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New Balance bulks up manufacturing presence in U.S. amid supply chain backlogs

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New Balance opened North America’s fifth manufacturing facility. It is located in Methuen (Massachusetts).

Source: The New Balance

Many retailers find it difficult to keep relationships with foreign vendors and manufacturers in order to protect themselves against the uncertainty of pandemics. shaky foreign relationsOne is increasing its North American presence by doubling its efforts.

New Balance, an American privately-held company that is well known for their retro-inspired and cushioned workout wear, announced Monday the opening of its Methuen facility. According to Joe Preston, President and Chief Executive, the move will strengthen its dependence on North America as production. This is especially important for businesses trying to manage a complicated global supply chain.

This move is being made at a time when prominent business leaders consider whether globalization, as we all know it, will end. Larry Fink (chairman and CEO, the biggest global asset manager), BlackRockLast week, he stated that Russia’s invasion in Ukraine had been a success. upended the world order that had been in place since the end of the Cold War. That could eventually lead to U.S. businesses becoming less dependent upon foreign countries in order for them to continue growing.

New Balance reported that renovations of approximately $20 million were done to this 80,000-square foot space.

Nearly 100 employees work at the factory, where New Balance makes its most well-known Made 990v5 running sneakers. New Balance claims it has plans to double its staff and increase production by the end of this year. This will allow it to make an additional 750,000 pairs per year.

Preston said in an interview that “it’s part our overall mantra to control our destiny,” which Preston stated in a telephone interview. While supply limitations have had a significant impact on our business, we managed to continue growing. [revenue]In 2021, it will be over 30%

This Boston-based footwear company will continue to expand its U.S. manufacturing capabilities. New Balance, which includes the Methuen facility, has five Massachusetts and Maine manufacturing plants that employ approximately 1000 workers. According to New Balance, these facilities are necessary to make its brand of New Balance Made sneakers. They’re at least 70% made domestically and account for a very small percentage of U.S. retail sales. New Balance reported that its global sales reached $4.4 billion in the last year.

According to Preston, the goal is to keep growing in North America — a move that is core to the brand’s “Made in America” ethos.

According to the CEO, “it differentiates us form our competition, when we make product and do not outsource our entire production.” This improves quality and craftsmanship.

New Balance North America employs about 1000 people who work at its facilities.

Source: The New Balance

Shoestack industry was particularly hit by supply chain challenges caused by the pandemic, including factory closures temporarily in China and Vietnam. Retailers including Nike and Adidas are incredibly reliant on cheap laborMaterial and services abroad

Pre-Covid, about 70% of shoes sold in the U.S. came from China, according to the Footwear Distributors & Retailers of America. However, retailers have been forced to diversify their production into countries other than the United States in recent years due to a growing trade war with China.

However, the coronavirus pandemicFactory shutdowns and strikes were a problem for operators outside China. Russia’s attack on UkraineThis has led to increased uncertainty and tensions between the U.S.A. and China.

Matt Priest is the president and chief executive officer of FDRA. He stated that the unpredictable nature of the market forces brands to make daily decisions, including where to source for their next shipment.

He said that there is a big geopolitical shift taking place beneath our feet in a telephone interview. It is amazing to see the changes that can occur in Russia where all the major Western corporations pull out within weeks.

NikeThe company said that although its Vietnam operations are now operational, it still takes a long time for goods to arrive in North America. According to the company, it takes approximately six weeks to obtain goods, compared to pre-pandemic levels. It also takes two weeks longer than that of the year before. To keep its shelves full, Nike increased the buying timeframes for fall.

It may seem like the easy solution is to boost production in America. Priest says that this is a difficult option, and it can prove costly.

He said, “If there isn’t anyone to work in the coffee shop on Main Street near your home, it’s unlikely that you will be able find people to work for a shoe factory.” We don’t possess the raw materials. The supply chain is not available here.”

New Balance claims it has low turnover rates in its U.S. factories workers. The retailer also relies heavily on overseas factories for its remaining production. Preston says that although it has the same difficulties as Nike and Adidas it will be able to offset certain obstacles with its North American presence.

He stated that domestic manufacturing allows him to respond to consumer trends faster, get products to market quicker and that it is easier to react to them if you are closer to the consumers.

He said that New Balance requires the additional capacity to keep up with its growing popularity for running shoes, as well as reach a younger generation of customers.

According to The NPD Group data, New Balance ranks fifth in U.S. sneaker sales in dollars, accounting for 3.4% market share. It is still only a fraction of the market share for Nike, Adidas, Jordan, and others. SkechersNPD stated.

Preston explained that the brand momentum we currently have is grounded in our lifestyle and business performance. It’s the combination of these two things that is able to really fuel some energy.

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