Brooks Running CEO mulls leaving China due to tariffs


LIZ: WHILE THE FATE OF THE ONGOING U.S./CHINA TRADE NEGOTIATIONS REMAINS A LINGERING QUESTION MARK, MORE AND MORE U.S. COMPANIES ARE BEING FORCED TO CONSIDER PULLING OPERATIONS FROM CHINA DUE TO THE TARIFF WARS, INCLUDING BROOKS RUNNING. THIS IS A MULTI MILLION DOLLAR ELITE RUNNING SHOE COMPANY OWNED BY WARREN BUFFETT’S BERKSHIRE HATHAWAY. THE HIGH PERFORMANCE RUNNING SHOES AND APPAREL FOR SALE IN MORE THAN 60 COUNTRIES WORLDWIDE INCLUDING CHINA. JIM WEBER IS THE CEO WHO ISSUED THAT WARNING. HE’S JOINING US LIVE FROM SEATTLE IN A FOX BUSINESS EXCLUSIVE. JIM, I REMEMBER BACK IN 2017, YOU TOLD ME AT THE BERKSHIRE ANNUAL SHAREHOLDER MEETING YOU WERE SO EXCITED ABOUT THE PROSPECT OF BOTH MANUFACTURING IN AND SELLING TO CHINA. A LOT HAS CHANGED SINCE THEN. ARE YOU WEIGHING WHETHER TO MOVE YOUR CHINESE OPERATIONS?>>WELL, YOU KNOW, IT’S REALLY MIGHTY RIGHT NOW. WE WOULD RATHER NOT. WE HAVE GREAT PEOPLE THERE, EMPLOYEES AND PARTNERS BUT IN THIS SITUATION, THE SIZE OF THESE TARIFFS IN OUR CATEGORY IS TREMENDOUS. WE HAVE BEEN PAYING ON A $130 RUNNING SHOE A 20% TARIFF SINCE THE 1930s, ANOTHER 25% WOULD MAKE THAT A 45% TARIFF. IT’S JUST UNTENABLE. SO WE HAVE TO LOOK AT ALL OF OUR CHOICES. IT’S NOT — IT’S AN UNSETTLING SITUATION. LIZ: THOSE NUMBERS ARE STUNNING AND I WANT OUR VIEWERS TO HEAR THAT AGAIN. 20% AND 24% JUST BECAUSE OF RUNNING SHOES?>>WELL, THE TARIFF, IF THE 25% TARIFF IS ISSUED ON THE REST OF CHINESE PRODUCTS, A RUNNING SHOE TARIFF FROM CHINA WOULD BE 45%. WE ARE SELLING SHOES SO IT’S BEEN IN PLACE FOR A LONG TIME AND THIS WOULD BE AN ADDED TARIFF ON TOP OF THAT. IT’S TENS OF MILLIONS OF DOLLARS FOR OUR BUSINESS ALONE. LIZ: YEAH, I KNOW. THESE ARE SHOES THAT YOU WOULD MANUFACTURE, YOUR OPERATIONS, I BELIEVE YOU HAVE SIX DIFFERENT OPERATIONS IN CHINA. WHEN THEY LEAVE THE COUNTRY AND COME TO THE U.S., THAT’S WHERE YOU GET SOCKED.>>THAT’S RIGHT. THE TARIFF HAPPENS AT THE BORDER. IT’S BASICALLY A TAX AND WE HAVE BEEN PAYING IT FOR MANY, MANY YEARS. BUT THIS INCREASED AMOUNT WOULD BE UNTENABLE. WE WOULD HAVE TO FIND SOLUTIONS AND FOR US, IT’S PROBABLY NOT RAISING PRICES BECAUSE WE DON’T THINK THE MARKET WILL SUSTAIN THAT AND OUR COMPETITORS WON’T ALL GO THERE. ABSORBING IT ISN’T AN OPTION. SO WE ARE HAVING TO PLAN POSSIBLY DISRUPTING OUR OPERATIONS THERE, TRYING TO KEEP AS MUCH IN PLACE AS WE CAN BUT LOOKING AT OTHER COUNTRIES. LIZ: I GET IT. OKAY. TO OTHER COUNTRIES. I KNOW YOU’RE IN TAIWAN, EL SALVADOR. ANY CHANCE YOU WOULD MOVE PRODUCTION OR A SLICE OF IT TO THE UNITED STATES?>>YOU KNOW, WE ARE LOOKING AT IT. LIZ: REALLY.>>I THINK THERE’S GOING TO BE MORE OPPORTUNITIES TO DO PROTOTYPE AND TESTS BUT AT VOLUME, IT’S REALLY NOT IN THE RADAR FOR THE NEXT FIVE YEARS. IT’S JUST NOT POSSIBLE. THERE’S SO MUCH LABOR INTENSITY STILL IN A RUNNING SHOE THAT THERE’S REALLY NO GOOD OPTIONS IN THE STATES IN THE NEXT FIVE YEARS. MAYBE WITH AUTOMATION DOWN THE ROAD, BUT IN VOLUME IT’S ALL GOING TO BE IN ASIA. LIZ: YEAH. I GET IT. I UNDERSTAND. BUT YOU’VE GOT SOME VERY HOT SHOES THAT AMERICANS LOVE TO BUY. YOU’VE GOT THE GHOST 11, I LOVE THESE NAMES, THE ADRENALINE GTS. WHAT ARE YOU MOST EXCITED ABOUT WHEN IT COMES TO THE RUNNING SHOE WORLD? THIS AS YOU HAVE REALLY KIND OF — DO I WANT TO SAY ACED NIKE WHEN IT COMES TO THE RUNNING CATEGORY, BECAUSE I HAVE TRIED BOTH AND I RUN MUCH BETTER, NOT THAT I RUN THAT MUCH, BUT BROOKS SEEMS TO BE BETTER PADDING AND BETTER SUPPORT. I LOVE NIKE FOR THE LOOK BUT HOW ARE YOU TAKING ON THE BIG BOYS IN THIS MARKET?>>YOU KNOW, IT’S INTERESTING, THERE’S AN OLD CLICHE THAT CONSUMERS ARE IN CHARGE. OH, MY GOSH, IS THE RUNNER IN CHARGE. THE INTENSITY OF FOCUS WE HAVE ON WHAT’S GOING TO MAKE YOU RUN BETTER, MILE AFTER MILE, COMFORT FIT, PROTECTION, ET CETERA, WE HAVE BEEN AT THAT GAME FOR DECADES BUT IN THE LAST TWO YEARS, WE DOUBLED DOWN IN PERFORMANCE. SO THE SHOES YOU MENTIONED ARE LITERALLY DRIVING OUR SALES. BUT WE GREW 26% LAST YEAR TO AN ALL-TIME RECORD 644 MILLION ALL IN PREMIUM PERFORMANCE RUNNING PRODUCTS. IT WAS ALMOST ALL MARKET SHARE. SO YOU KNOW, WE ARE SO INTENSELY FOCUSED ON THE CUSTOMER, I THINK THAT’S THE KEY TO OUR SUCCESS. THERE ARE SO MANY OPPORTUNITIES I THINK FOR BRANDS IN THE BROADER ATHLETIC FOOTWEAR AND APPAREL CATEGORY. WE PICKED OUR SPOT AND I THINK RUNNERS ARE RESPONDING. LIZ: AND THAT’S WHY WARREN BUFFETT BOUGHT YOU. HE LOVES THESE NICHE BUSINESSES THAT ARE BEST IN CLASS. I’M JUST CURIOUS, HAVE YOU TALKED TO HIM? I KNOW YOU DON’T REPORT DIRECTLY TO HIM ANYMORE. IT’S GREG ABEL NOW WHO IS IN CHARGE OF A LOT OF THE COMPANIES. BUT HAVE YOU TALKED TO HIM OR HEARD FROM WARREN ABOUT THIS TRADE WAR? WHAT’S HIS STANCE?>>YOU KNOW, I HAVEN’T. BUT I THINK WE ARE ALL WATCHING IT AND YOU KNOW, MY OWN VIEW IS THAT, YOU KNOW, GLOBAL TRADE IS SO IMPORTANT TO KEEPING THE PIE BIG. HOW THE PIE IS SLICED UP, THERE ARE BIG ISSUES IN TRADE THAT NEED TO BE ADDRESSED. BUT MY FEAR IS THAT, YOU KNOW, WE CURTAIL THE EXCITEMENT AND DEMAND FOR AMERICAN BRANDS ALL OVER THE WORLD, AND PEOPLE ALL OVER THE WORLD LOVE AMERICAN BRANDS. SO YOU KNOW, I’M HOPEFUL THAT WE CAN SETTLE IT OUT BECAUSE THE OPPORTUNITIES WE HAVE TO BUILD OUR BRAND IN EUROPE AND ASIA ARE JUST TREMENDOUS. WE WANT TO CONTINUE TO DO THAT. LIZ: MAYBE JUST KEEP COMING UP WITH DESIGNS LIKE THESE. YOU ARE HUGELY POPULAR, UGLY CHRISTMAS SWEATER RUNNING SHOES WHICH CAME OUT IN DECEMBER, HOW DID THEY DO? I WAS JUMPING ALL OVER IT. THEY GOT BELLS ON THEM.>>IT’S REALLY BEEN — WHAT’S BEEN SO FUN IS A LOT OF THE HOLIDAYS HAVE FANTASTIC RUNS, FOURTH OF JULY 5Ks, BUT THE JINGLE BELL 5Ks ARE MAYBE IN EVERY MAJOR COMMUNITIES AND CITY SO WE CREATED THIS UGLY SWEATER SHOE AND WHO KNEW. THEY SOLD OUT IN 48 HOURS. WE HAD NONE LEFT. IT’S JUST A FUN WAY TO EXPERIENCE SOME OF THESE RUNNING EVENTS THAT ARE HAPPENING ALL AROUND THE WORLD. LIZ: SOLD OUT IN 48 HOURS. MAYBE YOU WILL BRING THEM BACK.

13 Comments

  • That damn China! Poor US corporations.

  • Ask me if I feel bad that running shoes won’t be made by Chinese kids.

  • $130 running shoe, tells you all. Brooks , get out of China, we are not buying anything made in China, anymore. I guess their move to China was a big big mistake, tried to go for cheap labor, now you can sell them to your beloved China. You Democrats took your companies to China because Obama led you there, and now you’re having remorse, good on you.

  • This guy is avoiding the fact that he can pay two people minimum wage in the US vs half a factory of people in China.

  • $130 for a pair of sneakers.! Now tell the truth if they were in America they would have to pay $15 or more per hour for worker. In China they're probably paying the workers $5 an hour. Like you said it's all about money. Greedy corporate bastards

  • you need Captain Marvel (Tulsi Gabbard) to delete Thanos(Donald Trump)

  • Vietnam, Cambodia, ??? NOT U.S. too much labor cost.

  • China made their own shoes no need us shoe they cannot made money they go .

  • https://www.somfootwear.com/collections/featured-products Made in the USA, much better than Brooks shoes. Brooks could make their shoes in the US, but they would rather make more profit by making them in China.

  • They will simply move to another Asian country which has more economic freedom and better trained workers than US.

  • India?

  • I hope you go broke your a traitor leaving USA you for going to China ass hole crooks

  • Those shoes cost about $15 for material and to produce. What da fart is this idiot crying about??? He's been ripping people off for years selling it at $130.

Leave a Comment

Your email address will not be published. Required fields are marked *