• Materials prices fall whenever global production levels drop below 90% of global production
capacity and materials prices rise when global production levels rise above 110% of global
plant capacity. Should global shoe production fall below 90% of the footwear industry's global plant
capacity (not counting overtime production capability), the market prices for both standard and
superior materials will drop 1% for each 1% that global shoe production is below the 90% capacity
utilization level. Such price reductions reflect increased competition among materials suppliers for the
available orders. On the other hand, when global production levels exceed 110% of the industry’s
global plant capacity (reflecting use of overtime production), the prices of both standard and superior
materials will go up 1% for each 1% that global production levels exceed 110% of global production
capacity. Thus once overtime production exceeds a global average of 10% of installed plant capacity
worldwide, then material suppliers are able to exert pricing power and can command higher prices. In
the event global production reaches the 20% overtime maximum, the prices of standard and superior
materials will be 10% higher than they would otherwise be.