It’s looking fairly certain that the tariffs will be eliminated. The Trans-Pacific Partnership (TPP) is the trade agreement that’s expected to reduce the shoe tariff, and negotiations finished in October. Congress still needs to pass the bill (likely in 2016), but the basic gist of the deal is that tariffs on imported footwear will be phased out and eliminated by the 12th year. New Balance says it’s hopeful that the agreement will include provisions for protecting American jobs, but that hasn’t stopped protestors in Maine from appealing to congressional reps to “Flush the TPP.” Definitely curious to see how New Balance adjusts its business / operating models in reaction to the upcoming changes and how this will affect its performance.
Seems like products that have relatively known demand should be made abroad and can be shipped according to a set schedule, while custom shoes or orders that require fast turnaround are best suited for domestic production. I agree that higher-risk fashion products that could benefit from closer attention could benefit from being produced in the U.S. Setting up a new plant seems like a big investment, though. I imagine they invest in product-specific training or purchase new equipment, as they did for Berry-compliant shoes, to make these products.
My sense is that New Balance’s operations are a little less sketchy than what you suggest. The company’s website says that 4 million shoes are made or assembled in its five U.S. manufacturing facilities every year. However, I definitely see your point, and the company has been subjected to criticism for making a big deal about domestic manufacturing despite the fact that “Made in the USA” shoes account for only 25% of production (the remaining portion is made in China/Vietnam).
As someone who dislikes inconvenience, I’ve tried a bunch of on-demand food delivery services – Postmates, Favor, Caviar, etc. – to order what I want when I want it and have experienced varying levels of satisfaction. As a consumer, I really like being able to order food from restaurants that don’t normally offer delivery, although I’m definitely aware that I’m paying a somewhat hefty premium for the service. However, I’ve been hearing a lot about restaurants being less than thrilled about being included in Postmates’ services. My understanding is that Postmates generates a comprehensive list of restaurants based on the address that users provide. Interestingly, because of how Postmates curates its listings, restaurants that don’t want to have their food delivered don’t have the option of opting out of Postmates. But what about restaurants that made the conscious decision not to offer delivery? One common concern has been that Postmate couriers might not know how to handle the food properly or may take too long to deliver food that just wasn’t meant for delayed consumption, resulting in less-than-optimal food delivery. Unsatisfied customers sometimes attribute that to restaurant quality, and bad publicity for the restaurant ensues. It seems like Postmates should put some effort into working with restaurants who are concerned about delivery in an effort to not anger key players in the operating model moving forward.
I’m fascinated by the return of Bean Boots – these iconic boots are in such high demand lately, and I’m not convinced that L.L. Bean is handling its spike in popularity all that well. A few years ago, I made the mistake of waiting until November to order my boots in preparation for New England winter and ended up getting them in April. It seems like the company has yet to solve this problem – 100,000 Bean Boots were backordered last winter according to the article below. Manufacturing hand-sewn boots is a labor-intensive process, and this has helped the company develop a reputation for high-quality. I wonder whether L.L. Bean will be able to scale its manufacturing to keep up with its demand, and I question the company’s ability to forecast demand and manage inventory levels.
I’m a Danny Meyer fan and think it’s impressive that he’s built a line of successful restaurants at different price points by focusing on hospitality. As you point out, compensating workers at a rate above minimum wage has worked in his favor so far, but I’m curious about how Shake Shack will fare in the face of rising labor costs. New York’s minimum wage is increasing to $15 next year, and I’m wondering whether Shake Shack will be able to raise its wages accordingly without seriously hurting its profits. Shake Shack prices have already increased twice in the past year – will it raise prices again in reaction to the change in labor costs? If so, will that increase be enough to mitigate damage to profits? Additionally, will consumers stick with Shack Shack, or will an increase in prices drive people away from the restaurant’s “fast casual” and towards traditional fast food?