Made in America

New Balance: The US company shaking up the sneakernomics

Made in U.S. Sneakernomics
Made in U.S. Sneakernomics
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The 'Made in USA' company winning sneaker wars
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While many well-known sneaker brands like Nike and Adidas manufacture overseas, athletic brand New Balance continues to make sneakers in the United States. This year they expect to make more than 4 million pairs at their five factories in Massachusetts and Maine.

New Balance aims to compete in the $55 billion-dollar sneaker market. One key to New Balance's success is offering something that can't be done as quickly overseas: customization.

"The fact that a consumer can go online and order a pair of custom shoes that's delivered the next day, our competition can't touch us in that space," said Brendan Melly, the director of U.S. operations for New Balance.

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New Balance, headquartered in Boston, Massachusetts, announced last week that it is adding additional sneaker styles to the customization program, known as NB1. The popular program allows shoppers to design the color scheme and look of their sneakers on Customers can also have a personalized message embroidered on the back of the shoes.

Sneaker models that can be customized include the everyday 998, the classic look 574, and the 990 and 993 running shoes.

Resonating with celebs and athletes

Ben Affleck
Bauer-Griffin/GC Images | Getty Images

New Balance sneakers can be found on the feet of athletes, celebrities and sneaker enthusiasts. You'll find them on the feet of more than 400 Major League Baseball athletes, including Tampa Bay Rays third baseman, Evan Longoria; and Detroit Tigers first baseman, Miguel Cabrera.

"We take a lot of thought and pride in who we choose to sponsor in terms of athletes. We not only make sure that we get the top performers on the field but also off the field, where we partner with them in their charitable-giving organizations," said Melly.

The sneakers are also seen in in movies, such as Gone Girl, with Ben Affleck, and Ted 2, with Mark Wahlberg.

"Our associates have a lot of pride when they see their product that they've crafted on a celebrity's foot," Melly said.

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The shoes resonate in fashion, as well. New Balance has done sneaker-design collaborations with Kate Spade Saturday and J. Crew, among others. The newest collaboration, with retailer BAIT and inspired by Hasbro's GI Joe, will launch June 20.

A pair of custom sneakers is packed for shipping in New Balance’s Lawrence, Massachusetts, factory.
Source: CNBC

Over the past 30 years, which saw New Balance's competitors, including Nike and Adidas, move manufacturing overseas, New Balance has decreased the time needed to make a pair of sneakers.

"We've taken our process—from cutting raw materials to shipping finished shoes—from eight days down to three hours," Melly said.

Each of New Balance's more than 1,300 manufacturing associates in the U.S. are only supposed to touch the shoes for a quick 22.5 seconds. That includes difficult tasks such as cutting leather and hand-stitching. New Balance employs over 5,000 people worldwide.

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Some of New Balance's factories are located in historically industrial areas that have struggled with rising unemployment after industry moved out, such as Lawrence, Massachusetts. In Skowhegan, Norway, and Norridgewock, Maine, New Balance is one of the largest employers.

"The major reason why we continue to make shoes in the United States is the commitments to the communities," Melly told CNBC.

New Balance manufacturing associates at their Lawrence, Massachusetts, factory inspect sneakers before placing them in boxes
Source: CNBC

Quality is another advantage of manufacturing in the USA. New Balance's manufacturing associates average 13 years with the company. Each pair of shoes is carefully inspected before being packaged. For the customize shoes, this includes matching the finished product to the original design.

"We're able to compete with our competition, who is manufacturing overseas, the fact that we deliver a product that is highly superior in terms of craftsmanship and quality," said Melly.

The Made in USA shoes retail for between $75 and almost $400. In 2013, New Balance reported global sales of $2.73 billion, with one fourth of their shoes being made or assembled in the US. As a private company, New Balance does not reveal market share.

New Balance says their biggest challenges with manufacturing in the U.S. is getting supplies. When competitors in athletic footwear went overseas, their suppliers left as well.

In order to label a pair of shoes Made in the USA, New Balance requires that 70 percent of the material comes from the U.S.

Despite the challenges, New Balance says their American-based manufacturing is a competitive advantage.

"[Manufacturing in the U.S.] helps us design better, it helps us innovate faster, and it helps us deliver faster to our consumer," Melly said.

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