3 Things To Know About The Current State Of Footwear Production

3 Things To Know About Footwear
A worker in a shoe factory.
FN Archives.

The state of footwear production was a hot topic at the Footwear Distributors and Retailers of America 2016 Impact Executive Summit in Shenzhen, China, last week.

While China continues to be the lead sourcing hot spot for footwear production, Vietnam continues to rise in importance creating robust debates about the future of sourcing.

FDRA president Matt Priest caught up with key sourcing and trade executives from Fila, Caleres, Ever-Rite Factory Group and Payless ShoeSource at the summit to discuss key developments in footwear sourcing.

Here, we recap three key highlights from the executives’ commentary.

Why China is Still the Top Choice for Many

“We really see that China is kind of ‘the new China’ and it’s still a very valuable resource for us to develop. From the perspective of new places [for sourcing], we’ve been there and we’re looking around and we haven’t really found the opportunity that China provides anywhere else. The Fujian region is really where we focused our energy. … We’ve been able to take our factory base and really position it where everyone is close. Therefore, we are able to get that economy of scale; we’re able to control our quality and our pricing; and we’re actually able to control our material suppliers as well. [Our] centralized strategy is core to what we do and is a part of our big success.” — Joe Passio, director of global development and sourcing at Fila

“[Sourcing in China] is a very different picture than a couple [of] years ago. [At that time], everyone was concerned about labor shortages — the [Chinese currency] was gaining against the dollar — [which caused] some [companies] to moved to other places. But the people [who] are left are seeing that the labor shortage is not quite what it was. The pressure is off the [Chinese currency and that] has been helpful over the last year or two. We went into the year with that and felt like things were a little bit smoother than they had been. Of course, like everybody else, we’ve had headwinds in the spring and summer.” — Chuck Gilreath, SVP of supply planning and strategic sourcing at Caleres

Fresh Opportunity in Vietnam

“We all of our production to Vietnam a couple [of] years ago. … We find that in Vietnam we are able to retain workers for longer periods of time than in China. We’ve managed to get more skilled workers. And, of course, the wage rate is lower than [it is] in China … Within the next five to 10 years, I think Vietnam will still be very competitive. There is one [area of] concern which is the materials — or the material and components supply chain — still being very much dependent on China. But I do see more materials and components suppliers investing in Vietnam. I see a lot of opportunities for footwear in Vietnam, especially with TPP.” — Oliver Ng, factory manager for the Ever-Rite Factory Group

The Blurring of Source & Market Countries

“We’re seeing market opportunities in countries that are traditionally viewed as source countries and we’re also seeing sourcing opportunities closer to market. So [now] we can achieve greater speed to market. In the middle of all that, we have to understand and fundamentally engage around trade policy because all of those things are going to impact our decisions — not only on the sourcing side but on the market side.” — Mike McBreen, division senior VP of product development and global sourcing at Payless ShoeSource