A U.S. Shoe Town Tries to Rebuild From Warren Buffett’s ‘Worst Deal’ Ever
Two decades after Dexter Shoe closed, $325 hand-sewn penny loafers may hold the key to keeping the craft alive in Maine—and U.S. jobs onshore.
MaineSole’s workshop occupies an old wool mill in Dexter, Maine
Photographer: TJ Proechel for Bloomberg Businessweek
The morning of the job fair was frigid even for Dexter, a town of fewer than 4,000 people in central Maine: –17F. Dick Hall, a co-founder of MaineSole and one of the event’s organizers, arrived a few minutes early to find a crowd waiting on the snow-covered sidewalk in front of the municipal building. “I said, ‘Holy smokes! It’s cold out there. Let them in,’ ” he recalls.
It was January 2014, two decades since Dexter Shoe Co., once the town’s main employer, had been acquired by Warren Buffett for $433 million. At the time, the business was churning out 7.5 million pairs of modestly priced wingtips, boat shoes, and other footwear annually for retailers such as Nordstrom Inc. and J.C. Penney Co. But soon after Buffett took it over, the company was swamped by a tide of cheap imports, forcing it to shutter its U.S. plants. What was left of the business was integrated into another Buffett-owned company. “What I had assessed as durable competitive advantage vanished within a few years,” he wrote in a 2008 letter to Berkshire Hathaway Inc.’s shareholders. The man often cast as America’s savviest investor called it “the worst deal” of his career, because the acquisition was made with Berkshire’s stock. “I gave away 1.6 percent of a wonderful business—one now valued at $220 billion—to buy a worthless business,” he said.