Just Build It: Why Nike tuned out the distractions to invest in Arizona’s workforce

Nike’s first obligation is to shareholders, not politicians, so it’s no surprise it yanked the Besty Ross flag shoes to appease “talent” that speaks for a growing customer base. Colin Kaepernick has demonstrated he can move the sales needle for Nike. The political voices critical of Nike’s move haven’t.

Not every business calculation pans out, though, and the shallowness of this decision may yet come back to bite the company. But the stakes are much higher for Goodyear, Arizona — and politicians like Goodyear Mayor Georgia Lord. If Nike responds to Governor Doug Ducey’s encouragement to take its new shoe factory elsewhere, her work to bring new jobs to Arizona will have been for naught.

News last week is that Nike will Just Do It, and proceed with the factory. Good for Nike — and for Arizona. The grandstanding must have been hard for executives at Nike to stomach. The factory is a win for Ducey’s ally in the White House and aligns with the president’s push to persuade American brands to relocate manufacturing in the U.S. For a Trump supporter to throw water on a new U.S.-based factory must seem rich. Just last week, Nike confirmed the Goodyear facility would be only its third in the U.S.

Yet this factory represents more than the numbers convey, even though the numbers aren’t insignificant: 500 new jobs with an average salary of $48,514 per year, including overtime and bonuses. It’s a new apparel factory in the U.S. — a rarity these days — with jobs seemingly tailored to Arizona’s growing immigrant population. It’s talent that for decades has done work for American brands, just not on American soil.

An honest assessment of why American apparel brands haven’t opened new U.S. manufacturing facilities begins and ends with the challenge of workforce. In apparel, it always comes down to labor. Today many U.S. cut-and-make shops rely on the expertise of labor trained elsewhere. We’ve written about dozens over the past five years.

Nike has acknowledged that Goodyear offered a unique, hard-to-find talent pool by selecting the community in the first place. It’s a unique win. It’s unlikely we’ll see a surge in apparel manufacturing employment in the U.S. Companies are working overtime as it is to find production partners, and keep them, often in places like San Francisco and Los Angeles, where companies can tap a diverse labor pool. There’s a pathway for others to travel, one that involves an investment in the latest technology and a commitment to retrain underutilized talent. But it’s not easy. If it were, others would have accomplished it.

The hope is that companies like Nike will fuel the model and respond to the demand for more domestically made products, by siting new facilities where pieces are in place. Arizona is one such destination. Nike wisely tuned out the distractions to make an investment in a community willing to invest in a labor force uniquely suited to its needs.

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.com.