brand challenges

New Balance Faces U.S. Manufacturing Challenge

Posted by Mark J. Miller on August 3, 2011 11:00 AM

The U.S. shoe industry once employed about 250,000 back in its 1950s heyday, but 99% of shoes sold in America are imported from countries where manufacturing and employee costs are much cheaper.

Today, there are only about 15,000 U.S. employees in the shoe industry and about 1,000 of them work in the five New England factories that New Balance operates, according to The Seattle Times.

New Balance — which offers custom-designed shoes at its U.S. factories — has so far resisted the urge that every other major American shoemaker has succumbed to ... namely, moving its factories to other countries. Despite that loyalty, a new change in federal laws could hurt New Balance’s ability to maintain them.

The government is in the midst of negotiating a free-trade agreement with eight countries, including Vietnam, one of the leading exporters of shoes to the U.S., the Times reports. The Trans-Pacific Partnership would lift a tariff those countries pay, which would allow shoe prices to be cheaper or manufacturers to increase their profit margins. For Americans, it wouldn’t just mean cheaper shoes.

The hope would be that the country would be able to export more of its own products to those eight countries, thus creating jobs. New Balance is hoping “an unusual exemption can be created in any agreement with Vietnam to maintain the tariff on the shoes New Balance makes in the United States,” the Times reports.

"Making footwear in the U.S. isn't as easy or as profitable as making them overseas. If it were, every company would still be doing it," New Balance CEO Rob DeMartini said, as the Times reports. "We will continue to ask our negotiators to embrace President Obama's manufacturing agenda and to save what is left of our nation's once-vibrant shoemaking economy."

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