New Balance and the Made in USA Label
For years, New Balance had labeled its shoes Made in USA. New Balance is the only major manufacturer of athletic shoes that still assembles shoes in the United States, where it employs 1,600 people ( up from 670 in 1994). All other shoemakers ( Nike, Reebok, Adidas, Fila, Saucony) moved their plants overseas, where labor is cheaper. With 10 percent of the market and revenues of $ 1.2 billion, New Balance is committed to hiring U. S. workers and keeping its five U. S. factories going by using technology, tight teamwork, fast delivery, and close communication to keep costs near the level of the cheap Asian factories that make all its competitors shoes ( a pair costs $ 4 to make in the United States and $ 1.30 in China). Although it, too, has factories in Asia and Mexico, New Balance has continued expanding its U. S. workforce. But in the 1990s, the Federal Trade Commission ( FTC), which regulates advertising, clamped down on New Balance, saying the Made in USA label cannot be used unless all, or virtually all [ 98 percent], of the components and labor are of U. S. origin. New Balance shoes contain rubber ( 25 percent of the shoe) not of U. S. origin because rubber is not grown in the Unites States. When New Balance complained that its shoes were the only ones still 100 percent assembled in the United States by U. S. workers out of all U. S. parts except for rubber, which is impossible to source in the United States the FTC backed down, ruling that Made in the USA meant at least 75 percent U. S. parts and labor. But labor unions, consumer groups, and 150 members of Congress attacked the ruling, saying it made the label deceptive because it should mean 100 percent U. S. content. Darlene Adkins of the National Consumers League said, we live in an increasingly global marketplace, and consumers want to support U. S. jobs and manufacturing. The FTC revised its ruling to say a product had to be 90 percent domestic to say Made in USA. But that rule, too, was attacked. In the end, FTC officials went back to their original rule: all, or virtually all [ 98 percent], of the components and labor are of U. S. origin New Balance can no longer use the label.
1. Was New Balances use of the Made in USA label deceptive advertising?
2. In your view, should New Balance have been allowed to use the label? Why?