Shoemaker Annie Mohaupt nearly closed down a year ago after her move to make sandals in China proved a bust. The sandals could easily be pulled apart.
She looked into what it would cost to make her sandals in another country but returned production to Chicago. The decision, she said, allows her to tap into growing demand for U.S.-made products and to utilize manufacturing technology that makes her company, Mohop Inc., a global competitor.
"I have a factory," Mohaupt said, her statement reflecting her evolution from thinking of herself solely as a designer. As a manufacturer she understands she has control over the quality of her products — a key to sales and growth. "I'm happy but it's also intimidating. There is a lot to manage and wrap my head around."
Mohaupt's tale is illustrative of what manufacturing experts and politicians have been saying for quite some time: American manufacturers can be successful and create jobs by using the latest technology in producing and developing products.
So far this year, Mohaupt has sold about 1,500 pairs of sandals for about $158,000, she said. Mohaupt credits Facebook fans and word-of-mouth recommendations for a 500 percent increase in sales this fall over a year ago, and she expects to sell about 5,000 pairs of sandals in 2013. When she reaches annual sales of 10,000 pairs, Mohaupt said she'll need to invest in more equipment, like a new wood-cutting machine.
"I want for her to be making her shoes in the U.S.," said Greg Kaleel, owner of American Male & Co. a family-owned retail shop in Oswego, adding that his customers will pay more for shoes made here. "That's how important the 'made in America' is."
On a recent evening, the sweet smell of burned walnut filled Mohaupt's basement shop in a three-story building in Chicago's River West neighborhood. The smell emanated from a computerized machine about the size of a pingpong table cutting walnut blocks into triangles with concave curves and arches. Those curves support the heel and arch of a woman's foot and create a sleek, sophisticated look.
An architect by training, Mohaupt, 37, feeds her three-dimensional designs into a program that converts it into letters and numbers and tells the machine where to cut. That was the easy part for her to learn. To operate the machine, Mohaupt relied on a tutorial from the machine-maker and learned the rest via the Internet.
The soft-spoken woman employs three people, including an office manager and a young designer. If sandals sell as planned, she would hire four to six temporary workers in the spring. That's when sales typically ramp up after the winter lull. Mohaupt wants to expand her product line to lessen her dependence on sandal sales. One idea is a moccasin she can sell in the cold months.
Mohaupt has come a long way since 2005, when she cut and glued layers of plywood by hand to make her sandals. Her early versions featured a cylindrical wooden heel and elastic loops on each side of the sole that acted as guides for ties or ribbons that customers could change at will — her signature design.
She sold her first sandals for $70 at a craft fair and appeared to be off and running. The bliss of her success crumbled the following morning when customers complained that the shoes easily came apart. The heels broke off and the loops snapped. In effect, the stumble marked the beginning of her apprenticeship as a manufacturer.
Mohaupt spent the next year quizzing seasoned shoemakers and shoe repairers about how she could improve the quality of her shoes. Ultimately, she decided that her sandals should be able to withstand 100 miles of use. To test her designs, she wore her sandals while taking her dog on five-mile treks.
"I lost some weight," she said. She also test-marketed the evolving sandals by mailing samples to her first customers. Some got up to five pairs as Mohaupt developed — and later patented — a system to keep the elastic loops in place. One problem licked, she then focused on the labor involved.
Cutting the plywood by hand was grueling work in its own right. And then she had to glue together the layers. "I would end up covered in glue," she said.
So Mohaupt began experimenting with wooden blocks, which she'd sculpt with a saw into wedges. That eliminated having to glue together layers of plywood but still was physically draining.
That's when she made a decision that would forever change her business. In 2009 she bought on credit a $70,000 computer-driven machine that could read her 3-D designs and cut heels in minutes, saving hours of labor. The machine also allowed Mohaupt to experiment with new designs. For example, she could for the first time produce curved heel bases and make shoes with added arch support.
Demand grew steadily, which should have been a good problem. But even with the machine she couldn't keep pace with orders. Mohaupt tried training people to make the sandals but found that she couldn't train them and make shoes at the same time.
That's when she first considered outsourcing production. She tested a Canadian shoemaker but severed the relationship after it sent her a shipment of poorly made shoes. Mohaupt also was unsuccessful in lining up production in Argentina.
Then, suddenly, a competitor emerged that jolted her into making a decision that ultimately would nearly bring down her company. The competitor was selling sandals almost identical to hers and nudging her sandals out of local shops she had supplied for years. Its prices also were lower because it was producing its sandals in China. She faced being driven out of business, she said.
She considered suing the competitor, but her lawyer told her she'd be wasting her time and money. She needed to figure out how to stay ahead. "I couldn't let people take away what I had worked so hard for," she said.
Determined to fight for her business, she booked a flight to China and met with two so-called sourcing agents, who act as middlemen in lining up factories to produce outsourced goods. The pair, an American man and a Chinese woman, had been trying to persuade her for almost a year to make her shoes in China.
A week later, she was in Dongguan, a manufacturing city, and the agents took her to a factory that made high-end fashion shoes for internationally recognized brands. The factory owner boasted about the high caliber of the factory's customers and reassured her that its shoes were high quality.
She gave him the thumbs-up to produce her sandals and returned to the U.S. to put together instructions and videos on how to make her sandals. If China worked out, Mohaupt planned to rely on her sourcing agents to also market her sandals to China's expanding middle class.
As the months rolled by Mohaupt suspected there were manufacturing problems, and when the prototypes arrived, her instincts proved on target. She detailed how to fix the issues and sent them back to the factory. Racing against a tight deadline to deliver the shoes by spring 2011, Mohaupt ordered the first batch of Mohop sandals — 1,000 pairs in six different styles.
The shipment arrived in February 2011. Mohaupt immediately tried on a pair. The shoes held together for the rest of the day and she went to bed relieved. The next day, as she was walking out of a store she heard a pop. She rushed back to her shop, where she found that the elastic loops had snapped. And she burst into tears.
"My world was falling apart," Mohaupt said.
As she unpacked more boxes containing different sandal styles, she found more problems — damaged wood and hanging threads. A water-resistant finish hadn't been applied to some sandals. Others had loops too small to lace a ribbon.
"These are supposed to be 'luxury' shoes, but I don't think the quality of some of the shoes matches up with their price point,'' Mohaupt wrote to her sourcing agents in March 2011. "As this is our launch collection, the quality issues are very embarrassing, and what should be a joyful time is marred by all these problems.''
She tried to halt a second shipment of 1,500 sandals, but learned it was already en route. The agents, in short, said there was not much they could do. Mohaupt had approved the prototypes without putting them through a rigorous test. Once the shipment was out the door, it was a done deal, Mohaupt said.
As she repaired the sandals, she realized the Chinese factory had skipped important steps in production that weakened the structure of the sandals. "I never realized that I should try to see if the nails come out,'' she wrote to her agents.
It was yet another costly mistake. In retrospect, Mohaupt said that to guarantee the quality she should have supervised the production.
Mohaupt spent the summer fixing the sandals. At times she worked too quickly, making mistakes, a problem that worsened when some shops decided to drop her as a supplier.
Kevin Fitzpatrick, who invested $50,000 in Mohaupt's business, said he was disappointed when the Chinese deal fell apart. "Annie was very trusting," he said.
By the end of 2011 Mohaupt was essentially broke. While that year's revenue was $141,000, she had spent about $160,000 on the Chinese-made sandals, including additional materials and labor to try to repair them. And she still owed on her cutting machine.
It was a time of soul-searching.
"Some companies just fold," Mohaupt said, but she didn't want to go back to being an architect and she didn't want to do anything else with her life.
At the same time Mohaupt learned that the building where she was renting space was to be demolished and she needed a place to keep her wood-cutting machine. "I had to have somewhere to put it, so I had to have a new workshop." Within a month, she rented a basement unit at 700 N. Carpenter St.
"I was sick of feeling sorry for myself and feeling depressed, and sales started picking up," Mohaupt said. In the spring she hired back workers, looked around at her equipment and thought, "Oh, it looks like I have a factory."
Mohaupt realized that by fixing the sandals she had learned how to run a factory. She also realized that the technology she had in her shop gave her an advantage over manual labor in China.
Still, she needed a product that she could make at a faster pace and at a lower cost. In October, she introduced a hybrid between her wooden sandals and the flats, which she calls Mopeds by Mohop. She added a triangular piece of wood between a quarter-inch of foam and the sole, giving the flats a heel and making them more flexible because the wood ends right before the toes.
The sandals come in three different heights and can be made at a fraction of the time it takes for her to make the wedges. Mopeds are also priced lower, between $124 and $164. The flats are $84. The wedges are between $340 and $415.
"I was intimidated by the idea of having my own factory,'' Mohaupt said. "I thought it was something I couldn't do, but now I realize that it is something I have to do.''