Sunday, April 14, 2013

Reshoring - New Balance - Who Kept Significant MFG in US - Has Thoughts

I just listened to a fascinating Podcast from Bloomberg with President and CEO of New Balance Shoes, Robert DeMartini.  He maintains a significant manufacturing presence in the US and is one of the last shoe makers to do so.  Along with Allen Edmonds, he bucked the offshoring trend and now appears to be proven right.

When asked about why he stays in the US much of his answer has to do with supply chain.  Let's break it down:
  1. Through lean manufacturing he has brought the labor content in a pair of shoes to 2 minutes per shoe v. in Asia manufacturing it is 20 minutes per shoe. This "factoid" is one a lot of people do not think about when they go overseas.  Rather than try to find "cheap" labor you may be best to find efficient labor.  This is the "best cost" versus "low cost" thought process.
  2. Mr. DeMartini also talks about cycle time which is one of the major downfalls of overseas manufacturing.  You can go into a New Balance store, order a custom made shoe and have it in 5 days.  Virtually impossible if it were made in China. 
This is the sign of a very balanced (no pun intended) CEO. He has thought clearly and precisely about this topic and has found a very easy way to analyze and ultimately decide to manufacture in the US.

He also discusses 3D printing (written about extensively on this blog) and the fact that they now have the capability to make one shoe at a time.  

As a side note, I found it also fascinating and refreshing that he has no intention on taking the company public as he does not want to fool with the silliness of Wall Street.  Keep an eye on this man, I think he will grow this company dramatically.

Here is a live interview with him from September:

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