Rubber and Plastics Footwear

SIC 3021

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing fabric-upper footwear having rubber or plastic soles vulcanized, injection molded, or cemented to the uppers, as well as rubber and plastics protective footwear. Establishments primarily engaged in manufacturing rubber, composition, and fiber heels, soles, soling strips, and related shoe making and repairing materials are classified in SIC 3069: Fabricated Rubber Products, Not Elsewhere Classified; those manufacturing plastic soles and soling strips are classified in SIC 3089: Plastics Products, Not Elsewhere Classified; and those manufacturing other footwear of rubber or plastics are classified in SIC 3140: Footwear, Except Rubber.

Industry Snapshot

The value of shipments in the rubber and plastics footwear industry in the United States dove from $1.1 billion in 1998 to $504.8 million in 2005. The market reeled from a decline in consumer spending on athletic footwear but tried to capitalize on the shift in demand toward outdoor footwear, including rugged shoes for hiking and winter-sports footwear. The shift in consumer tastes toward casual street fashion was not of particular help to this industry as leather products tend to dominate that category of footwear.

The United States is the world's largest importer of footwear, accounting for one-quarter of the world's imports. In 2003, the United States imported $2.8 billion worth of rubber- and plastic-soled shoes. Asian and Middle Eastern manufacturers are responsible for about 70 percent of worldwide production. The major manufacturing countries include China, India, and Indonesia. Many U.S. companies produce a large percentage of their shoes in those countries, taking advantage of lower labor and material costs. Since the 1990s, this outsourcing has generated controversy for the footwear industry as news of harsh labor practices in U.S. manufacturing facilities unleashed a backlash against the use of sweatshop labor in particular, and exploitative labor practices in general. The controversy spurred calls for regulations establishing worldwide labor standards, including minimum wage and safety provisions.

The industry consists primarily of two product categories. One area includes the waterproof footwear worn over shoes to protect them from inclement weather. Such products are often referred to as overshoes, rubbers, galoshes, and arctics. Also included in this area are rubber boots that are not worn over shoes but protect the feet from mud and water. In addition to the retail market, protective footwear is more or less guaranteed a strong institutional customer base with restaurants, large construction crews, municipal snow-removal workers, and a host of other industries in relatively stable need of protective footwear. Within these limits, there is a great deal of specialization, with products often tailored specifically for different occupations.

The second area consists of rubber soled canvas shoes, generally known as sneakers. While nearly all sports shoes have a rubber or plastic sole, and athletic shoes other than the canvas sneakers featuring rubber soles and a fabric upper are included in this category, those with leather uppers are included in other SIC classifications.

In 2002, a new kind of plastic shoe came on the market when Foam Creations, Inc., of Boulder, Colorado, introduced the Croc to the market. Crocs are clogs made of a closed-cell resin, and were originally marketed as a boating shoe because of their slip-resistant soles. Touted as "the most comfortable shoe you'll ever have on your feet" by creator George Boedecker, Jr., the popularity of Crocs grew in other markets as well, with 60,000 pairs a month sold in 2005. Crocs, Inc., made its initial public offering in 2006, and reported 2007 second-quarter revenues of $224.3 million, which was 162 percent higher than the previous year's $85.6 million.

The rubber footwear industry in generalis largely based on the ability of rubber to protect against water and rain. An early breakthrough was made around 1920 by a Scottish chemist, Charles Macintosh, who developed rubberized waterproof cloaks that became known as "mackintoshes." Later, Macintosh's associate, Thomas Hancock, devised ways to process rubber for use as a material for footwear. By the 1990s, the manufacture of footwear required more rubber than that of any other product except tires. The sewing of uppers to rubber soles had been superseded by the use of adhesives or vulcanizing directly.

In the late 1990s, sports shoe manufacturer Nike received worldwide criticism because of substandard conditions and harsh treatment of workers, including corporal punishment and child labor abuses, at its factories in Indonesia and Vietnam. The firm hired the Goodworks International Group, headed by former United Nations ambassador and mayor of Atlanta, Andrew Young, to review a new code of conduct for its overseas factories in the late 1990s. Nike also expanded its U.S. advertising team, adding Goodby, Silverstein & Partners to help counteract the negative publicity. However, criticism of Nike hardly abated, despite continued profit margins. In fact, it became a general, widespread outcry affecting the entire apparel industry. Labor activists, human rights groups, and religious organizations forced politicians to take action against such practices, and President Bill Clinton created a task force to mitigate the abusive child labor practices employed by U.S. manufacturers in developing countries. As the issue became more integrated into social consciousness, industry manufacturers became further obliged to take note, while some analysts predicted that refraining from such practices could be turned into a selling point.

There were 62 manufacturers of rubber and plastics footwear in the mid-2000s, with 15,631 employees in 2005. Of these, 12,722 were production workers earning an average of $11.63 per hour. U.S. employment in the industry decreased steadily beginning in the early 1970s due in part to moves to lower cost suppliers overseas. This pattern continued into the late 2000s.

In 2003, U.S. manufacturers produced 6.1 million pairs of rubber and plastic footwear and 11.2 million pairs of shoes with rubber or plastic soles. Texas was the largest state in terms of production, followed by California and Pennsylvania.

Total industry shipments in 1999 were $1.02 billion but then started to decline steadily, to a low of $478.9 million in 2002. By 2005, the value of industry shipments had risen to $504.8 million. The cost of materials fell from $1.16 billion in 2002 to $982.7 million in 2005, and the number of total industry employees declined from 19,562 to 15,631 over the same period.

Current Conditions

In 2007, U.S. manufacturers produced 6.3 million pairs of rubber and plastic footwear, down 4 percent compared to 6.6 million pairs in 2006. Shipments of shoes with rubber or plastic soles also fell to 9.2 million pairs compared to 9.6 million pairs in 2006. Imported rubber and plastic footwear totaled 20.4 million pairs, while 171.5 million pairs of shoes with rubber or plastic soles were imported. Imported footwear satisfied nearly 99 percent of the U.S. footwear market in just about every footwear category, except plastic and protective footwear.

According to industry statistics, there were an estimated 190 establishments engaged in manufacturing fabric-upper footwear having rubber or plastic soles vulcanized, injection molded, or cemented to the uppers, as well as rubber and plastics protective footwear. The segment was valued at $23.1 billion in 2008, with industry-wide employment of 9,662 workers.

Manufacturers of rubber and plastics footwear held 52.6 percent in market share with shipments totaling $20.9 million and employment of 8,370. Rubber or rubber soled plastic shoes were responsible for 10.5 percent in market share with shipments totaling $1.4 million, while rubber sandals accounted for 6.3 percent of the market or $11.6 million. Rubber or rubber soled fabric upper shoe manufacturers had 5.3 percent in market share and shipments of $726.1 million. Rubber or plastic protective footwear generated $18.6 million.

Demand for Crocs was dwindling, falling 15 percent to $721.5 million in 2008 from over $847 million in 2007. The company's shares plunged from a high of $74 in November 2007 to just $1.05 a year later. The global economic downturn only added to the company's woes. To return to profitability, Crocs began to downsize, starting with 32 percent of its workforce and closed factories. The company reported 120 million pairs of Crocs were sold during the first 10 months of 2009, thus still adding to the industry's bottom line.

Industry Leaders

Leaders in this industry included large, diversified shoe and apparel manufacturers and smaller firms focusing on more specific products. Deckers Outdoor Corporation, employing 319 workers, generated revenues of $304.4 million in 2006 from its outdoor rugged footwear and sports shoes and sandals. This was a 15 percent annual growth rate from the previous year's $264.8 million. Vans, Inc., of Santa Fe Springs, California, produced a range of footwear for casual and rugged wear, including snow boots and biking shoes, and posted sales of $330.2 million prior to being acquired by VF Corporation in 2004. In the mid-2000s, Nike was the world's number one shoemaker and controlled 20 percent of the U.S. athletic shoe market. Total sales in 2005 were $13.7 billion, with 24,667 employees. In 2003, Nike purchased Converse, Inc., a global manufacturer based in North Andover, Massachusetts, with pre-purchase sales of $205.3 million. LaCrosse Footwear, Inc., based in Portland, Oregon, specialized in protective, sporting, and occupational footwear, generating 2006 sales of $107.8 million.

A number of established names also participated in the rubber and plastics footwear industry but derived most of their revenue from the $14.7 billion sneaker industry, which represents only part of this category. The leading manufacturers of this larger industry were Nike, controlling 34 percent of the market; Reebok, a distant second at 13 percent; and adidas, with 6 percent.

Deckers Outdoor Corporation's revenues grew from $448.9 million in 2007 to a reported $689.4 million in 2008. Deckers' popular Ugg boot was responsible for roughly 88 percent of total revenues in 2006 and 60 percent in 2007. Unfortunately, Deckers other brands were not performing as well and demand was beginning to contract slightly for the Ugg, leaving the company seeking a possible acquisition. Nike Inc. reported revenues of $19.1 billion in 2009, compared to $18.6 billion in 2008. LaCrosse Footwear, Inc., posted revenues of $128.0 million in 2008.

Research and Technology

Supporting the industry's technological development front was the Shoe and Allied Trades Research Association (SATRA), which maintained a Footwear Technology Centre in England. This group of 180 scientists, technicians, and support staff assists its 1,200 members in 70 countries by helping to control manufacturing costs and improve quality by evaluating materials and production. It aids the business side of the industry through its consulting activities and by developing management information systems tailored to the industry. Its members are footwear manufacturers, material and machinery suppliers, repairers, and retailers.

SATRA has done a great deal of pioneering research, providing industry members with technology too costly for the smaller companies in the footwear business to develop on their own. For example, SATRA has developed beneficial concepts in the areas of ergonomics, color durability, the environment, materials standards, quality control, and computer applications like CAD/CAM, robotics, and bar coding.

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