Shortly after the U.S. election, a Wall Street reporter put Matt Barretton, vice president of public affairs, on a trade and Trump issue. “Obama’s management is the blind man's ear for us,†Matt said. “To be frank, Trump was elected president. We feel that things are moving in the right direction.†However, when this statement comes out, it quickly becomes popular. Many people began to throw away New Balance's running shoes - even worse still burn them.
New Balance hurriedly came forward to clarify that this comment was purely about the TPP trade agreement, but the negative publicity was overwhelming for the sneaker giant who once boasted that he was the largest producer of American running shoes (25%). (In a few days, when the white supremacists claimed that New Balance was the "white official shoe," things got worse.) New Balance pointed out that Bernie Sanders and Hillary Clinton also opposed TPP. It stipulates that New Balance’s competitors in Asia will lower footwear tariffs, which is likely to lower the price of competitors.
In the field of sports shoes, the vast majority of outdoor product manufacturing companies are in Asia. According to industry observers, as many as 85% of outdoor products come from overseas in the United States, including Latin America and Europe. The main reason for the OIA's signing of the TPP is that it will reduce the tariff on their goods. However, since the election, Trump has reiterated his objections to this agreement. The question is: If the TPP becomes obsolete, what will happen to the American outdoor industry and their customers?
The Trans-Pacific Partnership Agreement (TPP) is a free trade agreement among 12 Pacific Rim countries, including New Zealand, Chile, Peru, Mexico, Canada, and Vietnam, which is the most important outdoor vendor. The agreement is part of the Obama administration's "Asian fulcrum" strategy. Its approach is mainly to reduce the tariffs between countries. For example, currently, the United States imposes a 17.7% tariff on backpacks entering the country; the average tariff on footwear is 13%, and the tariff for high-performance shoes such as Gore-Tex can be as high as 35%. Once the agreement takes effect, those products produced in the TPP countries will be exempt from customs duties. "This will not only provide customers with cheaper prices, but will also provide manufacturers with more resources for better investment and more innovative products," said Rich-Harper, OIA's international trade manager. .
Harper also pointed out that the goods produced in the United States will also be reduced in the TPP countries. It is worth noting that “'Made in USA' labels are very popular in Japan. Traditional companies like Danner, Woolrich and Redwing can be sold in Japan under the TPP. better."
In addition, the TPP also stipulates that the working environment of other countries that cannot generally meet the U.S. standards should be improved. For example, Vietnam will have to establish trade unions, prohibit children and prisoners.
Why is all the focus on Vietnam? Because labor wages are currently rising in China, manufacturing is shifting to cheaper labor in Vietnam, especially sewing. For example, "Osprey" currently produces all of its backpacks in Vietnam and employs 35 people in Ho Chi Minh City for product development and design. "We will save a considerable amount of tax money," said Chris Graham, senior vice president of products at Osprey.
Most TPP opponents fear that it will cause a large loss of job opportunities from the United States. "Agreements like this will lose the incentive to invest in domestic manufacturing," said Dan Ingley, founder of Voormi. All of the company’s products, including jackets, shirts, and other clothing, are produced in the United States. However, the biggest objection among outdoor producers came from Patagonia. They also opposed the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) signed in the 1990s.
"Before the agreements came into effect, more than half of Patagonian clothing came from US textile mills and sewing factories." Patagonia's CEO Ross-Maccario wrote on the official website, "NAFTA and GATT has seriously hurt the textile industry in the United States." The company also pointed out that agreements including TPP lack the ability to enforce the environment and implement labor terms, and therefore may be more harmful than manufacturing in the United States. practice. (Patagonia refuses to comment on this news.)
The death of TPP may mean that the price of many outdoor products will not drop as much as when the tariff is removed. "Our customers will definitely buy less," said Graham's Graham.
In the long run, OIA believes that they can sign better deals with specific countries, such as Vietnam, Japan, and even China. "You may see some small, focused bilateral trade agreements," said Harper. "We have long been committed to reducing the barriers and will continue to do so."
Will TPP's retreat help stimulate US manufacturing as promised by Trump? Many people are skeptical. "We are unlikely to move business back to the United States," Graham said. In 2004, when the Colorado production plant could no longer find a sufficient number of skilled sewing workers, Osprey moved the factory to Vietnam to meet the market demand for its products. They are reluctant to give up investment in huge facilities in Vietnam. Many other outdoor industry manufacturers also make similar investments abroad. If Trump wants to increase their product tariffs, they are likely to pass on these costs directly to customers.
Finally, the most promising job opportunities in U.S. manufacturing are those small companies in the United States. Certain prestigious “Made in America†brands such as Rocky Mountain Underground, Ramp, Wagner, and Gilson Snowboards may have jobs. These brands, like Voormi, are committed to new technologies that will make them more competitive.
“We can reshape America's manufacturing industry by focusing on innovation, but this requires true innovation, not just ways to save on production costs.†said Ingrid History, “Leaders need to focus on creating the most Innovative products, not just the cheapest products."
Reproduced Source: Sina Outdoor
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