Where Now?

Used to be, a Shoe Dog was a person, usually a male that worked in the footwear business. Most of the time working retail, back when you had full service shoe stores, they would be the guy measuring your feet, making sure the shoes fit properly before you left the store, etc. Basically, Al Bundy from "Married with Children." He was the atypical Shoe Dog, most of us weren't married to Peg and had kids like Bud and Kelly, although most of us would have liked to date Kelly Bundy (after she became "legal" of course.

Maybe the free-standing self service shoe store has gone away, but there's still plenty of shoe dogs left, and these days some of us are wondering where we'll be working next.

Sundays, is our usual weekly gathering of an "old farts club" breakfast, guys in the shoe business here in Dongguan that get together on Sundays and complain about just about anything but mostly how the eggs are cooked, and compare notes on the shoe industry in Dongguan. Thing is,our group used to have as many as 8 to 10 people, However the ranks are dwindling as people are calling it quits either through retirement or just too difficult to make a living.

This weeks topic after the earthquake discussion and why China could do such a good job with rescue/recovery but the US could totally muff Katrina response, was "where does the business go next?"

Raw material, labor costs, energy costs and petroleum are getting more expensive, but yet, shoe companies are still asking for price CUTS in order to get even better profit margins. Which means, if they were paying $12.00 a pair last year, they want to pay $11.75, even though the RBM has revalued, labor has gone up, etc.

In addition, locally in Dongguan, seems the city government has decided that they would rather not have low tech labor intensive industry in the city, so they are not renewing some factories business licenses. Plus, the 7 year tax break is coming to an end for many factories. Coupled with the Z visa situation, and it's becoming increasingly attractive to take the footwear business elsewhere.

Some countries discussed:

Vietnam - Issues with labor strikes, inflation in the areas of food and energy, combined with infrastructure issues make this once attractive alternative worthy of a second thought. Sure, Nike has put a lot of production there, but they tend to carry their own infrastructure, and are having to deal with strikes at some of their plants.

Indonesia - Once a major shoe manufacturing country, some companies are taking another look. In the late 80's there was a lot of political unrest, and everyone pretty much pulled out during the 90's. However, seems things may have stabilized and companies are thinking of returning.

Thailand - Another major shoe manufacturer in the past, has just signed an agreement with Japan to end duties on footwear. Decent infrastructure, but a bit expensive and labor can be an issue. However, many footwear companies still have offices and production there.

Philippines - Some folks starting to look back at this country, a lot of Filipino shoe technicians in China, but too early to tell what the results will be.

India - Our groups thoughts - many have tried, most have failed. No one wants to be the ground breaking company. Also the feeling is India would rather bypass the low tech shoe industry and go for high tech industries directly.

So, we're all keeping flexible, and counting the days until the rest of us can retire, probably to China, Vietnam, Indonesia, Thailand or the Philippines.

Going Bamboo anyone?