Athletic and leisure footwear manufacturer New Balance has advanced plans to build the company’s sixth footwear factory within the U.S. New England region.
According to a report from the Boston Globe, plans call for the design and opening of a termed $33 million “Factory of the Future” to be constructed in Methuen Massachusetts.
The company provides branded footwear and apparel with global sales amounting to $4.2 billion.
The report notes that the 80,000 square foot factory will initially be small in scale and focused on testing 3-D Printing and advanced manufacturing techniques. The athletic shoe manufacturer currently operates three factories in the state of Maine, and two in Massachusetts.
Despite knowledge that manufacturing shoes in the U.S. is more expensive, New Balance Chairman, Jim Davis strongly believes in a commitment to local manufacturing. While the company does outsource considerable manufacturing across Asia, there has also been a commitment toward maintaining some U.S. manufacturing and supply network capability as-well. This manufacturer boasts that it is the only major company to make or assemble more than 4 million pairs of athletic footwear per year in the United States. While that may represent a small percentage of total U.S. sales, it is none the less a sustaining commitment.
A part of this domestic manufacturing strategy was lobbying the U.S. federal government to procure needed athletic shoes from U.S. domestic sources. Last Fall, the manufacturer began shipping shoes to the U.S. Defense Department to be part of a military recruit’s kit. However, footwear industry supply network reality being what it is, New Balance must rely on select imported components. That is why the company remains vocal in its opposition to the latest proposed escalation of import tariffs concerning China based components.
From our Supply Chain Matters lens, the proposed investment of an advanced factory of the future within the U.S. is timely, given heightened trade and tariff tensions.
Since 2009, there has been a small but sustained resurgence in domestic apparel and footwear manufacturing. The trend is likely to continue but there are also certain realities relative to any higher-volume manufacturing presence. They include the need for advanced factory automation and access to a trained and skilled workforce, not to mention an inherent lack of an integral domestic based supply network. The fact remains that much of footwear and apparel’s supply chain network remains sourced in lower cost manufacturing regions because of the high dependency on direct labor and lower cost supply network. However, continuing market needs focused on ‘fast fashion’ and personalized product choices among online shoppers led themselves to increased automation invested close to points of consumption.
We have previously highlighted similar factory of the future investments concerning apparel and footwear, including an April 2017 blog highlighting manufacturer Adidas investment in its “Speedfactory” in Germany. That factory served the basis of others to be strategically located.
The basis of the supply chain management strategy is to produce closest to the major areas of product demand, thus avoiding added global transportation, inventory carrying and of late, added tariff costs. What has brought this strategy closer to fruition is the combination of higher direct labor costs in high volume manufacturing areas such as China, meeting the technology convergence of additive manufacturing that can incorporate faster, more dexterous, and cheaper robots.
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