New Balance amplifying 'long-standing commitment’ to US manufacturing
CEO Joe Preston argues other companies 'seeing the need to onshore'
New Balance CEO outlines importance of 'commitment' to US manufacturing
New Balance Athletics CEO Joe Preston discusses the impact of the 'supply chain crisis' and inflation on his company.
Joe Preston, president & CEO of New Balance Athletics, noted on Monday that his company has had a "long-standing commitment to domestic manufacturing" instead of relying on Asian countries, including Vietnam and China, like some of his competitors.
"We’ve been making product in the U.S. for years and we are the only athletic manufacturer that produces here in the states," Preston told "Varney & Co." on Monday.
He noted that the company has five factories in the U.S., including two in Massachusetts and three in Maine.
"One we just opened up last week. It’s a new facility," he continued, noting that the move led to the creation of 90 new jobs.
CALIFORNIA TRUCKING INDUSTRY LEADER WARNS WORKER SHORTAGE, SHIP BACKLOGS CREATING ‘PERFECT STORM’
"We’re going to bring that up to over 200 by the end of the year," he told host Stuart Varney.
The vast majority of shoes sold in the U.S. came from China before the onset of the coronavirus pandemic.
Preston pointed out that with the current supply chain issues presented in the economy due to the pandemic inventory is "taking so much longer" to arrive to the United States, which is "obviously tying up cash."
"So clearly I think other companies are seeing the need to onshore," he continued.
Impact of China lockdowns on global supply chain
Port of Los Angeles Executive Director Gene Seroka explains what should be expected and whether his port is already seeing the effects of the recent COVID-19 lockdowns in China.
When asked if there are any signs that the supply chain "crisis" will ease in the near future, Preston responded by saying he doesn’t anticipate the situation will alleviate within the next six months.
"Still today it is difficult to get containers," he told Varney. "It is difficult to get them into the ports."
He pointed to the significant amount of ships that are waiting offshore and noted that once they get into the ports, getting the goods onto trucks is a challenge given the shortage of drivers in the U.S.
The American Trucking Association has reported that there is a shortage of 80,000 truck drivers across the country.
New Balance in Hong Kong. (Photo by Chukrut Budrul/SOPA Images/LightRocket via Getty Images / Getty Images)
As it pertains to inflation, due to current macroeconomic factors, Preston noted that his company was forced to increase prices.
"We have selectively raised prices – we’ve had to," he told Varney, citing the higher cost of raw materials and the need to pay workers higher wages to attract and retain talent.
He added that the current inflationary environment is "not hurting our demand."
New Balance bulking up US manufacturing
Joe Preston, president & CEO of New Balance Athletics, notes his company has had a 'long-standing commitment to domestic manufacturing' instead of relying on Asian countries.
"Last year we grew over 30%, it was up double digits over 2019," Preston said. "We’re a $4.4 billion company today and we’re seeing that momentum into 2022."
He added that his company could have "grown even more" had it not been for supply chain constraints.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Inflation hit a fresh 40-year high in February with the consumer price index climbing 7.9% on an annual basis, according to data released last month by the Bureau of Labor Statistics. Month over month, inflation rose 0.8%.
Inflation data for March will be released next week. The February data, the latest data currently available, was taken before Russia's invasion of Ukraine, which pushed prices for some items higher.
CLICK HERE TO READ MORE ON FOX BUSINESS