Shoemakers stepping out of USA’s labor market
Publication: USA Today
By Larry Hansen
Special for USA Today
When Henry Bass’ water-repellent “leg” boot created warm and dry days for Maine loggers in 1876, little did he know that a century later, one-third of G.H. Bass and Co.’s shoes would be made in Brazil, Taiwan and Puerto Rico.
On Wednesday, Bass will cut domestic production even more by closing a 250-employee plant in North Jay, Maine, not far from Wilton, birthplace of the popular Bass boot.
One big reason: lower foreign wages, says Ken Lightcap, public relations director for Chesebrough-Pond Inc., Bass’ parent.
While the average wage for USA shoemakers hovers at just about $5 an hour, their counterparts in Taiwan, Korea and Brazil – the three leading exporters – earn a little over $1 an hour, on average.
That gap has taken its toll on the labor-intensive shoe business, one of the USA’s oldest industries:
■ Footwear imports have soared from 4% of USA consumption in the early 1960s to 65% today. USA exports dropped by 17% in the same period.
■ In 1968, nearly 1,000 USA companies produced about 640 million pairs of shoes for domestic consumption. By 1983, their ranks had thinned to less than 300 producing only 320 million pairs.
■ Lightcap says Bass was one of the last major domestic producers to shift operations out of the country. Most USA shoe companies make at least 50% of their shoes abroad. Nike Inc., which labels itself as a domestic company, produces 90% of its athletic shoes overseas.
“In no other industry has the impact of imports been so severe,” says Value Line, the investment newsletter that closely monitors the health of American industries.
Value Line predicted the improved economy of early 1984 would benefit USA shoe companies.
But many agree with James Sutton, editor of American Shoemaking: “With the number of plant closings around the companies, the imports are going to continue.”
The shoemakers’ plight has been darkened further by the failure of the Reagan administration to place restrictions on shoe imports, says George Q. Langstaff, president of Footwear Industries of America.
Last May, the International Trade Commission reported that domestic companies though fewer in number, had maintained their profit margins.
A month later, Langstaff’s trade group filed a petition charging that trade barriers in “just about every other country” have diverted exports that might have gone elsewhere to the USA.
The petition, asking the trade commission to recommend import restrictions that would keep the USA from being a target market by default, was thrown out.
Last week, Footwear Industries of America filed another major grievance before the trade commission, arguing that the health of domestic production is directly related to unrestricted importers.
“We need a breather, a little space,” Langstaff says.
The import restriction the association seeks will give USA companies time to adopt technology that, it is hoped, will cut shoes’ biggest cost: labor, which accounts for 50% of total production costs.
Computerized stitching machines and robots on heel and sole production lines is just beginning and may not be fully implemented for another five to 10 years.
In the meantime, the wholesale cost of foreign shoes is about half the cost of the average American wholesale price of $12.98 a pair.
“The foreign competition has pluses and minuses for the domestic consumer,” Langstaff says. “The plus is that prices are slightly lower at the retail outlet. The minuses are that foreign competitors are not as responsive to consumer needs. Domestic producers provide a wider variety of widths in the shoes.
“If an industry in Taiwan paid the same wages as we do, there wouldn’t be two pairs imported from Taiwan.”