Rubber Footwear May be Insulated a Little Longer
WASHINGTON–As Congress considers opening more doors to foreign competition, Sen. Olympia Snowe is trying to protect domestic rubber footwear manufacturers, more than one-third of whose U.S. workforce is employed at New Balance factories in Maine.
The Senate Finance Committee approved legislation last week that would remove tariffs from footwear imported from the Caribbean. Snowe, along with Sen. Sam Brownback (R-Kan.), inserted an amendment into the bill that would keep tariffs intact on certain types of footwear, including athletic shoes like those produced at Maine’s New Balance factories. About 1,000 workers are employed at the plants in Norridgewock, Norway and Skowhegan.
Snowe said in a statement that the committee action was a step in the right direction and “will help stem the erosion in the level of protection America provides for the endangered rubber footwear industry.”
The Miscellaneous Tariff and Technical Corrections Act would add to the Caribbean Basin Initiative, enacted in 1983, which allowed duty-free trading of certain products. Originally, it excluded footwear.
Under the new legislation, most types of footwear from Caribbean countries could be imported duty-free.
“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,” she said.
Snowe said that 30 years ago, imports represented about 20 percent of sales in the rubber footwear industry. Today, she said, imports make up 95 percent of such sales. .
There are just 2,600 domestic rubber footwear jobs today, Snowe’s statement said, only 10 percent of the number employed in 1973.
“Rubber footwear is a labor-intensive, import-sensitive industry in which the cost of labor represents about 40 percent of the overall cost,” Snowe said. “As such, it is difficult for the industry to compete on a level playing field with imports from countries with lower labor costs.”.
The average cost of a domestically made athletic shoe is $15.19, while the cost of the same type of shoe, imported, is $8.67, said Peter Mangione, president of the Footwear Distributors and Retailers of America.
“I don’t believe the duties have any relevance to making shoes in the U.S.,” Mangione said. “Imported products in this heading [rubber footwear], even after application of the duties, are drastically lower-priced than ones made locally.”
Mangione said it would be better for consumers and make little difference to manufacturers if the duties were eliminated. He said that the duties – usually around 37 percent for footwear in general and 20 percent for rubber footwear – are too low to make a difference.
“If price were the determining factor, we wouldn’t make any shoes locally…. Local products survive because of brand names, because of niche markets,” he said, adding that New Balance can afford to produce domestically largely because half of its production is based overseas.
Katherine Shepard, a spokeswoman for New Balance, said that the tariffs are crucial for the company’s domestic production.
“We’re only able to continue manufacturing in the U.S. because of the tariff protection,” she said. “It gives us a small assist, allowing us to come closer to the price of imported footwear.”
Shepard said that although she believes the protection from the tariffs will not last indefinitely, the duties are important now because they allow New Balance a phase-out period in which to find other ways to be competitive with imports.
New Balance constantly works to upgrade its methods and technology, Shepard said, with the goal of still being able to compete in another 10 years when the tariff protections may be gone.
“The owners of New Balance are very passionate about manufacturing remaining in the U.S.,” she said. “It’s a feeling that we need to have a strong manufacturing base in this country for our security and to help our economy. Anything we can do… is very positive – not just for the company, but for the country.”
New Balance has about 1,000 jobs in Maine, Shepard said.
Published in The Bangor Daily News, in Maine.
