Finding a niche has kept Falcon Performance Footwear alive and kicking in Lewiston
The 71 workers in the Falcon Performance Footwear plant have plenty of elbow room these days. They're stretched out across the fourth-floor of an old brick mill on Cedar Street that is so expansive you can almost imagine seeing a horizon beyond the end of the conveyor belt.
The workers don't need as much space anymore because the factory narrowed its focus this year from a variety of work boots to boots for firefighters. Some conveyor belts and other machines have been ripped up and removed, opening up large unused spaces in the factory. Most employees now work along one continuous production line, piecing together the factory's new specialty — a high-tech, high-end fire boot. But despite downsizing and decreasing production, the factory's sales are up, and its future is more secure.
To see women sewing leather pieces together with even, white stitching and to watch workers attaching boots to their soles is like witnessing a relic from this city's past. During the exuberant shoe-making era of the 1950s, Lewiston and Auburn's many shoe factories employed more than 6,000 people, accounting for more than 22% of the workforce, according to Gerard Dennison, senior economic analyst with the Maine Department of Labor.
But as the shoe market globalized, domestic factories closed. Falcon is one of two remaining shoe factories in Lewiston-Auburn, the other being the classy men's shoe manufacturer Allen-Edmonds Shoe Corp. Just a handful of shoe-making factories are left across the country, and many of these survive by making footwear for the United States military, which only contracts with domestic producers.
Falcon's story differs from so many other shoemaking plants in Lewiston-Auburn for its refusal to buckle. The company has managed to stay one step ahead of other shoe factories, narrowly dodging the fate of shutdown under pressure from offshore manufacturers. But its survival has been difficult and painful, with layoffs, declining sales, failed contract bids and unceasing stress. General Manager Roland Landry describes the past several years as "hell."
Even as early as last December, a shutdown seemed imminent when its then-owner, Modesto, Calif.-based Hi-Tec Magnum, informed Falcon it was pulling out of the shoe manufacturing industry. Most assumed Falcon's time had run out, except for Landry, his factory partner, Neil Hanley, and one of their more important customers. They weren't going to give up.
One step at a time
Throughout its history, Falcon has always been saved by its managers' ability to cast safety lines into the future, often by producing high-quality, specialized footwear several years before competitors. And this was a particular knack of Falcon's original owners, Ted Johanson and Bruce Hanley.
Originally Johanson and Hanley, who broke off from Eagle Footwear in Lawrence, Mass., to open a shoe factory in Lewiston in 1963, set up Falcon to make kid's shoes. But it became clear their factory could not continue to compete in an increasingly globalized market. Johanson scouted around and found a new customer, Stratham, N.H.-based Timberland, which was seeking to move into the boot market, in the early 1980s.
Neil Hanley, Bruce Hanley's son, says Johanson's strategy was to cater to the needs of hard-working people who were on their feet all day. "He recognized that workers were a little more discerning about the type of footwear they would wear, and I am not sure there was very good quality coming from overseas in the work-wear business," he says.
But despite surviving a series of twists and turns, from good business deals to bad ones, Falcon was straddling the brink of demise in the early 2000s. After being bought in 1995 by Iron Age Corp., a shoe distributor based in Penn Yan, N.Y., Falcon's boot sales slid quickly. In 2001, Iron Age was taken over by creditors after the company could not repay a bond. And Falcon had to let go of more than 200 employees.
"They were my best friends," Landry says about the workers he told not to return. "I almost had a nervous breakdown."
Gradually the factory was pared down to 24 employees. But Landry, who was managing the plant by this point, was determined to stay open, even though everybody, including Johanson, was telling him to quit.
So Landry started doing what his mentor used to do: seek new opportunities. Landry approached Hi-Tec Magnum, which specialized in making boots for police officers, to convince the company to buy Falcon and go after the military market.
At the same time, he was developing other contacts. "I knew that the only way to go was to specialize," Landry says. But finding an untapped niche market outside of the military is not easy. When Falcon discovered the fire boot industry, it found its saving grace.
Stephanie Ward, a spokeswoman for Footwear Distributors and Retailers of America, explains that U.S. manufacturers survive by differentiating their products, for instance, by offering different sizes and widths, a niche product, or rapid order replenishment. And distributors of fire boots, already a niche item, often require unique sizes and rapid bulk orders. Overseas competitors also are less likely to make fire boots because they are needed in relatively small quantities, not the formula for overseas producers who prefer large orders to reach economies of scale. "So the prospect seems positive for U.S. activity in this category," Ward writes in an e-mail.
And within the fire boot industry Falcon has specialized even further, developing a leather boot rather than a rubber one and designing a style that stands out for its comfort, safety and modern look. (For more on this, see "Hot boot," this page.)
While courting Hi-Tec, Landry also made contact with Globe Manufacturing Company LLC, a family-owned company in Pittsfield, N.H., that produces firefighting gear for more than 35% of the roughly 1.1 million fire fighters in the United States. "Since [Globe's] competitors offer head to toe, I convinced them to get into boots," Landry says.
Globe liked Landry and liked Falcon. "We felt they had quality standards, and quality people," Mark Mordecai, Globe's director of business development, says. "They were really passionate about what they did. They really wanted to do the best job that could be done, and that passion counts for a lot."
Hi-Tec Magnum in turn liked Landry's pitch, and also liked Globe, and so bought Falcon in 2005 for between $1 million and $2 million, according to Hanley. And then Hi-Tec invested $250,000 in designing a new fire boot for Globe that could pass the multiple tests required by the National Fire Protection Association, including heating the boots to 500 degrees Fahrenheit for 10 minutes and subjecting them to chemicals and blood-borne pathogens. At the same time, the company invested up to $500,000 over two years, and an enormous amount of time, in chasing military bids.
A step back
But not one of those military contracts came to fruition. And last December, Iron Age, which was still the factory's primary customer, declared bankruptcy, resulting in a $750,000 direct loss for Hi-Tec and leaving the factory filled with unfinished shoes. Hi-Tec informed Globe and Falcon it was done with shoe manufacturing.
"They told us if they couldn't find a buyer, we would have to close the place," Hanley says.
"Hi-Tec had stars in their eyes, and wanted to land a $150 million in a military contract," says Carl Spang, an industry consultant at the Kestrel Group Inc. in Durham, N.H. Despite Globe's offer to secure sales for 10 years with Hi-Tec Magnum, "it was just a blip on [Hi-Tec's] radar screen." A few million dollars in sales, after all, is just a small fraction of the company's worldwide annual revenues, Spang points out.
But Globe was in too deep to pull out — it had already invested close to $1 million in developing the boot and bringing the factory up to certain specifications to ensure the safety of the boots, Landry says.
Despite the deal appearing to be on the verge of collapse, Landry wasn't sweating. In fact, he says he was "sitting pretty." He knew that Globe needed that boot and needed to recoup its investment. And indeed the fire suit company told Falcon it would guarantee a one-year contract for $4 million.
After the boot's design was finalized, Falcon's workers went into production last year. They started slowly, but as time went on, the workers sped up, increasing from 60 pairs a day six months ago to 140 pairs a day today. The company now makes three styles of firefighting boots and plans to add two new styles next year for ambulance drivers and emergency medical technicians.
Landry says getting rid of extra machinery and production lines for older boot models, and laying out the factory for a single boot, has sped up the production process. Previously the factory would have to switch production lines and machinery to accommodate the shoe du jour. The workers, too, have become more innovative with the new boot. "Workers came up with ideas to improve the process, the way it flows," Landry says.
So to save the bustling company, Globe created an investor group and purchased the company, finalizing the sale on Oct. 9. Globe now owns 45% of the company; Spang owns 45%; and Hanley and Landry own the remaining 10%, according to Spang. Although the new owners won't reveal the purchasing price, they say the deal was a bargain.
"In January of 2007, the business wasn't worth anything," Hanley says. Spang says the group was able to buy the factory at a cut-rate price because Hi-Tec Magnum had broken a 10-year deal with Globe for the fire boots, and so sold the business at substantially below market value.
Now Falcon's new owners are predicting roughly $7 million in sales this year — up from $3.7 million in 2006, according to Hanley. And they expect to eclipse that $7 million figure in 2008, and reach $13 million in 2010.
"I'm very happy right now, happier than in a long time," Landry says.
And he has recently received some praise from Johanson.
"As business went offshore, he told me to quit several times," Landry recalls. But, "now that he has seen the relationship with Globe, he is very proud. Every time he sees me he hugs me and says, 'What a fantastic job, I can't believe you did it.'"
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