Share this article

print logo

New Balance U.S. plants face free trade threat

At the factory here owned by New Balance, the last major athletic shoe brand to manufacture footwear in the United States, even workers on the shop floor recognize that in purely economic terms, the operation doesn't make sense.

The company could make far more money if, like Nike and Adidas, it shifted these jobs to low-wage countries.

So employees try each shift to make it up. Conversations on the shop floor are sparse at best, and the tasks at each work station have been stripped of waste and precisely timed. Workers cut leather for a pair of shoes in 88 seconds, handle precise stitching in 37 seconds, and glue soles to uppers even faster.

"The company already could make more money by going overseas and they know it," said Scott Boulette, 35, a burly team leader. "So we hustle."

Now, however, comes what may be an insurmountable challenge. The Obama administration is negotiating a free-trade agreement with Vietnam and seven other countries, and it is unclear whether the plant can stand up to a flood of shoes from that country, already one of the leading exporters of footwear to the United States.

"We are deeply concerned by the inclusion of Vietnam in a potential free-trade agreement," said Rob DeMartini, president and chief executive of New Balance.

The workers' predicament highlights the difficulty facing the Obama administration as it seeks free-trade agreements as a potential cure for U.S. unemployment, now at 9.2 percent.

Backed by many economists, the administration says the agreement with Vietnam and the other countries, the Trans-Pacific Partnership, would create U.S. jobs by opening up Asian countries to U.S. exports like computers from California and Maine paper products.

Moreover, importing shoes from Vietnam at lower costs would benefit some in the United States, either by reducing prices for consumers or raising profits for manufacturers that have their operations overseas.

But the example of New Balance, which has long resisted the exodus of American footwear manufacturers, highlights the fact that despite the benefits of free trade, it can also destroy some U.S. jobs, and those losses are felt more acutely in a time of high unemployment.

"We want to fight really hard to keep this business in Maine," said Lori Cook, 28, a single mom with two kids.

The company's primary concern is that any free-trade agreement with Vietnam would likely eliminate the steep tariff on footwear imported from that country, making Vietnamese sneakers even cheaper than they already are.

New Balance officials said removing the tariff would undermine years of efforts at the company's five New England factories to compete against cheap foreign labor. The plants employ 1,000 workers.

Those employees earn upward of $10 an hour, plus benefits, while labor costs in China are about $1.50 an hour.

With the support of some New England legislators, the company is hoping that 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.

For decades, shoes coming in from China and Vietnam, the largest sources of imported footwear, have been hit with tariffs of as much as 20 percent or more. On a pair of shoes that comes into the country valued at $30, for example, a typical 20 percent duty amounts to $6. (In many cases, the markup amounts to 100 percent, meaning those shoes would sell to consumers for $72.)

As workers in New England look around at the shuttered textile and shoe mills that still dot many towns, relics of the industrial era, some see the shoe tariff as the least the United States could do for what's left of the battered industry. In their view, removing the tariff only rewards those companies like Nike and Adidas that have shut U.S. factories and concentrated their operations elsewhere.

The employees at the New Balance factory shrug off the cost to consumers, and question how it is that a move to save jobs could be considered bad economic policy, as economists often say, when jobs are so hard to come by and they have tried so hard to compete.

Since 2004, the 350 workers at the plant have increased daily production by nearly 9 percent while greatly reducing errors, plant manager Raye Wentworth said. The Maine unemployment rate is nearly 8 percent.