Doug Clark is a shoe veteran. During his 30-year career, the New England-based footwear maker has scoured Asia for affordable labor to make outdoor adventure shoes. He's been to China more than 75 times.
But Clark is tired of training a steady stream of new workers. Even laborers earning about $5,000 a year (a good salary by Chinese standards) grow weary of making shoes, which is laborious. Work rooms can be hot and dusty. Workers eventually want to move up the manufacturing food chain, to sit in quiet labs and assemble pristine tech parts for mobile devices.
"Taiwan, Thailand, China. Every single time, you train a new workforce. And the cycle is getting faster and faster," Clark said. "The sustainable answer is to find a new process. It's not to find a new workforce" in an untapped emerging economy.
Driven by a combination of factors, including new technology, rising production costs overseas and a growing appetite for "Made in USA" goods, Clark is doing something few American entrepreneurs have done in years: building a shoe manufacturing plant in the U.S.
"That's very rare these days," said Matt Priest, president of the Footwear Distributors and Retailers of America. Roughly 99 percent of shoes sold in the U.S. are made abroad. "You can probably count them on your hands," he said of the number of shoe factories remaining in the U.S.
Clark's career path is in many ways a proxy for global manufacturing. In the 1970s, American footwear makers took the fork in the road to South Korea. Big global footwear brands set up shop there and eventually hopscotched to other Asian countries, including Taiwan and China, in search of lower labor costs. That is what footwear makers live and die by, as 40 to 50 parts must be assembled to make an average pair of shoes.
Today, though, more manufacturers are getting hit by the rising costs of doing business in China—especially small and midsize businesses, which can't absorb macro-economic trends. China's annual consumer inflation rose to a seven-month high of 3.1 percent in September.
As costs there rise, China can charge more for products and services. That spells bad news for U.S. consumers looking for inexpensive merchandise at big-box retailers—and for American entrepreneurs doing business on the mainland.
Fueled in part by rising inflation, China's market share of footwear manufacturing has been declining. About 84 percent of shoes sold in the U.S. are made in China—the lowest level in seven years, according to data from the Footwear Distributors and Retailers of America.
More footwear makers are thinking they need to diversify beyond China, according to Priest. The association's annual "Footwear Traffic, Distribution" conference ends Wednesday, and a lot of talk at the gathering, in Long Beach, Calif., has been about seeking new solutions to rising costs.
"People are looking at a lot of alternatives: Nicaragua, Ethiopia, Cambodia," Priest said. "It's a different and dynamic time."