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If the Shoe Fits….the Onshoring of Footwear Makes Strides

When ComunityMade founders Sean and Shannon Scott first developed the vision for their Los Angeles-based footwear manufacturing shop, they knew they were venturing into uncharted territory. Veterans of Nike and Toms, they’d seen the best and the worst of the overseas production model that has long defined the global shoe industry.

In 2017, they decided to upend it. Years before the term “onshoring” became a hot buzzword, the Scotts were determined to bring footwear production back to their community. “We talked a lot about feeling like we were on this crazy person island, screaming out to everybody, ‘Hey, you should be on this island, too,’” Shannon said.

Four years later, their scheme has legs. With global supply chains in turmoil, brands have not only recognized the appeal of bringing production closer to home—many are looking to the strategy as a safeguard against further disruption.

“A lot has changed” since they opened up shop in L.A.’s Garment District, Sean said, “but if anything, it’s just reinforced the thought that we really need to get out of our reliance on centralized production—especially when it takes place in an environment that disrespects people and the planet.”

American brands have long toyed with the concept of onshoring, but in the past, the dollars and cents just didn’t add up. “We did this big experiment where we shipped all our production overseas, and it worked,” Sean said. For more than 30 years, footwear companies have been able to source quality products at low prices and high volumes that were out of reach for U.S. producers. “But now we’re realizing that the there was an expense associated [with that model],” he said. “That low cost really turns out to be artificial.”

Eyes have opened to the human toll associated with overseas mass production. And following a year of logistics hurdles that have seen shipping fees skyrocket, cheap labor no longer equates to inexpensive goods.

ComunityMade's headquarters in Downtown, LA.

ComunityMade’s headquarters in Downtown, LA.

While the Scotts once saw themselves as an island, ComunityMade has cobbled together a network of industry contemporaries who have also decided to part with the old ways. “There are suppliers involved with us now that are that are looking to support onshore production,” Sean said. “I had no idea how non-existent the supply chain was for footwear in the U.S. Midsoles, outsoles, laces, thread…nothing was available to us.”

Sourcing inputs such as conventional meshes and midsoles remains a challenge. But some industry players are planting their flags on U.S. soil. Outsole maker Vibram opened a rubber sole factory in South Dakota last July to supplement its Brookfield, Mass. operations. Earlier this spring, KX Inc. cut the ribbon on a 36,000-square-foot 3D-knitting facility in downtown L.A. that produces sneaker uppers and apparel using recycled PET. Regenerated midsole foam maker Blumaka plans to open a stateside facility by 2023. When it comes to building a self-sufficient footwear supply chain in the Americas, “we’re getting closer and closer—we’re really down to the details,” Sean said.

Sean Scott said the U.S. is close to achieving self-reliance when it comes to footwear production.

Brands weathering two years of logistics and production disruption are driving interest in onshoring. “It’s no big secret—everybody is looking for a solution,” including DTCs and established names, Shannon said. “Big, small, they’re all knocking at the door.” The Scotts have seen so much interest in ComunityMade’s local manufacturing capabilities—which rely on several dozen local artisans—that they’re looking to scale with help from strategic investors.

Even if a brand isn’t concerned about creating new jobs or promoting sustainable production, “the fact is, goods aren’t flowing right now—and that’s a tangible business cost,” she said. If ComunityMade can help brands take their first step into domestic manufacturing, they’ll see its value and “economies of scale always follow,” she added.

Down the road at Lalaland Production and Design, founder and CEO Alex Zar believes the future of American footwear manufacturing depends on “localization, customization and automation.”

“These are the three things that have to go hand-in-hand if we want to onshore, and we need a commitment from the biggest companies to support manufacturers,” he said.

Having brought his leather goods business to L.A. from Italy in 2005, Zar has built one of the city’s premier footwear and accessories manufacturing facilities, serving LVMH, Vince, Everlane, J. Crew and Cuyana. While his peers flocked to China, Zar recognized the value in bringing operations directly to his most prominent retail market. “I started with one operator and myself, and then I brought in from Italy some of my master craftsmen, and we started to teach people how to stitch and process high-quality luxury goods,” he said.

Today, Lalaland employs 130 leatherworking artisans at its 60,000-square-foot facility, with plans to increase capacity by building a subsidiary in Mexico. But even the most skilled workforce must be matched by technology that allows the business to scale, Zar said. China has created the world’s most sophisticated shoe supply chain using expert tooling technologies and efficiency-driven processes. In order to build out these capabilities and put the U.S. back on the map, brands need to buy in for the long haul.

Lalaland's Los Angeles factory employs 130 workers.

“They need to give us the tools, the long-term contracts and the patience to build that capacity, because you cannot just flip a switch to transfer production from China to here,” he said. Zar views Lalaland’s clients as strategic partners, and the group is not interested in taking on short-term projects. Companies that come calling face an interview process. “How committed are you? How far do you want to go? What are your target prices?” From there, Zar and his team can reverse-engineer a plan that involves investment from both sides.

Zar believes the most productive relationships are ones where risk is shared. That means brands must pony up to help build the supply chains they need. “They provide the equipment and machinery—we provide the management and the know-how,” he said. As the relationship progresses, the factory pays back the brand’s initial investments. “For LVMH, it took us about a year before we set up the capacity” to create the goods the luxury firm was looking for, he pointed out. Fourteen years later, the Louis Vuitton, Givenchy, Dior, Fendi and Celine owner remains Lalaland’s biggest client.

While Zar has seen an influx of interest in his factory’s capabilities over the past two years, he is wary of fair-weather friends who don’t share the same mission of building up the nation’s supply chain. “People build a relationship here, and then they get commands from the CEO or the board of directors who only see the bottom line,” he said. When shipping prices stabilize and overseas production recovers fully, brands that aren’t committed could jet off again, and leave Lalaland holding the bag. “That is my biggest concern—the biggest worry that keeps me up at night,” he said.

Footwear production at Lalaland in LA.

Zar believes American footwear manufacturing is poised for a comeback. “If you go back historically, the United States was the one of the largest manufacturers of shoes in the world, and invented 90 percent of the shoe machineries” used globally today, he said, adding that companies chased cheaper costs abroad. Committing to manufacturing some product domestically would reduce dependence on foreign markets and enable the U.S. to innovate in footwear production, he pointed out.

Lalaland collaborator Variant 3D is banking on that vision becoming a reality. The Malibu-based 3D-knitting operation is working with Zar’s factory to create a fully customizable, domestically produced running shoe available on-demand.

A veteran of the womenswear industry, Garrett Gerson launched the factory in 2016 after watching a documentary on garment worker abuses during a trip to China to source sweaters for his brand. The unsettling experience forced him to take a hard look at the overseas sourcing status quo. “I had to fully reevaluate what I was doing,” he said.

But the trip also inspired Gerson. “I was sitting next to a programmer just outside of Shanghai who was smoking cigarettes as he was programming a sweater for me” on a 3D-knitting machine, he said. “I started looking at the machine and I was like, ‘This is amazing. What is this?’” Gerson learned that the technology could make more than just sweaters without human labor, including shoes, medical braces and automotive parts.

Back home in California, Gerson converted a Malibu mountain ranch into a full-fledged knit lab, staffed by seasoned knitwear engineers who showed him the ropes. “They showed me the possibilities, from aerospace to the brake pads of Ferraris, to fashion and footwear, and how I can do it with zero waste, selecting the inputs I want to use to make things sustainable and traceable,” he said.

Variant's 3D-knitting machine.

Variant’s 3D-knitting machine.

Variant and Lalaland aim to produce a made-to-order performance sneaker, tailored using a virtualized fit and design process to a consumer’s foot shape. Meanwhile, the shoes’ knit-to-size recycled PET uppers leave no factory scraps behind. Gerson partnered with an Asian manufacturer to create a more affordable version of the three technical knitting machines currently running on site. Six more machines will be operational by July.

The unbranded shoe wasn’t conceived to be a moneymaker, Gerson said. It will serve as a platform to showcase the manufacturers’ capabilities and the self-sufficient, domestic supply chain they have built. Lalaland and Variant 3D have assembled partnerships with materials science companies, yarn manufacturers like North Carolina’s Evrnu, and other upstream players. “It takes people like Alex and myself to be able to put those pieces together,” he said. “The intention is to build the infrastructure, to create a sandbox for everyone to play in.”

A knit upper sample by Variant 3D.

A knit upper sample by Variant 3D.

Gerson believes the future of onshoring isn’t in “mega-manufacturing hubs,” but in hyper-efficient microfactories. “It’s not like we’re trying to create the next Nike—we’re trying to onshore some manufacturing to U.S. towns, starting on a little ranch in the middle of nowhere,” he said of a model that could easily scale to other locations.

The next challenge is finding commercial partners to validate the business. “I think those large brands with market share are the ones who can make the biggest impact, by helping invest in setting up the platform,” he said. “Then we can really show significant change” when it comes to sustainable production and job creation.

Hilos founder Elias Stahl also believes evolution is imperative if footwear labels and their suppliers hope to survive in a modern retail landscape. The Portland, Ore.-based brand produces women’s sandals and clogs using 3D-printing technology.

In a past life, Stahl worked in urban policy, and then with big companies looking to leverage their influence for social impact. While he appreciated their desire to do good, he was troubled by their reliance on archaic operational processes and myopic understanding of what a supply chain could, and should, look like. “It was there, when I was working with these huge companies, that I saw how little they could change the legacy of their businesses—the core part of how and where they make things,” Stahl said.

Hilos offers a small assortment of women's clogs and sandals.

High-labor, low-cost overseas production has created “a massive amount of downstream waste,” Stahl said. Beyond that, the pandemic exposed its inefficiencies. “The way that the supply chain is built is actually in direct confrontation with the demands of businesses today to become more agile,” he added.

Brands today are struggling to get product where they need it, when they need it, but they also want to reduce their environmental impact. These challenges are “increasingly at odds” with each other, Stahl said. Many companies are “stacking more inventory” to thwart stock-outs and missed sales. “They’re overproducing even further in advance,” he said. Meanwhile, trends are shifting at a rapid pace, rendering product obsolete before it even hits shelves. “This is a huge problem that we’ve seen develop over the past 18 months more than ever before.”

Onshoring production can cut down on lead times, logistics costs and carbon emissions, Stahl said. And he’d like to see the industry take things one step further by eliminating overproduction.

Hilos 3D prints each product only after a customer purchases. It’s a tough model to sell to companies that use dozens of materials and inputs to create a single shoe. “One of the keys to making on-demand work in footwear is to reduce the amount of components required for assembly,” Stahl said. Each of Hilos’ styles is made with five parts or less in about 12 steps. Single-piece 3D-printed TPU soles are imprinted with a wood grain finish, while U.S.-sourced leathers make up the shoes’ uppers. Each piece is made without tooling, and the finished product requires little human labor to put together.

Hilos' 3D-printed soles.

Hilos’ 3D-printed soles.

Stahl sees charting a course for domestic footwear manufacturing as a sector-wide undertaking, not a pursuit for an individual brand or supplier. “We’ve always been very collaborative from the very beginning,” he said. Hilos’ greatest strength lies in technology partners who also want to break the supply-chain mold.

Now, the brand is offering more than just shoes—it’s developed an infrastructure to support Supply Chain as a Service for like-minded peers. “As soon as we launched our first products to market, we had brands reaching out that didn’t know this was possible, and we saw that ultimately, we could have the largest impact by working with brands that align with us,” Stahl said. Few companies can invest in building their own value chain, “and they’re definitely not going to be able to invest in evolving it.”

Developing a viable, scalable American footwear production infrastructure to support real movement back to U.S. shores will require the buy-in of “domestic supply chain technology partners, retail platforms, and policy makers,” he added. “There’s a really exciting and interesting opportunity to connect dots and come together as a community and make something happen.”

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