of the total US consumption). Other key suppliers are Vietnam, Brazil and Indonesia.

It was perhaps inevitable that labour-intensive industries, such as footwear manufacturing, should move away from the US mainland, when the cost of employing labour in the USA is compared with that in the major shoemaking countries such as China. The current US minimum hourly rate varies across the country, but is in the range of $7.25 to $9.92, compared to a typical Chinese company, which pays around $1.19 per hour.

NAFTA

The North American Free Trade Agreement (NAFTA) came into force on January 1st 1994 and superseded the Canada/USA Free Trade Agreement. NAFTA covers trade between Canada, USA and Mexico, creating a trilateral bloc with a combined population of 445 million and total GDP of $16.8 trillion (2008 IMF estimate). The goal behind NAFTA’s introduction was to progressively eliminate barriers to trade and investment between the three countries over a ten-year period, except for specific US agricultural exports to Mexico, which were to be phased out over 15 years.

The NAFTA agreement also increased labour mobility, with Canada, USA and Mexico all claiming a higher level of ‘foreign workers’. There is little evidence to support the assertion that NAFTA assisted the retention and growth of US manufacturing. Figures from the US Bureau of Labor indicate that although in the six years immediately following the start of the NAFTA agreement, US civilian employment increased by almost 15 million, whereas manufacturing jobs grew by only 476,000. The same source reveals that in the period between 1994 and 2007, there was a decline in US manufacturing of 3.7 million jobs.

The value of the NAFTA footwear market reached $69.8 billion in 2007. The USA was the leading country among the bloc, with market revenues of $62.6 billion. Mexico was the fastest growing country, with a Compound Annual Growth Rate (CAGR) of 9.6 per cent over the 2004-2007 period.

The US footwear industry

The footwear industry is spread over the US mainland, reflecting both the historical pattern of manufacturing and the development of the retail and distribution companies. Companies which import or source footwear from outside the USA are located mainly on the coastal areas, whereas some of the traditional manufacturers (which are now often also importers) have remained scattered across the US mainland.

The east coast

New Jersey-based Stanbee began manufacturing footwear components in 1948, when Manny Berkson and his son Stan founded the organisation. Today, Company President Michael – the third generation of the Berkson family at Stanbee – has 25 years with the company and still follows the same formula for success: an organisation's growth is only as good as the service it provides its customers. Since its early days, Stanbee has been a significant supplier within the North American footwear industry and has become a leading producer of high-tech thermoplastic counter and box toe materials sold worldwide.

Timberland is a global supplier of footwear, apparel and accessories for consumers who value the outdoors and the time they spend in it. Timberland markets products under the Timberland, Timberland PRO, Mountain Athletics, SmartWool, Timberland Boot Company, Howies and IPATH brands. The company's products can be found in department and speciality stores, as well as Timberland retail stores throughout North America, Europe, Asia, Latin America, South Africa and the Middle East.

New Balance began as a Boston-based arch support company in the early 1900s, developed into a specialised shoe manufacturer in the 1970s, and has grown to become a global athletic products company with five manufacturing facilities in the US. Today, New Balance markets a number of brands, including New Balance, Dunham, PF Flyers, Aravon, Warrior and Brine. The company has developed what it calls an ‘endorsed by no-one’ philosophy, which holds that a superior product will sell itself better than any superstar athlete ever could.

USA’s mid-west

Collective Brands International (CBI) was formed in 2007, when Payless ShoeSource acquired the Collective Brands Performance + Lifestyle Group (formerly the Stride Rite Corporation) and Collective Licensing International. CBI Brands include Payless, Saucony, Spotlights, American Eagle, Airwalk, Alice Olivia, Champion, Christian Sirjano, Dexter, Dunkman, Lela Rose, Smartfit, Moments, Zoe and Zac, Vision Streetwear, Sims, Lamar, Sperry Top-Sider, Keds.

The new company was named ‘Collective Brands’ to reflect the idea that together, the sum is greater than the individual parts. In total, CBI reportedly sources and distributes over 220 million pairs of shoes annually. It operates some 4,000 stores in the Payless domestic segment, 600 stores in the Payless international segment and 340 stores in the Stride Rite retail segment.

In an era where an item being ‘handmade’ is said to have become more of a rarity, Red Wing Shoe Company is holding onto tradition by continuing to make its branded work shoes by hand, as it has since 1905. The company’s US and foreign factories make casual and outdoor shoes, as well as work and steel-toed boots. Its brands portfolio includes Red Wing, Vasque, Irish Setter, WORX, and Carhartt Footwear. Red Wing Shoe Company’s products are sold at more than 4,000 retail outlets in the US and, although it distributes worldwide, the US accounts for the bulk of its sales. Red Wing also owns the S B Foot tannery operation.

In 1886, American Civil War veterans Peter Wycoff Minor and his brother Abrahm Vorhees recognised the market for high-quality shoes and boots. They opened Minor Brothers Boots and Shoes in 1867 with 20 shoemakers, and the company continues today in its fifth generation of family ownership.

Brown Shoe is a global footwear company that produces more than 100 million pairs of shoes each year. These are sold through partnerships with department stores, national chains and independent retailers on behalf of their footwear brands, as well as its own retail stores, catalogues and
e-commerce sites. Brown Shoe maintains global operations in St. Louis, New York, Dongguan, Italy and Brazil. The company’s brand portfolio covers a broad range of styles – from the Via Spiga and Vera Wang Lavender Label fashion brands to comfort footwear under the Naturalizer and Franco Sarto labels, as well as the heritage of the Dr Scholl’s brand. Brown Shoe has also entered into celebrity collaborations with musician Carlos Santana and pop superstar Fergie.

Founded in Illinois in 1904, Belleville Shoe Manufacturing Company was soon employing 50 workers who made 75 pairs of shoes a day. Within a few years, the company was selling men’s and boys’ shoes from coast to coast. In 1917, during the First World War, Belleville Shoe received its first order for military footwear. This began an enterprise that has not only sustained the company ever since, but has also revolutionised it from a small operation making uncomplicated shoes to today's large, technology-driven business developing and producing footwear for the US armed forces. During the Second World War, the US War Department bestowed its coveted ‘Army-Navy ‘E’ Award’ on the firm for product quality and on-time delivery. Of the 90 companies producing combat boots during the war, only five received this distinction.

In the 1950s and 1960s, Belleville Shoe branched out into athletic shoe production, making baseball, football, golf, soccer, bowling and track shoes under the Rawlings brand. Today, Belleville Shoes turns out over one million pairs of military boots annually and, since 1997, this footwear has carried the Belleville name.

Rocky Brands Inc designs, develops, manufactures and markets premium-quality rugged outdoor, occupational, and casual footwear, as well as branded apparel and accessories. The company’s footwear, apparel and accessories are marketed through several distribution channels, primarily under owned brands, Rocky and, as a result of the acquisition of EJ Footwear, Georgia Boot, Lehigh and Durango. Most recently, brands Michelin Footwear and Zumfoot were added to the list.

Founded in 1883 by G.A. Krause, Wolverine Worldwide was initially known as the Rogue River Electric Light and Power Company bringing electricity to Rockford, Michigan. Twenty years later, a footwear factory was built in Rockford, making 300 pairs of shoes each day. This was followed in 1908 by the Wolverine tannery, set up to supply the shoe factory with horsehide. The company later became the ‘Wolverine Shoe and Tanning Corporation’ and began to grow. During the Second World War, it worked for the US Navy developing pigskin gloves. By the end of the war, Wolverine engineers had produced a new leather – pigskin suede – and a new factory was built to produce it.

The creation of soft, suede casual shoes led to the birth of the Hush Puppies brand. Wolverine claims that one in ten American adults have, at some time, owned a pair of Hush Puppies. In 1964, the company became Wolverine World Wide Inc. In recent years, several brands and global licenses have been acquired, including Merrell, the Harley-Davidson Company, European Caterpillar, Sebago, Docksides, Patagonia Footwear, Chaco and Cushe. Company sales topped $1 billion for the first time in 2005.

Norcross Safety Products claims to be one of the largest providers of personal protective equipment in the USA. Its range includes footwear, supplied for a number of PPE applications, including the fire service, electrical safety and general industrial sectors. The company also produces protective headgear, firefighter turnout gear, high-voltage sleeves and gloves, and arc flash protection. Norcross sells its footwear under the Servus, Ranger, Xtratuf, Northerner, Neos and Muck Boot brands. It is said to have one of the industry's most extensive distribution networks, with more than 2,500 outlets.

On the US West Coast

NIKE Inc, based in Beaverton, Oregon, is one of the world's leading producers of athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which produces luxury shoes, handbags, accessories and coats, and Converse Inc (which designs, markets and distributes athletic footwear, apparel and accessories). Nike also owns Hurley International LLC – a producer of action sports and youth lifestyle footwear, apparel and accessories – and UK-based global football brand, Umbro Ltd.

Columbia Sportswear manufactures and distributes outerwear and sportswear. It was founded in 1938 by Paul Lamfrom, father of the present Chairperson Gert Boyle. Headquartered in Washington County, Oregon, Columbia Sportswear also produces footwear, headgear, camping equipment, skiwear, and outerwear accessories.

A small, family-owned hat distributor called the Columbia Hat Company (named after the nearby Columbia River) was founded in 1937. Frustrations over suppliers influenced the family to start manufacturing their own products, and the Columbia Hat Company became Columbia Sportswear Company in 1960. Columbia became a publicly traded company in 1998. It acquired footwear maker Sorel Corporation in 2000 and Mountain Hardwear in 2003 and, in 2006, obtained the Pacific Trail and Montrail brands.

Through its subsidiaries, LaCrosse Footwear Inc engages in the design, development, manufacture, and marketing of footwear and apparel for the work and outdoor markets. Founded in 1897 and based in Portland, Oregon, the company offers work and outdoor boots under the ‘Danner’ brand name, with rubber and leather footwear, and rainwear and protective clothing sold under the ‘LaCrosse’ brand name. Its Danner offerings include product categories such as uniform, hunting, work, hiking, and accessories, supplied through a network of speciality retailers and distributors in the US, Asia, Europe and Canada, as well as through the internet.

Brooks Sports Inc was founded in 1914 by Morris Goldenberg as a manufacturer of ice skates and cleated sports shoes, and now produces high-performance sports and soccer shoes, and running apparel. The company originally produced bathing shoes in 1917 before moving into sports by producing baseball cleats in 1920 and football cleats in the 1930s. With headquarters in Bothell, Washington, Brooks Sports was briefly owned by Wolverine Worldwide in the 1980s, and was then acquired by Russell Corporation in late 2004. In 2006, it was sold to Berkshire Hathaway.

The North Face Inc is an outdoor product company specialising in outerwear, fleeces, footwear, and equipment such as backpacks, tents and sleeping bags. The clothing and equipment lines are aimed at wearers of wilderness chic, as well as climbers, mountaineers, skiers, snowboarders, hikers and endurance athletes. The North Face brand was established in 1968 in San Francisco, California, when Douglas Tomkins and Dick ‘Hap’ Klopp created an equipment retail store that eventually acquired the current name, chosen because the north face of a mountain in the northern hemisphere is generally the most difficult face to climb. By the 1980s, skiwear was added to the line of products, and camping equipment was also introduced. The North Face is now a wholly-owned subsidiary of the VF Corporation. In addition to selling through outdoor retailers, the company operates a number of retail locations in the US, with additional retail locations worldwide.

Materials and components suppliers

Established in 1920, Prime Tanning claims to be a leather supplier to the finest footwear, apparel, accessory and upholstery companies in the world, which demand the best in quality, service and innovation. Featuring over 200,000 square feet of production, research and development and office space, the Hartland facility serves as Prime's finished product operation as well as its headquarters.

Rogers Corporation – based in Woodstock, Connecticut – distribute a range of insole and footbed materials such as PORON performance urethanes, which are marketed as offering lightweight comfort and flexibility. Rogers Corporation says that PORON ReSource performance urethanes are formulated using a combination of sustainable materials and recycled content.

Horween Leather Company was founded in 1905. It is one of the oldest continuously-running tanneries in the US, and the only one still located in Chicago. Its proximity to the stockyards and meatpacking and processing companies helped to provide early growth. Today, Horween primarily uses cowhide and horsehide with smaller quantities of calf and bison hides also being tanned. The leather produced is used in many products, including footwear, sporting goods, bags, belts and other types of apparel and accessories.

Oakley Inc is a sports and lifestyle brand founded in 1975 and headquartered in Southern California. The company’s optics brands include Eye Safety Systems, Fox Racing, Mosley Tribes, Oakley, Oliver Peoples and Paul Smith Spectacles, as well as other brands covering performance apparel and accessories, prescription eyewear, footwear, watches and electronics. Over the years, Oakley’s innovations have been awarded more than 575 patents and 1,100 trademarks.

The Quabaug Corporation has been located in North Brookfield, Massachusetts, since 1916 and currently employs around 300 people. For many years, Quabaug has had a proud history of designing and manufacturing various rubber products, from hockey pucks and baby carriage tyres, to floor tiles and footwear soling products. In 1965, Quabaug became the exclusive US manufacturer of Vibram soles for the outdoor, rugged performance footwear market. Quabaug’s Vibram soles are found on a number of high-profile footwear brands, including Red Wing, Justin, Belleville, Addison, Danner, Wolverine and Rocky boots, and the company is said to be the largest supplier of outsoles to the US military.

Footwear retailers and distributors

The US footwear industry consists of around 100 manufacturers, 1,500 wholesalers and over 30,000 retail outlets with combined annual retail revenue of some $66 billion. Although these are spread widely throughout the US mainland. The states with the largest numbers of retail outlets are California, New York, Florida and Texas.

The retail sales profile is highly concentrated, with the largest 50 chains representing around 80 per cent of the total revenue. In terms of product types, athletic footwear accounts for about 35 per cent of the retail market, women’s casual and dress shoes for 25 per cent and men’s casual and dress shoes for 15 per cent.

Retailers include regional and national shoe store chains (such as Foot Locker and Payless Shoesource), department stores (including Sears and Wal Mart), discount stores and many independent local retailers. A number of sportswear companies such as Nike, New Balance and adidas have their own retail outlets, as well as selling their products through other stores.

Looking to the future

Although a relatively young country compared to many of the large shoemaking nations around the world, the USA can call on a self-belief and commercial drive that has boosted many home-grown industries and led them to achieve impressive trading figures.

The overall footwear market in the US is destined to see increased competition in future years. Many companies will grow larger because of the acquisitions of other smaller groups which, in turn, will trigger more marketing initiatives and new innovations. Manufacturing will also see significant changes as labour costs rise and more focus is given to reducing production costs through skills training and increased factory technology. An application of these new ways of working can pay dividends for US-based shoemakers willing to expend the necessary effort and outlay.