Men's Footwear, Except Athletic

SIC 3143

Companies in this industry

Industry report:

This category includes establishments primarily engaged in the production of men's footwear designed for dress, street, and work. Establishments primarily engaged in the production of such protective footwear as rubbers, rubber boots, storm shoes, galoshes, and other footwear with rubber soles vulcanized to the uppers are classified in SIC 3021: Rubber and Plastics Footwear. Establishments primarily engaged in the production of athletic shoes and youths' and boys' shoes are classified in SIC 3149: Footwear Except Rubber, Not Elsewhere Classified, and those manufacturing orthopedic extension shoes are classified in SIC 3842: Orthopedic, Prosthetic, and Surgical Appliances and Supplies.

Industry Snapshot

In the mid-2000s, the men's footwear market was shaped by two powerful forces. First, the U.S. footwear industry continued to be affected by the increasing dominance of imported shoes. Although 111 U.S. factories were engaged in the manufacture of men's dress, casual, and work footwear in the mid-2000s, U.S. imports from China accounted for 85.4 percent of all U.S. footwear imports in 2005, thus continuing a trend of heavy U.S. imports of footwear that began more than three decades ago. Second, the men's footwear market has also changed as more casual work attire has become more acceptable in U.S. offices. As a result, men's dress shoe sales fell, while those of casual, dress/casual, and outdoors shoes soared. After declining from $2.01 billion in 1997 to $1.69 billion in 1998, industry shipments in 2000 climbed to $2.02 billion. By 2001, the boom had slowed, and shipments in that year were $1.92 billion and dropped again the following year to $956 million. In 2005, shipments totaled $975 million. In the late 2000s, men's non-athletic footwear manufacturing totaled $846 million in 2008, falling to nearly $694 million in 2009.

According to industry statistics, there was an estimated 218 establishments engaged in the production of men's footwear designed for dress, street, and work with shipments valued at nearly $4 billion in 2009 with industry-wide employment of 11,395 workers. On average, each establishment generated $28.8 million employing 57 workers. California, New York, and Texas were responsible for 38 percent in market share. However, Michigan with only 6.4 percent in industry share was the top performing state in terms of sales with more than $1.1 billion in 2009.

Background and Development

New England had become the center of a thriving footwear industry as early as 1800, and by 1850, the United States was exporting large quantities of high-quality, inexpensive shoes to England and other European countries. Micajah Pratt, who began making and selling shoes in Lynn, Massachusetts, in 1812, was considered an innovator in the industry. He was among the first to use standard patterns and sole cutting machines. Pratt eventually employed about 500 workers, many of whom lived in other towns and worked at home. With this arrangement, he was able to produce almost 250,000 pairs of shoes annually.

Shoemaking became industrialized in the early 1860s, prompted by the development of machinery for attaching the leather part of a shoe, known as the upper, to the sole. In 1858, Lyman R. Blake of Abington, Massachusetts, invented a machine that attached the leather uppers with nails and wooden pegs. Soon after, Gordon McKay, also of Abington, improved Blake's invention by substituting thread for the cumbersome nails and pegs. Recognizing the threat that McKay's sewing machine posed to their livelihood, shoemakers staged the first general strike in the footwear industry in 1859. Nevertheless, by 1864, the Blake sewer was used by most U.S. shoemakers.

The most important technological advance, however, was probably the shoe-lasting machine, invented in 1882 by Jan Ernst Matzeliger, who also worked in a Lynn shoe factory. "Lasting" was the process of shaping the leather upper over a wooden form before attaching it to the sole. Matzeliger's shoe-lasting machine, patented in 1883, allowed shoes to be mass produced for the first time.

Technology remained relatively unchanged in recent years, but the U.S. industry was dramatically altered by the growing penetration of imports versus domestically produced shoes. According to Footwear Industries of America (which in 2000 merged with the American Apparel Manufacturers Association to become the American Apparel and Footwear Association), import penetration in the U.S. shoe market increased from 21.5 percent in 1968 to 89.5 percent in 1995. As import shoes claimed the market, the domestic production of footwear dropped. Between 1978 and 1995, the pairs of shoes manufactured by companies in the United States sank from over 418 million to about 145 million. While the export of U.S.-made men's footwear to other countries remained a significant factor into the 2000s at around 22 percent, primary destinations have shifted from England and other European countries a century ago to Japan, Canada, and Mexico.

Men's footwear accounts for a substantial portion of the total pairs of non-rubber footwear produced by companies in the United States. In the mid-2000s, 13 million of the 23 million total pairs of these shoes made in the United States were men's, according to the U.S. Census Bureau. In 2005, the value of U.S. shipments was $975 million.

According to the American Apparel and Footwear Association, 98 percent of all shoes in the United States in 2005 were imported. U.S. footwear imports grew 6.1 percent from 2004 to 2005, to 2.3 billion pairs worth $17.5 billion. Due in part to the removal of quota restraints on imports from China effective January 1, 2005, China was the largest exporter of footwear to the United States. Other countries that showed significant increases in footwear exports to the United States included Vietnam, India, Canada, Columbia, the Philippines, and the Dominican Republic.

The decline in U.S.-based shoe manufacturing took its toll on U.S. factories. As production continues to shift overseas to take advantage of lower labor costs, U.S. facilities closed rapidly. Employment in the general footwear manufacturing industry (including men's and women's footwear, house slippers, rubber and plastics footwear, and other footwear) decreased from 17,562 in 2002 to 15,631 in 2005. In 2005, 12,722 of these employees worked in production, earning an average hourly wage of $11.63.

Current Conditions

When the tally was in for total footwear imports in 2008, the struggling economy brought the totals down to levels not seen since the aftermath of September 11, 2001 terrorist's attacks. According to figures released by the U.S. Census Bureau, men's non-athletic footwear manufacturing totaled $846 million in 2008, falling to nearly $694 million in 2009.

The American Apparel and Footwear Association reported saturation of imported footwear stood at 99.67 percent in 2008, a decrease of 6.8 percent compared to 2007. The total number of imported shoes was 2.36 billion in 2007, decreasing to 2.20 billion in 2008, a reflection of the U.S. stagnant economy. China, the largest exporter of footwear to the United States saw their export volume fall 7.2 percent to 1.91 billion pairs of shoes, followed by Vietnam. Of the 20 exporting countries to the United States, 14 reported a decline in shipment volume with the Philippines reporting the largest shortfall at more than 38 percent in 2008, followed by Spain with more than a 33 percent decline.

The men's footwear, except athletic industry category held 51.8 percent of market share, or nearly $3.8 billion in shipments. The production of men's dress or casual boots was responsible for 22.9 percent of the market with shipment values of $137 million followed by the production of men's orthopedic shoes with 11.9 percent in market share with shipments valued at $19.7 million. Production of men's dress shoes generated $28.3 million, men's work shoes $12.7 million, and men's sandals $2.9 million.

Industry Leaders

Timberland Company.
A manufacturer of rugged, upscale hiking boots, walking shoes, and casual shoes, The Timberland Co. of Stratham, New Hampshire, became a leader in the men's footwear market as the so-called "brown shoes" it produces have become fashionable. The company rang up $1.6 billion in sales in 2006, and it employed 6,300 workers. Although Timberland was a staunch supporter of domestic manufacture, in 1994 burgeoning competition in the casual shoe market led the company to close some of its U.S. plants and outsource production to the Dominican Republic and Puerto Rico. Timberland sells its products through more than 200 company-owed and franchise stores in Asia, Canada, Europe, Latin America, the Middle East, and the United States, and through department and athletic stores worldwide.

Russian immigrant Nathan Swartz founded Timberland when he purchased half interest in the Abington Shoe Company in 1951. His partner died four years later and he purchased the rest. His sons, Herman and Sidney, joined him in the business, and for the next 15 years they produced inexpensive, private-label men's shoes and work boots in a converted Boston warehouse. Their dress shoes were most often sold through discount stores, while their work boots became a staple in Army/Navy surplus stores.

Sales of Abington's leather work boots increased unexpectedly around 1970, as the company was one of the first to stumble upon a new fashion trend that combined styles and gear previously favored by outdoors enthusiasts. "When we visited the stores, we saw that a lot of young people, college students, were buying them. You don't have to be a genius to know that something's going on," Herman Swartz later told INC. magazine.

Abington had by then relocated to Newmarket, New Hampshire, and in 1973 selected the "Timberland" name from a list suggested by an advertising agency. The company created a subsidiary to manufacture its new line of insulated and waterproof leather boots, which were distinguished by their thick rubber soles. It produced just 2,500 pairs that first year, compared to 490,000 shoes and boots in the Abington line.

The company initially marketed Timberland and Abington boots by appealing to hunters and anglers who shopped the army/navy surplus stores, and sales of the new line were unimpressive. However, in 1975 a marketing consultant suggested the company position Timberland as a fashion item sold through upscale department stores and retail outlets. A new advertising campaign was funded through a hefty price increase and launched with the slogan, "A whole line of fine leather boots that cost plenty, and should." In 1979, Abington officially changed its name to the Timberland Co. That year, it sold 500,000 pairs of Timberland boots as revenues topped $16 million. The company opened its first retail store in 1986 and made its first public stock offering in 1987. After fierce competition in the "brown shoe" sector eroded Timberland's sales, in 1997 the company began updating its retail stores. In 1998, Timberland introduced its "beige shoe," which a hybrid between a boot and a sneaker, and in 1999 debuted its line of Mountain Athletics products, which targeted younger men.

Other Leaders.
The outdoor look pioneered by Timberland spread throughout the industry, and several other companies also achieved success with it. L.L. Bean, Inc. of Freeport, Maine, was founded in 1912 by Leon Leonwood Bean. At the beginning, the business was built around the Maine hunting shoe. As of the mid-2000s, L.L. Bean sold all kinds of outdoor apparel, in addition to shoes and boots, and employed 3,900 people. Sales in 2006 totaled $1.5 billion. Wolverine World Wide or Rockford, Michigan, was another leader in industry, with 5,100 employees and 2006 sales of $1.14 billion. Wolverine also manufactured Hush Puppies, which were extremely popular with baby boomers. Hush Puppies sales soared as more relaxed office dress codes empowered men to wear casual shoes to work. The Rockport subsidiary of Reebok International Ltd. is another key player in the men's footwear industry.

The Timberland Company's revenues began spiraling downward with a reported $1.4 billion in 2007 and $1.2 billion in 2009 with 5,700 employees. L.L. Bean, Inc. through its 15 retail stores and about the same number of outlets throughout the Northeast, Illinois, and China, as well as its online presence, and the mailing of more than 200 million merchandise catalogs the company reported $1.5 billion in 2010 with 4,600 employees. Wolverine World Wide, Inc. reported revenues of $1.22 billion in 2008 before falling to $1.10 billion in 2009 with 4,018 employees. The company purchased the Cushe brand in January 2009 adding to its private labels that are sold globally. Reebok and Rockport were acquired by Adidas of Germany for about $3.8 billion in 2006.

Workforce

The general footwear manufacturing industry (including men's and women's footwear, house slippers, rubber and plastics footwear, and other footwear) employed 15,631 in 2005. Of these, 12,722 worked in production and earned an average hourly wage of $11.63, or about $2,000 a month. A comparison of this figure with China's basic monthly wage for its shoe-making workers, which is about $50, graphically illustrates why production has largely shifted to other countries in recent years. Even the average salary in Taiwan, reportedly the highest among major foreign competitors, was less than half the U.S. amount.

The total number of employees fell to 16,200 in 2007 or 6.9 percent compared to the reported 17,400 employees in 2006 in the general footwear manufacturing industry (including men's and women's footwear, house slippers, rubber and plastics footwear, and other footwear) industry. Of the total 16,200 employees, 13,500 worked in production. The average hourly wage climbed to $12.31 or 7.5 percent in 2007 compared to $11.45 in 2006. Average weekly hours increased 7.4 percent to 40.5 hours compared to 37.7 hours in 2006.

America and the World

Considered one of the most open footwear markets in the world because it was one of the few industrialized nations that did not impose high import tariffs, the Footwear Industry Association reported that imports to the United States grew at an average annual rate of 11 percent from 1978 to 1998.

After 1968 (when President Lyndon Johnson cut tariffs in half) several attempts were made to impose higher import tariffs, the most notable of which was the Textile, Apparel, and Footwear Act of 1990, which was vetoed by President George Bush. Similar bills were rejected by Congress in 1985 and 1988. Also during this time, the industry filed complaints about unfair trade practices with the International Trade Commission (ITC), but in 1984 the ITC ruled that the U.S. footwear industry was not being harmed by imports. A Senate recommendation for five years of global quotas was tabled in the early 1990s.

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