Package deal

A Hong Kong company opened a boot factory in Tennessee—but it still has to import shoe boxes from China

July 14, 2014
July 14, 2014

In a reversal of global trade patterns, a Hong Kong shoe company recently opened a factory in Jefferson City, Tennessee. Loretta Lee, the founder and chairwoman of Merchant House International Ltd.—which makes everything from industrial work boots to kitchen towels and Christmas decorations—told the Wall Street Journal she found it “ridiculous” to ship US cow hides across the Pacific to be processed, made into shoes, and returned to US consumers as leather goods. But that has been the pattern (and presumably Merchant House’s mode of operations with boots made in its factories in Tianjin, China) since Chinese-made shoes came to dominate the US market in recent decades.

Lee’s reasoning is sound, up to a point. The US is rich in raw materials. According to the Journal, the country shipped about $1 billion of cow and horse hides to China last year—much of which came back as shoes and boots. Trouble is, there’s a lot more to footwear than rawhide. Manufacturers need tanneries to process the leather hides and suppliers to provide components such as eyelets and laces. But finding competitive suppliers for those middle steps and auxiliary pieces stateside may prove challenging for US factories, now that footwear manufacturing—and the infrastructure necessary for it—has been largely outsourced. Lee’s Tennessee-made Craftsman work boots, for example, will arrive to Sears stores in imported Chinese shoe boxes, she told the Journal. Those boxes could be five times costlier if sourced in the US.

Although Asia still dominates shoe manufacturing, there are bright spots in the US beyond Merchant House’s modestly sized factory. The big-box store Walmart has agreed to support a Georgia-based manufacturer of polyurethane sandals and clogs, and the outdoorsy clothing company L.L. Bean recently increased employment at a Brunswick, Maine boot factory by 25% (bringing the total to 500 workers) in response to increased demand for its enduringly popular “duck boots.”

But perhaps the most telling investment comes from ISA TanTec, a German company that owns leather tanneries in China and Vietnam. In May, the company announced it will open its third tannery in a highly strategic location, accounting for the supply and market for leather hides: Vicksburg, Mississippi. There, the processor will enjoy proximity not only to South America—where both cattle farms and shoe factories flourish—but also to US-based suppliers and manufacturers. TanTec buys half a million hides from Texas every year and Schneider says brands have asked for help developing the domestic leather market.

Made-in-the-USA footwear will stand a better chance if more companies invest in every step of the supply chain infrastructure. It just may be that the investors making US manufacturing possible arrive from overseas.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 21,042 other followers