ATHLETIC
FOOTWEAR
PRODUCTION NETWORKS & CONTRACTING
Athletic
style footwear is made of rubber, canvas, and other materials, both man-made and natural. Before production, the manufacturers must
determine what is important: fashion or
function. This industry is characterized by
simple technologies to improve production, and ensure comfort and performance. Other aspects of the industry include low fixed
assets per employee and expansion through the use of contractors. The major focus is on low cost manufacturing,
specifically in low-price segments
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Production Networks
Large retailers,
marketers, and branded manufacturers play pivotal roles in setting up decentralized production networks among the
globally decentralized factory system. Athletic footwear companies design and market the
branded products they order- they don’t make them.
Rather, networks of Third World contractors make finished goods for foreign buyers.
Large retailers and marketers that order the goods make the specifications. Thus, domestic athletic footwear companies focus
on the design and marketing aspect of the industry, while the actual physical production
of the shoes is contracted out to foreign sources.
International
Subcontracting System 
Since the sourcing is done overseas in developing countries, it is an industry that exhibits “manufacturing without factories”. The firms supply materials to networks of overseas suppliers in neighboring countries. Locally owned firms in these countries then make the goods. The factories have low entry barriers and there is an intensive use of low-skilled labor to produce the finished products.
1-the company must buy and or build a
plant
2-they must establish agents that
have ties with factories in foreign countries
3-they must maintain direct contact
with owners of foreign factories
Location
of Production 
Since 1985, there
has been a continuous decline in the footwear industry in industrialized countries and a
relocation of many production facilities to the Third World, a trend likely to continue in
the coming years. These large nations exhibit
inexpensive pools of labor.
Over 90% of shoes purchased in the United States are imported from foreign
countries. The main producers of athletic
footwear overseas are China,
Indonesia, and Brazil.
Developed countries which accounted for half of the
world’s footwear output in 1983, increased their share to 61.4% in 1987. During that period, China, Taiwan, Brazil, South
Korea, India, Mexico, Thailand, Indonesia, Portugal, and Colombia increased production.
Indonesia and Portugal nearly doubled
their production. China accounted for the
production of 89.5% of the domestic consumption of 1.9 billion pairs of athletic shoes
produced in 1987. Furthermore, Asian
countries produced 42% of the world’s footwear output in 1987.
The employment
conditions vary depending on the country’s economic situation, influence of unions,
and enforcement and respect or non-respect of labor and social legislation. In most
countries, social protection is lacking, with low wages and little employment security. Child labor is
widespread- it accounts for about 25% of the labor force in some countries. Footwear
manufacturers are among the poorest paid manufacturing workers in most countries.
Also, among these workers, skill
deficiency has hampered the
assimilation of new technology. However, recent training programs have been updated to account for progressive computerization of
manufacturing. In addition, a recent emphasis has emerged on adult training and it
will become more difficult to recruit younger workers.
Technological Developments
Computer Aided Design (CAD)
-allow designers to create new styles on comps w/out constructing many
prototypes
-converts designs to patterns via computer (speeds up design process)
-saves time, labor, material, and increases quality
-software for accounting, materials mgmt & production scheduling of inventory control
Numerically controlled upper roughing
Injection molding
Automatic Sole laying
Additional
Trends
There has been a diminished competitiveness of traditional sectors of athletic footwear production on internal markets and abroad because of changes in raw material markets. The introduction of synthetic material has caused the production costs to decrease as automatic processing operations have come into play. Also there has been a disappearance of small production units and a decline of employees in this industry.
Competitive Production Strategies
They must focus on the production of
special or high quality athletic footwear with superior design and craftsmanship.
They must increase responsiveness to market changes and
trends.
They must rely on microelectronic technology to improve the
quality of the product and keep labor costs down.