Keen Footwear, a prominent player in the shoe industry, faces significant challenges in maintaining its manufacturing operations in the United States. The firm’s US operations now have a staffing cost that is 10X to 12X that of their Asian factories. To that end, Keen is looking under every rock for new ways to remain nimble and competitive. Keen now has 40 workers at its Alasco plant in Georgia. As they continue to open more facilities in Kentucky, they’re doing the hard work of making domestic production work while making it economically competitive.
Keen made the decision to manufacture footwear domestically back in 2010. This change occurred at the same time that increasing costs in China prompted the company to pivot its manufacturing strategy. This step offers some relief from the Trump-era tariffs that hurt many of the businesses that depend on importing goods. Keen’s domestic production capabilities are exceedingly small, with less than 1 in 11 of its shoes assembled in America. Nearly 99% of shoes sold in the US are made abroad. In fact, almost 99% of them are imported, mostly from China, Vietnam, and Indonesia.
Keen is on a mission to increase efficiency and effectiveness. They’ve invested heavily in automation at their factories to lessen their need for human workers. The Kentucky plant is the first real example of more than a decade of planning coming together. It runs with a third of the workforce of comparable plants abroad. This strategic emphasis on robotic and automation technology enables Keen to manufacture their footwear at a lower cost and with higher productivity.
Hari Perumal, Keen’s Chief Operating Officer, believes automation having a smart production system will boost Keen’s competitive advantages.
“We are making products here in the USA very economically and very efficiently,” – Hari Perumal.
In one section, he describes how automation not only makes production more efficient, but changes how the products are designed and what materials are used in production.
“And the way we do that is with tons of automation, and [it] also starts with how the products are designed and what kind of materials and automation we utilize,” – Hari Perumal.
This strategy is similar to what’s done at Oka, another shoemaker that makes all its shoes in the US. Oka uses lots of high-precision robotics to speed up its processes, like fusing soles and trimming upper materials. These innovations highlight the importance of companies shifting to survive and continue producing goods in the U.S.
Keen and Oka both have big challenges ahead. Like many of their peers, the domestic footwear supply chain is next to nonexistent, making their progress all the more difficult. Today, less than 1% of shoes sold in America are made here. The lack of infrastructure creates added difficulties in any attempt to reshore manufacturing. For starters, companies today have to develop their own supply chains.
As Pepper Harward, the “kingmaker of the footwear industry,” pointed out, there are many hurdles to overcome in trying to build a domestic supply chain.
“You kind of have to build your own. That is extremely challenging as vendors and suppliers sometimes come in and out,” – Pepper Harward.
Harvard points to the more long-term economic worries linked to tariffs. To make reshoring happen, he argues, we have no choice but to call for massive and permanent government disruption.
“It would probably take 10 years of pretty high tariffs to give people incentives to do it,” – Pepper Harward.
We’re heartened to see Keen steadfastly emerging from under these pressures. Its sustained commitment to automation and long-term business strategy may serve as a model for others looking to keep or create domestic production lines. The company remains committed to finding a balance between cost-effectiveness and quality manufacturing while contending with an evolving global market.