Mass. and the shoe industry: They’re still a great fit
If you want to understand the incredible story of the modern shoe business in Massachusetts, the best place to start might be Inman Square, Cambridge, in 1906.
That was the year a Russian immigrant, Abraham Hyde, started a business in the back of a laundry, making slippers out of scraps of carpet and selling them for a dime.
The company survives today as Saucony, based in Waltham, which next month plans to release a $120 running shoe called the Ride ISO 2 (“reliable comfort on any run.”)
It’s tough to find industries doggedly chugging along in 2019 that date to the days when John Fitzgerald, JFK’s grandfather, was Boston’s mayor.
And the shoe business is becoming even more high-profile now that companies that were once based in the suburbs, like Reebok and Converse, are building headquarters closer to the city. Puma will be the newest arrival; it’s consolidating its US headquarters at Somerville’s Assembly Row, along with about 550 jobs. Scheduled opening date: 2021.
Of course, the biggest change since 1906 is that few companies actually make products locally — though New Balance has production facilities in Brighton and Lawrence, along with three in Maine, and Alden Shoes cranks out shiny penny loafers in Middleborough. Some suppliers, like Quabaug Vibram Innovation and Jones & Vining, which produce soles and other shoe components, also still have factories here.
The business that Abraham Hyde started in Cambridge was a typical 20th century entrepreneurial success story: Immigrant founder without much capital discovers a business opportunity, and then others. His company, A.R. Hyde, began to make fashionable shoes for women, then boots for soldiers during World War I. It made ice skates between the wars, and boots again during World War II.
“Then,” says John Fisher, the founder’s grandson, “my grandfather made the decision that the fashion industry had too much cyclicality and trendiness, so he started making athletic footwear only: bowling shoes, skating boots, ski boots, basketball shoes, baseball cleats.”
Hyde grew by acquisition, buying brands like Spot-Bilt. (It made athletic shoes, including a cleat worn by O.J. Simpson called the Juicemobile.) The company supplied shoes to NASA, and a pair of its boots were worn during the first space walk. In 1968, Hyde purchased the Pennsylvania-based Saucony brand of sneakers, in part so it could add additional production capacity. In the 1970s and 1980s, the US running boom put the wind at the company’s back.
But the company was always “a small brand in a big brand world,” says Fisher, whose first job at Hyde was in the advertising department, around 1971. Making athletic shoes, he says, was “a fair industry. If you built a good shoe, and you charged a fair price, and sold it through the legitimate channels of distribution, you could carve out a place for yourself.”
Fisher assumed the CEO role in 1991, around the time the company changed its name to Saucony, its most recognizable brand.
Fisher says Nike was the company that helped popularize the idea of making shoes overseas, and then marketing the heck out of them. “They really disrupted the industry,” he says.
Nike, founded in 1964, grew into the shoe industry’s colossus. Its revenues last year were $36 billion, and in 2003 it acquired one of the oldest sneaker-makers in Massachusetts, Converse, for $305 million.
Converse was one of the original marketing innovators, hiring basketball star Chuck Taylor in the 1920s to be a traveling salesman for its high-top sneaker. (Converse dates to 1908 in Malden; it introduced the All-Star, one of the earliest athletic shoes, in 1917.) Under Nike, Converse’s annual revenue has grown impressively: from about $200 million to nearly $2 billion.
“Nike is so large that not to call Portland the center of the industry is foolhardy,” says Fisher. “But the origin of athletic footwear was here, and still is here.” (Germany is home to two of the biggest brands, adidas and Puma, founded by two estranged brothers. The former company chose Oregon for its US base of operations, and the latter initially chose Brockton.)
Fisher says his company was still making product in Massachusetts and Maine up through the mid-1990s. Then, there was a dust-up with the Federal Trade Commission over using the phrase “Made in America,” he says.
Because many of the industry’s suppliers had moved to Asia, and buying components from them was much less expensive, Saucony was purchasing components overseas and assembling them in Bangor, Maine. After a few consumer complaints about representing those shoes as being “Made in America,” the FTC charged both Saucony and New Balance with misrepresenting their products as being entirely domestically made. The company closed the Bangor factory, which had employed 300 workers, and, like the rest of the industry, started working with contract manufacturers abroad, which own the factories and employ the workers, but will make shoes to a company’s specifications. That move “freed up a huge amount of capital,” Fisher, says.
These days, the industry is searching for new customers in China and trying to cope with the closing of many of the brick-and-mortar stores in the United States that once sold its products.
“Hopefully, the downsizing of wholesalers and retailers has hit bottom, knock on wood,” says Tom Carleo, a New Balance vice president who has also worked for Saucony and Nike. Then there are fads and customer preferences, which can change as fast as New England’s weather.
Carleo says the talent base that has grown up working in the shoe industry in Massachusetts is one reason it has remained rooted here. There are also technologists and entrepreneurs, he says, thinking about how new technologies, like 3-D printing, will change the way shoes are made.
And one last reason: “Boston is one of the top running cities in the world,” Carleo says.
It doesn’t hurt to have that annual road race every April, bringing 30,000 runners to town from 100 countries.
These days, Fisher is out of the shoe business. He teaches marketing at Boston College’s Carroll School of Management, often relying on his experience to supply real-world examples. And though he sold Saucony for $170 million in 2005 — it’s now part of a publicly held Michigan company, Wolverine Worldwide — he still owns a small piece of history: When the company decamped from its original Cambridge building in 1987, eight decades after it was founded by Abraham Hyde, Fisher took a brick with him. He still has it.