Should America Build a Strategic Shoe Reserve?
- "Under a provision of 1941 legislation known as the Berry Amendment, the Defense Department must buy boots, uniforms and certain other items that are 100% U.S.-made. It can make exceptions if U.S. manufacturers don't have the capacity to make what it needs, and has done so for athletic shoes needed for boot camp."
- "But now, under pressure from the domestic shoe industry and lawmakers, particularly those from Massachusetts, Maine and Michigan that have some of the country's few remaining shoe plants, the military is going to review its exemption for U.S.-made sneakers."
- "New Balance Athletic Shoe Inc. and Wolverine Worldwide Inc. both say they could provide 100% U.S.-made athletic footwear for the military. Others expressing interest include Capps Shoe Co., a maker of military shoes, and two producers of military boots: Wellco Enterprises Inc. and the Danner unit of LaCrosse Footwear Inc."
Takeaway from Hedgeye’s Brian McGough:
While this is good on the margin for Wolverine Worldwide (WWW), the reality is that the lowest margin customer in the country is…
The US Government -- unless you're supplying rockets and other things that explode (and even then, margins are questionable).
But hey, the orders tend to be steady, and they always pay on time.
Net/net, we'll take it.
