Nike ditches plans for metro Phoenix plant, cites coronavirus pandemic

PHOENIX – Nike announced Tuesday that it was pulling the plug on a ballyhooed manufacturing facility in metro Phoenix because of the coronavirus pandemic.

“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.

The company had planned to invest $184 million in its third U.S. manufacturing line for Nike Air sneakers.

The plant had been expected to open this year and create 500 jobs.

“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 of Goodyear said in a statement to KTAR News 92.3 FM.

Tuesday’s announcement is just the latest twist in the yearlong Nike-Arizona saga.

In July 2019, Arizona Gov. Doug Ducey pulled an offer of $1 million in incentives to Nike via the Arizona Commerce Authority after the sporting goods giant canceled production of a shoe featuring an American flag design.

Former NFL quarterback and social activist Colin Kaepernick objected to the Betsy Ross-era design, calling it offensive because of its connection to an era of slavery.

“Nike made the decision to halt distribution of the Air Max 1 Quick Strike Fourth of July based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday,” the company said at the time.

Ducey called it a “terrible decision” and said he was “embarrassed for Nike” in a tweet.

Goodyear, however, moved forward with $2 million in incentives and completed a deal with Nike that Ducey called “good news for Arizona” when it was announced.

But with the coronavirus pandemic wreaking havoc on the economy, even for businesses as big and successful as Nike, the good news turned bad.

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.

KTAR News 92.3 FM’s Martha Maurer and The Associated Press contributed to this report.

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