On a subzero night in January 1984, John Stollenwerk watched $14 million in equipment and inventory explode into flames, smoke seeping from every crack of Allen-Edmonds Shoe Corp.'s main manufacturing plant in Belgium, Wis. "I'm going home," announced the company's president after watching the blaze for half an hour. "There's nothing I can do here, and we have to get to work tomorrow." Stollenwerk got up at five the next morning, and set about one of the most difficult tasks in his four-year tenure as president -- convincing both employees and customers that he was in business for the long haul.
He was well prepared for the challenge. When Stollen-werk bought the 58-year-old family-owned company from its founders in 1980, he faced a similar dilemma. Experienced as an exporter, he knew nothing about manufacturing shoes, so skepticism among customers and his 250 employees ran high. "They thought I was going to pump the company up to sell it." Competitors, he says, spread the word that Allen-Edmonds was going out of business. "I remember one four-day trip -- I went from Milwaukee to Seattle to San Francisco to Los Angeles to Dallas to Houston, and New York City -- to save the business with customers, to reassure them about what we were doing."
The new owner was faced with a huge marketing problem. While Allen-Edmonds shoes were widely recognized within the industry as the Rolls-Royce of men's foot-wear, name recognition among consumers was nearly nil. The previous owners had managed to produce one of the best lines of shoes in the world and lose $400,000 a year in the process. Overseas competition made matters even worse. In 1980, imports had already captured 50% of the U.S. footwear market, and factory closings totaled a staggering 336. Still, Stollenwerk was determined to carve out his own niche. "The first thing we did was tackle our suppliers," he says. "We cut out all middlemen and went directly to the suppliers, and we assured ourselves of the finest quality." Stollenwerk also revamped the plant with more modern equipment, changed the layout to make production more efficient, increased everyone's pay, cross-trained employees to combat boredom, and hired a quality-control manager. For dealers, the company instituted a co-operative advertising program, started publishing a quarterly newsletter, and created a 22-minute video that walks the viewer through the shoe-production process. Allen-Edmonds promised the largest range of sizes and widths and the best in-stock inventory (56,000 pairs) of any shoe company in the world, and it pledged to ship all orders within 24 hours. Upscale ads containing a toll-free phone number were placed in The Wall Street Journal, and the company hired a first-rate advertising agency to take the product's image "uptown."
It worked. Sales increased from $9 million in 1980 to $11.5 million in 1981, and the company became profitable for the first time in five years. And while another 20 U.S. shoe manufacturers went under that year because of import competition, Allen-Edmonds began gaining acceptance in the overseas market.
But just when the company looked like it was on firm footing, the main factory was reduced to a pile of rubble by fire. Fortunately, the leather storage, cutting, and sewing operation had been moved to another location, which meant that Allen-Edmonds still had its raw materials. Without missing a beat, Stollenwerk set up shop in an abandoned schoolhouse. Major customers were called and asked to return inventory so that the company could start shipping to other dealers immediately, and a local unionized shoe company voted to allow Allen-Edmund's non-union employees to work in their plant three days a week. Three months after the fire, the company had moved and was back in full production.
Nearly two years later, with sales of $20 million (10% in exports), Allen-Edmonds is still feeling the effects of the fire. But that hasn't stopped John Stollenwerk. Just a few miles down the road, a 69,000-square-foot plant is under construction. "I see us having about 15 years of really good growth," says Stollenwerk, confident of having proven once and for all that he is here to stay.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.