Wolverine Worldwide has sold its factory in Big Rapids, Michigan and some other assets related to its business with the U.S. Department of Defense to a smaller firm, the Original Footwear Company. Wolverine says the divestiture will improve the future viability of the Big Rapids facility because small businesses like Original Footwear have access to many contracts that are not available to large corporations under U.S. legislation.
The terms of the deal have not been disclosed.
Based in Morriston, Tennessee and born in 1969, Original Footwear is a small firm that has specialized since then in the manufacture of military boots products, and developed the Altama brand. It also makes boots for uniformed safety and service professionals under the SWAT brand name. The company has developed and patented a special technique for molding and attaching a rubber sole to a welted upper.
Under the new agreement, Wolverine has also transferred its outstanding contracts with the Department of Defense to Original, with effect from Sept. 29. On the other hand, Original will become a supplier of footwear to Wolverine for certain products currently made at the Big Rapids facility. Wolverine will also retain the Bates brand, continuing to operate the civilian and military exchange businesses under this brand name.
Wolverine had made significant investments in the Big Rapids plant, which is located less than 50 miles away from its head office in Rockford, Michigan. Last year, it spent about $1 million on a 16,000-square-foot expansion of the factory, adding also a new warehouse for incoming raw materials and creating 250 new jobs. The investment reportedly helped the group to honor two big new contracts for the U.S. Marines and the Afghan military.
The whole manufacturing facility, which had been originally built in 1964 to make Wolverine and Hush Puppies branded shoes, employs some 600 people and measures a total of 80,000 square meters. In addition to Bates shoes, it has been manufacturing some Hytest and Merrell styles for Wolverine. It was also going to make some Saucony footwear styles.
Typically, military contracts make for smaller profit margins than consumer-oriented businesses. In a bid to improve its profitability, Wolverine has been cleaning up its product range since its acquisition of Collective Brands in 2012, which turned it into the owner of 16 different footwear brands. The group stopped developing apparel under the Merrell brand. It then sold Robeez, a children's footwear brand last December, and licensed out its much bigger children's brand, Stride Rite. This past summer it divested Sebago, which was in some ways cannibalizing Sperry, a bigger brand of boat shoes in its portfolio.
Observers are wondering what will be the company's next move on the merger & acquisitions front. The takeover of an outdoor apparel business could help it to develop in expertise that it may be able to apply to Merrell and other brands to create some new and meaningful brand extensions.