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The shoe has dropped: Nike backing out of Valley factory plans
Company officials blame impact from COVID-19 for their decision to drop the plan.
GOODYEAR, Ariz. - Nike said it’s withdrawing plans to make soles for its Nike Air shoes in a Phoenix suburb because of the coronavirus pandemic.
The company had planned to invest $184 million in its third U.S. manufacturing line for Nike Air sneakers in Goodyear, Arizona.
“We are experiencing unprecedented times and due to the COVID-19 impact we will no longer be investing in our Goodyear facility,” said Greg Rossiter, a Nike spokesman.
Nike said last year it planned to open the plant in 2020. Rossiter did not say whether the plant had begun operating.
Nike lost $790 million in the fourth quarter, as soaring digital sales couldn’t make up for the loss of revenue from shuttered stores in most of the world. The world’s largest sports apparel maker said last month that its revenue fell 38% to $6.31 billion in the three-month period ending May 31.
The company grappled with costs associated with reducing built-up inventory, including wholesale markdowns and factory order cancellations. Product shipments to wholesale customers fell 50% during the period. Chief Financial Officer Matthew Friend said the company expects its inventory, which rose 30% in the fourth quarter, to be right-sized by the end of the second quarter.
"The city of Goodyear was very much looking forward to the opening of the Nike facility in our great city. While we are disappointed, we recognize and appreciate the many challenges and difficult decisions businesses are faced with as a result of current economic realities," the city said in a statement to FOX 10.
Nike’s Goodyear facility was the subject of controversy last year when Arizona Gov. Doug Ducey threatened to pull state incentives because of the company’s decision not to sell the Nike Air Max 1 USA shoe, which included a Revolutionary-era emblem known as the Betsy Ross flag.
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Ducey to pull Nike plant incentives following shoe design flap
The City of Goodyear was celebrating after the West Valley city put the finishing touches on a deal with Nike, but now those plans might be in jeopardy due to outrage over another Nike story making headlines.
Former NFL quarterback Colin Kaepernick, who has a high-profile endorsement deal with Nike, told the company the flag recalls an era when black people were enslaved and that it has been appropriated by white nationalist groups, a person familiar with the conversation told The Associated Press last year.
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