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Wolverine World Wide expanding in Big Rapids
BIG RAPIDS — Wolverine World Wide is consolidating its combat boot production in Big Rapids and plans to add six new production lines and hundreds of new employees, with the help of lean manufacturing processes improvements and a $2.5 million tax credit from the Michigan Economic Development Corp.
Wolverine CEO Blake Krueger and U.S. Congressman Dave Camp, whose district includes Big Rapids, joined with state and local officials at the plant last week to announce the expansion of the facility where Bates boots have been made for 45 years, according to Krueger.
Since the start of 2009, Wolverine has "added 130 new jobs in Big Rapids," said Krueger. "In addition, we will be adding about 150 more jobs between now and the year-end."
"For 2010 and beyond, we haven't quantified it yet, but obviously, there will be additional jobs" added, said Krueger.
According to a Wolverine spokesperson, the company now has about 340 full-time employees at the Bates plant in Big Rapids, plus more than a hundred temps.
Wolverine announced in July that it was going to move production at its Jonesboro, Ark., plant to Big Rapids, which will ultimately eliminate 270 jobs in Jonesboro, according to the Associated Press.
About 60 jobs were eliminated when the Wolverine pigskin tannery in Rockford closed in May. Krueger said those individuals were offered employment at other Wolverine facilities and "a fairly good number" accepted the offer.
In January, Wolverine announced plans to cut 450 U.S. jobs — roughly 10 percent of its work force — part of a strategy aimed at reducing operating expenses by $17 million to $19 million.
For almost two years, Wolverine manufacturing managers have been working on lean manufacturing improvements, which has "resulted in the creation of additional manufacturing space" at the Big Rapids plant, according to Krueger. The current plan is to add up to six new production lines, "which will necessitate new equipment purchases and a lot of new hires."
Krueger said he was not sure how much capital Wolverine is investing in the Big Rapids plant, but it is "millions … a minimum of several million dollars."
"In terms of footwear, that would be additional capacity for our Big Rapids plant of well over a million pairs," said Krueger, primarily Bates shoes and boots for the Department of Defense.
"We are making a wide variety of shoes and boots in Big Rapids, from basic uniform shoes to the most technical boots provided to the U.S. military," said Krueger. Those high-tech boots include Tora Bora Alpine Boots — "a true mountaineering boot," he said, used in "the most extreme environments in Afghanistan and Iraq by our special operations forces."
The capacity of the Big Rapids plant, after the new lines and new employees are on the job, will be about 2.5 million pairs of boots and shoes per year, according to Krueger. Not all are for the military; some will be specialty products for industry, such as Wolverine brand work boots.
Although Wolverine's production of military/police boots is less than 10 percent of its total revenue, Krueger said it is "still a very important business and division for us."
"I believe we are probably still the largest single footwear vendor to the U.S. military but we have a number of very good competitors," he said.
Krueger said Wolverine employment in West Michigan is now more than 2,000 — "well over half of our total global employment."
Wolverine, with its headquarters in Rockford, has been part of the West Michigan economy for more than 120 years.
"We like West Michigan; we like our team members here. They're hard working, loyal. West Michigan is obviously going to be our home for the next 120 years," he said.
"Michigan is sitting here with official unemployment over 15 percent. Obviously, any time you can add jobs, especially manufacturing jobs here, it's very good news for the community and the state," said Krueger.
"There's no better feeling in the world than when you can tell somebody they have a job — especially when maybe it's their first job," said Krueger.
William Mrdeza of the Mecosta County Development Corp. agrees wholeheartedly, calling the expansion of the Big Rapids Wolverine plant "huge" news in that region. In July, the official Mecosta County unemployment rate was 14.7 percent, he said.
"We're doing a little bit better (than Michigan as a whole) but an unemployment rate of almost 15 percent is not really something you want to celebrate. Anything you can do to bring jobs into the community is a benefit," he said.
The Mecosta County Development Corporation is a private nonprofit economic development organization that estimates manufacturing jobs like those at the Bates plant have a multiplier effect of 1.89. What that means, said Mrdeza, is that "they bring in a hundred jobs and we'll see an additional 89 jobs created in various other sectors — service sector, whatever."
The largest employer in Mecosta County is Ferris State University, followed by Mecosta County Medical Center. In the manufacturing sector, the leading employer is Fluid Routing Solutions Inc., an automotive supplier, which had 300 employees as of the end of 2008, according to the Michigan Economic Development Corp. The second largest employer is Haworth Inc., followed by Wolverine's Bates plant.
Wolverine has about a dozen brands, most of which are manufactured overseas where costs are lower. Mrdeza noted that U.S. military contracts require that all materials and assembly for all products it consumes must be sourced within the U.S.
Despite that challenge, Mrdeza said Wolverine management has "continued to try to sharpen their pencil" on maintaining a competitive edge for U.S. military contracts, to the point where "they've become more competitive than their competitors."
In July, Wolverine reported that its revenue declined 3.1 percent in the second quarter, reflecting what it called "challenging trading conditions in many major global markets." Second quarter revenue was $246.4 million, a decline of 7.8 percent compared to the same quarter a year ago.
During the quarter, Wolverine continued to implement its 2009 strategic restructuring plan, which is aimed at increasing efficiency across the business. That entailed non-recurring restructuring and related charges of $7.9 million, or $0.11 per fully diluted share, in the quarter, of which $3.1 million were non-cash charges. Adjusting for these charges, fully diluted earnings in the quarter were $0.27 per share, compared to $0.33 per share in the prior year. Reported fully diluted earnings were $0.16 per share.
Wolverine stock (NYSE: WWW) was selling at around $25 last week, approximately the same price as a year ago.