Latest news with #HariPerumal
BBC News
15 hours ago
- Business
- BBC News
Can trainers be made in the US without cheap labour?
In a corner of Kentucky just outside of Louisville, family-owned shoe company Keen is opening a new factory this move fits neatly into the "America First" economic vision championed by the Trump administration - an emblem of hope for a manufacturing renaissance long promised but rarely beneath the surface, Keen's new factory tells a far more complicated story about what manufacturing in America really looks like just 24 employees on site, the factory relies heavily on automation -sophisticated robots that fuse soles and trim materials - underscoring a transformation in how goods are made today. Manufacturing is no longer the labour-intensive engine of prosperity it once was, but a capital-heavy, high-tech enterprise."The labour rates here in the US are very expensive," says Keen's chief operating officer, Hari Perumal. Compared to factories in Asia, American staffing costs run roughly 10 to 12 times higher, he a reality that forced Keen to come up with a solution back in 2010, when rising costs in China pushed the company to begin producing domestically - a decision which today offers it some buffer against Trump's tariffs. But it's far from a straightforward like many industries, remains tightly linked to sprawling global supply chains. The vast majority of footwear production is still carried out by hand in Asia, with billions of pairs imported annually into the make domestic production viable, Keen has invested heavily in automation, enabling the Kentucky plant to operate with just a fraction of the workforce required overseas."We are making products here in the USA very economically and very efficiently," says Mr Perumal."And the way we do that is with tons of automation, and [it] also starts with how the products are designed and what kind of materials and automation we utilise." The challenges of reshoring manufacturing go beyond Keen. Major brands such as Nike, Adidas, and Under Armour also attempted to develop new manufacturing technologies in the US around a decade ago — efforts that ultimately Keen only assembles 9% of its shoes in America. It turns out that making shoes in a new way, and at scale, is complex and story of American manufacturing is one of dramatic rise and gradual decline. After World War Two, US factories churned out shoes, cars, and appliances, employing millions and helping to build a robust middle as globalisation accelerated in the late 20th Century, many industries moved overseas, chasing cheaper labour and looser regulations. This shift hollowed out America's industrial heartland, contributing to political and economic tensions that still resonate has become a symbol of these changes. Approximately 99% of shoes sold in the US are imported, mainly from China, Vietnam, and domestic footwear supply chain is almost non-existent - only about 1% of shoes sold are made in America. Pepper Harward, CEO of Oka Brands, one of the rare companies still producing shoes in the US, knows this challenge well. His factory in Buford, Georgia, crafts shoes for brands like New Balance and sourcing affordable parts and materials in the US remains a constant struggle."It's not a self-sustained ecosystem," Mr Harward says. "You kind of have to build your own. That is extremely challenging as vendors and suppliers sometimes come in and out."To source the foam and PVC for their soles, Oka Brands tried tapping into the automotive industry's supplier network — an unconventional but necessary workaround. For companies like Keen and Oka, making shoes in America requires patience, investment, and innovation. The question is whether they - and others - can scale production under the protectionist policies now in Harward says there is definitely more interest in local manufacturing because of tariffs, noting that the supply chain disruptions caused by the pandemic also spurred greater interest in reshoring. But he is sceptical that tariffs alone will drive a wholesale return."It would probably take 10 years of pretty high tariffs to give people incentives to do it," says Mr Harward. Even then, he believes the industry might realistically see only about 6% of production return to US for Keen, plans that began over a decade ago, are coming to fruition. It is the kind of patient investment only a family business can afford."We are a private, values-led company," Mr Perumal explains. "We're able to do these types of decisions without having to have to worry about quarter after quarter results."Still, even for companies who are already making shoes in America, the reality of modern manufacturing is that it is difficult to simply reverse decades of new factory is not a signal of a return to the past, but a glimpse of what the future of American manufacturing might look like - one where technology and tradition intersect.
Yahoo
22-05-2025
- Business
- Yahoo
Shoemaker Looks to Outsmart Tariffs, Labor Woes with Automation Boost
A factory in Shepherdsville, Kentucky, reliant on automation, looks to help a shoe manufacturer navigate tariffs and labor shortages. The Wall Street Journal reported that Keen Footwear recently closed its facility in Portland, Oregon, with plans to relocate production to a 60,000-square-foot site in the Bluegrass State, scheduled to open next month. The company expects the new location to nearly double its domestic output and credits that growth to increased automation. Most Read on IEN: Another EV Maker Is on the Brink of Collapse Ford Worker Accused of Stealing Millions in Parts The Cybertruck's Staggering Depreciation Podcast: Car Shatters Record; Ford Worker Steals Parts; Nissan's Big Cuts Keen noted that the Kentucky plant's automation would support the 24 workers it plans to initially hire. According to the Journal, the machinery would handle mundane tasks, allowing the employees to focus on more detailed work. The report mentioned that Keen plans to expand its payroll as it increases production. The development arrives at a timely moment amid U.S. President Donald Trump's multiple tariff threats. However, the Journal reported that Keen Chief Operating Officer Hari Perumal said the decision to invest in U.S. manufacturing predates the latest trade war drama. Founded in 2003, Keen began domestically producing footwear in 2010 in response to rising Chinese manufacturing costs and a desire to diversify sourcing. Keen has since shifted production of its hiking shoes, thick-soled sandals and work boots out of China. Now, the company makes a third of its shoes at its factories in the Dominican Republic, Thailand and the U.S. The rest comes from contract manufacturers in India, Vietnam and Cambodia. Keen can avoid the new tariffs on Chinese-imported goods, but the same could not be said for the nearly 1.2 billion pairs of shoes shipped from China last year. This compares to the approximately 25 million pairs manufactured annually in the U.S., according to the Footwear Distributors and Retailers of America. Click here to subscribe to our daily newsletter featuring breaking manufacturing industry news. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
20-05-2025
- Business
- Wall Street Journal
Shoemaker Leans on Automation to Expand U.S. Production
A shoemaker's decision years ago to expand its U.S. manufacturing capacity is about to pay off as President Trump's tariff moves roil global trade. Footwear manufacturer Keen plans next month to open a new factory in Shepherdsville, Ky., near Louisville. The 60,000-square-foot facility will nearly double the company's domestic production capacity, in part by ramping up its use of automation. Ahead of the new building's opening, Keen closed its previous, smaller factory in Portland, Ore. The decision to double down on U.S. manufacturing could give Keen a competitive edge as the Trump administration has rolled out new tariffs on imports from around the world. Hari Perumal, the company's chief operating officer, said Keen opted to invest in American manufacturing long before there was discussion of new tariffs. The privately held company, founded in 2003, has been making footwear in the U.S. since 2010. At that time, Keen's manufacturing costs had started to climb in China, and it wanted to diversify its sourcing to help prevent supply-chain disruptions. 'We did not know that we would be considered lucky 10 years ago,' Perumal said. 'But it definitely puts us in a good position.' Most shoes sold in the U.S. are made in China and are therefore subject to hefty new tariffs on Chinese imported goods—a cost that Keen is exempt from because it no longer manufactures in China. More than 2.1 billion pairs of shoes were imported into the U.S. last year, of which about 58% came from China, according to the trade group Footwear Distributors and Retailers of America. That is compared with about 25 million pairs of shoes that are made in the U.S. annually, according to FDRA. Keen, which makes work boots, hiking shoes and thick-soled sandals, today produces about one-third of its shoes at factories it owns and runs in the U.S., the Dominican Republic and Thailand. The remaining two-thirds of its products are made by contract manufacturers in Cambodia, Vietnam and India. Its shoes made abroad are subject to a new 10% reciprocal tariff on top of previously existing duties on imported shoes. Keen said it plans to share those cost increases with its suppliers and that it won't implement any price increases for the rest of this year, a decision that comes as other retailers say they will pass along the cost of higher tariffs to consumers. Perumal said the company chose to relocate manufacturing to Kentucky in part because of the state's central location within the U.S., enabling Keen to reach 80% of U.S. consumers with two-day ground shipping while cutting transportation costs. The company has a distribution center and several suppliers nearby. Keen plans to rely heavily on automation at its new facility, using machinery to handle mundane, repetitive tasks while employing human workers to handle more precise work. It plans to hire 24 highly skilled workers and expand its payroll as production ramps up. Patrick Penfield, a supply-chain management professor at Syracuse University, said companies choosing to manufacture in the U.S. are employing more automation to help control labor costs. 'Automation is getting better. The price points for machines are coming down, so the [return on investment] is there now where we can say, 'Hey, look, it does make sense to automate,'' Penfield said. Write to Liz Young at
Yahoo
09-05-2025
- Business
- Yahoo
Forget tariffs — this U.S. shoe company vows not to hike its prices
Steep new U.S. tariffs on imports are rattling businesses large and small, with many companies planning to absorb the higher costs by hiking prices for customers. Not footwear company Keen. Although the midsize company, based in Portland, Oregon, operates in an industry that is highly exposed to tariffs, Keen tells customers that it will keep prices steady this year no matter how tariffs affect its costs. That's no idle pledge calculated to preserve market share — Keen has been steadily retooling the business for years to protect itself from sudden shifts in global trade and the vagaries of geopolitics. "We have been preparing for this for over a decade. Early on, we saw the risks of being overdependent on any one country, so we made the decision to diversify our supply chain well beyond China," Chief Operating Officer Hari Perumal told CBS MoneyWatch. The 22-year-old company, with 650 U.S. employees and owned by design and brand management company Fuerst Group, has worked to reduce its dependance on Chinese manufacturing while expanding its U.S. presence and diversifying its supply chains. President Trump's tariffs are upending retailer supply chains, forcing them to devise workarounds. That can mean moving manufacturing to another foreign country with lower tariffs or investing in U.S.-based production. For small businesses, tariff-driven uncertainty can mean shutting operations down altogether when the financials no longer add up. Shoe and clothing prices could soar Footwear companies are particularly vulnerable to the upheaval caused by President Trump's trade war given their reliance on China, where 36%, or $9.8 billion's worth, of imported footwear sold in the U.S. is made, according to a TD Cowen analysis of international trade data. For that reason, tariffs are expected to hit footwear and apparel companies hard, and that impact will be felt by American consumers as well, according to Jason Judd, a global supply-chain expert and executive director of Cornell University's Global Labor Institute. In 2023, U.S. households spent an average of about $1,700 per year on footwear and apparel, Judd said. He expects that figure to surge 70% in the short term, to $2,800 per family, because of tariff-related price hikes. In the coming years, meanwhile, consumers are still likely to be paying more for footwear and clothing because of higher global tariffs. "That pain will lessen as terms and sourcing patterns change, but the longer-term costs per family will still be around a $425 increase per year." The abrupt change in tariff policies is already rippling across the industry. German sportswear giant Adidas last month warned U.S. customers that "cost increases due to higher tariffs will eventually cause price increases." And retailers across various industries, from apparel to food, have started passing some of the cost from higher import taxes to consumers in the form of "tariff surcharges." "We saw the writing on the wall" Today, Keen operates plants in Shepherdsville, Kentucky; the Dominican Republic; and Thailand, where it handles a third of the company's global production. It also contracts with manufacturing partners in Cambodia, India and Vietnam, all of which are subject to impending new U.S. levies. Cambodia faces a country-specific tariff rate of 49%, while Vietnam and India face levies of 47% and 27%, respectively. "We do have 10% exposure in those countries, but the 10% tariff we're dealing with is significantly lower than what other companies are facing on products that would come out of China," Perumal told CBS MoneyWatch. Back in 2015, executives at Keen were already taking note of rising labor costs in China. Today, the company's broad supply chain helps it spread costs across the company, its manufacturing partners and their suppliers, he said. "We are making a conscious decision not to increase prices, but that's shared by our partners," he said. "They share some of the costs with us, then they go to the company they buy materials from, and those tier-one suppliers share some of the costs as well." Did the conclave pick a front-runner to be new pope? Here are some of the front-runners to be the next pope World awaits new pope after conclave's vote
CBS News
09-05-2025
- Business
- CBS News
Forget tariffs — this U.S. shoe company vows not to hike its prices
Steep new U.S. tariffs on imports are rattling businesses large and small, with many companies planning to absorb the higher costs by hiking prices for customers. Not footwear company Keen. Although the midsize company, based in Portland, Oregon, operates in an industry that is highly exposed to tariffs, Keen tells customers that it will keep prices steady this year no matter how tariffs affect its costs. That's no idle pledge calculated to preserve market share — Keen has been steadily retooling the business for years to protect itself from sudden shifts in global trade and the vagaries of geopolitics. "We have been preparing for this for over a decade. Early on, we saw the risks of being overdependent on any one country, so we made the decision to diversify our supply chain well beyond China," Chief Operating Officer Hari Perumal told CBS MoneyWatch. The 22-year-old company, with 650 U.S. employees and owned by design and brand management company Fuerst Group, has worked to reduce its dependance on Chinese manufacturing while expanding its U.S. presence and diversifying its supply chains. President Trump's tariffs are upending retailer supply chains, forcing them to devise workarounds. That can mean moving manufacturing to another foreign country with lower tariffs or investing in U.S.-based production. For small businesses, tariff-driven uncertainty can mean shutting operations down altogether when the financials no longer add up. Shoe and clothing prices could soar Footwear companies are particularly vulnerable to the upheaval caused by President Trump's trade war given their reliance on China, where 36%, or $9.8 billion's worth, of imported footwear sold in the U.S. is made, according to a TD Cowen analysis of international trade data. For that reason, tariffs are expected to hit footwear and apparel companies hard, and that impact will be felt by American consumers as well, according to Jason Judd, a global supply-chain expert and executive director of Cornell University's Global Labor Institute. In 2023, U.S. households spent an average of about $1,700 per year on footwear and apparel, Judd said. He expects that figure to surge 70% in the short term, to $2,800 per family, because of tariff-related price hikes. In the coming years, meanwhile, consumers are still likely to be paying more for footwear and clothing because of higher global tariffs. "That pain will lessen as terms and sourcing patterns change, but the longer-term costs per family will still be around a $425 increase per year." The abrupt change in tariff policies is already rippling across the industry. German sportswear giant Adidas last month warned U.S. customers that "cost increases due to higher tariffs will eventually cause price increases." And retailers across various industries, from apparel to food, have started passing some of the cost from higher import taxes to consumers in the form of "tariff surcharges." "We saw the writing on the wall" Today, Keen operates plants in Shepherdsville, Kentucky; the Dominican Republic; and Thailand, where it handles a third of the company's global production. It also contracts with manufacturing partners in Cambodia, India and Vietnam, all of which are subject to impending new U.S. levies. Cambodia faces a country-specific tariff rate of 49%, while Vietnam and India face levies of 47% and 27%, respectively. "We do have 10% exposure in those countries, but the 10% tariff we're dealing with is significantly lower than what other companies are facing on products that would come out of China," Perumal told CBS MoneyWatch. Back in 2015, executives at Keen were already taking note of rising labor costs in China. Today, the company's broad supply chain helps it spread costs across the company, its manufacturing partners and their suppliers, he said. "We are making a conscious decision not to increase prices, but that's shared by our partners," he said. "They share some of the costs with us, then they go to the company they buy materials from, and those tier-one suppliers share some of the costs as well."
