May 22, 2011

The Bottom Line: Running hard

At New Balance it takes 70 minutes to make a shoe, and 7,700 pairs of shoes are made daily. Are you tired yet?

By J. Hemmerdinger jhemmerdinger@pressherald.com
Staff Writer

NORRIDGEWOCK - Not long ago, the production process at New Balance's Norridgewock shoe factory spanned eight days.

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Justin Waring places soles on shoes at the New Balance plant in Norridgewock.

Photos by Shawn Patrick Ouellette/Staff Photographer

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Sharon Estes inserts laces into shoes at New Balance.

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NEW BALANCE

HEADQUARTERS: Boston, but the company operates production plants in Skowhegan, Norridgewock and Norway.

HISTORY: New Balance launched in the early 1900s as a manufacturer of arch supports and orthopedic shoes, and by the 1970s focused on athletic shoes. The Skowhegan and Norridgewock plants opened in 1982 and the Norway plant opened in 1997. Twenty-five percent of the shoes New Balance sells in the United States are made domestically.

NUMBER OF EMPLOYEES: More than 4,000 staffers worldwide, including 838 employees in Maine.

EXECUTIVES: New Balance's owner is James Davis, and John Wilson is executive vice president of manufacturing. The Norridgewock, Skowhegan and Norway plants are managed by Raye Wentworth, Patrick Welch and Darian Keaten, respectively.

WORTH NOTING: Labor costs at the U.S. plants are more than 13 times higher than labor costs overseas, but the domestic plants are more than 13 times more productive, say executives. New Balance boosted efficiency at the Maine plants around 2004 when the company adopted manufacturing techniques developed by Toyota Motor Corp.

FINANCIALS: 2010 worldwide sales were $1.78 billion, up from $1.65 billion in 2009 and $1.64 billion in 2008.

 

Today, the plant makes shoes in 70 minutes from start to finish, thanks to recently adopted production techniques pioneered by Toyota Motor Corp.

Executives say the resulting efficiency gains, as well as a direct-to-consumer sales program, have allowed the Boston-based company to keep Maine's shoemaking heritage alive while competing with overseas producers.

"The people here and the craftsmanship represent who we are," said Raye Wentworth, the Norridgewock plant manager. "Many (employees) come from families in the shoemaking industry."

New Balance, a $1.78 billion athletic shoe company, operates three plants in Maine -- in Norridgewock, Skowhegan and Norway -- and factories in Boston and Lawrence, Mass. Those five athletic shoe plants, say executives, are the last in the United States.

New Balance has deep New England roots, being founded in Boston in the early 1900s as a manufacturer of arch supports and orthopedic shoes. In 1972, current owner James Davis purchased New Balance and began growing the company and the product line, selling athletic shoes in a vast range of sizes and widths.

Executive Vice President of Manufacturing John Wilson said soaring demand in the late 1970s and early 1980s led New Balance to open the plants in Maine, a state with a rich shoe-making history.

"We started visiting and found there were a number of shoe factories still in existence (in Maine)," said Wilson. "We were drawn there by the labor force and the skill sets."

In 1982, New Balance began making shoes in Norridgewock and Skowhegan. The company expanded to the former Melville Shoe factory in Norway in 1997.

Today, New Balance employs more than 4,000 employees worldwide, including 838 Mainers. New Balance owns brands including Dunham, PF Flyers, Warrior and Brine.

The domestic plants manufacture 7 million pairs of shoes yearly, roughly 25 percent of the shoes the company sells in North America. New Balance also owns a plant in the United Kindom and makes shoes through partners in countries including China, Vietnam and Taiwan.

New Balance reported 2010 sales of $1.78 billion worldwide, up from $1.65 billion in 2009 and $1.64 billion in 2008, according to global public relations manager Kristen Sullivan. She attributed the growth partly to overseas sales.

Matt Powell of Charlotte-based SportsOneSource, a company that analyzes the sporting goods industry, said retail sneaker sales in the United States are roughly $20 billion annually, and are expected to grow 5 percent to 10 percent in 2011.

Powell said that in 2010 Nike and its subsidiary Jordan had roughly 45 percent market share, Skechers had 6.4 percent and New Balance had 5.8 percent.

New Balance competes with those companies, as well as Adidas, Asics, Brooks Sports, Mizuno, Reebok and Saucony, said Sullivan.

The Norridgewock plant sits near the railroad tracks and along the Kennebec River. Nearly every day, trucks arrive from Massachusetts with raw materials like mesh fabric, soles, thread and tanned pig skins.

The plant can make some 7,700 pairs of shoes daily with a staff of roughly 360.

A few years ago, Norridgewock had a "batch" production system, in which different sections of the production line worked largely independently, said Wentworth.

Fabric cutters, for instance, completed an entire batch of fabric before the batch was ready for stitching.

Production, from start to finish, took eight days and required massive amounts of inventory.

Wentworth said boxes "took up the whole building."

In 2004, New Balance adopted what Wentworth called "single piece flow" manufacturing, one of many recent initiatives to boost efficiency.

Executives learned the process at Toyota's Georgetown, Ky., plant.

(Continued on page 2)

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Additional Photos

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Ashley Smith stitches shoes at New Balance in Norridgewock. Shoes are assembled in steps that take 44 seconds.

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Debbie Foss washes shoes at New Balance. In April, the company launched a custom-made shoe program that allows customers to design their own New Balance shoes online.

 


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