New Balance President and CEO Joe Preston joins Yahoo Finance Live to discuss the brand opening its fifth production facility in the U.S. and domestic manufacturing amid inflation.
JULIE HYMAN: New Balance, which is the, of course, apparel and shoemaker, it's opened a new production facility in Methuen, Massachusetts. Fun fact, one of our producers was born there. It's about 30 miles north of Boston. And let's talk about US manufacturing with Joe Preston. He's the president and CEO of New Balance. Joe, thank you so much for being here. I'd like to ask you about the US production proposition right now.
Obviously, the cost differential is sort of rapidly changing when it comes to manufacturing in the US as we have inflation, but there's inflation globally. So I'm curious what that gap looks like now and what the economics of producing here on a relative basis to other nations looks like right now.
JOE PRESTON: Well, good morning, Julie, and thank you for having me. You know, New Balance has had a long-standing commitment to US manufacturing. We've been producing here for decades. And, in fact, we're the only athletic footwear company that has US production. So it's something that's in our DNA, something about our culture, and it's a part of purpose and community as well as we think it makes us better shoe makers. And so, certainly, there is a labor cost difference between the wages here in the US or anything that's overseas and you need to try to make up for that in terms of innovation and speed to market. And we've all seen what's happened to the global supply chain over the past couple of years and the impact of cost and also just getting materials from overseas to here.
BRIAN SOZZI: You know, clearly your company is having success in doing this. This is not your first plant. You are, in large part, US-based manufacturer. The reality that a lot of your competitors just don't want to put in the hustle to bring production back from low cost China and bring it back to this country.
JOE PRESTON: Well, like I said, it's always been part of our DNA. When Jim Davis bought the company in 1972, we were producing 30 pairs a day, so today we've come a long way since then. We opened up a factory here in Lawrence, Massachusetts in 1978. And then four years later we introduced the 990, which was the industry's first $100 running shoe. I think you see it behind me here. It's still in the line today, it's still an iconic model, and it's known for quality and craftsmanship and we make that product here and we export it all around the globe.
JULIE HYMAN: You know, I don't think of New Balance shoes as hugely expensive versus the competition, so how do you guys manage costs when you are presumably paying more for things like labor?
JOE PRESTON: Well, you need to work with your suppliers to make sure that you can get source of supply, work on innovation, work on manufacturing techniques that allow you to mitigate some of the differences in those labor costs. And then you also have to think about speed to market. And again [AUDIO OUT] if you think of product that is being made overseas and we do make products overseas as well, and the timelines of getting product, there's a big difference. So that speed take up for what you're going to see on [AUDIO OUT].
BRIAN SOZZI: Joe.
JULIE HYMAN: Oh, Joe.
BRIAN SOZZI: Go ahead, Julie.
JULIE HYMAN: I think we're having-- I think we're having a bit of audio problems with Joe, but Soz, why don't you try and-- do you want to try and ask your question and we'll see if it works?
BRIAN SOZZI: Yeah. Joe, you know, I mean, do you get upset when companies say that your company just makes dad shoes? I was surprised. I went to the website and there were some really trendy, forward-thinking apparel and footwear that you guys are selling.
JOE PRESTON: No, I don't. I actually think it's a testament to our brand and the fact that we appeal to such a wide range of consumers, from young kids in high school to grandparents. And quite frankly, I think that elasticity that we have as a brand is something that we embrace and we're proud of it, quite frankly. You know, New Balance is a privately held company so you don't hear a lot about us, but we grew over 32% last year, up double digits over 2019.
We're a $4.4 billion company. About 1/3 of our business is here in the US and the other 2/3 are outside of the US, so the expansiveness that we have from a performance standpoint, from running product, 30% of Major League Baseball players wear our product, to the lifestyle side of it, to some of the most coveted lifestyle product in the industry, I mean, that's really who we are.
JULIE HYMAN: Joe, thanks so much for being with us. Joe Preston is president and CEO of New Balance. Really appreciate it.
JOE PRESTON: All right, thank you. You have a nice day.