This classification includes establishments primarily engaged in the production of shoes, not elsewhere classified, such as misses', youths', boys', children's, and infants' footwear and athletic footwear. Establishments primarily engaged in the manufacture of rubber or plastics footwear are classified in SIC 3021: Rubber and Plastics Footwear, and those manufacturing orthopedic extension shoes are classified in SIC 3842: Orthopedic, Prosthetic, and Surgical Appliances and Supplies.
Other Footwear Manufacturing
The nonrubber footwear industry manufactures all types of footwear except rubber protective and rubber-soled fabric upper (the traditional "sneaker"). Nonrubber footwear may be constructed with leather, vinyl, plastic, or textile uppers or combinations of these materials for all ages and both genders. Men's footwear producers, classified in SIC 3143: Men's Footwear, Except Athletic, and women's footwear producers, classified in SIC 3144: Women's Footwear, Except Athletic, compose their own independent industries.
The main categories of nonrubber footwear include athletic shoes, outdoor shoes (such as boots), and safety footwear. The safety footwear segment includes heavy leather work boots with steel toes for extra protection. U.S. consumers purchase more than 1.3 billion pairs of shoes a year, spending nearly $50 billion. Sales in the footwear industry are influenced by economic conditions, demographic trends, and pricing. Fashion trends generally play a limited role in overall market demand. Since 1993, consumers shifted away from designer brands and became more price conscious. With more companies allowing casual dress, the demand for dress shoes declined. In addition, consumers increasingly chose "brown shoes," which are rugged, yet comfortable, instead of athletic shoes for casual wear.
Because of lower manufacturing costs and modified trade rules, most footwear (or the parts requiring the most labor) was produced in Mexico, Central America, and Asia during the late 1990s and early 2000s and, consequently, employment in U.S. footwear factories plunged. Between 1967 and 2001, a total of 775 U.S. shoe plants shuttered operations. Automation also contributed to the decline.
During the same period, unit sales of shoes declined, although dollar sales increased slightly. Price increases for men's, women's, and infants' shoes contributed to the sales increases. Lower-priced shoes and athletic footwear dominated the market. To improve market share, manufacturers consolidated, increased marketing, and opened their own retail stores. Some also increased sales operations abroad; demand in some countries, however, was lessened by the Asian economic crisis, which lasted into the early 2000s.
According to Footwear News, shoe style cycles have historically "averaged two years in ascendancy, two years at peak, two years in descendency." Those averages held for various popular styles—such as loafers, platforms, and dress boots—and their design characteristics until athletic footwear manufacturers captured nearly one-third of the total footwear market in the early 1970s. Over a span of more than 25 years, American consumers spent $300 billion on 7.5 billion pairs of athletic shoes. Athletic shoe companies built empires by spending huge sums on innovative marketing strategies that included sports-celebrity endorsements and advertising and promotion with tie-ins to college and other sports. Reebok International Ltd. and adidas became $3.5 billion companies, while Nike Inc. became the first-ever $9.5 billion company. In 1998, however, athletic footwear for casual wear began to lose out to leather boots and more rugged casual footwear, and companies started to downsize, reduce inventories and production, and trim their advertising and celebrity endorsement budgets.
In 1987 there were 120 companies operating 129 establishments in this industry. In 1992, that number had gone down to just 84 companies operating 94 establishments. By 1996, the number of establishments had dropped to about 52, with 12 factories closing since 1995. Many of the plants that closed in the early 1990s were owned by the largest manufacturing and retailing companies, which opted to source more footwear from less expensive producers overseas. In 1996 total employment declined about 11 percent to 46,100; production employment also declined by about the same amount.
As a group, the nonrubber footwear industry reported a 2.6 percent decline in shoe production in 1996 from 1995 figures, and recorded a 19.5 percent decline in profits. The two largest athletic footwear producers, however, were responsible for 94 percent of the group's total profits. Four companies, including the third-largest athletic footwear producer, recorded losses in 1992.
In 1994, shipments of footwear began to steadily decline, dropping approximately 24 percent to 19 million pairs in 1995. The value of these shipments decreased 68 percent from 1994 to an estimated $139 million in 1996. Shipments of footwear in this group accounted for 15 percent by quantity and 7 percent by value of all categories of footwear sold. Production of all types of footwear within this industry fell in 1996, dropping by an annual rate of 3 percent over the previous five years.
More than half (56 percent) of the nonrubber footwear produced in the United States had leather uppers in 1996. This was up from 51 percent in 1991. Only 31 percent of juvenile types of shoes had leather uppers, while almost all athletic footwear had leather uppers.
Historically, consumers have primarily purchased their footwear at footwear specialty stores and department stores. In the past, customers were strongly brand-loyal and most often selected footwear purchases on the basis of brand recognition and style. During the 1980s, consumers took great interest in their appearance and became slightly extravagant at the sales counter. Personal consumption of footwear and other apparel nearly doubled, with an average annual growth rate of 7.3 percent. Hurt by a recession, weak growth in disposable income, and high unemployment, however, consumers in the early 1990s became much more frugal.
Along with these economic changes came changes in consumer psychology. Designer names, high-priced shoes and apparel, and frequent shopping sprees became things of the past in 1993, as consumer tastes in general shifted away from designer brands. Consumers became more value conscious and began purchasing less expensive products at lower-end retail establishments, such as mass merchandisers, stores in strip shopping centers, and outlet stores. Department stores' share of all apparel expenditures fell to 24.3 percent in 1993, down from 33.6 percent in 1985, as women were buying more of their families' shoes and other apparel at mass merchandisers, such as Kmart and...