ACADEMICS STUDYING... NEW BALANCE?

Alternative Path? - NEW BALANCE
  • New Balance continues to make some (but not many) of its shoes in five U.S. factories; New Balance has 1600 U.S. workers (7); Most shoes are made in China.
  • Feb 2 2006 New Balance goes to China. See this NICNET report on labor conditions http://www.nlcnet.org/news/china/pdfs/Li_Kai_Report_Web.pdf New Balance claims "Made in the US" label, but this is a deal struck with a state legislature; actually most of New Balance production is outsourced. If you contrast what New Balance claims as its ethical code, with the stage-managed cheers, the ways they union-bust, hire underaged women workers, etc., with this report you will see the difference bewteen IMAGE STORY CONTROL and the COUNTERSTORY resistance of the workers.
  • The Federal Trade Commission has attempted to determine what it means to say a product is "made in" the United States... shoes produced in New Balance U.S. factories are made by U.S. workers using both U.S. and imported materials" (3, 4).
  • New Balance defines "Made in US"  U.S. as at least 70% of labor and materials (5).
  • New Balance - "1994 we have increased our manufacturing jobs by 23%." (4).
  • Pou Chen Corp. plant in Dongguan,
    China. The factory makes Nike, Adidas, New Balance, Asics and other brands of shoes (Jeff Manning, Oregonian 1998).

How shoemaker New Balance keeps some production at home

    -- U.S. employees get constant training, master a variety of skills, and work in small teams
    -- Managers are creative in adapting new technologies to shoemaking
    -- The productivity gains allow U.S. workers to produce a pair of shoes in 24 minutes, vs. 3 hours in China. That whittles the cost per pair of shoes to $4 in the U.S., vs. $1.30 in China.
February 26, 2001


COMMENTARY; Number 3721; Pg. 92
HEADLINE: LOW-SKILLED JOBS: DO THEY HAVE TO MOVE?
BYLINE: By Aaron Bernstein; Bernstein writes about labor markets and social issues from Washington. BUSINESS WEEK.

BODY:
Stroll through New Balance Athletic Shoe Inc.'s factory in Norridgewock, Me., and you will see workers using high-tech skills to make a low-tech product. Well-trained, $ 14-an-hour employees work in small teams, perform a half-dozen jobs, and switch tasks every few minutes. Some operate computerized equipment with up to 20 sewing-machine heads running at once. Others control an automated stitcher guided by cameras, which allows one operator to do the work of six using ordinary sewing machines.
 
Now, visit a Chinese subcontractor's factory that makes the same shoe for New Balance. You might think you had traveled back in time 100 years. In the factories that manufacture shoes for New Balance, Nike, Reebok International, and other U.S.-based athletic-footwear companies, hundreds of women hunch over sewing
machines much like ones used in their grandmothers' time. The story is the same across China and in Indonesia and Vietnam. Young women in their teens or early 20s, with little education and few skills, put in long hours six days a week, usually performing the same task in mind-numbing repetition for 20 cents to 40 cents an hour...

 

If nothing else, New Balance's efforts show that it's possible to improve jobs instead of move them...
The combination of teams and technology has slashed the cost disadvantage of producing in the U.S...

WHAT IS THE OTHER SIDE OF THE STORY?

NEW BALANCE - History

  • 1906 - Founded William Riley in Belmont, MA, as the New Balance Arch Company; manufactured arch supports and orthopedic shoes (1, 2).
  • 1956 - Paul Kidd bought the company
  • 1972 - New Balance was purchased by current Chairman and CEO James (Jim) S. Davis; Sales were barely $100,000 a year (7); "New Balance continued to build shoes in America, stitching the tongues with a MADE IN USA label. The idea, Jim Davis would tell his employees, wasn't to catch Nike or Reebok, but to offer customers an alternative."
  • 1980s - New Balance sent most of its production to Vietnam, Indonesia, Bangladesh, the Philippines, the Dominican Republic, and Mexico -
  • Early 1990s - dispute with the US government over the Federal Trade Commission's "Made in USA" labeling standards; New Balance claimed 75% made, but the FTC standard is 100%.
  • 1995 Brief filed with FTC about New Balance not being Made In USA New Balance Athletic Shoe, Inc. acted in bad faith when the company emblazoned their
    product with "Made in USA" labels when the soles of their shoes, constituting 29% of the product, were made in China. (Bain's 1995 Brief)
  • Late 1990s production shifted to China; By 1998 New Balance imports from China increased more than 36 percent over the first nine months compared to 1997.
  • 1997 - In an 11th-hour push labor leaders and a bipartisan group of politicians torpedoed the FTC change of NOT Made 100% in USA (7).
  • 1999- New Balance becomes fourth-largest athletic-shoe maker in U.S. and the fifth-largest in the world.
  • 2000- New Balance reexamined its China factories and found most of the sweatshop charges published in Business Week to be accurate (Sweatshop Watch, Nov 6; Business Week).
  • 2001- In the past 5 years New Balance doubled its U.S. work force.

What is NEW BALANCE STRATEGY?

New Balance built an image as the anti-Nike (Gay, Jason Feb 1999). New Balance sold itself as Made In the USA, but in reality most of New Balance production comes from China and other parts of Asia.  Only 1600 workers in five factories produce New Balance. And in these factories, the component parts are not 100% USA made. New Balance estimates it at 75%. 

Nevertheless it is possible that modern management and production methods can produce high volume with fewer workers and offset cheaper wages in Asia. It remains to be see if New Balance's  U.S.A. factories and workers can close the gap by upgrading skill and technology.  New Balance gives 22 hours of training in teamwork and production techniques to new employees.

 

The MADE IN THE USA STRATEGY

New Balance continued to make shoes in the U.S. with the MADE IN THE USA label until the early 1990s when production began to shift to Asia.  This lead to a dispute with the US government  over  Federal Trade Commission's "Made in USA" labeling standards. In  an 11th-hour challenge in late 1997, labor leaders and a bipartisan group of politicians torpedoed the FTC effort to revoke Reebok's MADE IN THE USA.

Feb 2 2006 New Balance goes to China. See this NICNET report on labor conditions http://www.nlcnet.org/news/china/pdfs/Li_Kai_Report_Web.pdf New Balance claims "Made in the US" label, but this is a deal struck with a state legislature; actually most of New Balance production is outsourced. If you contrast what New Balance claims as its ethical code, with the stage-managed cheers, the ways they union-bust, hire underaged women workers, etc., with this report you will see the difference bewteen IMAGE STORY CONTROL and the COUNTERSTORY resistance of the workers.

1999 - February 14 - OFF BALANCE - by Jason Gay - Boston Phoenix  Boston-based New Balance built an image as the anti-Nike. Now America's feel-good shoe company finds itself in the midst of an ugly labor dispute... New Balance's increased reliance on overseas production has not gone unnoticed

New Balance also presents itself to special niche markets, such as vegans - Vegan New Balance Shoes - guaranteed no sweatshop work and no animal products?
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