Berry Amendment may Extend to Athletic Shoes, Benefiting New Balance and Other US-based Shoemakers

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According to the Wall Street Journal (WSJ), under the pressure from the domestic shoe industry and lawmakers, the US Department of Defense (DOD) is evaluating the possibility of procuring athletic (running) shoes 100% made in USA. Under a provision of 1941 legislation known as the “Berry Amendment” , DOD must buy clothing, fabrics, fibers, yarns, other made-up textiles, boots and certain other items that are 100% US-made. The exception can be made, however, if US manufacturers do not have the capacity to meet the procurement needs. This exception has been applied to athletic shoes for boot camp.  

US-based shoemakers are excited about this opportunity and trying to convince DOD that they have enough capacity to make shoes in USA. Shoemakers say the initiative will add jobs both at their plants and at suppliers.

Statistics from the American Apparel and Footwear Association (AAFA) show that in 2012 98.6% of shoes consumed in the US were imported. The WSJ report cited the Boston-based New Balance Athletic Shoe Inc as the only US maker of athletic shoes with large-scale production in the US, although New Balance also imported 75% of its branded shoes from overseas.

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2On the other hand, the Berry Amendment itself is not without controversy and future challenges. Cited in a recent CRS report, some policy makers believe that the Berry Amendment contradicts free trade policies and produces negative effects such as reducing business incentive to modernize, causing inefficiency due to a lack of competition and causing higher costs to DOD.  Negotiations of new trade agreements also create uncertainties for the future of the Berry Amendment. For example, under the Trans-Atlantic Trade and Investment Partnership (TTIP) negation, the European Union is seeking removal of “buy America” requirements such as the Berry Amendment to get more access to the US government procurement market.

Updates:

The DOD announced on April 25, 2014 that it will require new recruits to use their footwear allowance to purchase athletic footwear that is compliant with the Berry Amendment, which requires the use of domestically sourced apparel and textile products.

Wolverine, which for the past several years has urged the Pentagon to procure athletic footwear manufactured in the US rather than purchasing foreign-made products, believes the move will significantly help support the country’s supply chain for US-made shoes.

The policy change comes after campaigns last year to require the Department of Defense (DOD) to treat athletic footwear like every other uniform item, including boots, and ensure that such items are bought from American manufacturers.

Estimates suggest the DOD has spent around $180m to date on the athletic footwear cash allowance programme. Until now it has issued cash allowances to new recruits for training shoes which are not required to be Berry-compliant.

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Author: Sheng Lu

Professor @ University of Delaware

25 thoughts on “Berry Amendment may Extend to Athletic Shoes, Benefiting New Balance and Other US-based Shoemakers”

  1. This was a very interesting article to me because I have learned so much about the manufacturing sector in the United States this semester. Previous to this class, I was like most of the U.S population that believes companies choose to out source production to lower cost and increase their own income from these lower costs. I am now aware that this is not true at all, companies have been forced to out source production because the U.S does not have the resources to create the factories needed for production or have the labor capital to employ them while maintaining sustainable prices. This issue seems to be affecting the governments decision to move the manufacturing of sneakers for bootcamp from foreign countries to our own.

    There seems to be two sides that have differing opinions on this issue. U.S shoemakers are elated to have the opportunity to manufacture the sneakers for bootcamp. In doing so, this would greatly expand their businesses and create more jobs for U.S citizens. On the other hand, policy makers are wary of the possibly significant increase in costs. As mentioned earlier, the U.S does not have the resources to make shoes as affordable as foreign countries. Although the shoemakers claim to have enough capacity to make the shoes, it will come with a high cost.

    I must admit it is difficult to decide which option is best. I believe expanding the U.S job market is very appealing; however, this may be too costly for the government and indirectly for U.S citizens. If making the shoes in the U.S is too costly for the government and they choose to do so anyway, would they raise taxes to make up for this loss?

    1. glad to see you realize there is debate around the Berry Amendment. It is always the case for economic policy–think about what we mentioned in the class: TAA, quota system and FTAs. I hope this class can give students a balanced and complete picture. On the other hand, as you can read from the blog, many markets are “artificially” created. I hope through TMD433, our TMD/TM students can realize those important “rules of the game” associated with the T&A sector.

  2. I believe that putting the production of running shoes under the Berry Amendment would be a great move for US manufacturers. Under this amendment these manufacturers will have to purchase all the components to make a running shoe from US companies. This will spark the need for more textile mills and factories in the US. As a result, jobs that are positioned overseas will be placed back in America. US-based shoe companies will also be in demand for jobs. After reading this article I think that this is a positive change for the US companies and will have to adapt as the Berry Amendment changes throughout time.

    1. that’s why the US textile industry keeps a close watch on the defense budget debate in Congress. Many markets are “artificially” created by policy.

  3. I feel as though there are not many products that are actually made in the United States. We rely heavily on globalization and having products made over seas and just being imported back to the U.S. for sale. I personally think that this will benefit the United States in more ways than one. For example if the United States was to begin making shoes here, we will have a need to open more textile factories and help with unemployment. Overseas production has caused many people to lose their jobs and by producing here it gives them an opportunity to work again. Although I do believe this would be a positive change for the United States, the cost may be too extreme. Since it is cheaper to have offshore production, it may seem easier to stick to how things are made now. It is hard to tell whether this will happen or not, but I do think making shoes in the U.S. would effect us positively, especially those unemployed due to overseas production.

    1. if shoes made in the USA turn out to be more expensive than those made overseas, are you willing to pay more taxes in support of the higher purchasing cost of the DOD?

  4. Implementing the Berry Amendment would be a great thing for the United States. Even though we are so used to out sourcing out our products I think it would be give to give the US a chance to show they have enough capacity to keep up with foreign competitors. This a good opportunity to not only keep things within the US but to add more jobs to the plants.

  5. I think the U.S will benefit immensely by implementing the Berry Amendment. Not only will we be creating more jobs for those who work in different shoe manufacturing factories and production companies, but we are putting money into our own economy to stimulate it. It’s refreshing to hear that the U.S is stepping up to compete with countries such as China and Vietnam when it comes to apparel manufacturing. We simply do not see “made in USA” on enough clothing/apparel labels. However, I do think its important that, in order to create a competitive and effective product, the U.S needs to really make sure they do have the capacity to do so since previously, 98% of shoes in U.S were imported.

  6. I think it would be a smart move for US manufacturers to put the production of running shoes under the Berry Amendment and it would give them more opportunities. In the Berry Amendment the manufacturers gather all the resources they need to make the what they are trying to make from US companies. This could lead to more jobs in the textile and fashion industry. Also, like Mackenzie mentioned it will not only create more jobs in shoe manufacturing factories and companies but it will be putting more money into our own economy. Since globalization is such a huge thing in our industry it is refreshing to see “made in the USA” on some products.

    1. isn’t it very interesting that the general public still wants trade protectionism and strongly favors domestic made products over those made overseas despite as consumers people benefit from imports and leaders of the world always stress the importance of trade liberalization?

  7. This is certainly a step in the right direction. Although, the constant debates over the berry amendment and the arguments that travel back and forth between organizations like the FTA and TTIP are difficult to work around, there is a positive and negative side to everything. It is a benefit that the US has a company like New Balance that is capable of making running shoes 100% made in USA and we should continue this way to promote domestic products rather than importing from other countries, this helps create jobs and benefit our economy immensely. But with the FTA negotiations and the EU seeking to remove American made items, this puts a down fall to the US economy as well.

  8. I think this will benefit US economy greatly. Under the Berry Amendment, it will give more work opportunities for US shoe makers, and also their suppliers. The Berry amendment will also allow money to stay in our own economy instead of other countries. Like in the video we’ve seen in class, people from China likes to buy brand items that are made in USA, if athletic shoes have the “Made in USA” label, there will be a increase of exports.

  9. I believe that placing the production of running shoes under the Berry Amendment would be a significant step forward for American businesses. By making shoes here we would be giving U.S. citizens more jobs, thus stimulating the American shoe market which has never been done before. The majority of shoes in the U.S. have been imported due to cheap production costs overseas. Just like Kara has mentioned, it is time we start seeing “Made in the USA” on the products we consume. I believe we must start domestically producing our own products because it will help boost U.S. economy and employment and increase exports for once.

  10. I think it is interesting that the general public still wants trade protectionism and strongly favors domestic made products over those made overseas, even though most people (who are consumers) would benefit from imports. I agree that if we use the Berry Amendment for the production of running shoes would help the US businesses.

    1. You raise an interesting and important question. It is quite true that there is still many misunderstanding about trade in today’s world. Also, compared with consumers, those people who are negatively affected by trade are more organized to insert political impact. This is why in our class, we learn business, economics as well as laws and politics.

  11. Although I do understand the debate over the Berry amendment and whether or not it contradicts free trade policies, I do believe that this particular example of producing athletic shoes made in the US would be a beneficial act. If the US has the capacity to manufacture running shoes for the DOD and can prove this, I think they should be required to use them. There are a lot of obvious benefits as stated in the article such as more jobs, but it also coordinates with the agreement that the DOD has with the Berry Amendment. I think it is I’m important for the department of defense to promote all domestically made products when they can. Furthermore, it is not like there aren’t many more opportunities to promote free trade. This is just one small issue in the grand scheme of things.

  12. I too find this article very interesting. I think that the Berry amendment provision is a great idea and that having DOD purchase shoes that are 100% made in the U.S.A is a no brainer. While I do understand the controversy that comes along with this, such as the Europeans petitioning to get rid of the “buy America” slogan or that it denies business to other countries who are involved in a free trade policy. But it is a way to boost the U.S economy, and while it is created so that it 100% U.S made, there is still plenty of other businesses from the U.S that are outsourcing to other countries; so they should, in no way, feel cheated out of profits. Especially if these sneakers are meant for physical activities for military soldiers, all the more reason to make it in the U.S. While the costs may not be the cheapest option for the DOD if made in America, it will definitely have quality and if more money needs to be spent it should not be a problem because it is going back in to OUR economy.

  13. I think it is a great idea to have athletic shoes be made 100% In the USA. I agree with the initiators that this would help create US jobs. I was surprised to see that 98.6% of shoes consumed in the US were important. I knew we imported a majority of textile products but I never knew the number was that high.

    I also agree with some of the negative aspects that this could bring on. Globalization is growing in the textile industry and forcing athletic shoes to be made in the US is like taking a step backwards. However I think if we only asked that athletic shoes be made in the US it wouldn’t be a huge barrier in the scheme of things.

  14. I do not see this negatively affecting our economy. I think it could only be beneficial. However, I think it is becoming more prevalent to the American consumers that we make our own footwear and Apparel. The consumers are becoming more and more demanding toward this outlook. I find it to be relatively interesting that our industry imports such a high percentage of our goods. As dominique said, with globalization taking place it is likely that this movement will force us to take a step backwards but it is worth a shot.

    I also find it important to note that creating US jobs goes far beyond our industry. The T&A industry losing profit to create more jobs in the US causes just as many issues as it does importing goods from a foreign market. Running shoes are just one example of the many.

  15. By producing this brand of athletic shoes under the Berry Amendment, I feel the United States manufacturers could benefit greatly. According to the Department of Defense, DOD, the rules following this amendment say that the clothing, fabrics, yarns, made-up textiles, boots, and other items must be 100% made in the US. This will open opportunities for more factories and textile mille to expand further into the United States, as well as job positions to be opened up that were originated in various under-developed countries. By the end of this article, I believe the Berry Amendment will create positive changes for the United States manufacturing companies and businesses and we can expect to see great changes in the future.

    1. Keep watching on T-TIP. US and EU may open each other’s government procurement markets, which will potentially affect the Berry Amendment.

  16. I believe the Berry Amendment should extend to athletic shoes and even athletic apparel for American athletes such that represent us in the Olympics. Just like with the U.S. Military I believe that it is essential that not just these men and women represent our countries but what they wear should represent our country as well. To take this into a fashion perspective, our clothes identify who we are, therefore when a soldier or U.S. Athlete is represent our country theyre clothes/identity should as well. It shows patronage and will also benefit our economy buy creating jobs and stimulating more production of textile and apparel here in the United States.

  17. I feel that placing the production of running shoes under the Berry Amendment would be a smart move for the United States. The T&A industry in the United States has been struggling due to globalization and needs any help it can get. I understand that importing goods from other cheaper countries is beneficial to many companies but I feel that it is more important to help support your own country. Increasing production and manufacturing in the United States will help to create more jobs and stimulate the economy.

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