It took a year, but footwear group Wolverine Worldwide wrapped up the sale of its in-house leather business at the end of 2023. We go into the story behind the story here. 

Footwear group Wolverine Worldwide has completed the sale of its leather business, with Thailand-based leather manufacturer Interhides Limited (IHL) acquiring the Asian side of the business at the end of 2023. This news came three months after Wolverine announced that it was selling the US part of its in-house leather sourcing business to athletic footwear brand New Balance, and exactly a year after it first made public its intention to sell this part of its operation. It said it had raised $6 million from the sale of the US part of Wolverine Leathers and $9 million from the Asian part of the sale.

For 100 years, the footwear group ran its own tannery in Rockford, Michigan, specialising from the 1950s onwards in making nubuck leathers from pigskin for brands in its portfolio, including, most famously, Hush Puppies. This tannery ceased production in 2009, but Wolverine Leathers has, until now, remained an active part of the group, contracting leather production and colouring to suppliers in five locations in the US, Vietnam, Thailand and China. Interhides, now the owner of the Asian part of the business was one of its suppliers for many years.

More than one way

The incoming president of the Leather and Hide Council of America, Kerry Brozyna, was the general manager of Wolverine Leathers for many years and went on to become head of material sourcing at the group and one of its vice-presidents. The Rockford tannery had closed before he joined Wolverine, but he says this integrated set-up was typical of companies that were still running their own footwear factories. To own a tannery too was what he refers to as “old school”, but it made sense for many corporations, and still does for some.

If leather is a material that is integral to a shoe company’s product line and it uses large volumes of the material, having first-hand expertise of making leather and “subject-matter expertise” can be a great help. “It gives companies a better understanding of what they are using,” Mr Brozyna says. “But running your own tannery isn’t the only way to do this.”

Under the new set-up that was in place when he first took up his role at Wolverine in 2013, the group was buying in all of its leather, rather than making any itself. Other major brands had been successfully operating their leather sourcing in this way for many years. “Like many other brands, what Wolverine now does,” Mr Brozyna explains, “is hire people that have the expertise and place them in its sourcing programmes. You can have a team located in all of the facilities that are responsible for producing your leather, keeping a close eye on the process from beginning to end.”

Worn in the USA

New Balance is committed to making some of its shoes in the US. It has a premium collection called Made US for which at least 70% of what goes into each pair, by value, must be from the US. It runs five footwear factories of its own in the US, three in Maine and two in Massachusetts. It broke ground on a sixth facility, this time in New Hampshire, at the end of 2023 and expects to be producing shoes there in 2025. Chief executive, Joe Preston, said the new factory would “drive future business opportunities that showcase our longstanding pride in American craftsmanship and innovation”.

All of this makes it possible for the company to offer what it calls Berry-compliant athletic footwear. For decades, the Berry Amendment has made it a requirement for the US Department of Defense to give preference in lucrative procurement exercises to domestically produced, manufactured, or home-grown products. The Department of Defense has to source footwear for millions of active service personnel, including running shoes and other athletic footwear.
The shift to overseas production of a large proportion of the athletic shoes that US brands bring to market has led to intense discussions in Washington DC about making this type of product exempt from Berry Amendment compliance. New Balance has worked hard with government officials and its supply chain partners to secure unchanged implementation of the legislation for athletic footwear.

This is the reason why investing in the US segment of the Wolverine Leathers business makes good sense for New Balance. Speaking at the science-based talks at Lineapelle in Milan in February, a senior executive specialising in sustainability at New Balance, Katy O’Brien, said the company currently makes around 100 million pairs of shoes and boots per year. Not all of these products are made from leather, but Ms O’Brien says New Balance’s consumption currently stands at 60 million square-feet of finished leather per year.

Sustainable growth

Investing in part of Wolverine Leathers is a different proposition for IHL. It sees the acquisition of the Asian component of the business as an opportunity for growth as a supplier of leather to the wider footwear market. Traditionally, the Thailand-based tannery had automotive leather and contract wet blue production as its main specialisms, but it has long-term relationships with a number of footwear companies, too, including Wolverine. General manager, Wasin Thumrongsakunvong, mentions Keen and Vivobarefoot as other good examples. It has worked extensively with these brands on sustainability. One project with Vivobarefoot has involved sourcing material locally from small-scale farmers, making sure they receive “a fair price” for their hides. He adds that, in the course of the last three years, it has begun to expand its business in the footwear sector. 

IHL is ambitious, but wants its growth to be sustainable. Mr Thumrongsakunvong describes this as the thinking behind the way it sources and uses raw materials and chemicals, and the way it uses energy. The tannery it runs in Bangpoomai, about 30 kilometres south of Bangkok, is 30% powered by solar energy, and solar’s share of total energy use is going up.

People management is part of this, too. IHL employs 1,300 people and has made sure that most workers are able to work on more than one aspect of the production process. “This is about efficiency,” the general manager says. “It means no overtime is needed; our people receive pay-rises without that and are still able to go home on time and have a  good work-life balance.”

Shortcut to shoe market stature

Its relationship with Wolverine dates back to the time when the footwear group closed its tannery and put Wolverine Leathers on a new specialist outsourcing footing. IHL was one of the tanneries with which it established key-supplier relationships, specifically because the Thai company embraced willingly the challenge of developing expertise in producing leather from pigskins. “We hadn’t done that before,” Wasin Thumrongsakunvong says, “but we gave it a go and it worked very well. We have had some hiccups here and there, but we have built a strong partnership with Wolverine.” This part of the business currently processes 400,000 pigskins per month with most of the raw material coming from the US.

Under the new deal, IHL has acquired all of the inventory Wolverine Leathers held in Asia, and all the members of Wolverine Leathers’ teams in China and Vietnam are now employees of IHL. The leather manufacturer also employs a sales person in the US. “This purchase is a great idea,” Mr Thumrongsakunvong insists. “It’s hard to become a big player in shoe leather if you don’t have a strong team in terms of sales. Our feeling is that this will be a good shortcut for us.”

It is making bovine leather for footwear as well and says it wants to expand this part of the business, not least by connecting with brands that are not part of the Wolverine Worldwide group. “Some new customers are already coming to us,” the general manager says, “because they previously had a policy of not supporting a competitor. We are not a competitor; we can service all kinds of brands.”

Wolverine Worldwide ran its own tannery in Michigan for 100 years before closing it in 2009. 
Credit: Wolverine worldwide

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