Vibram’s headquarters in Italy’s Lombardy region is at the epicenter of the coronavirus crisis. The company’s three main manufacturing facilities in Italy, China and the U.S. have been equally caught in the crossfire of a rapidly unfolding pandemic and its associated economic repercussions.
But even though the company’s business has been in a state of disruption for two months, it says that overall revenue is only down a “recoverable” 10 to 15 percent. Vibram mitigated extreme losses by nimbly shifting its business and production capabilities across its global supply chain — adapting to each day’s news as the pandemic unfolded, first across Asia and now within Europe and North America.
“This is one of competitive advantages of having three manufacturing facilities,” said Vibram U.S. president and global chief brand officer Fabrizio Gamberini. “If we only produced in Asia or Italy that would be an issue for us, but this way we can share the pain. The goal is to produce the same technology in the three global manufacturing locations we have.”
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Vibram’s multiprong approach includes its own private-label shoe business, third-party footwear manufacturing, a robust division for shoe repair and cobbler goods as well as a contract with the U.S. military to produce shoe soles for all military personnel.
Production is split across three continents, with China responsible for 50 percent, the U.S. accounting for 25 percent and Italy the remaining 25 percent.
Chinese production, headquartered in Guangzhou, was shut down for nearly 10 weeks. Vibram quickly shifted some priority orders to its Italian and U.S. facilities to stem the loss of business. Other orders took care of themselves, as footwear manufacturing in Vietnam — where a majority of shoe ‘uppers’ are produced — had also come to a standstill as a result of COVID-19, lessening the demand for immediate shoe sole production.
“Lots of companies are leveraging shoe makers in Vietnam and Thailand, so the demand for outsoles was lower as a consequence. If they are not able to produce the upper [part of the shoe] they are not needing soles,” said Gamberini.
“It was an issue of defining priorities and we didn’t fulfill many of them as clearly China has capacity much larger than what we have here [in the U.S.],” Gamberini continued. “We are able to overcome this mainly through communication, we have daily conference calls for two hours to talk about the ramifications and to try and work with accounts. Some companies are clearly shut down, so they go to priority number 20, while others are still open so we try to serve them right away.”
In the last few weeks, Vibram’s Chinese manufacturing facility has reopened and is now between 75 and 80 percent at full running capacity by Gamberini’s estimate. But as the Chinese economy began to hum back into order, Italy and the U.S. began to shut down under government mandates.
Vibram’s Italian manufacturing facility has been closed for nearly two weeks and the company is looking at ways to shift some of that production elsewhere. Due to Vibram’s military contract, the company’s U.S. facility was granted essential services status earlier this week.
“We are discussing if there are ways to come up with immediate and urgent needs that Italy may have — we can do most of that technology here [in the U.S.], too,” said Gamberini.
“We don’t want to disservice U.S. military, we need to prioritize that contract. We have a sister company, in South Dakota, producing for us in the U.S. as a valve for production. It’s a requirement of our military contract so that if something happened to our Massachusetts plant, we have a back-up plan to shift production. This may end up covering a small part of what Italy needs,” said Gamberini.
Vibram is looking at diverting some of its Chinese manufacturing facility to produce masks while its U.S. facility could make paramedical shoes used by doctors and nursing staff working on the crisis.
Last week Vibram announced that amid COVID-19-induced uncertainty, it is issuing bonuses to each global production employee for meeting goals set in 2019. “We want to invest in production people globally to support them in a moment when we are bombarded by negative news. We are trying to help the people to have a piece of mind in this situation,” said Gamberini.
The real test will come this summer when the company enters production of fall-winter goods. Said Gamberini: “That’s when we will assess the temperature of the situation and see if the repercussions of this crisis is big. We’ll see the orders. As of now this is something that’s still recoverable.”