SKOWHEGAN – At their biweekly meeting in a conference room off the closing stitch area of the New Balance athletic shoe factory, the six members of team CS-39 worked out a plan to become cross-trained in one another’s skills.

On the following Monday, Lisa Sherburne learned “foxing,” a stitch on the shoe’s heel. On Tuesday, Michelle St. Peter shifted to “bonis,” sewing the inner lining on the underside. Later in the week, Susan Viles picked up “second collar” and Dawn Johnson went on to “heel close” and “OS collar.”

Becoming proficient in different skills is one way 1,000 workers at five New Balance plants in New England have improved productivity and kept their jobs while other shoe manufacturers have moved production overseas.

“I never thought they would be so driven, but they are,” Tina Stevens, the supervisor of CS-39, said of the team members. “They want to stay here. They want to show people that this can work.”

The move overseas has hit hard in Maine, where the number of shoe industry jobs dropped from nearly 27,000 in 1968 to about 3,500 today. Nationally, the industry declined from 235,000 jobs in 1972 to 28,000 this year, according to the U.S. Labor Department.

While bucking the trend, New Balance has risen from No. 12 in U.S. sales of athletic footwear in 1991 to fourth in 2000 behind Nike, Reebok and Adidas, according to Sporting Goods Intelligence.

All the more amazing, New Balance has done it without hiring sports stars to endorse its products.

“Our competitors have, to some degree, oversaturated the market with logos on their products,” New Balance owner Jim Davis said. “They’ve lost the panache they might have had.”

Saucony closed its Bangor factory last year, leaving New Balance as the industry’s last holdout with domestic manufacturing. It has plants in Skowhegan, Norridgewock and Norway, and in Boston and Lawrence, Mass. An Ontario, Calif., plant owned by a Taiwan-based company also produces New Balance shoes.

In New Balance’s 19th-century brick building in Skowhegan, technology gives workers who make $10.50 an hour an edge over their counterparts in other countries who are paid as little as 25 cents an hour.

For example, operators in the stitching room use $100,000 see-and-sew machines equipped with two 35mm cameras that guide the stitch for accuracy, improving quality and cutting down on waste.

The leather, rubber, synthetics and other materials that make up an athletic shoe account for roughly 65 percent of production costs, says Sheldon Kilkenny, divisional manufacturing manager.

Labor costs are the big variable, and the company admits it pays a premium to make its shoes at home.

New Balance can produce a shoe in 22 minutes of labor time, at a cost of roughly $4; by contrast, a plant in China where the work is done in assembly-line fashion might require two hours, but the labor cost is 80 cents.

Import duties offer some relief over the costs of labor and meeting government-mandated regulatory standards, Davis said. “Hopefully, some day we can compete effectively without import duties, but right now we cannot.”

Davis recognizes that overseas manufacturers eventually will adopt advanced technologies and that his company must continuously introduce new methods and equipment, such as its computerized embroidery machine with 15 sewing heads.

Some of the advances that reduced labor costs are the result of brain work by people on the factory floor. Workers in the cutting room came up with the idea of putting inventory figures into a computer by themselves, eliminating the need for a $30,000 data entry specialist. Employees also have suggested equipment modifications to enhance productivity.

Training sessions and employee meetings promote worker involvement in the manufacturing process. Every department shuts down for five minutes a day to review the previous day’s performance.

“There are no secrets here,” said Kilkenny, whose workers are informed about production targets and costs. “We’re all working toward the same goal.”

Davis maintains domestic plants produce a higher-quality shoe, but there are other tangible benefits.

Domestic plants enable the company to ramp up quickly to introduce new styles or to shift production to respond to demand. Overseas manufacturers require a longer lead time and cannot react as quickly.

Because New Balance differentiates itself from the competition by sizing its shoes in widths, it offers many more sizes that stores must keep in stock. But the company helps out by maintaining inventory that retailers can draw upon on an as-needed basis.

“We’re closer to the retailer, which is very important,” Davis said. “We get retailers that order every day from us. If they sold two shoes yesterday, they’ll reorder them today.”

New Balance believes the “Made in USA” product resonates with customers, even though some of its shoes are not allowed to carry that label because some components are imported.

According to federal guidelines, a shoe is regarded as U.S.-made only if the level of domestic value is at least 70 percent.

Last year, New Balance had roughly 1,000 manufacturing workers, or more than twice the number it had a decade ago. But because of a sharp rise in production during that period, the percentage of its domestic-made footwear has dropped from 70 percent in 1993 to 25 percent today.

Davis said his goal is to raise that to 50 percent, although he’s not sure that is possible. Although any immediate plans to expand domestic manufacturing are on hold, he foresees the establishment of a new factory as well as possible expansions of the Norway and Boston operations.

Because Boston-based New Balance is privately held and not under pressure to squeeze out higher returns to shareholders each quarter, it has been easier for the company to resist the move overseas.

“We’re willing to make a long-term investment,” said Davis, who, with his wife, Ann, bought the shoe company on April 17, 1972, the day of the Boston Marathon. Annual sales have grown from $100,000 to $1.16 billion last year.

The company was founded in 1906 as the New Balance Arch Company, a maker of orthopedic shoes and arch supports. It started making running shoes in the 1950s and has earned the loyalty of serious runners more attuned to performance than fashion, Davis said.

Analysts agree.

“Running is their core competency. They have a very good product,” said Carol Pope Murray, an analyst at Salomon Smith Barney in New York.

While New Balance is strongest in running shoes, along with walking and cross-training shoes, analysts are watching as it expands into a hot market – basketball shoes – in time for back-to-school shopping.

Establishing a foothold in basketball shoes could propel the shoemaker to greater heights, Murray suggested.