Bates waits for the other boot to drop
The election may affect future business for defense contractors.
There are several hundred people in the region — particularly Mike Stornant in Rockford and another 560 people at the Bates boot factory in Big Rapids — who are wondering if the election is going to affect their future business.
Wolverine Worldwide’s Bates division may now be the largest supplier of footwear to the U.S. military, according to Stornant, vice president and general manager of Bates.
“We make a million pair of boots and shoes for the military in that facility, annually,” said Stornant.
Over the last year or two, said Stornant, Bates has been “the number one supplier (of footwear), in terms of dollars and volume, to the military. But that changes, from year to year.”
A change could put Bates back to number two or three, he added, “but right now, we happen to be having some success with these contracts, and view ourselves as a leader in that competitive set.”
In September, Wolverine Worldwide announced it had won a new $6 million contract for Bates boots for the U.S. Army. Under the contract, Bates will produce 64,000 pairs of temperate weather mountain combat boots at the Big Rapids plant over the next six months. It is a specialized boot for U.S. combat troops operating in the mountainous regions of Afghanistan, according to Stornant.
This is just one of many contracts awarded to the Bates division.
Wolverine’s announcement in early September said the new contract, combined with the other orders recently placed by the Army for mountain combat boots, brings the cumulative value of those contracts to just over $15 million in 2012.
Defense contracts are actually a very small percentage of Wolverine’s business, however. The global company had had annual sales up to $1.4 billion; that is expected to reach about $2.5 billion, now that it has acquired the company that owns the Sperry Top-Sider, Saucony, Stride Rite and Keds brands.
Wolverine is now apparently the world’s top “brown shoe” company, surpassed in sales only by the two giant athletic shoe companies, Adidas and Nike.
The military is not the only Bates customer. It makes many types of “uniform boots” that are popular around the country with police, fire and rescue departments, park rangers, and others.
Stornant said other shorter-term contracts were about to expire when the early September Army order came in, so it didn’t require any additional hiring at the Big Rapids plant. However, there was yet another, longer-term contract for the same type of boot that was awarded to Bates in late September, so there will probably be hiring of another 20 or so employees next year.
When he spoke to the Business Journal, Stornant had just returned from a conference put on by the Army in Washington for defense contractors. He said there were a lot of vendors there who have questions and concerns about military spending and the Department of Defense budget for next year.
Due to the impending election, however, there was “much hesitancy in speculation.”
Stornant said if there was a change coming in U.S. military spending, his personal opinion is that it might not be felt for another 12 to 18 months.
“Obviously, as a key supplier, we’re concerned about it,” he added.
Wolverine’s announcement about the mountain combat boot contract noted that “this product meets all Berry Amendment requirements.”
According to the U.S. Department of Commerce, the Berry Amendment (originally passed by Congress in 1941 and made permanent in 1994), requires the Department of Defense to purchase only food, clothing, fabrics, fibers, yarns, other made-up textiles, and hand or measuring tools that are grown, reprocessed or produced in the United States.
“The Berry Amendment has been critical to maintaining the safety and security of our armed forces by requiring covered items to be produced in the United States. With respect to textiles and clothing, the Berry Amendment has been critical to the viability of the textile and clothing production base in the United States,” states the DOC website.
According to the American Apparel & Footwear Association (AAFW), of which Wolverine is a member, the Berry Amendment “provides a vital national security protection, while simultaneously maintaining a strong domestic manufacturing base and jobs for American workers.”
Unlike footwear for the U.S. military, almost none of the footwear bought by consumers in the U.S. is made here.
According to the AAFW ShoeStats 2012 report, “98.6 percent of footwear sold in the United States is made internationally, a 0.2 percent decline from 2010, which represents the first-ever decline in import penetration, or the amount of the U.S. footwear market supplied by imports.”