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New Balance expands manufacturing presence in the United States in the backlog of the supply chain

New Balance has opened a fifth manufacturing space in North America. It is located in Meshuen, Massachusetts.

Source: New Balance

Many retailers struggle to maintain relationships with foreign vendors and manufacturers against pandemic uncertainties and volatile diplomatic relations, but have doubled their presence in North America. ..

New Balance, a privately held company known for its cushioned sneakers and retro-style workout gear, has opened a manufacturing facility in Meshuen, Massachusetts, the company announced Monday. The disrupted global supply chain was said by President and CEO Joe Preston.

Larry Fink, chairman and chief executive officer of BlackRock, the world’s largest asset management company, said last week that Russia’s invasion of Ukraine overturned the world order. It has been in place since the end of the Cold War, but over time, US companies may become less dependent on foreign economies for growth.

According to New Balance, the 80,000-square-foot space has recently been refurbished for about $ 20 million.

Currently, about 100 people are employed at the facility, producing New Balance’s most popular Made 990v5 running sneakers. New Balance says it aims to more than double its employees and capacity by the end of the year. Helps to produce an additional 750,000 pairs of sneakers annually.

“This is part of our overall belief in controlling fate and has really been associated with Covid in the last few years. Supply constraints are certainly ours,” Preston said in a telephone interview. Impacted on our business, but we can still grow [revenue] More than 30% in 2021. “

The Boston-based shoe company builds on its current production capacity in the United States, including Meshew Enspace, and New Balance owns five manufacturing facilities in Maine and Massachusetts with approximately 1,000 employees. I am. These spaces help organize the “New Balance Made” line. “Sneakers, according to retailers, are at least 70% domestically manufactured and account for a limited portion of US sales. According to New Balance, global sales totaled $ 4.4 billion last year.

According to Preston, the goal is to continue to grow in North America. This is the core movement of the brand’s “Made in America” ​​spirit.

“If we manufacture our products and don’t outsource all of our production, we will differentiate ourselves from our competitors, which will help us with quality and craftsmanship,” said the CEO.

New Balance’s North America has approximately 1,000 employees working in manufacturing facilities.

Source: New Balance

The shoe industry has been particularly hit by pandemic-fueled supply chain disruptions, including temporary factory closures in both China and Vietnam. Retailers such as Nike and Adidas are highly dependent on cheap labor and materials abroad.

According to the Footwear Distributors & Retailers of America, in Precovid, about 70% of shoes sold in the United States came from China, but in recent years, the trade war between the United States and China has made retailers more diverse in their manufacturing presence. It came to become. To other countries in the hope of avoiding sudden tariffs.

However, a subsequent coronavirus pandemic broke out operators outside of China, including Vietnam, due to the closure of the factory. Russia’s attack on Ukraine has increased uncertainty as well as tensions between the United States and China.

FDRA President and CEO Matt Priest said unpredictability has forced brands to make day-to-day decisions, such as where to source their next batch of orders.

“There is this big geopolitical change happening at our feet. See what can happen where brands across the western corporate world, like Russia, collectively withdraw within a few weeks. And .. just blow your mind about the kind of change that is happening. “

Nike said last week that all of Vietnam’s facilities are in operation, but the time frame for delivering goods from abroad to North America is still long. It’s still about 6 weeks longer to receive the item compared to the pre-pandemic level. Two weeks longer than in the same period last year, the company said Nike is raising its purchase schedule for the fall season to keep its shelves in stock.

The simple answer may seem to be mass production of production in the United States, but according to the priest, it is a costly option and it can be difficult to get workers.

“If you can’t find someone to work in a cafe on your local main street, you’ll never be able to find a shoe factory worker,” he said. .. There is no supply chain here. “

According to New Balance, the turnover rate for factory workers in the United States is low. Sure, retailers face the same challenges as Nike and Adidas because they rely on overseas factories for the rest of their production, but Preston says they have at least some hurdles in their presence in North America. Can be offset.

“The fact that we can bring our products to market faster, the fact that we can respond quickly to consumer trends if we are closer to them … that’s what domestic manufacturing gives you,” he said. rice field.

He added that New Balance needs additional capacity to boost the momentum of running shoes and reach a new generation of younger customers.

According to NPD Group data, New Balance is the fifth largest sneaker brand in the United States in terms of dollar sales, accounting for 3.4% of the market share. This may seem like a small percentage, but it lags behind its four rivals, Nike. , Adidas, Jordan, sneakers, NPD said.

“The brand momentum we have now is rooted in our performance and lifestyle businesses, and it’s a crossroads of both that can really drive energy.”

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