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Nike Scraps Air Manufacturing Innovation Investment, Citing Pandemic Woes

A year after forging ahead with plans to build a Nike Air Manufacturing Innovation facility in Goodyear, Ariz., despite political headwinds, the Oregon sportswear giant has scrapped that investment.

“We are experiencing unprecedented times and due to the COVID-19 impact we will no longer be investing in our Goodyear facility,” the company said on Tuesday. “We are repositioning our resources to further invest against our biggest opportunities and Air MI will continue to be an important part of Nike’s growth strategy. We thank the City of Goodyear and the team we have worked with to date. They have been outstanding partners.”

In July 2019, Nike said it would build the state-of-the-art manufacturing facility, its third Nike Air site in the United States, after the plant’s future became uncertain due to a political backlash related to the release of a sneaker emblazoned with a “Betsy Ross” flag.

The sneaker was pulled back despite already being shipped to retailers when Nike endorser, Colin Kaepernick, reportedly informed the company of the flag’s use in white supremacist circles. Following the move, Arizona Gov. Doug Ducey tweeted that he would be instructing the Arizona Commerce Authority to “withdraw all financial incentive dollars under their discretion,” dubbing the move anti-patriotic.

The decision to walk away from the Arizona facility comes after Nike shook up its executive team last week in an effort to focus on digital goals, a month after reporting fourth-quarter results that revealed a $790 million loss. Nike indicated that the management changes could result in a net loss of jobs, meaning workers could be laid off in the weeks and months ahead.

Nike’s fourth-quarter revenue dropped 38 percent year-over-year to $6.31 billion alongside a net loss of $790 million as the athletic apparel and footwear giant’s results were significantly impacted by store closures across the North America, EMEA and APLA (Asia-Pacific and Latin America) regions.

Total inventories for Nike increased 31 percent to $7.4 billion, amid store closures at its own locations and at its wholesale partners. Product shipments to partner retailers were down nearly 50 percent. In order to prevent excessive inventory from impacting the remainder of the year, in mid-March, Nike cancelled pre-COVID-19 factory purchase orders for the fall and holiday seasons by roughly 30 percent.