At the annual Footwear Innovation Summit in Washington D.C. trade was the hot topic of the day. Hosted by the Footwear Distributors and Retailers of America, footwear executives gathered to discuss key issues affecting the business, and ways to get ahead in the business.
While at the summit, Sen. Mike Enzi of Wyoming spoke about the future of the trade promotion authority and Trans-Pacific Partnership deals both making their way to Congress. Executives from the Office of the U.S. Trade Representative were also on hand, in addition to the executives from Nike, Shoe Carnival, Brown Shoe and Wolverine Worldwide.
Here were three key takeaways from the event:
Trans-Pacific Partnership & Footwear Tariffs
As trade promotion authority was simultaneously being debated on Capitol Hill, executives were anxious to hear whether or not the Trans-Pacific Partnership stands a chance in Congress. Despite some hard-nosed opposition to the trade agreement, most seem optimistic that the deal will pass, especially with the President’s support. Blake Krueger, CEO and president of Wolverine Worldwide, said even with the company’s domestic production he was a supporter of the TPP.
“TPA and TPP will be very good for the country. In my mind, lowering trade-barriers, that is good for the world,” Krueger said. “Some of our duty situations that exist, especially for the footwear industry, which pays about a fifth to a quarter of all tariffs collected in the United States, it really becomes a tax on the consumer. In our industry, it’s a regressive tax, because generally children’s and lower priced footwear pay higher tariffs than higher priced footwear.”
After a rocky start to 2015 thanks to port delays on the West Coast, more and more shoe companies are looking to expand their sourcing markets. Dan Friedman, president of global sourcing and supply chain, at Brown Shoe Co. said his company was looking to expand further outside of China including Africa, Europe and Vietnam.
“We have such respect for our China partners, but there has been such an over-dependence on China fr the last 20 years for every kind of product, but footwear is certainly one of them. It’s just not healthy, so TPP becomes a good catalyst and ignite these other markets in the Pac-Rim and create trade and balance things out,” said Friedman.
Private Equity Leads Business Opportunities
Blackstone principal of tactical opportunities Naveen Bhatia and FDRA chairman Greg Tunney talked private equity at the event. As private investors scoop more and more shoe brands up, Bhatia said he expected the landscape for footwear to increasingly look like large, public firms and then smaller, privately invested firms.