Ftc Questions New Balance’s ‘Usa’ Label Shoes Are Manufactured In Maine, But The Soles Come From Overseas

On a sparkling summer day, this central Maine city on the banks of the Kennebec River looks as All-American as they get.

Squealing children plunge down a shiny slide at the playground. A man waters his newly seeded lawn. Shoppers stroll the sidewalks of downtown or the aisles of the Wal-Mart.

And in a century-old brick factory building, hundreds of people are making New Balance running shoes at one of four New England plants the company operates. Skilled workers cut, stitch, cement and press leather, foam and fabric into some of the hottest footwear on the market.

Another example of goods “Made in the USA,” right?

The Federal Trade Commission isn’t so sure - the soles of the shoes from the Skowhegan plant are made overseas.

To be labeled “Made in the USA,” “all or substantially all” of a product’s components and labor must be of U.S. origin, the FTC has maintained under a decades-old standard.

Until last week, the agency was trying to stop Boston-based New Balance from using the phrase on its labels and in its ads. On Tuesday, less than a week before the matter was to go before a judge, the FTC backed off the case, saying it would instead study consumers’ perceptions of “Made in USA” claims in the context of a new “global economy.”

The matter is far from settled.

Jim Davis bought New Balance the day of the 1972 Boston Marathon and has used “Made in the USA” labels ever since. He has battled for months with the FTC over the labels and says a literal translation of “Made in USA” labeling could have far-reaching ramifications.

“It has tremendously broad implications for virtually anything that is made in this country today,” Davis said. He said most “American-made” products - from cars to computers - have some foreign-made components.

“I think that if we don’t make the investment to manufacture in our country, the country’s wealth is going to deteriorate … and we’re going to be dependent on the rest of the world for our manufactured goods,” he said.

New Balance doesn’t buy domestic soles because Davis can’t find any made here, he said.

But “Made in the USA” claims are prominent in New Balance advertising, with slogans like “If we can make great athletic shoes in America, why can’t our competition?”

FTC staffers say the “Made in the USA” claims can be deceiving. They say surveys show many consumers buying products bearing that label believe they are buying merchandise made entirely in the U.S. with domestic parts.

Last week, the FTC said it would consider whether its “standard that a product must be wholly domestic before a marketer can make an unqualified ‘Made in USA’ claim, is appropriate in today’s global economy.”

New Balance does meet standards set by other federal agencies. Under the North American Free Trade Agreement, shoes are considered manufactured in North America if 55 percent of their content is made here. The Commerce Department sets its U.S.-made level at more than 50 percent. At 70 percent or more domestic content, Davis feels his shoes are made in the USA.