So the papers were signed, the money was provided, and the William Brooks Shoe Co., occupant of a 1919-vintage brick factory on Main Street, the largest employer in Nelsonville, finally belonged to John Brooks. John rechristened the business John W. Brooks Inc. Then he went back to managing the factory, which was his first love. As for running the business, that would be mostly up to Mike.
* * *
The year is 1975. The United States is emerging from the worst downturn since the 1930s. But the next few years won't bring the kind of swift, sure recovery Americans once could expect. Growth is slow. Inflation threatens to spiral out of control. U.S. manufacturers find themselves attacked by powerful overseas competitors. Imports from steel to semiconductors flood onto American shores, eating up market share.
The Midwest is hit hard. So many plants close that pundits coin the term Rustbelt to describe the region. As for the shoe industry, it has gone from the stagnation of the late 1950s into sharp decline. In 1970 imports accounted for 30% of the market. Ten years later the figure will be 50% and rising. During this decade more than 300 domestic shoe plants will shut their doors -- for good.
* * *
For a while Mike didn't worry much about the economy or about the sorry state of his industry. He had too much to do, and he was having too good a time doing it.
He designed a new product, a good-looking pair of hiking boots with red laces, and hit the road to sell it. He worked with his father to speed up production, thus easing the company's cash needs. He spent time on the factory floor, trying to pep up a demoralized work force. What made the whole proj-ect seem possible, even exciting, was that a couple of other young men, age-mates, were already at the company and were eager to join the fray. Dave Fraedrich, hired by John Brooks right out of college, was the financial guy. Bob Hollenbaugh, a childhood buddy of Mike's, managed shipping and personnel and purchasing. The group became a kind of entrepreneurial troika. Each did a little of everything. After work they'd get together over a beer and plot out their collective future. In their dreams, it was exhilarating. In reality, it was the late 1970s, and no one could ignore the tides of history for long. Mike and his pals might be young and hopeful, but they were caught in the squeeze on margins that was strangling manufacturers all over the United States.
On the revenue side, Brooks's customers were the same big chains the company had always sold to. Sears and J.C. Penney bought 80% of the plant's output. The chains might like new designs, such as the red-laced hiking boots. They might appreciate Brooks's reputation for quality. But what they really cared about was price -- and now, with the growing availability of imports, they could put the screws on. Mike could sell a lot of shoes to those customers. He just couldn't sell them at prices that would keep his company in business over the long haul.
The cost side of the ledger looked equally bleak. All the Brooks shoes were made by union workers at the Nelsonville plant. Manufacturing techniques such as just-in-time and Toyota-style "lean production" hadn't yet made their way across the Pacific. Big corporations in a similar situation might have cut costs by eliminating layers of management. Here, that was hardly an option. Brooks was an $8-million company run by a few managers and their helpers, all crammed into a tiny warren of offices on the second floor of the aging plant. None of them took much of a salary.
One day in 1979, in a meeting with a buyer for Sears, Mike finally understood that he was losing the battle.
At an earlier meeting he had asked the buyer for a price increase of 50¢ a pair. He knew it would be a shock, but he had steeled himself; the company couldn't survive without higher margins. The buyer, an old-timer, wasn't just shocked, he was outraged. He asked Mike if his father knew what he was doing, and demanded to speak with John in person. The next week, Mike drove John, who didn't like to fly, the 400 miles from Nelsonville to Chicago.
At the meeting, Mike felt he was hung out to dry. John, worried about losing Sears's orders, waffled on the price hike. Mike, stubborn, stuck to his guns. "I said, 'Look, we want your business. But we don't want to be at breakeven anymore."
At the end, Mike thought grimly, the meeting degenerated into a good news, bad news joke. The good news: Sears agreed to the 50¢ hike. The bad news: the deal was good only until the big chain could replace Brooks as a supplier, probably with a Korean manufacturer.
"It was a long drive home," recalls Mike, sighing. "We had been promised the increase. But we had only a few months to live."
* * *
The 1980s. The floundering economy is now showing signs of life -- even in manufacturing. America's industrial giants -- some of them, anyway -- begin to learn to compete with the Japanese. Entrepreneurial companies elbow their way into the marketplace.
In shoes, the rejuvenation is dramatic: several upstart companies begin to prosper. Making an end run around the classic margin squeeze, they develop distinctive products, stamp a brand name on them, and charge premium prices. They sell their shoes through new retail channels, not just the old shoe stores and department stores. They advertise heavily. In athletic shoes the leading practitioner of this strategy is Nike. In boots it is Timberland.
