Snowe takes action to protect New Balance workers

By Deirdre Fulton

WASHINGTON – The New Balance athletic shoe plants in Norridgewock, Norway and Skowhegan employ about 900 workers. With only 4,000 rubber footwear jobs remaining in America, according to the American Apparel and Footwear Association, these 900 jobs represent an at-risk group. And some lawmakers are worried that foreign imports are putting these few remaining jobs in considerable danger.

On Monday, Maine Republican Sen. Olympia J. Snowe won a provision in trade legislation under consideration in the Senate that would help to protect domestic workers who manufacture rubber and plastic footwear - like the athletic shoes with rubber soles and fabric uppers that New Balance makes - from some foreign competition.

The victory came in the form of 17 exceptions to provisions of the proposed Miscellaneous Tariff and Technical Corrections Act. The legislation would eliminate all tariffs on imported footwear. These duty-free provisions, discussed at a Senate Finance Committee markup meeting Monday, would benefit consumers and importers by making foreign footwear less expensive to buy.

However, Snowe warned, tariff elimination would prove devastating for the vulnerable rubber footwear industry, which already is experiencing considerable "erosion" as a result of import competition. At the markup meeting, Snowe pushed for a compromise that would exempt rubber footwear from the duty-free rule. The exception would keep tariffs on rubber footwear at approximately 20 percent.

"Without recognition that rubber footwear manufacturers are particularly sensitive to imports, the delicate balance in trade could have been upset - with serious consequences for Maine and other states that produce rubber footwear," the senator said in a statement. "Today's committee action is a step in the right direction that will help stem the erosion in the level of protection America provides for the endangered rubber footwear industry."

The rubber footwear industry is labor-intensive, making it more vulnerable to imports from foreign countries where the cost of labor is much lower, said Katherine Shepard, senior corporate communications director at New Balance.

"We're only able to continue manufacturing in the U.S. because of the tariff protections that provide us with a small assist," she said. The "small assist" allows the company to "come close to the cost of an imported shoe from a low-wage country," she added.

Overseas, shoes are made in assembly lines and with an abundance of cheap labor, Shepard said. In the United States, production is different, with "wages many, many times higher" and workers split into small groups.

Ninety-five percent of all footwear is now produced overseas and imported, according to the American Apparel and Footwear Association. Athletic and rubber shoes were the second and third most-imported types of shoes in 2001, association statistics said. Only women's shoes were imported in higher volume. As of 2002, only 68 shoe companies were still based in the United States.

Nike and Reebok, major New Balance competitors that also produce rubber-soled shoes with fabric uppers, rely completely on overseas production, said Mitchell Cooper, a lawyer who represents the Rubber and Plastic Footwear Manufacturers Association. This leaves New Balance to rely more on the productivity of their smaller, higher-paid workforce and tariff protection provided by the government, Cooper said.

Even with this protection, however, companies like New Balance still face a difficult struggle, said Peter Mangione, president of Footwear Distributors and Retailers of America.

"You would have to have 200-percent duty," Mangione said. Even the existing duty "is far too small to come anywhere near to equalizing the vastly lower price of imports," he said.

According to Mangione, the average price of a domestically made rubber-soled, leather or fabric upper shoe in 2000 - before marketing and other costs that make the price skyrocket - was $15.19. An imported shoe, with duty paid, was only $8.67 because of lower production costs, he said.

But Cooper said he remains optimistic about the future of New Balance and other rubber footwear manufacturers left in the United States. He pointed out that New Balance just expanded its operations in Maine. In the past year, New Balance renovated a new warehouse building, adding 27 jobs in the town of Skowhegan.

"They have survived all of these years and they will continue to survive," he said, "provided there is not a significant cut in their level of protection."

Maine Democratic Rep. Michael Michaud thought Snowe's efforts in this debate were a "small step in the right direction," said Monica Castellanos, Michaud's press secretary. Michaud has consistently voiced his support of free trade "as long as it is fair trade," she said, referring to Michaud's willingness to open up American markets as long as American workers remain protected.

The legislation was voted out of the Finance Committee Thursday morning, preparing it for Senate consideration in the near future. The House has yet to take up the issue, according to Snowe's office.

Published in The Kennebec Journal and The Morning Sentinel, in Maine.