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October 19, 2017
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Executives at Allen Edmonds are resisting the tide that has been driving the operations of fashion houses overseas. Instead, a 390-strong workforce mans the warehouse floor of the upscale men's shoe manufacturer in Port Washington, Wisconsin. While that number has fluctuated with the economic times over the years, executives past and present have held true to the concept of the Made in America brand.

Allen Edmonds' CEO Paul Grangaard.
Source: allenedmonds.com.

The costs of staying on home turf are higher because of wages, benefits, taxes, health care and other government regulatory costs, but the company's CEO, Paul Grangaard, says that extra costs, along with his business philosophy, are huge contributing factors to the company's recent financial success.

Grangaard was a partner at Goldner Hawn Johnson & Morrison, the private equity firm that bought a majority stake in Allen Edmonds in 2006. In 2008, he became Allen Edmonds' CEO, at a time when, says Grangaard, only about one per cent of shoes bought in America were actually made there.

The company is now one of the last large shoe manufacturers to keep operations in America. Despite higher costs domestically, the company says it has doubled its revenue in the last four years, finishing 2012 with an estimated US$120 million in revenue.

But sales figures aside, Allen Edmonds doesn't measure its success in numbers, implies Grangaard. The CEO recalls hiring a man who was coming out of unemployment: the man had told him that the job was the difference between his daughter going to college or not. "This is the best market value of success," he says. "Most focus on shareholder returns, employment growth. But, if you do right by employees and customers…you'll do just fine by shareholders and that's certainly what's happened here" - unorthodox sentiments from a man who spent a large part of his professional life as an investment banker.

But apparently, the philosophy allows workers to do what they do best: jobs that don't just require someone to operate machinery but to understand and appreciate the craft itself. Any given worker on the floor takes about three months to train. "There's a good Midwestern can-do attitude about the place," says Jim Kass, the head of production, and an employee of two decades. The "can-do" Kass is referring to, is epitomised in a number of areas: the company's ability to respond quickly to customers due to 93 per cent of operations being located in America; plus, the unique process of manufacturing its footwear.

Allen Edmonds uses the welting process - stitching a strip of leather to the sole of the shoe, instead of using a metal shank - to help keep the shoe's shape and add comfort. This is just one of more than 200 steps required to create an Allen Edmonds shoe. On any given day, a completed shoe will cross the hands of 70 workers. "There's a lot of machinery in it, but it's all guided by really careful operators," says Kass. "It's a manufacturing plant but it's almost a craft shop. You walk through and it looks like a fast, lean operation but when you really get into the details of how the shoes are put together, it's amazing how much craftsmanship is involved."

Most [companies] focus on shareholder returns, employment growth. But, if you do right by employees and customers…you'll do just fine by shareholders and that's certainly what's happened here" - unorthodox sentiments, from a man who spent a large part of his professional life as an investment banker.

Fifty workers alone are involved in building the sole onto a shoe and because the shoes are built from the bottom up, they can also be re-built. Kass says it is not uncommon to have shoes that are 30 years old come into the facility to be mended. The flexibility with production and shipping times also speaks to Allen Edmonds' ability to gain popularity through word-of-mouth. Older generations have brought the younger into the brand, not so surprisingly, considering Allen Edmonds garnered much of its popularity during the Second World War, outfitting the Army and Navy. 

Many customers have worn their shoes ever since. These customers, in turn, become evangelists for the Allen Edmonds brand. "[When] a young man in college or in the early part of their career…starting to look at shoes other than tennis shoes, they'll be told by their father, a mentor or colleague. It's word of mouth and from generation to generation." The tradition seems to extend beyond the average citizen; both Bush presidents, Bill Clinton, as well as Canada's Prime Minister, Stephen Harper, are customers.  

The brand's recent resurgence can be attributed to its focus on craftsmanship, but increasingly its ability to adapt to advancements in technology and demands of the market. The CEO of less than five years has found a way to keep with heritage and tradition, while concurrently extending the company's reach to a younger demographic.

The reinvention began when Allen Edmonds started placing emphasis on product development. In addition to bringing back classic styles, like the cap toe or wing-tip brogue, there's also a creative culture within the company that isn't just reserved for a specified design team. "We've changed a lot over the years," says Kass, who was hired right after he completed graduate school. "When I first started, it did look more like the traditional stuff - black and brown shoes running on the conveyer. Now, [there is] a lot of variety, a lot of colour."

"I just saw about 40 of the Jingle Bell Moks going down the production line," says Grangaard. The shoe is a modern take on the wing-tip shoe, two-toned with red and white laces, literally unveiled just in time for the Christmas shopping season; the style was conceived a week before Black Friday. "We like the fact that great American styling and heritage is delivered by great American production. We would lose our ability to [do product development] on the fly. If we had to go over and have someone live in China for a month to develop a new product, then come back…then wait another six months to get the product delivered, we'd be a lot more regimented," he continues. "We don't have a problem with long shipping half a world away."

Grangaard has also embraced new, edgier colour schemes and manufacturing while avoiding time constraints that comes with overseas production by using the internet. He has developed what he calls "web gems," a throw to ESPN's baseball highlights that viewers can vote for online. "[Web gems are for] shoes that we think are a little bit out there. They're kind of fun, but we wouldn't want to invest in inventory and try to spread around our stores if they don't sell."

So, instead, shoes like the Jingle Bell Mok are made to order. In the month since their conception, Allen Edmonds has sold more than 4,000 pairs. This could be considered surprising, since most winter merchandise is rolled out by the fall season, though the CEO argues its selling success hinges on the male shopping mentality. "Women are trained that summer starts in February…Men are much sloppier," he explains. "[For us], summer starts around Memorial Day and is still going on in late July."

Made-to-Order, Jingle Bell Moks.
Source: allenedmonds.com.

While the company can certainly say that it already has a loyal following of men who have stood by the brand for decades, the most effective way to ensure its advancement and longevity is perhaps in hiring a business-minded CEO who just happens to be a long-time, loyal customer. "I get asked all the time, sometimes with a sort of skeptical brow - do you do a lot of focus groups? Or, 'Who's in charge of the design?'" he says.

The answer to that is simple: Grangaard himself is part of the team that heads product development. As he is part of a network of executives, investors and business people who wear the Allen Edmonds shoe, arguably he knows the target audience because he is part of it. "You don't have to tell me what the guys wear or who wears Allen Edmonds. I also know what they wear when they're not wearing Allen Edmonds. I know the market."

The next step is expanding into markets of serious competitors. The company has recently opened a store in Shanghai and Grangaard hopes to do the same across Europe, where there are many more hand-crafted and home-grown shoe companies. "We want to have a personality as a company," he says, explaining why he thinks Allen Edmonds stands out among this lot. "We're serious a lot, but we also enjoy having fun and we want our company to reflect that."

And it may very well be the ability to hold the title of a big-league corporation while still maintaining a hands-on attitude that will see the wing-tips and brogues in the closets of the already-established customer base, but increasingly, on the feet of a brand new generation.

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