U.S. shoe firms thrive in high-quality market

Nation's Business, Feb, 1989 by Jane Easter Bahls

Tony Lama ads generally focus on the distinctive styling and quality of the boots, which range in price from $79 to $450--except for alligator boots, which run to $850. The company makes custom boots with a rancher's brand or an executive's corporate crest.

Lama admits that he has been tempted to have some of the work done in Mexico to save on labor costs, but he has rejected the idea.

"We can control what we're doing here," he says. "It would be harder to control in another country." He adds that U.S. standards for wages and benefits make labor one of the company's biggest costs.

The cost of U.S. labor is daunting for the other companies as well. "How can you compete with 60- and 70-cent-an-hour labor?" asks Stoll, whose Musebeck shoes require 230 separate steps.

Another obstacle is the worldwide shortage of leather, attributable in part to consumers' reduced demand for beef and veal for dietary reasons. At the same time, competition for the leather supply has increased with the rising demand among the more affluent for leather furniture and auto interiors.

One of the biggest problems for American footwear companies is the imbalance of trade in the world market. The U.S. is one of the few footwear-producing countries that does not protect its industry with significant import tariffs. Accordingly, U.S. companies have to face a flood of inexpensive imports, but they cannot sell their shoes overseas without paying tariffs of 25 percent or more.

John Stollenwerk of Allen-Edmonds addresses the world market with missionary zeal. He and his sales representatives attend 20 trade shows per year all over the world. In January 1987, officials at the Tokyo Shoe Fair denied his application for a booth, telling him the fair was only for domestic companies. When Stollenwerk learned that 30 European companies had been invited, he packed up 50 sample shoes and flew to Japan to crash the show.

"I was really angry," Stollenwerk says. "We're Japan's best customers in the world, and they're treating us so poorly." Sheepish trade-show officials gave him one of the best locations in the exhibition hall.

For the Tony Lama firm, one protection from import competition is the uniqueness of the product. "They don't make original cowboy boots everywhere in the world," says Lama, who distributes his boots in Italy, France, Germany, Saudi Arabia, and Japan. He notes that the American West is exotic in Oriental countries. "They don't mind spending money on a fine pair of cowboy boots, but it's important that they be made in America."

Likewise, musebeck and Allen-Edmonds pride themselves on offering something the imports cannot: a full selection of sizes and widths. Because the import strategy depends on mass marketing, most imports come only in a B width for women and D for men, or at most three options. "People aren't getting the fit," says Stoll. Musebeck offers 10 widths in each size, and he maintains a backup inventory for dealers.

Almost all of Musebeck's dealers are still independent retailers. "We try to sell to retailers who are qualified to fit footwear," says Stoll. Though many independent retailers are being forced out of business by discounters, Stoll maintains that there is still a market for skilled footwear service.