New Balance ‘made in the USA’

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Many shoes from New Balance generally contain the label “Made in the USA” which makes them unique among most of the main running shoe brands that are generally all manufactured in Asia. New Balance have given the impression that they are supporting manufacturing in the USA. This has proved controversial and New Balance have been accused of misleading consumers to give the impression that they more widely manufacture in the USA than they actually do. The majority of New Balance’s shoes are made in Asia and those that are manufactured in the USA have components that are not made in the USA. For these shoes, the main sole component and other parts are made in Asia and the shoe is assembled at their USA factories, but New Balance claims that the amount of manufacturing done in the USA complies with the law to allow them to claim, ‘Made in the USA’.
new balance made in the usa
The New Balance website states that:

New Balance and Manufacturing in the US
We are proud to be the only major company to make or assemble more than 4 million pairs of athletic footwear per year in the USA, which represents a limited portion of our US sales. Where the domestic value is at least 70%, we label our shoes Made in the USA. Our commitment to domestic manufacturing allows New Balance to employ American workers at our five facilities in Maine and Massachusetts. Whenever possible, we purchase materials from domestic suppliers who employ more than 7,000 workers locally.(link)

The Federal Trade Commission (FTC) in the USA says:

Marketers and manufacturers that promote their products as Made in USA must meet the “all or virtually all” standard.(link)

What factors does the Commission consider to determine whether a product is “all or virtually all” made in the U.S.?
The product’s final assembly or processing must take place in the U.S. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.(link)

In the 1990s, the FTC did bring an enforcement action against New Balance over the claims. The FTC eventually dropped its action after a legal battle with New Balance.

A 2019 class-action lawsuit was settled by New Balance for $750,000 over claims that New Balance shoes are falsely advertised as “Made in the USA”. Under the settlement, consumers who purchased these shoes were eligible to collect $10 per pair.

In July, 2021 the FTC did release new guidelines for the use of the ‘Made in USA’ claims for products that appears to be stricter and remove any confusion (link).

In September 2021, the group, Truth in Advertising Inc (TINA.org) filed a complaint against New Balance with the Federal Trade Commission. The complaint asserted that “for far too long New Balance has brazenly violated Made in USA origin laws”. The TINA complaint letter concluded:

… The FTC now has a powerful and efficient tool it can use to bring New Balance to justice, put an end to the company’s deceptive Made in USA labeling, and effectively protect consumers and honest businesses from the company’s long-running deceptive Made in USA marketing. TINA.org urges the Commission to open an investigation into New Balance and take appropriate enforcement action. (link to complaint)

Another class-action lawsuit was filed on 20 December 2021 in the US District Court for the District of Massachusetts* against New Balance about the “Made in USA” phrase. The plaintiffs are claiming that the New Balance products that have this tagline are not entirely made in the USA and that is misleading. They are seeking $5 million in damages. While it is not clear how the consumers were harmed by this, but they do allege that they would not have purchased the footwear if they knew that the shoes were not entirely made in the USA and that they were deceived into paying a higher price for products they believed to be entirely made in the USA.

Commentary:

  • New Balance probably should consider rethinking its ‘Made in USA’ marketing approach
  • It is possible that New Balance maintains its manufacturing presence in the USA to allow it to access made in USA supply contracts with the USA government. They do have a Department of Defense contract worth over $17 million from 2018 to supply shoes to military recruits.

*New Balance are headquartered in Boston, Massachusetts which is probably why it was filed there.

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