New England shoe industry decline

Same export-of-old-equipment pattern as steel — North Shore broker rebuilding 1930s shoe machines for sale to third-world manufacturers who shipped product back as low-cost shoes. Includes the Gordon McKay / Harvard endowment backstory.

This has happened many times. I ran into this in shoe manufacturing back when I was an assistant professor. New England used to be the center of shoe manufacturing. The Gordon McKay School of Engineering at Harvard, of Applied Sciences — Gordon McKay was a wealthy shoe merchant in Boston who gave 10 million dollars to Harvard in the early 1900s, and now the Gordon McKay name is all over their School of Applied Sciences, professorships and everything, out of shoe manufacturing. I had to go up to the North Shore — there was a guy going to these old mills, taking the old shoe machines from the 1930s, rebuilding them, and selling them to third world countries. They would make footwear which would come back to the United States as low-cost shoes.

Boston basement warehouse refurbishing 200-year-old shoe-making machines to ship to South America — same pattern as the 1980s steel-equipment sales. The shoes came back from South American labor; "they should have melted it down." Used to make the don't-sell-your-old-equipment-to-your-future-competitor point.

These types of lessons we have to learn over and over again. One of the great industries in the United States — or in New England — back a hundred and twenty-five years ago was the shoe industry. This is where they made shoes. I remember as a young assistant professor going to this basement warehouse in Boston, in an old building that had probably been built two hundred years before, and they had all kinds of shoe-making machines, and they were refurbishing them from these old mill buildings in New England and selling them in South America. Rather than selling the old equipment, they should have melted it down, because those shoes ended up coming back being made by lower-cost labor in South America. Same thing happened in the steel mills, and it took the management a little time to realize: selling your old equipment to someone who has an economic advantage of low labor costs just means that you have worse competition that you have to face.