New Balance Athletic Shoe, Inc. - Energetic Growth Begins in the Mid-1970s
Energetic Growth Begins in the Mid-1970s
Quickly, Davis found himself marketing a highly popular product, the success of which forever altered the face of the once sleepy New Balance. As the company struggled to meet demand by increasing production, an order backlog swelled with each passing month. Annual sales leaped upward, jumping from $221,583 in 1973 to more than $1 million by 1976 and eclipsing $4.5 million in 1977. Everything was changing at the company that labored 70 years to achieve a sales volume of $100,000, but there were aspects of the company that did not change and, in the years ahead, would stand as hallmarks of New Balance. Chief among these qualities that tied the company to its 1906 origins were its attention to craftsmanship (something Davis continued to preach as his staff frenetically endeavored to meet demand) and to making shoes for a wide range of width and length sizes. Marketing shoes with widths stretching from AA to EEEE and lengths up to size 20 was something no other athletic footwear manufacturer did, either in the 1970s or 20 years later when the athletic footwear industry represented a nearly $10 billion business. Another thread of continuity was the company's long-time presence in New England. As the athletic footwear industry grew by leaps and bounds from the early 1970s forward, registering robust growth through the 1980s and into the 1990s, nearly all of the manufacturers moved their production overseas where labor costs were an infinitesimal fraction of labor costs in the United States. New Balance did not make such a move. Davis, through the years, was steadfast about his refusal to establish manufacturing operations in Asia, preferring to keep his production operations close to home where he believed he could exert greater control over manufacturing quality. As New Balance moved forward from the early 1970s on, its domestic production operations and width-sizing choices would stand as two of the most distinctive qualities describing the company.
The massive surge in the popularity of running that began in the early 1970s and swept up New Balance in late 1976 pressed forward into the 1980s, never losing much of its energy. Though the intensity of the running craze suggested it might be a fleeting fad, the athletic footwear industry recorded numbing growth throughout the 1980s, distinguishing itself as a legitimate multibillion-dollar business. As the industry expanded at an annual pace of roughly 20 percent, New Balance shared in the riches, registering great gains in its revenue volume. By 1982, a decade after Davis acquired a $100,000-a-year-in-sales company, New Balance was collecting $60 million a year in sales, with its future prospects as bright as they had been during the previous six years. Three years later the company was generating $85 million a year in sales, but it was at this point that the perpetually growing athletic footwear industry and New Balance parted company. Though the industry continued to expand at an exhausting rate, New Balance no longer was sharing in the riches. The company faltered, and Davis blamed himself. "We lost our focus," he later mused, recalling the years when industrywide growth pushed the company forward. "Growing that dramatically, you're behind the eight ball all the way. It was out of control. We didn't execute well . . . we tried to chase Nike and Reebok in terms of design, which we never should have done. The result was a lot of closeouts, a lot of selling below the recommended wholesale price." Between 1986 and 1989, New Balance's prolific financial growth all but vanished, leaving Davis searching for answers.
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