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New Balance Says It Could Be Forced to Leave US

Thursday, 13 Sep 2012 | 2:47 PM ET

The chief executive officer of New Balance told CNBC Thursday that he could be forced to close as many as five sneaker factories in the United States if a new free trade agreement lifts tariffs on foreign footwear.

New Balance Plant Manager Raye Wentworth poses Tuesday, July 19, 2011 with a 993 athletic shoe at the New Balance shoe factory in Norridgewock, Maine.
Joel Page | Washington Post | Getty Images
New Balance Plant Manager Raye Wentworth poses Tuesday, July 19, 2011 with a 993 athletic shoe at the New Balance shoe factory in Norridgewock, Maine.

In an interview with CNBC’s Carl Quintanilla on "Squawk on the Street", New Balance President and CEO Robert DeMartini said the tariff protects the 7 million pairs of shoes the company makes inside the United States each year. All of the company’s five US factories could be impacted by the decision, DeMartini said.

“Vietnam which already imports a significant amount of shoes in the country would have an advantage up against those factories,” DeMartini said. “It would be very difficult to keep them competitive.”

He also argued that the tariff did not create an advantage for American manufacturers, but just the opposite. (Read More: US Trade Deficit Edges Up; Exports to Europe Tumble.)

New Balance Fights to Stay in USA
Robert DeMartini, New Balance president and CEO, explains how a change in U.S. trade policy could force him to shutdown factories and lay off workers.

“Vietnam is a government-subsidized industry in shoe making,” he said. “All we're asking for is a fair, level playing field to compete on.”

On the same day, US Trade Representative Ron Kirk toured a New Balance plant in Norridgewock, Maine, inspecting the work performed by some of the company’s 900 employees in that state.

Those are the jobs that could be impacted by a decision to move ahead with the free trade agreement, known as the Transpacific Partnership, which is currently under negotiation. That pact would include 11 nations, and among other changes would lift the tariff on foreign footwear that New Balance says it needs to remain competitive.

“I think the in fact he's here is a great sign,” said DeMartini of the Kirk visit. “He understands that we've got real jobs here supporting the community.”

—By CNBC's Eamon Javers
@EamonJavers

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