Firm reverses one-way flow of shoes
PORT WASHINGTON, Wis. — There's a good chance the shoes you're wearing right now were made in China. Now an American shoemaker wants to put the shoe on the other foot, by persuading the Chinese to wear shoes made in the USA.
The Allen Edmonds Shoe Corp., whose high-end shoes have been worn by U.S. presidents for generations, is preparing to open stores in China while keeping the manufacturing work at home. The plan marks a reversal of sorts in a footwear industry that has flowed almost entirely from East to West.
Nearly 99 percent of shoes sold in the United States are imported, with China accounting for about 88 percent of the total, according to a report by the American Apparel & Footwear Association.
Allen Edmonds is hoping to become a larger player in the world market. So the Wisconsin-based shoe company announced this month that it has signed a licensing agreement with a Shanghai-based company to sell its shoes in China, Hong Kong and Macau. The first store is slated to open in Shanghai by the end of June.
Conventional wisdom might suggest that the cheapest way to sell to the Chinese is to assemble the products in China, thereby minimizing labor and shipping costs. But Paul Grangaard, Allen Edmonds' top executive, wouldn't hear of it. He said a significant part of his company's appeal is that its products are U.S.-made.
"We sometimes forget in this country what a strong reputation 'Made in America' has around the world," said Grangaard, the president and CEO of the privately held firm. "If we started making shoes in China, we'd be just like any other company."
Allen Edmonds shoes are handmade at the company headquarters in Port Washington, about 30 miles north of Milwaukee. Its 330 production workers crank out 2,000 pairs of shoes a day, and Grangaard predicted that if sales in Asia take off, the manufacturing staff could double in the next 10 years.
There's room for his optimism. China has about 1.3 billion people — or, as Grangaard sees the market, 2.6 billion feet — and its expanding upper and middle classes can increasingly afford pricey shoes.
Capturing even a small fraction of that market could be lucrative. The company thinks it's possible to do so, given recent trends in the United States.
Allen Edmond shoes range in price from $120 to $600, with the more popular styles in the $300 range. That might be out of the price range of many Americans, especially during a recession, yet Grangaard said domestic demand has surged within the last year or so.
He attributed the trend to several factors. Men are dressing better, he said, trading in the beat-up tennis shoes they might wear on weekends for a pair of comfortable, classy business-casual shoes.
Customers also want quality, preferring to spend $300 on a pair of shoes that last five to 10 years rather than pay half that price for a pair that has to be replaced in a year or two, he said.
He credits those factors with putting Allen Edmonds on pace for $100 million in sales this year. That would be about a 20 percent increase over last year. It would also mirror a national trend, as U.S. sales of footwear jumped 14 percent from 2009 to 2010.
But some of the company's most notable customers have been loyal for years.
Every U.S. president from Ronald Reagan to George W. Bush wore Allen Edmonds on the dais for their inauguration ceremony, Grangaard said. Although that trend ended with Barack Obama in 2008, Grangaard said the current commander-in-chief has been spotted wearing them since then and even bought two pairs in recent months.
While Allen Edmonds has always touted its American workmanship, Grangaard said the message didn't resonate as much as customers stopped looking for "Made in the USA" tags. But with renewed demand for U.S.-made products, the company is now being rewarded for keeping all its jobs on U.S. soil, he added.
"It took dogged determination to stay an American manufacturer during the '90s and the first decade of this century," Grangaard said. "Now the pendulum is coming back."