U.S. Shoe Industry Announcement of Trade Adjustment Assistance Program.

A program to revitalize segments of the American shoe industry injured by foreign competition was announced today at the White House. The plan includes formation of special teams of experts to assist affected companies in the design of "customized" strategies for recovery.

The 3-year, $56 million program was developed by the Department of Commerce, in consultation with other Government agencies, in response to President Carter's directive of April 1 to provide "an expanded and more effective program of assistance."

It was announced by Under Secretary of Commerce Sidney Harman and Stuart Eizenstat, Assistant to the President for Domestic Affairs and Policy.

Harman said the program reflects the President's observation that, "Over the long haul, the solution to difficulties in the shoe industry lies not in the restriction of imports but elsewhere--in innovation and modernization of ,our own production facilities and and the financing to make these possible."

The program will establish specialist teams of experts in the fields of management, production, marketing, and finance to provide consultative services to the estimated 150 trade-injured shoe manufacturers in 36 States. The firms employ approximately 80,000 employees--half of all U.S. nonrubber footwear workers. They produce 230 million pairs of shoes annually, which is approximately half the U.S. production total.

"The teams, each of which will consist of two to five experts drawn from the private sector, will work with the firms which indicate interest to develop custom analyses of their particular problems and to develop solutions. These solutions may involve new management initiatives, production, technology, or marketing improvements, worker-management innovations or a combination of these factors," Harman said.

The specialist teams will also assess the need for additional expertise and talent in each firm and help each company fill its needs. To aid in this effort, the Government will sponsor management development and technical training programs for industry members. The Commerce Department expects that teams will be in the field in October of this year.

Approximately $40 million will be made available to firms for investment in new plant and equipment, new technology, and, where they are integral parts of recovery programs, acquisitions, mergers, or other cooperative arrangements among industry members.

Harman explained that since the $40 million of Federal support for investment by the industry will take the form of loans or loan guarantees, a substantial portion of the Federal cost of the program should be recovered. Cost of the custom analyses of companies and training programs are expected to run to some $14 million over the 3-year period.

Another major aspect of the program is the voluntary cooperation of retailers in increasing orders to trade-injured shoe manufacturers as a spur to production.

"A number of major retailers have indicated their willingness to participate actively in such a program, and to facilitate increased orders," Harman said. "We will be providing them with information on the shoe firms' major product lines and size of orders that can be accommodated by those manufacturers who wish to participate in the program.

"As the consequence of increased volume created by increased orders, the affected companies should be able to cut production costs. This will permit them to reduce the selling price of shoes to be more competitive with foreign imports," Harman said.

"We think this program has advantages for manufacturers, labor, consumers, and the taxpaying public," Harman commented. "No new legislation is required to implement the recovery program. It should increase shoe industry employment. It should have no appreciable effect on the price consumers pay for shoes. The plan is a temporary mechanism designed to revitalize an industry and make it selfsufficient. It is a one-time experiment by the Federal Government operating in a new role--that of facilitator. The Government will do its job over the next 3 years and then get out. At that time a thorough assessment of the results and conclusions will be developed."

He said that the Economic Development Administration of the Commerce Department is "gearing up to contact all firms in the shoe industry about the program and to accelerate its certification process for companies eligible for assistance."