New Balance Plots $65 Million Maine Footwear Factory Investment – Sourcing Journal

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New Balance wants to reinforce its American manufacturing capabilities with the proposed expansion of its athletic footwear production facility in Skowhegan, Maine. The move would double the shoe company’s production capacity at the factory to more than 1 million pairs of sneakers, and create more than 200 new jobs to total 450.

New Balance purchased the facility, known as NB Skowhegan, in 1981. The site produced more than 500,000 pairs of the brand’s Made footwear line in 2022 alone. The factory currently manufactures the brand’s Made 990v6 running shoes as well as other lifestyle footwear models. 

New Balance is currently in the planning and design stage to develop additional manufacturing capabilities at the Skowhegan site, which is estimated to cost $65 million in construction and capital equipment. It submitted its proposal to the Skowhegan town board on Tuesday.

The plan calls for a 120,000-square-foot, single-story addition to the existing five-story factory building with an additional 20,000 square feet of the existing building also undergoing renovations.

Manufacturing operations would continue during the construction phase. Early project scheduling suggests a late August 2024 move-in date, with project completion by the end of 2024.

In March, New Balance opened an 80,000-square-foot facility in Methuen, Mass. that the company said at the time was expected to produce 750,000 pairs of sneakers each year.

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Including the Skowhegan and Methuen properties, Boston-headquartered New Balance owns five manufacturing facilities across Maine and Massachusetts that employ approximately 1,000. The New England facilities are largely used to manufacture sneakers across the Made line, which makes up a “limited” portion of New Balance’s U.S. sales, the company says.

At the facilities, workers prepare, cut and mold materials and components of athletic shoes, and sew, press and assemble those materials and components into the final product.

Alongside domestic supply chain expansion, the Made manufacturing team is seeking out new automation and robotics opportunities to increase production and enhance worker safety and ergonomics.

Outside the U.S., the company also owns a factory in Flimby, England that produces Made in U.K. footwear, and works with supplier factories overseas in Vietnam, China and Indonesia.

But New Balance has reasons to bring more production home as supply chain constraints continue to fester, with the company saying it is proactively working to expand its domestic supplier network. In a statement, New Balance said it “calls on companies across industries to examine the feasibility of onshoring more of their manufacturing.”

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New Balance says it has longstanding relationships with domestic suppliers that employ “several hundred” U.S. workers.

“I think [local production], particularly because of logistics issues, is going to grow,” said Duncan Scott, senior vice president of strategic sourcing and quality, New Balance, during the Reuters’ Supply Chain Execution USA conference in June. “It is also a specific kind of production that we want to do here and a lot of that is for product that we need to be able to react very quickly in the market and meet our customers’ needs.”

As New Balance’s ambitions develop, the wider manufacturing industry in the U.S. hit a slight speed bump. Factory activity in the U.S. manufacturing sector contracted in November for the first time since May 2020, after 29 consecutive months of growth, the nation’s supply executives said in the latest Manufacturing Institute of Supply Management (ISM) “Report On Business.”

The firm’s PMI (Purchasing Managers’ Index) registered 49, lower than the 50.2 recorded in October. A reading under 50 represents contraction within the manufacturing sector.

New Balance’s American-made manufacturing expansion plans come as the company faces legal scrutiny over some of its claims. Last December, a class action suit was filed claiming that the brand falsely markets some of its sneakers with “Made in USA” branding despite up to 30 percent of the footwear components being produced outside the country.

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This total, the suit alleges, does not meet the Federal Trade Commission (FTC) guidelines that “[f]or a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim, the product must be ‘all or virtually all’ made in the U.S.” In 2019, New Balance paid $750,000 to settle a similar class action lawsuit.

New Balance says it sources its shoe components and materials for the Made footwear line in the U.S. “whenever there are viable options.” Even when certain parts of Made US shoes, such as soles, cannot be sourced domestically due to the limitations of the current U.S. supply chain, New Balance imports those parts and incorporates them into the final manufactured product through assembly, molding, laminating or other processing by New Balance workers or by its U.S. suppliers. 

The brand does advertise that the Made footwear produced in the U.S. contains “a domestic value of 70% or more,” and includes that description for all shoes sold online.

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