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Op-Ed: 3 Current Sourcing Insights Everyone Should Know

3D printing for our industry is less about a revolution in manufacturing and more about the development of another important piece to the manufacturing automation puzzle. There are some in the industry who believe 3D printed footwear will be the norm in 10 years or less while others who have worked in the industry for decades think 3D is a flash in the pan. The truth lies somewhere in the middle as athletic companies in particular are using this new technology to continue to push the horizons of innovation.

Advancements in printing technology have been used to produce certain athletic footwear components from shanks to outsoles to upper materials. For much of the industry, this technology may be more focused on basic components like custom insoles that can reduce cost and add value. However, it remains to be seen how other segments of our industry will use the technology for the overall manufacturing of shoes.

No matter what your forecast may be for 3D technology, the continued development of advanced manufacturing—including the use of 3D printing—is here to stay as Nike, Under Armour and Adidas have all announced plans and unveiled technologies that will further advance manufacturing in a variety of different ways. Regional manufacturing hubs close to consumers worldwide will become the norm for athletic companies utilizing a variety of technologies including 3D printing and upper knitting.

Furthermore, the use of 3D printing technology is emerging as a key tool in the overall development process. Cutting down lead times and shortening development is vital to meeting the evolving needs of a diverse and demanding footwear consumer. Companies such as Wolverine are using 3D printing to develop samples much more expeditiously, helping to shorten the entire development process from concept to retail.

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In the end, democratizing 3D printing for the entire industry will take time as costs come down and broader use of the technology is adopted. Footwear retailers serving working families will continue to be cost conscious in their pursuit of providing high quality shoes at competitive prices. So, for this segment of our industry, 3D printing won’t be the be-all and end-all. But with any innovation, particularly 3D printing, it’s fun to let your imagination run wild and see where the industry’s innovators lead us.

China is Changing in Ways That Will Continue Its Production Dominance

The buzz around the sourcing water cooler these days has been the huge footwear production growth in Vietnam. While much of the hype is justified, the competition from factories in the Southeast Asian nation are causing a stir among Chinese factories and pushing them to adjust and change. Meanwhile, even as companies move production to Vietnam and continue to look around at other options, China has emerged as the preeminent location to house strategic centers for managing materials, designs and coordination of worldwide sourcing for many footwear companies.

Even as China’s shipments to the U.S. grew again to a record last year, China’s share of global footwear shipments to the United States slid to just 62.5% in dollar terms and 76.3% in volume terms, both multi-year lows. And early evidence in 2016 suggests this trend will persist again this year. Its value share of year-to-date U.S. footwear imports is just 57.9% and is on track to recede to the lowest annual share in 18 years. Vietnam, the DR, Cambodia and India again are enjoying double-digit year-over-year growth so far in 2016 and continue to take share from China again this year, an extension of the recent trend. But even as the numbers look negative, companies are finding a sourcing rebirth in China.

Over the past several months we have had in-depth conversations with a range of sourcing professionals who have told us factory owners and managers are hungry for orders and are working hard to make their customers happy. They are more willing to adjust prices and work to ensure production times are met. At the same time, others have told us that even as their production goes outside China, China has become important to coordinating material supplies all the way to design. These developments point to China remaining a dominant sourcing center for years to come.

Recent Footwear Imports Declining Even as Athletic Booms

Footwear imports sank on a year-over-year basis for the third straight month in June, off 1.1% in value and 4.6% in volume, marking the fourth-lowest May volume in 13 years. Yet, even as there has been a total decline, athletic shoes are booming once again as this segment continues to dominate. In fact, athletic has overtaken children’s shoes in volume terms for the first time in many years.

Year-to-date shipments are now off 4.8% in value and 5.8% in volume from the first five months of 2015, confirming our April outlook that imports would stall from a robust start to the year. More specifically, Vietnam’s 33.7% advance in rubber/fabric footwear shipments coupled with China’s 12.5% decline caused shipments from the former to surpass shipments from the latter so far this year, an unprecedented event.

Performances in total year-to-date footwear imports are mixed across categories. In dollar terms, children’s year-to-date footwear imports are off 1.9% and boot imports slouched 5.5%, while athletic footwear shipments are up 3.1%. Shipments from Vietnam are up at least 5.5% in all three categories, suggesting it is maturing as it increasingly produces leather footwear in addition to athletic.

The import decline this spring could be seen as a result of built-up inventories needing to be liquidated, a point supported by the drop in footwear prices seen across the board in June. Another takeaway is that the athleisure footwear trend shows no signs of slowing. We will continue to monitor these trends as we publish summer data for FDRA members in our monthly import reports.

This is an op-ed from the FDRA. FDRA is the footwear industry’s voice in Washington. In all, it supports over 130 companies and 250 brands, or over 80 percent of total U.S. footwear sales, making it America’s largest and most respected footwear trade association.