Walk a mile in their shoes

Despite enormous odds, this Wisconsin shoe manufacturer has kept the ‘U.S.’ in its business

by Paul V. Arnold

Americans purchase nearly 2 billion pairs of shoes each year.

The American Apparel & Footwear Association reports that footwear consumption in the United States has increased every year since 1998. Its most recent study, which includes full data through 2002, shows consumption rose 20 percent since 1996, 45 percent since 1990 and 58 percent since 1968.

To get an accurate view on the state of the shoe manufacturing business, though, you must take into account additional AAFA figures:
• 98.5 percent of the shoes consumed in the U.S. in 2002 were imported; only 1.5 percent were made in America;
• 80.4 percent of shoes consumed in the U.S. in 2002 were made in China (that figure was 67.4 percent in 1995);
• 78.5 percent of shoes consumed in the U.S. in 1968 were American made (that figure fell to 53.4 percent in 1978, 15.9 percent in 1990 and 3.2 percent in 2000);
• 804 U.S. shoe factories went out of business between 1967 and 2002; employment fell from 91,100 in 1990 to 25,500 in 2002.

“The U.S. shoemaking industry is, for all practical purposes, gone,” states John Stollenwerk, president of Allen-Edmonds Shoe Corporation.

One hundred years ago, there were more than 1,000 makers of men’s shoes in the United States. Today, Allen-Edmonds is one of only two significant manufacturers of men’s shoes in the U.S. (Minnesota-based Red Wing is the other).

“The industry will never come back because all the infrastructure is gone,” says Stollenwerk.

Most remaining shoe companies in the U.S. follow the Nike model: Design and market the product, but outsource manufacturing to a company in China, Brazil or Indonesia.

“Wages in China are around 65 cents an hour for 10-hour workdays, six days a week,” says Stollenwerk. “If the Chinese government wants that industry, it gets it. So how can a manufacturer compete here?”

The Allen-Edmonds president paints a bleak picture, but he isn’t singing the blues. His privately held company is firmly in the black and has increased its market share in recent years. And, here’s a figure you won’t find in the AAFA report: $1 million. Last year, the company invested that sum of money into improving manufacturing operations at its headquarters plant in Port Washington, Wis., and providing additional training and skills to that site’s 150 employees.

Allen-Edmonds is bucking the economic trend and cementing the “U.S.” in its business.

Stitch is part of the niche
Allen-Edmonds hasn’t survived in this global marketplace simply through defiance. It has built a unique niche with handcrafted quality, the best raw materials and an incomparable range of shoe sizes and widths (164 size-width combinations spanning sizes 6 to 16 and widths from AAA to EEE). These factors explain the shoes’ high price point (on average, $275).

Founder Elbert Allen used to say, “I get the best leather I can buy and the best craftsmen I can find.”

Plant workers put the shoes through 212 distinct manufacturing operations. The signature step is a 360-degree welting process where the top and sole are separately sewn to a welt (a thin, folded strip of leather) that runs the circumference of the shoe. This increases shoe comfort and durability.

Consumers in the U.S. and other countries have acknowledged the Allen-Edmonds difference (businessmen in Germany, Italy and Japan are big fans). But that didn’t mean the company had a secure future.

“Go to a town like Brockton, Mass.,” says Jim Kass, the director of operations at the Port Washington plant. “Some very good shoe companies called that town home. Today, 80 percent of the buildings there are vacant. The shoe companies, the suppliers and the other industries that grew around those companies are all out of business.”

Allen-Edmonds was vulnerable; it knew it had an Achilles’ heel.

“The productivity just wasn’t there,” says Stollenwerk. “In 1999, we realized we better do something to eliminate the waste and inefficiency. We couldn’t gloss over it. The days when a company raises its prices to cover up its inefficiencies are over. So consequently, we had to learn to be keener and leaner in our processes.”

In need of heeling
Plant employees now admit to a not-so-lean past.

For decades, each production step was completed during a linear and cumulative process. One individual had to complete his or her job before passing the shoes on to the next person for the next task.

“You had to see it to truly appreciate it,” says Kass with a wry smile. “The old conveyor was a chain link system that carried pairs of shoes on a trolley. Each pair clipped along at a real slow rate until it met a stop in the line, which was you, the worker. The worker did the work, however long it took, and relieved the stop.”

Says group leader Tim Goetsch, “You had 15 to 20 people standing around waiting for work, and that’s not productive.”

If a worker left his or her workstation for a scheduled or unscheduled break, it still hit that stop and waited for the person to return.

Why wait for a worker? People couldn’t swap jobs because they were so specially trained.

“Production co-workers had very particular skills and focused on just one or two jobs,” says Stollenwerk. “When a co-worker was missing, the entire line slowed down.”

The plant also struggled with:
• Inventory: The warehouse held 70,000 pairs of finished shoes, valued at close to $10 million.
• Clutter: Tables, chairs, storage bins and floor-standing fans clogged aisles and work areas.
• Rework: Doing the same task 9 1/2 hours a day, five or six days a week, can lead to operator error.

Out with the old
At some companies, change initiatives are ushered in with slogan-clad coffee mugs and T-shirts. At Allen-Edmonds, it was with a chain saw, dumpsters, paint brushes and, oh yeah, $1 million.

Stollenwerk announced last year that the company would invest $1 million into making the Port Washington plant lean and keen.

Change began in the second half of 2003 with a total plant cleanup effort. Managers laid the ground rules: If it’s not needed, it must go.

“When you clean the place out, you don’t know what you’ll find,” says Stollenwerk. “We found boxes of heels and top lifts that had been taken off recrafted shoes ages ago.”

Says Kass: “(Employees) filled eight dumpsters with stuff that clutters the workspace: old desks, chairs, buckets and storage compartments.”

Truckloads of floor-standing fans also were jettisoned.

The cleanup freed 4,100 square feet of space on the 15,000-square-foot production floor. The company will move its small cut-and-sew plant from nearby Lake Church, Wis., into the vacant area this summer.

As the outgoing trash piled up, managers and production workers mapped the future.

“We brought operators into the planning meetings to help us design a more efficient plant floor layout,” says Kass.

Adds Goetsch: “Jim had the vision, but we had to perfect it by injecting real-world experience.”

The next stage commenced during a 16-day plant shutdown from Dec. 19, 2003 to Jan. 4, 2004.

Goetsch and director of maintenance Steve Grossenbach led the efforts to remove the conveyor line.

“Steve and I used a chain saw with a carbide cutter to slice it up,” he says. “It was hauled out in 12- to 15-foot sections. By the end of the first night, most of it was gone. There’s the proof that your work can be here today and gone tomorrow. I’ve worked here 20-plus years, but you can tear this place out in one night.”

With a clean slate, the entire plant was repainted and a high-efficiency dust-collection system was installed. New fans were secured to the ceiling, as was a state-of-the-art lighting system to improve visibility. An overhead electrical system replaced an on-floor version.

But that wasn’t all. New production equipment was purchased, installed and arranged in cellular fashion — two parallel assembly lines each have 14 cells; four more cells are in the finishing area.

“When we reopened Jan. 5, it was like we had a brand new plant,” says Goetsch.

More skills, fewer delays
The reworked lines were laid out for greater balance and efficiency. But it took human enhancements to eliminate the old bottlenecks. Employees were cross-trained to do more than one task.

“They have evolved from single-skilled specialists into multi-skilled craftspeople,” says Kass.

Today, each cell is operated by a team that performs several tasks with its neighboring cell. In each cell, team members move from workstation to workstation to eliminate production lulls.

“Assembly delays happen on a much smaller scale,” says chief operating officer Mark Birmingham. “We recognize problems more quickly, identify them more accurately and fix them right away.”

Self-managing a cell and doing multiple tasks limits repetition and tedium. “It makes the day more interesting,” says Goetsch.

This led to greater ownership and accountability, reduced defects and rework, and improved plant safety.

Lasting impressions
Stollenwerk says the plant has reaped a 20-percent productivity improvement so far as a result of the machinery, line and skills enhancements. As a result of that gain, the plant scaled back from a 52-hour work week (five 91/₂-hour weekdays plus 41/₂ hours on Saturday) to a 40-hour schedule (10-hour days Monday through Thursday).

“People now have a life outside of work,” says Goetsch.

Another benefit comes from two processes that are enabling a 60-percent cut in finished inventory by the end of 2004.

One process is called “lasting.” A “last” is a foot-shaped mold upon which shoes are built. Each last is shaped for a given size, width and style of shoe. The plant uses lasts to move from a push to a pull production system.

“The lasting schedule is created based on orders,” says Kass. “We only introduce lasts into the system that are tied to orders. We aren’t trying to crank out as many shoes as possible. We try to line up supply with demand.”

The other process deals with cut uppers. The upper is, of course, the upper part of the shoe. Instead of piling up finished shoes, the plant holds a surplus of generic-sized uppers. Uppers are one-third the cost of a finished shoe and take up much less storage space.

The generic upper is trimmed during the assembly sequence to get the required size.

“Instead of building stock, we are moving to a just-in-time system,” says Kass. “With the generic format, we are ready for orders and can still deliver product on a quick, accurate basis, but we’re doing it at less cost and with less space.”

The initiative’s heart and sole
Allen-Edmonds’ transformation has been smooth and quick. The company and its employees attribute that to several factors:

The state of the industry: “It’s really not that hard to give a crisis speech on shoe manufacturing in America,” says Kass. “We’re realists. Crisis mode was definitely here.”

The age of the workforce: The plant’s employees have an average age of 35. Many were hired within the last five years and aren’t tied to “doing things the way we’ve always done it.”

Stollenwerk’s involvement: “I’m a cheerleader,” the president says. “My job here is to motivate people and set the pace.”

Kass’ lean vision: “Jim believed in this and said, ‘This is the way it’s going to be,’” says Goetsch. “He stuck his neck out.”

An overall feeling that change is good and important: “You have to change,” says Stollenwerk. “You get older every single day, whether you like it or not. Things change in this world, and if you don’t follow suit, you get left behind. In manufacturing, you’ll be out of business. So, embrace change. Be a change agent. And, don’t be afraid to make mistakes. That’s how you learn.”

It can help you succeed against some pretty heavy odds.

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