New Balance: ‘It’s literally us against every other athletic shoe manufacturer in the world’

By Whit Richardson, BDN Staff
Posted July 30, 2013, at 2:58 p.m.

Twice within the last year, the United States’ leading international trade negotiator has toured one of New Balance’s manufacturing facilities in Maine.

The most recent visit was on Monday, when independent Sen. Angus King and Rep. Mike Michaud, a Democrat who represents Maine’s 2nd U.S. House District, led Michael Froman, the country’s newly minted U.S. trade representative, on a tour of the New Balance facility in Norridgewock, one of the company’s three Maine facilities.

In September, Michaud led Froman’s predecessor, Ron Kirk, on a tour of the same facility.

Why has New Balance received so much attention from Maine’s delegation? It’s certainly not the only manufacturer that’s making domestic production work.

Some of it is simple: The Boston-based company has a good story to tell.

The 100-year-old company is the only athletic footwear manufacturer that still produces some of its shoes (about 25 percent) in the United States. But that homegrown story is threatened by a free trade deal the Obama administration is negotiating with Vietnam and other Pacific countries, which is why Maine’s congressional delegation is so eager to tout its successes to federal trade officials.

More people can relate to making sneakers than talking about some of the other niche products Maine manufacturers churn out, according to Lisa Martin, executive director of the Manufacturers Association of Maine. Consider, for example, Allagash International in South Portland, which is expanding its business of manufacturing industrial valves and controls used in the oil and gas, papermaking and wastewater treatment industries.

And New Balance, which is a privately held company, has made it work. It now employs 900 people at facilities in Norridgewock, Skowhegan and Norway, the most Mainers it has ever employed, according to Matt LeBretton, New Balance’s director of public affairs.

That story resonates in Maine because shoes are an integral piece of the state’s manufacturing heritage, Martin said.

But the attention New Balance has received from Maine’s congressional delegation isn’t because it has created jobs, it’s because those 900 jobs are in jeopardy.

Both visits by the U.S. trade representative stem from free trade negotiations the Obama administration is having with 10 Pacific nations. At issue are tariffs the United States imposes on imported athletic shoes from Vietnam. New Balance depends on as many 10 long-standing tariffs on certain footwear products to remain competitive, according to LeBretton.

Vietnam, along with New Balance competitors such as Nike, which manufactures all its shoes overseas, want the tariffs removed as part of the free trade agreement, which is known as the Trans-Pacific Partnership.

New Balance claims if those tariffs are removed, the company no longer would be competitive.

“I’m not going to say categorically we would close our facilities, but it would make it incredibly difficult for us to continue,” said LeBretton.

LeBretton said the case for removing these tariffs — that it would reduce consumer prices in the United States — is a “false argument.”

“What’s going to happen if these tariffs go down, [the reduction] won’t be seen at the consumer level,” he said. “It’ll be a profit taken somewhere along the line, either at the corporate level, the wholesaler or the retailer. Historically, that’s what we’ve seen from [tariff] reductions.”

New Balance likely would benefit as well if the tariffs were eliminated because it does manufacture approximately 75 percent of its shoes abroad, but LeBretton said the company doesn’t look at it that way.

“It’s literally us against every other athletic shoe manufacturer in the world,” LeBretton said. “We look at it through the prism of domestic manufacturing and everyone else is looking at it through foreign partner manufacturing. It may at some level benefit us if [the Trans-Pacific Partnership] went through, but we don’t look at it that way. It would hurt our domestic operations and that’s just something we cannot stand.”

It’s also apparently something Maine’s congressional delegation can’t stand. King told the Bangor Daily News on Monday that he and the rest of Maine’s congressional delegation have been “pretty aggressive” in working on the company’s behalf.

A look at political donations reveals that the company is not buying that attention. Only Michaud received campaign contributions — $4,000 — from New Balance employees in 2012. Former U.S. Sen. Olympia Snowe received $5,000 in 2011.

Working with Washington is nothing new for the company, LeBretton said.

“We’ve been making shoes in Maine for a long time, so we have a history of working with folks going back to when Sen. George Mitchell was the Senate majority leader,” LeBretton said. “Some of it is we are a brand people recognize, but we’re also at a juncture, particularly since the TPP discussions began, when real actual harm could happen to us. The reality of what’s going on is recognized by the delegation.”

The threat is so real, in fact, that King used a political maneuver to secure Froman’s visit.

During Froman’s confirmation, King objected to the proceedings and held up the process until the future trade representative promised to take New Balance’s concerns into consideration and to visit one of its Maine facilities.

“I’m learning,” King said when asked about his deft maneuver.

It turns out a simple request doesn’t always work in Washington.

“Sometimes it might,” King said. “But I felt this was urgent and I just wanted him to understand how important it was, and it worked.”

King is more certain of what would happen to those 900 Maine jobs if those tariffs are removed.

“I think ‘much more difficult’ is an understatement,” he said. “If these tariffs go away prematurely it would eliminate those jobs.”

King wanted Froman, like his predecessor, to visit a New Balance facility and see firsthand how his trade negotiations with Vietnam would affect people in Maine.

“It was important because I wanted him to understand that there are real people affected by this decision, not just numbers on a piece of paper,” King said. “It’s much harder to make a decision like this if you understand the true impact, and I thought it would be very beneficial to have him there in person.”

King said a company such as New Balance, which has worked hard to maintain manufacturing in the United States, should be rewarded for its perseverance, “not hit over the head.”

U.S. Sen. Susan Collins, who would have joined the tour on Monday if her duties in Washington hadn’t detained her, agrees.

“I admire the determination of New Balance’s owners, managers, and employees to continue manufacturing in the United States, rather than abandoning American production as so many other footwear manufacturers have done,” Collins said in a statement provided to the BDN.

Froman told workers at the Norridgewock facility on Monday that he is “trying to strike a very good balance” between the calls to remove the tariffs and to protect American jobs.

Maine’s congressional delegation will continue to use political tools and personal contact with New Balance’s workforce to influence Froman, as he prepares for the next round of Trans-Pacific Partnership negotiations in late August, to put U.S. jobs above all else.

http://bangordailynews.com/2013/07/30/business/new-balance-its-literally-us-against-every-other-athletic-shoe-manufacturer-in-the-world/ printed on October 22, 2014