New Balance plots independent strategy

New England, once the shoe capital of the world, could lose another sneaker company with the proposed acquisition of Reebok International Ltd., but New Balance Athletic Shoe Inc. has managed to stay independent by going its own way.

Instead of hiring sports stars to pitch shoes, Boston's New Balance has a philosophy of ''Endorsed by no one." Instead of focusing on fashion and teenagers, as many rivals do, New Balance chairman and chief executive Jim Davis emphasizes function, something his baby-boomer customers appreciate. Instead of making all its shoes abroad, 25 percent of New Balance shoes are made or assembled domestically. And instead of becoming a public company that sells stock shares on Wall Street, New Balance has remained private.

''Jim Davis has never bowed to industry pressures," said Bob McGee, editor of Sporting Goods Intelligence, an industry newsletter headquartered in Glen Mills, Pa. Davis seemed unperturbed yesterday that a proposal by Adidas-Salomon AG to buy Reebok could mean that New Balance may have to compete with another sneaker giant besides Nike Inc.

''For us, it will be business as usual," said Davis, who bought New Balance on the day of the Boston Marathon in 1972.

Davis noted that the industry has been steadily ''consolidating." In June, Stride Rite Corp. of Lexington, known for children's shoes and Keds, agreed to buy Saucony Inc. of Peabody, a brand popular with female runners. In 2003, Nike unveiled plans to acquire Converse Inc. of North Andover, famous for its Chuck Taylor line.

By growing through acquisitions, a company can gain leverage over retailers and get better prices on the raw materials. Combined, Adidas and Reebok project revenues of $11.1 billion, compared with Nike's annual sales of $13.7 billion.

According to Davis, an Adidas-Reebok merger could benefit New Balance, which had 2004 sales of $1.5 billion, up from $1.3 billion. Retailers don't like dealing with a handful of giant suppliers because giants can dictate terms; retailers appreciate smaller, more flexible suppliers.

A New Balance goal is to become more flexible by exploiting the nimbleness of its US factories. The capacity to make and assemble shoes domestically allows for faster turnarounds on customer orders, said Davis, who plans to shift some production from overseas to the United States.

''We're making a larger commitment to domestic manufacturing," he said.

Davis, 62, said he has no plans for retiring. His wife, Anne Davis, is New Balance's executive vice president for administration. They have two children, 20 and 17, and one possibility is that they might take jobs in the company.

The athletic footwear business is not an easy one.

The National Sporting Goods Association estimated 2004 footwear sales at $14.8 billion, up from $14.5 billion the previous year, said Thomas B. Doyle, the association's vice president of information and research.

Demand is so-so; one reason is that teenagers, typically big customers of athletic footwear, currently make up a smaller percentage of the US population than they did when the industry enjoyed strong growth, Doyle said.

Under Davis, New Balance focused on running shoes that came in various widths, once a rarity in the industry and a godsend for older runners. Recently, New Balance has augmented its middle-age customer base by also wooing younger customers with trendier styles and by offering shoes for such team sports as football and lacrosse.

Chris Reidy can be reached at reidy@globe.com.