Sunday, March 14, 2004

Rocky Shoes climbs out of the shadows

Homegrown footwear company gives style, profits a kickstart

By John Eckberg
The Cincinnati Enquirer

Rocky Shoes & Boots Inc. is still headquartered in Nelsonville, Ohio.
Michael Snyder photo

Carol Smith of Millfield packs Rocky boots at the company distribution site near Lancaster, Ohio.
Meggan Booker photo
NELSONVILLE, Ohio - Rocky Shoes & Boots Inc. could make its home anywhere in the United States and probably should be anyplace but here in this Southeastern Ohio town, miles from an interstate, far from any port-of-call.

Two Rocky factories are in the Dominican Republic and one is in Puerto Rico. An office is in mainland China. Buyers are in China, Vietnam and elsewhere on the globe. A division is chartered in the Cayman Islands.

But because Mike Brooks, chairman of the board, president and CEO, has a soft spot for Nelsonville, this company and the 150 jobs related to sales, design and distribution of Rocky shoes, boots and gear are likely to remain here for decades to come.

"I'm a southeast Ohio boy," Brooks replied simply when asked why the headquarters is not located elsewhere. "It would be better if we were in Miami, but my roots are here."

Unlike many U.S. manufacturers, which have gone under because of overseas competition, this company has made a big and successful transition in recent years.

It fought off cheaper imports by fighting fire with fire, shifting production to cheap-labor nations and creating a brand recognized for its premium waterproof boots and rugged outdoor wear.

Another arm sells to people who are on their feet all day: post office employees, police officers, sheriff's deputies and firefighters. Yet another division focuses on work and leisure apparel.

In the heart of Nelsonville, Rocky has a retail store that looks like it belongs in a tourist town at the foot of a mountain range.

North of Nelsonville near Lancaster is an $8 million distribution building, full of ramps, conveyors, people working and $30 million in shoe and boot inventory. About 50 semi-truck drivers haul boots and shoes from this warehouse all over the United States.

Rocky has come a long way since 1975, when Brooks' father, John, bought the then-struggling shoe and boot firm, the William R. Brooks Shoe Co., despite its three years of consecutive losses.

After graduating in 1995 from design school Ars Satoria in Milan, Italy, with a degree in pattern engineering and shoe design, Brooks returned to Nelsonville, but only briefly. He soon left to work at the former U.S. Shoe Co. in Cincinnati.

He lived at the former L.B. Harrison Club on Victory Parkway for $18.50 a week for room and board. "I got two meals a day and a room about the size of this table," he said.

The U.S. Shoe days were invaluable: "I learned from U.S. Shoe about quality fit, and I learned that you can be a little shoe company and grow."

Location: Nelsonville, Ohio

Work force: 150 in Nelsonville, 814 worldwide

Chief executive: Mike Brooks

Revenue 2003: $106 million

Products: Boots, shoes, gloves, hunting gear, apparel and accessories

After his father acquired the company, Mike, a graduate of the Ars Satoria shoe design college in Milan, Italy, brought his pattern engineering and shoe design degree to Nelsonville to try to rejuvenate a tired and troubled shoe company.

Since 1932, employees had manufactured classic boys' and men's dress shoes in a cramped two-story brick factory on the main drag of town. But by the 1970s, times had changed. Looking back, Brooks can only shrug and quote Phil Knight, the founder of Nike:

"He said most people really don't want to work in shoe factories," Brooks said, "and he's right. I didn't understand that 25 years ago. I wanted protectionism. I always thought let's have jobs, no imports. But he was right."

Blue-collar customers

Today, mostly because Brooks embraced Gore-Tex for a waterproof lining, the company is taking in $106 million in annual revenue and has nailed down a 45 percent share of premium hunting boots.

James D. Ragan, an analyst at Crowell, Weedon & Co., a brokerage firm based in Los Angeles, believes there is still plenty of tread left on the Rocky sole. He gives company shares a "buy" rating with a 52-week price target of $28 per share.

"They have a loyal customer base with technically high-quality waterproof hunting boots," Ragan said. "They've been able to extend the brand into other markets: work boot customers like airport security, state troopers, postal carriers, guys on the factory floor.

"Rocky is going to continue to target its core blue-collar mid-American customer."

Tim Clay, a 39-year-old Minford, Ohio, resident says he would not hunt in anything but a Rocky boot. "They are excellent boots and worth the price," Clay said. "I've had boots last 15 years."

Duty shoes represent about 20 percent of revenue - some $20 million - and that's due, in part, to joint ventures with companies such as Fechheimer Brothers Co. of Blue Ash.

"Anybody who wears a uniform is the focus," Brooks said. "We are making footwear right now for the U.S. Marine Corps in Afghanistan. We used to make a lot of military boots, but my father would say forget about boots for the military, you can't make any money on them.

"Build the brand, he'd say. So for years we never focused on the military."

Then one day a call came in from a research consultant who told Rocky brass that "some guy named Schwarzkopf" had research money available, and would Rocky help design some new boots?

That's Schwarzkopf as in Gen. H. Norman Schwarzkopf.

"Military footwear had not advanced technology-wise for 40 years, and young people were growing up with marshmallows on their feet," Brooks said.

So Rocky took a hunting boot and made it black. It had a fiberglass shank, lightweight construction and Gore-Tex waterproof lining. Voila, the military had a new boot.

Now, says Brooks, "we're close to making a deal with another large military contract."

Juggling jobs

While shifting jobs overseas has helped the company's top and bottom lines, it also has hurt the company's standing among some in the community.

"I'll never buy another boot from that company," said Scott Mitchell, an account executive for a potato chip company who was making his rounds one recent weekday outside Athens, Ohio. "They took the jobs overseas."

Brook said his company had no choice. "It was the hardest decision I ever made in my life."

"There were 61 people across the street (at the factory). I went to high school with some. I go to church with them. They are my friends.

"I felt that if I could build the company and bring jobs, sure it'd be a different person filling the job, but it was the only option I had," he said.

Brooks defends the decision to close the plant because the new jobs have health benefits and pay better, too.

"Today, when I show you a boot or shoe pattern, well, that comes from a designer who lives in Lancaster, Ohio," Brooks said. "The jobs we have here are much higher-paying jobs."


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