One of the ongoing memes of the current economic crisis (and despite what a lot of the Wall Street and ‘thin air’ types are saying, Aunt Toby takes the position that until I see my neighbor get called back to HIS job, then I don’t think the economic crisis is over – all economic crises are local) is that ‘if only the American consumer would spend more money!”

When  American consumers did not have any, are over-burdened with debt, and scared of losing whatever jobs they’ve got, if they have not already. There is, however, one segment of consumers who appear to be doing their patriotic bit for the economy.

“The American public, it would seem, cannot carry on without new shoes. Boots, booties, sneakers, pumps — for the last few months they have all been selling well as the broader economy struggles toward recovery.Consumers Buying Shoes

Retailing executives and analysts offer varying, occasionally wacky, explanations. The one favored by many of them is that consumers consider shoes more of a necessity than, say, dresses, cuff links or handbags, so people feel less guilt about buying them.”

Now, shoes are something that Aunt Toby knows a little bit about, and not just because supposedly the XX has a little bit of shoe genetics built in. For the last 30-odd years, we have lived in a place where, at one time, 20,000 people were employed in making shoes. The company, Endicott-Johnson Shoes, was not known for making great or particularly stylish shoes – they were, in a way, the Payless of their time. What Endicott-Johnson Shoes was known for, locally was what came to be known as ‘The Square Deal’ and frankly was a complete program of what was the closest thing to Industrial Paternalism that could be found in the United States then or ever. This company was one of the first to put in a 40-hour work week. They made it possible for employees to buy/build kit houses (which are still referred to in real estate ads as ‘EJ Houses’). Because the vast majority of workers were immigrants who had come from Italy and Eastern Europe (they used to provide a card with a hole for the button on a coat. The card had the company’s name and address on it to help the non-English speakers to get through the Ellis Island gauntlet easier. Supposedly, they were all told to memorize the sentence, “Which way, EJ?”), they provided English lessons, a library, a hospital, amusement parks, a golf course (En-Joy), and carousels in the public parks with the instructions that no child would be charged to ride. There is a statue to George F. Johnson, paid for with the pennies and nickels of area children for all the good works of this man. For all the thought locally that IBM was what made our area great (or at least high tech), what really shaped the area was Endicott-Johnson Shoes, which closed in 1998 after limping along for a decade, like practically every other shoe manufacturer in the United States.

Another reason I know a little bit about shoes and how they get made is that Aunt Toby indulged herself by going out to Washington State and enrolling in a four-day shoe making course. The couple teaching the classes included one refugee from Timberland Company and a shoe designer for the Ringling Brothers Circus. When were not pounding, cutting, hand stitching, gluing, sanding, clamping, etc. , we were watching movies on shoe making, discussing the state of shoe manufacturing in the US, and the possibilities for the future. (and yes, those ARE the shoes I made)

It was not just the overwhelming industrial power of shoe making in other countries that left an impression on us – it was what happened in the shoe industry which basically extracted not only America’s ability to make shoes, but also to have any grasp in any area of the shoe making business. Here are some statistics which may illustrate for you.

Shoe Statistics 2008

“China remains by far the largest supplier to the U.S. market, accounting for 86.4 percent of the quantity and 71.5 percent of the value of all U.S. footwear imports.”

In terms of Thousands of Pairs of Shoes imported – and this is just from China (add three 0s to all of these figures):

1999:  1,107,566

2007: 2,047,614

US Production: 1999…………..2007 (thousands of pairs)

Mens…………120,877………30,660

Men’s Work……9392………….8344

Women’s…….13,632………..3631

Over this period, 34 shoe factories closed. Also, over this period, you can see that men’s work shoes have become a much larger percentage of all men’s shoes made (and by the way, these are not athletic shoes). And the reason for this is that the vast majority of shoe making in this country for men goes to the military and other forms of work shoes and boots, not dress shoes.

Production Employees

……………..1997……………2007

Prod. Emp…..38,600…………16,200

Av. Hrly Wage…$8.85…………$12.31

Cumulative factory closings from 1967 – 2007:  813

What happened between 1967 and 2007? What happened to all the factories and equipment and sheer unadulterated know-how? People were let go; people were sent to Asia to train, equipment was shipped overseas and junked. There were huge bonfires of wood shoe lasts behind the EJ Factories. And when the industry really got going in China and Vietnam and Thailand and Mexico and a dozen other countries, the governments invested heavily in making their industries modern and high tech. I’m sure the old EJ equipment was junked pretty quickly.

So, let’s go back to the beginning, where people buying shoes are being hailed for doing their economic duty in the marketplace. They are doing nice things for retailers. But they are not doing much of anything for companies that manufacture shoes in the US. There are very few of those at all and the items they are buying are items which are made mostly in China. When consumers, looking for a bargain in a famous/luxury name buy at deep discount, they are wondering how Ralph Lauren, or other designers can possibly make money at that price, I will let you in on a secret: They manufacture in China as well. And some countries in Europe (Italy being one of them) will allow companies there to put “Made in Italy” on the tags as long as ONE process has been performed on Italian soil. For handbag manufacturers, that is usually putting a metal tag on handbags, or attaching the handle. Everything else has been performed in China.

Ethical Shopper

And, here are several things about this that infuriate the crap out of me (and not just because we used to make shoes where I live – crappy shoes, but shoes):
1) The same factories in China that make the crappy shoes for Payless are making the hyperexpensive designer shoes. Same cost structure, same skill set, same workers, same horrific pay to the Chinese workers. So the profit margin in just obscene. (ditto on clothing, ditto on handbags, ditto ditto ditto)

2) Even if tomorrow morning, Obama proclaimed a brand new fully funded "American made shoes’ program, we couldn’t do it – the shoe companies sent all the equipment overseas or junked it; no one makes the equipment any longer in the US; the entire skill set of people who actually worked in shoe factories is….gone.  It would be like our deciding to create an entire industry that we did not have from the ground up. And yes, I know that a lot of people feel that we should not be doing things like making shoes – or pants, or men’s suits, or women’s dresses, or kids clothing, or toys. But, I feel that as a country, we need to do these things – the best, highest level, most technologically advanced way, but that we need to do them.

3) We need to make and keep good jobs here; I’m tired of sending money to China. The only way I know of to do this is to make sure that we take every opportunity to support our own industry, no matter what it is – and make sure that tax payer dollars don’t end up going to China. Don’t think that is going to happen?

Schumer Protests Chinese Involvement in Wind Farm

“U.S. Renewable Energy Group, a private-equity firm based in Washington, and Cielo Wind Power LP, a closely held company in Austin, Texas, said last week they formed a joint venture with China’s Shenyang Power Group to build the 600-megawatt wind farm. The 36,000 acre-project marks the largest Chinese-American investment in U.S. renewable energy, the companies said.

A-Power Energy Generation Systems Ltd. of China, Shenyang’s largest shareholder, is set to supply turbines for the farm, the companies said…The Texas venture will be funded by Chinese banks as well as take advantage of financing through the U.S.’s $787 billion economic stimulus law, Cappy McGarr, managing partner of U.S. Renewable Energy Group, said at a news conference in Washington last week….Senator Charles Schumer said he would pursue legislation if necessary to prevent stimulus funds from being used for the Texas project, though he said he’s “hopeful” the Obama administration will “change the policy.”

He said it was “counterproductive” for the U.S. to invest federal funds in Chinese companies. Energy Secretary Chu and other administration officials have said the U.S. is in danger of falling behind China in a competition to dominate the global market for clean-energy technology.”

This project is estimated to create 3,000 jobs — and Schumer predicts that if the Chinese connection goes through, most of those jobs will be located…in China.