Tuesday, January 23, 2001
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Posted on: Tuesday, January 23, 2001

Struggling Converse closing plants, moving production

Associated Press

BOSTON — Sneaker-maker Converse Inc., best known for its basketball and "Chuck Taylor" brand shoes, is closing three North American production plants and shifting production to Asia as part of a Chapter 11 bankruptcy reorganization.

The Chuck Taylor model of Converse All Star basketball shoes is one of the company’s most popular.

Associated Press

The 93-year-old company said yesterday it plans to close its plants in Lumberton, N.C.; Mission, Texas; and Reynosa, Mexico, by March 31. The three plants employ about 1,000 people.

Converse said it plans to become exclusively a licensor of Converse-brand products — a model it has already adopted for overseas sales.

"One could perhaps criticize us for holding on longer than most," chairman and chief executive Glenn Rupp said in a telephone interview yesterday. "If you look at our major competitors, with rare exceptions, all of their products are manufactured in the Far East."

Converse, which faced a Jan. 31 deadline to satisfy its creditors, missed a $25 million interest payment in June. On Sept. 30, it listed assets of $202.1 million and debts of $226.2 million.

Converse reported a net loss of $6.3 million, or 36 cents per share, for the third quarter ending Sept. 30, 2000.

Rupp insisted the Converse brand and sales are strong, but the company is simply too overwhelmed by debt dating back to its 1995 acquisition of apparel-maker ApexOne. Converse sued ApexOne for fraud and deception after the acquisition, and received a $13.7 million jury award, which Rupp said was far less than the actual damages.

It also suffered through a dramatic slump in the athletic footwear market worldwide in 1998 and 1999.

"We certainly didn’t have the wind at our back," Rupp said.

The company, founded as the Converse Rubber Company in 1908 in Malden, Mass., got a big boost in 1921 when basketball star Chuck Taylor joined its sales force and traveled the country, hosting basketball clinics and selling shoes. The old-style, Chuck Taylor shoes came back into fashion in the 1980s.

Converse has tried to diversify beyond basketball shoes, which Rupp says now account for less than 20 percent of sales, shifting its focus to leisure-wear lines like Chuck Taylor All-Stars and skateboarding shoes.

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