You have to spend money to make money, Mike told himself. But he hadn't quite realized how expensive and risky an IPO could be. The accountants got busy. So did the lawyers. The corporations that operated the Dominican and Puerto Rican plants had to be folded into the parent company, which was being renamed Rocky Shoes and Boots. By the time the prospectus was drafted and printed, the offering had cost Rocky some $630,000, plus the time and expense Mike and Fraedrich had put into it. Yet no one could know how Wall Street would view an IPO from an obscure little shoe company in Ohio.
As it happened, by late 1992 initial public offerings were back in favor on the Street. Timberland stock was hot -- it had more than doubled during 1992 -- so another outdoor-shoe company looked good. In January 1993 Mike and Fraedrich began the road show.
Like all road shows, it was grueling. After 10 days Mike was played out. At his last meeting -- with a group of eager young analysts from Fidelity Investments, the big Boston-based mutual-fund house -- he hit the wall. They asked questions. Why are you any different from Timberland? How can you make money with U.S. manufacturing? Mike had answered the same questions once too often. "I said, 'Look, guys, we're going to take this company public whether you buy any stock or not.' I said, 'You can buy it at $10 a share, or don't buy it. I don't care." He left for Logan airport in Boston and ordered up a double martini.
Before drinking it, he called his contact at Bradford to apologize for his behavior. Never mind, the Bradford guy said -- Fidelity just ordered 150,000 shares.
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Rocky Shoes and Boots went public on February 3, 1993, netting about $15 million. Ever since, money has been flowing through the parched company like water through an irrigation ditch, bringing dreams to fruition.
The old Nelsonville plant has undergone a metamorphosis. Last fall you could have caught it in midtransformation. Some sections of the plant were dark and dingy. Workers in those areas moved rack after rack of shoes-in-the-making from one station to another, much as they had done for the past 60 years. In the new areas, by contrast, teams assembled a constant flow of shoes under bright lights. Paid by their team's output rather than by the traditional piece-rate system -- and earning from $1 to $1.50 an hour more now than before -- team members scurried to help one another with their jobs. Plant manager Allen Sheets estimated that the new system cut throughput time from 10 days to 3, and that the 3 would soon be 2. Mike figured that the cost of making a shoe dropped by 7%, even with the higher wages. In a business like shoemaking, that was the difference between scraping by and making decent money.
Behind the Nelsonville plant, ground has been broken for a new 12,000-square-foot retail store, a "mini L.L. Bean," as Mike describes it. Nelsonville isn't on anybody's main road, but so many people in this rural section of Ohio stop by Rocky that even the old store last year did $2.2 million. The new one, says Mike, should do more than $4 million. A little ways down the road, out behind the company's offices, is a 60,000-square-foot addition to its already-cavernous warehouse facilities.
How much more the company will grow is anybody's guess. Already it's the largest producer of Gore-Tex footwear in the world. This fiscal year, analysts say, it should top $50 million in sales. Investors are optimistic. Rocky's stock, initially offered at $10 a share, peaked at more than $20 a share last November. As Inc. went to press, it was around $13. To be sure, the footwear industry is still hazardous. By the end of 1993 the IPO money was invested, and the company again was back to bank loans. It had boosted production, but it still couldn't meet existing demand.
For the moment, however, at least a few dreams have been realized.
John Brooks, nearing 73, still comes in every morning at 7:30. He hasn't moved his office down the road, where Mike and the other managers sit; it's still in the plant. On John's wall is a meticulous, hand-lettered chart of the week's production. There are no hard feelings about the disagreements over the offshore manufacturing. Though John divvied up the company among his children, he retained an interest in the Dominican plant. That interest, translated into Rocky stock, was worth about a million dollars. At the IPO, John cashed it in. When Mike gave him the check, John smiled. He said, "Hard to believe, isn't it, son?"
Mike Brooks, 48, has many of his dreams ahead of him. Right now what he feels is responsibility -- for the business, for its employees, for its investors. The payroll now numbers more than 1,000. There are 565 workers in the Dominican Republic, 230 in Puerto Rico, nearly 300 in Nelsonville. The list of investors includes a sizable number of individuals, many of whom are local. "A lot of people are counting on the company to be successful," says Mike. "I feel a lot of pressure."
But he can already point to one accomplishment: the effect his company has had on Nelsonville. Near the Rocky factory is the remains of what was once a brewery. The Rocky plant itself might have become the remains of a shoe factory. Nelsonville might be dying. It isn't. That's because Rocky Shoes and Boots -- and Mike Brooks, who runs the company -- are survivors.
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Research assistance for this article was provided by Vera Gibbons.
