Shoemaker plans U.S.-made line

PHILADELPHIA – An overpowering smell of fresh leather and the words printed on stacks of cardboard boxes containing Dansko shoes inside the company’s West Grove, Pa., distribution warehouse are jarring to the senses.

“Made in China,” most of the boxes say, or “Made in Italy.” None say “Made in U.S.A.,” but that’s not to say Dansko, the 22-year-old company that made stapled clogs popular across the country, hasn’t tried.

The impressions are all the more striking because just a short stroll away stands a headquarters building that projects a company with a capitalist conscience. Visitors are greeted by an indoor wall of plants hydrated by a waterfall of recycled rainwater and other accoutrements of a business driven by more than just low-cost, high-profit mathematics. The Dansko nerve center has LEED Gold certification, a stamp of environmental approval.

Much about Dansko LLC and its founders, Mandy Cabot and husband Peter Kjellerup, reflects a business vision fixed on a broad horizon: Employee stock ownership is part of the privately held company’s mix, as is a “B” corporate structure that rewards decisions that consider more than profit.

Yet like countless footwear companies in the past two decades as the nation hemorrhaged its shoe-manufacturing footprint overseas, Dansko has failed to achieve perhaps the most symbolic goal of a company attuned to its place in the economic ecosystem. It has not found a way to make in America the shoes it sells to Americans.

That may be about to change, with Dansko completing a plan for a new line of shoes to be manufactured from molds in a stateside factory as early as next year.

Currently, 80 percent of Dansko’s bulbous clogs and other ergonomically designed shoes are assembled in China and 20 percent in Italy – an equation the company is eager to recalculate.

If all goes well, Dansko hopes to manufacture a new clog from recyclable material in Arkansas in 2013. A nonrecyclable version called Avalon Pippa debuted this spring in stores. It is made in China.

If successful, the company – founded in 1990 from the tack shop of its founders’ equestrian farm – will have reached a milestone that could allow for further domestic manufacturing of shoes in its growing collections, top executives said.

It may seem odd that the recyclable clog’s forerunner, the Pippa, is made in China. The reason, however, illustrates just how little footwear manufacturing is left in America, and why it is hard to stitch it back into the nation’s economic fabric.

China is the leading producer of footwear in the world, ahead of No. 2 Vietnam, and is chock-full of factories and trained cobblers as a result.

Since the 1980s, footwear manufacturers have flocked to such nations for labor so inexpensive that, even with import tariffs imposed by the United States, the shoes can be sold at prices consumers will pay and generate profits that companies crave.

Dansko is among them, having learned that domestic manufacturing is no easy task, and finding that the rising cost of the euro was making it hard to keep all its manufacturing in Europe, even though Europe is what made it famous to begin with.

In 1995, despite the cachet and craftsmanship associated with having the clogs and other so-called “Euro comfort” shoes made in Europe, Dansko commissioned a factory in Maine to assemble the clogs. It imported the outsoles from Italy, used U.S. leathers, and employed the technical expertise of Danish technicians, Cabot said.

“But after about 18 months of manufacturing in Maine, there was so much attrition in the workers and workforce up there that we simply couldn’t continue,” she said.

Dansko had set up shop in Maine as other shoe manufacturers had pulled up stakes from the Northeast for foreign shores. It was hard to find and keep talent; the industry was vanishing.

“We had two technical people from Denmark over here, and they kept getting really bad results,” Kjellerup said. “Half the shoes, we couldn’t sell because the quality was so bad.”

The next year, Dansko left Maine, and its Danish manufacturing partner instead expanded production to a small town in Poland. There was enough of a shoemaking industry there that the factory was up to speed in no time.

“They put the machinery in, and within three to six months they were full running,” Kjellerup said. “Within six months, we had perfect shoes come out of there, no problem.

Why start with a molded shoe in the United States? Labor costs are lower than they would be with a 54-component leather shoe.

The Avalon line is a baby step. Even if it proves viable, do not expect Dansko to make leather shoes stateside soon.

Even if the company were to offer U.S. workers wages similar to what it pays in Italy – $18 to $20 an hour – its founders say there would remain the fundamental issue of where to find people with the expertise, or the desire, to take those jobs, given how shoemaking as an industry has been decimated.