April 8, 2010

Greetings –

As you may know, the shoe industry is an extremely price-competitive, global business. Fifty years ago, almost all shoes sold in the USA were made in this country. But today, over 90% of the shoes that are sold onshore are manufactured offshore, most often in China.

American manufacturing is a steadfast commitment that we have here at Allen Edmonds. We employ over 380 people in this country, mostly in Port Washington, Wisconsin. Sustaining and building that U.S. employee base is a big part of what drives our entire management team. We’re proud that we’re still able to sell hundreds of thousands of shoes per year that are Made in the USA, despite our higher U.S. labor costs. In fact, we strive to make superior quality products that represent the best value of any company manufacturing shoes anywhere.

Our hard work is paying off — the robust strengthening of consumer demand for our products since November has us adding to our USA headcount in 2010 and we’ve hired about 25 production people just since January. As our Timeless Classics, new Executive Collection, Rugged Casuals, boots and other welted shoes continue to attract a wider customer following, we plan to hire more people here throughout the year and beyond. I tell you, hiring grateful new people sure beats the layoffs forced upon us by the global recession.

Another trend in the shoe industry over the past few years is that men are dressing very casually on the weekends. Competitors are matching consumers’ desires with simple boat shoe designs, flat lasted slip-ons, sandals, and… well, you know what kind of shoes you have in your closet that you like to wear around the house and yard. We call them ‘garage door’ shoes because men leave them by the garage door and slip them on before rushing to do an errand, getting the newspaper or walking the dog. They’re much simpler shoes to manufacture than our Timeless Classics with our 212-step USA manufacturing process. Boat shoes require low-cost manufacturing to sell at low prices.

Rather than continue to forfeit this substantial business opportunity to our 100% offshore competitors, we’ve decided to stand up and compete directly against them. Recently, we’ve begun producing a handful of lower-priced slippers and casual rubber-bottom slip-ons in our small company-owned plant in the Dominican Republic. We have developed this plant and trained the employees over the past three years. All of the people there are Allen Edmonds employees, working closely with our manufacturing and quality control executives in Wisconsin. These new products help us to sustain and improve our overall market share, to broaden our presence on the shelves of our dealers, to cover some of our U.S. overhead costs and to grow our company, which secures job growth in both the U.S. and the D.R. in the process.
The Boulder
What products am I talking about? The new BOULDER slip-on is one of them, as is the WINTHROP driving moccasin, the BANFF slipper and a couple styles of simple boat shoes that we’re introducing this summer. Our new Major League Baseball®-licensed “BASEBALL SHOES” – that we just introducedThe Banff for Opening Day 2010 — also are being made in our DR plant so that we can keep the price low enough for fans of all ages to enjoy them. Our next Fall catalog will note which shoes are made in the DR for those of you who prefer American Made shoes. Likewise, our website will provide similar notation.

Our Made in USA shoes will remain 95% of our production this year and in the future. A handful of simpler styles we will make with our good people in the Dominican Republic, and thereby provide jobs and economic opportunity just a few hundred miles off of Florida (which is also good for America).

Many of you will not want to buy any shoe made outside of the U.S., which we really respect and appreciate. Others of you will make an exception for these simpler shoes, and we hope you’ll choose ours over the competition’s. Rest assured, all of our products will offer an incredible value, superior quality, and great American styling, backed by our commitment to superior customer service.

Thanks for your support of Allen Edmonds.

Warm regards,

Paul D. Grangaard
President & CEO
Allen Edmonds Shoe Corporation