While patriotism, populism and politics exert combined pressure on the U.S. government to buy American, various exemptions in the laws and regulations highlight just how difficult it can be to find 100 percent domestically sourced products. Now, American shoemakers have met the standards and are calling foul on long-standing exemptions.
Nowhere is this more evident than with shoe manufacturer Wolverine World Wide, Inc. (NYSE:WWW), a global firm that spent years domestically sourcing its components and owns U.S. military footwear supplier Bates. Now, Wolverine wants the military athletic shoe market to itself, but the competition is fierce and the legislation is surprisingly complex.
“We’ve had to work with our elected officials to get the Department of Defense to do what they're supposed to do,” said David Costello, a spokesman for Wolverine Worldwide. “They've basically been ignoring the Berry Amendment, which is law, for the past 10 years and buying foreign products instead.”
While each service branch has a slightly different policy for outfitting its personnel, the Defense Department for the most part allows troops to buy a training shoe of their choice from on-base stores known a post exchanges, or PXs. That contravenes a little-known but significant law from 1941 called the Berry Amendment, according to Wolverine Worldwide and the privately held New Balance. New Balance also makes a Berry-compliant athletic shoe.
Under the Berry Amendment, the DOD is required to give preference to domestically produced, manufactured or homegrown products, especially foods, clothing, fabrics and certain metals.
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The amendment is a far stricter military-only offshoot of the 1933 Buy American Act, which was signed by President Herbert Hoover on his last day in office, in the worst of the Depression. That act requires the U.S. government to give preference to U.S.-made products, unless the U.S. product is more expensive than an identical foreign-sourced one or the quality and quantity are inadequate.
This has led to bizarre scenarios where, for example, the government has to buy fish caught in the U.S. or by U.S.-flagged ships, but can use foreign-sourced breadcrumbs in processing military food.
The simple idea behind the amendment and the act is to preserve U.S. industry. But occasions do arise when the required goods do not exist. Incredibly, two years ago the Defense Logistics Agency, which does all the buying for the DOD, issued a memo asking for Berry-compliant athletic shoe manufacturers to come forward with their products. None could meet the criteria.
In January, the DLA asked again, and this time four companies came forward with 100 percent "Made in America” products. Along with Wolverine and New Balance, the lesser-known Danner and Lacrosse companies have put forward their own products. However, the DLA, with urging from the DOD, said that just because a product is available, it doesn't mean it would buy it. The reason, according to the DOD, is athletic shoes do not count as uniform.
“Because athletic shoes are not uniform items,” a DOD spokesperson said in an email to the International Business Times, “the Berry Amendment does not apply. As such, the flexibility in the current law already meets the needs of the services and allows them discretion to prescribe a cash allowance to be paid to a member if athletic footwear is not furnished.”
According to Costello, this is the line the DOD has taken for years. He argues that that position amounts to breaking the law.
“I make that the DOD is avoiding the topic as they are hesitant to change,” said Costello. “The Berry Amendment clearly states that any textile or footwear-related products that are purchased with appropriated funds must be 100 percent American-made. The cash allowance that is being used as a workaround comes from appropriated funds. They are violating the intent of the Berry Amendment and negatively impacting the U.S. industrial base.”
The athletic shoe companies are not alone in their pursuit to get the DOD to change its tone. Carl Levin, the outspoken Democratic senior senator from Wolverine’s home state of Michigan, has been banging the "Buy American" drum for years.
He sponsored the National Defense Authorization Act for 2014, which states that if an American product becomes available, the DOD must assess it. So far the Pentagon is doing just that and has recognized that a Berry-compliant athletic shoe now exists. But it’s also emphasized that just because a product exists, a contract or guarantee will not necessarily be forthcoming.
Levin’s spokesman told the International Business Times that the law is not the only issue. “Dependence on foreign-sourced military items could leave the military subject to supply disruptions,” Gordon Trowbridge said.
“Also, Americans have made it pretty clear that they expect U.S. service members to be equipped in U.S.-made gear; there was a fair amount of outrage several years ago when it became known that the Army was buying Chinese-made berets for troops,” Trowbridge concluded.
Along with the loudest voices in the industry and politics, New Balance, the Boston-based athletic shoe company, has also chimed in with a bid.
“It’s inappropriate that the military can pick and choose when they are going to follow the law," said Matt LeBretton, a spokesman for New Balance. "The law applies across the foot -- boots are covered, dress shoes, women shoes, socks. They’ve made an arbitrary decision not to apply it to athletic footwear, and it’s wrong. We will continue to fight this until the last day and make the DOD follow the law.”
While an all-American-made athletic shoe might appear to be more expensive, a touchy subject around the Pentagon these days, Costello at Wolverine says the current arrangement is an not a highly effective way to buy anything.
“I also would suggest that they are buying shoes right now in the most inefficient way possible,” Costello said, “because essentially they are having soldiers pay retail and if you buy one pair of shoes or 10,000 pairs of shoes you will definitely achieve cost efficiency if you buy in volume, just like anything else.”