Krueger Is Tied To Shoes
ROCKFORD — "When people today ask me what I do, I usually tell them I sell shoes," said Blake Krueger, smiling.
Which is a very witty reply, in view of the fact that he is an attorney who heads a major global corporation.
Krueger, CEO and president of Wolverine World Wide and a member of its board of directors, took the helm of the 105-year-old, $1.2 billion footwear company in April 2007 — but he has had close ties to the company going back 30 years.
Krueger (pronounced "kreeger") is a native of Minnesota but graduated from Parchment High School near Kalamazoo in 1971. He attended Michigan State University, where he earned a B.A. in business administration with high honors. He then attended Wayne State University Law School, graduating magna cum laude in 1978, and went to work at Warner Norcross & Judd in Grand Rapids.
Almost from his start there, Krueger was assigned to the Wolverine account, and by the early 1980s, he was the lead attorney on several of Wolverine's acquisitions.
"I got to know the management team and the business very well," he said.
So well, in fact, that in 1993 he was recruited by Wolverine and accepted a position there as executive vice president, general counsel and secretary. However, Krueger had been a partner at Warner Norcross since around 1985, and he continued to be employed there until 1996 when he completed his transition to Wolverine.
Krueger agreed that dual employment in high-level executive positions is "a little unusual," but he noted he spent the majority of his time at Wolverine, and the arrangement "worked in this case because Warner Norcross & Judd is really a service provider" to Wolverine.
"I think Wolverine World Wide might have been one of their clients back when the law firm was formed back in 1932," he said.
Name: Blake W. Krueger
Company: Wolverine World Wide Inc.
Title: Chief Executive Officer and President
Family: Wife, Mary, and four adult children
Biggest Career Break: "In 1993 when I was recruited to be a part of the new management team at Wolverine that was charged with turning the company around."
Wolverine started out making sturdy horsehide work boots for Midwest farmers, but it really took off with its famously comfortable Hush Puppies — the suede shoes that everybody seemed to be wearing in the 1960s and 1970s. Today its owned and licensed brands include Merrell — its most profitable line and a world-leader — plus Hush Puppies, Wolverine, Sebago, Bates, Patagonia Footwear, Harley-Davidson Footwear and Caterpillar Footwear.
Wolverine footwear is sold around the world in more than 200 countries and territories, through owned operations and third-party distributors, and has about 4,500 employees worldwide. About 2,000 Wolverine employees are in West Michigan, according to Krueger, with another 400 in Arkansas. Wolverine's Bates boots for the U.S. military are made in Arkansas and in Big Rapids, and there is still a Wolverine leather processing division in Rockford, plus warehouses in other parts of West Michigan.
"We operate in a very fragmented industry, both here in the U.S. and around the world," said Krueger.
"The non-athletic footwear industry tends to be made up of many, many different brands," he said, adding that the industry is also very competitive.
Krueger referred to a study “a couple of years back” that revealed "the top 50 women's brands in the United States — both athletic and non-athletic (shoes) — have like a 65 percent market share."
That means there are a lot of companies out there selling shoes.
"Having innovative products is absolutely essential to succeeding in the fashion world — and to a large extent, we operate in that fashion world," he said.
"To operate successfully in our industry, you have to be pretty nimble and fast on your feet."
According to Krueger, Wolverine's closest competitors in terms of size and market share are probably Clarks and Timberland. Clarks is based in the U.K., while Timberland is a New Hampshire company — a vestige of the days when the northeast U.S. was a key region for shoe production.
Most U.S. shoe production has moved to southern China and other Asian countries over the last 25 years or so. China, in particular, Krueger said, is the focus when it comes to the footwear industry. He noted that in 1980, half the shoes consumed in the U.S. were made here. Today, he said, less than 1 percent of the shoes consumed in the U.S. are made in the U.S.
Southern China alone accounts for about 85 percent of all shoes consumed now in the U.S., and produces about 65 percent of all shoes sold throughout the world.
And now everyone around the world — not least the shoe industry — is watching the Chinese economy.
"Their costs are going up significantly in China," said Krueger. Eventually, he added, those cost increases — and not just in footwear — are going to be passed along to consumers.
"That's why (Wolverine is) focused on re-engineering product," he said, in order to achieve greater efficiencies in the supply chain "so we can remain more competitive than our peers."
"I think we're in some very interesting times," said Krueger.
"I used to think I knew a little bit about macroeconomics, at least on a country basis if not a global basis. But a lot of the old beliefs and truisms seem to be falling by the wayside. I think we’re entering some uncharted waters as far as the global economic situation."
He added that he believes Wolverine will continue to do well. "It's a key advantage in today's world to be a lifestyle brand, a global brand, not just a single-country brand. But the shrinking and fast-paced nature of today's economy puts a keen emphasis on supply chain efficiencies" and "operational efficiencies."
"You are also seeing, around the world, the consolidation of retailers and consolidation of brand owners at a pace that we really haven't seen before."
He noted that Wolverine had three brands in 1993. Since then, the company has added five.
"I think one thing that separates Wolverine World Wide from a lot of our peers is, first and foremost, our business model. We're multi-brand, we're multi-country, we focus on many different consumer groups. We operate, through our different brands, many different distribution channels.
"That inherently limits our exposure, limits our risks to any single country, any single fashion trend or any single region."
Krueger was asked if he sees any likelihood of shoe production returning to the U.S. in view of cost increases in China and the price increase of energy worldwide. He said he does not see that happening, because southern China "still remains a much more competitive environment when it comes to a labor-intensive manufacturing process."
While many other publicly held West Michigan corporations are suffering a serious decline in their stock value, Wolverine World Wide has been on a roll for six years. It has maintained its stock value and standing as one of the leading dividend payers in the shoe industry, with a stock price of about $25 at the end of July 2007, and almost the same price at the start of July this year.
Wolverine announced July 9 that the second quarter of this year marked the 24th consecutive quarter of record revenue and earnings per share.