Sole of a company: Members of the ‘combine team’ box up Chaco sandals. At least 45 full-time positions were lost when the Paonia, Colo., company moved manufacturing operations overseas. (JT Thomas)
A proudly American shoe company ships jobs to China
Chaco Sandals in Paonia, Colo., succumbs to global market forces and lays off 45 full-time workers, silencing a manufacturing plant – and a town.
By Michelle Nijhuis | Correspondent / August 27, 2008 edition
JT Thomas
Mark Paigen, the founder and owner of Chaco Sandals, says he's seen the company's margins steadily erode.
Paonia, Colo.
Paonia, Colo.
On the Chaco factory floor in western Colorado, workers are head down at sewing machines and sole trimmers – stitching, gluing, and shaping pair after pair of rubber-bottomed river sandals. The high-ceilinged room hums and buzzes with activity, as it does every day, but today is different. For most of these employees, today feels something like a graduation and something like a funeral.
Since company founder Mark Paigen invented the sandals in his spare room almost 20 years ago, Chacos have caught on among river guides, kayakers, and weekend warriors, and the company has grown from a one-man operation to a 145-person business with a catalog of styles and an international clientele. Through it all, the sandals have been designed, made, and proudly worn here in tiny Paonia.
The company’s steel-sided headquarters and factory sit just outside town, next to soccer fields and within sight of the western edge of the Rockies. The setting, tucked between the mountains and the desert, is starkly gorgeous, but as the saying goes, one can’t eat the scenery. The county’s per capita income hovers just above $17,000, and blue-collar jobs with benefits – like most of those on the Chaco factory floor – aren’t easy to find here.
So the sandal builders at Chaco tend to stay around – Cheryl Burch, the leader of the “glue team,” has been with the company more than 13 years – and their camaraderie is palpable, their ribbing and bickering like that of an extended family. The tags on the completed sandals read “Made with pride” – sometimes even “Made with love” – “in Colorado, U.S.A.”
But in the past two decades, shoe manufacturing has rapidly decamped overseas. Now, only about 1 percent of all shoes bought in the US are made here, with the vast majority of the rest made in China. (US military footwear, required by law to be made domestically, helps sustain what stateside manufacturing remains.)
Chaco, founded on small-town loyalty, resisted the trend. While the company sent some of its manufacturing abroad, it continued to make the bulk of its sandals – some 320,000 pairs a year – in this isolated Colorado valley. Today, that’s about to change. “We knew it had to happen,” says Mr. Paigen, Chaco’s founder and owner. “There was no way we could continue to compete in the marketplace and have our material costs so much higher than everyone else’s.”
•••
Paigen is a former river guide who remains an inveterate skier and sailor. In his years leading the company, he has traded shaggy curls and a moustache for a trimmer look. While he recognizes what he describes as the “tremendous feeling of solidarity” on the factory floor below his office, he says the move to China was at least a year overdue.
“We’ve seen our margins erode, erode, erode,” he says.
Even after accounting for shipping and other costs, he says, a pair of Chacos can be made for at least $4 to $5 less in China than in Colorado. That translates into roughly a $16 to $20 difference for consumers, he says, and while some might be willing to pay such a premium out of patriotism – or regional pride – he doubts that loyal core could support the company.
What’s more, he says, dwindling domestic supplies of materials and equipment could soon force Chaco to look overseas for more of its components, no matter the location of its factory – meaning that if were it to stay in Colorado, the factory would have to ship in materials only to assemble them with more costly labor.
Paigen, and employees throughout the company, are also aware of the decision’s disadvantages – not only the immediate loss of local jobs, but also the environmental costs of overseas shipping and the inevitable difficulties of distance. Company headquarters and manufacturing, once separated by two flights of stairs, will sit on opposite sides of an ocean; quality control will be tougher in the short term, and special orders will take longer to fill.
In this small town, where the 45 people who lost full-time work aren’t anonymous laborers but friends and neighbors, the cost is emotional, too. While nearly all the employees upstairs – those in product development, customer services, human resources, and the like – will keep their jobs, some tear up when discussing the move. “I understand the economics – I’ve spent my whole career in numbers,” says David Shishim, manager of customer services and sustainability. “But there’s still an inescapable sense of betrayal.”
Some employees, upstairs and downstairs, wonder if added efficiencies could have extended the life of the US factory floor. But most acknowledge that at some point, manufacturing had to move or die.
“It’s not anybody’s fault, it’s what has to be done for business,” says departing employee Jerry Price. “None of us like it, especially us older ones who have been here for a while. We really appreciate the company, and know what it’s been doing for us and the valley. Now it’s going away, because somebody clear around the world can do it cheaper.”
Many longtime customers, local and otherwise, are also disappointed by the decision, and the customer services department has handled more than 100 critical e-mails. “People say, ‘You were the last ones doing it right, and now you’ve sold out,’ ” says Paigen. “If I can sit down and talk with somebody, they’ll usually understand that our choices are limited. But it often takes a long conversation.”
•••
On closing day at the factory, the production teams cheer their way through their last sandals, and the entire company assembles to watch the final pairs come off the line. When they’re finished and packaged, the workers sign the box with farewells, leaving it on Paigen’s desk – part tribute, part reminder.
By the next morning, the factory floor is eerily empty, with only a skeleton crew of workers left to muscle apart the remaining equipment. Some of the machinery already bears red “sold” tags; the company hopes to rent the cavernous space to another business.
Ten factory employees will stay on for the long term, to repair sandals or fill custom orders. Several departing workers will participate in the federal Trade Adjustment Assistance program, which funds education and retraining for those who have lost their jobs to foreign commerce. Others may take often better-paying but more dangerous posts in the nearby natural-gas fields or coal mines. Still others may move elsewhere.
Outside, in the high desert sunshine, departing and remaining employees gather for a lunchtime barbecue. Chaco, which announced the factory closure last fall, has extended a wide array of small-town courtesies – and practical assistance – to its soon-to-be-former employees.
But today, there’s no avoiding the firings. Beneath the speeches, thanks, and tears runs a trickle of bitterness. “All I got to say is, when China is down, look for us,” Debbie Mitchell, a member of the factory’s glue team, says to the crowd in parting. “We’re still here. We want our jobs.”
While the mourning won’t last forever, that doesn’t make today – or tomorrow – any easier. “When one door closes, another one opens,” says human-resources manager Mary Treder. The tough part, she acknowledges, is the hallway.
3. Marvin | 08.29.08
The fault is not business, nor Chinese workers who reduce cost working like slaves - but ignorant stupid Americans who American forget quality and want things cheap.
marvin
5. Brenda | 08.29.08
My heart goes out to the owners and workers for one of our very last remaining shoe companies. I’m 58 and the shoe business is part of my heritage. I was brought up in Brockton, MA — once known as “Shoe City” when America was at it’s height of shoe-making in the world. My father worked his whole life for Knapp Shoe which made a was a shoe of such high quality that you could wear for many years. And their Knapp Boots were famous, as the Army heavily contracted with them to provide boots for military during World War II. When my dad came back from the war he went to Knapp’s, just a few miles from where we lived. He was a master shoe maker. He also did the high-end, hand-made, leather weaves for special clients. I could understand only a tiny bit of Portuguese, but when I was about 11 I heard mom and dad’s first angst-ridden talk at the kitchen table one night about how Italian imports were threatening the shoe industry and my dad’s only trade. We were so scared. 5 children. Eventually Knapps was bought out by a big corp. 2 years before my dad was supposed to get a Knapps pension. He got nothing. He was heartbroken. He found a job at Foot Joy (Golf Shoes, etc. til he died.) Foot Joy’s around, but the jobs are in China. As for me? 10 years ago the type of Information Technology work I did started going to India. So 5 years ago I had to settle for a much different, lower paying job for which I certainly didn’t need a B.S., summa cum laude. I feel your loss!
6. Wally Matell | 08.29.08
Unless Americans learn to sacrifice as a nation: paying more for domestic products such as Chacos, conserving energy, paying taxes to support veterans, paying off the national debt — the list goes on — we will no longer be “home of the brave”.
7. Rod | 08.29.08
We’re between a rock and a hard economic place. Yes, it would be great if Americans insisted on American made goods, but today most Americans don’t earn enough to buy those goods. It’s the Wal-Mart syndrome. I buy cheap because I am cheap, but eventually I buy cheap because I have to. My company manufactured in the USA in the 1990’s, but we were forced to go overseas or the competition would have killed us. Interestingly, the only goods we make in this country are exported to Japan. Our prime customer there insists on only American made goods. Go figure!
8. Andy | 08.29.08
I went through this recently with the purchase of a pair of Blundstone boots. Formerly union-made in Tasmania, the manufacturing of the bulk of the boot has been moved to Thailand… The irony is that many manufactures (the greedier ones) are actually looking beyond China, because as their standard of living increases, the labor is getting too expensive! So cheap boxers shots are likely to be made in India or Vietnam. By supporting companies like American Apparel, you can send the message that American manufacturing still has value, and sometimes when something is dirt cheap - you get what you pay for.
9. rodney | 08.29.08
The problem is Americans falling into the marketing program of buying new aned not buying quality and keeping it for years. At this point it will always be the KMART crap……… here today gone tomarow. When have you had a product for more than five years? Amoung many, my toaster is over 15 years old and working just fine.
10. Jim Bencivenga | 08.30.08
I bought a pair of Chacos five years ago in Boise, Idaho. I live near Boston and use them most often at rocky New England beaches. They are a great pair of sandals. I’m sorry to hear the company has to make them in China to stay in business.
11. H. D. Schmidt | 08.30.08
Sadly most Americans don’t realize that America is doing exactly and even more so than what all previous Empires did in the past. Yes, shipping its know how and all things abroad where it can be done cheaper with slave labor type, etc. Yes, have you not noticed how the personal storage has and continues to thrive in America with all cheap goodies from Communist China where Wal Mart and the likes have become the agencies of destroying thousand upon thousands of generation owned small family business?
Yes, in so doing all Empires at the same time enriched and also armed that other power that ended up its enemy. Is America not doing that to itself? Don’t let the Wal Mart folks here me? Secondly, have Americans not noticed that America’s borders do not truly exist anymore? Yes, in all Empires, borders became meaningless! In as much as territory conquered those folks became virtual citizens. So, what do we have today? Even to the point that their languages become official languages. Yes, both candidates beg for votes from a bunch called: La Raza. So?
So, as the election comes around, get ready for more! No matter who sits in that Oval Office. America is locked in fully, on Imperialism. Yes, the more I look at this Empire the more I conclude that, that same God America calls upon to bless her, is looing is patience and will soon take over! Things cannot get any worse anymore in America. Homes virtually dying as even women forsake their own ever younger, to go to war become politicians even more fiery than most men etc.
Yes, I am also speaking as a legal immigrant of 52+ years! Yes an 80 years old father and grandpa. Yes, my comment perhaps not so fully organized, but I tried!
12. Jeff Foster | 08.30.08
I’m saddened to hear about Chaco moving overseas. I’ve lived in western Colorado for 20 years and Chaco has been a home-grown icon to us river and outdoor types. To Michelle Nijhuis and CSM, please continue to follow the story of Chaco and the former employees. I think we could learn something useful about people, economics, and survival/success in the world.
P. S. It should be noted that Michelle Nijhuis writes for another western Colorado icon in Paonia, “High Country News”….it’s an excellent environmental paper, please take a look on-line at hcn.org.
13. MERRY LYNN BRABANT | 08.30.08
I LIVED IN PAONIA IN 1972, IN A COOK SHACK AND PICKED CHERRIES. MOVED BACK TO COLORADO SPRINGS BECAUSE THE WORK COULD NOT KEEP US ALIVE. LIVED ON THE SIDE OF A STREAM FISHING FOR TROUT DURING THAT TIME. I AM SADDENED TO HEAR ONCE AGAIN PEOPLE FORCED TO CHOSE BETWEEN THE LAND THEY LOVE AND SURVIVAL. LESLIE MARMON SILKO WRITES THAT INDIANS KNOW HOW TO LIVE SKINNY. AS A WOMAN ON HER OWN WITH CHILDREN I KNOW WHAT LIVING SKINNY MEANS. THE FOCUS IS ON SHELTOR AND FOOD PLUS ANY CLOTHING AND SHARING EVERYTHING WITH ANYONE ELSE WHO NEEDS. MY MOTHER USED TO SAY YOU CAN BUY GOOD FOOD OR PAY THE DOCTOR. AMERICA PAYS THE DOCTOR. SHE USED TO SAY I WILL GO SECOND CLASS SO YOU CAN GO SECOND CLASS BUT I WON’T GO THIRD SO YOU CAN GO FIRST. AMERICANS ALWAYS WANT TO GO FIRST CLASS AT THE EXPENSE OF THEIR FAMILIES, LET ALONE THEIR COUNTRY. I HAVE A GOOD JOB TODAY THAT MAY END TOMMORROW. I HAVE LEARNED TO LIVE ON VERY LITTLE AND SHARE THE EXTRA WITH FAMILY, OTHERS, AND COMMUNITY. I AM SORRY FOR YOUR LOSS. MY DEEPEST SYMPATHIES. I LOVED THE ENVIRONMENT YOU SEE OUT YOUR DOOR. TAKE IT WITH YOU WHEREVER YOU GO PLUS THE VALUES YOU LEARNED OF SELF SUFFICIENTCY AND COMMUNITY. MY MOTHER WAS HAPPY IN PAONIA BECAUSE WHEN WE WERE THERE MEN WERE STILL TIPPING THEIR HATS TO WOMEN OF HER AGE.
14. El Gabilon | 08.30.08
Yes, the fault is American Business and government. Perhaps not the individual companies who now have to close, but companies such as Nike who moved overseas. Not satisfied with the reductions in honest labor costs, Nike resorted to slave labor techniques to such an extent that Nike shoes could be produced for $1.00 or less. Here at home however these shoes were costing in the hundreds. There were many others who did the same thing. The American government, instead of concentrating on the needs of Americans concentrated in imposing the democratic principle to the rest of the world. They succeeded by spending hard earned tax dollars overseas, neglecting Americas needs and now Americans are suffering for their insane ideology. The American government built up China by failing to impose upon all American companies who produced goods to be sold in the United States a tarrif tax that would reduce their profits to what they would have made if such goods were produced in the United States. If an event such as WWII were to occur the United States would have to depend upon the rest of the world to produce the tanks, arms etc to fight it. Thanks to American Business and Government, the United States of America is fast becoming a BANANA REPUBLIC.
15. Allie Revelo-Feliciano | 08.30.08
As Americans, as a world power, as a nation indeed blessed by God, can this shipping of our businesses to China & elsewhere, be the last?? Can’t we commit to prefer our own goods instead of everything imported from elsewhere?? I was not born in this country but when I took the citizenship oath, I meant it. When I shop, I prefer goods that read -Made in USA- & also for this reason: they’re better!
As American Citizens can we commit to help the economy of Our Own Nation first? True, God loves the whole wide world, but we are the only ones who openly claim the blessing and say: God Bless America.
My appeal is to the American citizens… If we don’t do it, let’s not kid ourselves that maybe the legal & illegal residents will do it for us.
Now that we are on the eve of elections, let’s vote Values: Family, Marriage, Community, Freedom, Truth, Nation, above all: God. Unsure who to vote for? Pray! You are also invited to visit my website.
17. Kerry | 08.31.08
Another fine example of the USA not being #1 in the world. Another nail in the coffin.
19. BillW | 08.31.08
An extra 20 bucks for shoes made by my neighbor vs cheaper shoes made by slave labor? Where can I by a pair?
20. chris@cannabis | 08.31.08
Hi Allie Revelo-Feliciano,
That “god” stuff is silly. So is that “one nation” stuff. I don’t mean to disparage you personally, but please don’t believe that we are united. “God is coming, and she’s pissed.” Good luck to the Chaco folks, but hey, welcome to the club of “survival of the fittest”.
Question religion.
22. Shane D | 09.01.08
I am wearing a pair of Chaco’s this very moment. I had just said the other day that, despite the $110. I paid for them, I would definately buy another pair (I have all-purpose shoes, not sandals). I disc-golf in them, work in them as a server and bartender, walking who knows how many miles per shift, and they are my everyday shoes. I am sad to hear that some people in an economically depressed area of Colorado will lose their jobs (and benefits), but it has been stated here already very plainly. This is the reality we live in. Globalization MUST hurt someone somewhere so that it can ensure economic survival to others. I believe the goal consumers should have is to be personally involved with the heads of the companies of the products they buy and demand that sweatshop labor or illegal child labor not be used in the production of their products. Insist that they have vigorous, random visits to factories oversees to check on working conditions and wages, and most of all, demand that they allow unions, despite what the gov’t. of that country says. If unions are outlawed or severely repressed, DO NOT BUY THAT PRODUCT and make sure that the owners know why you are not buying that product.
23. Tony Giglio | 09.01.08
Whether we like it or not, globalization is something that has a very good chance of taking place in our economy today. When it destroys a person in one place of our world, it gives the oppurtunity to another person or group of people. This is why the business cycle has a constant motion to it today.
24. mark | 09.02.08
What is sad, and most Americans forget this. Is that when you buy locally, especially in your neighborhoods and cities, then this keeps the money circulating in between a few number of pockets. When there are more pockets and not a stable work force. Then people are always looking for that next cheap price. If there was a stable work force (by buying locally). Then you are certain that an amount of money is in your circle. Then you can start looking for well built items, and at a little higher cost. But you can sacrifice the extra dollars, by knowing that this money will come to you sooner that it would if it had to be sent to China, then exchanged to yen then, exchanged back to US dollars.
25. mark | 09.02.08
Also when the world’s economy is not equally shared, then this creates the situation Chaco’s and other business will become. When not all nations are up to par with the US’s “Golden Era”, then the US will have to wait for all the rest of the world to either catch up, or we will have to slow down and get on the same level as the world. It’s what happens when one nation becomes greedy, ie. 1920-1990. Maybe it’s China’s turn.
26. Drew Osterman | 09.02.08
This article is sad because it shows how hard it is for a business to compete in a global market. Therefore many US companies have switched to overseas production because of how expensive it is in the US. But many over look the fact that when this happens hundreds of people are layed off and must seek other means of employment.
27. Joni | 09.03.08
Chaco sandals are the best shoes I have ever worn. I have 4 pairs! They cured my plantar fasciitis! I hope the quality doesn’t deteriorate. I certainly would still buy them for $16 - $20 more. This makes me very very sad, and a little scared. What is happening to our country? Maybe when Barack Obama is president our jobs and quality will come back home.
28. me | 09.04.08
time to restore our laws protecting american only businesses… TARRIFS
GROW American JOBS and WAGES. Keep our spending moneies and SALARIES earned inside the GATES of our HOME Country… so we CAN have higher pay checks..
29. Dan | 09.06.08
I question the economics.
The company says that its shoes cost $4 to $5 more to make here, which raised the price $16 to $20 for consumers. Why should this be the case.
Also, I wonder if the company has accounted for the increased risk/cost of returns, currency fluctuations, and changing shipping costs. I also wonder how many sales it will lose because of this move. Though I recognize that the flip side (domestic production) may have its own issues as well, including access to and costs of materials.
I just have to wonder if the savings will end up being worth it. I truly hope this company really did the proper analysis and do not live to regret their decision.
30. Gaylon Harden | 09.06.08
corporate greed pure & simple,The owners just want more and more and they don’t care about there loyal employees who have bilt the company,More China junk shoes on the market that will end up in the landfills around the country because of poor quality.
31. bunnySue | 10.31.08
Joni:
When Barack Obummer becomes president you will be required to give half the shoes you own to someone too lazy to work for his! And remember, it’s PATRIOTIC to pay MORE TAXES! Enjoy!
32. adriane | 12.02.08
Very sad- I would have been willing to save up more to buy them at their current pricing because I have a pair that is vintage and still holding up. America is selling its soul in little pre-packaged, shrink wrapped slices. And how long will it take to find jobs for the displaced, with training or without?
P.S Bunny Sue- Stay on subject- your sophomoric political views are uncalled for here.
34. Lisa | 03.28.09
I found this site while trying to find an American Shoe company that Makes the shoes in USA. Guess what? I can’t find a US company that makes hiking boots in USA. I try to buy American made products and all the jobs have been shipped out. This is what is wrong with this country. We are supporting everyone else’s economy and not our own.
35. brian | 06.29.09
this is sad. i love chaco’s but will have a hard time buying them in the future. The founder indicates that they had to be made overseas to be competitive and that the savings would be around $20…….funny that the price for a pair of chaco’s hasn’t changed one bit….he meant to say $20 more profit….
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1. Naomi Smith | 08.27.08
Thanks for the article. My name is Naomi Smith - proud Chaco employee for 8.5 years. Dedicated Manufacturing Manager for 6 of those. Even though some time has passed, the emotional stigma still lasts. I am moving on, and am grateful for open doors. I am equally grateful for the opportunities, personal growth and the lessons I learned at Chaco Sandals Inc. It will forever hold a special place in my life.
Naomi Smith