Cover image from the Wall Street Journal of a Nike Factory
One of the consumer industries most impacted by the proposed (already negotiated, but not approved or signed) Trans Pacific Partnership (TPP) is footwear. To be honest, Americans like their shoes. We like them a lot, which is why so many of us have more than we really need. In the TPP, the shoe industry, particularly that in Vietnam where the import tariff to the American marketplace will be gradually decreased to nothing in the coming years, gets particular attention. So much so, that when the Pentagon started mulling over the idea of making American made athletic shoes required for recruits (and the base commissaries), a special version of the TPP was floated to the American athletic shoe companies.
What do you mean the military doesn’t require its members to be issued strictly American made equipment? the reader may ask. Well, it does with one exception that dates to shortly after the Second World War when there were few American makers of athletic shoes. The law is known as the Berry Amendment and does allow the Pentagon to purchase athletic shoes from overseas.
In recent decades, the American athletic shoe industry has blossomed – and not all of their shoes are made overseas. There are still plants in New England, specifically. New Balance, an easily recognizable name in athletic shoes, is one of many manufacturers that operate factories inside the United States. New Balance’s owner, Jim Davis, is a long-time Republican, and, in the early years of TPP publicity, a frequent and vocal critic of the 11 nation trade pact. The Boston Globe reports that the Pentagon went to New Balance and told them that if they would lay off the trash talk on TPP, there would be a chance to bid on shoe models for the military since there was now sufficient competition within the United States.
The bidding has taken place, and no decisions have been made by the Pentagon to purchase athletic shoes from any American company. New Balance is crying foul at this turn of events.
“We swallowed the poison pill that is TPP so we could have a chance to bid on these contracts,” said Matt LeBretton, New Balance’s vice president of public affairs. “We were assured this would be a top-down approach at the Department of Defense if we agreed to either support or remain neutral on TPP. [But] the chances of the Department of Defense buying shoes that are made in the USA are slim to none while Obama is president.”
New Balance did develop multiple prototypes for the military to consider. The Pentagon came back with one is not acceptable, and the others are too expensive.
The problem, according to the Department of Defense, is that none of the three New Balance shoes offered for consideration met the agency’s cost requirements and one didn’t meet durability standards.
The administration portrays the delay as quality and cost control. But New Balance sees it as foot-dragging, and as reason enough to revive its fight against the Trans-Pacific Partnership.
“The Department of Defense has basically played a shell game with domestic footwear manufacturers to protect the profits of their [base stores],” said LeBretton, who added that the company has offered to sell its shoes to the military with no retail markup. “They’ve put up roadblock after roadblock. Our shoes are ready to go. It’s a bureaucracy run amok.”
Anyone who has ever worn New Balance shoes – even the cheap ones – repeat after me: WHAT?! No quality control? New Balance? This writer will admit that not every pair of New Balance she has owned has been suitable (plantar fasciitis caused by an arch in one pair), but they were all made well.
As for the government, of course the bidding process at the Pentagon is separate from any TPP talk, and one has absolutely nothing to do with the other. However, from the tenor of the Globe article, New Balance’s stance is presented as a stand alone even if other American companies would like to bid on government contracts for athletic shoes.
New Balance’s stance also drew criticism from the Footwear Distributors and Retailers of America, which argues that eliminating the Asia tariffs would be good for consumers and could allow US companies to invest more in domestic operations. “We would have loved to have had all duties eliminated on Day One,” said Matt Priest, the group’s president. “That’s not what we got. We got a compromise.”…
Wolverine Worldwide, another company looking to build an all-US running shoe for the military, backs the Asia-Pacific deal …. Spokesman David Costello said Wolverine, whose Saucony brand is based in Lexington, is also frustrated by the delays. Landing a Pentagon contract, he said, could create a positive impact that would ripple throughout Wolverine’s and New Balance’s supply chains and support smaller companies that make components for the shoes.
These people need to make up their minds. Either we get a trade deal that benefits American companies by making American made products competitive price wise, or the big government contracts will go to the overseas competition. That’s the stance New Balance is making, and no, the Obama Administration is not going to like that.