LaCrosse Footwear, Inc.

LaCrosse Footwear, Inc.

1407 St Andrew St.
La Crosse, Wisconsin 54603
U.S.A.
(608) 782-3020
Fax: (608) 782-3025
Web site: http://www.lacrosse-outdoors.com

Public Company
Incorporated: 1983
Employees: 1,432
Sales: $122 million (1996)
Stock Exchanges: NASDAQ
SICs: 3021 Rubber & Plastics Footwear; 3143 Men’s Footwear Except Athletic; 3144 Women’s Footwear Except Athletic; 6719 Holding Companies, Not Elsewhere Classified

Celebrating its 100th anniversary in 1997, LaCrosse Footwear, Inc. is the largest manufacturer of rubber, leather, and vinyl footwear in the United States. It specializes in premium-quality protective footwear for the sporting, occupational, and recreational markets. It has four major brands: the original LaCrosse brand; the Danner brand, established in 1932 and acquired by LaCrosse in 1994; the Red Ball brand, acquired in 1996; and the Rainfair brand, marketed through a joint venture established in 1996 between LaCrosse Footwear and Rainfair, Inc., of Racine, Wisconsin. The company has about 1,400 employees in six production facilities, and all of its products are assembled by hand in the United States. Sales for 1997 are projected to reach $150 million.

The company was first established in 1897 as La Crosse Rubber Mills Company, a manufacturer of rubber horseshoes, by a group of local citizens in La Crosse, Wisconsin. Led by Albert Hirshheimer, Michael Funk, and George Zeisler, the company started with 25 employees working on 160 steam-powered sewing machines. It originally planned to manufacture rubber goods of every description, with the notable exception of footwear. It soon switched from producing horseshoes to making rubber-coated fabrics and raincoats. From the beginning, La Crosse stressed “quality goods, workmanship, and honest values.”

Business was good for the La Crosse Rubber Mills in the late 1890s, and by the turn of the century the company had expanded its facilities and increased its workforce to 400 people. It was producing about 850 rubber-coated garments a day. To reduce the risk of fire, it installed the city’s first sprinkler system in its factory, which was reportedly located on land once owned by Buffalo Bill Cody. In 1898 the opening of a new addition was celebrated by a “rubber ball” for employees, complete with orchestral music. In 1899 Albert Hirshheimer took over as president of the Rubber Mills, as it was known locally.

Capitalizing on the popularity of a nonrubber rain garment called Laxette, the La Crosse Rubber Mills launched a national magazine advertising campaign in 1904 to market its clothing under the “Indian Hill Brand.” Within a few years, however, the company discontinued making rubber-coated fabrics and raincoats and started producing canvas and rubber footwear. Its workforce was reduced to 150 employees, who could produce about 1,200 pairs of footwear a day. It adopted a new slogan, “Everything in Rubber Footwear,” in 1908 and produced a line of 1,000 different styles of shoes. Among its most popular offerings were the Red Fibre Heel Brand of rubbers and overshoes built for long-lasting wear and the first buckle overshoes ever made. Showrooms were opened in a leased building on South Front Street in La Crosse, showing the company’s line of clothing as well as its popular footwear.

In 1912 two of the company’s founders, Michael Funk and Albert Hirshheimer, purchased controlling interest in the La Crosse Rubber Mills. They put Michael Funk’s two sons, Albert P. Funk and Arthur S. Funk, in charge of management and operations. Arthur S. Funk had recently returned to La Crosse from studying at the University of Notre Dame in South Bend, Indiana, where he had pioneered the development of synthetic rubber, also known as neoprene.

New Concrete Facility Built in 1913

Until 1913 the company’s manufacturing operations were housed in a wooden structure. That year the first of several concrete buildings was constructed on St. Andrew Street, directly north of the old facility. Originally three stories high and later expanded to four, the new building had twice as much space devoted to manufacturing, and the 350-member workforce began to produce 6,000 pairs of footwear a day. In 1916 a second concrete building was built, adding 75,000 square feet and doubling capacity yet again. The workforce grew to about 1,000 employees and was producing about 15,000 pairs of footwear a day. The company started its own bus line to transport workers, who had difficulty getting to work because of inadequate roads and too-short streetcar lines. With business booming, another “rubber ball” was held, with attendance reaching 5,000 people.

By 1921 production had leveled off to about 13,000 pairs per day, with a “rush” capacity of about 20,000 pairs. In the early 1920s the Funk family bought out Albert Hirshheimer, who retired as president in 1922. He was succeeded by Albert P. Funk. Soon the company started an aggressive building campaign, adding a one-story fireproof warehouse and cafeteria as well as research and test facilities. In 1923 a third four-story concrete building, plus powerhouse, warehouse, and laboratory buildings, added another 75,000 square feet. In 1927 a single-story building with a new mill room and storage areas added another 85,000 square feet. By this time the company was truly national, with a retail presence in every state. It also did a healthy export business under the direction of a New York City-based export manager.

Still growing in 1929, the company announced a 100,000-square-foot expansion that would add factory and office space as well as a new machine shop and vulcanizing area. Company president Albert P. Funk said at the time, “We are undoubtedly facing one of the brightest years in our history, with every department operating at full capacity.” He noted that sales in tennis footwear were an especially bright spot for the company. With 2,000 employees on the payroll, La Crosse Rubber Mills was named the largest employer in La Crosse in 1930.

La Crosse Rubber Mills Awarded First Army Contract in 1941

The company weathered the economic depression of the 1930s, and at the end of the decade it installed the latest conveyorized assembly-line equipment and shoe-making machinery. In 1941 it received a contract from the U.S. Army to produce 43,200 pairs of Arctic, rubbertop overshoes. It was the first of several government contracts that La Crosse Rubber Mills would fulfill over the coming years. During World War II it produced jungle rubber footwear, hip boots, four-buckle overshoes, tennis shoes, and rubbers for use by military personnel. When the war ended in 1945, the company promised all returning veterans who had worked for the company that they would either get their old jobs back or be hired for even better ones. The company also streamlined its manufacturing and fabricating processes by eliminating all bench work. Albert P. Funk died in 1945, and his brother, Arthur S. Funk, succeeded him as president of the company.

La Crosse Rubber Mills began the 1950s marketing a full line of rubber footwear, including sporting boots, tennis and basketball shoes, and novelty shoes. In 1951 it introduced the Big Chief hip boot and the Duluth work overshoe. In 1954 Albert P. Funk, Jr., became the company president, and annual sales totaled $4.5 million. Under a newly negotiated pension plan with the United Rubber Workers-CIO, 65-year-old workers with at least 25 years of service were given full payments. As the 1950s drew to a close, La Crosse Rubber Mills was offering 192 different products in eight product groups: insulated footwear, sporting boots and pacs, industrial and general business boots, farm and work overshoes, family fashion overshoes, rubber-soled canvas shoes, and vinyl plastic protective boots.

La Crosse Rubber Mills continued to grow steadily during the 1960s and 1970s at a rate of about 10 percent annually. The modern “Burly” knee-high rubber boot was introduced in 1963 and featured an innovative ankle-gripping design. During the mid-1960s the company maintained a production capacity of 20,000 pairs of footwear a day at its 350,000-square-foot facility in La Crosse and a workforce of 700 to 750 people. It advertised 31 styles of canvas shoes. By 1972 sales reached $10.5 million. The company’s workforce grew to an average of 850 during the 1970s. In 1978 Frank J. Uhler, Jr., became president, and the company stopped manufacturing and started importing athletic footwear. By the end of the decade sales reached the $20 million mark, with 80 percent of sales from rubber footwear and 20 percent from canvas footwear.

Sale to New Owners Ended Hostile Takeover Bid in 1982

In 1980 sales of canvas footwear decreased to 10 percent of sales, with 90 percent attributed to rubber footwear. With 800 employees, La Crosse Rubber Mills was the third largest employer in La Crosse. In 1982 the company had to fight off a hostile takeover bid from Endicott Johnson Co., of Endicott, New York. To avoid a takeover, George Schneider and president and chief operating officer Frank J. Uhler, Jr., purchased the company from the heirs of the founding family and other shareholders in a leveraged buyout. Schneider was a member of the company’s board of directors and husband of Virginia Funk, granddaughter of founder Michael Funk. He became chairman and Uhler remained president. As of March 1996, the Schneider Family Voting Trust owned 52.8 percent of the company’s outstanding common stock.

Company Perspectives:

Our strategy is to win the loyalty of our customers and consumers and reward the loyalty of our investors and employees.

In 1983 the company acquired an injection molding plant in Claremont, New Hampshire, that allowed it to produce low-priced boots to complement its higher-priced products made in La Crosse. Annual sales rose that year to $27 million, and the company was producing about 8,800 pairs of footwear per day, or 2.2 million pairs annually. The next year sales rose more than 10 percent to $30 million, and company employees enjoyed their first checks under a new profit-sharing plan. La Crosse also introduced the first waterproof boot with a removable liner for kids in 1984.

Adopted New Corporate Name for 1986

On December 26, 1985, the company adopted a new name, LaCrosse Footwear, Inc., eliminating the space between “La” and “Crosse” in its new logo. Under its LaCrosse label the company introduced the Iceman boot, which pioneered the use of double-insulation construction in rubber footwear. The popular Iceman boot would be worn by Iditarod dogsled winners and be used on an expedition in China that explored the frigid upper reaches of the Yangtze River. Five years later the company expanded the line with the Ice King, a triple-insulated boot rated to -100 degrees Fahrenheit. That was later followed by the LaCrosse Footwear “boot system,” a line of rubber bottom performance footwear with interchangeable liners that was designed for use in hunting, fishing, and other rugged outdoor activities.

Toward the end of the decade LaCrosse stopped importing athletic shoes from the Far East. Sales continued to grow steadily and by 1989 had reached $50 million, boosted in part by a $4.7 million contract—the company’s largest ever—with the U.S. government to produce more than 682,000 vinyl overshoes for U.S. military personnel. The company’s three-hundred-item product line reflected a shift in marketing strategy, as LaCrosse sought to offer products less dependent on weather conditions. Mild winters usually had a negative effect on LaCrosse’s sales. As a result, the company tried to place greater emphasis on its industrial and sporting footwear as it entered the 1990s.

As the 1990s began, LaCrosse continued to enjoy good relations with the U.S. military. In 1990 it received a $3 million defense contract to manufacture 300,000 pairs of mustard gasproof boots for the Persian Gulf conflict. A second defense contract was awarded in 1991 to produce an additional 700,000 pairs of the mustard gas-proof boots. As a result of its new marketing focus, LaCrosse achieved a leadership position in the sporting goods apparel industry by 1993. It had 1,465 full-time employees, who were producing 21,000 pairs of footwear a day. Sales reached $85 million, and the company was manufacturing more than 400 types of boots and rubber footwear from 170 compound formulas.

LaCrosse Acquired Danner in 1994

In March 1994 LaCrosse acquired the Danner Shoe Manufacturing Co., located in Portland, Oregon, which specialized in leather footwear for hiking, hunting, fishing, and cross-training. Danner was originally founded in 1932 in Chippewa Falls, Wisconsin, by Charles Danner and his father-in-law, William Weyenberg, as a small family factory that handcrafted work shoes. After Weyenberg passed away in 1933, Danner relocated his family and business to Portland in 1936. By the end of World War II, Danner had become established as a high-quality manufacturer of popular logger-style work boots. During the 1960s Danner produced leather hiking boots that were light and flexible, yet sturdy and comfortable. In the 1970s Danner designed and patented a unique way of making a waterproof boot using the first free-hanging Gore-Tex inner bootie.

LaCrosse acquired Danner for $13.5 million in cash, 277,778 shares of common stock ($13 per share market value), and the assumption of approximately $4.4 million in liabilities. In April LaCrosse completed its initial public offering (IPO), resulting in net proceeds to the company of $17.6 million, plus an additional $2.7 million the next month in connection with the exercise of an over-allotment option granted to the underwriters. LaCrosse used the proceeds from the IPO to reduce short-term debt taken on to finance the Danner acquisition, pay off $3.4 million of long-term debt, and plow into working capital. Sales for 1994 reached an all-time high of $108.3 million. New product introductions included the Firetech line, firefighting footwear that fit like a shoe and had a patented steel arch guard that offered greater protection against punctures. Frank J. Uhler, Jr., retired as president and chief executive officer and was succeeded by Patrick K. Gantert.

Sales for 1995 were down about 9 percent to $98.6 million. Even though LaCrosse had been focusing on making its products less weather-dependent, sales were affected by the mild winter weather during the first quarter of the year. Sales were also affected by softening in the retail market during the fourth quarter of 1995. However, the harsher winter weather had a favorable impact on first quarter earnings in 1996. It had the effect of helping to clear retailers’ shelves, resulting in larger advance orders for the fall.

Major Acquisitions in 1996

LaCrosse made two major acquisitions in the first half of 1996. The first was the acquisition of Red Ball, Inc., a leading designer, manufacturer, and marketer of branded outdoor sporting and protective footwear used in hunting, fishing, and other outdoor activities. Red Ball, with 1995 revenues of $5.8 million, had been operating under the protection of Chapter 11 of the Federal bankruptcy code since February 1996. The acquisition of Red Ball for approximately $6 million in cash provided LaCrosse with the opportunity to expand the distribution of the Red Ball brand to mass merchants as well as to introduce new products to the LaCrosse line. In July LaCrosse began manufacturing Red Ball products at its Claremont, New Hampshire, facility.

The second major acquisition involved establishing a joint venture in May 1996 with Rainfair, Inc., a leading designer, manufacturer, and marketer of protective clothing and footwear for the safety, industrial, and uniform markets. The company was based in Racine, Wisconsin, for more than 100 years. The joint venture between the two companies assumed the old Rain-fair name and purchased the assets of the old Rainfair, Inc. Rainfair’s owner and CEO, Craig L. Leipold, continued as CEO of the joint venture. The joint venture brought together complementary product lines and brand names, providing significant cross-selling opportunities, especially in the industrial market.

With LaCrosse set to celebrate its 100th anniversary in 1997, it occupied a leadership position in its established markets. Recent acquisitions have increased its product offerings and provided it with an even stronger position in the sporting and outdoor, farm and general utility, and occupational and children’s markets for rubber, leather, and vinyl footwear and rainwear. After retiring all of its preferred stock in 1996 to lower its borrowing costs, LaCrosse was in excellent financial condition to pursue even higher levels of sales in the coming years.

Further Reading

“LaCrosse Footwear, Inc. Set to Purchase Assets of Red Ball, Inc.,” press release, May 8, 1996.

“LaCrosse Footwear, Inc. to Form Joint Venture with Rainfair, Inc.,” press release, May 17, 1996.

“LaCrosse Footwear Reports First Quarter Results,” press release, April 19, 1996.

“LaCrosse Footwear Reports Second Quarter Results,” press release, July 26, 1996.

“LaCrosse Footwear Today Reported Increased Net Income for the Third Quarter,” PR Newswire, October 18, 1996.

—David P. Bianco