NIKE established its own manufacturing operations in Exeter, New Hampshire, in 1974 and
in Saco, Maine, in 1978. The initial impetus for this move had been an uncertainty about production
quality and capacity of the other Far Eastern countries, following the revaluation of the yen in 1973
which removed the cost advantage of Japanese sourcing. In fact, South Korean and Taiwanese
factories developed their capability quickly. The New England operation, however, became
important for the learning opportunities it offered NIKE executives. They developed an
understanding of the manufacturing business and its economics that was invaluable in negotiations
with the contract factories (see Table B). Also, “tech-rats” got the hands-on understanding critical to
effective work as an expatriate technician with the sourcing factories. In addition, the New England
operation manufactured many shoes at the high end of the product line. It was advantageous,
executives reported, to have a source close to the R&D facility