ABSTRACT
The history of footwear goes back many thousands of years. Early footwear undoubtedly grew out of the necessity to provide protection when moving over rough terrain in varying weather conditions. Initially, footwear was probably made of plaited grass or rawhide held to the foot with thongs. Soon the rich and influential began distinguishing themselves by the craftsmanship and decoration, which characterized their shoes. Today the footwear industry manufactures a wide range of footwear ranging from leather, rubber and other synthetic materials, and styles ranging from casual, formal, work, and athletic shoes. On average, every man, woman, and child in the United States purchases more than four pairs of shoes each year, a level of consumption that establishes the U.S. as the world's largest importer of footwear. The U.S. accounts for about 40 percent of footwear imports. In 1998, Americans spent approximately $38 billion to purchase more than 1.1 billion pairs of shoes.
The footwear industry is labor intensive and as a result is subject to pressure from imports. The U.S. footwear industry has been severely affected over the past decade; imports account for about 90 percent of shoes sold in the country.
Since 1976, imports have grown at an average rate of 5.6 percent a year. Exports have been declining over the last three years but this trend may soon level off. Only in a few other industries such as apparel, autos and consumer electronics is the U.S. trade deficit higher than in footwear. And more than half of the footwear deficit is with one country -- China. China accounts for about 68.3 percent of all footwear imports into the U.S. Brazil is second with 8.3 percent of the market. The low cost of labor in China makes it a very attractive place for foreign shoe manufacturers to build factories. Since 1986, U.S. imports from China have increased by a staggering 2,700 percent.
The U.S. industry, hard-pressed to compete with low-priced imports, probably will shrink again this year, analysts are predicting. Last year, domestic output fell by 9 percent to less than 100 million pairs, the lowest level on record, according to the U.S. International Trade Commission.
Issues and Concerns: It is extremely difficult for the U.S. footwear industry to compete with low-priced imports. In 1960, shoe imports averaged 2.2 million pairs a month. In 1976, shoe imports totaled 29.2 million pairs in one month. And by 1980, they rose to a monthly average of 30.5 million pairs. That number shot up to 74.8 million in 1990 and to 90 million in 1995. More significant, in 1960 foreign shoe manufacturers held just 4 percent of the U.S. market. In 1976, imports accounted for 47 percent of the market. By 1995, they controlled 89 percent. Last year, domestic output fell by 9 percent to less than 100 million pairs, the lowest level on record, according to the U.S. International Trade Commission. In the past four years, production has dropped by nearly one-third, as more and more plants shut down. Last year alone, reports Footwear Industries of America, eight factories closed, reducing the number operating to fewer than 300, compared with more than 1,000 in 1968. Nevertheless, U.S. Commerce Department analysts believe there is hope for the industry. Productivity has been climbing, particularly in men's footwear. Further gains could lead to increased investment, improve competitiveness and return the production of some types of footwear to the U.S. Additionally, virtually every domestic footwear producer now imports finished shoes and/or components, in order to offer a balanced product mix.
The intense competition faced by the United States footwear industry reflects the ongoing global shift in comparative advantage. Labor remains the most important cost factor in footwear production. Wage rates in the Asian developing nations are as low as 5 percent of those in the United States. There are many manual steps involved in the assembly process of shoes and no amount of technological innovations of the manufacturing process can narrow the gap in labor costs between the United States and the developing countries.
Another issue that concerns the footwear industry is the increasing trade imbalance between the U.S. and China. In 1999, Footwear was one of the top five U.S. imports from China. More than half of the footwear deficit is with one country -- China. Only in a few other industries such as apparel, autos and consumer electronics is the U.S. trade deficit higher than in footwear. Another concern is the working conditions in these Chinese factories. Critics charge that China uses child labor in shoe factories.
Trends: Until the second half of the 19th century, individual cobblers working either alone or with one or two apprentices or journeymen produced practically all shoes. The goal of every apprentice cobbler was to learn how to make an entire shoe as soon as possible. Cobbler craftsmen were mostly male. The advent of the sewing machine enlarged craftsmen's shops and converted them to factories. New York City became the garment-manufacturing capital of the world at the turn of the 20th century.
World footwear production has continually moved to those areas with comparatively low labor costs. Assembly of shoes (as well as low-cost apparel, footwear, radios, TVs, toys, sporting goods equipment, and consumer electronics) began shifting offshore in the 1960s Ñ first to Japan; then to Korea and Taiwan; and starting in the 1980s to Southern China. In the mid-1980s, Taiwan and Korea supplied 45 percent of the world footwear exports. Production began to shift to other Asian nations when labor costs rose. By 1994, the share of world exports supplied by Taiwan and Korea dropped to 7 percent while China's share grew to 50 percent from 8 percent in 1986. In the meantime, the U.S. was supplying less than 1 percent of world footwear exports.
For many years, under U.S. tariff laws, U.S. footwear companies have sent items overseas for partial production and brought them back to the U.S. for finishing, only paying duties on the value added by the overseas work. China has historically been the main source of work for the U.S. and remains the world's largest shoe producer and the main source of footwear imported by the U.S. Under the World Trade Organization (WTO) agreement of 1995, apparel and textile quotas are being gradually eliminated by2007, and firms are responding by cutting down on domestic manufacturing. For example, NIKE markets shoes but is not involved in manufacturing. The danger of outsourcing is that manufacturers have less control over overseas factories, some of which badly exploit workers.
Athletic Shoes -
Athletic footwear makes up about 35 percent of the U.S. footwear market. The exercise boom (and the related boom in people who want to look like they work out) sent athletic shoemakers NIKE (#1), Reebok, and adidas-Salomon to the front of the pack. Athletic footwear includes aerobic dance, baseball/softball, basketball, cross training, hiking, running, sportssandals, tennis, walking,"athleisure" (athletically styled casual shoes, canvas, suede and alternative sports) and "other," such as golf, football and volleyball. The wholesale value of athletic shoes for the U.S. market totaled $8.7 billion in 1998 down 8.5 percent from the year before. According to the Sporting Goods Manufacturers Association, athletic footwear accounts for almost 35 percent of all footwear purchases. In general, consumers are spending less worldwide for athletic footwear. The current domestic industry focus is on casual and comfortable shoes. Although athletic footwear sales appear to be recovering, demand is still leaning toward the "brown shoe" casual footwear with a comfortable and rugged design. This switch is due to the increasing number of workplaces adopting casual dress codes.
LEGISLATION/INTERNATIONAL TRADE AGREEMENTS
China/Permanent Normal Trade Relations (PNTR): PNTR with China passed the U.S. House of Representatives in June (the Senate will take up the measure in September). The Clinton administration and business heavily supported PNTR. Labor unions and other powerful lobbies opposed permanent normal trade relations with China. The footwear sector is heavily dependent on China, which shipped more than 1.2 billion pairs of shoes to the U.S. last year. PNTR affects the footwear industry in that the annual review of China's trade status will be eliminated.
STATISTICAL INFORMATION
United States Census - Footwear Industrial Report 2000 1999 1998 1997
Footwear Data, Office of Consumer Goods, International Trade Administration
CONTACTS AND LINKS
Footwear Industries of America (FIA): FIA is the national association for footwear manufacturers, importers and distributors and suppliers to the leather and allied trades. Members produce in the U.S. and in all areas of the globe. FIA's mission is realized through programs that help members maximize productivity, enhance marketing effectiveness, and ensure that the footwear industry is represented in Washington, D.C.
Footwear Distributors and Retailers of America (FDRA): FDRA is a Washington, D.C.-based trade association whose 100 member companies operate some 20,000 shoe retail outlets and account for nearly three-quarters of U.S. shoe sales. FDRA's primary mission is representation on U.S. and international footwear specific, government relations issues for members' U.S.-based retail chain shoe retailers and the footwear brands, and importing agents that supply them.
National Shoe Retailers Association (NSRA): NSRA is a trade organization representing independent shoe retailers. Founded in 1912, NSRA provides independent shoe retailers with solid, practical workplace benefits that enable them to operate their business more profitably and successfully.
Athletic Footwear Association (AFA): AFA was founded in 1982 to serve an international group of manufacturers and marketers of athletic footwear. It has about 140 members. AFA provides a range of marketing, management and other services to its members. It also identifies and monitors key issues affecting the industry and serves as a liaison or source of information to those interested in the industry. AFA is one of 14 non-profit associations and committees that are part of the Sporting Goods Manufacturers Association (SGMA). SGMA, the trade association of North American manufacturers, producers, and distributors of sports apparel, athletic footwear, and sporting goods equipment, is dedicated to increasing participation in sports and fostering industry growth and vitality.
The history of footwear goes back many thousands of years. Early footwear undoubtedly grew out of the necessity to provide protection when moving over rough terrain in varying weather conditions. Initially, footwear was probably made of plaited grass or rawhide held to the foot with thongs. Soon the rich and influential began distinguishing themselves by the craftsmanship and decoration, which characterized their shoes. Today the footwear industry manufactures a wide range of footwear ranging from leather, rubber and other synthetic materials, and styles ranging from casual, formal, work, and athletic shoes. On average, every man, woman, and child in the United States purchases more than four pairs of shoes each year, a level of consumption that establishes the U.S. as the world's largest importer of footwear. The U.S. accounts for about 40 percent of footwear imports. In 1998, Americans spent approximately $38 billion to purchase more than 1.1 billion pairs of shoes.
The footwear industry is labor intensive and as a result is subject to pressure from imports. The U.S. footwear industry has been severely affected over the past decade; imports account for about 90 percent of shoes sold in the country.
Since 1976, imports have grown at an average rate of 5.6 percent a year. Exports have been declining over the last three years but this trend may soon level off. Only in a few other industries such as apparel, autos and consumer electronics is the U.S. trade deficit higher than in footwear. And more than half of the footwear deficit is with one country -- China. China accounts for about 68.3 percent of all footwear imports into the U.S. Brazil is second with 8.3 percent of the market. The low cost of labor in China makes it a very attractive place for foreign shoe manufacturers to build factories. Since 1986, U.S. imports from China have increased by a staggering 2,700 percent.
The U.S. industry, hard-pressed to compete with low-priced imports, probably will shrink again this year, analysts are predicting. Last year, domestic output fell by 9 percent to less than 100 million pairs, the lowest level on record, according to the U.S. International Trade Commission.
Issues and Concerns: It is extremely difficult for the U.S. footwear industry to compete with low-priced imports. In 1960, shoe imports averaged 2.2 million pairs a month. In 1976, shoe imports totaled 29.2 million pairs in one month. And by 1980, they rose to a monthly average of 30.5 million pairs. That number shot up to 74.8 million in 1990 and to 90 million in 1995. More significant, in 1960 foreign shoe manufacturers held just 4 percent of the U.S. market. In 1976, imports accounted for 47 percent of the market. By 1995, they controlled 89 percent. Last year, domestic output fell by 9 percent to less than 100 million pairs, the lowest level on record, according to the U.S. International Trade Commission. In the past four years, production has dropped by nearly one-third, as more and more plants shut down. Last year alone, reports Footwear Industries of America, eight factories closed, reducing the number operating to fewer than 300, compared with more than 1,000 in 1968. Nevertheless, U.S. Commerce Department analysts believe there is hope for the industry. Productivity has been climbing, particularly in men's footwear. Further gains could lead to increased investment, improve competitiveness and return the production of some types of footwear to the U.S. Additionally, virtually every domestic footwear producer now imports finished shoes and/or components, in order to offer a balanced product mix.
The intense competition faced by the United States footwear industry reflects the ongoing global shift in comparative advantage. Labor remains the most important cost factor in footwear production. Wage rates in the Asian developing nations are as low as 5 percent of those in the United States. There are many manual steps involved in the assembly process of shoes and no amount of technological innovations of the manufacturing process can narrow the gap in labor costs between the United States and the developing countries.
Another issue that concerns the footwear industry is the increasing trade imbalance between the U.S. and China. In 1999, Footwear was one of the top five U.S. imports from China. More than half of the footwear deficit is with one country -- China. Only in a few other industries such as apparel, autos and consumer electronics is the U.S. trade deficit higher than in footwear. Another concern is the working conditions in these Chinese factories. Critics charge that China uses child labor in shoe factories.
Trends: Until the second half of the 19th century, individual cobblers working either alone or with one or two apprentices or journeymen produced practically all shoes. The goal of every apprentice cobbler was to learn how to make an entire shoe as soon as possible. Cobbler craftsmen were mostly male. The advent of the sewing machine enlarged craftsmen's shops and converted them to factories. New York City became the garment-manufacturing capital of the world at the turn of the 20th century.
World footwear production has continually moved to those areas with comparatively low labor costs. Assembly of shoes (as well as low-cost apparel, footwear, radios, TVs, toys, sporting goods equipment, and consumer electronics) began shifting offshore in the 1960s Ñ first to Japan; then to Korea and Taiwan; and starting in the 1980s to Southern China. In the mid-1980s, Taiwan and Korea supplied 45 percent of the world footwear exports. Production began to shift to other Asian nations when labor costs rose. By 1994, the share of world exports supplied by Taiwan and Korea dropped to 7 percent while China's share grew to 50 percent from 8 percent in 1986. In the meantime, the U.S. was supplying less than 1 percent of world footwear exports.
For many years, under U.S. tariff laws, U.S. footwear companies have sent items overseas for partial production and brought them back to the U.S. for finishing, only paying duties on the value added by the overseas work. China has historically been the main source of work for the U.S. and remains the world's largest shoe producer and the main source of footwear imported by the U.S. Under the World Trade Organization (WTO) agreement of 1995, apparel and textile quotas are being gradually eliminated by2007, and firms are responding by cutting down on domestic manufacturing. For example, NIKE markets shoes but is not involved in manufacturing. The danger of outsourcing is that manufacturers have less control over overseas factories, some of which badly exploit workers.
Athletic Shoes -
Athletic footwear makes up about 35 percent of the U.S. footwear market. The exercise boom (and the related boom in people who want to look like they work out) sent athletic shoemakers NIKE (#1), Reebok, and adidas-Salomon to the front of the pack. Athletic footwear includes aerobic dance, baseball/softball, basketball, cross training, hiking, running, sportssandals, tennis, walking,"athleisure" (athletically styled casual shoes, canvas, suede and alternative sports) and "other," such as golf, football and volleyball. The wholesale value of athletic shoes for the U.S. market totaled $8.7 billion in 1998 down 8.5 percent from the year before. According to the Sporting Goods Manufacturers Association, athletic footwear accounts for almost 35 percent of all footwear purchases. In general, consumers are spending less worldwide for athletic footwear. The current domestic industry focus is on casual and comfortable shoes. Although athletic footwear sales appear to be recovering, demand is still leaning toward the "brown shoe" casual footwear with a comfortable and rugged design. This switch is due to the increasing number of workplaces adopting casual dress codes.
LEGISLATION/INTERNATIONAL TRADE AGREEMENTS
China/Permanent Normal Trade Relations (PNTR): PNTR with China passed the U.S. House of Representatives in June (the Senate will take up the measure in September). The Clinton administration and business heavily supported PNTR. Labor unions and other powerful lobbies opposed permanent normal trade relations with China. The footwear sector is heavily dependent on China, which shipped more than 1.2 billion pairs of shoes to the U.S. last year. PNTR affects the footwear industry in that the annual review of China's trade status will be eliminated.
STATISTICAL INFORMATION
United States Census - Footwear Industrial Report 2000 1999 1998 1997
Footwear Data, Office of Consumer Goods, International Trade Administration
CONTACTS AND LINKS
Footwear Industries of America (FIA): FIA is the national association for footwear manufacturers, importers and distributors and suppliers to the leather and allied trades. Members produce in the U.S. and in all areas of the globe. FIA's mission is realized through programs that help members maximize productivity, enhance marketing effectiveness, and ensure that the footwear industry is represented in Washington, D.C.
Footwear Distributors and Retailers of America (FDRA): FDRA is a Washington, D.C.-based trade association whose 100 member companies operate some 20,000 shoe retail outlets and account for nearly three-quarters of U.S. shoe sales. FDRA's primary mission is representation on U.S. and international footwear specific, government relations issues for members' U.S.-based retail chain shoe retailers and the footwear brands, and importing agents that supply them.
National Shoe Retailers Association (NSRA): NSRA is a trade organization representing independent shoe retailers. Founded in 1912, NSRA provides independent shoe retailers with solid, practical workplace benefits that enable them to operate their business more profitably and successfully.
Athletic Footwear Association (AFA): AFA was founded in 1982 to serve an international group of manufacturers and marketers of athletic footwear. It has about 140 members. AFA provides a range of marketing, management and other services to its members. It also identifies and monitors key issues affecting the industry and serves as a liaison or source of information to those interested in the industry. AFA is one of 14 non-profit associations and committees that are part of the Sporting Goods Manufacturers Association (SGMA). SGMA, the trade association of North American manufacturers, producers, and distributors of sports apparel, athletic footwear, and sporting goods equipment, is dedicated to increasing participation in sports and fostering industry growth and vitality.
DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.
