CANVAS + RUBBER - The company was finding its footing when, in 1901, U.S. Rubber Co. announced a 25% reduction in rubber footwear prices, initiating a price war within the market. If Hood Rubber Co. (known more simply as “Hood”) failed to match their prices, heavy operating losses would force the company to shut down. Hood chose to compete. At these fire-sale prices, customers purchased larger quantities. But while the increased production resulted in reduced fixed costs, goods could not be produced at a profit. The first few months of operation at the reduced prices resulted in substantial losses, rapidly depleting Hood’s operating capital.
Fortunately, Hood began producing a new type of shoe that required less rubber to manufacture, with a canvas upper and a rubber sole. Over the next decade, new types and styles of the rubber-soled canvas-upper shoes were developed with an improved appearance. A large portion of Hood’s growth came from the extraordinary increase in sales of these shoes – the original “sneakers.”