The story of New Balance, the Boston sneaker company, helps explain why it’s so hard to make shoes in the United States — and why tariffs are a reason it’s possible at all.
Of all the sneakers available to U.S. consumers, New Balance’s are the only ones with styles made on U.S. soil. Its three factories in Maine and two in Massachusetts are remnants of an industry whose manufacturers, in droves, abandoned the Northeast for low-cost Asia and beyond.
A quarter of all athletic shoes New Balance sells in the States are made in those factories; the rest are made overseas. New Balance has not packed up entirely because it believes it should not.
One reason it has been able to make that choice: Government-imposed duties on shoes made in cheap-labor China and Vietnam, the world’s No. 1 and No. 2 shoe manufacturers, make New Balance’s higher labor costs competitive.
The minimum hourly wage in Vietnam is 33 cents, according to Mark L. Fleischaker, Washington-based trade counsel to the Rubber and Plastic Footwear Manufacturers’ Association (RPFMA). Tariffs mean that retailers and manufacturers with factories there must pay the U.S. government what amounts to a retail markup before selling their wares here.
Employing 1,300 people, New Balance’s U.S. factories are viewed as an endangered species. Last week, U.S. Sen. Olympia J. Snowe, R-Maine, invoked them in urging caution over trade-policy discussions.
Snowe called for Obama administration negotiators to ensure that a pending free-trade agreement with Vietnam take care not to threaten companies such as New Balance.
“These are precisely the kind of jobs that we must support, particularly since more than 28,000 jobs in the footwear industry have gone overseas in the past 15 years,” Snowe said in a Senate Finance Committee hearing. She sent a letter echoing those concerns to U.S. Trade Representative Ron Kirk.
Advocates for domestic footwear manufacturers worry that the Trans-Pacific Partnership with Vietnam and eight other countries could cause irreparable harm if shoe tariffs are lifted. They have asked negotiators to, at minimum, maintain tariffs on styles of Vietnam-produced shoes made domestically, too.
“Companies that want to compete with what’s currently produced in the U.S. would be very happy with an elimination of tariffs because then they could begin to compete more effectively,” Fleischaker said.
New Balance and makers of specialty boots, such as firefighting gear and fishing waders, that are RPFMA members say dropped tariffs could force factories to close.
“If we go to zero duty on these tariff items, there’s no change on the winners, but the losers are the people that make shoes here,” said Matt LeBretton, who handles trade-policy issues for New Balance as public-affairs director.
Negotiators hope to complete talks on the Trans-Pacific Partnership by year’s end, said spokeswoman Carol J. Guthrie.
“We know that there are certain sensitive products — both for the United States and our negotiating partners — that will require intensive discussions as the negotiation moves forward,” Guthrie said Friday. “Footwear is one of those sensitive issues for the United States.”
© 2012 The Philadelphia Inquirer
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