Keen, a family-owned footwear company, is opening a new factory near Louisville, Kentucky, this month. This aligns with the “America First” economic policy, symbolizing a hoped-for manufacturing resurgence.
However, Keen’s new facility presents a complex picture of modern American manufacturing. Employing only 24 workers, the plant relies heavily on automation—sophisticated robots handle sole fusion and material trimming—highlighting a shift in manufacturing processes.
Manufacturing is no longer primarily labor-intensive, but rather a capital-intensive, high-tech endeavor. Keen’s COO, Hari Perumal, notes that US labor costs are significantly higher than in Asia, approximately 10 to 12 times greater.
This reality prompted Keen to begin domestic production in 2010 due to rising Chinese costs, offering some protection against current tariffs. However, this isn’t a simple victory.
The global footwear industry remains deeply interconnected. Asia handles the vast majority of production, with billions of shoes imported annually into the US. Keen’s investment in automation allows its Kentucky plant to operate with a fraction of the overseas workforce.
Perumal emphasizes the factory’s efficient and economical production, attributing this to extensive automation and product design optimized for automation and materials.
Reshoring manufacturing faces significant challenges. Major brands like Nike, Adidas, and Under Armour attempted similar US-based manufacturing technology investments a decade ago, ultimately failing.
Keen currently assembles only 9% of its shoes domestically, illustrating the complexity and expense of large-scale, innovative shoemaking. American manufacturing’s history is one of dramatic growth and subsequent decline.
Post-World War II, US factories employed millions, building a robust middle class. However, late 20th-century globalization shifted much manufacturing overseas in pursuit of lower labor costs and less stringent regulations, impacting the American industrial heartland.
The footwear industry exemplifies this shift: approximately 99% of US shoe sales are imports, predominantly from China, Vietnam, and Indonesia. Domestic production accounts for roughly 1%.
Pepper Harward, CEO of Oka Brands, a US shoe manufacturer, highlights the challenges of sourcing affordable domestic materials. Oka, which produces shoes for brands like New Balance and Ryka, even sources materials from the automotive industry’s supply chain to find affordable foam and PVC for soles.
For Keen and Oka, domestic shoemaking requires significant investment and innovation. The question remains whether protectionist policies will allow sufficient scale. Harward believes tariffs, while stimulating some interest, won’t fully reverse the trend.
He estimates that even with sustained high tariffs, only about 6% of production might return to the US within a decade. Keen’s long-term plan, initiated over a decade ago, is finally materializing, a testament to the patience of a family-owned business.
Perumal explains Keen’s ability to make such long-term investments due to its private, values-driven structure, freeing it from the pressures of quarterly results.
Even for existing domestic manufacturers, reversing decades of globalization is a significant hurdle. Keen’s new factory isn’t a return to the past but a glimpse into the future of American manufacturing—a blend of technology and tradition.
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