Recognizing a Lifetime of Unconventional—and Wildly Successful—Leadership
When Jim Davis purchased New Balance in 1972, the company had six employees and made 30 pairs of shoes per day in a single location. Today, the company has over 5,250 global associates, with more than 4,000 in the U.S., including more than 1,400 in manufacturing and distribution. It’s a global athletic footwear, apparel and accessories company that earned $3.72 billion in global revenue in 2015, while making or assembling more than 4 million pairs of athletic footwear per year in the U.S.
Every year of that history featured intense competition in the high-flying sports shoe market—remember the 70’s running and fitness boom?—with competitors the likes of marketing powerhouses Nike, Reebok and adidas. As well, during the following decades, a mass exodus of production from the U.S. to low-cost offshore countries upended conventional manufacturing strategies. New Balance became in 2003 the last major athletic shoe company with production in the U.S.
In a 2003 interview with IndustryWeek, Davis asserted that New Balance’s commitment to U.S. production was simply part of the company’s history. “It’s really a part of our culture,” he said. “When I became involved with the company 30 years ago, all we did was manufacture here. It steadily grew from there.” He noted that the company also was increasing its overseas production.
Still, nearly every other manufacturer at the time had a similar long history of production in the U.S., and most didn’t hesitate to close U.S. factories and head East to the new “world’s factory.”
To this day, the Davises—Jim is the chairman and Anne is vice-chair—are loathe to take credit for the strategy of maintaining production in the U.S.—or even for their role in shepherding the company through some of the most difficult years for U.S. manufacturers and achieving astounding success.
Instead, upon learning that IW editors had chosen them as the first recipients of the IW Manufacturing Lifetime Achievement Award, they enlisted current President and CEO Robert (Rob) DeMartini to speak for the company. The award is one of a series of new IW Industry Excellence Awards created to celebrate innovation in manufacturing business leadership.
The company’s senior corporate communications director, in stressing the Davis’ resistance to accepting the award, suggested instead that IW honor the company.
However, IW editors assert that the Davises represent the best of U.S. manufacturing leadership, setting a principled course with the commitment to delivering innovative, quality products; leveraging lean and continuous improvement; valuing factory associates; and, of course, supporting U.S. domestic manufacturing.
Indeed, we’ve become more firm in our belief that the example set by the Davises should be celebrated and shared. This award recognizes the contribution of an individual whose leadership and tireless commitment to excellence has had a transformative effect on their organizations and American manufacturing. Recognizing the effect of the Davises on the company’s growth, we’re extending the award to them both.
Moreover, that the company sustained such growth while maintaining production in the U.S. makes it an example for other manufacturers similarly inclined to “make it in America.”
Davis' Core Belief, Principles Have Delivered Steady, Sustained Growth
That the Davis’ philosophy remains the backbone of the company culture is made clear in an email interview with DeMartini. In the earlier interview, Davis had made clear that he believed that, for New Balance, keeping production in the U.S. is a benefit, not a hindrance. “We feel that we make better shoes here, because we can control the quality better,” Davis said then. “But we also make better shoes abroad because we know how to make shoes. Our competitors will design a shoe, and they’ll send it over and say ‘make it.’ We usually tell them how to make it better.”
Manufacturing in the U.S. is a competitive advantage—it helps us design better, it helps us innovate faster, and it helps us deliver faster to our consumer."— Rob DeMartini, President & CEO, New Balance Athletics, Inc
DeMartini’s response, coming 13 years later, echoes Davis’: “Manufacturing in the U.S. is a competitive advantage—it helps us design better, it helps us innovate faster, and it helps us deliver faster to our consumer,” he asserts.
“Domestic manufacturing gives us the ability to be closer to consumption and closer to the consumer so it’s a supply chain advantage. We are better able to manage inventory for ourselves and our retailers and have the highest service levels in the industry. In addition, in an industry that uses partners to produce its product, we believe by running our own factories we know how to work with our partners better.”
Likewise DeMartini, as Davis before him, credits New Balance’s associates for the company’s success. “Our associates have proven that high quality athletic footwear can be produced competitively in America,” he says. “Their craftsmanship and dedication to continuous improvement and customer service excellence has enabled us to withstand economic challenges and remain strong.”
In that 2003 interview Davis, when asked about the top three strategies that help the company successfully manufacture in the U.S., he’d replied: “It’s really having the right people: That’s the key. There are a lot of secondary strategies but the main thing is having the right people who are ready to make that commitment.”
Davis allowed at the time that training was also part of the equation, noting that “you can’t just ask them to do something without the proper training.” Extensive training in the Toyota Production System, or lean, has been a mainstay that has paid off handsomely for the company.
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."— Rob DeMartini
“During the past 30 years, New Balance has decreased the time needed to make a pair of sneakers,” DeMartini says. “We've taken our process—from cutting raw materials to shipping finished shoes—from eight days down to three hours.”
He adds, “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.”
The consistency of purpose at the company is striking. Throughout its history, it’s evident that the Davises have led with their core belief: “Let’s challenge the conventions of industry,” along with the principles upon which the company was founded: "superior customer service, a strong commitment to American workers and domestic manufacturing, and leadership in product fit and technological innovation.”
The words of DeMartini exhibit such sentiments: “Manufacturing has always been an important part of the New Balance company culture—we strongly believe that making things matters. … as a company, we are proud to invest in American workers who provide some of the greatest working spirit, commitment to advancement and ingenuity known in the industrial world.”
He adds, “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, Mass. In Skowhegan, Norway, and Norridgewock, Maine, New Balance is one of the largest employers, so a major reason why we continue to make shoes in the United States is our commitments to these communities.”
As for innovation, recently the company began “offering something that can’t be done as quickly overseas: customization,” DeMartini said. Beginning with select models, including the “everyday 998, the classic look 574, and the 990 and 993 running shoe, customers can now go online and design a pair of domestically made custom shoes that are shipped that week.” The program, dubbed NB1, allows shoppers to design the color scheme and the look of their sneakers on NewBalance.com, as well as a personalized message embroidered on the back of the shoes.
“Our competition can’t touch us in this space,” declares DeMartini.
To IW editors, it appears that New Balance’s competitors, along with other manufacturers, have a long way to go before they can top the strategic advantage of “the New Balance Way.”
