New Balance Mission and Core Values:
The New Balance Mission: To be the world’s leading manufacturer of high performance athletic and active lifestyle products while operating in a socially responsible manner is supported by conducting our internal and external relationships according to these Core Values:  Integrity, Teamwork and Total Customer Satisfaction.  This is the underlying principle steering New Balance business throughout the world.  We strive for continuous improvement by exemplifying the core values in all of our operations and relationships.

With this underpinning, we have developed a comprehensive Code of Conduct, built an organization to manage and monitor human rights compliance issues, and integrated a series of programs to monitor manufacturing and sourcing activities into our daily operations.

Manufacturing Facilities:
There are six New Balance owned and operated factories.  Five are in the U.S. and one is in the U.K.  As recently as 1998, we added the fifth U.S. factory in Norway, Maine.  Because of our unique team manufacturing process, versus traditional assembly line, it takes very flexible individuals to work in a New Balance factory and a few years before a new factory is up to speed.  Our associates are highly trained and skilled and they are increasingly involved in business decisions everyday.

In 1999, we also entered a new arena when one of our China Suppliers agreed to open an assembly factory in California producing New Balance product exclusively.  This brought even more New Balance production to U.S. shores.  In 2003, we produced more than 8 million pairs in the U.S.

While our U.S. production has increased by 61% (between 1996 and 2000) adding approximately 500 manufacturing and distribution jobs in our U.S. factories, our overseas production has increased by 188% during that same time period.  There are four core subcontracted factories in China, one in Vietnam, and one in the U.S.   In total, about 75% of all our shoes are produced in factories not owned by New Balance.

Our Compliance Program:
New Balance cares about ALL workers who make New Balance product and the conditions in which they work, regardless of the country in which they work.  We have been aggressively promoting our standards, and monitoring and correcting conditions for many years and will continue to do so.

The company’s program operates under the leadership of a Social Responsibility Steering Committee whose focus is to understand the issues and find creative solutions to improving working conditions and increasing the standard of living for those who make our products.  On this team are three members of the senior executive staff and five senior managers.

Our requirements are defined in the New Balance Code of Conduct to which all our U.S. and overseas subcontractors must sign and adhere.  The Code is rigorously applied through a process which includes training, establishing standards of performance, sharing of ideas and methods for compliance, monitoring by New Balance, and monitoring by an independent third party.  Anytime a requirement is not being met, we have worked aggressively with the subcontracting partner to remedy the issue in a timely fashion.  If after substantial effort has been made and the subcontractor fails to remedy the situation, the relationship is terminated.

Consistent with our Core Values, we believe any effective Compliance Program must be focused on continuous improvement.  New Balance has established what is probably a unique approach to accomplish this.  In addition to the U.S. based corporate management responsible for the program including a Steering Committee and a Corporate Compliance Manager, we employ a senior level New Balance Compliance Program Manager in China who is native to the area.  This key manager and his staff, one of whom is based in each of our core factories, are dedicated to working on improvement programs in partnership with each factory, reporting results and problems, and overseeing daily conditions in all of our subcontracted Asian factories.  These steps are taken with local plant management to indicate the seriousness of our intent to do business only with suppliers who maintain fair and safe working conditions, demonstrate tangible improvement and exhibit a consistent willingness to change.

In 1998, wanting a thorough, independent and ongoing assessment of conditions in our subcontracting factories, New Balance sought out a third party organization who could help with monitoring and the continual development of our program.  We selected Verité, an independent, non-profit monitoring organization, with a history of excellent work in helping various types of organizations with their Human Rights Compliance efforts around the world.  Verité is based in Amherst, Massachusetts and you may learn more about them by visiting their website, www.verite.org.

Verité has conducted a number of comprehensive factory evaluations at the factories where New Balance shoes are made in China.  All evaluations are done under the strict guidelines of the Verité organization to ensure independence, comprehensiveness and accuracy, and all include independent interviews with workers.  The evaluations confirm successful achievement of our Human Rights goals and the substantive progress we have made with our subcontractors in adhering to the Code.

Although no major non-compliance issues have currently been identified, each report from Verité has recommendations for correction or remediation, improvement in standard or adherence level, or an increase in monitoring.  We take these recommendations seriously and aggressively take appropriate steps to address the items reported.  For example, Verité’s audit determined that workers’ input to the factory management was not being adequately heard by the senior level of factory management and by New Balance.  The factory team and our staff remediated the problem by developing comment boxes throughout the facilities for communication directly to factory management or to New Balance, providing open feedback to all questions through the use of bulletin boards, running a series of awareness programs for all workers, and establishing worker/supervisor project teams to help identify issues that go unresolved from the worker’s perspective.

Other examples of improvements stemming from the Verité work include training programs for workers and factory management, increasing factory safety measures in the use of equipment and the facility; improving air quality, light and noise levels in the factory; increasing dorm space and improving living conditions, cleanliness and safety; and increasing worker earnings.

We are able to benchmark improvements and identify areas still in need of attention. Following each successful change there has been an increase in trust from local management that these changes improve morale, quality, and productivity.

It is important for anyone interested in this subject to seriously explore the efforts made and results accomplished by any company in establishing standards, managing an improvement process, and monitoring compliance.  All efforts must be made to improve working conditions within the business environment of a factory in a country in which government oversight and working standards are weak.  A long-term commitment to a sound and comprehensive program by any company is needed to succeed.  New Balance is proud of the results we have obtained to date.  And the results are not only good for the workers, but also have produced substantial positive results in terms of quality and delivery of product.  Satisfied workers do indeed produce higher quality product.

It is our hope that this information has helped you understand our commitment to holding our suppliers to strict standards and to maintaining safe and fair working conditions for all people who make New Balance footwear.